How many calls did you get from services that said they could provide the Glengarry* leads that you couldn’t find on your own? How many software ads did you view that promised your success through fun looking data rich dashboards? How many calls did you get from marketing services that provide magical customer attracting websites and promise to get you on the top of search engines?
In his book about rules, Donald Rumsfeld suggests to prune your business, customers, and employees on a regular basis. Love the rule but, since I really enjoy the team I have, and can’t prune any more of the business than we already did during the past 16 months, I am going to focus my pruning activity on performing a sales cleansing event on our customer base.
When your sales cleanse is performed successfully, you will:
- Identify which customers to replace
- Identify what customers to clone
- Identify where to focus your marketing efforts
- Identify pricing strategies
- Identify what activities your sales team needs to focus on first
Want to know the best part about this sales cleansing exercise? You already have the ingredients and you already have the talent to follow the directions, discuss, and analyse, so ignore the calls, ads, and pitches and continue reading. Here’s my favorite recipe for performing a sales cleanse.
- 1 Sales Comparison Report (should include segmentation, at least 3 years of sales and profitability data, and your approximate closing rate for all business quoted by customer)
- 1 Sales Team
- 1 Operations Team (optional)
- 1 Estimating Team (optional)
- 1 Laptop, Screen and Projector
- 1 Well Lighted Room
- Snacks (non-healthy preferred)
- Export necessary customer data from your ERP system into MS Excel.
- Sort customer data including segmentation from greatest to least sales and profitability based on 2018 sales data. (print)
- Sort customer data including segmentation from greatest to least sales and profitability based on 2017 and 2016 data for reference. (print)
- Provide copies of the reports to the necessary team members.
- Project and be able to sort the report visually on the screen during discussions.
Analyze and discuss:
- Why were certain customers profitable and others not?
- Why did certain customers grow while others declined?
- Why did certain segments grow?
- What segments should you focus more on?
- What customers can you replicate?
- What customers need to be replaced?
- What customers did you spend more time quoting business for than entering orders?
- What activities need to happen next in each of the accounts you want to grow?
- What prospects can you target next to be able to cleanse other customers next year?
- What activities worked best to reach the great customers?
- What services are you not offering that customers are asking fo?
- Ask what the cost of not performing a sales cleanse or completing the relevant sales tasks could be.
- Develop a business case for your CFO to invest in additional services.
- Ask the team what they need from you to get started on their relevant tasks.
- Follow up regularly to drive the results you need.
Even when your sales are growing, I guarantee there are customers that are negatively impacting your business. Completing this exercise will give you and your team time and energy to focus on better sales. It will also give you the template to perform this exercise again next year.
Think I’m nuts? This was always the first exercise as a consultant for hundreds of past projects and since taking the wheel at Allis Tool and Machine Corp., we fired 20% of our customers, replaced 20% of the others, realized a 26% increase in sales, a 50% increase in gross, have a 65% increase in our backlog over last year, and we have a bank that believes in us to foster our expansion goals. This was all accomplished without adding expenses which has been great for shareholder value. Choo choo!
You probably have all of the ingredients but if you would like some help arranging them in the right order and getting started, feel free to contact me. You can also hear about some of the great things we have going on at Allis Tool & Machine through an interview conducting by Katie Felten and her crew. VIEW VIDEO
I pulled into my favorite car wash this week and pushed the button as usual and waited for the robot voice to tell me to swipe my card.
Boom! What the hay? The price of my usual deluxe wash with the under body flush and towel dry had increased by 20% since my visit last week. Now I had two cars behind me and couldn’t reverse in protest. Yes, it was now a hostage situation with my only alternatives being to choose a lesser option that would not get me what I expected or grudgingly pay the 20% and feel taken advantage of.
Where was the warning? Where was the loyalty to the regular longtime customer? What was I actually getting for the 20% increased ransom I just ended up paying?
Sales goals will never go down and part of making your sales goal will include raising prices to your top customers as well as your bottom customers. However, being proactive, transparent, and honest with communicating the price increase will help your cause of not creating a hostage situation.
