Playing Nice in the Sand Box

Haven’t we all heard from a very early age that you have to play nice with others? Parents, teachers, sibs, bosses, even your own kids make it pretty plain that being nice to others is the way to go. But aren’t there some times when you’d like to take that little bit of wisdom and chuck it? Oh my, wouldn’t it be awesome to tell the boss that he/she is about the dumbest excuse for a leader since the Ayatollah? But in business doing that can be and probably will be hazardous to your future. Burning bridges and all that kind of stuff.

However, there does come a time when I question whether playing nice does much good. Here is one example with others to follow over the next few posts.

Take the owner of a small plastic molding company. They put out quality product but the place was filthy-walls needed painting, floors were caked with grease, old parts and past molds were laying in dirt three inches thick. I’ll never forget two potential customers who visited the facility. They peaked in my office, looked out my window on the manufacturing floor and shook their heads in unison. It was over before it began. They were kind enough to carry through with the discussion but I never heard from them again.

I decided that being nice in this situation would do absolutely no good so I let the owner have it and hard. He agreed with my feedback. So, not playing nice paid off-the owner painted the walls himself and did a lousy job. Sometimes it makes no difference how you play, some people just don’t get it.

Here is an obvious bit of advice for company owners. Look at your company the way a prospect or customer would look at it. Better yet, invite your best customer in for an honest appraisal (no holds barred) of how you do business. Then change how you do business.

 

Common Sense Rule (CSR) Number 2: Don’t Cap Income!

This sounds like a no-brainer doesn’t it but you would be shocked at the number of company presidents/owners who place a limit on what a salesperson can earn. Talk about a misguided philosophy! I’m sure someone has done a study about salesperson turnover at companies where earnings are capped. If anyone has that info please pass it along.

Why do leaders of companies cap incomes? Couple of reasons. They’re naive about sales realities. To many leaders it just seems ludicrous to have a salesperson make more than they do. Some leaders are shallow-they are perfectly willing to ride the wave of sales all the while basking in their income numbers. No doubt there are more reasons but that isn’t the focus of the post.

What happens to salespeople when their incomes are capped? (When I say capped I mean that salespeople won’t make over X amount of income annually.) The obvious result is “demotivation”. Imagine sitting in your cubelet in September looking at your YTD sales knowing that no matter how much more you sold before the end of the year you weren’t going to make any more than $90K. Dust off the golf clubs boys, we can get 30 rounds in before the snow flies!

If you don’t think that doesn’t happen you are naive. I know very few salespeople who are so altruistic that they will continue working their butts off when they know that more sales won’t result in more income. If you think about capping and you believe what I wrote in the last sentence don’t you wonder why leaders do this? They actually hurt the  company’s bottom line by not letting the salespeople earn as much as they can.

There is an interesting flip side to this. If you’re a company owner/CEO and you have capped salespeople’s income and you have had little or no turnover guess what’s happening? You have a group of salespeople on your payroll who are essentially lazy. They are making enough to pay the bills but they don’t have the drive to earn more. In short they are satisfied! Satisfied is not a word you want to see attached to a salesperson or sales organization. That smacks of complacency.

One more little bit of wisdom on commission structures. Some companies in theory have an “uncapped” commission plan but upon further review the plan is really capped. Here’s how that little sleight of mind works. Prior to a large commission percentage kicking in (usually toward the end of the fiscal year) the salesperson needs to reach a certain plateau in sales. If that plateau is not reached then the larger commission percentage does not kick in. A company can set that plateau at artificially high levels so either the higher rate is never reached or it’s reached in December with limited time left to make larger commission dollars. And when is the plateau number introduced? Why January of course at the national sales meeting when everyone is optimistic, there are no back orders, new products are on the horizon, and the sales manager says that the numbers are a lock this year!

Small Business No-Nos

A couple of years ago I made a call on a $3M company. They needed help. As the owner described the business and customer base he mentioned that one customer represented 60% of the company’s revenue! Gasp, cough, clear the throat, turn pale, and fight off that faint feeling! Holy mistake bat-owner what the hell are you doing? Sometimes consultants have to hide all manner of emotions in situations like this.

Here is a short list of situations that should be of concern if you own a small business:

  1. One customer represents over 50% of company revenue.
  2. Less than 5 customers represent over 90% of the revenue.
  3. If the owner is also one of the salespeople and his or her clients represent over 70% of the revenue.
  4. Your salesperson has not closed a sale in 3-6 months. (Obviously you have to consider the length of the sales cycle. Adjust a “closed sale” to the sales cycle.)
  5. Your salesperson is new to the company and has not closed a sale in 9 months. (My rule of thumb is that it takes 6 months for a new rep to get their feet under them. Of course factors affect this as well so, again, adjust accordingly.)
  6. The owner spends too much time involved in sales instead of running the company. (How much is too much? If the company does $3M in revenue, there are salespeople creating business, and growth is good then the owner should be more involved with running the company. If the company does $500K then the owner may have to stay involved with sales.)
  7. Growth comes only from existing customers and not from new customers.
  8. The owner decides to market products to companies outside the main business niche. (Diversification of product lines will work but going into a new industry niche could be hazardous. More than anything else, greed drives this. Be careful.)
  9. As we saw in silicon valley in the 80’s don’t get carried away with your building, and what’s in it. Most of the owners I know have humble yet functional office space.

