Sales and Sales Management Blog

December 31, 2007

Recommended Reading: TKO Management; TKO Selling; and TKO Hiring by Dave Anderson

Dave Anderson has just released a series of 3 great little books:

TKO Management: Ten Knock Out Strategies for Becoming the Manager Your People Deserve

TKO Sales!:  Ten Knock Out Strategies for Selling More of Anything

TKO Hiring!:  Ten Knock Out Strategies for Recruiting, Interviewing, and Hiring Great People

I was privileged to be one of the people Dave asked to read and evaluate his manuscripts before production and I was amazed at how much real world, actionable information he packed into each one of these small volumes.

Although each book is small (about 150 pages), they each pack a punch.  Dave doesn’t waste any time nor space getting to the meat of each subject.  Each chapter has real world examples of the problem the chapter addresses and then moves on to present quick, effective, workable solutions.  Although the solutions are easy to apply, they aren’t fluff.  They are tried and proven solutions to some vexing sales, management and hiring issues.

Each chapter ends with a series of questions to help guide you through the application process—and to make you feel guilty if you haven’t applied the solution. 

It’s hard not to apply Dave’s wisdom because he makes it so easy to do with step-by-step directions. 

The old adage that good things come in small packages isn’t always true, but this is certainly one instance where it is.  If you’re looking for a guide to help you manage better, hire better people, or sell more, pick up a copy of the appropriate TKO book. 

You can find the book at Amazon, Barnes and Noble, Books a Million or any fine bookseller.

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December 30, 2007

Guest Article: “Successful Selling and the Theory of Relativity,” by Lee B. Salz

Successful Selling and the Theory of Relativity
By Lee B. Salz

Are you as successful as you can be? Are you limiting your personal growth? In this article, you will learn how to remove all barriers that prevent you from maximizing your success.

Albert Einstein formulated the theory that says that space and time are relative concepts rather than absolute concepts. For example, consider a car speedometer reading at 65 miles per hour. How fast is the car going? This question seems like the beginning of the joke of who is buried in Grant’s tomb and you are expecting a punch line. No joke here, I assure you. As a matter of fact, most would respond 65 miles per hour. This is the correct answer if and only if you are comparing the car to someone who is not moving. However, if you compare that same car to the car driving next to it that is driving 55 miles per hour, your car is only moving at 10 miles per hour.

So, what does that have to do with sales? When you look at your sales performance, to what standard do you compare yourself? Is it to the others on the sales team? Is it to your quota? Is it to a sales record that has stood for 10 years in your company? Maybe you look at your performance relative to your income goals?

While any of these comparative points are important, they all have one thing in common. They limit your potential. How good can you be? If you set a ceiling to that, you will never know. Yes, hitting your quota is important. Achieving your income goal is also important. But could you achieve more? Could you be better? The car moving at 65 miles per hour is moving pretty fast, but only relative to a non-moving entity. Your competitors are moving right along with you. Maybe you are in the lead, but competition does not stagnate. To them, maybe you are only moving at 10 miles per hour.

Compare that same car to a jet. The speed of the car is not overly impressive. The jet can get you from New York to Florida in a couple of hours. The car needs 24 hours to reach the same destination. Competitors get smarter. Customers get smarter. And you have to get better if you are going to be successful. What worked yesterday is not going to work tomorrow. Self improvement is the only way to do it.

There are no ceilings in sales unless you place them there. One of my favorite quotes is, “When someone says it can’t be done, it only means that HE can’t do it.” Every day people accomplish the seemingly impossible. How do they do it? Simple. They don’t compare themselves to any standard. They have no limitations. As I write this, I’m flying on a plane. If the Wright brothers believed in ceilings, I’d be driving. If Bill Gates believed that people would never own a personal computer, I’d be writing this on a typewriter.

To further make this point, I thought I would share a personal story. When I was in the eighth grade, my family moved from New York to New Jersey. (Where to start with the jokes…) At the time that we moved, I was an excellent student, A’s across the board. Shortly after moving, I injured my knee playing baseball. I ended up having two knee surgeries and spent my entire freshman year of high school on crutches. Here I am living in a new state, going to a new school, knowing next to no one. I lost my focus.

I became friendly with a few kids who were not very good students. They were nice kids, not troublemakers, but they did not perform well in school. During my freshman year of high school, I set my personal worst records for grades, but I was able to rationalize my performance. My grades were nothing to write home about, but I was scoring better than my friends. From that relative point of view, I was doing fine.

Towards the end of my freshman year, I became friends with a different group of kids. These friends later attended Wharton, Harvard, Emory, and Bates. All prestigious schools… Relative to them, my grades were a disgrace. They never made me feel badly about it, but I felt uncomfortable. Their success drove me to rediscover myself. During the remainder of my high school and collegiate career, I elevated my game to top of the class. I credit much of that with changing my approach to relativity.

Nature also uses the theory of relativity. If you put a fish in a 10 gallon tank, the fish will only grow to a certain size. The surroundings of the fish limit its size and growth. Put that same fish in a larger tank and the fish will continue to grow. Want to get better at golf? Play with better golfers. Want to run faster? Train with better runners.

