Barking Spider Strategy

Cheap Date: Do Free Social Connections Create Hidden Costs?

2009-11-05T07:06:00.000-08:00

Which choice provides the best answer for the statement,

An online social network requires each of the following, EXCEPT:

A. a computer or mobile device
B. an Internet connection
C. people you like, know, and trust

The correct answer, of course, is C. No need for familiarity, either. “You have one friend request. Click to confirm.” Done!—without even shedding your fuzzy bedroom slippers. But is your social network a trusted community of valued connections, or simply a collection of names?

Marketing technology has met social networking, and changed it. Whether it's for the better is another question. Once-private “black books” are open to the world. I can “connect” with people I don’t know. From the comfort of my office, I can solicit thousands who have never heard of me or my company to follow me on Twitter, to join my network on LinkedIn, or to become a friend on Facebook. Anyone can connect with anyone—or anything. No additional charge!

“Community” now grows at warp speed—but assumptions struggle to keep pace. Why? Because many people maintain that “social network” and “trusted connections” are intertwined ideas. True--before “click to connect.” But zero-cost Web 2.0 social connections mean there’s a significant likelihood that any two connected individuals have never communicated beyond a perfunctory default email invitation, and a single mouse click. Compare that process to laborious face-to-face meetings, and it’s easy to understand social media’s stunning popularity for building community. Scalable workflows and simple user interfaces have obviated the need to shake hands.

Has the concept faded that social connections are spawned when people mingle with like-minded people? As web-based communities erode boundaries between personal and professional domains, are we more open-minded to different beliefs and ideas—or just more dispassionate? I floated a related question on LinkedIn: “Would you sever a social network connection if you learned the individual belonged to a group, or held an opinion, that was diametrically opposed to a matter important to you?”

Some people drew an almost-crisp line. Mike Stankus, CEO of STM/360 said “if the person was part of a movement (or) group that was pushing hate or some other seriously negative agenda, I probably would sever the connection.” Sales expert Christian Maurer shared that he recently cut a tie. “I did not want readers of my profile (to) draw the conclusion that I could possibly be supporting an idea by being linked to this individual.” Others were ambivalent. A few wrote they value diverse opinions, and social media allows people of adamantly opposing viewpoints to connect. In a sense, we’ve come a long way. Although the same individuals might never socialize over a beer, they remain happily connected in the virtual Web 2.0 world.

In three years, social media technologies have undermined basic assumptions about connectedness. In January, 2007, blogger Guy Kawasaki wrote, (“10 ways to use LinkedIn”)

“By adding connections, you increase the likelihood that people will see your profile first when they’re searching for someone to hire or do business with. In addition to appearing at the top of search results (which is a major plus if you’re one of the 52,000 product managers on LinkedIn), people would much rather work with people who their friends know and trust.”

Feel the love! But not everyone looks at connectedness that way, as blogger Joe Bartling describes: (“LinkedIn: The Myth of Having "Too Many Connections")

“To me, having too many connections is like having too much MONEY. Bring me the connections, and bring me the money! People seem to think that a person who has ‘too many connections’ doesn't have a life. Though that may be true, it's not because he/she has too many connections.”

Want to understand “connection” and “connectedness” in the context of social media? It’s hard to reconcile those two statements. While both tout the benefit of numbers, one statement assumes "know and trust," while the second one doesn't make any mention of either. If you believe the concepts of social networks and meaningful connections are inextricable, then indiscriminately adding connections erodes the value of the network. If networks are valued for quantity of connections, then the assumption of trust between connections adds risk, because there is little that coheres individuals. These risks create costs, a reason that people are driven to B2B communities that are “’gated’ or have a threshold for membership,” as Vanessa DiMauro describes in her blog, “Moderating B2B Communities: Keeping the Fire Lit”.

The future of web-based social networks will be determined more by the requirements of people who use them, than by the technologies that enable them. If societies value true communities, then shared beliefs, trust, and common purpose must exist within those communities. Easier said than done! With 230 million and 50 million members respectively, Facebook and LinkedIn undoubtedly know that it’s harder to measure the intangibles that flow between connections—knowledge, innovation, inspiration, and energy—than it is to collect data about individuals.

Further reading:

Lynn Townsend White, Jr. versus: Technological Determinism

Just the Facts? Sales Discovery Requires More than Asking "Killer Questions"

2009-10-19T07:50:00.000-07:00

Every day, salespeople receive gobs of well-intentioned advice, including:

“Shut up and listen!”
“Being interested is more important than being interesting.”
"Telling is not selling."
“The Right Sales Questions Will Get the Right Answers.”

But simply asking questions and listening won’t solve our most vexing sales challenges. If only it were that easy. Probing questions followed by patient listening as the magic keys to sales success. But here’s a plain fact that many people ignore: Conversations carry questions. And sales questions minus conversation equals interrogation. I know. When it comes to conversational rapport, some sales meetings go better than others.

Yet, hard-sell hype about the power of questions drives many people to website altars in search of A Better Way. Do you really believe in

“Killer sales questions?”

“Sales questions that close every deal?”

"The 12 best sales questions to ask?”

We count on the promise of such “hot ideas” and shortcuts to help us become more productive. No doubt, for many people, this is all very confusing. Should we ask open-ended questions? Closed-ended questions? “Facilitative” questions? Who cares! If salespeople can’t embed sales questions into meaningful, rapport-laden dialog, the best sales questions in the world take sales opportunities down a path to nowhere.

Salespeople—it’s time to talk! Questions need the medium of conversations in order to work. It’s what we do! But this time, let’s call it dialog! As our top-producing salesperson, Denise, said in an earlier CustomerThink article, To an Octopus, ‘50’ Means Nothing: Why Empathy Matters, “. . . I think about what I’m going to ask and say.” In that order. Denise doesn’t dismiss the importance of her contribution to the conversation.

From her desk in the depths of the call center cube farm, Denise has a key insight. With all the attention we heap on asking good questions, do we honestly believe prospects will spontaneously open up? Is “ask a Really Good Question, get an answer,” a simple, straight line? Or, is there more to it than that? How do we create what author Jim Collins described as an environment where the truth is heard?

Here are a few ideas:

Make your intentions and motivations clear from the outset. As Mahan Khalsa wrote in Let’s Get Real or Let’s Not Play,"you will communicate your intent whether you want to or not . . . Based on your intent, people will decide to trust you or not.”

Share your expertise throughout the discussion. No one likes a know-it-all, but as a prospect, would you rather share your answers with an expert or a greenhorn? As Jill Konrath, author of Selling to Big Companies, said, “the best sales questions have your expertise in them.”

Demonstrate that you are connecting the dots. Sharing your insights throughout the conversation not only makes it clear that you’re listening, but also helps to ensure understanding.

Be transparent, not opaque. It’s hard to ask for a prospect’s candor without being similarly forthcoming about your enthusiasm and concerns. Being open with both enables reciprocal dialog.

Above all, don’t be afraid to talk. Sales discovery works best in a conversation.

Going, Going, Gone! e-commerce Erases More Than Paper Money

2009-09-25T09:46:00.000-07:00

Imagine a meeting of Major League Baseball team owners as they collaborate to improve their financial results. You're in the room. A scrawl of operating statistics covers several flip charts. Alternatives ranging from increasing ticket prices to cutting fan perks are discussed. But at the end of the 10-hour meeting, one option prevails: beginning next season, the pitcher’s mound in every stadium will be moved a modest six inches closer to home plate.

Great excitement follows. Owners can take the results to the bank, and players and fans won’t even notice! How? The executives figure that the shorter distance will make it possible to play a full game in just under three hours, down from the current average of three and a half. They reason that six fewer inches of throwing distance cuts the decision time for a hitter to swing, resulting in more strikeouts. More strikeouts mean less playing time, and less playing time means shorter operating hours for stadiums. (There were about 33,000 strikeouts in 2008.)

Eyes light up as numbers are eagerly keyed into pro-forma spreadsheets on flickering laptop screens. The thirty-minute per game reduction will save millions of dollars of operating expenses for every team. Lower labor and utility costs! Faster fixed charge coverage for expensive stadiums! The savings will drop right to the bottom line!

If you think the boundary-changing idea sounds preposterous, think again. This principle behind this imaginary gambit isn’t fantasy in e-commerce. The difference is that the boundaries are abstract and the money is real—to those receiving it. Want proof? This year, banks are projected to earn $38.5 billion in overdraft charges by shifting a long-assumed boundary called “I accept the charges.” How? According to a recent editorial in The Washington Post (Overdrawn and Uninformed, 9/22/09): “. . . from time to time, you may have found yourself inadvertently making a debit card purchase that exceeds your remaining funds. Alas, the way you may have found out about the overdraft was a notice from your bank, days later, informing you that you owe a $30 service fee. The bank just automatically floated you a small loan and charged you for it without giving you a chance to accept or reject the offer.”

Missed the boundary change? Don’t worry. Thirty-four billion dollars in 2009 overdraft fees suggests you’re not alone. The bank extracts money through a silent, virtual [i]ka-ching,[/i] with binary 1’s and 0’s flowing to complete the seamless transaction, absent the faces of Jackson and Hamilton. And that’s just the point. Customers don’t attempt to intervene because the experience fails to excite the same area of the brain that real money does—a phenomena that author Jonah Lehrer describes in his book, How We Decide. A small transaction-boundary shift yields a $38.5 billion reward—a sensational feat that now has the attention of Congress.

Elsewhere in e-commerce, changing abstract boundaries also keeps fiscal 1’s and 0’s moving from payer to vendor. Ever receive a charge on your credit-card statement for a "trial offer" you didn’t really want? It’s probably because you didn’t remember to “opt out” after you “opted in.” Was there a clear boundary for the transaction?

Opt in/opt out. It’s today’s tool of choice for e-commerce boundary changers. Remember Facebook's Beacon Debacle, in which a man purchased a diamond ring (for his wife?) from overstock.com, and 720 Facebook friends were informed about the transaction? As Christopher Caldwell wrote in The New York Times (“Intimate Shopping,” 12/23/07), “Facebook designed Beacon so that members would be able to “opt out” by clicking a pop-up window. But these windows were hard to see and disappeared very fast. If you weren’t quick on the draw, your purchases were broadcast to the world, or at least to your network . . . Privacy advocates urged that Beacon be made an “opt in” program, which members would have to explicitly consent to join . . . Facebook agreed to this approach. The Beacon fiasco gives a good outline of what future conflicts over the Internet will look like. Whether a system is opt-in or opt-out has enormous influence on how people use it.” No joke. And how much revenue can be generated, as well.

Of course, boundary changing has as much to do with our (presumably) private information sold to others as with the flow of money. Did you “accept” the data-collection cookie that resides on your hard drive? Better check the Terms of Use. “Increasingly, there are no limits technologically as to what a company can do in terms of collecting information . . . and then selling it as a commodity to other providers,” said Representative Edward Markey in August, 2008.

These examples prove that dollars can be taken and lost in the blurry zone between asking for specific approval to complete a transaction, and simply assuming assent for things that formerly required it. Whether it’s baseball or banking, with scalability, a little boundary shift goes a long, long, way.

Pfizer's Ethics Violations Hurt All of Us

2009-09-16T07:58:00.000-07:00

"At Pfizer I was expected to increase profits at all costs, even when sales meant endangering lives. I couldn't do that," said John Kopchinski, the sales representative who blew the whistle on Pfizer’s illegal marketing practices of Bextra, a now-discontinued medication approved for arthritis and menstrual pain.

Mr. Kopchinski was fired from the company in 2003. In hindsight, he won’t miss his job. He’ll receive over $50 million from the US government for his efforts to prosecute the $2.3 billion fraud settlement from his former employer—the largest such settlement in US history.

Paying $2.3 billion for “fraudulent marketing" should cause every marketing professional and salesperson to break into a nervous sweat. Why? Because murky ethics aren't limited to Pfizer. They're amazingly common. They begin innocuously, then escalate. According to Mr. Kopchinski, what started as “aggressive promotion” of Bextra mutated into illegal practices. As he put it, “the ethical line kept moving.”

I’ve seen it over and over. Ethical risks are shrouded in code-speak: “we’re a ‘revenue-focused’ organization,” or “our company champions an ‘aggressive sales culture.’” Sound familiar? Anyone who doesn’t take heed from Mr. Kopchinski’s ethical-line observation faces the same risks. In Pfizer’s case, the problems didn’t begin with stereotypical predatory salespeople and percolate upward—they began at the top. Lies float, and so do corporate leaders who don’t set a good example--belly up. As sales effectiveness consultant Christian Maurer wrote this week on LinkedIn, “the fish starts rotting at the head.”

How can bright people working for well-regarded companies commit such ruthless dishonesty, when they wouldn’t think of robbing a cabbie at gunpoint—arguably a far less-heinous crime? By insulating the perpetrators from the victims. Here’s how (please see the embedded links):

Sales commissions: According to the NPR health blog, a “$50 bounty (was) paid to reps when they got doctors to add Bextra to the standard care for patients before and after surgery. These care protocols would direct patients to take Bextra, often at high doses, a few days before a knee operation, for instance, and then afterward to control pain.”

Telemarketing scripts directed to physicians: Salespeople were coached to tout greater efficacy and safety for Bextra compared to Vioxx, a competing painkiller from Merck. The US Food and Drug Administration never approved these claims.

Sales culture: OK. Let’s call it by its real name—intimidation. "If you don't aggressively sell your products . . . you're labeled a non-team player," Kopchinski said, adding that only by promoting Bextra for unapproved uses could he achieve management’s revenue goals.

You can see the evidence in clear black and white, and it’s all creepy. What was Pfizer’s management thinking? Caught with its pants down, Pfizer cut a check for $2.3 billion. Everybody—just shut up, leave the chicanery behind, and let’s move on! Problem resolved. But is it? At the same time that jolly Pfizer managers were gloating over PowerPoint slides showing escalating sales curves, people were suffering or dying from taking medications for unapproved uses. Bad ethics don’t get much worse than that, and even a $2.3 billion mea culpa won’t enable the company to sweep its dark tactics under the rug. A plan to sell cigarettes in elementary schools might have appeared more benign.

Which brings Pfizer’s indiscretions to the everyday salesperson. We’ve all experienced what happens when “baggage” is brought into a sales meeting. A salesperson is often considered guilty before he or she proclaims innocence. It’s understandable. Along with evaluating the performance and features of a product, prospects scrutinize a salesperson’s motivations and integrity. But as Pfizer’s deceit has shown us, prospects now need to look further, and to question whether the top management of a vendor's company has a moral compass. The answer to that question could reveal buyer risks that were previously unimagined.

For more on the topic of marketing ethics, please see:
Goofus and Gallant Make CRM Decisions, and
On My Honor as a Salesperson: Why Sales Ethics Matter

Perfect Pitch: A Tribute to Billy Mays, 1958-2009

2009-07-27T14:39:00.000-07:00

Think you can sell ice to Eskimos? What about making a sales pitch in front of strangers for toilet bowl cleaner, picture hooks, laundry detergent, or putty. Go ahead. Step right up. See if you’re a better salesperson than Billy Mays, who died this week at age 50.

Billy’s commercials for Mighty Putty, OxiClean Detergent, and Kaboom are as close as a sales process gets to haiku. He builds rapport and trust, identifies a problem, pitches a solution, and motivates action—all within a two-minute commercial. Straight up, straightforward—and straight for the jugular. Whether he’s talking about toilets or dirty laundry, with his staccato delivery, Billy doesn’t tiptoe around anything.

Selling solutions that aren't glamorous, for problems that aren't pretty is much, much harder than it looks. And while it’s tempting to analyze Billy’s effectiveness by looking at the components of his sales pitches, his commercials are best appreciated without being encumbered by details. Billy connects with emotions, not with intellect. Who wouldn’t buy bonding putty that sets instantly, with the strength to pull a tractor trailer? I saw it in the commercial! And Billy just tripled the offer to six sticks!

What separates Billy Mays from other great salespeople isn’t his mastery of sales techniques. It’s not his effective deployment of people, processes, and technology. It’s his ability to delight the buyer. On that measure, he has few equals.

Whether we’re marketing gardening tools or ERP software, Billy Mays offers sales lessons for all us. In the meantime, a haiku tribute to Billy Mays, who could sell ice to Eskimos:

Top sales producer.
An opening. Hard sell. Close.
Buyer spends money.

Is "Call on the CXO" a Winning Strategy for Salespeople?

2009-06-23T08:39:00.000-07:00

Here are some tired and no longer true sales tenets:

"Focus your efforts on reaching C-level executives."
"Get in front of a decision maker."
"Get around the gatekeeper!"
"It's a numbers game. The more calls you make, the better your chances are for a sale."

Why are these passé? Because the statements rely on these increasingly tenuous assumptions:

C-Level executives are influential
Job titles reliably predict whether an individual will be valuable in the sales process
An organization transfers value through formal hierarchies
Within an organization, decision rights are consistent, enforceable, and understood
Sales is the most important connection point between vendor and prospect

Besides, selling isn't a numbers game. It's an intelligence game. But if these sales-ism's aren't true, then how do top sales producers develop, use, and manage selling networks?

Meet "Mr. Barcode"

I stumbled into part of the answer to this question in the early '90's, when I sold barcode technology. My prospect, a Fortune 100 manufacturer, purchased on a departmental level, but I wanted an enterprise-wide sale. I didn't know where to begin my campaign. Operations? Information Technology? Materials Management? Finance? As I placed calls into various departments, my inquiries were rewarded with a consistent answer: "When we have questions about barcoding, we go to Jim. We call him 'Mr. Barcode.'" I didn't know Jim, but encouraged by the moniker his colleagues assigned, I called him.

Jim was an unassuming man who worked in a windowless office in the middle of a cramped cube farm on the fifth floor of the Information Technology building. He had no decision-making authority, and his position was so low it didn't merit a spot on a published org chart. But today, a Social Network analyst would call Jim an Information Broker, a role of crucial importance for salespeople. I quickly learned why: no department made a barcode-related decision before he was consulted. I also learned that Jim already had many connections to my company's engineering team, and that by encouraging more connections, I improved the probability of achieving my goal. With Jim's involvement, along with some luck, our team won an enterprise-wide SAP project the following year.

What makes this story remarkable isn't that low-ranking Jim played such an important role. It's that most enterprises worldwide have many Jim's—and sales executives pay little or no attention to reaching them. Why? Because finding Jim's isn't easy. Their titles don't convey their importance. Their identities aren't readily mined from data warehouses. They don't hang out together in the same bars. Most significant, these key influencers are not self-anointed—they achieve their status through peer recognition. For a salesperson selling into a large enterprise, that fact alone makes identifying a Jim a task of near-monumental proportion.

Finding the First Mouth

But once identified, the rewards can be great. A paper by Raghuram Iyengar, Christophe Van den Bulte, and Thomas W. Valente Opinion Leadership and Social Contagion in New Product Diffusion, and discussed in an article The Buzz Starts Here: Finding the First Mouth for Word-of-Mouth Marketing explains how Social Network Analysis can be applied to this challenge.

The researchers conducted their work for a pharmaceutical company and found their Jim, referred to as Physician No. 184, on a Social Network Map. "Researchers had tracked how prescriptions of a new drug spread from one physician to another, depending on who talked to whom and referred patients to whom. Mapped out on the screen, the story became clear: The medical community was actually divided into two sub-networks split apparently by ethnicity, with one sub-network dominated by physicians with mostly Asian names and the other with mostly European names. Connecting the two, like a spider suspended on a thread between two webs, was the dot for Physician No. 184— a doctor the company's marketing department and salespeople barely knew (my emphasis).

The article shared further insight: "Not only did the study indicate that word-of-mouth had been affecting physicians' prescription behavior . . . but it also showed that converting the right individual could have a dramatic impact. And for executives in the conference room, it revealed something else: They had been overlooking some of the networks' most important social hubs. 'That was the biggest a-ha! for the company,' said Van den Bulte. Physician 184 'was not the most important in the number of connections he was getting, but he was vitally important in linking the networks.'"

And there's more. Whereas traditional market research asks people "Are you an opinion leader?," network research asks "Whom do you turn to for advice about ...?" According to the article, "the different approaches can produce widely different results...asking people how important they are is not the best measure of how important they really are. Just because people think they're important doesn't mean it's true. And some people are actually more important than marketers believe, or even they themselves believe."

Great opportunity awaits salespeople who develop relationships with Jim's and Physician 184's. But the first challenge is in knowing who you're looking for. So put titles and organization charts aside. If your sales team finds that concentrating effort on getting C-level appointments doesn't bear fruit, and that it's frustrating to "get around gatekeepers," maybe it's time to ask some questions beyond "how can we better reach the CXO?" Those questions could start with "what do the selling networks of top sales producers look like?

Like the study that discovered Physician 184, your best path to a sale might be through people your competitors don't even recognize.

Race and Gender Impact Employee Customer Service Bonuses

2009-06-02T09:30:00.000-07:00

Are customer satisfaction surveys a fair and unbiased tool for for assigning employee bonuses?

No, according to a study published in the Academy of Management Journal, An Examination of Whether and How Racial and Gender Biases Influence Customer Satisfaction. According to the lead author, David Hekman, assistant professor of management at the University of Wisconsin, surveys “are highly reliable—but they are reliably wrong.” The authors believe that customer satisfaction surveys are biased because they are "anonymous judgements by untrained raters that usually lack an evaluation standard."

Hekman conducted several experiments to measure customer satisfaction. In one experiment, subjects watched videotaped interactions between a bookshop sales clerk and customers, and were asked to imagine they were the customer and to rate the bookshop’s service performance. Three actors played the part of the sales clerk—a white male, a black male, and a white female. All used identical settings and scripts.

The subjects shown the white male clerk rated the bookshop’s service 19% higher than subjects who viewed the other two actors.

If we use customer satisfaction measures to assign bonuses, can we assume we’re not compounding race and gender bias? If this assumption isn't correct, how can we make survey-influenced compensation systems fair? Could other attributes not measured in Hekman's study—for example, weight, age, and appearance—create similar results?

Tell the Truth--Is an Educated Consumer Really Your Best Customer?

2009-05-22T09:50:00.000-07:00

“An educated consumer is our best customer.”

That slogan stood out when Sy Syms, CEO of Syms Corporation, said it in television ads in the 1980’s. Customer empowerment wasn’t a popular notion back then.

Fast forward to social media-enabled 2009. A new book, Get Content. Get Customers. , by Joe Pulizzi and Newt Barrett, challenges the Syms ideal. According to the book, “the more informed a consumer or buyer is, the more difficult it is to sell them.” Could both statements be correct? While they don’t directly contradict, they do point in different directions. In sales, there’s no such thing as an irrefutable truth, and in my experience, there’s truth in each one.

Not everyone agrees. In metro Washington DC, where I live, major corporations employ high-dollar lobbyists to fight the risks educated consumers pose, as anyone who tracks policies of the Federal Trade Commission or Food and Drug Administration can attest.

When is an educated consumer not the best customer? When she wants to know facts about the soil that grew the carrots she ate in last night’s salad. Or when she wants to learn about the living environment of the chickens or cattle that are now in the grocery meat case. Better for the producers that she sticks to knowing generic fat, carbohydrate, and protein content, along with “sell by” date. For other foods, the lobbyists insist she also doesn’t need to see the word “imitation” on some products, that she doesn’t need to know anything about the farms her food comes from, or what pesticides were used for their production. (For a more detailed discussion about why food manufacturers benefit from disconnected supply chain information, see author Michael Pollan's blog.)

