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The First Rule Is…
We’re in a good news/bad news conundrum.
- Good News: Demand for services is up. The word recession is being used less frequently and business leaders are looking for ways to move the business forward.
- Bad News: It is ridiculously competitive out there. The Drought has caused businesses to radically cut their budgets, so buyers are harping on pricing with historical emphasis; and every competitor out there is willing to do almost anything to try and get the business.
This is precisely the type of market where Demand Creators excel, and the cost of traditional sales approaches are at their highest. While I spend lots of time working with clients and their salespeople to develop and implement sales processes that enable them to become Demand Creators, the first – and most important step – can easily be done without me.
Simply:
Know & Understand Your Customers
Better Than They Know & Understand
Themselves
I’ve written several times about The Shift that Demand Creators make. They sell critical business results, while everyone else sells products and services. If you don’t understand – and I mean really understand – the business results your customers are pursuing, there is no way that you will be able to adequately differentiate yourself from the competition to earn sustainable profit margins.
How can you learn more about your customer, before you even meet them?
- Visit their website and find out what they are telling their investors.
- Search their press releases and for forward looking statements.
- Review their marketing presentations – what are they telling their customers?
- Google their key executives and look for where they’re talking
- Go to LinkedIn and see who you know that knows them and ask those people about their experience.
- Read their blogs. Follow their tweets. Engage them.
- Apply your knowledge about their business. (If you don’t have any knowledge, nothing is preventing you from doing some first hand research.)
These are all very simple ways that can give you a critical knowledge advantage and enable you to stand out. Yes, these approaches are available to anyone. My experience says that only 5 – 10% of salespeople or selling organizations will actually do this. That 5 – 10% are also the ones that will most likely be Demand Creators.
Happy Thanksgiving
It’s that time of year again. Have a great Thanksgiving and make sure you take some time to consider all of the great opportunities we have.
Here’s my tribute to Thanksgiving:
I love this time of year. We’ve got the 3-F’s: friends, family & football. There’s the wine, the turkey, the stuffing, the wine. It’s great fun.
And I have a tradition at this time of year that I would like to share with you. I often write about how the old paradigms of business, sales and marketing are letting businesses down. Well, today, I’m not going to get that deep. Today, I’d like to focus on one of the all-time promotion fiascoes, from one of my favorite shows.
The tradition: Watching The Turkey Drop from WKRP in Cincinnati. Have a great holiday everyone.
RSS Readers that don’t see a video below, click here to watch the video.
Want Growth? Focus on Effort, Not Outcomes
Over the last two years, I’ve become increasingly aware of a fatal flaw in my management (and parenting) style. I’ve always focused on and favored outcomes. I’ve learned (full disclosure: I’m learning) that focusing on effort may be far more effective in driving performance.
For years, I’ve prided myself on being task oriented. I’ve set results-based goals and chafed when asked about activity.
- As a sales person, I’ve focused on closing business, saying things like, “I don’t care if I have to work one hour or 15 hours – all that matters is: did I win the business?”
- As a sales manager, I’ve focused on sales quota and eschewed weekly reports that focused on sales activity.
- As a CEO and owner, I’ve focused on key metrics and ensuring that the customer was happy. I’d happily tell employees that I didn’t have time to hear a story, what I needed to know was what the results are.
I admit that I simplified business, and life, into two paradigms:
- The paradigm of quantity, which focuses on activity; and,
- The paradigm of quality, which focuses on results.
I’m learning that it’s not really a battle between these two paradigms, but rather the integration of both paradigms. Business and life are about quality activity and both are critically important.
I’m no less focused on the importance of the results, but I’m fast gaining an understanding that I must focus equally on the quality of the effort and activity. The failure to focus on either creates a fatal flaw.
To develop superior performance in others, you must focus on effort. The focus on results kills the opportunity for learning, and can lead to numerous bad habits. Chief among them:
- It creates dependency; which, interestingly, is the precise “result” a manager is looking to avoid by focusing on results.