What limitations are you putting on your sales success? Are you failing to achieve your quota? Are your friends on the team missing their quota too? Do you accept that because you are all failing? Or do you compare yourself to a higher standard? What are you doing each and every day to improve yourself? Is your goal just to be better, or is it to be the best?

You are the only obstacle to your success. Get out of your own way and enjoy the results.

Lee B. Salz is President of Sales Dodo, LLC and author of “Soar Despite Your Dodo Sales Manager.” He specializes in helping companies and their sales organizations adapt and thrive in the ever-changing world of business. Lee is available for keynote speaking, business consulting, and sales training. He can be reached via email at lsalz@salesdodo.com, his website at www.salesdodo.com or by phone at 763.416.4321.

December 29, 2007

An Example of One of Our Illustrious Public School Educators at Work

Filed under: Culture — Paul McCord @ 12:49 pm
Tags: , ,

Seldom do I engage in political or even social criticism.  Yet, I ran across a blog post this morning that simply begs for attention.  Written by a gentleman named Malcolm Martin–described as a teacher and elected member of a chapter of the American Federation of Teachers.  The title of his post pretty much says it all: “Socialism Is The Only Way.”  It is an argument that Marxism and the defeat of capitalism is the only salvation for humankind.

Many lament the sad condition of our public schools.  Mr. Martin is that sad state personified.  More than a teacher, more than an elected member of a teacher’s union, he describes himself as a “warrior” for socialism and the death of the American system.  God save our children from our educational system.

The post itself would be humorous if it weren’t for the fact that it is written by one who is charged with the task of educating our kids.  And should we expect a reasonable, logical, balanced presentation of facts and ideas from one who describes himself as a “warrior” for socialism?  Warriors don’t teach–they proselytize, they seek converts—and destroy those who don’t convert. 

Here is the link to his article at the Dissident Voice: a radical newsletter in the struggle for peace and social justice

http://www.dissidentvoice.org/2007/12/socialism-is-the-only-way/

Guest Article: “Sales or Salary + Commission” an article by Frank Rumbauskas

I’m pleased to offer a new article by a friend of mine who also happens to be a great trainer, Frank Rumbauskas.  He lays out the advantages and disadvantages of the three most common pay structures in sales.  Since many salespeople have found themselves jobless due to massive layoffs in some financial services industries, this is a timely article for many. 

Salary or Salary + Commission
By Frank Rumbauskas

One of the most common questions I get lately is from people who have been out of work or lost a job due to a layoff, and are now faced with the decision to take a straight-commission job due to a steady decrease in the number of available salary + commission jobs.

It’s not an easy answer simply because each has its own advantages and disadvantages. Personally, I think the straight-commission world offers greater opportunity and higher overall potential, but everyone’s situation is different and what is right for me may not be right for the next person.

So, with that in mind, let’s take a look at each.

Salary or Salary + Commission

Advantages:

1. Economic security. In a job with a base salary, you know you’ll always have a paycheck and paying your bills will never be an issue.

2. Stability. Along with the steady paycheck, most jobs offering a base salary generally expect you to stick around for the long-term. In fact, longevity of a potential salesperson is usually highly scrutinized during the job interview and selection process. They expect you to stay with them for at least a few years, and they assume that you view them as a long-term, if not permanent, employer.

3. Training. Part of the stability and structure typically offered with a salaried position is a training program. Nearly all salaried sales positions have a formal new-hire training process, and most provide valuable ongoing training. This training will not only help you improve in your current job, but will be considered highly valuable by any potential employers in the future.

4. Expenses. Most (but not all) salaried positions provide basic expense reimbursement, usually mileage and cell phone at a minimum, with some providing more.

5. Benefits. With few exceptions, a salaried base + commission job will offer health insurance, possibly along with other fringe benefits.

Disadvantages:

1. Reduced commissions. Nothing in this world comes without a price, and the price for the security of a base salary is a lower commission rate. In most companies, the difference can be staggering. My first straight-commission job paid 17% compared to the 2% I was previously earning in the base + commission position. The reason for this is obvious. Employers decide upon how much money you should make at 100% of quota, subtract your base salary and the cost of benefits and payroll taxes, and whatever is leftover becomes your total targeted commission. However, if your base salary is rather large, a low commission rate may not be an issue after all.

2. Less freedom. Another price for a steady base salary and the structure and stability of that type of position is that you are obviously an employee and will need to meet certain requirements. At a minimum, most salaried salespeople must show up for meetings, come into the office at set times or otherwise report in, complete certain reports and forecasts at set intervals, participate in company activities, and so on.

3. Time management. All the activities that a salaried salesperson must complete seriously cut into productive selling time. All that time you spend commuting to and from the office, filling out forecasts and reports, attending sales meetings, going through ongoing training, filling out expense reports, etc., is time that you cannot spend selling. The end result is reduced productivity.

4. Questionable security. While a base salary guarantees that you can pay the bills while you have it, there is always the risk of being laid off, or of losing your job thanks to a couple of poor sales months. Companies are really tightening the leash these days when it comes to sales reps who are not at quota. I know of companies who used to keep non-performing salespeople for six months or longer, and today they’ll drop the same people in less than 60 days.