Beyond food, The Wall Street Journal reported three related articles just this week:
FDA Says Video for Pain Drug is Misleading
SAT Coaching Found to Boost Scores—Barely
Laws Take On Financial Scams Against Seniors
What value do uneducated consumers bring to the companies profiled in these articles? Bernie Madoff won’t be reading this blog, but it’s not hard to guess how he would weigh in on this question.

Closer to where my clients live in the B2B selling world, I floated the statement from Pulizzi's book to a few sales groups on LinkedIn and received some excellent thoughts. The consensus was that it’s preferable to sell to informed prospects. That’s good, because—like it or not—prospects are better informed than ever. But a few of the responses I received were circumspect. Informed prospects aren’t necessarily any more open minded or are better decision makers than uninformed prospects. One salesperson commented about the difficulties that occur when a prospect is well informed on price, but has a poor grasp of the complexities of the product he or she is buying.

So when it comes to prospect knowledge, information is a two-edge sword. I’ve left some sales meetings in frustration, convinced my uninformed client wouldn’t recognize a good solution if it flew in and hit him in the head. In other situations, my client did homework and told me (correctly) that he could procure reliable refurbished or off-brand equipment for one-third the cost of my proposal—information that a sane commission-driven salesperson wouldn’t typically volunteer.

But today, with social media, the information genie is already out of the bottle. It’s more fruitful to debate what to do about managing prospect information than it is to debate whether informed-slash-educated prospects are better to deal with than those who aren’t.

Here are some questions to ask:

How well-informed is your average prospect? When you begin your formal sales process, what do they already know? What don't they know that they definitely need to know?

Where do your prospects congregate online (and offline) to get information?

For information outside of your company’s direct control, what risks and opportunities are present? What misinformation exists, and what is the impact on your sales strategy? Do you have a plan to counter significant misinformation?

What information do your prospects seek? What motivates them to seek the information, and how do they value it? Which risks are they mitigating and which opportunities do they want to capitalize on?

What information is available to them? Who contributes to that content? Who “owns” the content?

How will your prospects use the information they obtain? What portends a next step or action? What will break the buying process, and do you have ways to mitigate the risks?
Back to Syms. Whether an educated consumer really is the best customer depends on what you sell and how you sell it. Above all, be agile. If your sales process can’t adapt quickly to changes in information power, you will be debating about whether it’s better to sell to educated customers. But with social media, events move quickly. By then, it might be too late.

Will a "Slow Sales" Movement Save Us from Ourselves?

2009-05-13T09:36:00.000-07:00

“Sell more, with fewer resources, faster. Oh, while you’re at it, bring me the broomstick of the Wicked Witch of the West.”

How’s that for a quartet? If you haven’t seen these challenges in a PowerPoint slide at your latest management meeting, you probably will. Most of us are already experienced delivering at least three of them.

We responded even before the banking meltdown. We absorbed higher sales quotas, targeted prospects better, made our lead generation more efficient, and shortened sales cycles. What’s unclear is whether we’re rocking uncomfortably from the ripples we’ve created. Time and again, we learn that our sales efforts have a negative impact on customer relationships. Our prospective customers often don’t trust salespeople, don’t like them, and don’t want to communicate with them. Are we pushing too hard? Should we cool our jets? Maybe the time has come for a Slow Sales movement.

Decades of Fast Sales dictums have yielded tactics that clash with long-term strategic goals:

“Close the Sale” versus “Build a Relationship”

“Generate a Quick Win” versus “Improve infrastructure to gain long-term improvements in customer loyalty”

“Win the monthly individual sales incentive” (and hoard tacit knowledge) versus “share knowledge so the entire sales organization can benefit”

“Make the quarterly revenue goal” versus “maximize the total value of the customer”

The Slow ideal has found a growing audience willing to question whether our obsession with collapsing timeframes serves our longer-term interests. The Slow Food Movement began as a counter-force to government and commercial entities that promoted convenience food and economies of scale without regard for sound nutritional and environmental practices. Educators have recognized a parallel danger. Peggy Orenstein wrote in The New York Times (Kindergarten Cram, May 3, 2009) “maybe the current economic retrenchment will trigger a new perspective on early education . . . Call it Slow Schools. After all, part of what got us into this mess was valuing achievement, speed and results over ethics, thoughtfulness and responsibility.” In education, it takes a brave person to question outcomes that are sacrosanct to many. But Ms. Orenstein reframed the question: it’s not about how can a child’s development be sped up, it’s “why are we so hellbent on doing so?”

Similarly, in sales, we must change the overarching questions we’re asking. The problem is, “how do we sell more, better, faster?” sounds better at the Achiever’s Club golf outing than another question I recently heard, “what steps do we need to take with each prospect and when should we take them based on the natural progression of our prospect’s purchase process?” That long-winded question sounds way too kind, and many sales executives would feel silly asking it. But by asking and answering that question we’re possibly more likely to achieve strategic sales success than by relentlessly pursuing tactics to satisfy the first one. Fast Sales rarely comes without high pressure and customer pain—two conditions that damage, rather than improve, financial results.

The promoters of the Slow Food movement exposed exploitation after recognizing a long-simmering win-lose relationship between top producers and end consumers. Large food manufacturers such as Monsanto, ConAgra, and Archer Daniels Midland could meet their financial objectives while at the consumer end of the value chain, people became overweight and undernourished. But Slow Food and Slow Sales are an imperfect comparison. The Slow Food movement encompasses ideals I haven’t seen on the white board for any sales planning meeting I’ve attended: equitable distribution of products and resources, and responsible stewardship of the planet.

Not that we’re unconcerned and mercenary, but in sales, one simple financial reality explains our preoccupation with speed: Net Present Value. Assuming the cost of capital is constant, the present value of a dollar in revenue today is worth more than in any future period. That cold fact drives strategic decisions. Sometimes customers benefit—sometimes they don’t. So through the Net Present Value lens, the juxtaposition of “slow” and “sales” might mean a situation to avoid rather than an inspirational movement.

But the same way fast food brings us Type II diabetes, and high-achieving preschoolers bring us win-at-any-cost adults, tactics to secure short-term revenue bring unwanted side effects that could take more than one generation to fix. Some progressive companies understand this, and not surprisingly, have embedded Slow Sales ideals into their brand. For example, “At Oboz we build shoes for outdoor use—shoes with meaningful innovation, solid performance and recognizable quality. We are also stewards of our rich natural heritage and believe that a business should contribute to the greater common good.”

If that lofty goal conjures up images of American consumers (who want affordable quality footwear, available in local retail outlets) holding hands in the woods with citizens of producing countries (who want jobs, unpolluted air, and clean lakes), it’s probably a mirage. Would Oboz voluntarily curtail sales growth to avoid sourcing materials from non-compliant vendors (a common dilemma in eco-manufacturing)? There are no easy answers, and tradeoffs must be made. But kudos to Oboz! At least I sense this issue has a spot on the white board in the company board room.

Like other Slow movements, Slow Sales requires taking some unpopular stances, and asking uncomfortable questions that put tried-and-true in the cross hairs of change. For some companies, that means looking at selling in a fundamentally different way by regarding a purchase transaction as a point on a timeline, rather than the end-game of a sales process.

Slow Sales won’t work for every company. It requires a long-term planning horizon, and companies that don’t have the resources to go the distance will trade one set of risks for another. But as with food and education, Slow might provide the best way to deliver value that can sustain both producer and consumer now, and in the future.

Hype of Hope: For Salespeople Does Social Media Live up to its Promise?

2009-05-06T08:26:00.001-07:00

Social media has permeated our personal lives so thoroughly that we hardly notice when a new technology tool chips away a little more of our privacy. But in sales and marketing, we embrace social media as transformational. We're primed for game changers, and we don't need to look far for good old fashioned hype in these articles about how social media will transform sales:

For Sales Guys, Social Media is the New Cocktail Party
Five Ways to Increase Sales Through Social Media
How to Tap into the Social Media Phenomenon for Greater Sales and Profits
Social Selling—Building a Web2.0 Sales Force

. . . But is social media living up to its promise?

Double-edged sword

It depends. One statement by Kevin Waldvogel, Account Executive at Image Systems sums up the ambivalence of eight senior salespeople I interviewed for this article: "Social media is great to help people and get your name out there, but not the greatest place to make instant business. It reminds us to listen to people who are in need of help and think about helping them because you never know when you might be in that situation. It's kind of a double-edged sword."

One edge symbolizes that social media provides valuable improvements to sales processes, and the other that social media won't help if it's not intelligently embedded with more mature, proven sales techniques.

From Waldvogel's comment, one senses that if the plugs were suddenly pulled on LinkedIn, Twitter, and Facebook, life would go on—at least for this group. Social media touches their jobs, but outside of collaborative CRM, I couldn't find one case of a corporate mandate to use it.

Clearly if there were a mandate, it would have to consider the boundary of social media, a question Jeff Baker, Major Account Manager for Hewlet-Packard asked. "It's important to expand the list, to expand the footprint" of social media. According to Baker, it's everything from the directories in today's cell phones, which can be shared, to electronic community directories. Joe Panella, Sales Manager at Alpha Systems, corroborated Baker's idea. He has scoped the recipient line of more than one neighborhood community email to find domain names of companies he targets for his company's suite of data collection products and services. When he finds one, he sometimes contacts the individual. But from there, his sales processes are little changed from the early '90's when he joined his company.

Mike Chiappetta, Unified Computing Systems Specialist at Cisco, voiced a similar view. "Selling hasn't changed in fifty years. LinkedIn makes for great icebreaker discussion, but you don't know your prospect's agenda or business problems, so you gather nothing that will help you in a B2B sales process. There are no shortcuts for doing real homework."

Real homework requires learning strategic and operational pain points that ignite sales processes—information which social networking sites don't offer. And while the sites offer community, there's no insight about the activities between community members. According to Chiappetta, "if I spend time on my client's corporate website or Yahoo Finance, I'll get more information to help me build trust than I ever can on LinkedIn."

Social media's greatest impact results from how it enables internal sales collaboration.

These seemingly prosaic uses of social media are emblematic of the resourcefulness of people who sell for a living. They don't necessarily rely on sophisticated social networking software to capture, share, and use information about the organizations and people who are potentially valuable to them. They exploit little ways to improve on what they already do. I asked about the most visible social-media created change in their jobs. The prevailing answer? Email—not voice—now transmits an overwhelming majority of prospect sales communication. According to Panella, "I rarely get a phone message, but I touch 200 emails a day."

Still, I probed for a big social media success story. Panella told me of a large order he sold when he serendipitously discovered a friend's posting on Facebook. Baker described how he facilitated a sale for HP hardware in Eastern Europe by connecting a graduate school colleague to an Outlook contact who specializes in IT financing in that region. But despite these positive outcomes, neither Panella nor Baker is convinced that the same tools could dependably enable them to repeat those successes in the future.

Internal collaboration

For the salespeople I interviewed, social media's greatest impact results from how it enables internal sales collaboration. Cathy Cromley, Sales Director at market research firm IDC Government Insights, uses Yammer, which her company implemented to enable employees to share knowledge internally. In an organization with over 1,000 analysts, Cathy would find it overwhelming to identify expertise on high-level topics such as cloud computing or green that she researches for her prospects and clients. But with Yammer, she can find referenceable projects, connections to subject matter experts, and blogs internal to IDC.

Eric Freeburg, Senior High Touch Account Manager with Motorola Enterprise Mobility Business leads teams of up to 70 people on sales engagements for large accounts such as Kellogg, Whirlpool, GM, Ford, Chrysler, and La-Z-Boy. For Freeburg, internal collaboration is mission critical. If he spends time on social networks, it's managing his team through Motorola's CRM software, Salesforce.com. "Who has time for LinkedIn?" he asks.

External sales processes

When it comes to client contact, the veteran salespeople I spoke with use social networking tools conservatively, and in different ways. Baker of HP, manages one customer, AOL. "I know everyone I need to connect with at AOL. I don't do prospecting the way others do."

Trudy McCrea, CEO of IT Services firm Achieve-IT, LLC in Northern Virginia, avidly uses social media tools, but not to close business. Through Outlook, she maintains a list of target accounts, and uses LinkedIn for an advanced search to uncover who isn't in her database. She searches for specific information about the kind of people who work for a company, their education, previous company affiliation, and other background to develop a second tier of contacts. From there she might make a cold call by phone or send an inMail. She also uses LinkedIn's Groups function extensively. McCrea understands the role luck plays in developing new business, saying "I make many unplanned discoveries."

Unfortunately, social media websites have driven many influencers away.

Motorola's Freeburg works with between 50 and 300 active customer contacts at a time, but uses one resource—Salesforce.com—for the daily information he requires. He uses LinkedIn mainly to post his professional credentials so he can "present myself without bragging." IDC's Cromley thinks of online social networks as a dynamic Outlook application that doesn't require time or resources to maintain. She uses LinkedIn and other tools "mostly to keep up with where people are."

Protocol and impediments

This conservative use of social media might result from the fact that adoption of social media tools faces large hurdles—an often-obscured reality. According to Panella, "some employers don't allow their employees to use (social media) for company purposes. They place restrictions around it."

Such impediments aren't fully recognized. In a March 31, 2009 webinar "Hear it Now! Social Selling: Live Q&A on Selling with Web 2.0," Christopher Carfi of Cerado, Inc. said that it's important to engage with an influencer in their place first, and that if they have a public persona to use the mechanisms provided. Unfortunately, social media websites have driven many influencers away. McCrea, who regards client privacy of paramount importance, works with a high-level contact at Google who had a public persona, but changed because the visibility brought unwanted solicitations. According to McCrea, "LinkedIn doesn't shield customers. (My contact) got unwanted email and now uses Facebook. Now, people keep less data on LinkedIn to keep from being found."

Several salespeople shared that simple business etiquette guided their decisions about how to adopt social media. Cromley believes that using social networks as a prospecting tool is "not appropriate," adding "I'm offended by someone trying to tap my network simply to hawk their wares." While she uses LinkedIn to look up information about prospects, she cautions that salespeople "should be careful not to look like you've stalked the person."

And then there's The Law. A senior business development professional who sells technology solutions to the legal industry said that attorneys must address confidentiality, security, and privacy issues of Electronically Stored Information (ESI), and the public nature of the Internet adds to the complexity of legal issues. Many sources of ESI are discoverable in legal matters —something to think about before you set up your next social media campaign. My contact cited the case in which Whole Foods CEO John Mackey posted blogs for over eight years on Yahoo online stock forums by using a pseudonym. The SEC opened an informal inquiry to see if any insider information was released. Although the SEC ultimately concluded that Mackey hadn't broken any laws and that no action needed to be taken, ethical issues linger.

Social products and services

If better social media mousetraps exist, salespeople will buy them, and Twitter has made the shopping list of at least two.

If social media hasn't forced major process changes among the group I interviewed, it has dramatically changed the products they sell. Motorola, long a dominant player in mobile technology and retailing "has always been a strong supporter of social networking and is developing solutions for its clients," according to Freeburg. IDC has conducted numerous studies of government's use of social media and has released a case study about how the DC Government used YouTube for procurement, entitled Social Networking and Takin' Care of Business Every Way. In the legal industry, FTI Consulting broke ground in legal discovery with Attenex, a software application that provides visualization of social networks by tracking email traffic and document trails. In a global economy, this resource provides crucial support to corporations that might need to document connections for a seamy side of social networks—bribery activity.

If better social media mousetraps exist, salespeople will buy them, and Twitter has made the shopping list of at least two. Ironically, the staid legal industry occupies the vanguard of industry adopters. That's because "congress is adopting Twitter, so attorneys are as well," according to my legal industry contact. Cromley also considers Twitter a potentially valuable tool. The analysts at IDC use it extensively in the financial services vertical, and the company will expand its use to all six verticals in which it competes.

The road ahead

If the individual insights of these salespeople prove anything, it's that social media's promise depends on the ingenuity of the people using it. But there's another takeaway. Even in the face of market upheaval, and a great shift in information power from vendor to consumer, legacy selling processes are surprisingly durable. We're a long way from the seismic changes in selling others have predicted.

So where are we on the Social Media Maturity Curve? No one can say with certainty. Some have suggested that we're at a social-media saturation point. In her recent column, Let Them Eat Tweets—Why Twitter is a Trap (The Medium, New York Times, April 19, 2009), Virginia Heffernan wrote "Twitter may now be like a jam packed, polluted city where the ambient awareness we all have of one another's bodies might seem picturesque to sociologists (who coined "ambient awareness") to describe this sense of physical proximity, but (it) has become stifling to those in the middle of it."

If that's the case, in an uncertain economy, should companies take a conservative approach and delay implementing new selling strategies by waiting for the Next Great Thing after social media? No. When deployed intelligently, social media can provide remarkably valuable outcomes. Here are a few points to remember:

Social media should transform processes, but not etiquette.
Technology-enabled sales tactics will backfire unless acceptable business protocol is considered in the customer experience.
Social media enables business strategy. It's a set of tools, not an endpoint.
In the short-term, deploy social media tools selectively. Identify the most persistent selling problems you or your sales team faces, and embed social-media tools where appropriate. Unless there's a compelling reason, don't rip and replace.

Thought Leaders: PLEASE tell me something I DON'T know!

2009-04-16T13:52:00.001-07:00

This year CMG Partners, an East-coast based marketing strategy firm hosted a panel discussion entitled Why Good Products Fail & How to Improve the Go-to-Market Process. The face-to-face event was complimentary to the local business community in Northern Virginia, and included experts from four enterprises: startup beverage company Honest Tea, National Geographic Channel, WeatherBug, and Intelevision.

Five minutes into CMG’s introductory PowerPoint, a man in the audience named John interrupted the presenter and opined “You’re the experts in marketing strategy, and yet, I don’t hear anything new. You haven’t provided anything we don’t already know!” He continued by reciting the unremarkable bullet points projected on the large screen in the front of the room, and emphasizing that he wanted to hear thought provoking insight worthy of his time. The slack-jawed audience at the McLean Hilton fell so totally silent you could hear a Blackberry hitting the plush carpeted floor.

Faced with this unexpected detractor, the presenter replied with such aplomb that his response belongs in the history books along with Lloyd Bentsen’s legendary debate response to Dan Quayle : “Well John, you get what you pay for!” The widespread laughter that followed was evidence that the tension of the moment had been broken.

The exchange somehow ended amicably, although I don’t think John will receive an e-invitation to CMG’s next event. The panel tried hard to live up to John’s expectations, thanks largely to Mark McNeely, CEO of Intelevision (more about that in a moment). During the post-panel networking, I introduced myself to John and thanked him for voicing an opinion that was probably unspoken by many, including me. “I might not have said it the same way, but I appreciate that you spoke your mind. There have been many times that I’ve wanted to say what you said, but didn’t.”

John might have been similarly moved during the recorded one-hour webinar on social media and selling I listened to on Monday. The topic is of particular interest as I’m completing a series of interviews with salespeople for an article I’m releasing next week. Like CMG’s event, there was a panel of thought leaders with cross-functional expertise—a great blend that should have created pungent discourse. And there were some good ideas that I jotted on my notepad and marked with an asterisk. But a few opinions were so over-worn that I stopped the recording and pushed back the timer a few seconds to make sure I heard them correctly: “We have to be in touch with our customers and understand what’s OK for them and what they expect from us.” And “It’s becoming more critical to know your customer.” Really? I acknowledge these comments are removed from the context of the discussion, but they were as attention-grabbing in the webinar as they are here.

Which leads to a question: are thought leaders fostering a sort of institutional stupidity by being too timid to espouse bold ideas? Or are thought leaders simply reacting to a perception that businesspeople need to be spoon-fed unremarkable ideas (not too big, not too small, not too hot, not too cold) so they can be nudged into considering larger ideas? On the other hand, could executives and managers simply be too intimidated by the multitude forces that are upending their business plans and strategic objectives to consider big ideas?

Mark McNeely might have answered the question when he synthesized the reason for the problems American businesses face: “there’s no oxygen in the room. Companies are run by management that is stagnant, bureaucratic, and self-satisfied.” He predicted that will change—because, if you subscribe to the idea of a Darwinian process for business, it has to.

Resolving our global economic situation demands the creation of provocative ideas. Controversial ideas. Ideas that are unpopular or disagreeable. We don’t need any more Mom and Apple Pie. In marketing and sales, nothing great will happen when well-known truisms are dusted off and passed on as contemporary expertise.

To those who regularly offer contrarian views, keep doing what you’re doing. The world needs your fresh perspectives now more than ever.

Ready to Sell? Quick--Name Your Prospect's Issue!

2009-04-03T07:56:00.000-07:00

Author Michael Korda said “great leaders are almost always great simplifiers who cut through argument, debate, and doubt to offer a solution everyone can understand and remember . . . straightforward but potent messages.”

As the photo illustrates, simplicity alone doesn’t make a message potent. What’s missing? Two crucial factors that Howard Gardner describes in his book Leading Minds: how effectively the scripts are enunciated and how convincingly the deliverers of the communications embody the scripts. On those dimensions, “now serving food” doesn’t demand rigorous analysis.

In marketing and sales, we live and breathe message potency. We have to. Everything we do must nudge, push, or demand a change in one or more entrenched behaviors. So, when it comes to potency, could the intended change be as significant as the message itself?

To answer that, we must address a challenge even more basic than potency: how to select the right issue to address in the first place. From experience, I know it’s hard to get it right. In business, we tout high ROI when our clients want strategic enablement. We push strategic enablement when cost reduction matters most. We communicate about best practice knowledge transfer when the greater issue is how to build communities. We promote social media tools to build communities when a client’s overarching concern is managing profitable growth. Our assumptions leave us in a fog of sometimes-happy ignorance. Most exasperating, our prospective clients usually can’t tell us that we’re attacking the wrong issues because they’re not even aware of our companies or our products!

Happily, every now and then, we find a great example that reminds us that we can connect to visceral issues and make our communications potent—but first we have to understand what the issues are. An advocacy group called Food Democracy Now (FDN) has a mission is to advance “the dialogue on food, family farm, environmental and sustainability issues at the legislative and policy level.” Against a powerful food industry lobby intimate with the complexities of the Farm Bill and the machinations of the National School Lunch Program, Dave Murphy, FDN’s president, faces a daunting challenge. According to a recent article in The Washington Post (“Where Policy Grows," March 25), Mr. Murphy recognizes that it’s not only important to understand the legislation, but to “recast the debate about good food from a moral battle to an economic one. Take the school lunch program, which Congress will review this year. Food activists have long argued that more fruits and vegetables from local producers should be included to help improve childhood nutrition. But Murphy says the better way to sell the idea to legislators is as a new economic engine to sustain small farmers and rural America as a whole (italics, mine). Talk about nutrition and you get a legislator’s attention, he said. ‘But you get his vote when you talk about economic development.’”

Bland? After all, ‘economic development’ lacks originality—many times over. In addition, because righting economic wrongs isn’t FDN’s primary mission, Mr. Murphy could be forgiven for being more pedantic about nutrition, health, and the environment. But he knows that by building an economic frame around his cause that FDN will accomplish more than it could through moral grandstanding. By going after the wrong issue Mr. Murphy would find promoting his cause a much tougher row to hoe (pun intended).

Mr. Murphy’s circumspection about issues applies equally to other marketing challenges with differing complexities. What does finding the right issue mean for achieving a targeted return on invested capital? Sales productivity? Reducing sales risks and shortening sales cycles? Meeting revenue forecasts? Everything. Attacking the wrong problems (or attacking the right problems the wrong way) creates a cascading set of selling failures. When it comes to changing entrenched behaviors, not all issues are created equal. For maximum potency, messages need a highly motivating context, and that means choosing the right issue.

Like FDN, when you find the right one, you can change the world!