Stagnant prices can mean a stagnant business model and stagnation can destroy companies. Sure there is the economic and academic argument that internal efficiencies, purchasing methods and production improvement should allow you to lower the price to the customer, but we are not just talking about widget production.
Professional services, SaaS solutions, any skilled labor based business, and custom manufacturing are always evolving their offering at a cost that is not always evident to the customer. These evolved offerings and services need to be communicated. Not only in the initial sale, but in ongoing communications as well.
Here are 8 tips to help your conversations when the time for a price increase is necessary.
1. Understand that your customers increase their prices
Your customers have probably raised prices to their customers and stand to increase more revenues if they mark up your product or services as part of their value chain.
What have they changed or added to their cost centers? Asking some questions and understanding their pricing changes could help open the door for your conversation.
Look at this opportunity as shared growth and more of a partnership in their growth rather than being a vendor with bad news.
2. Rapport won’t save you, but it helps
Although having rapport helps to soften the conversation about price increases, it is not built overnight, building rapport takes some time. Trust builds rapport so do what you say, honor your commitments, call when you say you will and always follow through.
If this a new customer and you don’t have rapport built, then start building it. It may not be the right time for a price increase this early in the relationship so place yourself in a good position to have the price increase conversation next year.
3. Understand the field of play
What questions have you asked to test the waters about a price increase? Asking some key open ended questions about their business trends, what they see in the market, what they have heard about competition, and where they see prices going can help you set the tone for your conversation.
If you are in a competitive market place, asking some key questions from strategic partners and potential prospects could help frame the potential conversation as well. It’s a good time to use that rapport you have built.
4. Remember why they originally said yes
Most of the time, your customers had a previous vendor in place or other options available before you won their business. Why did they switch to you? What are the top three reasons they stay with you? Reinforcing the value they realize should be ongoing and part of the price increase conversation needs to be how raising prices will continue to deliver that value.
5. Don’t flinch
Do you have a quality reputation and record with the customer? Then part of the increase is to ensure it continues.
If not, then you should stress how the price increase will allow you to begin addressing some of the issues in question by allowing you to improve the overall quality of service they have been receiving. Naturally, it is important to make sure all comments are backed with a commitment to follow-through.
Communicating a price increase is all about the delivery. Be transparent, honest, and continue to offer real value to your customers and you will be able to communicate a price increase with very little pain.
This could even make a huge impact on profits since 10% of most troublesome customers cost you money with givebacks and constant concessions. I would plan to talk to those customers first. The rest should be easy.
6. Believe in the price increase
In order to be paid what you are worth, you must charge what you are worth. In order to charge what you are worth, you must believe that you deliver the value you are worth.
Tell your customers what they receive in exchange for more money. In an ideal world, you’re asking for money for a better product which benefits your customers.
7. They could pay the same for less
Is there something you did not communicate they were receiving? Something they have been using but was not part of the original contract? Do you offer an alternative? Do you offer lesser option at the same price they were paying before?
You may consider having options available or an a la carte menu of alternatives if they really want to keep you as a vendor but can not afford the new price levels.
8. Switching vendors may cost them even more
Nuclear option? New Vendor? The lower price vanishes after the initial order and the new vendor will not have nearly the knowledge or expertise as the original company about how to service the customer, so the switch often winds up costing more money in the long-run. I would not consider this a hostage issue. It is rather a business point of where their time and energy is best spent in keeping the value chain running.
Turns out, the car wash added a towel person to the end of the line to better dry the car, they included a repellent in the final rinse that would help with the winter salt issues, and they upgraded the scrubbing mechanism to better clean the wheels of brake dust. If only they had posted a note!
Death, taxes, and sales goals never going down are three constants you can bet your next expense check on so make sure communicating future price increases effectively is part of your sales plan.
Getting results out of your sales team is still the goal but the days of beating the Viking drum are over except for those lucky few that still work in a pirate culture where beatings will continue until moral improves. These are the companies and bosses that only care about how many calls you made, how many leads you found, and how late you are working this Saturday when you come in. Most socks in your dresser drawer have a longer life than the sales team members and sales managers in these types of cultures.