5. Lowered competitiveness. A salesperson who is an employee of a company can only represent that company, and therefore must continually battle the competition.

6. Higher taxes. 9 times out of 10, an employee will pay higher income tax rates than a self-employed commissioned agent who has consulted with a good accountant and structured his or her operation for maximum tax advantages.

Straight Commission

Now, let’s take a look at the advantages and disadvantages of working as a straight-commission salesperson:

Advantages:

1. Higher overall opportunity. A straight commission opportunity almost always pays a drastically higher commission rate than the same position paying salary + commission. When I was faced with the decision to take the plunge that first time, at first I was terrified at the thought of not having a steady paycheck. However, after I sat down with a calculator, I realized I couldn’t lose. The commission rate was so high that only one sale would pay as much as I made every month in salary, and making only one sale in a month at that particular job didn’t take much. In the end, I quadrupled my income by switching to commission only, even though I wasn’t selling any more than I had before.

2. Freedom. This one can be a double-edged sword. I always hated going into an office and trying to work in an environment in which I wasn’t all that comfortable and that was full of distractions. I’ve always gotten far more accomplished working from home. However, this isn’t the case for everyone, especially those of you with families. (If working from home won’t work, executives suites are plentiful and inexpensive.) In addition to the home office, you have the freedom to structure your time as you see fit. This is why it’s a double-edge sword – some people don’t have the discipline to make this work. But if you do, you can be FAR more productive than the person who must stick with the company’s plan.

3. More productivity. Going back to the advantage of freedom, without mandatory meetings, forecasts, cold call blitzes, and the other many activities that are usually required for regular salaried salespeople, you have a lot more time to sell. Just the time spent commuting will free up at least an hour each day for most people.

4. More competitive. As an agent, you can sell whatever you want for whoever you want. As I said earlier, an independent agent representing every company in his or her respective industry need not fear competition.

5. Lower taxes. If you consult with a good accountant, you’ll almost always pay less in taxes than a salaried employee.

Disadvantages:

1. No financial guarantees. If you’re on straight commission and you sell nothing, you earn nothing. Zero sales means no paycheck and low sales means a very small paycheck. This is the trade-off for getting the high commission rate. If you don’t sell, you don’t eat.

2. Freedom. I added this to the list of disadvantages as well as advantages because, as I said earlier, many people have not yet developed the self-discipline to “be their own boss” and as such, they wind up in the situation described in the previous paragraph.

3. Higher expenses. You won’t be reimbursed for mileage, cell phone allowance, and all of the other costs, including ones you might not think of. Agents are generally required to carry a business insurance policy, and my first straight-commission job required me to carry one million dollars in auto liability insurance. It not only took me weeks just to find a company offering such high limits, but also wound up costing over $400/month. (The flip side is that, if you’ve structured things properly, all these expenses are also tax deductions, including part of your rent or house payment as a home office deduction.)

4. The Government. You’ll need to file paperwork to form a business entity, you’ll probably need to get at least one or more licenses or permits, and you’ll need to be meticulous about having all your
necessary tax deposits and paperwork in on time if you don’t want to get into trouble.

5. Questionable security. Just like with a regular job, the company you represent may decide to drop it’s agent program, they can terminate you without cause, or they may go bankrupt at any time. Unlike a regular employee, you won’t have any severance pay or other compensation coming to you if any of these things happen.

Conclusion

As I stated earlier, I’m in favor of working on straight commission. I made far more money doing that than I ever did at a regular job, and I enjoyed it a thousand times more because the freedom it offered fit perfectly with my independent personality.

So I really can’t give a “yes” or “no” answer to all the people who write in asking, “I’m having difficulty finding a regular salary + commission job, but I’ve been offered this straight commission opportunity – should I take it?” It really depends on yourself and your requirements. Hopefully the information in this artcile will give you some guidance and has brought up some points you may not have thought about in making your own decision.

New York Times best-selling author, Frank Rumbauskas is a sales trainer and consultant focusing on training salespeople and teams on how to institute sophisticated prospecting and marketing strategies.  His NYT best-selling book, Never Cold Call Again, and his second book, Selling Sucks, show salespeople how to they can capitalize on marketing methods designed to reduce prospect resistance and open doors that traditional marketing methods can’t.  Frank’s website is http://www.frankrumbauskas.com

December 28, 2007

Referral Selling Isn’t About You

Becoming a referral-based salesperson has tremendous benefits: 
•  You spend far less time prospecting
•  Your sales increase
•  You spend less on mass marketing activities
•  Your income increases substantially. 

But referral selling isn’t about you.

To become a truly successful and profitable referral-based salesperson, your focus must be on your client and their needs.  Your client, no matter how much they may like and respect you, is NOT concerned about your wants and needs.  They are concerned about THEIR wants and needs and in order to generate a large number of highly qualified referrals from your clients and prospects, you must communicate to them why it is in their best interests to give you referrals. 

