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Why Dell, IBM and Intel Are Able to Sustain Growth
Stop relying on genius to fill your sales team. In my work with growth companies, I am constantly surprised by how much reliance is placed on what I call the rainmaker-salesperson. The rainmaker-salesperson is one with the ability to “figure it out” and drive sales. Rainmaker-salespeople are those who can sell the proverbial ice to the proverbial Eskimo.
There are several problems with the rainmaker-salesperson approach.
- It rarely works.
- It is rarely profitable – rainmaker-salespeople eat up a lot of gross margin.
- It is extraordinarily difficult to find rainmaker-salespeople, and when you find them, it is equally difficult to keep them.
- Your growth is limited when you rely on rainmaker-salespeople – they become the tail that wags the dog.
Look at companies that have sustained growth through good economies and bad. You’ll find that, while their strategies and products are different, they all have a documented sales process that allows the mortal-salesperson to excel. All of their salespeople implement the same sales process. This makes hiring, training, and, if necessary, replacing salespeople easier.
In my next post, I’ll address the stated obstacles to implementing such a process.
How to Get Your Customers To Be Willing to Pay For A Sales Call – Part 2
The second opportunity for salespeople to create value is what we call The Design Phase. In The Design Phase the salesperson enables the buyer to identify and understand a solution the buyer didn’t know was available. This sounds a lot like “consultative selling,” and it is what consultative selling is supposed to be. Consultative selling in practice, however, rarely lives up to its billing.
The salesperson cannot play the role of peddler. The salesperson needs to forget about what they are selling and focus on helping buyers identify what really solves their problems. The salesperson also needs to help the buyer understand what has to happen to implement the solution effectively – the good and the bad.
When a buyer views you, or your salespeople, as resources, you are creating value – something people would be willing to pay for. We’ve even had clients who, after taking this approach, found there was more profit to be made helping buyers understand solutions than there was in selling the actual products.
In any case, when buyers get something they would pay for from the sales calls people in your company make that’s creating value, and it means you are well on your way to faster, more profitable growth.
The 80/20 Rule Can Kill Your Business!
Vilfredo Pareto, an Italian economist in the early 20th century created a mathematical formula to describe the inequality of wealth within nations. He stated that 80% of assets were owned by 20% of the people. This observation was later applied to many other phenomena and became known as ‘The Pareto Principle.’ No observation is more damaging to developing a fast-growth, highly profitable businesses than the application of The Pareto Principle, or the 80/20 rule.
Businesses have frequently taken the 80/20 rule to mean that 80% of the good stuff (profits, revenues, new business, etc.) comes from 20% of the participants (customers, product lines, and, especially, salespeople). I know the following may sound obvious: if 80% of your sales come from 20% of your salespeople, then it follows that 80% of your salespeople are producing only 20% of your sales, or 80% of your customers are producing only 20% of your revenues. Think about that for a moment.
“Make sure that you allocate 80% of your resources to the 20% that produce the results!” shout consultants. I say you should allocate 100% of your resources to increasing the 20%. Every salesperson must be extremely profitable. Every customer must be profitable (or have a darn good strategic reason for not being profitable). You can longer apply resources, any resources, to activities that don’t vault your business forward. Jack Welch says you should be turning over 20% (I don’t think that 20% is a coincidence) of your workforce every year – upgrading at every turn. Stop settling for mediocrity. Today, when customers and companies lack time and attention, if you want to be a fast-growth company, or if you want to accelerate your growth rates, you cannot afford to live by the 80/20 rule.
Making Your Sales Process Your Competitive Advantage
Businesses must change their focus. The sales force must create value. Salespeople can no longer simply communicate information about the product the company provides. Salespeople must create value themselves. The only way to test whether or not salespeople are sufficiently creating value is to answer the following question from the point of view of your prospects and clients:
Would your prospects or clients pay for a sales call from your salespeople?
The question is not “Will they buy what your salespeople are selling?” but “Would they pay for the opportunity to have your salespeople make a sales call?” The point of this question is not to encourage you to start charging for sales calls (though we have helped several organizations do exactly this).
Imagine Business Development has studied the concept of value creation in depth. We teach our clients that if their actions don’t create value, then their actions decrease value. This means that if your prospects and clients would not pay for a sales call, they view your sales process as reducing the value you offer. In essence, they buy from you in spite of your sales process.
How to Get Your Customers To Be Willing to Pay For a Sales Call – Part 1
Our study of best practice value creation demonstrates that there are three opportunities when your sales force can add value. The first, and most important, opportunity is called The Diagnosis Phase.
One of the most meaningful ways a salesperson can create value is by helping a client or prospect identify and understand a problem either the prospect didn’t know they had or they didn’t fully understand. We call this process Diagnosis, as it is very similar to the process the medical profession goes through.
Most buyers are aware of the symptoms (problems) that are bothering them. Rarely are they fully aware of the cause of those problems. This is the reason that so many “solutions” fail to solve problems, and why buyers are less interested in “solutions providers.”
If your sales process helps buyers more fully understand their problems and the causes of the problems that they are dealing with, you will immediately differentiate yourself from your competition and provide your prospects and customers something they would be willing to pay for.
Doing this will put you well on your way to bypassing commoditization and competition; and providing your sales efforts a critical foundation to fast growth.
A Brief Explanation Why Traditional Sales Systems No Longer Work
Colorful new brochures, catchy new advertising, Blackberrys for the salespeople — do any of these actually create value? Value creation is among the most common buzzwords used in business today. There is only one definition of value to use in business: something someone is willing to pay for. Your company can create great things, but if people aren’t willing to pay for what your company creates, they give no added value. The only way to avoid or escape commoditization is to deliver more of what people are willing to pay for. Nowhere is this issue more important than in the implementation of your business development systems.
The most common sales techniques used today were developed to provide great value to consumers. Salespeople gave buyers information in an era when information was not easily available. As recently as the early 1990s, if a traveler wanted to find out a flight schedule or how much an airline ticket cost, she had to contact a travel agent. If a buyer wanted to know how much a product cost or what a product does, they buyer had to interact with a salesperson. A salesperson’s primary job was to communicate the value provided by a business’ products and services and to process orders. Because the supply of information, of goods and of services could not keep up with the demands of a growing nation, commoditization was of no concern to businesses.
As the 20th century unfolded, information remained the force propelling the evolution of sales and marketing. Rather than serving as an added value, information has become ubiquitous. Buyers often have more information than the people selling to today’s consumers. The primary value a sales force provided in the past is no longer valuable today. The result of this is widespread commoditization. The impact of commoditization is impacting businesses more powerfully and faster everyday. How can business successfully compete in this new era?
My next posting will begin to answer this question.
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Resources
Doug's Washington Business Journal Columns- Intelligent Growth Articles
Third Wave Selling Blog
Products to Grow