Today’s sales leaders don’t yell down from upstairs, ask questions that are meant to make you look foolish in front of your peers, threaten to take accounts away if you don’t make your numbers, or force their teams to sit through sales training from the bosses networking friend that only addresses perceived organizational problems.
Today’s sales leaders are characterized by the following:
- They work with and support their teams in the field
- They work hard to make sure their teams have the resources and training they need
- They make sure post-sales support is in place
- They make sure that marketing is aligned with target markets and generating leads
- They make sure that goals have been developed together, plans are in place, and that activities are aligned with meeting the goals.
They also keep their teams focused by asking these 6 simple questions of their sales team members on a weekly basis:
- What went great this week?
- What got in the way?
- What is your plan for next week?
- What does success look like next week?
- What changes do you need to make for that success to happen?
- How can I help you?
Today’s sales leaders get their team members to become autonomous and self-directed like independent business units that independently have a unique set of skills. These questions are asked in a one-on-one setting where individual hurdles and constraints can be solved like using a personal trainer versus the traditional drill instructor that we see in movies.
Results still matter at the end of the day but so does how you get them. Provide your sales team members with the resources and training they need and make sure they have a personal trainer to help them.
We’ll end with a quick quiz.
Q: What do typewriters, asparagus tongs, horse plows, beta cassettes, Polaroids, and 1950 sales management tactics have in common?
Feel free to contact us if you need help with the answer.
In our previous posting, we identified that most companies forget to build any “execution” into their business plans, financial plans, marketing plans, and sales plans. Most sales and marketing professionals are very good at telling others what they want to do and hope to do, but terrible at telling others what they are going to do and when it is going to be completed. So, let’s develop your execution plan to merge with your other plans for next year.
Including Others: Nobody likes having a list of things handed to them to do and being given goals that seem unachievable. You need to include the people that will be completing the necessary activities in this planning process. It will help you understand what their capabilities are, identify the potential skills gaps are for you to invest in training or hiring another person, and it will help everyone understand what you are trying to accomplish and what their roles will be.
Setting Goals: We will start with the end in mind by first setting a goal of what exactly needs to be accomplished. What does success look like when we look back at the end of the year? Do you have a financial goal or a non-financial goal for next year? Are you targeting a specific sales goal (as an organization or individually) or do you want to launch a new product/service, hire a key employee, buy a new piece of equipment, build an inbound marketing function, enter a new market, on board a number of new customers, or break ground on your new building? It does not matter what the goal is, but you need one, upon which, to align all of your resources and activities.
Reverse Engineer Success: Picture the instructions you laid out in front of you this past weekend to assemble that new TV stand, mount the stand alone wine rack, or install that kitchen sink faucet. What are the key things that have to happen in order for you to get this done? What are the milestones that have to be met and what are the deadlines? What tools do you need? What needs to happen step by step to get the job done?
Example 1: Let’s use an example of gaining 10 new clients next year: If your close ratio is 10%, you will have to pitch to 100 targeted prospects. If only 50% of your prospects let you pitch to them, then you will need 200 targets to meet with. If only 50% of targets meet with you, then you will need 400 targets. If only 50% of prospect turn into targets, then you will need 800 prospects……See where this is going? You will need to look deeper then at how many leads you need, where those leads are going to come from, and how you are going to reach them. You also may want to look at the quality of leads you are chasing to be more efficient.
Example 2: How about hiring that new key employee as an example. We will assume that you are not going to hire someone first and then start to find business to keep them busy and pay for them. Define how much additional business you need for that position to add value to your efforts and then plan the steps that it will take in reverse order to get there.
Assign Duties/Accountability: Go back to our goal of gaining 10 new clients. We now understand how many leads we need and maybe where they are going to come from. But however, we have not created the plan to contact them and convert them into clients. What are those key activities that need to be completed? How are we going to market to these leads? Who is going to contact these leads? How are we going to contact them? When are we going to contact them? What happens if we don’t contact them? What is going to prevent us from contacting them? Having your sales team develop their own plans will help keep them focused on what they need to do and help identify what support will be needed to keep them doing the right activities.
