Where does margin come from?

We all know how to calculate margin in the simplest form by subtracting the cost of goods from the price those goods were sold for, but do many sales people, experienced or not, understand how to sell margin to their clients, suspects or prospects? When people on the street are all hyped up by presenting features and benefits, margin seems to be the last thing on their minds. What is the first thing on the mind at the executive level of the companies those salespeople are pursuing? Well, at that level it is profit or the operating margin of the business.

Rise to the Head of the Class

Features and Benefits are old school issues today. I didn’t say they weren’t important, just old school. The business development people that will rise to the head of the class and become highly profitable for their employers, and highly valued by their customers, are the ones that can provide products and services that generate profit for those customers and clients. Features and Benefits are a surface level approach that can be challenged by a “me too” competitor that is willing to drop price or make unreliable commitments. Everyone knows the downside of those experiences.

What’s the big picture?

Business development teams that can understand the business issues of the people they interact with will provide more value for longer periods of time and at higher margins. Knowing why a feature or benefit is valuable from the prospect’s perspective will build more trust than simply knowing what those features and benefits are. Features and benefits are “seller-centric” in nature, and if not attached to the total financial picture of a prospect they can be too assumptive and quite easy to ignore. The challenge then becomes how to open a business / profit conversation that doesn’t begin with a feature / benefit or price cutting pitch.

You don’t have to hire all MBA’s, but what would happen if your team embraced a little bit more business sense out on the street?

Hire Slow, Fire Fast?

11/12/2009 1 comment

Does it really have to be that way? Sure, there are lots of management courses that suggest that the old “Hire Slow, Fire Fast” process is a best practice, but there are plenty of things that have to have to go right along the way. Hiring slow the right way can make firing fast a non-issue. If so, then starting the process right pays huge dividends

Is everyone suddenly a Super Star in their own minds?

Using a proven methodology to select long term, successful hires that can and will sell ends the merry-go round practice that has become acceptable for many sales organizations.  The “hire three, keep one” stories exist in any economic condition, but with so many resumes touting a career as a top producer hitting the streets now, this practice can be even riskier. When you read these submissions it is truly hard to believe that such high producers and proven winners ever got let go at all. How did so many all-stars meet the fate of down-sizing all at the same time?

Don’t be duped

With everyone claiming they are competent, your process must include some tools and practices that separate the wheat from the chaff. Stop trusting your gut and intuition. No one’s resume says they performed poorly or got axed by an unappreciative manager, so buyers beware. Do the right thing and get some outside help. If two heads are better than one, get a second head or at least an instrument that can validate your gut feeling.  Slow down and make a selection that will last. It can’t be any worse than doing it all by yourself.

A Funny Thing happened when he quit – (Part 2 of 3)

11/10/2009 Leave a comment

In the first installment of this series, we looked at Robert, a rep that was not only overpaid relative to his results, but that was causing trouble within the organization. Because of the circumstances, Robert had made the decision to leave that position and go out to find someone that would pay him what he thought he was worth. After his resignation, his former employer was shocked to learn that there were many pockets of business that had gone untouched and were easy pickings for someone willing to do some selling.

So what happened to him?

Many of you might guess that failure or job hopping was the inevitable future, but the outcome was entirely different. Despite his vast network of contacts, Robert was more than a little deflated to find that nobody was willing to pay anything close to his last salary, and that the nature of comp plans in his business were heavily slanted towards pay for performance. Not wanting to be on the street for too long he took the best offer he could find and proceeded to figure out how he was going to make the kind of money he was used too.

Now that he was mostly on commission, it didn’t take long for our wayward rep to discover that the game had changed. Being in a slightly different market, he couldn’t really leverage all his contacts the way he used to, so something would have to give. Looking back he realized he had behaved like an account manager (farmer) rather than the new business development pro (hunter) that he was expected to be. He also knew that his pipeline of new opportunities had been a stagnant list of hope and wishes.

Progress starts with change

Now that he had a firm understanding that he would actually have to prospect and sell again, Robert found some new strength from internal motivation and an unwillingness to make any excuses for himself. He became totally committed to his own success, he was willing to track his progress, monitor his behavior and develop the confidence to set and meet the goals he had failed to set for himself in his last position.

Update: It’s only been less than a year since Robert set out on this new course, but we know he is performing a lot better than he was before and that his results continue to grow.