Hold the Trust: A "Trusted Advisor" Who Earns a Sales Commission is Just an Advisor

2009-03-19T07:09:00.001-07:00

“We want our salespeople to work as trusted advisors to our clients.”

The VP of sales who shared that idea has a noble vision, and he’s not alone. Building customer trust is inseparably connected to building shareholder value. Not surprisingly, there's great interest: searching the phrase “how to build customer trust” returned 3,890 results on Google. But the VP has a conflict: his sales team is “coin operated,” vernacular for “they earn commissions based on revenue.” Could that undermine the platform of trust that’s core to his strategy? After all, his customers don’t know his company’s sales commission plan, and it’s no secret that clients don't always benefit.

In the US, commission-based arrangements for sales forces come in many flavors and varieties. And they're widespread, according to Barry Trailer of CSO Insights. His company's research found that of companies responding to their 2008 sales compensation survey, 98% included variable pay as part of their compensation plans. I know from personal experience that a commission-earning salesperson walks a fine line as a Trusted Advisor, and there's an ethical morass on either side.

Variable pay by itself doesn’t destroy trust, but the opacity that commonly accompanies it does. The headlines we've read about AIG and Madoff remind us why. In The New York Times, Frank Rich wrote “The question in the aftermath of the Madoff calamity is this: why do we keep ignoring what we learn from the black boxes being retrieved from crash after crash in our economic meltdown? The lesson couldn’t be more elemental. If there’s a mysterious financial model producing miraculous returns, odds are it’s a sham—whether it’s an outright fraud . . . or nominally legal, as is the case with the Wall Street Giants that have fallen this year.” And Republican Richard Shelby of the Senate Banking Committee, quoted in The Wall Street Journal (March 17), said of AIG's widely-condemned bonus payments “There’s been no accountability, no transparency to speak of. . . Whatever we’ve gotten, we’ve had to extract it piece by piece, little by little. There’s too much secrecy.”

Agreed. Secrecy stinks. But Madoff committed deception. AIG . . . didn’t. And in what way do these issues relate to an Account Executive who sells professional IT services to companies in the Midwest? Fair question. There is a connection. Customers think salespeople have something to hide—and that’s a trust breaker. In a March 2, 2009 issue, InformationWeek reported the results from their survey of 345 technology professionals. The participants were asked “if you could get vendors to start doing one thing, what would it be?” Thirty-four percent of the respondents indicated “being up front about how their products do and don’t meet customer requirements.” That was more than twice the percentage for any other response.

In our technology-rich world, it’s humbling to think that good old fashioned honesty exists at the top of the list of customer wants. If only we could easily give our customers what they’re begging for. But for a salesperson with money on the line, “being up front” presents a wide ethical strike zone. And companies use variable pay to influence a myriad of actions, which include the ethical decisions the sales force makes. (Specific ethical dilemmas salespeople face are discussed in an earlier CustomerThink article, "On My Honor As a Salesperson: Why Sales Ethics Matter") Similarly, in my selling past, there were many background situations I didn’t disclose, but they influenced the advice I offered. For brevity, I’ll list just four:

Service plan revenue generated 8% commissions (at the time, the highest percentage category)

Selling direct to customers (versus through a channel partner) credited 40% more revenue toward achieving my sales quota

There was a quarterly bonus of $10,000 for achieving the quarterly revenue goal

Competitive displacements earned higher commission than installed account sales

In March, I decided to investigate this issue in more depth, and through LinkedIn I asked salespeople “Do you think prospective customers should know how much their salesperson might make in commissions and/or bonuses from their purchase transaction?” Although the number of responses received wasn’t large, they supported the idea that for salespeople, such transparency was not needed—with one notable product exception: sales of financial securities. A few nuanced views discussed the importance of disclosing to a customer how much a broker might make selling Security A versus Security B. But why draw a boundary around financial services? Shouldn’t customers of other products and services demand equal levels of transparency from their sales advisors?

Some companies believe so, and in the name of increasing shareholder value, they have adopted a progressive view for creating sales trust and transparency—and been rewarded for the effort. The Wall Street Journal reported on March 16th (Best Buy Confronts Newer Nemesis) that Best Buy CEO-designate Brian Dunn “opposed (Best Buy’s) 1989 decision to do away with commissioned sales in favor of salaried staff, which was widely opposed by sales workers who feared losing income. He now concedes it was the most important shift in company history, lowering worker costs, and changing the core model of electronics retailing. Best Buy expanded across the US, and Circuit City eventually followed by eliminating sales commissions.” To the victor go the spoils. Analysts believe Best Buy will capture half the business of now-defunct archrival Circuit City.

There’s more to that story than just sales commissions, but it’s worth pondering how—for a business as complex and dynamic as electronics retailing—elimination of sales commissions was granted such honored recognition. As one who eschewed buying from high-pressure Circuit City salespeople, I know the decision had as much to do with improving customer experiences as with lowering labor costs. According to Mr. Dunn, “we want our stores to morph into a series of experiences . . . to do that, you need to go where the rubber meets the road, the sales floor.” For Best Buy, eliminating sales commissions makes it easier to foster the transparency required for creating valuable customer relationships.

Outside of electronics retailing, improving customer experiences doesn’t mean eliminating variable pay, but it does mean looking at sales compensation differently. Are the right outcomes rewarded? Does rewarding revenue achievement alone work at cross purposes for maintaining excellence in customer experiences and building loyalty? Does increased transparency matter to customers? When it comes to trust, what changes would be most valued? If transparency is increased, what additional changes would cascade throughout the sales organization? Would those changes be positive for building shareholder value?

Best Buy, which now has a new major competitor in Wal-Mart, has the right perspective on trust, transparency and customer experience. I hope others will follow their example.

When False Expections Lead to "I Don't Think There's Anybody Back There"

2009-03-06T08:17:00.001-08:00

If you’re old enough to remember Wendy’s Where's the Beef? commercial, you’ll recall Clara Peller, the woman on the right of the skeptical customer trio, slipping in one final barb, “I don’t think there’s anybody back there,” as she struggles to peer across an oversized sales counter. I doubt if anyone reading this hasn’t wondered the same thing at least once after clicking “submit” on a customer support web page.

The commercial parodies the frustrations of customers trying to squeeze a plaintive request through a monolithic corporate bureaucracy, and it would be even funnier if it weren’t so true. The ladies’ voices echo off stark, confining walls, ominously distorted by the camera. It’s unclear who they are talking to. There’s no response to their now-iconic question “Where’s the beef?” Dancer Fitzgerald Sample, the ad agency that created the commercial in the early ‘80’s, might have been unintentionally prescient of Voice of Customer (a yet-to-be popularized term at the time) challenges in the age of the Internet.

Technology hasn’t made us any better at hearing customers. But the issue is greater than companies using simple email services and Web 2.0 to craft a “we’re listening to you” image for their customers and prospects. That over worn approach has now become a cliché. It’s about companies taking action when they’re creating the expectation that they are going to take action.

In the last two weeks, I’ve requested support from two companies, CraigsList, and a communications service called DimDim. Both companies offer an online feature that enables a person to send questions and other information from a web page. In both instances, I carefully composed a written explanation of my support question and clicked “Submit.” Then—nothing. It’s more than a coincidence. It’s happened with other companies enough times that when I see Clara trying to peer over that counter, I know exactly how she feels.

What should customers expect? Well, at the very least, to receive a response. In the case of CraigsList and DimDim, an auto response such as “Thank you for your question. Because our support manager decided to take two months off to go mountain biking in the Andes, it might take a week or so to answer your question.” would be better than to hear nothing at all. A few websites offer a great service that requests my phone number online. Within one second after clicking “submit,” my phone rings! Then, an agent gets on the call. At least I know there’s someone on the payroll!

Failure to support breaks trust, and breaking trust is fatal for successfully selling anything. In an era when so many past truths are called into question, the certitude of “no trust, no sale” might even be half comforting.

I don’t care how cool a company’s technology is. When they belly flop on customer support, what message does that send about how they care about their customers? What information do consumers receive about the capabilities of their operations? What do they convey about their ability to provide value in the future? I don’t think there’s anybody back there!

What Makes a Social Network Valuable? The Answer Might Surprise You

2009-03-04T07:36:00.000-08:00

“What do we know about the networks of high performers? What promotes knowledge worker productivity? What would you do if you could see the networks? What would you do differently?” Rob Cross, author of a new book, Driving Results through Social Networks, shed light on the answers to these questions and others in a webcast I attended on February 19.

These questions are especially important because the answers lead organizations away from practices that worked a year ago, but might not today. For example, if you really want to know how your firm won a new client, what’s the value in knowing that your marketing team began by mining a database? As Mr. Cross shares, “when you look inside teams and see networks that are forming around an idea, you get a totally different perspective about how value is getting built in organizations.” And that perspective offers killer insight for sales teams.

The Social Network Analysis (SNA) tools Mr. Cross describes identify bottlenecks and gaps that hinder customer relationships. They also identify where “value is built out,” and where cross-selling occurs—insights particularly important for large, multi-division global organizations. Adding more Web 2.0 connectivity won’t help. According to Mr. Cross, “we don’t need more calls, meetings, and emails.” The key strategic and tactical changes result from learning where and how organizations need to add social network connectivity, both internally and externally.

Mr. Cross offers a social network taxonomy and fascinating statistics that upend entrenched views about how ideas are created, sold, and implemented. Three types of people hold critical importance:

Central Connectors: Leaders, experts, long-term employees. Central Connectors represent 3% to 5% of the individuals in a company, but account for an astonishing 25% of the value-added ties—relationships that foster the transfer of best practice knowledge, innovation, and revenue. Unfortunately, when it comes to information flow and value exchange, the same people can also create bottlenecks and impediments.

Brokers: The “unsung heroes” of an organization. Brokers drive change through organizations through their cross-division, and cross-department connections. Mr. Cross discovered that a paltry 30% overlap exists between these enablers and the “top talent” that corporate HR departments identify through traditional contribution measures such as revenue achievement. Ignore the insight at your own risk. Many know from painful experience what happens when a company lays off a critical inside resource who was viewed as “overhead.” “We’re sorry about Tom. He just didn’t have the numbers to justify our keeping him on board.”

Peripheral players: As the term connotes, peripheral players have few connections, and 40% are newcomers to their organizations. This issue presents special challenges for distributed sales forces. When new salespeople are brought into an organization, their companies suffer from long periods of low productivity as salespeople assimilate the tacit knowledge required for the job. But as Mr. Cross points out, social network analysis identifies opportunities to more rapidly connect peripheral individuals—and the knowledge [i]they[/i] bring—into their organizations.

So given these archetypes, what [i]do[/i] we know about high performers and their social networks? One thing is clear: bigger is not necessarily better. Through his research Mr. Cross found that high performers

Develop networks that minimize insularity

Maintain balanced ties across organizational lines

Nurture relationships that extend individual expertise

Mr. Cross demonstrated how to identify these individuals through looking at actual network diagrams. In one instance, using just one mouse click, he subtracted them from the network. The remaining people in the network appeared almost free-floating in space, untethered to Central Connectors in other divisions remaining on the screen. Through this representation, the real-world result becomes chillingly apparent: a company that doesn't know its key liasons with its customer community can become virtually isolated if--and when--those individuals leave. Does the possibility that this could happen (slowly [i]or[/i] quickly) keep you up at night?

Advances in Social Network mapping will enable companies to examine collaboration for sales and business development in a new light. What are the strategic opportunities? The risks? The costs? Mr. Cross frequently points out the irony that companies scrutinize routine travel expenses to the penny, but don’t often track collaboration costs such as time spent in meetings—possibly a far more significant expense for many corporations.

Mr. Cross shows that the energy that flows around the creation, development, and implementation of ideas can not only be documented, but that social network analysis yields new ways to model how enterprises create and transfer value. As the state of the art matures, it's exciting to think about how companies will use this insight. Which new strategies, tactics, and processes will result?

Do Salespeople Bug You? Here's Why They Won't Go Away

2009-02-06T07:25:00.001-08:00

Search the phrase death of a salesperson on Google, and it will return around 15,000 results. This corruption of the title of Arthur Miller’s iconic play Death of a Salesman has become embedded in blogs and articles worldwide. But as Mark Twain said, “the rumors of my death have been greatly exaggerated.” Unless you live in Cuba, North Korea, Laos, Vietnam or China, sales professionals won’t vanish. Not now. Not soon. Not ever.

Why? In capitalist economies, organizations must acquire customers to survive, and that requires leading change—and leading change requires selling ideas. People malign the art of selling, people diminish its importance, people even wish it away. But whether you’re discussing weight-loss plans or economic reform, minds won’t change without one very human interaction: someone must sell an idea. And we work with idea sellers every day. They’re called Associates, Agents, Account Executives, Senior Solutions Marketing Managers, Directors of Product Management, VP Sales, Senior VP Global Sales and Business Development, Chief Marketing Officers, Customer Account Managers. Add your own title and the list goes on.

In 2006, the U.S. Bureau of Labor Statistics reported that out of 132,600,000 US workers, 10,464,000 were in “Sales and related” jobs—about 8% of the workforce. This number of jobs—sub-classified as retail salespersons, cashiers, sales representatives, and their first-line supervisors—reflects both the diversity and complexity of the selling process. Selling change isn’t easy. And there’s friction because salespeople and customers don’t always get along. Not all salespeople provide value. Not all customers are open-minded. Some products aren’t easy to buy. And when it comes to fair play, no party to a business transaction can claim exclusivity on the ethical high road.

There’s additional upheaval. Foundations of trust shift. Technology and other forces change once-stable commercial relationships. In some sectors, sales jobs are lost—in others, they’re gained. But it’s illogical to interpret recent trends as portents for the eventual demise of the sales professional. Automation and business process reengineering will no more eliminate the need for salespeople than changes in healthcare delivery models will eliminate the need for doctors and nurses.

I’ll take a contrarian position from many hyper-caffeinated emarketing and social media experts: we’re a long way from replacing salespeople with mouse clicks and drop-down menus. When it comes to Great Customer Experience, the automation we’ve created stinks. Proof? We can scale our selling models through information technology, but we still can’t wean ourselves off "human intervention" (oh, come on, Andy, just use the word salespeople!): “To speak to a representative, press zero.” “If you need help selecting a product, just ask one of our retail floor Associates.” “To initiate online chat, click here.” “If you’d like to meet with one of our Sales Representatives, enter your email address.”

Still, the critics complain that salespeople often inject themselves into the buying mix. “We don’t need them,” the critics say. “After all, they’re only thinking about their next commission.” I’ll accept the criticism. As my VP of sales fittingly said “any salesperson who doesn’t add value risks being replaced by a kiosk.” But over 10,000,000 “sales and related” US jobs suggests that buyers also need salespeople.

The critics won’t admit it. “Salespeople are unethical.” “Social media changes everything. We get better information through blogs and online product reviews.” “Let me tell you about my last encounter with a salesman . . .” I’ve held these sentiments myself—and I’m a salesman! But much of the enmity is misplaced. Salespeople are not inherently bad. It’s the culture under which salespeople work that needs overhaul. Customer relationship problems start with people at the top of the organization chart, whose faces aren’t often public. Those executives create business plans that contain financial forecasts that are divided into sales quotas that are measured in revenue that are credited against the salesperson’s “individual goal.” Ready to talk about improving the “customer experience?” You’ve heard it before: It’s the system, stupid!

Maybe what’s needed is a redefinition of sales itself. What does "sales" mean in the context of leading change? After all, isn’t leading change fundamental to every organization’s strategy? Interpretations will be the progenitor of new ways that sellers and buyers connect and relate, new processes, and new best practices.

Perhaps it’s gratuitous for a salesperson to espouse that nothing happens until somebody sells something. But in the non-communist world, I haven’t found a more accurate statement. The sales professional is far from dead.

Senior Moment: What Our Elders Can Teach Us About Sales

2009-01-30T08:31:00.000-08:00

Yesterday I received a sales letter that hit me like a breath of fresh, un-digitized air. I wanted to share it with my readers:

Dear Friend:

As we enter the new year, conditions are not very good for purchasing new supplies and equipment. However, there are some signs that this may improve as the year progresses.

Your responsibility as a department manager or property manager is to maintain your facilities in the best possible manner. I have three things to offer:

Excellent products
Good service
Fair prices

If the need arises this year for you to replace or add to your equipment, please don’t hesitate to give me a call. I will be happy to furnish you catalogs and written quotations for your consideration.

Sincerely,

My friend Stanley’s name follows below his hand-written signature.

Three paragraphs, two sentences each. There’s purity of form and a sincerity that rarely emanates from today’s marketing communications.

Stanley began his sales career before most of us were born, and he hopes to achieve the milestone of entering his ninth decade this year. He’s a retired CEO who is passionate about selling. He’s never stopped. When he started working, ‘personal selling’ meant . . . personal selling. Telephones, “snail mail,” and cars were the tools of the sales trade. Most of all, face-to-face dialogs created the trusted bonds between buyer and seller, and were an inextricable part of the sales process. Little wonder that Stanley’s letter says “I care” so clearly, without using those two words. He perfected that skill in the trenches, by looking at his customer in the eye.

In our Twittered, Blogged, and Web 2.0’d sales world, Stanley’s selling talent has become rare. The forces of information technology, product commoditization, and cost reduction have pushed legions of salespeople from the prospect’s office to the deep innards of the call-center cube farm. Millions must make their quotas using far more sophisticated tools than Stanley had—but without ever physically shaking hands with a customer.

As Stanley approaches his 80th birthday, he has become rare in other ways as well. He’s part of a shrinking population that will all but vanish in twenty years: a self-selected group of senior citizens that choose not to use a computer. He doesn’t use email or a have website for his company. He puts up with my e-marketing hubris when I rib him about not being able to accept orders online (FAX and phone work fine for him). The few times he needs Internet access, he taps an eager pool of knowledgeable grandchildren. It would be easy to dismiss his knowledge as outdated.

But the wisdom contained in his letter reminds me that when it comes to selling, seniors have a wealth of knowledge for the rest of us. Stanley has taught me how courtesy, respect, and sincerity have great power in sales. I wish Stanley many more great years in selling. I still have much to learn from him.

Money is Tight. Where's the Biggest Customer Experience Bang for the Buck?

2009-01-23T10:37:00.000-08:00

By Andrew Rudin, Outside Technologies, Inc.

The VP of Sales at a software company I worked for frequently chided his sales force not to boast to prospects about recent wins. "Customers are always unhappy within the first 90 days of an install."

He was right in one way: our customers were invariably disappointed early. But he was wrong in accepting customer rancor as inevitable, and his myopia cost his sales force and the company substantial revenue. What was the company's strategic CRM blunder? I'll describe that in a moment.

If you graph customer expectations over time, one inarguable high point comes immediately following the sale. Why? Because salespeople have an understandable tendency to over-promise results, especially when quotas--and jobs--are on the line (been there, done that). On the customer side, harsh spotlights turn on the decision makers as anxious colleagues look for quick, tangible improvements, or detractors salivate for opportunities to say "I had serious doubts about the vendor choice." Meanwhile, the decision makers seek validation for why they made the best decision from a pool of qualified competitors. Word-of-mouth is in hyper-drive. My experience has been that a significant number of queries are exchanged immediately post-sale (Although I haven't taken formal measurements, I'm interested in learning if anyone has).

If there's ever a time you need to love your customer, it's right after you first shake hands when referring to your prospect as customer. Hugs all around--for 90 days! What better time to provide the decision makers with every reason that he or she made the best choice?
What did my employer do? Management scrutinized departmental financial performance for every part of the delivery, and customer satisfaction measurements were omitted from the equation. What did that mean? Revenue was split between departments: custom development, warranty support, packaged application sales, installation and training, and product management. Expenses were measured down to the penny. From a customer perspective, support was grudgingly parsed. Meters were ticking for every direct customer interaction--and behind the scenes as well--because no department wanted to "eat an expense," an expression that became well-worn at internal client meetings.

What dynamic does this problem create for a sales organization? Notwithstanding the incredible amount of time a salesperson must spend responding to calls and emails that open with "Before we bought this, you told me . . , " consistent service breakdowns destroy credibility. When that happens, sales don't repeat easily, and cannot scale--two must have's for growth-oriented strategies.

What should my company have done? Hindsight offers vivid clarity. A management planning horizon that extended beyond the current quarter would have helped. A business strategy that included in its financial calculus the lifetime value of the customer would have made general ledger expense silos less dysfunctional. At the very least, internal bickering would have been minimized as managers strategized how to create value for customers as well as themselves.

Business strategies have the best opportunity to work when a customer says "I made best choice given what I knew at the time, and if I had to make my choice again, I'd do the same thing."

Look Both Ways Before Making 2009's Sales Resolutions!

2009-01-07T10:05:00.000-08:00

In the past, making resolutions was a challenge that was easy for me to delay. After January 1, the world kept moving and I moved with it--resolution ready or not! But so much changed in 2008 that I felt a steadying resolution or two might help. So I grouped my 2009 sales resolutions into two Janusian groups (owing its name to the Roman god of gates and doors, Janus, whose vigil required him to look in two directions):

Things to continue doing
Things to do differently

Things to start doing
Things to stop doing

Before January’s calendar rolls into double-digit days, I wanted to share my list for my clients and other enterprises:

Things to continue doing (for some people, after 2008, this might be the shortest of the four lists!):

1. Setting strategic goals that push the envelope (sometimes called BHAG’s—Big Hairy Audacious Goals).
2. Exploiting social media communication to achieve corporate strategies.

Things to do differently:

1. Develop not just many social media connections, but those that provide the highest value to enterprises: innovation, revenue achievement, and knowledge for process best practices.
2. Reorganize marketing and selling processes to address redistribution of information power and changes in how people buy.
3. Trust, but more skeptically. As author David Berreby said, when writing about trust in the New York Times(March 30, 2008), Stanley Milgram’s famed electric shock experiments show “in difficult situations, when (people) wrestle with the line between trust and skepticism, trust often wins. Much of the time, that’s a good thing.” The aftermath of Bernie Madoff’s scheme suggests differently.

Things to start doing:

1. Ask a teenager for ongoing, in-depth tutorials about how to use Facebook, Twitter, instant messaging, and other social media tools (if you haven’t already done so).
2. Seek opinions from people, books and blogs that are controversial or even disagreeable.

Things to stop doing:

1. Flogging the sales force for more productivity and more revenue output without providing better tools, training, or process improvements.
2. Delaying strategy decision making “until we know what the economy is going to do.” The forces in world keep moving. Could the risks of indecision be greater than the risks from a wrong decision?

What’s on your list?

Why Sears Customers Continue To Suffer

2009-01-06T09:17:00.000-08:00

(first published March, 2007)

Sears--the retailing powerhouse that broke down paradigms for how consumers purchase hardgoods hasn't figured out how to maintain their visionary edge. Many would argue that they lost it many years ago. Today they are the poster child of companies that say--no, shout--to their customers: "We're happy to take your money. After that, we don't care."

Here's the evidence: last August, we purchased a relatively inexpensive refrigerator to replace our failing 15-year-old unit, which had been housed in our garage. We found it on the Sears website and engaged in a conversation to clarify a few questions with Sears customer service before placing the order. At the appointed time, two men in a Sears delivery truck arrived and, delighted that this stop didn't involve taking the new refrigerator around the back and up 4 flights of stairs, happily placed the new unit in the spot in the garage location formerly occupied by the old one. They thanked me for the order, took our old refrigerator, and drove off less than 15 minutes after they arrived. I paid about $20 for this service, which was fine.