Certainly, there are clients who will give a couple of good referrals now and then simply because they like you or they respect the work you do.  Buy you don’t want a couple of referrals every now and then.  You want a large number of highly qualified referrals from every one of your clients.  Unless the client understands that giving referrals is in his or her best interest, you will not generate the volume and quality of referrals you are seeking.

So, why is it in the client’s best interest to give referrals? 

TIME AND ATTENTION:  you must make the client understand that you, as a referral-based salesperson, are unique.  You, unlike the vast majority of other salespeople, have the time to take care of their wants and needs because your clients provide you with your client base through their referrals.  If it were not for your clients providing referrals, you, like all the other salespeople, would have to spend 70-80% of your time prospecting for new clients, leaving only 20-30% of your time to sell, monitor, and administer your client’s files.

Asking your client a few simple questions will generally help remove any doubts about the value of you having the vast majority of your time free to see to their needs.  Ask your client:
•  if they have had purchasing experiences in the past where the salesperson didn’t properly monitor their purchase
•  if they have had experiences in the past where the salesperson was difficult to contact
•  if the salesperson didn’t keep them fully informed during the sale
•  if they have had an experience where problems arose during the sale that were not deal with in a timely manner
•  if they have had experiences where their expectations and priorities were not met. 

Every single client you deal with will answer yes to at least one–and probably all–of these questions.

Explain that the root cause of these problems and issues is that the salesperson did not have the time and freedom to oversee the client’s purchase.  Rather than taking care of their client, the salesperson had no choice but to spend his or her time seeking out new clients, leaving their current client’s sale to be worked on as they could squeeze out time.

After this line of questioning and your explanation of where the problems in past purchases arose, virtually every client I’ve dealt with quickly grasps how referrals are in their best interest.  People are self-centered.  They want their purchase, whether dealing with the most sophisticated high-tech system or simply a new washer and dryer, to go smoothly with all the details attended to.  They don’t want problems, and if they can legitimately help you pay more attention to their purchase—and you’ve earned the referrals—they will give referrals because it helps them, not because it helps you.

Since you don’t earn the referrals until after the sale has been completed, you must come through with results.  Just because a client agrees to give referrals upon completion of the sale because it is in his best interests, if you don’t perform to expectations, you will not receive the referrals because you have not earned them.  In fact, you will have lost all credibility with the client because your explanation of why you deserve referrals and how they benefit the client will have proven to be false.

EGO:  Clients will also give referrals to stroke their egos.  If you have established yourself as a referral-based salesperson whose business is exclusive enough to demand potential clients come through referral, then many clients will be happy to refer you to others for no other reason than to flaunt the fact that they work with you.  From your perspective, that is a valid enough reason.  You want the referral; the client wants the perceived prestige.  You both win.

In both of the above cases, the focus is on the client.  And of the two reasons for giving referrals, you will find far more clients motivated by the care you can afford their purchase than by the stroking of their ego.

Either way, you must take the time to explain to your client why you work by referral and why providing referrals are in their best interests, not yours.  If you are mindful that the client is self-centered and needs to be motivated by self-interest and you live up to the promises you make, you will find almost all clients are open to giving quality referrals.

December 27, 2007

Guest Article: The End of Solution-Based Selling by Jeff Thull

Solution based selling is a term that has been used since the 90’s and describes a selling approach that was a shift for many organizations. Does this presentation sound familiar? We have the solution to meet your needs. We will tailor our products and services so that they fit your reality precisely. Our price is reasonable and we’ll provide excellent customer service. It’s the move from selling products to selling solutions and it’s what the vast majority of all companies say to their prospects. Perhaps you’ve said it to yours.

If you’re still selling that way, you’re missing the boat – the one that recently crossed over the horizon leading to the 21st century.The way most companies are selling solutions just doesn’t work in today’s business world. Things have gotten so complex that most customers can’t even comprehend what their problems are, let alone distinguish between you and your competitors. And too many salespeople are out there making smoke-and-mirrors claims, simply re-labeling a collection of their products as ‘solutions,’ when in reality the customer is not able to connect those solutions to their business. And if they do buy the ‘solution,’ 80 percent are dissatisfied with the value results.

Solutions offered by most companies fail to deliver real value for a variety of reasons. Maybe the product or service itself doesn’t deliver on the promise made. Or the customer is unable to properly implement it. Or the customer is able to implement the product or service, but his or her expectations still aren’t met. Not that the reason matters in the end. Unless you can define, address, and connect with value on your customer’s terms, you lose.

The answer is to quit selling your solution as you would sell any other product and start selling like a “business advisor,” a job that requires the diagnostic skills of a doctor. You must help customers unearth and comprehend their most compelling problems. You must help them recognize the pain they’re experiencing in the absence of your solution, anticipate and respond to problems they will face in the future, and help them manage the pain of change they will no doubt go through as they implement your solution. You must help your customers provide greater value to their customers. In short, you become an indispensable source of business advantage.

I call such complex, robust, revenue-building solutions-which fully deliver on the value you promise and often go far above and beyond customer expectations-“prime solutions.”

Creating them requires the complete consideration of the following:

– Value outcomes that the solution will generate

– Decisions that will underlie its purchase

– Challenge of implementation and usage

Clearly, this is not your grandfather’s method of selling!