- It limits the ability to grow, creating what is often called a “fixed mindset.”
- It inhibits the ability to learn, which is the most important skill in the 21st century.
Avoid The Sales Flu
November can be a beautiful time of year. The smell of fall, the fireplace and NFL playoff battles lining up. It can also be a dangerous time in the life of a sales force or for a salesperson.
This is the time of year where distractions are the rule. Whether it’s the holidays, closing the year, or 2011 planning, it is tough to stay focused. It’s easy to defer actions to after the new year. Just as it’s the beginning of the flu season, it’s also the height of the “sales flu” season.
The flu makes life difficult because everything just feels tougher. Your body aches, your brain works a little slower, and it feels like you’re always in a fog.
“Sales flu” makes selling tougher because you – and your customers – are just a little less focused, a little off your game, and it becomes easier and easier to do nothing. Sure, there are lots of reasons and rationalizations. We convince ourselves:
- Prospects are just not focused, they’d rather we not call.
- “They’ll” just put things off until next year.
- I’ve worked really hard this year. I need the break. This way I’ll come back stronger.
November and December are always dangerous times for the sales flu, but it’s especially dangerous now. With the economic displacement we’ve all gone through, our “sales immune” systems are weak, as momentum is working against us. It is more important than ever that you make sure that you take your sales flu shot and stay focused.
Here’s the prescription:
- Set very clear goals and/or milestones that you will measure yourself against between now and the end of the year.
- Focus the goal on effort – not outcomes. Just as physical exercise is one of the best things you can do to avoid the real flu, quality action is the best immunization against the sales variety.
- Get an accountability buddy to push you and hold you accountable to your goals. Unlike the real flu, sharing is critical to avoiding the sales flu.
- Make sure you have two, solid lead conversion events or initiatives planned for early to mid-January to ensure that you get back in the swing of things quickly.
- Take some time off – you deserve it. You’ve worked hard, you do need to rejuvenate and come into 2011 ready to rock. But take a real break. Don’t show up to work and waste your time away – get away (from the office at least). Find something fun to do, read a fun book, catch an exciting movie – and please make sure you get plenty of sunlight.
2011 promises to be a year of opportunity – for those people and organizations healthy enough to capture it.
The Texas Rangers & Making More Sales
Anyone who knows me know what a HUGE baseball fan I am. I love the game, the lessons it teaches and the metaphors it provides for business and life. I’m regularly mocked in my company for saying, “It’s just like baseball…” whenever we are dealing with an issue. I really enjoyed the playoffs this year (and not just because the Yankees were eliminated). The highlight was watching how the Texas Rangers played the game. What struck me was just how well they took advantage of their opportunities. The opportunistic nature was no accident. Their hitting coach, Clint Hurdle, believes in a concept he calls “Positive Plate Appearances” (also called productive at-bats). According to Hurdle, there are 8 ways you can have a positive at bat:
- Hit
- Walk
- Sac bunt
- Sac fly
- HBP/Catcher’s Interference
- Move lead runner up w/an out
- Move lead runner up w/an error
- 8 pitch AB
Most people only think of the first two as productive, but Hurdle understood – and was able to get his players to understand – that it takes many things to cause a run to score. My focusing on “advancing” the opportunity to score a run, rather than on scoring the run; the probability of actually scoring would increase. The Texas Rangers set a goal of 17 Positive Plate Appearances per game. No surprise that the Rangers led the league in that category. The same is true in selling. There are many things and lots of steps that cause a sale to occur. Far too often salespeople, and sales organizations, focus only on making the sale, rather than focusing on advancing the sale. Sales advisor Neil Rackham (author of SPIN Selling) distinguishes between what he calls “advances” and “continuations.”
- Advance – where an event takes place, within the call or after it, that moves the sale forward toward a decision.
- Continuation – where the sale will continue but where no specific action has been agreed upon by the customer to move it forward.