The refrigerator worked well until this winter, when the freezer mysteriously stopped keeping our frozen food frozen. The refrigerator was still under warranty, so I contacted the service number printed on the manual. After over 90 minutes of phone hold "press 1, press 2, press 3" agony, I persevered and spoke to a customer service representative who blandly asked me to open my manual and to read some text embedded on a paragraph on page 12 that indicated my refrigerator was not built for use outside of the temperature confines of a typical American home. Therefore, garage and back porch installers need not apply! I informed him that this information was not shared with me--not by the Sears website (which didn't state "Not designed to be installed in unheated areas in colder climates), not by the order desk personnel I spoke with before ordering (I told the representative the unit would be installed in my garage), and not by the delivery crew (who PUT it in the garage)--and I also told him that Virginia, in fact, experiences freezing weather in the winter. He further impugned Sears by saying that this issue comes up all the time. "So why doesn't the website provide the appropriate information?" I asked. "I guess nobody outside of tech support really knows this," he responded. At this point, I asked him what is the process for resolving this problem resulting from what I felt was an irresponsible omission of key product information--times 3! He said they would have to send a service tech to my home to see if it could be fixed. "FIXED--How? you just told me it won't work, according to page 12! What is your service tech going to do or tell me that you haven't done already?" He responded that that is his process and he's sticking to it.

A few days later, according to Sears Plan, I received a friendly automated recording from Sears informing me that a service tech would arrive at my home the following Saturday--somewhere between 8 am and 5 pm. Not being exactly overjoyed at the prospect of spending the entire day at home further contaminated what little expectation I had of achieving any positive result from this "process." I called Sears back and firmly committed that I would make no commitments to staying at home all day on a Saturday (did Sears think I had nothing else to do?). In fact, a service tech did show up when I wasn't at home. Little wonder. A few days later, exactly according to the Sears "process" script, another friendly recording arrived in my voicemail inbox, offering another window of opportunity for a service call--this time during the week between 8 and 12, which I accepted.

On the scheduled day, a friendly, but jaded, service tech arrived and confirmed what I already knew: the compressor on the freezer wasn't designed to operate in temperatures below 50 degrees. "I'll write this up in a case and let them know what I found. At this point, there's nothing I can do." Who is "them?" I asked. He said the store manager at our local Sears. "But I purchased this online," I said. No matter, he told me--the local store would have to resolve my issue. "I see this all the time," he said. "I don't know why they they sell these and install them in this climate. They should know better. So many people buy these in the summer and they are happy. Then winter hits and they don't know what happened. I see it all the time." All this information about how preventable this misfire was didn't leave me with a warm feeling.

Contributing to the evidence of how pervasive is the ineptitude at Sears is this fact: the refrigerator cost less than $450. Did it even occur to the product planners and buyers at Sears that such a low-price model might be utilized by someone in the United States as an auxiliary appliance, and therefore might be installed in a location other than a kitchen? Clearly, that question was never asked by people who should have asked it. (Although I sardonically envision a lowly Sears intern voicing concern, but quickly dropping the idea after withering in the conference room before the pompous glares of his superiors.) Like most systemic customer support problems, the organizational partitions that managers faithfully create lose their utility when the challenge becomes "how do we demonstrate to our customers that they matter to us?"

After 3 weeks,I haven't had time to contact Sears to figure out what to do about the appliance they so flagrantly misrepresented. And as for the Sears resolution "process:" No follow up call from Sears, no resolution, no anything. Maybe they'll give me another automated call--this time with a synthesized voice saying "Hi! This is Sears! We just want to let you know we care. Goodbye."

It's still winter in Virginia, and all of my outdoor freezer stuff is in my indoor freezer so it won't spoil. I can't wait till the weather turns warm so that my freezer will work again. Then I'll call Sears to let them know--in the vain hope that someone cares.

Clearly Sears is adept at completing the sales transaction: my credit card payment and delivery order were processed quickly and efficiently. They still haven't figured out how to make the customer experience satisfactory. It's the last product I'll ever buy from them. Oh, and that includes Land's End, too! I can't wait to show my friends how well my Sears refrigerator works! Maybe I'll spoil some sales to go along with my spoiled food!

"On My Honor, as a Salesperson . . .": Why Sales Ethics Matter

2009-01-06T09:15:00.000-08:00

(first published April, 2007)

Which business risk represents the greatest threat to shareholder value? Natural disasters? Terrorism? Product defects? Piracy? Patent infringement? Lack of ethical boundaries?

If you answered anything but the last choice, think again. The massive collapse of market capitalization at Tyco, Worldcom, and Enron underscores the grave dangers posed to shareholder value when employees lack an ethical compass. The cumulative decline in market capitalization resulting from fraud at these three companies was $136 billion, according to Public Citizen's Congress Watch.

These scandals originated in the executive suite and required an ecosystem of compliant people to execute. What about ethical problems that originate elsewhere? What happens when ethical violations spiral from what are euphemistically called "aggressive sales practices?" In 1998, ethical violations at Prudential Insurance became so pervasive that the company's management eventually estimated its liability from the pending class-action lawsuit at $2 billion. Among the voluminous courtroom testimony from the case was this nugget: "Your judgment gets clouded out in the field when you are pressured to sell, sell, sell."

Could ethical problems affect your company? No company is immune. How might your company's reputation or your personal reputation be affected? How real are the ethical risks you face, and what, if anything, should you do about them? These are risk-related questions that one company should have asked—but didn't. As a result, the indiscretions of a person I'll call Travis Doe cost MegaCorp (not the company's real name) more than $1 million.

Travis Doe was a reseller account manager for MegaCorp. He was affable and gregarious, and his compensation plan enabled him to earn a comfortable six-figure package. But Travis had a revenue scheme that would make his day-job earnings pale in comparison, and it paid him very well—before he was caught. When the dust began to settle a year later, the total estimated cost to MegaCorp was more than $1 million. That's before adding the 40 percent revenue loss of the diverted direct sales. What about the greater cost of diminished employee morale and broken customer trust?

The loss was buried in the income statement of MegaCorp's financial report, away from the eyes of investors. No mainstream publication or trade journal carried the story. What was Travis's scheme? I'll get to that in a moment.

Unethical
Any discussion of ethics involves drawing boundaries. But drawing boundaries for sales ethics is much easier said than done:

"I'll sell an early version of my software that isn't fully tested, but I won't sell anything that I know doesn't work."

"I won't bring up the fact that I'm missing a key feature, but I won't lie about its absence."

"At the end of the quarter, I will commit resources I don't control so I can win the sale, but I won't promise my prospective customer anything I know cannot be delivered."

I won't overcharge anyone, but I won't sell at the lowest possible price, either."

I'll look out for my client's best interests but only if doing so doesn't jeopardize my business."

As author David Quammen writes in Wild Thoughts From Wild Places (Scribner, 1998), "Not every crisp line represents a triumph of ethical clarity." What causes this obfuscation? Individual ethical interpretations are a function of a person's current emotions, situation, values, experience, logic and personality. What do blurry interpretive boundaries mean for sales? They mean that ethical practices and behaviors are difficult to define.

Travis's plan
Travis executed his plan by setting up a bogus reseller account. When prospective clients sent requests for quotes, Travis sent the requests to his bogus company instead of sending them to a legitimate reseller. Because the bogus reseller purchased from MegaCorp at a 40 percent discount, Travis made a significant profit on every order his bogus company processed. Only when an order administrator on the West Coast spotted a benign part number anomaly did Travis's ruse begin to unravel. She phoned the "reseller" with a question, and the person who answered stated that "our vice president, Travis Doe, will contact you tomorrow with an answer." The order administrator blew the whistle. An embarrassed MegaCorp quietly fired him about a week later.

The evidence on the laptop exposed how far the ripples from the scam had traveled. There were copies of letters and proposals bearing the name, "Travis Doe, Vice President," on fake letterhead. Under the guise of a legitimate reseller, Travis had created price lists, spreadsheets that tracked the status of quotes, customer lists, marketing material and more.

Surprised colleagues (and some not-so-surprised) came forward to describe how Travis had pressured them to send orders to his bogus reseller rather than place them directly with their employer. Betrayed customers who had unwittingly placed orders with the reseller loudly expressed their woes because Travis's company had no capabilities to support them. Legitimate resellers were particularly irate because they had been deprived of valuable orders.

No one else was terminated, but except for the alert order administrator, Travis's indiscretion created no winners. Where were the boundaries of ethical responsibility? MegaCorp utterly failed by not having adequate controls to prevent Travis's scheme. If Travis's immediate boss knew about his dishonesty, why didn't he stop him? If he didn't know, why not? You know it's a bad day at the office when any answer you provide isn't a good one.

Ethical risk presents vexing challenges for organizations because ethical standards must first be defined, then documented, communicated and followed. In addition, the subjectivity of what constitutes good ethics, and resulting interpretive challenges, defy standard-setting. Senior managers should not avoid this problem. Instead, they should embrace it by creating an environment for open, candid discussion about ethical challenges that will encourage salespeople, and those who support their efforts, to identify issues and confront them before they spiral out of control.

Establishing an ethical culture requires strong leadership; expectations for ethical behavior must be visible and consistent throughout the enterprise. Similar to many operational risks, the likelihood of ethics problems is magnified when multiple risk conditions coexist. When high financial incentives for dishonesty, lax audit controls and non-integrated processes exist simultaneously in an organization, a shrill alarm should sound in the boardroom or executive suite indicating a condition ripe for exploitation. Ethical lapses can irreparably undermine the best business plans, corporate reputations, and brand building. There are too many opportunistic Travises in the world, and too much value at risk, to ignore the alert.

© 2007 Andrew Rudin

How Humor and Eavesdropping Combine To Win Sales

2009-01-06T09:14:00.001-08:00

(first published October, 2007)

I was in midway through writing an article with the dour title "Prospecting Doesn't Matter" (owing to Nicholas Carr's 2003 Harvard Business Review article "IT Doesn't Matter") when I serendipitously uncovered something that debunked my premise--at least for now.

A New Jersey company, Hammerhead Advertising (www.hammerheadadvertising.com), has created a campaign for new business by combining time-worn voice mail technology with an edgy message. After listening to the six samples available on the company's website, I was stunned by the power of the deceptively simple--but wildly innovative--approach. What makes the messages so powerful? It's not what you might think. There's no "value message," no glowing customer references, no gratuitous branding. It exploits an unvarnished, visceral approach that combines subtle humor with voyeurism.

The messages are delivered to the voice mailbox of the intended recipient, the Chief Marketing Officer, but are created to sound as if the CMO is actually eavesdropping on a recording of his or her company's receptionist thwarting yet another unwary and untalented ad agency salesperson. (It's worth five minutes: go to the company's website, and click on "our work" and then on "radio" to play the messages.)

What does Hammerhead's innovation mean for CRM? In our buttoned-down, ROI-obsessed, prove-the-business-case, new media, B2B sales world, the connections that we have with others are often closer than we think, and it's possible to use these connections productively if we can break out of our cultural and technological boxes. Many salespeople bemoan that they "can't get through the gatekeeper," and some develop compensating tactics that violate ethical boundaries. It's great to know that it's possible to exercise the adage "If you don't have it, feature it!" so effectively.

Your Cutting-Edge Strategy Won't Cut It in 2012

2009-01-06T09:12:00.001-08:00

(First Published December, 2007)

Demographic and Financial Trends Will Change the World of Buying and Selling

Which of the following two definitions more closely reflects your beliefs? "Salesmanship is a battle of organized knowledge against unorganized knowledge or ignorance" or "salesmanship is the ability to make a mutually profitable exchange of values"?

In fact, both definitions appear in a book first published almost 100 years ago, Salesmanship and Business Efficiency by James Knox. The second definition is relevant, but the forces of social and technological change have rendered the first definition all but obsolete. Laws, theories, ideas and assumptions become stale at different rates. The force of social change is marked in another way: In 389 pages, the book includes no references to women.

Will your strategies become stale—or obsolete—in the next five years?

By 2012, will familiar terms such as "cold calling," "individual contributor" and "lead lists" mean anything to sales and marketing professionals? Will "word-of-mouth marketing," "collaborative teams" and "integrated marketing databases" be our buzzwords?

Based on interviews with industry experts and scholars, here is what I predict will happen demographically, financially and technologically to the world of buying and selling. In a companion feature, I will discuss how social networking, environmental responsibility and the redistribution of information power will redefine sales.

Trend 1: Retirement of the early baby-boom generation

The cascading retirement of the baby boomers, whose most senior members will be 67 in 2012, has significant implications for selling, including how to transfer knowledge and how to staff future sales organizations. Because much of sales knowledge is tacit, organizations will need first to define knowledge and then systematically capture and share it, or the knowledge will leave the enterprise along with the worker. The exodus will create a dearth of highly experienced sales professionals—at least initially.
‘Organizations will need first to define knowledge and then systematically capture and share it.’

At the same time, new entrants to the workforce in 2012 will change the culture of buying and selling. Those individuals, born in 1994 and after, will bring technical competencies that the retiring generation learned only recently—or never at all. The new generation of workers is growing up in a digital culture and comfortable in an environment of near-ubiquitous and instantaneous mobile communications, information and video. Today organizations encounter challenges because younger workers may have developed skills on new software that employers haven't yet adopted. This skills imbalance will alter one change-management paradigm: Many organizations will be required to update their technology and processes to accommodate their incoming workforce—not the other way around.
Trend 2: Growing use of product virtualization

Ten years ago, the prevailing wisdom was that meeting face to face and satisfying the visceral need to "get the product into the hands of the customer" were correlated with successful sales outcomes. But the trend for product virtualization—a visual representation of something that emulates its physical properties—is very much driven by the financial needs of business and is not just a fad made possible through technology. That's because virtualization creates an emotional connection with a product and can generate demand before physical products are available.

That early demand enables many companies to profit from the cash-before-delivery outcome that Dell famously unleashed. Second Life, a web site known for virtualization, has promoted this capability to manufacturers from Adidas to Mazda. Through avatars—representing individuals in Second Life's virtual world—Mazda made it possible for anyone to test drive its Hakaze concept car, even though only one physical model existed. Once the virtual drivers demonstrated an appropriate level of online handling mastery, they could keep the virtual concept car and re-use it in subsequent activities on Second Life. By the time the first Hazkazes reach the dealerships, the benefits for Mazda's financial strategy will be huge: reduced time to financial break-even, increased demand, lower supply chain costs and improved forecast accuracy.
Trend 3: Increased predictive insight into customer behavior

Exploring ways to more accurately identify and reach valuable prospective customers will continue—even in the face of privacy concerns and regulation. Why? Investor-backed companies require lower selling risk and more productive demand generation for improved cash flow and rapid business growth. These financial imperatives are unlikely to diminish.

Companies will convert from low-productivity marketing activities—like mass mailings and telemarketing to broad markets (derisively called "smiling and dialing")—to tools providing unprecedented sophistication in targeting and reaching the most likely buyers. Average sales cycles will shorten into timeframes once thought anomalies, and results from measurements such as close ratio (the number of prospects completing a purchase transaction divided by the total number of prospects contacted) will improve dramatically. What underpins this capability is a combination of improved predictive analytics and what Stefano Grazioli of the University of Virginia's McIntire School of Commerce calls the growing use of the universal identifier. (Think of it as a large digital bucket that can collect lots of information about a person.) This powerful combination makes it possible to derive meaning from a rich trove of artifacts about an individual from disparate databases containing his or her personal information. Consider the predictive accuracy regarding a person's lifestyle and buying habits when data from his grocery purchases, warranty card registrations and motor vehicle records are combined versus just looking at grocery-buying habits.

The wave is already forming. The Wall Street Journal reported in October 2007 that a company called Acxiom has a database of 133 million U.S. households divided "into 70 demographic and lifestyle clusters." Two married women who are next-door neighbors can visit the same financial services web site at the same time and see two different ads. Differing lifestyle-related content will follow these individuals as they visit other sites, and software services to support immediate purchases will accompany the ads.

How will today's strategies evolve in light of the forces that are changing our culture and world? In Part 2, I'll look at how social networking, environmental responsibility and the redistribution of information power will redefine sales.

Six Ways Companies Promote Sales Failure

2009-01-06T09:10:00.000-08:00

(First published January, 2008)

It’s a new year! There’s a new sales quota and new ways to stub your toe making the number. If you’re like me, you’d rather avoid the pain and learn from someone else’s difficult experience. So, pull up a chair while I share the latest 2007 Sales winners of the We-Have-Met-The-Enemy-And-It-Is-Us Awards.

#1. Create commission incentives that reward the wrong results.

This winner comes from a software company that used a declining commission reward for increased revenue levels. Here’s the schedule from the company plan:

Up to $60 K revenue = 6% commission
$60 K to $100 K = 4% commission
$100 K + = 3% commission

I know. You’ve already done the math, and realize that a $50K deal will net a salesperson $200 more than if he sells a $70K deal. I can hear a salesperson saying to a customer “You want to spend $70,000, but Christmas is coming up—can you make it $50,000 so I can buy my kids a Wii?” When I asked the company’s VP of Sales about this possible absurdity, she remarked “Our view is that ‘it takes a village’ to close larger-sized deals. We pay less commission to reflect that.” Translation: A CXO at her company doesn’t want salespeople driving a later model Lexus than he does.

Solution: Champion the salesperson’s Lexus if meeting quarterly revenue objectives is part of your business strategy. Whatever your strategy, build your sales incentives around achieving it.

#2. Provide no-value “special offers” for prospective clients
This company broke sales rapport by offering purchase incentives that were plainly hollow. The company compounded their misery by insisting their sales force push the incentive to every prospect each month—even though the monthly deadlines were asynchronous with the customer’s buying pattern. Customers resisted, and the more astute salespeople covertly abandoned the promotion. The company committed what author Tony Parinello calls a “reload.” Shoot yourself in the foot, reload, then shoot yourself in the other foot.

Solution: Listen to your customer and to your sales force. If customers aren’t buying the promotion, there’s a reason for it.

#3. Measure and manage unproductive sales activities.
Holding steadfast to the simplistic view that sales is a “numbers game,” this company rated salespeople on how many prospecting calls they made and how many software demonstrations they provided to prospects. Since efficiency wasn’t part of the measurement, it’s worth pausing a moment to think about what behavior they encouraged—and got—from their sales team. It’s called indiscriminate prospecting. Jennifer’s numbers looked great because she averaged 70 calls a day last month. Steve was a bum because he averaged 38. Steve’s revenue is 3% lower. But who is working smarter?

Solution: Measure and manage efficiency. Ask yourself whether you want to reward more activity, or better activity.

#4. Maintain a long, agonizing “exit strategy” for under-performing salespeople
Under the guise of a “Performance Improvement Plan,” this company mandated underperforming sales people hold monthly meetings with a manager so they could receive instruction on how to improve. What’s absent from the process? For one, mining any value from the salesperson’s point of view. The “Plan” held no requirement for the manager to gain and report on insight regarding the difficulties the salesperson was experiencing. And there was a lot of it—the company churned almost 30% of its sales force every year. When I asked a sales manager if any sales person ever became productive after being on “Plan,” the answer was, “Well . . . no.” The duration of the documented “Plan” was four months.

Solution: If your company has no resources to elevate the performance of the bottom of your sales staff, make the exit short and sweet. Also, remember that you can learn as much from your underperformers as they can learn from you. Ask yourself “what was missed in the hiring process? Did we provide the right sales support? How can we avoid making this mistake again.”

#5. Disconnect your new account capture team from your installed account team
This company took “silo” to a new dysfunctional height because management felt that New Account reps would become “complacent” if they received an annuity for renewals. When a software subscriber failed to renew, the account was considered “lapsed,” which meant that after four months, it reverted to a “new account” status for sales credit purposes. You’ve probably already figured it out—this company’s new account sales team craved “lapsed” accounts, because they were easier to sell to than cold call leads. In fact, New Accounts regularly monitored subscriber activity for such upcoming “low hanging sales fruit.” You can be sure that no New Account salesperson ever called Inside Sales to share information.

Solution: Complacency is a risk for any employee, so share the wealth. Encourage your sales force to sell to valuable customers, not just to many customers. When salespeople can reap rewards for establishing long-term relationships, they will seek better prospects, and support them better, as well.

#6 Build rapport-breaking statements into your sales scripts.
This company found a way make alienation scalable. When asked for a reference, telemarketers were scripted to advise the prospect that they were obligated to protect their client’s time and they couldn’t provide reference information. Most of those calls went to the “not interested” branch on the process flow chart. “I’m sorry, my other line is ringing. In any case, please don’t call back.”

Solution: Take your sales scripts on a trial run before you distribute them to your national sales team. Bring your best nay-sayers into the conference room and write everything that could go wrong on the white board. Most important, ask yourself “how will our communication be perceived?”

A Tsunami of New Social Connectedness Is on the Way

2009-01-06T09:08:00.000-08:00

Five years from now, which sales strategies and tactics will matter? Will familiar terms such as "cold calling," "individual contributor" and "lead lists" ultimately vanish, replaced by "word-of-mouth marketing," "collaborative teams" and "integrated marketing databases"? Will viral potential and page views become the currency we use to persuade others to accept our products and ideas? Or will other yet-to-be-developed tools emerge and become dominant?

In the second part of this two-part series, I'll show you how industry experts and scholars say social networking, social responsibility and the redistribution of information power will link to sales strategy beyond the year 2012. Read Part 1, Demographic and Financial Trends Will Change the World of Buying and Selling.

Trend 4: Development of social networks and word-of-mouth marketing as sales tools

For marketers, the challenge of leveraging informal social networks—which have existed as long as organizations have—occupies center stage. As automated tools manage more transaction-level sales, expensive sales resources have been directed toward more profitable—and more complex—large-system and enterprise sales, which transcend organization boundaries and sometimes blur distinctions between buyers and sellers.

Early in my sales career, the prevailing theory was that meeting with a C-level executive increased the likelihood of a successful sales outcome. But there were many tenuous assumptions inherent in that idea, not the least of which was that C-level executives were influential within their organizations. Rather, when a C-level executive said, "Send me the proposal and I'll give you our decision," it meant that once a proposal was sent, heretofore unknown forces acted on the purchase process.

‘Will closer connections mean shorter decision cycles or longer ones?’
Then, things began to change. Rather than be misled by the deceptive pathways on organization charts, salespeople recognized the need to understand the informal and unofficial connections among individuals. The realization changed selling strategies because it meant that networks of people influenced sales and that people played different roles than their titles or hierarchical placement suggested. CRM software tools and other services such as LinkedIn and Facebook became not only available but also, for some, indispensable as aids to navigate sales processes that relied on connections as much as chronological events ...

And a tsunami of new connectedness is on the way, according to Limor Schafman, an expert in the commercialization of emerging technologies and founder of Keystone Technology Group. According to Schafman, converging developments, such as IPv6—the newest version of the Internet protocol—make it possible to create unique address profiles for billions of devices, each of which can be individually linked to one or more other devices. This connectedness will change social networking—but it's not entirely clear how. Will closer connections mean shorter decision cycles or longer ones? How will new personal connections affect assumptions about decision rights in an organization? What even constitutes an organization?

Today, the power of social networks has extended to word-of-mouth marketing, a set of methodologies that mean concomitant changes for sales strategies and tactics. No longer governed by the metrics of the past, the viral value—how likely a message is to be passed from individual to individual—of a campaign or message has now come into prominence. MPowerPlayer, a Northern Virginia-based start-up, used social networks to promote its library of trial mobile game software. According to CEO Michael Powers, through word-of-mouth and viral marketing alone, the company has delivered more than 8.5 million gaming software demos since 2006.
Trend 5: A growing link between environmental responsibility and business development

The challenge for marketing professionals and salespeople will be how to sell under a new set of rules that include environmentalism and corporate ethics in the sum total of product value. Twenty years ago, prospective customers never asked me whether my employer, a manufacturing company, had a renewable energy program or initiatives to reduce carbon emissions. I never discussed such issues in a sales call or included related documentation in a sales proposal. But today, Subaru North America proudly proclaims that its Indiana plant produces less waste in a year than a single newspaper its ad appears in.