So how can you move away from solution-based selling and toward becoming a prime solution provider? Here are a few thoughts to get you started:

Commit to moving into Era Three

In Era One, which ranges from 1950 to the mid seventies, salespeople were persuaders. (This is a great product; you need it and here’s why it is the best.)

In Era Two, mid seventies to the mid nineties, salespeople became problem solvers. (Tell me what your problem is and I’ll provide you with a tailored solution.) Although this approach lost its effectiveness a decade ago, many salespeople don’t realize a shift has occurred. They are still developing, marketing, and selling in the style of Era Two.

In Era Three, which began around 1995 and is still in effect today, the salesperson is seen as a source of business advantage. He or she essentially says, “Let me help you diagnose your problem and design, evaluate, and implement a solution that provides a high level of value to your customers and sets you apart from the competition.”

Operating in Era Three is a daunting prospect. It requires taking on the mindset of a physician and advising the customer, and it really is a deeper, more complex process than most salespeople are accustomed to. But if you want to gain and keep a solid foothold in a time when your customers have an endless supply of choices, you must do it.

Shift your thinking about the role of salespeople

You may be starting to suspect that some professionals steeped in a solution-focused approach to selling are ill prepared for the brave new world of Era Three. Sadly, this is sometimes true. Today’s salespeople must function like general managers. They must have a thorough understanding of the customer’s business, but more importantly, the business of their customer’s customers. Salespeople must be able to pinpoint where customers may be losing revenue and failing to take advantage of opportunities. In short, they must be highly intelligent, observant, focused, and collaborative.

Start paying close attention to the abilities, personalities, and attitudes of your sales team. When you hire new people, look for Era Three characteristics. Selling is no longer about psychological games and forceful personalities. After all, the goal of the Prime Solution salesperson is not to get a signed order. His or her goal is a high-quality decision based on an honest, thorough, and rational evaluation of the correlation between the customer’s problem and the seller’s solution. That decision may well indicate your solution is not the best fit. You need salespeople who recognize that is a quality outcome.

Change your position at the table

In the first two eras of selling, the customer sat on one side of the (metaphorical) table and the salesperson sat across from him or her on the other. Today, both parties are on the same side of the table, sleeves rolled up and eyes trained on the customer’s problems and opportunities. If you are a salesperson developing a Prime Solution, you will go through the following four phases:

Discover
Here, you set the stage for a compelling engagement and a continuing relationship based on trust and respect. You push beyond the traditional boundaries of prospecting to create a solid foundation on which to build a long-term, profitable relationship.

Diagnose
You maximize the customer’s objective awareness of her dissatisfaction, whether or not that dissatisfaction supports your company’s offerings. You assist the customer in understanding her situation and, as a result, reinforce your credibility by refusing to alter the customer’s reality to fit your needs.

Design
This is where you help the customer create and understand the solution. It is a collaborative and highly interactive effort to help the customer sort through her expectations and alternatives to arrive at the optimal solution.

Deliver
You begin with the preparation and presentation of a formal proposal, and the customer formally accepts your solution. Next comes the implementation and support of the solution and the measurement and evaluation of results. Finally, the Deliver phase includes the maintenance and growth of the sales team’s relationship with the customer.

Take steps to end cross-functional dysfunction in your company

In a process like the one described above, selling doesn’t happen in a vacuum. It cannot. Every department in your company-from R&D to marketing to customer service-must work together with sales to create real value for your customers. That means ending “cross-functional dysfunction”-the state in which internal politics and the incessant maneuverings for corporate power and resources cause managers to wall off access to their domains and restrict communication.

Since the salesperson puts himself in his customer’s shoes, so must everyone else in the company. If not, the salesperson’s efforts are wasted. You need to take a good, hard, honest look at the inner workings of your company, and, more to the point, your culture. Successful solution development depends on open communication and broad-based inquiries. If you see any evidence that such information flow is being impeded, do what is necessary to open up these channels.

Okay, you may be thinking. I understand that a solution-focused approach may not work for all companies. But it seems to be working fine for mine. If it ain’t broken, why should I fix it . . . especially when fixing it sounds so difficult? To companies with that attitude, a word of warning.

No one can afford to be complacent. No one. The technological and global changes that have taken us from Era Two into Era Three will continue to unfold, probably in new and unforeseen directions. Your products and services can-and will-be copied.

Only by ingraining yourself deeply and inextricably into every aspect of your customers’ day-to-day realties can you escape being replaced on a whim or due to a sudden shift in the market. It’s tough, yes, but it’s a tough marketplace. Shifting to this new paradigm will not only help you live to see tomorrow, but it will foster in you the agility and plain old street smarts to take your business in completely new, highly profitable directions. Realize that and you’ll see that it’s well worth the effort.