[In the final installment next week, we’ll take a look at the cause and effects of this situation, and connect all the dots]

A Funny Thing happened when he quit (Part 1 of 3)

10/28/2009 2 comments

We know of a company in the Midwest that sells construction supplies through an outbound sales force of about 10 reps. Although they had a few new people, most of their sales team consisted of veteran reps who had been in the business for 10 years or more. They had the usual mix of a few underperformers, a few Top Guns, but with the majority of the team falling in the “average” category. One of those average performers (we’ll call him Robert) was well respected because of his knowledge of the industry and the market, but never really seemed to be able to make anything but a mediocre contribution to the top line. Interestingly though, Robert had appointed himself the “guardian” for the rights of his fellow team mates, making sure to question management on their every move concerning  comp plans, perks, marketing, pricing and other strategies. Also, it wasn’t unusual for Robert to recruit his team mates to gang up on management to insure they had frequent and active “bitch sessions”

 

Here’s the surprise

As disruptive as Robert was to the daily operations, he was considered “too valuable” to terminate or re-assign because of his relationships with key customers. The fear was that if he left, the competition would storm in, taking critical business that was needed by the company. Although management coddled him, gave him his way sometimes, and tried to reason with him, nothing much seemed to change until the economy stepped in with the answer. With sales down, the company had no choice other than to start cutting salaries. Management took the first hit, and then it was time to talk to Robert about his big fat salary. So Robert, being the “guardian of all things righteous”, decided to resign and go out on his own rather than suffer the indignation being offered at the heavy hand of the wrong doers.

 

Now it gets interesting

With Robert gone, his sales manager began to do damage control by visiting all of Robert’s key accounts. At the very first place he visited, within 30 minutes, he walked out the door with one of the biggest orders ever placed by that client. And it didn’t stop there. Many opportunities were popping up that seemed like they had just been laying there waiting for someone to take the business.

 

The lesson learned

Just as many banks were deemed “too big to fail”, it’s not uncommon to find companies that have reps or other personnel that are deemed “too valuable to let go”, even though they are no less a drag on the company than the banks were to the economy. Field reps need to have only a few key ingredients in their “sales DNA” to succeed. While everyone knew that Robert “could sell”, the truth was that most times he “wouldn’t sell”. While there could be many reasons for this, the lack of the desire to be the best, and the lack of commitment to his profession are surefire signals that mediocrity is about the best you can expect.

Passion for selling … a blessing or a curse?

10/27/2009 2 comments

Curse #1

What leaves a bad impression more than encountering a salesperson that is just going through the motions? The smell of the of lack of interest and commitment seems to linger after these folks have dropped off their literature, business card and limp hand shake. The sad part is realizing that you lost interest almost immediately in what they saying and found yourself feeling sorry for these miscast pretenders. You may want to tell them that if they could just show a little emotion they might actually sell something someday.

Curse #2

On the other hand, there are the salespeople that love selling so much it scares prospects away. They love the company, the product, the marketplace (and probably you too) by the end of a call. When they leave, you can find yourself shaking your hand to make sure the gooeyness of the hand shake is gone. The passion these people have overwhelms your interest in what they offer, and you can’t help but wonder what all that emotion may be hiding. If something sounds too good to be true, well you know the rest.

The Blessing

Somewhere in between are sales pros that love to sell, but still remember that the customer is more important than their emotions. You can sense a balance that looks and sounds like confidence in what they are doing, a confidence to succeed with or without you as a customer. There is a genuine interest in helping you find solutions, but not in making a commission if the sale isn’t in your best interest. In short, these people act and carry themselves as winners. Aren’t things more comfortable when you get to interact with these kinds of people as opposed to the ones that can’t even muster the strength to quit a job they hate, or the ones that can’t quit selling so hard you want to run away?

Important Event

10/15/2009 1 comment

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Don’t miss Dave Kurlan’s Live Streaming presentation on Tuesday, November 3rd.  This is not a webinar!

 After the Cutting … 

How Successful Companies Sell Their Way Back to the Top

 

 With Dave Kurlan:  Best-selling author, top-rated speaker and internationally acclaimed business authority

Details Here

One of the hardest things a sales manager has to do …

Telling the truth is often one of the hardest things to do in sales management. When the economy tanks and everyone’s excuses seem to make so much sense, a sales manager’s job gets tougher every day. When the parade of struggling producers marches through your office and tells you all the sob stories about why no one is buying, why price is all that matters and that even your biggest competitor is off 40%, even the toughest task master can find it hard not to be sympathetic.

So what’s the problem?

And that would all make more sense if you didn’t have two or three guys or gals that seem to be getting the job done under the same conditions. For some reason there is often a couple of people that never seem to get caught in the morass of self pity and resignation that afflicts so many others. When that happens someone has to step up and tell it like it is, and if you are the sales manager, that is going to be you.

The truth is that some folks just don’t want to be responsible for where they are and what they are doing … or not doing. And the other truth is that some managers don’t want to be responsible for selecting or keeping these folks either. It’s time to decide; are you going to believe the winners, or are you going to allow the others to make or break your commitment to get it done? Tell the truth.

It isn’t easy

Selecting and keeping reps that resist making excuses and that are self responsible isn’t easy. It’s human nature to want to defend performance that is less than expected. But accepting excuses implies permission to do it more, and that is usually what happens. And that leads to a whole array of other trouble. If you want to know more, drop us a line and we’ll tell you how to train that habit out of your sales team. Otherwise, go out and Google “Excuses” and you’ll find a number of good books like “Let’s get results, not Excuses.