One business owner I know assumes that Murphy (of Murphy’s Law) has an office in the building. That’s a little out there for me but it worked well for him. I am no graduate of Wharton but it seems to me that if an owner has a solid product, a reasonable business/growth plan, good people, a decent market and economy then they will or should avoid some or all the above. Shouldn’t common sense drive business decisions?

Can Y’All Stand Just One More Post On How To Make Sales Training Successful?

Sales training is a topic that has been written about ad nauseam. So, it’s fair to ask why am I contributing to the abundant wealth of information? The main reason is that I just completed a project with a company and I was reminded again of the importance of the sales manager to make training effective.

For those of you who may not know this I am, among other things, a sales manager for hire. So back to the project. I was doing some typical sales training in the conference room. Each session ended with a commitment from the salespeople that they would use the techniques we discussed in specific sales situations they encountered. These situations were common in nature so we weren’t creating fake scenarios. Of course everyone promised on the St. James version of the bible that they would do this. Yeah, right!

These salespeople involved are not nimrods so I had some faith that they would follow through. Let’s put it this way-their intentions were good. I went to plan B which is the reason for the post. I put myself into each rep’s office one-on-one. The goal was to listen to their phone calls and if the call was a true sales opportunity we would discuss their use of the sales technique-after the call. It gave me an opportunity to listen to them in real time and coach in real time, which is the point of this post.

There is no point in spending the money or time for sales training unless the sales manager immediately follows-up with the salespeople when they use the techniques learned. This was one reason why I got out of the sales trainng business. I saw salespeople and managers go nuts over the techniques I introduced to them. They would sit there and expound on situations where the technique would work. A week later when we met again and I asked how it went with what they learned, all of a sudden people would start looking at their shoes!

The process works regardless of whether the salespeople use the phone to sell or are face to face. The key to sales training is the follow up from the sales manager or the owner to ensure that techniques are being used. How fast will the manager see results, as in increased sales? I can prove this from experience. Sales will grow within 3 months and often sooner, depending on the intensity of the follow up.

The Final Thought:     I Like this quote I dislike this quoteWhen planning for a year, plant corn. When planning for a decade, plant trees. When planning for life, train and educate people.” Chinese Proverb

It’s A Question Of Preparation-Again

You have probably figured out that I’m a bit keen on preparation for a sales call. I will dredge up a quote from an earlier post when I said that Prior Planning Prevents Pi_ _ Poor Performance. Knowing what to ask a prospect is not always easy, particularly when the pace of the sales call can be quick. That’s why I suggest walking into a sales call with specific questions already prepared.

Let’s say that you are calling on an account that you have already qualified. You have called for an appointment and you are meeting with a prospect that has some decision making capabilities. For the sake of the example let’s assume that the company may have a need to upgrade equipment for their manufacturing process. You are in front of your prospect.

Before we go full tilt into the purpose of this post let’s also put forward another sound principle, which is that the more you agree with your prospect earlier in the call, the more they will agree with you later during the sales call.  If you do the sales call professionally then there is some give and take early in the sales call. Listen for the things that your prospect says, things they have done, things they believe. As you listen to these comments, examples or situations make a strong effort to agree with them.

In order to ask quality questions you need to know the features of the product and how those features will help prospects. And finally, you’ll need to phrase your questions about the product in such a way that the prospect will agree with you. Here are a few examples:

  1. Wouldn’t that machine give you increased production?
  2. This type of equipment would also shorten your production time, wouldn’t it?
  3. Wouldn’t you agree that the equipment would also increase your product’s profit margin?

Generally, people would rather say yes than no so why not give them the opportunity to say yes more often? Yes, these are leading question but they way they are phrased tends to lead the subject to say yes vs. no. So what do you do if the prospect says no? One response is to just say, oh, and then shut up. Let the prospect respond to why he or she said no. The other way for you to respond is to say something like “I must have misunderstood your earlier comment about needing an upgrade to newer equipment.” And then wait for the prospect to respond. Nine out of ten times they will respond before you have to pick up the thread of the conversation.

Create at least 5-7 of these types of questions. Do you have to use them all? No. Chances are that using 2 or 3 will move the conversation along very nicely.

The Final Thought: Questions are never indiscreet; answers sometimes are. Oscar Wilde