This trend means re-engineering the components that provide transferable value to customers. No company will be immune.

The mass-market retailer Patagonia is a notable example of a company that has created a business by embedding environmental values into its products. "The notion of [environmental] sustainability is becoming more mainstream. . . Consumers are getting closer to the earth," says Jerry Savage of ResearchSight. Even mid-market firms like Ikea and Wal-Mart have announced initiatives to offer organic products and ensure ethical sourcing of raw materials.
Trend 6: Redistribution of information power from providers to consumers

"Could you send me something about your products?" In 1990 that question most often meant placing an envelope containing printed materials in a U.S. Postal Service mailbox, or sending it FedEx, if the prospect's need appeared imminent. Vendors—not prospects—controlled the flow of documents. My colleagues and I debated whether it was better to send full technical documentation or to parse the information to avoid overwhelming the prospect.

Those debates around the water cooler don't occur anymore. Web 2.0, Internet search engines, e-marketplaces, blogs and easy-to-retrieve product reviews took information power from vendors and gave it to customers.

The shift of information power from vendor to consumer has profound importance for sales because it has fundamentally changed not only buying processes but also information-gathering processes. In 2006, fully 46 percent of business-to-business buyers initiated their product search via an online search engine—well before a salesperson prospected their organization, according to Redmond Channel Partner Magazine. The modern prospective customer is already very well-informed about a product or service before the first sales contact is ever made.

Beds.com has embraced the Internet's transparency by enabling any visitor to its web site to read about its customer-service problems along with its customer accolades. The airing of the full thread of the online conversation makes it possible for Beds.com to showcase its commitment to customer satisfaction, a trend that Marcel Goldstein, senior vice president of Ogilvy Public Relations Worldwide, expects other companies to emulate.

Which strategies will succeed is unclear. What is clear is that, as the fulcrum of information power continues to move in favor of the consumer, agile companies that adopt processes based on an empathetic view of how people ask questions for discovery, gather and manage information—and are moved to buy—are the ones who are most likely to enjoy the profits.

Getting to "No" U: The Higher Education of Qualification Strategy

2009-01-06T09:06:00.000-08:00

“There’s nothing wrong with getting a ‘no’ answer on a purchase decision as long you get that answer early in the sales process.” This admonition came from a VP of Sales I worked with. He wasn’t being glib. “No” answers are a sales fact of life. The VP recognized the strategic importance of knowing how to vet opportunities before the scarce resources of time and money were committed.

The common term for this process is qualification. What’s uncommon is thinking about qualification from a strategic perspective, and then managing the associated risk. Many companies leave qualification to the tactical discretion of the sales force. The results are clearly mixed. Some salespeople languish by pursuing unknowingly risky opportunities that other salespeople might quickly reject. Some salespeople may readily reject opportunities that might be valuable for the company because their commission plans don’t provide an adequate reward. In any case, when a sales force is experiencing disparate achievement results, qualification processes should be on the radar as one probable cause.

The symptoms will be manifest in statements like these, taken from my own selling past:

“They would have purchased, but they told me they couldn’t afford my proposed solution.”
“They selected a vendor whose Senior VP is the brother-in-law of their VP of Operations.”
“They postponed their decision. It’s not a priority for them now.”
“They can’t buy anything until they replace their legacy IT infrastructure. They expect to change over in about two years.”

Successful sales organizations understand that vetting the best sales opportunities requires the same strategic visioning and thought as how to invest in new product development or how to fund expansion. Why? Because selling requires the commitment of significant scarce resources—mainly time and money. Companies that excel at managing sales risk early in the process possess a key advantage over those that don’t.

How do companies formulate qualification strategies and the questions that follow? They begin with understanding the value their products and services provide. That understanding yields insight into what prospect companies and opportunities might benefit from them the most. Those insights are converted to profiles of organizations or persons, and those profiles can be further described by more detailed attributes. From there, qualification questions can be created.

Executives should ask themselves “Do we have a set of qualification questions that is consistently effective for identifying the most valuable opportunities for us to pursue? What are the greatest selling risks that we face? How do our top performers qualify opportunities? Are we disqualifying potentially valuable opportunities? And last—but not least—“Does our sales incentive plan encourage our sales team to pursue opportunities that are valuable to our organization? ”

But building effective qualification doesn’t stop there. Qualification questions are never static; they are refined by reviewing sales losses and wins. For losses, the top question is “What didn’t we know at the time the purchase decision was made?” (With that in mind, it’s not difficult to determine the questions that should have been asked early from the list of sales outcomes above.) For every win, the questions should start with “Why did this customer buy?”

What are the best questions to ask? In over twenty years of selling of high technology products and services, I uncovered risks in sales outcomes that can be mitigated through asking the following set of questions, which I term the Four Green Lights. (Note that all questions have a ‘yes’ or a ‘no’ answer.)

1. Solution fit: Does my prospective customer have a strategic challenge or operational issue that can be solved using my product or service?
2. Access: Can I get access to the person or people who have the authority to commit and spend the financial resources to procure my product or service?
3. Money: Will my prospective customer pay me what I am likely to charge for my product or service?
4. Timeframe: Will my prospective customer purchase from me within a timeframe that matches my planning horizon?

How should your company manage the risk? The answer depends on your appetite for it. Even four “yes” answers doesn’t begin to address all the sales risks that could be encountered. But one or more “no” answers might represent a risk level that is clearly higher than a company can financially accept. For example, if I don’t have access to the people most influential in making a purchase decision, the likelihood of a successful sales outcome is very small (based on my experience). Today, I wouldn’t pursue such an opportunity, so it’s imperative that I uncover that condition through early qualification. A situational analysis of your company’s competitive position might cause you to eliminate some of these qualification questions and add others.

How does your organization view the connection between strategy, risk management, and sales opportunity qualification? Are your processes related? Do your qualification steps support your business strategies? What do you believe are some best practices?

The Hidden Risks of Social Networks

2009-01-06T09:05:00.000-08:00

Not to throw cold water on anyone’s exuberance, but social networks could destroy your sales strategy, and your company along with it.

Why? Because technology and the Internet propel unplanned situations and events at unprecedented speed. So it’s important to recognize that the same social forces that create significant value also have the power to annihilate it. How you manage the risks will determine whether history will judge you to be a New Media Ninja or another unprepared victim. While new media and social networking present boundless opportunities, no discussion is complete without asking what could go wrong, and what actions should be taken.

Risk Silos

Consider the catastrophic outcome that Bob Furniss shared in which a disgruntled 15-year-old started a FaceBook group called "ACME Tied to Kill Me."

As he described it, “She outlined her dissatisfaction. Suddenly, there were others who joined the group. Soon there were hundreds of links to personal and business blogs and complaint sites.” Twenty years ago, an unhappy teenager would have limited capacity to disseminate a product grievance, and would not have posed a measurable threat. That was then. This is now. The CRM breakdown likely led to a significant financial problem for the company. How many times do you think Acme’s Director of Customer Support said “Woulda . . . Coulda . .. . Shoulda” when he met with the company’s board?

How did ACME blow it? By failing to manage risks across the organization. CRM risks ARE financial risks. Unfortunately, many organizations like ACME silo risk management in the same way as they do business processes and information. Could this problem have happened if ACME’s VP of Customer Experience warned their CFO that through the Internet, an unhappy customer could singlehandedly undermine her best cash flow projections? Or, if the CFO had considered how events outside of market cycles and interest-rate fluctuations might put her imperil her financial planning? What preemptive actions could ACME have taken? In the absence of such strategic planning, the unprepared ACME managers must have appeared like deer in the headlights to this media-savvy kid.

For companies that value brand identity, social networks create unique risks as well. For example, a vexing trend is for consumers—not marketers—to use social networks to define product and brand attributes. While social media create the opportunity for products to better match required consumer outcomes, this shift in information power underscores the importance of asking the right risk-related questions:

• If we lose control of product designs and life cycles, what strategic risks would we face?
• What if the resulting product design or image is one we don’t want, can’t support, or both?
• What operational challenges could occur if we can’t manufacture the desired products in the right quantity at the right time?

While the operational questions highlight risks that companies have faced and managed for many years, social networks have rendered past mitigation strategies obsolete, so new strategies must be developed.

Strategy risk

In his article, Like On-Demand, the Social Web May Have Unintended Consequences for Businesses, Denis Pombriant highlighted another set of risks. He writes, “My bet is that social computing will provide us with an avalanche of new data from customers that must be analyzed, and that's where I think we can look for unintended consequences.”

Those unintended consequences are the associated risks of implementing the wrong strategy, or implementing the right strategy the wrong way. According to Denis, one risk is “that we take the new information we collect too seriously and that we fail to perform analysis and challenge the results. If that happens, look for companies running off in strange directions chasing what amounts to unicorns. The odds are that some companies will fall into this self-baited trap...”

Reputation Risk

If you’ve worked in sales for few years, you’ve probably heard a manager in your company say “If we can just get meetings with the right people, our product sells itself.” Clearly, the best products in the world can’t be widely sold if influential people don’t know about them.

Based on that imperative, it’s easy to understand why social networking tools are vital for reducing sales risk.

John Todor explained why in his CustomerThink article, Social Networks and Online Communities Create Elastic Ties and Surprisingly Powerful Pay-Offs: “The power of online social networks comes, not from whom you know directly, but from the people the people you know know. People who actively pursue weak-tie relationships stand to gain substantial benefits. They can quickly take advantage of emerging opportunities, find collaborators, find jobs, find employees and build a pool of advocates.”

Barry Trailer’s blog provides empirical proof:

“For a test, 30 sales executives were selected to interview. Using LinkedIn members of our network were asked to facilitate an introduction to these people we had never met. Surprisingly, 29 of these individuals accepted the request and passed it on to their contacts with a personal note of introduction. More surprising, 23 of those targeted executives (including people in Europe and the Far East) accepted our request, and offered to consider helping our research effort.
In follow up, 18 of the 23 participated – a 60% hit rate! A much more favorable result compared to cold calling.”

But these discussions don’t tell the risk part of the story. As I’ve learned the hard way, prospects hold very high expectations from social connections, and underperformance in the sales process causes backfires that can remain ugly. For example, one company I worked with believed its account executive was so well connected in a prospect’s organization that they didn’t apply customary rigor to navigating the steps to the sale. “No need for account qualification, value propositions, or financial justification because we know Joe through Steve,” they said. They were wrong. Not only was Joe disappointed, but he called Steve and asked “How did you ever get involved with these guys?” Beyond the introductory social connection chit-chat, somebody still needs to sell something. Complacency gets in the way.

Further, I was struck by a certain irony as I read Barry’s findings. Although we admonish our school-age children to be wary of social networking tools on the web, the high ratio of invitation acceptance he describes suggests that executives don’t exercise similar caution (albeit they need to do so for different reasons). Does the risk of a damaged reputation seem so remote that executives readily accept requests from cyber-strangers to endorse them? Will the current success ratio Barry discovered diminish as social networking becomes more mature, and executives learn how carefully-built reputations can become damaged? Will we see a similar wave of caution as we did with chat rooms, FaceBook, and MySpace?

Stay tuned.

(Apologies to Rob Cross for corrupting the title of his excellent book, The Hidden Power of Social Networks.)

Goofus and Gallant Make CRM Decisions

2009-01-06T09:03:00.000-08:00

For those who may not be familiar with Goofus and Gallant, the Highlights Magazine feature contrasts how two children—Goofus, who is bad, and Gallant, who is good—make divergent ethical choices when faced with the same set of circumstances. The text is presented as captions below simple drawings that illustrate the action. (A quote from a 1960 Highlights: “Goofus turns on the television when there are guests; whenever guests arrive, Gallant turns off the television at once.”)

Reading Goofus and Gallant is a great dose of reality on days when I’m feeling totally ethical. I always ask myself “What would I do?” While I don’t think I’m as flagrantly selfish as Goofus, I’m clearly socially and ethically maladjusted next to Gallant’s consistent kindness, thoughtfulness, and sense of fair play.

What if Goofus and Gallant outgrew their permanently juvenile forms and became grown-up executives faced with contemporary ethical decisions? How might they decide when they aren’t guided by flowcharts, formulas, and sophisticated software, but rather when answering the question “what is the right thing to do?”

Here are some examples:

“Goofus believes that only frequent passengers on his airline have the right to expect good service. Gallant believes all passengers are entitled to a good flying experience.”

“Goofus markets his products as ‘green’ even though he buys many materials from unregulated offshore factories; Gallant only sells products that meet rigorous standards for responsible environmental stewardship.”

“Goofus licenses his company’s logo to other companies whose practices and motives are unknown so that he can make an extra profit; Gallant values the trust that his customers place in his company.”

“Goofus uses direct mail to circumvent regulations so he can get senior citizens to accept telemarketing pitches; Gallant complies with the FTC’s vendor guidelines for no-call lists.”

“Goofus saves IT costs by not updating infrastructure and information security software; Gallant believes the privacy of his customers’ transaction information is a strategic priority.”

"Goofus optimizes his personal exit strategy when making CRM decisions; Gallant thinks about what’s best for his employees and customers.”

As sales, marketing, and business development professionals, we have at our disposal unprecedented power to create positive outcomes for many people, or to turn that power toward tactics that exploit trust and erode value. The overwhelming majority of the decisions we make are not constrained by laws and regulations. Even if Gallant’s decisions represent an unattainable ethical purity, isn’t it worth asking “what is the right thing to do?”

A Sales Team Needs More Than "High ROI" and "Low TCO" To Compete

2009-01-06T09:01:00.000-08:00

“How will your IT solution help me sell more pizza?”

That’s how one COO recently confronted a team of salespeople from a software integrator when they showed up for their first sales call. The salespeople could not answer the question. They had prepared for a different discussion, and the PowerPoint they brought, but never showed, included lots of technical information, along with charts and graphs showing ROI (Return on Investment) and TCO (Total Cost of Ownership)—none of which offered insight about how to solve COO’s strategic challenge. The meeting was terminated and rescheduled for a later date. The final outcome? It’s described toward end of this blog.

The pain of that interaction underscores why one of my clients, a large software developer, initiated a worldwide program to help their resellers shift from selling mainly small $20,000 Information Technology (IT) projects—which are frequently vetted using ROI calculations—to selling larger enterprise projects that require sales teams to prove strategic value along with financial returns. As enterprises adopt governance policies and “balanced scorecards” designed to promote alignment between IT investments and corporate strategy, the need to adopt a sales process that proves value beyond the achievement of simple financial calculations or Key Performance Indicators (KPI’s) has never been stronger. The project I’m currently working on provides me the opportunity to facilitate this metamorphosis.

But what’s wrong with talking to prospects about ROI and TCO?

Nothing, other than the fact that many marketers and salespeople simply fail to put these metrics in any context. Case in point: This week, RFID Solutions Online sent me an e-newsletter with the subject “Find The ROI In Your Asset Tracking Initiatives”. But the accompanying article summary doesn’t connect the value of asset tracking to financial or operational strategy.

And it’s not that there isn’t a connection. There is, but I couldn’t find it anywhere in the email. So the over-worn statement “Find The ROI . . .” isn’t visceral to C-Level executives who live and breathe strategy. This example is the tactical equivalent of a quarterback leading an offense to the opponent’s 10-yard line, and on third down saying “I think we’ve gone far enough.”

Why does ROI/TCO alone fall short? Because the “heavy lifting” in sales is in enabling prospects first to believe the facts about an issue, then to care about the issue, then to act to solve it. ROI and TCO are reasonably helpful for the belief stage (“We used the numbers the client provided for our ROI calculations!”), but marginally effective for answering the question “Why should I care?” And, if no influential individuals in an organization care about a given issue, would anyone wager that they would act to solve it?

So, beyond ROI and TCO, how can a company gain a sales advantage?

To answer that question, let’s look at how the sales team managed its setback with the pizza company COO. After returning to their office, the group took the time to formulate a set of questions about the growth strategy for the pizza company, including questions about finance, supply chain logistics, CRM, and human resources. They reformulated a presentation and met with the COO about two weeks later. Their project was approved and they won the opportunity.

What did the team figure out?

First, the team realized that positioning their offering to enable growth was mission critical for both vendor and prospect. By making the shift from a purely financial appeal to a strategic appeal, the sales team minimized the risk of “no decision.” In addition, another important outcome occurred. Because strategic growth impacts every operating unit in an organization, the sales team opened relationships with a cross-functional team of senior executives. Prior to that change, the vendor’s sales team networked only in the IT department. Finally, the sales team was rewarded with an unintentional benefit: they faced fewer competitors. Before changing their approach, the sales team competed with every vendor touting high ROI—some of which were selling IT solutions. Now, only two vendors offered a path to the strategic growth the COO required.

How did the sales team realign to address the COO’s problem, and what steps did they follow from beginning to end?

The team leveraged the competencies they already had, but had never effectively combined. They used empathetic listening skills, systems analysis techniques, and business acumen to convert what could have been a certain loss. All of these competencies rarely exist in one individual, so collaborative processes and effective team leadership were also required. The specific steps the team used will be covered in next week’s blog, “How to Uncover Strategic Opportunities through Strategic Questions.”

Is Sales Necessary? ... Or Necessarily Evil?

2009-01-06T08:59:00.000-08:00

Salespeople fight a "guilty until proven innocent" reputation when working with customers. I know, because as a salesperson I’ve battled it for over 20 years. The customer reaction isn’t surprising. Sales people are on the customer-relationship front line, and they absorb the brunt of buyer vitriol. In fact, a survey that DDI International recently conducted with 2,705 corporate buyers worldwide, “2007-2008 Global Sales Perceptions Report,” documented the problem with painful clarity. The report reveals how salespeople are perceived, and over 47% of US survey respondents indicated that they “would not be proud to be called a salesperson.” According to the report, “the most common description across all countries was that Sales is ‘a necessary evil.”

Given the billions of dollars that are spent annually on sales effectiveness training and CRM systems, this sentiment is an indictment on the sales profession, and it says we’re failing at our efforts to improve our face-to-face experiences with our customers. Not all is bad, however. Tremendous opportunities exist for enterprises that strategically change how their sales forces engage with customers.

Why do buyers have antipathy for sales people?

To answer this question, it’s necessary to look beyond salespeople themselves and to the culture and systems under which salespeople have worked for several generations. First, ever since sales became a distinct entity in commercial enterprises, the tactical objectives of the sales force have been dictated by corporate revenue goals. A closely-watched metric by investment analysts, revenue goals are developed in the board room, and trickle down to the individual sales representative through a sometimes-perverse and inherently flawed calculus, the end-point of which is called a quota. This all-important number represents the salesperson’s revenue commitment to the organization, and it carries ponderous weight. With revenue as the focal point of sales-performance discussions, quota over-achievement often means significant financial rewards; under-achievement compromises a salesperson’s ever-tenuous job stability.

As any quota-carrying salesperson or sales manager can attest, the assignment of sales quotas frequently involve rancorous negotiations. Some quotas are completely arbitrary, based on the direction fairy dust blows when it is thrown up in the air. Others are based on conditions that are outside of the salesperson’s control—market and economic forecasts, product and pricing forecasts, assumptions, and growth factors.

Quotas are half the story. The other half is how revenue is credited against sales quotas. This exercise often results in a smoke-and-mirrors game that is as much political as it is the application of accounting debits and credits. The result is an unwieldy multi-page document, sometimes called a Commission Plan, which can require a lawyer’s expertise to decipher for all the ambiguity. Such complexity prompted one Vice President of Sales at a company I worked for to envision a commission plan that could fit on one side of a business card—a noble goal he never implemented.

So every day under this basic system of illogical quota calculation and revenue accrual, legions of salespeople engage with millions of customers worldwide. Lost in all the shouting and confusion are the answers to these questions: “What is valuable to the people and organizations that use our products?” And the corollary question, “How will our salespeople behave given the financial “ecosystem” we have created?” No wonder so many buyers decry their sales experiences. Any moniker purporting “customer-centricity” only serves to put lipstick on this big, ugly pig.

Second, many organizations have not applied thought to the question, “what value must sales contribute to our organization in order for us to meet our strategic objectives?" Yet, companies invest in recruiting, hiring, managing, training, and compensating their sales forces in spite of such vagueness, and without a coherent way to measure efficacy.

When I ask my clients what value their sales force must provide to their organization, the immediate answer I often hear is “revenue.” “OK,” I say, “but if there are no profits associated with the revenue, is that valuable?” My clients respond “Of course not, we must make a profit.” Taking this idea further, I ask “If you make a profit, but your customers aren’t satisfied with your product and wouldn’t recommend your company—is that valuable?” And the inevitable answer: “No, of course not.” Finally, I ask “What if your organization achieved profitable revenue targets, and had satisfied clients, but didn’t gain any market insight for future strategy—would that be valuable?” The answer: “No, our planners and strategists depend on our sales force to provide valuable feedback from the field!” Then the light bulb turns on: the sales force must deliver value beyond top-line revenue! Unfortunately, we’re stuck in a cycle of value-chain discord until organizations stop demanding multiple outcomes from their sales force, but understand only one dimension—revenue.

Happily, some organizations have taken important steps to break free from the revenue-at-all-cost myopia. One company I work with penalizes a salesperson if a customer has purchased its software, but does not use the capabilities the software provides. Why has the vendor taken this position when nearly all of its competitors are focused on pushing new licenses and version upgrades? Because their senior management recognizes that nothing puts a company’s logo into a customer’s budget-cutting crosshairs faster than a known wasted IT investment. Other examples abound in which organizations have taken a progressive stance on rewarding salespeople for activities that are valuable to the organization beyond revenue generation. Such changes are important because they serve as steps to mitigate the discord described in the DDI survey.

But if we can’t change the economic system, how can we find a better way for sellers and buyers interact?

Probably the more fundamental question is “do we need to find a better way?” Are you content with the status quo? The DDI survey clearly says buyers are not. Your answer likely depends on whether you view sales as necessary—or necessarily evil.

Strategic Questions Will Uncover Strategic Opportunities

2009-01-06T08:57:00.000-08:00

The late Peter Drucker said “true marketing starts out with the customer, his demographics, his realities, his needs, his values. It does not ask ‘what do we want to sell?’ It asks ‘what does the customer want to buy?’ So, why have so few people figured out how to routinely and systematically uncover this fundamental insight? And why do few senior managers pay more than lip service to encouraging or requiring their sales forces to discover the answer?

One reason is that in the quest to create a “sales-driven culture,” companies push muscular sales tactics that often subordinate the importance of questions. “ABC—Always Be Closing,” or “Show the ROI!” or “Go for a trial close after showing our key features,” are part of sales-process DNA. Does anyone remember this recommendation--“When you get the customer to answer ‘yes’ to three consecutive questions, ask for the order.” ? One sales training tape I heard ignored asking questions altogether, offering this nugget: “If the customer voices an objection, give them a ‘yes . . .but.. . .” (I am not making this up—and I’m sure the phonic similarity to “headbutt” is not just a coincidence!) These superficial tactics fall short by not embedding strategic discovery into the sales process.