Jeff Thull is the President and CEO of Prime Resource Group, a strategy and performance consulting firm based in Minneapolis.  Jeff’s book, “Mastering the Complex Sale” was released in 2003 and is rated one of the top 30 best business books by Soundview Executive Book Summaries and #1 best selling book on Amazon.com. Jeff’s newest book “The Prime Solution” was released in January 2005.  Jeff’s website is www.primeresource.com 

December 26, 2007

The False Promise of Word of Mouth Marketing

We’ve all heard the advice: turn your clients into your mini ‘sales force’ by encouraging them to tell others about you and your business.  Word of Mouth Marketing is touted as being the easiest and best marketing any salesperson, professional, or business can hope to get.  Not only does it get your word out, but nothing is more powerful than a customer telling others about how great you are.  Customers will flock to your door if your clients create a buzz about you.

There is some truth to those statements.  If you can get your customers to create enough ‘buzz,’ you will see an increase in your business.  Customers will come.  Sales will increase.  Nevertheless, for most small businesses and salespeople, the hype about word of mouth marketing is a false promise of easier, less stressful marketing and increased business. 

The problem isn’t with the concept.  A broad, expansive word of mouth marketing campaign can work wonders for a business.  If you can get enough people talking about your product or service—or you, the method can be one of the most effective marketing formats there is.  A spontaneous recommendation from a very satisfied customer is a powerful thing that few other marketing methods can match.

The problem with word of mouth marketing is the breadth of buzz needed in order to see an increase in business–and the passive nature of the method itself. 

True word of mouth marketing seeks to create a substantial level of general discussion and awareness within the community of a product, service or individual business.  This awareness isn’t spontaneous but is rather generated and directed by the company who is seeking the promotional benefit of the marketing.  True word of mouth marketing is typically engaged in by large companies who commit millions of dollars to creating the ‘spontaneous’ viral marketing by ‘customers.’  Often the ‘customers’ who are spreading the word about the product or service are not actually customers but are hired to appear as satisfied customers or are receiving some type of incentive for talking up the product or service.

On a much more modest level, small companies, professionals, and individual salespeople try to create word of mouth marketing by asking their legitimate customers to tell others about their services.  Unlike the major word of mouth campaigns above, these are simply a handful of truly satisfied clients whom the salesperson or company encourages to spread their word for them by telling family, friends and acquaintances about their experience and then encouraging the prospective customer to call the salesperson or company. 

Of course, this mini word of mouth campaign can never begin to reach the magnitude of buzz of that created by the major corporate campaigns, but the hope is the same—increased business through the transmission of the company or salesperson’s message to potential new customers through their existing client base.

Unfortunately, for the typical individual salesperson or small company, the numbers simply don’t work.  Despite their effort to encourage each client to tell others about them, in reality only a small percentage of customers will actually tell anyone else about the salesperson or the company.  Recommendations generally only come when the client happens to hear someone say they are currently looking for the salesperson or company’s products or services, and these occasions of happenstance occur very seldom for any one customer.  Consequently, for the word of mouth marketing campaign to generate a substantial increase in business, the salesperson needs hundreds or even thousands of customers spreading the word for them.

To compound the issue, once the customer has made the recommendation to a potential customer, the prospect must then take the initiative to contact the recommended salesperson or company.  All the salesperson can do is hope the client passes the word along and that the recipient of the recommendation decides to act upon the recommendation and contact the salesperson.

Word of mouth marketing is a passive activity where the salesperson has no control over any aspect of the process once they have encouraged their client to tell others about them and their products.  Either the customer chooses to tell others or they don’t.  Once a client has encouraged a prospect to seek the company or salesperson’s services, the prospect chooses to contact the recommended company or salesperson or not. 

For a small company, professional, or salesperson to rely on word of mouth marketing as their primary method of generating new business is dangerous.  Asking others, no matter how much you trust them or how sincere they are, who do not have a stake in the success of your business is to risk your success and future on chance. 

This is not to say that word of mouth marketing should not be a small portion of your marketing plan.  Word of mouth marketing certainly has its place in the marketing lexicon of most businesses.  It is simply to say that it should play only a minor part in the marketing strategy of your business. 

Nor is it to say that some small businesses haven’t used word of mouth marketing successfully.  For some certainly have.  Most of those who have found word of mouth marketing to be highly successful have tended to be retail stores and others who rely heavily on walk-in traffic. 

Moreover, it isn’t to say that a salesperson or company’s client base can’t be the primary source of new business, for it certainly can, and for most businesses and salespeople, it should be.  However, it shouldn’t be through word of mouth marketing but rather through referral selling. 

Although often used as synonyms, word of mouth marketing and referral selling are distinctly different marketing methods.  As mentioned, word of mouth marketing is a passive activity.  On the other hand, referral selling is a highly proactive marketing format.

Whereas with word of mouth marketing, you have no control of the process; with referral selling, the you retain complete control of the process. 

Referral selling is a process where you work with your client to acquire direct introductions to others your client knows who may need or want your products or services. 

True referral selling is a disciplined process that establishes a relationship with your client that has a predictable outcome—receiving a large number of high quality referrals from the client.

Unlike the referral method most salespeople, professionals, and business owners have been taught, true referral selling isn’t just “doing a good job and asking for referrals.”  That method, like word of mouth marketing is more chance than process.  The most typical result of ‘asking’ for referrals as most have been taught to ask, simply results in the client claiming they have no referrals to give or if they do give a name and phone number, it is most often little better than taking out the phonebook and simply pointing at a name at random.