Develop Leading Indicator Metrics: Most sales management efforts are still like using a rear view mirror to drive forward. Just tracking the activity from last week is not going to help you but looking at the results from last week will….and make them public for all to see! Again, go back to our goal of gaining 10 new clients. Everything sales people do should be focused on growing their sales funnels and moving opportunities through their sales funnels…..that’s it! Anything else needs to take a back seat, be automated, or be delegated to a support role. With this in mind, how many meetings does the sales person need to have with “new” prospects per week? How many new opportunities do we need to identify per week? How many pitches do we need to make per month? Focus on the metrics that will guarantee success based on your numbers. If they are not met, then you can start asking questions about what is not happening based on best practices/training and what needs to be changed (coaching 101).
Release the Hounds: No time like the present. One useful line I remember from one of my coaches was “Every day that passes is an opportunity lost”. So there is no time like the present to start focusing on what you need to do today to ensure your success in the future. If you have a 6 month sales cycle and you do nothing today to grow or move opportunities in your funnel, guess what you can guarantee six months from now?
Execution will be the key to achieving your goals next year and following years. If you need help developing an execution plan or if you would like a copy of our Integrated Sales and Marketing Calendar to help keep everyone on task and on time, please contact us and we’ll get a copy of it to you.
“Execution”. Short posting right?
We have reached that time of the year again where sales teams are trying desperately to meet their goals and put together last minute sales plans, where CFO’s are developing the financial plan and top line revenue budgets to be met in 2015, and where leaders are revising business plans and looking to make changes based on the lack of meeting goals this year or the hopes of making goals next year.
It is also that time of the year where you (the sales and marketing experts) start down the annual marketing plan path looking to do market research, re-define your target markets, plan the content for your new products and services to launch, make SEO changes to your website, update social media profiles, revisit your SWOT and competitive analysis, communicate your mission statement, develop your marketing communications tactics and activities, schedule tradeshows, look at the 4 P’s, begin the begging process for a budget from your CFO, establish goals, define what metrics your are going to use to measure success, hopefully use some sort of system to track the results of your efforts, and put all of this nicely into a report that makes you look really busy to the powers that be.
Sound familiar? This scenario is being played out in companies all over the globe. You have all the latest articles that tell you what the trends are for next year, you have the latest templates downloaded from the various marketing associations for planning, you have your three focus words for the year, You even have a useful spreadsheet that a consultant left behind which performs brilliantly as a tool for organizing it all. But there is still something missing when all of the planning is complete and the appropriate approved forms are filled out and submitted to the leadership team for their 2015 files.
Where is the execution in all of this? Someone will eventually have to do the activities that are necessary to make all of these plans work. I guarantee that most of you will overlook the following questions and just submit plans on what you “want” to do and not what you are “going” to do. You will need an execution plan and it will need to answer the following questions:
- What exactly has to be completed?
- When does it have to be completed by? What is the timeline?
- Who is going to complete the activities?
- Who is capable of completing the activities or do we have to invest in training?
- What additional training and skills do we need to invest in?
- What tools and resources have we given that person to make sure they are successful?
- What benchmarks do we have to measure improvement?
- What happens if that activity is not completed? What are we at risk of losing if we don’t get that activity completed?
- What changes are we prepared to make if we can’t get the activity completed?
At the end of the day, the word “execution” and the execution plan are the only things that should matter to you for achieving your goals in 2015 and future years. Without execution, your plans mean nothing and you can guarantee that you will fall short. Look for our next article on how to develop an execution plan.
Do you know where to focus your sales activities to get to the next level?
Most companies were successful in the beginning because of one or two main clients that represented 80% of their sales. Their second stage growth then came from employers from those first two clients that moved to other companies and pulled that company with as a supplier. But what happens when that organic growth stops and your company has to go find new customers to achieve that third stage of success? Would you be able to develop a plan, create new habits, and commit to the right sales activities that drive your sales funnel growth and sales funnel movement?