What is strategic discovery? It’s the process of learning how an organization plans to create, monetize, and deliver its value. Why is strategic discovery a vital competency for sales forces? Because compared to operational problem solving, strategic collaboration tightly connects enterprises in a value chain. Those tight connections increase a vendor’s value and reduce selling risks. Why? Because strategic initiatives are mission-critical and are often less ephemeral than operational initiatives. When a salesperson says “my solution enables your strategy,” she has a competitive advantage over the salesperson who says “my solution provides the highest ROI (and/or lowest Total Cost of Ownership).” I know from numerous sales engagements I’ve managed that “high ROI” alone provides a wobbly sales-value foundation. (See my recent blog, A Sales Team Needs More Than "High ROI" and "Low TCO" To Compete and related article The Right Sales Questions Will Get the Right Answers.)

Strategic discovery doesn’t have to be difficult, but the process makes many salespeople uncomfortable. Strategy questions must uncover business and financial challenges. They examine forces that are outside of anyone’s direct control. Part of the discussion includes blurry concepts like risks and trade-offs. Few strategic questions can be answered with a simple ‘yes’ or ‘no.” And strategic plans aren’t guided by ordained roadmaps or prescriptive methodologies.

So, what are the steps that a Sales-Discovery Black Belt should follow?

1. Begin with a foundation of mutual trust. As Jim Collins said in the bestseller Good to Great, “create an environment where the truth is heard.” Prospective customers don’t spontaneously open up and provide meaningful and honest answers to questions. And if you wait until the second meeting to start thinking about how to cultivate trust, it’s probably too late. Mutual transparency of goals and objectives must characterize the business relationship from the beginning. The best book I have read on this topic, Mahan Khalsa’s Let's Get Real or Let's Not Play, provides an approach that is as eloquent as it is sensible: “The decision to trust doesn’t start inside (your prospect)—it starts inside of you. Intent is a choice, and your choice will have consequences. You will communicate your intent whether you want to or not . . . Based on your intent, people will decide to trust you or not.”

2. Ask the right questions. Here are some of my favorite strategy questions, culled from a list of hundreds I’ve compiled over many years:

What are the key capabilities and resources required to execute strategy and achieve your goals?

In order to execute your business strategy, what are the key things you must do well?

What proprietary advantages must your company create for your strategy to be successful?

What are the most valuable outcomes your organization enables for your customers?

What are the major forces driving changes in your business?

What conditions have the most disruptive impact on your business now, and will have in the future?

What are the greatest opportunities for your company to change the basis of competition in your industry? How might these impact barriers to entry? Switching costs? Relationships in your value chain? Product differentiation?

How sustainable is your market position and the business model needed to achieve and support that position?

What are your options for growing your business in the future?

3. Identify capability gaps. Specific operational questions will uncover gaps between strategic imperatives and current capabilities. For example, the question “What are the major forces driving changes in your business?” might yield that global competition is a condition of growing importance. If the prospect company lacks operational capabilities to manage a worldwide supply chain, a strategically-significant impediment has been identified. From this finding, the essential work of sales takes place—enabling a client first to believe the facts about an issue—then to care, then to act. Operational questions are instrumental for crossing the belief threshold, so caring and acting are more likely because of the strategic ramifications of the capability gap.

4. Align the gaps with a recommended solution. This final step ensures that the recommended solution matches the client’s strategic imperative. A scenario from my sales past illustrates the importance of this step. Several years ago, one prospective client told me “Our goal is to get our organization 100% on bar coding by the end of next year.” Although I was pleased he believed in my product, I cringed at his remark, wondering how he would handle the Q&A from his management peers at his next planning meeting. The strategic goal was to improve cash flow by cutting order cycle time. Bar coding was one enabler. By establishing a foundation of trust described in Step 1, my commitment was to help my client achieve that outcome.

Achieving the right sales outcome--my client's success--required both my client and me to keep the strategic objective in focus.

Honor Thy Customer Before He Leaves—Not After

2009-01-06T08:55:00.000-08:00

In three years, I’ve never felt as loved as I do now by the cable service I just dropped, Cox Communications. Why? Because at the end of March, Verizon Fios will be the new communications provider at my home. And I feel heartsick for Cox—I’m not leaving Cox because I love Verizon more, but only because the Verizon package costs much, much less than my unbundled services.

Now the jilted Cox is communicating—with a vengeance. They have called me several times in the last two weeks to tell me how much they will miss my business. Today’s call was from Vivian “calling on behalf of Cox.” Picking up on her semantic hint, I asked her what company she was with. “Timberline,” she reported, and without pausing, she continued, “We understand you want to go with another provider, and we’re calling to offer you a discount on your cable service if you continue with Cox.”

The irony of all this was too much to bear, so I asked Vivian why Cox would wait until I’ve decided to terminate my service to have an outsourced salesperson call to tell me how much I’m appreciated by offering me a discount when they were perfectly happy to bill me at the premium rate up to this time. The unflappable Vivian didn’t have an answer for me, but she told me she noted my concern and she wished me a good day.

I was disappointed that Vivian couldn’t shed light on my question. I realize that logic often gets in my way. Is there anyone who can help me understand why Cox might wait until a customer has decided to leave to apply significant resources toward customer retention, rather than loving a customer while he or she is a customer? Is there a compelling conversion factor or KPI that I’m unaware of that makes Cox’s late plea economically astute?

In the end, it seems sad that Cox has such poor Customer Relationship Management execution that it could only muster a price-play on this “hail Mary” telemarketing call. Cox’s customers deserve better—and so does Vivian.

Strategies—Not Products—Create Lasting Market Disruption

2009-01-06T08:52:00.000-08:00

"I just saw our software demo," I said to my company's VP of sales. "I can see how its features will be valuable for our customers." "It's disruptive!" he replied proudly, without enlightening me about what that meant or why it mattered. But his ebullience seemed so promising at the time.

Within two years, the company churned its senior management team, the sales VP and the majority of its sales force. What went wrong? I'll get to that in a moment.

The sales VP probably knows now that products and processes by themselves have little capacity for creating meaningful change because they are not disruptive. Strategies enable market disruption, and those strategies include product innovation. Skills play a role as well, and successful managers know that working with potentially disruptive innovations requires the economic insight of Adam Smith, the inspirational leadership skills of Martin Luther King, the communication skills of Ronald Reagan, the perseverance of Thomas A. Edison, and the entrepreneurial vision of Steve Jobs. If that sounds like a daunting combination, take solace in the fact that these individuals took risks and failed repeatedly before achieving success.

‘Try describing to a teenager today what you did in 1980 to obtain music that you liked to listen to.’
What makes an innovation disruptive, anyway? An innovation is disruptive when it affects the hegemony of the market-leading company, companies or prevailing technologies for a specific market. Among the many examples of disruptive products are digital photography technologies, which replaced photographic film. And Netflix upended complacent market leader Blockbuster through an innovative business and logistics model, which forced Blockbuster to relinquish a significant source of profits from late fee charges.

Many variables
The term, disruptive innovation, was introduced by Clayton Christensen in an article written with Joseph Bower, Disruptive Technologies: Catching the Wave. The magnitude of the disruptive impact resulting from innovation can take many years to develop because the influence of many of the variables involved is unknown at the time the innovation is introduced. Today, the amount of disruption caused by such nascent innovations as iPhone, Linux and digital media file sharing is still unknown.

What conditions must be present to create disruption?

The market for the product or service is experiencing, or is likely to experience, an increased rate of demand. This demand might be created by social, business or regulatory change.
The economic outcomes in providing, acquiring or adopting the new product or service must be significantly better than the prevailing offerings.
The business model or core technology used for the innovation must be both fundamentally different from the prevailing offerings and sustainable.

Because there are many variables over long timeframes that influence whether a product or service will be disruptive, is it accurate or even useful to proclaim disruption as the sales VP did? What relationship do product innovation, market demand and marketing strategy have with market disruption? Do products that have potential to create market disruption have unique characteristics that require specialized strategies and tactics? See Elements of a Successful Disruptive Strategy below for the answers."

So what did go wrong for the sales VP and the rest of the company? Simply put, the company couldn't generate enough sales to cover expenses. It had scant market presence or brand recognition. The partner strategy was formulated as an afterthought to the sales program. The product's value to its prospective customers was poorly understood, so it could not be communicated. Compound those problems with high adoption costs and unproven financial and operational outcomes for customers, and the result was a sure failure by any sales measure.

Most egregious was the company's miscalculation that the strategic benefits its customers achieved in one successful market—electronics—would extend to other market verticals. The reason that assumption was proven wrong can be summed up with one word: Dell. No other market vertical had the adapt-or-die economics that Dell imposed in electronics. The company's managers completely misunderstood that reality, and they made poor assumptions as a result.

What can you take away from my erstwhile sales VP? First, market disruption does create value for customers. Try describing to a teenager today what you did in 1980 to obtain music that you liked to listen to. He wouldn't believe that before disruption in the music industry, consumers had to accept music in the form of complete sets (back in the day, they were called record albums) from artists that companies wanted to record, in the order they recorded them, on the media they provided, from retail channels they controlled, at the prices they wanted to charge.

But here's the second lesson: Customers are not interested in disruptive products per se; they're interested in the outcomes those products provide. Chasing the objective of creating a disruptive technology will almost surely divert management's attention from achievement of more worthwhile goals. Market disruption is a byproduct of other strategies that are inherently more meaningful to define, measure and control. Those goals could be achievement of a targeted return on investment, revenue milestones or a specific customer adoption rate.

Any one of those, managed well, will garner more success for your company than chasing the elusive disruptive technology.

Elements of a successful disruptive strategy

An understanding of the economics of the product innovation in the context of the prevailing competitive economics. Companies that have created market disruption have exhibited a keen understanding of the laws of supply and demand. Their executives understand the connections among costs, pricing, adoption rates, and market growth.
Leadership for facilitating change. Displacement of entrenched competitors—whether they are loved, reviled or something in between—requires the displacing organization to lead change. Leading change requires appeals at multiple levels: emotional, factual and symbolic. In the book, Changing Minds (Harvard Business School Press, 2006), Howard Gardner outlines seven levers of change: reason, research, resonance, representational re-descriptions, resources and rewards, real world events and resistances. These seven levers relate to different ways visions and ideas can be communicated, so people are inspired, motivated and moved to action.
Business processes that are empathetic to the customer's perspective. Effective disruptive strategies are based on an outside-in view of the innovator's organization, which means that sales processes are created from the perspective of how customers buy—not how sellers sell.
Providing purchase motivators. Those motivators are based on managing two product attributes: reduced price compared to current offerings and an expectation of increased benefits—or a combination of the two.
Reducing adoption barriers. Similar to purchase motivators, reducing adoption barriers has two components: minimizing switching costs and ensuring availability (synchronizing supply with demand, for those who like buzzwords)—or a combination of the two. Many companies formulate compelling purchase motivators but fail to consider the huge impact that adoption costs have on purchase decisions. Many great products have failed in markets because adoption economics have favored the status quo or because the new product simply wasn't available when needed.
Demonstrable thought leadership. Thought leadership involves being a champion for the change you wish to see in the world, however that might be defined. It's easier to be known as the market leader because you've said so from the beginning, rather than reminding customers of that fact when the market is saturated. Innovators who seize an early opportunity to become thought leaders can dominate the industry buzz for their product or service; elevate the value their prospects perceive for their product or service; and solidify their role as the innovation pioneer.

—Andrew Rudin

Do You Know What Your Customers Are Really Buying From You?

2009-01-06T08:49:00.000-08:00

How does an enterprise create sustainable value? Through listening to customers and innovating products and services they want to buy? Or by creating a product and hoping the world beats a path to its door (or website) to buy it?

The better answer—listening to customers and innovating products and services accordingly—plays well in PowerPoint presentations under the Why We’re Customer-centric banner, but many truly smart people still don’t get it.

An article, The Innovation Illusion, by Sergio Zyman, contains a compelling real-world example. “While Sony was busy making colorful new versions of personal, portable CD players, Apple was out there redefining portable entertainment. Sony should have introduced iPods, not Apple. So what was the domain of Sony is now Apple’s forever.”

If Sony can find solace about squandering an opportunity it created almost 30 years ago, it’s in the fact they have plenty of company. In February, Polaroid Corporation announced it would cease manufacturing virtually all of its instant film, closing three plants in the process. Polaroid’s explanation: “marketplace conditions,” which is business-speak for “so few people want to buy our products that we can’t afford to produce them.”

If you were born before 1980, you’ll recognize these other not-seen-lately products to add to the dustbin: water beds, dustbusters, cigarette vending machines, mimeograph machines, and multi-media all-in-one stereo systems. The list goes on. The all-important wall-mounted pencil sharpeners that used to adorn almost every school and workplace? Made obsolete by computers and mechanical pencils. Many of the companies that were dominant suppliers are no longer in business. Marketplace conditions also likely claimed the financial stability of the ecosystems of people and companies that produced these products—parts suppliers, retailers, resellers and distributors, and sales forces.

So why do some companies closely tied to blockbuster successes like Polaroid Film and the Sony Walkman lose momentum while other companies perpetuate through other offerings? A new book, Think Two Products Ahead, by Ben Mack, explains why, making a case for understanding customer need and building brand equity to support it. Mr. Mack supports his point by describing how in the late 1800’s, Wells Fargo transitioned from a delivery company to a financial services company by understanding that trust was what their customers were really buying. “Trust is the essence of the Wells Fargo brand, more than its physical banks, checks, or even its name. The name became a symbol of this trust, but without this trust, the company would have evaporated when the government took over Wells Fargo’s express business. It was the customers’ willingness to do business with Wells Fargo that allowed it to continue when the business suddenly had to switch product offerings. It was the business managers leveraging Wells Fargo’s common thread that facilitated the company finding new business opportunities.”

What creates the success-failure chasm between companies like Wells Fargo and Sony and Polaroid? Could it be in the questions they ask—or not? Did Wells Fargo survive through astute introspection? Were senior managers from Sony and Polaroid so enamored with their own revolutionary technologies that they failed to later ask the same questions that ironically might have helped create their own breakthroughs? These questions include:

What does our next customer want to buy?

What emerging forces will impact our business?

Are there new business models or technologies that should be adapted to deliver radical improvements in the value we provide?

What proprietary advantages must we exploit to sustain or improve our market position?

Are there shifts in market power or industry fragmentation that create new sales opportunities?

A historical comparison will prove that asking questions such as these—and taking action on the answers—have played an important role in every successful product or business venture. Curiosity has great innovative power.

The next time I nostalgically remember a product or company made newly-extinct by marketplace conditions, I’ll just say “We bought one of those! It worked so great at the time.” But I won’t need to guess about what happened.

"Our Computers Don't Talk to Each other." No Kidding!

2009-01-06T08:45:00.000-08:00

In May, my client told me they have a project for me in Tel Aviv. The bad news is I had to fly to get there.

About thirty days before my trip, Expedia sends my itinerary by email. The travel document shows a Delta flight number, and the carrier as "Delta, operated by: Air France.” (The airlines refer to this arrangement as “code sharing,” but a more accurate term is “code unsharing.” I will explain why in a moment.) It contains an Expedia Itinerary Number, an Airline ticket number, a Delta confirmation code, and an Air France confirmation code—all conveniently grouped in the upper left hand corner of the email.

Which company is responsible for delivering an excellent customer experience? I’m not sure, but the memorable scene in The Wizard of Oz in which the Scarecrow at once points to the left and to the right as the best way to reach Oz seems as good a way as any to describe the confusion.

“Code Unshared” Experience #1: My Expedia reservation doesn’t have seat assignments, meal requests, or my Delta SkyMiles number. Easy enough to fix, I think. I go online to make the needed changes. First to Delta’s website, where I enter my SkyMiles number. I use SeatGuru (www.seatguru.com) to help me find the best seats, but Delta’s website stubbornly won’t accept my seat request for the Paris to Tel Aviv leg. Security reasons maybe? The website offers no information.

So I try Air France’s website using their conformation code, and still no luck. Thinking the transaction might be best done by voice, I click around to find the Air France reservation phone number and reach a human after several minutes. “We can’t reserve a seat for you. You’ll have to do that when you check in at Washington Dulles in June,” I’m informed. When I realize that this seemingly-simple transaction has consumed over ninety minutes, involving the resources of (count them) four companies, I settle for a partial win.

“Code Unshared” Experience #2: June 12. My taxi drops me off at the Delta door at Washington Dulles Airport. I stride up to Delta’s self-service check in kiosk and slide my credit card into the reader. The system finds my reservation, but the display indicates that for a boarding pass, I must check in at Air France (recall that I have a Delta flight number). I look down the uncharacteristically empty terminal at Dulles and see about 100 people queued in front of one counter. That’s Air France.

“Code unshared” Experience #3: The check in procedure at Air France goes smoothly, and I make the long walk to Terminal B. As I’m heading up a long escalator, I glance at my seat assignment: 33E. Forging ahead toward the gate, I count on my fingers to “E.” Five! To my horror, I figure out this is not the aisle seat I painstakingly acquired online. It’s in the middle of the middle! I rush to the counter at the gate to get another seat, and to ask what happened. The agent can’t explain, but she kindly accommodates my request and immediately reissues my boarding pass with a better seat.

“Code Unshared” Experience #4: About an hour into the flight, the attendants push the meal carts through the aisles in coach and distribute trays of food to the passengers. As one is about to be dropped onto my tray table, I ask if it’s the vegetarian meal I requested. As if by rote, the flight attendant responds “Sir, you must request those at least twenty-four hours . . .” Cutting him off, I say “I requested the meal last month.” “What is your last name?” he asks. “Rudin,” I say, spelling it, just to make sure. He looks at his computer-generated list and shakes his head. “I’m sorry. We don’t have any record of your request,” he says with finality. With my patience waning, I say “This looks really stupid. Not you—but this whole situation. You can’t get anything right.” I show him the printout of my Expedia email with the four confirmation numbers. “Sometimes our computers don’t talk to each other,” he offers. It's an unnecessary attempt to explain what is already painfully obvious to a frustrated passenger.

I often hear road warriors share bad airline stories over drinks at the bar the same way cowboys used to tell yarns about the cattle drives around the campfire. But this story isn’t really about airlines. It’s about what happens when businesses “team” for marketing and sales purposes, but don’t put the right operations in place to execute on their promises—both stated and implicit. In the process, high customer expectations slam into voids created by disconnected services and systems. In information technology, website facades and user screens that have no infrastructure behind them are derisively termed “Hollywood Sets,” a metaphor which needs no explanation in terms of the customer experience.

In contrast, a great customer experience can be found in a transaction nobody wants—auto collision repair. A single call to an insurance company or agent creates a claim record that seamlessly flows between the insurance company, body shop, and rental car company. A single version of the information is available to all, and billing and funds transfers occur quickly and easily. Even more remarkable, compared to Delta and Air France, you couldn’t find three business operations more different than insurance, auto repair, and car rental—yet the process integration between the three, along with convenience for the customer, is astounding.

Whether you believe the excellent customer experience is intended—or simply a byproduct of a larger need for insurance companies to control payouts is the subject of another blog. But using that logic, in the name of Tight Security is it unreasonable to expect that even basic passenger information be shared between two carriers? Unfortunately, just the opposite is true.

Part of my work in Tel Aviv on Monday involves analysis of a telecomm business case as a way to help salespeople identify strategic business opportunities and operational gaps. One fact the participants will uncover is that the telecomm firm can’t meet its objectives because it lacks integrated IT systems. I think I’ll invite Expedia, Delta, and Air France to sit in.

How Do You Stop a Great Product from Drying Up?

2009-01-06T08:43:00.000-08:00

What do community swimming pools and pencil sharpeners have in common?

In twenty years, both might be remembered as once-valuable products that are now in the scrap heap.

Pencil sharpeners, I understand. But Swimming pools? That rock-solid institution of suburban summer fun? What’s next? Fireworks?

In Swim Clubs Struggle to Stay Afloat (The Washington Post , June 24, 2008), the paper reported that “beneath the sparkling-blue surface of scores of the region’s neighborhood swim clubs is a troubling new reality: many of them are crumbling physically and financially. . . The choice is simple, many pool officials say: If the clubs don’t change, those icons of Washington’s once-thriving middle-class suburbs won’t survive.” The claims are supported with declining membership statistics over the past ten years. With plant and equipment built half a century ago, many clubs can’t adjust to changing customer preferences.

How many industries and companies can you name that are experiencing these same gut-wrenching changes? Even if you market a product or service that doesn’t involve wearing a swimsuit, it’s worth taking a moment to understand what’s happening. The cultural and social forces exerting pressure on pool clubs are a microcosm of the world.

Lack of leisure time. Because an increasing number of households are supported by two working parents or a single working parent, it’s harder to spend hours at the local pool.

Increased availability of alternative activities. (It’s sad to see the swimming at the local pool replaced by more sedentary, digitally-enabled pursuits, particularly for a person who grew up swimming in pools and lakes. For an excellent discussion on this topic, read Richard Louv’s book The Last Child in the Woods).

Changing demographics in established neighborhoods brought about by new immigrant populations. Not every culture values the recreational experiences developers envisioned when pool complexes were originally built.

Escalating membership fees to cover high fixed costs. Membership fees are out of reach to consumers in the local communities.

Collision of local tax rates and current market conditions. Local tax rates create financial burdens because they reflect operational conditions over thirty years ago, when pool clubs were more financially stable.

How to stem the declining membership trajectory for public pools isn’t just a public policy problem, a land-use problem, or a recreation problem. It’s a sales problem. It’s about how seemingly rock-solid institutions succumb to forces when they are either unable to see them coming, unable to change, or both. It’s about substitute products cannibalizing markets. It’s about assumptions—valid up until few years ago—which are now incorrect because of changing preferences. And it’s about using those now invalid assumptions to create new strategies and tactics that are inherently flawed.

But there is hope. Could local pools be one beneficiary of high gas prices, as consumers modify their recreational activities to favor local pursuits?

Fundamentally, swim clubs need to rethink what they are selling. Could it be that it’s no longer splashing in the water, swimming laps, and playing “Marco Polo?” Instead, what about the community pool as a resort escape that you can walk to?

Here’s what I recommend for several of the local clubs profiled in The Washington Post article:

Install large poolside plasma TV screens. They’re on the beach in Tel Aviv. (After all, what’s sunset over the Mediterranean without World Cup Soccer?)

Co-locate Starbucks. Have “Free Latte Wednesday nights.”

Offer free wireless access and a “business center” in the clubhouse for those who just want to feel tethered to the office.

Provide alcoholic beverages (in plastic cups) Served weekdays from 9 pm to 11 pm, and all day on the weekend!

Offer Massage and spa treatments as concessions.

Offer live meringue for Hispanic residents and other ethnic music for other immigrant groups.

Hold inner-tube races for kids and adults instead of just swim team for kids.

Partner with property managers who need amenities such as pools to make their products more appealing. Provide direct transportation services from underserved communities.

Given the consequences of inaction, no idea is too preposterous. On paper, Minnesota’s Mall of the Americas, or the TV series Hogan’s Heroes, probably appeared equally foolish. Thanks to the resolve of their creators and financial backers, their commercial success proved otherwise.

Don't Bother Me With Social Media--I Have to Sell Something (Part II)

2009-01-06T08:40:00.000-08:00

Can salespeople gain measurable business value from social media?

Reactions to Part I were mixed:

The skeptical:
“. . . we need real benefits, not hype,”
and
“We’re drowning in a Web2.0 sea of useless drivel.”

The visionary:
“Social media’s emergence today parallels the emergence of mass printing and mass literacy back in the early 1800’s . . .”

I wanted to find out which is correct. What I learned is that the jury is still out. In the meantime, it’s worth examining how companies have innovated using social media to solve some familiar, perennial sales problems.

1. Objection handling. In March, Mei Lin Fung wrote about how Dell used social media in You Can Learn From "Dell Hell." Dell Did when she examined why customer sentiment about Dell became negative. She writes, “What we arrived at was that what had changed was outside, not inside, the company.”