In order to turn referral selling from being little better than a warm call to a suspect rather than a true prospect, you must develop a referral generation process that:
•  Gives your client an opportunity to get comfortable with giving referrals
•  Lets the client know exactly what a quality referral is
•  Gives the client a reason to give referrals
•  Gives the client ample opportunity to think of quality referrals to give
•  Helps the client come up with several quality referrals to give
•  Turns contacting the referred prospect from a warm call to a direct introduction

A referral process that meets the above criteria turns referrals into a disciplined process where you retain complete control.  You know exactly where the process will end—with several high quality referrals to people you know you want to be referred to and with a direct introduction to them from your client.

Word of mouth marketing is dangerous for the typical salesperson or company if relied upon as their primary marketing method.  It is easy.  It is safe in the sense that the salesperson seldom hears rejection.  But for most salespeople and companies, it cannot produce enough new customers to sustain the business.  The promise of easy marketing and increased business is false because the premise of word of mouth marketing on a small scale is false.

Yet, taking the time and effort to learn how to generate high quality referrals from each of your clients will expand your business many times over by eliminating chance and replacing it with a predictable process to generate new customers.

December 25, 2007

And a child was born . . .

Filed under: Uncategorized — Paul McCord @ 7:24 am

I wish each a Merry Christmas and the joy of the season.

More importantly, I wish all remeber the reason this day is celebrated and that our minds and hearts turn once again to the true meaning of Christmas.

Although many of the traditions and customs of Christmas have been adopted from Pagen rituals and holidays, they have been merged into the day we celebrate the birth of the Christ Child and each has taken on new meaning.  And I hope that each of us can take on a new meaning in the coming year.

Celebrate with family and friends on this day.  But remember the real purpose of this day is the celebration and recognition of the birth of the Lord Jesus Christ.

December 24, 2007

Guest Article: Creating Urgency by Craig James

There are three points in the sales process where a deal is likely to slow down: after you’ve made your formal presentation, after you’ve presented your proposal, and when your contract has gone to Legal. Because the last of these is less a matter of “selling” your decision-maker and more a matter of getting the prospect’s attorneys to get on with it, we’re going to focus here on the first two situations, since they’re the ones requiring us to use our skills to close our buyer.

Let’s start with what strategies we can employ to try to prevent a deal from slowing to a crawl.

Establish dates for next steps – yours and theirs. You should, of course, be doing this at every point in a sales engagement, but it becomes even more critical after you’ve reached the presentation/proposal evaluation stage. Why? Because it’s at this point that the dynamic changes for the prospect. Up until now, you’ve both been in “discovery mode” – you’re learning about the prospect’s business, and he’s learning about you, your company, and your solution. It’s a safe, non-threatening place. With your presentation and proposal, you’ve moved into “selling” mode. The prospect is aware of this, and any concerns, worries, or fears he’s kept to himself will begin manifesting themselves – often times as unresponsiveness. That’s why it’s particularly important at this stage to agree to speak or meet by a specific, agreed-upon date. Failure to do so gives the prospect an out.

Insist on delivering and presenting your proposal in person, and with the decision-maker present. A proposal is a selling tool, but just like a tool you might use around the house to fix something, it won’t get the job done unless its owner is there to make it do so. With your proposal, you are proposing the terms of your business relationship. Your prospect will most certainly not agree with or accept everything you’ve proposed; wouldn’t you rather have him “object” with you there, so you can help him resolve his concerns, rather than while he’s reading it alone, where you can’t?

Now let’s explore some tactics we can use in conjunction with these strategies. Each of these, with the exception of the last, presupposes you’ve been able to have reciprocal communication in some form or another with your prospect – which may sound circular, since, after all, your deal may have slowed down precisely because you can’t get a call back.

Uncover the Real Reason for the Indecision/Delay

We’ve all at one time or another been on the buying side of a transaction – as consumers. Think back to what you felt when you were faced with making a decision on a major purchase – a car, a house, a piece of furniture, an investment. How did it feel? Despite knowing the purchase you were about to make made sense, you likely weren’t quite ready to commit. You needed – wanted, in fact – to share your concerns with the salesperson and have them resolved. Well, what’s good for the goose is good for the gander. When your prospect demurs, find out what’s holding him back and help him resolve the issue. It’s a win for both of you.

Convey the Consequences of Doing Nothing or of Delaying

Revisit the goals and objectives they revealed in your earlier discussions, and why they told you the purchase had to be made now – and why it couldn’t wait (prospects often lose sight of these things when faced with the daunting decision of making a commitment). Have him think about what it will cost him: lost opportunity, lost time, lost ground to competitors, special terms, discounts, etc. Communicate subtly that the world doesn’t stand still just because they do. Remind him of what he said he wanted, why it was critical that he have it, and what he won’t get if he continues to delay. Also, since no one likes the feeling of being in an indecisive state, you might try something like, “Wouldn’t it feel better to make a decision, one way or the other, rather than having it continue to hang over your head? Let’s work through this together”

Find Out Where You Stand, and Why

If the prospect is reluctant to open up, well, you may have a deeper problem: you may not have developed a “trusted advisor” relationship. Granted, this is not always possible, especially with prospects who value being neutral among vendors over developing an advisory relationship with one trusted vendor. In this case, approach the situation by first asking a closed-ended question, such as, “Are we closer to working together, or not working together?” If the answer is, “closer to not working together”, you’ll need to probe for why. If the answer is, “closer to working together”, you’ll want to uncover what it will take to get to “working together”.