In my experience, far too many sales interactions end in continuations rather than in productive advances. Here’s my advice: learn from the Texas Rangers. Sit down today at ask yourself, “What are 5 -10 productive advances that can occur that lead to sales?” Teach those advances to your salespeople and keep track of them. Do that and I’ll bet your become a far more opportunistic sales organization. Oh yeah, I’d love it if you shared some of your “productive advances.”
Peyton Manning, Rex Grossman & Demand Creators
Who’s a more expensive quarterback: Peyton Manning or Rex Grossman? The answer is that it depends how you measure expense.
- If you look at it from the perspective of direct cost (who gets paid more) the answer is clearly Peyton Manning – heck, Rex Grossman is a bargain by comparison.
- If having a viable chance of playing in the Super Bowl is paramount then most people would agree that Rex Grossman is more expensive. The likelihood of making the Super Bowl if far, far lower with Grossman than it is with Manning.
Sellers deal with this paradigm everyday. Buyers naturally assess decisions based upon the perceived cost of taking an action. The primary job of a Demand Creator is to create the paradigm that allows buyers to make decisions based upon the desired returns.
This is why it is absolutely critical that sellers establish and focus on the desired results that a buyer is looking for, rather than focus on the means to achieving the result.
Sounds simple, but I’ve learned it’s not. A common mistake sellers make everyday is that they confuse “process goals” with “results goals.” For example:
- Reducing headcount is not a result – it’s a means.
- Consolidating vendors is not a result – it’s a means.
- On-time delivery is not a result – it’s a means.
Results are the impact of those means.
If a company is looking to reduce headcount, the result may be to lower it’s overall cost structure to be competitive in tighter markets. And that opens up a series of questions and potential implications, about what really drives their cost structure.
- The seller that focuses on how they support headcount reduction will be valued like Rex Grossman.
- The one that focuses on how they support a lower cost structure will be valued like Peyton Manning.
It’s your choice.
Measuring The Vitality of Your Business
Remember that guy that had it all in high school and never ended up going anywhere? Maybe it was in college, or in an early job. We’ve all seen people like that. They seem to have all the tools and yet they never end up doing anything special.
Do you ever wonder what happened to them? What was the wall they hit? Why did they suddenly stop growing?
People have different theories as to why this happens, but mine focuses on vitality. It just seems that people, often suddenly, lose their vitality. “What they did” becomes far more important than “what they are going to do.”
I’ve been thinking about this a lot recently, as I’ve come across many businesses that seem to be mirroring people who get stuck. These are businesses that used to do things that were special, they had really good people and everything was aligned to be an American success story. Then suddenly – poof – mediocrity.
As I dug deeper, I discovered that these businesses lost their vitality. They stopped growing their capabilities, they stopped stretching, and they began to define themselves by what they did in the past, rather than maniacally focusing on what was going to make them special in the future.
In 20 years working with businesses, I’ve discovered two key measurements that can assure you that your business doesn’t lose its vitality, or at least alerts you that you are in danger of losing it.
Average revenue (gross profit/profit/etc.) per customer (client/guest/employee/etc.)
Growth should not be arithmetic; rather it should be geometric (or even exponential). Companies that maintain their vitality are not just increasing their customer base; they’re increasing the size and profitability of each customer. When your revenue/customer stagnates, it’s a pretty good bet that your business will as well.
Average Revenue (gross profit/profit/etc.) of your largest 5 (sometimes 10) relationships
I learned this measurement from Dan Sullivan and The Strategic Coach. They call it The Largest Cheque, and it’s one of the most valuable measurements I’ve ever come across in business.
Companies that keep their vitality are regularly growing the size of their largest relationships. This requires that they gain new, better, and stronger capabilities. It forces them to compete, and ultimately win, in new and valuable markets.