According to the article, “Dell’s approach paid off. Dell weathered the storm because Michael Dell has been personally involved in Dell's efforts to listen to its customers. One of those moves was to create a dedicated corporate blogger . . . (who) speaks to people ‘honestly and directly.’” She described how the blogger admitted the company's problems, and gave the company a “human voice.” The blogger “gave (the) customer respect and "got respect in return.”

2. Generating leads. Andy McCann of software company Radian6 shared a success story. When his client monitored online discussions about their company’s brand, they found 400 separate online conversations. But when they monitored their competitor’s brands, they found a huge opportunity: there were 4,100 conversations! Where do you think his client’s sales force went for new leads? Directly to the people that were talking about the competition! Not surprisingly, Andy uses online conversations for his own lead generation. As he tells it “I’ve never had to look up a lead at this company.”

3. Transferring knowledge. Salespeople crave proven techniques, but forums for sharing information can be prohibitively expensive for companies to build. Some salespeople use social media not only to share ideas, but to find out whether others have found those ideas effective. It’s similar for books, as Andy McCann shared. He searches online for subjects of interest and finds out who has written a book about the topic. Then through social networks, blogs, and reviews, he learns not only who has read the book, but who has found it influential, and why. Such precision has enabled him to glean valuable insight while investing little precious time.

4. Differentiating from the competition. Almost every company faces product commoditization as a strategic issue. Lee Erickson of Erickson Barnett described how her clients have blended social media and brand marketing to communicate a message to customers that very few companies have been successful duplicating: “We’re listening to you every day.” Blogs and other online resources enable her clients to do that. The assumption is that the trust created through listening is more correlated with customer loyalty than other attributes that often require much larger investments. So far, Erickson’s bets have paid off. Listening to customers through social media has spun off into other important differentiators, including reducing time to market for new products, and enabling the sales force to initiate discussions about the most relevant issues.

5. Monitoring the competition. In the past, many salespeople used readily-available competitor product specifications and compared “feeds and speeds.” But the value of that information was limited, at best. Spec sheets (as they were called) contain the manufacturer’s own data. And that information still didn’t uncover the answer to the far more valuable questions: How do customers like using [product X]? and What don’t they like about [product X]? That was then. This is now: Using Google Alerts and other tools, salespeople regularly mine blogs and product reviews to find out the answers to these questions. The result: salespeople have unprecedented power to position strengths against competitive weaknesses.

6. Finding the right people to call on. Developing a community of advocates and influential people within a client organization continues to challenge salespeople. But today, social networking tools such as LinkedIn have become so widely adopted among salespeople that many simply can’t perform their job without it. CRM software developers such as Salesforce.com and SalesCentric are keenly aware of this fact, and integrate to LinkedIn to tap the power of these already-built social networks.

Are these tools just more Management by Magazine flashes in the pan--or are the benefits significant and sustainable? How will managers know? Will traditional sales productivity measurements such as sales cycle time and conversion ratio be valuable for assessing the effectiveness of social media? Or do new selling models require redefining selling itself, and by extension, will they dictate new ways to measure productivity?

Those questions need to be considered as companies develop strategies and build sales models to achieve them.

"That's Not Our Policy--and No, We Don't Want to Hear From You!"

2009-01-06T08:37:00.001-08:00

How’s this for a conundrum?

Help the customer or enforce company policy. Enforce policy or help the customer.

Office Depot’s management created this very quandary when my friend Elena visited their brand spanking new store in Albuquerque last week.

She wanted a copy of a two-page color document, but she was told she had to wait because the store’s policy was to service register customers first. Watching customer after customer enter the store and leave with a purchase, she gave up waiting after one hour. The manager overseeing the few overworked employees could hardly have been less contrite. After she complained about the long wait, he offered “you can come back later this afternoon and pick up your copy.” How’s that for service?

What could have been the outcome if the store manager wasn’t conflicted in his goals? What if he were empowered (to use a now-popular term) to offer to courier Elena’s document to her or to ship it overnight? Instead, the policy shackles at Office Depot prevailed, to everyone’s detriment.

During Elena’s wait, she purchased a few items, and decided to voice her complaint via the website printed on her receipt, which helpfully shared how much Office Depot values her opinion. After carefully crafting an informative message about her poor Office Depot experience, her transmission was promptly rejected. Why? She declined to include her gender and annual household income among the information she submitted. Clearly, any mantra espousing customer centricity isn’t mounted in a frame at the home office.

My friend Elena left Office Depot without her color copies, and without Office Depot learning about her experience. She won’t visit the store again. And yes, she will tell twenty people about her experience.

Office Depot, are you listening? Maybe Staples will!

In an Uncertain Economy, Sales Success Means Knowing When to Throw--and Catch--a Hot Potato

2009-01-06T08:32:00.000-08:00

Sales risk has always been a business hot potato. It's more comfortable when someone else is holding it. In this economy, the risk potato has become scalding hot.

Salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities.
As a sign of the times, one software client told me, "We're looking for a salesperson who will work on full commission." In other words, "We can't afford to invest anything in case he or she doesn't produce." My response: "If you find that person, don't forecast the revenue. Moving all of the risk to someone else's shoulders won't make your sales strategy successful." The problem is, in an uncertain economy, few companies want to absorb any more risk, and the trembling has become palpable.

My client's effort to avoid risk is not altogether wrong. Sane businesspeople don't seek risk; they manage it! But eliminating risk altogether is a zero-sum game. Without risk, there's no return. What are my client's options?

Disaggregate. Follow Henry Ford's lead. One hundred years ago, he recognized that production efficiencies were enabled by specialization of tasks. Some selling tasks, such as prospecting, are so inefficient that it's better for outside organizations to manage those processes. Many sales organizations cope by creating hybrid selling models that embed third-party prospecting and lead management resources. Can such a hybrid sales process appear seamless to customers?

Beth Schrager of Schrager and Associates, a Massachusetts-based outsourced sales provider, believes so. Her firm provides full-service outsourced sales solutions, and her record of long-term client retention corroborates her success. According to Schrager, "We bring to the table proven, tactical sales experience that enables companies to generate more revenue without increasing sales costs."

Not every outsourced provider works the same way. Further, keeping costs flat while increasing revenue reduces financial risks but creates new ones. Past assumptions are no longer certain. The salesperson we talk to might not be an employee of the company we buy from. Some outsourced firms impart that information with a subtle semantic hint, scripting salespeople to say "I'm calling on behalf of . . . " While some prospects might ignore the distinction, others find the disclaimer unsettling. Outsourced selling models require particular attention to how to disclose information because trust and rapport can be damaged when communications are not handled properly.
Listen first—then shout! Many organizations begin the selling process by spending mightily on broadcasting messages to prospects. That strategy means shouting first, then waiting for prospects to communicate interest. But there's great financial risk in that approach. Why? Because customers and prospects can block perceived noise using widely-available tools that are becoming increasingly sophisticated.

But thanks to social media and a fabulous online tool called alerts, a method has emerged that inverts the old model—lowering risk in the process. Through services such as Google Alerts, Yortify.com and Alerts.com, salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities. My Aug. 19, 2008 CustomerThink blog post, Don't Bother Me With Social Media, described how one company converted its dominant sales tactic from shouting to online listening. Instead of producing mass-market e-newsletters and other lead-generation campaigns, the company's small sales staff looked for online conversations that mentioned competitors and identified a large universe of highly qualified prospects in the process. From there, a salesperson-initiated phone call began the direct communication.
Create sales intermediaries. Sales intermediaries, such as independent channel sales partners, enable producers to share selling risks and to extend market reach. But channel sales models don't fit every organization. Are you comfortable riding in the business-development passenger seat while someone else drives? If not, channel sales will bring you uncomfortable new risks. Selling your company's product might be your priority, but it's one that your channel partner might not share. On the other hand, recruiting, hiring, training, developing, managing and retaining a dedicated in-house sales force require financial resources that not every company can afford. Adopting a channel sales model offers a viable solution because the financial risks can be more easily absorbed if they are spread between multiple organizations.

Larry Bossidy and Ram Charan describe channel sales risk trade-offs this way in their book, Confronting Reality—Doing What Matters to Get Things Right (Crown Business, 2004):

Learning about end users is harder for companies that sell through intermediaries, and whose ultimate buyer may be several steps down a distribution chain. They generally don't have mechanisms designed to capture information about the customer and end user." But selling through intermediaries has benefits. "There may be steps that can be eliminated, cost reductions, or insights into how value is added (or subtracted) along the way. The result can be to make the entire chain not only more cost-competitive, but also more effective in delivering value.

In an uncertain economy, executives who look through a risk-reduction lens when creating sales strategies will make better decisions than those who look through a cost-reduction lens alone. Why? Because cost reduction skews decisions by failing to consider the financial impact of the concomitant risks. I'm talking about market risks, communication risks, hiring risks, sales cycle risks, ethical risks, brand-image risks—and yes, financial risks. You must fully consider each one.

What will my client do to achieve his sales objective? It's unclear. Given the economy, there are few guideposts and many forks in the road ahead. One thing is certain: When it comes to selling, to get the right results, you must provide effort. That requires the ability to catch the risk hot potato—not just the ability to throw it.

Will This Year's Sales Assumptions Work in 2009?

2008-12-17T10:59:00.000-08:00

Will This Year's Sales Assumptions Work in 2009?
By Andrew Rudin, Outside Technologies, Inc.

In the last two weeks, has anyone swaggered up to you and said “Yeah, 2008 played out the way I thought it would.”? I certainly can’t brag! So, how well did your sales assumptions work in 2008?

The good news: compared to this time last year, you have 365 more days of hard-won experience to guide your upcoming decisions. The bad news? The future appears ever more uncertain. Just one year ago, it was hard to imagine that the words “credit crunch,” “financial bailout,” “GM bankruptcy,” and “President-elect Obama” would become woven into popular discourse—a reflection of a changed country in a changed world.

Considering that there are constant forces that affect business, the calendar point 1/1/09 seems an arbitrary moment to focus thought on the relationships between assumptions, past events, and future strategies. But beginning a new year presents an opportunity for all of us to pause and think about how old assumptions will work in the near future.

The question isn’t whether assumptions are bad—they’re a decision-making fact of life. The problem is that people who assume things (all of us) are judged harshly when decisions don’t produce the required results, or when things don’t proceed according to plan. If you’re like me and have made a few poor assumptions recently, you’re in good company. Just look at 2008’s Bad Assumption rogue’s gallery:

Alan Greenspan, who said "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms, " He added “. . . I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

Yahoo’s management, for assuming that an even better opportunity awaited the company’s shareholders following their rejection of Microsoft’s offer to purchase the company in February.

Big-3 CEO’s Wagoner, Lally, and Nardelli, for assuming that boundless arrogance didn’t matter when making a sales pitch before Congress to secure $25 billion in taxpayer-funded financial aid.

In an unstable world buffeted by unpredictable economic, social, political, environmental, and technological forces, which sales assumptions merit scrutiny? Here are my picks:

“Assuming our prospects and channel business partners are trustworthy . . . " An editorial in The Wall Street Journal, (December 15, 2008) said it best: “Capitalism runs on trust . . .” If we learned anything from this year’s financial market debacle, it’s that trust can’t be assumed, and that if trust is broken in financial markets, we’re all affected.

“Assuming that the economics of our industry follow the trend of . . . " Radical reductions in credit availability debunk many assumptions, including how to forecast sales, how to segment markets, how to price products and services, and how to interpret financial calculations for deciding on capital goods purchases.

“Assuming our business model will work . . . " Technology convergence and other forces call this idea into question, even in the most well-established industries. Just ask any newspaper publisher or domestic car manufacturer.

“Assuming we can communicate our message. . . " Emerging web applications and Social media have irreversibly changed the communication balance of power. Product consumers now produce the most valuable product and brand information. That change alone invalidates many long-held assumptions about how to reach prospects and how to create and manage marketing and sales campaigns.

“Assuming our sales process is efficient . . .” Do legacy interpretations of sales efficiency matter when technology and other forces call into question the very definitions of buying and selling? And how important is sales efficiency anyway if there’s incongruence between selling and buying processes?

“Assuming that our CRM tools will help our employees perform their jobs . . . " According to Rob Preston of InformationWeek (November 17, 2008) citing a 2008 survey, “only 30% (of companies in the InformationWeek 500 ranking) say their companies encourage employees to use consumer (applications) they find useful, down from 33% last year. So it appears companies are becoming more stringent . . . not a positive trend . . . If those issues always ruled the day, instant messaging, a staple of today’s knowledge professional, never would have made it into the enterprise.”

“Assuming that our Key Performance Indicators predict the results we require . . . " Correlation doesn’t mean causation, and many selling organizations measure (and reward) behaviors that don’t produce value for the company, as Michael Webb of SalesPerformance.com points out: “The senior executive of a large software company observed that most prospects who went through the expensive ‘proof of concept’ stage of their sales process became customers. So, he ordered a sales contest where salespeople were rewarded for getting more prospects to conduct a proof of concept. Salespeople complied, and the results were disastrous: costs went way up, and revenues didn't. (The manager’s) assumptions about what caused customers to buy created enormous waste . . .”

Challenging previously-held assumptions will rock the corporate boat, but survival in 2009 and beyond requires a fresh approach. Start asking at the top: “Which assumptions are we making that must be true for our strategy to work?” The answer might uncover 2009’s greatest risks and opportunities.

Is There "White Space" in Your Customer Relationships?

2008-11-25T09:40:00.000-08:00

When managing sales relationships with major accounts, is it better to have more points of contact between vendor and customer—or fewer?

The answer depends on whether those interactions add value to or subtract value from the customer relationship, according to Rob Cross, an author and expert in social networking, who led a symposium I attended last week, “Leading in a Connected World.”

More than "fuzzwords," social network value added and value subtracted are measurable and meaningful in financial terms. Yet C-Level executives don’t think that way when creating CRM processes, account teams, and collaborative sales models. Oddly, the same companies that routinely scrutinize the cost of airline tickets don’t track efficiency of collaborative activities—a potentially far greater expense. That irony was underscored when the majority of the symposium attendees indicated that well over half of their time was undocumented, and spent in internal meetings, on the phone, or answering email.

Ever since the words “social” and “networking” were joined to mean informal channels of communication, CRM practitioners have offered conflicting ideas about how to make collaboration more effective. One Symposium insight: sometimes, “less is more.” This is because not every interaction produces value. Which interactions are the most valuable? According to Professor Cross, the best opportunities for value-producing collaboration are best-practice knowledge transfers, innovation, and revenue generation activities. The absence of those value-producing activities might be considered “white space” in the customer relationship. In Professor Cross’s words, effective collaboration doesn’t mean “everyone in the woods singing Cum By Ya to each other.” By uncovering where value is added or subtracted in collaboration, companies can garner the right resources, manage staffing, and organize teams.

So where is collaborative value added and where is it subtracted? Value is added when tacit knowledge for best practices, innovation, and revenue generation is exchanged between individuals. As for subtraction, there are two major sources. If the outcome of collaborative activities provides neither productivity improvements nor cost reductions, then those activities are value-subtracting to an organization. Second, consistent negativity from even one employee can have a measurable, cascading impact on the value an organization produces. And the impact is magnified in organizations that depend on collaboration for executing strategy.

In a PowerPoint slide, Professor Cross illustrated a basic social network. When individuals in a large, multinational company were asked “who do you receive information from and provide information to,” the network’s visual similarity to a giant hairball was stunning. It's easy to get the impression that everybody talks to everybody. I would be challenged to explain to a CFO how that picture portends to drive value for his or her company.

But underneath that picture, communication silos exist. These silos are losing favor, particularly for business development operations. One symposium panelist, Tracy Cox, Director of Performance Consulting for Raytheon Corporation, debunked the idea that selling activities should be the exclusive domain of the sales department. He recommended that companies consider different collaborative routes to engage with high-potential prospects, noting that it’s important to “understand the key influencers and reputation holders in the customer community and how to leverage those connections for new business.” It’s myopic to think of the Account Executive as the focal point for facilitating those connections.

When more specific relationship questions are asked to produce the social network model, the lines in the amorphous hairball social network strip away, yielding valuable insight. Who energizes you in your business activities? Who do you go to in order to generate revenue? Who gives you a sense of purpose? When these connections are mapped, patterns emerge that are highly predictive in how real value is transferred within and between companies. Not surprisingly, for these questions, the best performing account teams not only had strong client connections, but also better networks into their own organizations.

In addition to the Raytheon panelist, two other panelists, Lisa Vertucci, Managing Director, Global Head of Talent Development of Lehman Brothers; and John Helferich, former Vice President of Masterfoods USA shared how their organizations have used social network modeling to create value through collaboration. The operational decisions they made began with asking these questions:

How can we make invisible value visible to our customers?
How can we create the most effective cross-boundary relationships?
How can we identify key new business opportunities?
How do we uncover which people provide greater than average value in cross-selling products and services?
What is the most expedient way to “grow the conversation” about an important topic?

As with forensic sleuthing for suspicious financial transactions, following the money path in a social network context provides a good starting point for figuring out what’s valuable—and what’s white space—in your customer relationships.

Age Verification Bypassed By Cashier

2008-11-25T09:39:00.000-08:00

It all started with a half-case of Corona beer . . .

Amid the routine supermarket cacophony of bar code scanner beeps and crying babies, I almost miss a message that whirs onto the register’s colorful plasma display at my checkout station:

**Age verification bypassed by cashier**

The cashier barely looked up while scanning my items, but she had already made an age assessment. As the verification message scrolled up and off the screen, replaced by the odd character strings that comprise the retail shorthand for my purchases, I pondered how the cashier could have made such a hasty decision regarding my age, given the gravity of the consequences she faced had she been wrong.

What influenced her decision? I’m dressed in a black T-shirt, jeans, and running shoes. Was it a little gray hair? Slight balding at the temples? Crows feet around the eyes? Maybe I really do look fifty. In the name of Positive Customer Experience, couldn’t she have feigned a shred of age confusion, prompting her to ask me for an ID? But could my reaction of flattery be someone else’s annoyance over privacy invasion, or a twenty-something’s frustration that he doesn’t appear sufficiently old? Whatever the answer, could the enforcement of age verification be achieved without the ruthlessly cold message the Point-of-Sale system displayed?

Welcome to the murky world of personal profiling, and its collision with technology. Headline: A customer’s personal appearance is judged when managing a transaction. While web analytics enable companies selling products over the Internet to profile people at arms-length with clinical precision, face-to-face transactions require on-the-spot judgment and strong interpersonal skills. That’s a tall public relations order for anyone who must decide who to interrogate when selling alcohol or tobacco, allowing a senior-citizen discount, providing entrance into a bar, or pricing a kid's haircut (are you eight—or nine?). Jim Barnes described related pitfalls in his March 16th blog "The Tripping Point."

It’s not just age-related profiling that creates customer relationship problems. In 1994, Denny’s Restaurants paid a $54.4 million class action settlement to thousands of black customers who sued the chain for discrimination, alleging they were refused service or had to wait longer for service than white customers. And during a recent cab ride to the airport, I endured the driver’s diatribe about the bad tipping habits of a certain nationality (did he assume I had a different heritage?).

A recent article “Confessions of a Car Salesman,” by Chandler Phillips,
elucidates how institutionalized customer profiling infects the customer experience:

“Since I was still a "green pea" the other salesmen tried to push me to wait on undesirable ups — the undesirable customers who the salesmen thought wouldn't or couldn't qualify to buy a car. My manager had, at one point, described the different races and nationalities and what they were like as customers. It would be too inflammatory to repeat what he said here. But the gist of it was that the people of such-and-such nationality were "lie downs" (people who buy without negotiating), while the people of another race were "roaches" (they had bad credit), and people from that country were "mooches" (they tried to buy the car for invoice price).”

Data mining has freed many e-commerce companies from the burden of coaching employees on such sensitive issues. Sequestered in Spartan cubicles that could be anywhere in the world, analysts can look at a myriad of variables and target messages and tailor processes without offending customers. Amazon.com made business intelligence-generated recommendations famous with “Customers who bought this item also bought . . .”

The so-called statistical objectivity of analytics makes it possible to sell billions of dollars of products without customers taking umbrage. No value judgments, no offensive antecedents such as “People like you want . . . “ If a poor recommendation is made online, it’s an anomaly in the algorithm, and no one person is to blame. Most of all, no one makes a hurtful request based on how a person looks or thinks. In the cyber-world, psychographic judgments are deeply hidden in lines of code. In the bricks-and-mortar world, they're not.

It’s not that technology and analytics hasn’t brought new ugliness to the customer experience. When caller-ID technology became widespread, many feared that it would create a two-class customer service system by routing inbound calls differently, depending on the neighborhood a person happened to be calling from. And technology-enabled profiling made headlines again when civil libertarians debated the potential abuses resulting from embedding RFID chips into clothing.

But the fact remains that for all the heavy lifting carried by today’s e-commerce workflow engines, billions of face-to-face customer-relationship interactions are conducted every day, and managing them is a less-than-perfect science. Add to the equation that any judgment based on an individual’s appearance might be considered offensive, you quickly realize this is not a job for amateurs.

As with many issues that reside in the union of social mores, technology, and the law, there are more questions than answers. Given the sensitivities over personal profiling, how should companies enforce regulations for sales of certain products to underage consumers? What constitutes appropriate management of policies? How should an appropriate customer interaction be defined? How should employees be trained? What is the role of Customer Relationship Management (CRM) systems in supporting employees when profiling must be part of the transaction? What constitutes unethical physical profiling? What risks are associated with profiling?

Companies such as Disney have addressed some challenges by regarding customer-facing employees as actors and patrons as guests, and providing interpersonal skills coaching along the way. Other companies need to think further about how profiling impacts the customer’s experience. Unchecked, customer profiling mutates into dangerous “—ism’s:” racism, sexism, and ageism, to name a few. Has the car dealership referenced earlier already crossed a perilous threshold? It’s worth thinking about, since once the fuzzy line has been crossed, the issues discussed around the boardroom table relate to litigation and damage control.

But companies should not ignore the opportunities as well. When you’re buying beer at age fifty, life seems brighter when a cashier asks you for an ID. You can bet I would tell at least twenty people, after first telling my wife! Talk about evangelizing the customer experience!

What Would Mark Twain Click On?

2008-11-25T09:38:00.001-08:00

Imagine that you’re living in 1895. You’ve just sat down to dinner with your family when you’re interrupted by a knock on your front door. It’s a travelling salesperson holding a sample of a new book by Mark Twain. Would you listen to his pitch, or would you just close the door and mutter about annoying salespeople?

I recently learned that was how Mark Twain’s writings were originally sold. The hard sell was normal marketing for Twain’s books, and he was one of the first writers to trademark his name to promote sales. Although today we might appreciate Twain’s writing on literary merits, business considerations influenced what he wrote, and how he wrote it. He said that the money he could make from publishing a book “has a degree of importance for me which is almost beyond my comprehension.” Most of us would associate those words with the ambitions of a dyed-in-the-wool capitalist, but not an artist.

The financial calculus of book publishing drove Twain to innovate in other ways. He deployed a subscription sales model along with a dedicated sales force to cover a wide geography. (At the time, this itinerant sales force was one of the first to recruit women for jobs.) Using brand-name recognition common today, sales agents sold his books on the promise of the enjoyment the reader would get over time.

The salespeople engaged with customers by reading the publisher’s selling script, which included choreographed conversational details. Because the subscription sales model required selling some works that hadn’t yet been published, salespeople didn’t possess complete books. They sold entertainment, using samples that contained rich content at the time, including portions of text, pictures, page layouts, and choices for bindings.