Send a “Surrender” Letter

When all else fails, and it looks as if your prospect has simply gone underground, try sending what I call a “surrender” letter. It says, in so many words, that “I give up, since it seems that you’re no longer interested in engaging us.” In the letter, you express your disappointment that after both parties had invested so much time and effort, neither one will reap the benefits of a working relationship. You then ask for feedback on where you failed them in conveying the value you could provide (to request a sample of such a letter I recently composed for a client, click here ). If you’re lucky, the prospect will feel guilty enough to respond (probably by email), and you’ll learn why. With this knowledge, you may then try a last-ditch effort to save the deal.

Action Item:

Review your list of stalled deals and determine which of these tactics would be appropriate to try. For deals in which you’re about to make your presentation, be sure to agree at the end of the presentation on next steps with precise dates. For deals for which you’ve already presented and are preparing a proposal, insist on delivering it in person. If you get push back, explain the value to the prospect of discussing it together – that you’ll be able to immediately clarify anything that requires clarification. Employ these strategies and tactics, and you’ll see your sales cycles shorten, and your sales figures go up.

Sales Solutions Founder and President Craig James has over 12 years’ experience in sales and sales management, primarily in technology and software. He has sold products and services ranging from $1,000 to $250,000. He knows salespeople – what motivates them, what holds them back, how they operate – and how to get them to improve themselves, and their value to their employers.  He may be contacted at info@sales-solutions.biz

December 23, 2007

Adding Value to Client Communications

Whether you know it or not, your database of current and past clients is your best source of new clients.  “Prospecting” for a new client is time consuming and expensive.  If you can find a way to increase your sales without the time commitment and expense of cold calling, mass direct mail, advertising or purchasing leads, would you be willing to implement it?  Of course, you would.

Taking the time and effort to keep in contact with past clients will grow your business through new direct sales to the client and generating referrals to qualified prospects.

Often salespeople complain that keeping in touch with past clients takes too much time, effort, and money.  Considering the return on investment, this really is not true—at least for most salespeople.  The key is finding a way to communicate that is time efficient, relatively inexpensive, and effective.

Studies indicate that in order to keep your name at the top of your customer’s mind, you need to “touch” your customer a minimum of 14 times per year—more if at all possible.

What is a “touch?”  A touch is any communication from you to your client—email, telephone call, snail mail, postcard, holiday card, in-person meeting, or any other method of getting in front of your customer.  If you are communicating with the client, you are touching them.

 What is the most effective way to touch your past clients?  Studies have shown that there is not a “best” way to touch the client, but rather, the most effective client communication programs enlist a number of communication formats.

Sending 14 emails a year is better than nothing, but it is not the best way.  Neither would be sending 14 snail mail pieces.  Or, making 14 phone calls.  Nor, sending 14 postcards during the course of the year.  However, constructing a campaign using a combination of these methods could be a very effective program.  For instance, setting a marketing calendar to send 4 postcards per year, 6 emails,  2 snail mail letters, one phone call, and one holiday card during the course of the year allows you to touch your client approximately once every 3 ½ weeks during the course of the year. 

But, what do you send?  What do you say 14 times during the course of the year?  The content of your communication is just as important as the fact that you sent something.  When you communicate with a past client, the fact that you have something in front of a previous customer is not necessarily a good thing in and of itself. 

Many traditional marketers will disagree.  Much traditional thinking says that any time you get your name in front a client you are ‘communicating.’  However, is a 3-second trip to the trash for your expensive postcard or letter best the use of your money?

Whether or not your communication campaign is effective will depend on what you are communicating.  If you send junk just to send something, your customer will quickly learn to ignore you and your communications and everything you send will take that 3-secnd trip to the trash.  On the other hand, if your communications offer something of interest and value, you will train your client to pay attention to you.

Which would you rather have:  a client that ignores you or one that pays attention to you?

I assume you would rather have a client that pays attention to you.  To train your clients to pay attention, and, therefore, to keep you at the top of their mind, you must figure out how to send them communications that give them value.  Can you offer a special for them or someone they refer to you?  Can you provide them an annual or semi-annual update on their purchase?  Can you send or email them articles of interest that relate to their purchase, their business, or an interest of theirs?  What you send does not have to be large or costly—it just needs to be of value to the client. 

A program such as this requires thought and considerable customization of content, but the payoff can be enormous.  Think about what you are sending and what it will—or will not—communicate about you and your business.  If you want your clients to think of you and not ignore you, then take the time and the effort to make sure you are sending value.  If you are not sure it has value, it probably does not.  Marketing to your client database should be at the top of your “to do” list and your campaign should be constructed with the thought and care as if you were communicating with the most important people in the world, because for you, they are.

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