For every sales effort, there is an identifiable key sales activity that drives the growth and movement of the sales funnel. It is that one activity that if you repeat it over and over, success will follow. Example of 1% sales activities would include:
- Presenting to ideal prospects and key strategic partners about value you can add to their business
- Having lunch with key centers of influence to understand how they integrate with clients
- Speaking at a business networking event full of people representing businesses that are in your wheelhouse
- Meeting with a new ideal prospect to learn about their business and understand where you might be able to help them add value to their clients
- Making introductions for others to help grow their business
- Writing blogs to share your experience with the world
I refer to these activities as the “1%” since when they are completed, the other 99% of activity follows automatically. My personal 1% is having 3 meetings per week; One meeting with a business owner to learn about their business, one meeting with a center of influence or a service partner in the market to learn about what their challenges are, and one meeting where I am introducing two people that I know should be working together. If I have those three meetings per week, I know that my sales funnel will stay full through referrals, and that I will be scheduling meetings with potential clients to learn where I can help their business.
When was the last time you reverse engineered where your sales success comes from? Do you know what your 1% activity is? Do you know who you need to perform that 1% activity with? What do you need to clear from your schedule to make sure that 1% happens every week? Please feel free to contact me if you need help identifying what your 1% is and creating the right habits to make sure it happens.
While working on my village late one night, trying to assemble a clan, and trying to gain a better league status, I realized how similar the tactics in Clash of Clans are to developing a market and managing a sales team. In fact, the tactics are also similar to playing such strategy games as Risk, Axis and Allies, and Battleship that so many of us grew up playing. When starting out, you have infinite possibilities but limited resources and competitive forces that sometimes have more experience and are better established.
So where do you start and how do you compete successfully in both the game and in market development and sales management?
Have enough of the right resources
In the game, it takes gold and elixir and you need to mine for both of them. In market development and sales management, it takes money, time, and the right activities. All three must to be used efficiently to build your market and using your resources efficiently will lead to more resource being available to continue your growth.
Defend your ground
In the game, you start by building a village that you will quickly need to defend because you are the weakest village on the planet. In market development and sales management, it starts with identifying a market, entering the market with an initial offering, and then protecting your market share from competition by servicing your customers with great customer service and delivering value.
Have the right team
In the game, you have a choice of warriors with various skills sets that serve different purposes depending on what you need to accomplish successfully in a battle. In market development and sales management, you need to have the right people in the right positions doing the right things for lead generation, customer conversion, relationship management, sales support, and customer support.
Choose your battles
In the game, you are given the ability to choose your battles which is helpful since you get to survey the competition and do a quick analysis of your resources compared to your enemy’s defenses to decide if you want to take the risk of competing. You will not be able to compete against some opportunities so it is helpful to have some foresight. In market development and sales management, we try to know the competitive landscape as best we can and use our differentiators to sell against our competition. Knowing how the competition might respond and knowing from experience which opportunities to walk away from are helpful skills in the long term.
Review your failures
In the game, you can watch a replay of your battle to determine where you need to make changes for next time. There is no better learning opportunity like having your village leveled 100%, your resource pilfered, and you are given a shield for 12 hours out of pity from the game creators to protect yourself since you lost so badly. In market development and sales management, you can’t replay your activities but you can perform a post mortem analysis and learn what behaviors, language, activities, questions, solutions, and competitive activities you need to be aware of or perform better for the next opportunity. You can actually learn more in sales from your losses than you can from your wins.
In the game, you are can see how much upgrades and additions cost and understand where you are weak so you begin to plan what changes you need to make based on how successful your offensive campaigns are and how successfully you defend your village from raiders. In market development and sales management, you are able to use business intelligence reports from the CRM and accounting system to identify what product lines are most profitable, which customers are most profitable, and what activities are the most productive so you can make adjustments to your selling plan and how you are using your team.
If you are not a fan of Clash of Clans or you did not grow up playing strategy based games, then this might not make as much sense to you. However, the same lessons can also be learned from competing in sports, competing in the talent shows, and from your current market development and sales management success. If you would like some pointers on Clash of Clans or in your market development and sales management, feel free to email me. Nothing like having a coach and a mentor to help you navigate through some difficult times.