Companies that are increasing their Largest Cheque are always more attuned to what’s going on in the market, and how to take advantage of it, than those that are not. I’ve never met a company that was growing the size of its Largest Cheque that wasn’t also increasing its vitality.
What measurements do you use to ensure that your company’s future will always be brighter?
A (Very) Brief Thought on the Election
The thing I love about America is that every day, approximately 300 million people wake up in the morning and pursue their personal agenda to make their life and the lives of their family better. They do so with no grand plan and a tremendous amount of freedom. It is awesome (it the purest sense of the word) what happens when the creativity of 300 million people is unleashed. This phenomena is at the core of what makes America such an innovation leader.
The news today is filled with analysis of what yesterday’s election means. While many of the issues are important (and, of course, many of the issues are just silly), my feeling is that today isn’t much different than yesterday, and it won’t be a much different that it will be in January with the new congress.
I’ve always loved owning a business and, before that, just being a salesperson because I control my destiny. Congress and the President can do what they do, and I still have control. Sure, some of their policies help and some hurt. But the impact they have on me pales in comparison to:
- Having a well thought strategy.
- Developing an effective selling proposition.
- Building an effective sales process.
- Developing and leading a great team.
- Becoming indispensable to my customers.
So, whether you’re happy with the election results or upset – keep your focus where it belongs. Keep your eye on the prize and soon, we’ll all be talking about how good things are again.
What can you do to create a bigger and better future?
Product vs. Service Sale: A Crucial Distinction
For as long as I’ve been in sales, guru’s have always focused on the differences between selling products and selling services. The approach, skills and talents required to successfully sell products are quite different from those needed to successfully sell services.
A major trend I’ve noticed over the last 5 – 10 years is that the distinction between “products businesses” and “services businesses” has become increasingly blurred; as product oriented companies have added services, and services companies have “productized” their offerings.
While the distinctions between companies has grown more nuanced, it’s impact in the selling process hasn’t. It’s critical that you decide if you are selling a product or a service. This simple statement of need can best illustrate the difference between a product and service sale:
Which word do you focus on – “it” or “now?”
If you focus on “it” over “now” you are making a product sale. You’ll focus your sales process, marketing and positioning on the product being offered. You’ll gear your sales efforts to late stage buy-cycle opportunities. Because your focus is on the product, you’ll deal with commoditization on a regular basis (you may even be the chief commoditizer), and as a result your margins will be tighter; hence, you’ll focus more on volume.
If you focus on “now” over “it”, you are making a services sale. You’ll focus your sales process, marketing, and positioning on the consequences of not getting it now. You’ll spend more time educating your customer base on the barriers to “now” and the impact that “now” has on their organization. Your efforts will focus on radical differentiation, and while your volume may be lower (everyone that needs “it” doesn’t need it “now”), you’re margins will be much higher.
A perfect example of the two can be seen between the two most profitable companies in the technology space:
- Microsoft focuses on “it,”
- Apple focuses on “now.” (Realizing that “now” is a metaphor.)
The Big Mistake
Everyday I see companies, especially small and mid-market ones, make a critical mistake. They try to focus on both “it” and “now.” At the risk of over-simplifying the issue, let me be clear:
You must focus on either “it” or “now;” you cannot focus on both.
For those that have been reading this blog for a while, you realize that the product sale focuses on “left-side value,” while the service sale needs to focus on “right-side value.” When you try to focus on both you fall in the middle, and there is no room in the middle.
The middle is Death Valley. You face the on-going margin pressure like a products company with the increased complexity and costs associated with services businesses.
When you’ve chosen which sale you will focus on, your job is to ensure that everything you do – the questions you ask, the ads you run, the social media strategy you implement, etc. – is completely aligned behind the decision.
I am not saying that the product or the service sale is either good or bad. My point here is that they are different. If you want to accelerate your profitable growth in the future you need to chose one – and only one.
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Resources
Doug's Washington Business Journal Columns- Intelligent Growth Articles
Third Wave Selling Blog
Products to Grow