Here’s the pitch you might have heard, quoting from an actual script: “I’ve got specimen pages of Mark Twain’s latest and greatest book! . . . there are nearly 700 pages in this book, and there’s a laugh on every page . . . The title of Mark Twain’s work (open the title page) is Following the Equator.” Even then, promoters and salespeople knew the importance of “controlling the conversation.”

Given Twain’s penchant for sales innovation, how might he exploit digital media if he were writing today? It’s interesting to think about what he might click on. In which formats would we discover and enjoy modern versions of Huck Finn and Tom Sawyer? Could their adventures be distributed through a series of two-minute YouTube videos or Podcasts? Would this presentation enhance—or detract from the enjoyment we’ve derived from Twain’s stories. Would his ideas be equally inspiring and memorable without the written word? Or, you might think that because no other packaging can eclipse the eloquence of Twain’s prose, we should consider ourselves fortunate that when Twain was alive, print publishing was the dominant vehicle for mass recording and sharing of thought.

I can’t help but wonder what we’re sacrificing as information technologies develop and converge, and we embrace digital media. With similar uncertainty, in his book The Big Switch, Nicholas Carr questions the eventual outcome from the actions we take when exchanging thoughts and ideas:

“The Internet turns everything, from news-gathering to community building, into a series of tiny transactions—expressed mainly through clicks on links—that are simple in isolation yet extraordinarily complicated in the aggregate. Each of us may make hundreds or even thousands of clicks a day, some deliberately, some impulsively, and with each one we are constructing our identity, shaping our influences, and creating our communities. As we spend more time and do more things online, our combined clicks will shape our economy, our culture, and our society.” Clearly, Carr is ambivalent about the outcome. His insight leaves it up the reader to determine whether the future impact will be sustaining or debilitating.

Jeffrey Bezos, quoted in The Wall Street Journal (“The Way We Read,” June 9, 2008) said, “Over some time horizon, books will be read on electronic devices. Physical books won’t completely go away, just as horses haven’t completely gone away. But there is no sinecure for any technology. If you think about books, it’s astonishing. It’s very hard to find a technology that has remained in mostly the same form for 500 years. And anything that has stubbornly resisted improvement for 500 years is going to be hard to improve. That is what we’re trying to do with Kindle. We see this as an effort to improve upon the book, even though it’s resisted change for 500 years.” He continued, “Over the last 20 years, most of the tools that we humans have invented have made it easier for us to be information snackers. If one of the outcomes of Kindle and other devices like it [is] making long-form reading more frictionless so that you end up doing more of it, I think that’s a good thing.” But is the trend toward “information snacking” a signal that we’re sliding toward an abyss that denies society literature on the level of Mark Twain’s creations?

Maybe not. Twain, who made his narratives intentionally long to fit the subscription distribution model he pioneered over a century ago, would have already sent an instant message to Mr. Bezos. “I have a great idea for a story! Let’s meet and we’ll talk about how we’ll both make money.” I applaud Mr. Bezos for his vision. I hope that 100 years from now we’ll look back, recognizing that Kindle—or something like it—facilitated a literary achievement on par with The Adventures of Huckleberry Finn.

Why Do You Use an Umbrella?: The Best Sales Questions Dig Beyond the Obvious

2008-11-25T09:37:00.000-08:00

By Andrew Rudin, Outside Technologies, Inc.

Why do people use umbrellas?

It’s not a trick question. But before you answer it, substitute your own product or service for the word “umbrellas.”

My client uses this Umbrella Question to help salespeople learn the importance of digging past biases when asking questions. Like all discovery, there are many pathways to the answer. Here’s one from a recent meeting:

“Why do people use umbrellas?”
“So they don’t get wet.”

“Why is it important for them not to get wet?”
“So they don’t catch a cold.”

“Why is it important for them not to catch a cold?”
“So they won’t get sick.”

“And why is it important for them not to get sick?”
“So they won’t die.”

Wow! Using an umbrella prolongs life!

The person who answered these questions had clear ideas about the connections between cause and effect. Whether or not you believe an umbrella will enable someone to live longer, the exercise underscores the importance of continuing the discovery past the obvious answer, “so they don’t get wet.”

An article I wrote, "The Right Sales Questions Will Get The Right Answers" describes a sales opportunity I lost by failing to do just that—to get beyond the obvious. It would have been great to know the Umbrella Question at the time.

The value of asking questions that dig beyond the obvious doesn’t just apply to sales calls. It applies to anyone who must understand needs, wants, desires, and motivations of the individuals who purchase from them. In a CRM scenario:

“Why do customers choose to call our contact center?”
“To place orders.”

“And why do they use the phone?”
“Because they’re uncomfortable using live chat.”

“Why are they uncomfortable using live chat?”
“Because they feel more at home communicating by talking to another individual.”

“And why do they prefer talking vs. typing?”
“Because they feel lonely.”

“And why do they feel lonely?”
Etc.

Think of how an organization might shape the Customer Experience by uncovering the root causes of customer preferences.

Whenever I buy pharmaceuticals for my dog, I place the orders through the call center of Drs. Foster Smith, a catalog retailer for pet supplies. The call center agents are invariably helpful and knowledgeable. Although I’ve never asked, I wonder how many pet stories they patiently endure as they guide callers through how to select the best squeaky toy for their dog.

Could the company already understand something that most companies don’t—that customers call them for reasons that go beyond one obvious answer—to place orders?

To An Octopus "50" Means Nothing: Why Empathy Matters

2008-11-25T09:35:00.000-08:00

What qualities make a salesperson a top performer? Being young and energetic? Money-motivated? Aggressive? Outgoing and gregarious? Or having strong product knowledge? Experience selling big-ticket items?

None of these describes "Denise," a top-performing salesperson I interviewed recently. In fact, her resume probably wouldn't reach the inbox of most prospective employers. She's over 60, friendly but not outgoing and motivated by more than commissions as a measure of success. She has so little product knowledge that she emphasizes that fact when working with prospects (more about that in a moment). But if you met her, you'd be glad you didn't have to earn your living selling against her. She dominates her competitors.

Wondering what killer attribute she has? It's empathy. In a sales world in which her competitors are shouting in their own language, Denise learned a long time ago that, "to an octopus, 50 means nothing."

‘One question that should be at the top of the list: How does the world look through your customer's eyes?.’
When I saw how empathy creates sales success for Denise, I wondered if other sales professionals had similarly identified this essential competency. So I asked an experienced sales recruiter, Natalie Buford-Young of The Rainfield Group, whether empathy matters. I was surprised by her answer because she told me that she has never worked with an employer that has specified "empathy" as a candidate requirement. Not once. But Buford-Young's expertise enables her to fill the knowledge gap for her clients because she views empathy, along with ego, as the attributes that every salesperson must possess for success, and she carefully screens her candidates accordingly.

Buford-Young's straightforward answer belies the complexity of uncovering the empathetic behaviors of a great salesperson. While most sales managers eagerly focus on ego-related interview questions (How did you perform against quota in the last five years? What did you W-2 last year? What was the amount of your latest quota? What was your largest sale?), they are much less adept at uncovering empathy. One question that should be at the top of the list: How does the world look through your customer's eyes?

Here's how Denise became a top performer by imbuing that perspective in everything she does.

Outside-in viewpoint. According to Denise, "Before my (prospecting) phone call, I envision the person I'm calling in their office, along with what's in their surroundings. I think about what they are doing when my call comes in. I think about what they did five minutes before, what's on their calendar that day and what pressure they might be facing at home. From there, I think about what I'm going to ask and say. Then I make my call."
Common concern for the prospect's objectives and goals. Denise not only knows what motivates her customers, but also, she believes in the same principles. She described it this way: "My clients are cause-driven. I share the same interest in those causes." Shared values create a bond.
Meaningful discovery through asking the right questions. Here's where Denise's limited product knowledge serves her well. She eliminates the common trap of "showing but not selling." And because her ego enables her to know where she wants to lead her prospect, she guides the person there by asking the right questions. In fact, she has sold many software licenses by beginning with this caveat before a demo: "I've never run this function before, but let's step through this together and we can see how easy it is. Now, how would you start out with ... ?"
Insightful dialog. A conversation with Denise is a far cry from the cliché salesperson portrayed in Dan Ackroyd's famed Saturday Night Live Bass-o-Matic sales infomercials. Denise is soft-spoken and articulate. While her voice quality is pleasant, she commands attention because she is adept at sharing her insight about what her customer has said. Her conversations follow a self-supporting pattern: Ask a question. Listen. Restate the answer better than how she heard it. After hearing several of her customer calls, I could clearly see that in the course of going from Cold Call Telemarketer to Trusted Advisor, Denise is a Lamborghini.
Appropriate humility. Denise always walks a fine line where others fall off. She's intelligent without being pompous. Articulate but not highfalutin. Knowledgeable but not pedantic. Most important, she knows her customer's priorities and how the product she sells fits into that schema. She knows the daily pressures her customers face and how her interactions are perceived. These important aspects are often lost as salespeople pursue ever-higher quotas and sales goals. Compare Denise's approach with the get-around-the-gatekeeper-any-way-you-can mentality, and you'll recognize why most telemarketing voice mail messages never get heard and most emails hit the spam bucket, forever unread. In a statement that at first seems counter-intuitive, Denise attributes her high-close ratio to the fact that "there is no sales urgency in my voice."
Courtesy. Denise doesn't deny that some people she must work with can impede her, but she treats everyone with appropriate courtesy and respect. She believes that the same people her competitors may try to avoid can be of critical importance for gaining access to decision makers.
Knowledge of the world outside of business domain. Denise brings a broad view of the world to her sales relationships. She's well-read and very comfortable talking about complex issues that transcend geographic and topical boundaries. Think that's not important for a person who mainly uses the phone to complete sub-$10,000 sales? I listened intently as she spoke to an Indian-surnamed prospective client three time zones away in Atlanta about literacy issues in India and what those issues mean for that country's global competitiveness. She booked an appointment to talk with the client again the following week. A Lamborghini going from Cold Call Telemarketer to Trusted Advisor.

As Denise demonstrates, empathy is really an umbrella-term under which strategies, tactics and processes should be formulated. And because strategies are directional, the best sales results will be achieved when empathy is viewed as a guideline, not as a prescription. Empathy yields patterns of positive sales behaviors that don't need to be culled into neat checklists, micromanaged at every quarterly sales review. "Be courteous to the front desk receptionist," is a hollow admonition to a salesperson who doesn't understand what empathy means for building a valuable business relationship. Uncovering a salesperson's propensity for empathy will help identify a potential sales star. Nurturing empathetic behavior once it's found will be the next great management challenge.

Can Johnny Raise Money? How Public Schools Exploit Social Networks

2008-11-24T09:10:00.000-08:00

Reading, writing, ‘rithmetic, and raising money. Today, for public education, building the latter competency has never been more important. Schools want your money and they are pushing harder than ever to get it. If you haven’t already felt the heat, you will soon.

This month, a strange envelope arrived in our postal mailbox at home. It looked like a bill, but different, because the envelope had three windows instead of the usual one, and because our name and address was scrawled in freehand. On closer inspection, I saw the handwritten name of our nephew above the printed name of his elementary school in Florida. (My wife and I live in Virginia.) I bit the curiosity bait and opened the letter.

It begins with a handwritten salutation: “Dear Aunt Barbara and Uncle Andy,” followed by preprinted text saying, “We’re hoping to raise much-needed funds through the sales of magazine subscriptions—either new ones or renewals!” At the bottom: our four-year-old nephew’s name—written in adult cursive. How’s that for bravado? And just the week before, we received a similarly-packaged solicitation from our niece (not related to our nephew) asking us to buy magazine subscriptions to benefit her school in California!

Both letters contained several pieces collateral, and a convenient postcard to send to our school-aged loved one informing him or her of our donation to the school. The postcard was thoughtfully pre-printed with the salutation “Dear,” a message, and amazingly, a closing sentiment, “Love,” followed by a blank line for me to fill in my name. (This technique of fundraising enables all parties to be equally perfunctory!)

Even stranger is what’s not included. The communication didn’t provide any information about how the proceeds will be used, or how our relatives will benefit. (Great American Opportunities, the marketing company that sent one of the solicitations, doesn’t provide an address or corporate website to learn more.) There isn’t a website listed for the school, or even a picture of the school (or of any school, for that matter!) to make a visual connection.

All of which leaves me feeling weirdly hollow about my role in a value chain that encompasses magazine publishers, marketing promotion companies, school districts, nieces and nephews—and finally, me. Here’s why:

1. Schools are part of the fabric of local communities. I support close family ties, but those bonds don’t mean I feel compelled to fund my niece and nephew’s schools. That’s the fiscal responsibility of their neighbors, and local government and businesses.
2. The marketing junctions don’t work. Family members making product pitches on behalf of big media companies ostensibly in support of vague school programs seems an odd and convoluted arrangement.
3. The charity request is utterly insincere.
4. The economics are flawed. One letter touts that “Forty percent of every dollar goes to our school.” Wouldn’t my niece or nephew’s school be twice as well off if I contributed 80% directly, and saved the remaining 20% percent myself? Clearly, the media companies are the primary beneficiaries of this marketing program.

The low-overhead appeal of this fundraising tactic is undeniable. Schools compete for the diminishing number of volunteer hours of time-strapped parents. So they ask parents to tap address books and dash off thirty or so letters to relatives and acquaintances, and voila! Money for the school! And no one even had to get off the sofa!

But what’s sacrificed in the process? For starters, sixty percent of every dollar spent. In addition, local communities are circumvented and kids lose the valuable experience of learning face-to-face sales—an important skill no matter what field they enter. Finally—as I can personally attest—away goes the goodwill of otherwise affectionate relatives who now get hit up for donations anytime and anywhere.

Maybe I’m wistful for a kinder, less harried time. When I was in elementary school, a fundraising drive meant hopping on my bike to get every neighbor on Oak Leaf Lane to buy one or more boxes of peanut brittle. That was before “working mom” became a mainstream term, before No Child Left Behind, before federal and state school budget cuts, before child predators, and yes, before big marketing companies salivated over how social networks and heartstrings promotions can stem declining sales for products like magazines in the age of the Internet.

Whether or not such promotions are successful, I find them degrading. If schools need to raise money, they might be better served to hire marketing specialists that understand the nuances of fundraising. In the meantime, my advice: don’t overlook appealing to local community. The most valuable social networks are just a bike ride away.

The Two-edged Sword: Loyalty Decided versus Loyalty Divided

2008-10-22T06:04:00.001-07:00

“No thanks. We are completely happy with our current provider.”

It’s a loyal sentiment that stops many sales conversations cold.

If my customers always swatted down every competitor’s sales overture that way, it would make me very happy. But when the ties that connect customers to vendors are under stress from every direction, it’s a Herculean task to preserve customer loyalty status quo. So, every day we strategize about how to undermine customer loyalty from our rivals, and our rivals focus on doing the same to us.

Today, ephemeral customer loyalty is reality for most firms, creating a contradiction of terms that should make perfect sense to those who sell for a living. In order to minimize the revenue valleys that occur when loyalty wanes, organizations commonly engineer a pseudo-loyalty, through switching costs—business-speak for the technological and financial handcuffs a vendor embeds into products. But such techniques make it impossible to discern where resistance to switching costs ends and loyalty begins. More than once, a prospective customer has told me “I’d throw every bit of this hardware out of here if it wouldn’t cost me so much to do it.” Based on that, does low customer churn equal high customer loyalty? Talk to Joe the Corporate Decision Maker, and you’ll know you can’t get to the answer by looking at churn rate alone.

But what makes a customer loyal, exactly? Whatever terms you use to describe loyal attachments, there’s one consistency: the more loyal the customer, the more closed-minded he or she is. Clearly, for customers to willingly shut off new ideas from competitors while remaining open to hearing new ideas from us requires an extraordinary combination of trust, commitment, great customer experiences, and more that marketers and academics continue to study and debate. In fact, this week on Amazon.com, my search on customer loyalty returned 8,993 results.

But are we deluding ourselves about what makes loyalty valuable—or whether it’s valuable? Do we really understand what our customers are loyal to? Does investing in customer loyalty programs always align with corporate objectives? Can high customer loyalty be counterproductive for sales? We make many assumptions about loyalty, and we should know whether we’re chasing a loyalty mirage. After all, do we really know if what we’re investing in customer loyalty is worth it?

Do we really understand what customers are loyal to? Is it our products or services? Our sales or support team? Our unique customer experience? Our brand? All of these? None of these? Rob Walker, author of Buying In, explains by citing a study in which consumers were asked “What are the things in your home which are special to you?. . . Part of what the authors found was that—not surprisingly—the most meaningful objects were rarely chosen on the basis of some intrinsic, rational property, like marketplace value, cutting-edge quality, simple aesthetic pleasure, or anything else that an economist might describe as ‘utility.’ They were chosen instead for connections to something else: family or social ties, a particular episode in the narrative of the subject’s life, perhaps religious faith or some other belief system affiliation. That is to say, their meaning tended to be a function of what the thing represented.”

This finding suggests that one object of customer loyalty might be as intangible as a meaning or idea, and that discovering what customers are actually loyal to will identify different pathways for creating and selling products to those customers. The book describes many modern examples in which companies have appealed to customers by “not . . . simply infusing some company’s material objects with fresh meaning, but creating meaning by creating objects—branded objects.”

Does investing in customer loyalty programs always align with corporate objectives? Not necessarily. David Corkindale debunks the loyalty yields value idea in his article Mistakes Marketers Make (The Wall Street Journal, October 20, 2008). “Studies have found that the individuals who are totally loyal buyers of a brand tend to make up only 10% of all buyers, and they buy it less frequently than others, too . . . A company that focuses on gaining and retaining such customers isn’t doing the smartest thing commercially.”

Can high customer loyalty be counterproductive for sales? Yes, when that loyalty is placed only on a physical product—as many salespeople responsible for upgrading products at installed accounts will attest. At one company I worked for, many customers maintained my company’s machines well beyond their useful, fully-depreciated life. Why? Because they were loyal to the equipment—so much so that they were close-minded to the economic benefits and other advantages of replacing it.

When it comes to customer loyalty—whether preserving your own, or undermining someone else’s—what’s the best strategy? First, understand how customer loyalty fits in the context of your company’s overall business strategy. Moving customers up the loyalty continuum might not be the best use of resources if there’s little or no strategic value. Although few will argue that having customer loyalty isn’t a useful or valuable outcome, Mr. Corkindale stresses that “there is really only one way for a company to achieve lasting growth in sales, and that is to increase its customer base, by either reaching new customers in existing markets or entering new markets. That doesn’t stop some marketers from trying to do the impossible.”

Can Sales Productivity, Ethics, and Shareholder Interests Coexist?

2008-09-17T07:43:00.000-07:00

“I don’t care how you make your sales number, as long as you make it!”

Fifteen years ago, that was my Intermec sales manager’s guidance on how to achieve quota.

But my manager made assumptions that the sales team had the knowledge, motivation, and integrity to deliver the required results. He didn’t have the time or interest to micromanage anyone. At Intermec, many salespeople got fat, dumb, and happy under such laissez-faire management. Ultimately, sales suffered in the face of unrelenting competitive pressure, shareholder demands, and product commoditization.

Policies changed. Not only did management measure results, they began to scrutinize sales activities as well. Thousands of other sales organizations facing the same forces created measurement spotlights under which few could hide.

Today, business needs and technology have converged, causing the productivity-management pendulum to swing even further toward Total Management Control. Are purveyors and users of sales productivity software tools telling us that salespeople are too stupid to figure out how to be productive? Are their managers too lame to manage? Pete Reilly, a senior vice president at RedPrairie, developer of the Ann Taylor retail labor productivity system ATLAS (see my September 10th blog, Please Buy From Me! The New Ann Taylor Shopping Experience) said “the (ATLAS) system will allow you to push (productivity initiatives) too far, but at the end of the day, it is based on business principals and how I treat my employees. That is really up to the retailer.” His statement reveals his ambivalence. But it’s clear that financial success depends on how businesses deploy productivity tools, and no one should assume that they understand what they are doing.

The most insidious dangers aren't created by productivity rules based on flawed assumptions or incorrect information. They're created when managers detach from the gut-wrenching ethical and personal conflicts imposed on the employees who are measured and managed. Scott Knaul, director of store operations for Ann Taylor, described one misguided tactic when he was quoted in the Wall Street Journal (Retailers Reprogram Workers in Efficiency Push, September 10, 2008) saying “giving the (productivity) system a nickname, Atlas, was important because it gave a personality to the system so (employees) would hate the system and not us.”

What Mr. Knaul might be alluding to are torn emotions caused by Ann Taylor’s institutionalized sales conflicts of interest—all in the name of productivity. To mention a few possibilities: “If I’m honest with my customer, I could lose this order, and possibly my job.” “How do I spend time with my ailing parent and satisfy the minimum number of hours I must work to keep my time slot?” “As a single parent, how do I plan my weekly food purchases knowing my work schedule can be cut or changed at a moment’s notice?” These poignant struggles are frequently the other side of productivity-improvement equations, unmentioned when numbers are bandied about at the quarterly management retreat.

If laissez-faire management contributes to complacency, and overbearing rules are tantamount to wielding a stick without offering any carrot, what works? For insight, I consulted a local sales leader, Mark LaFleur, director of worldwide sales and channels for Arlington, Virginia-based software developer GroupLogic. He said “Understanding what causes sales to happen and managing metrics is critical to success, but sometimes it’s easy to get so caught up in metrics that you lose sight of the big picture . . . Effectively managing your team’s performance requires a balance between hard metrics and business instinct. I have found that there is no substitute for frequent, intensive one-on-one meetings with reps and sales managers, where you hold them accountable for understanding and articulating all aspects of their business and how they are tracking toward their revenue goals. Metrics are only one component of that discussion, and the key there is to develop practical metrics that really do lead to sales, communicate them clearly, and then hire disciplined sales people that are smart enough to understand their importance.”

When it comes to using metrics to improve sales productivity, Mark’s views are clearly nuanced compared to those of Ann Taylor’s managers. Still, it’s troubling to think about the future clash between productivity improvement, business value, and work-life balance. Managers like Mark recognize both the power and limitations of productivity measures, and that we have the opportunity today to build shareholder value without exploiting the people who help deliver the value we produce for our customers.

Asking to Send Literature is not Lead Qualification

2008-09-12T07:17:00.001-07:00

Some people collect stamps, some collect coins. The salespeople I spoke to at a recent technology trade show must think I collect PowerPoint presentations and Adobe attachments. In every initial follow up phone call I received—bar none—the contact center representative offered to send me sales literature. When were they planning to ask me about my product need?

I don’t know the answer, but it’s odd that even the most basic qualification questions aren’t asked in the first call. Here’s a typical exchange:

Caller: Hi. This is Joe Jones from XYZ Technologies. I’m following up because you stopped by our booth at the FOSE Trade Show in Washington last month.

Me: Yes I did. I remember a little about your product. It’s a tool for searching databases for specific text information. I visited with a number of companies—I don’t remember much else about XYZ.

Caller: Well, we wanted to know if there’s any additional information you would like. We have some case studies we can email to you. Also, we’re holding a Web seminar next week about our just-released Optimized Search Algorithm. I can send you a link so you can sign up.

Me: I can’t think of a specific need right away, but if you want to send me an email with your company’s website information, I’ll look at your site. If there’s a specific need that matches up, I can get in touch.

Caller: Sure. I’ll include the link. Once you receive it, if you have any questions, please don’t hesitate to call me.

We sign off the call and I go on my way, and Joe goes on his. As promised, he sends his email that day. It’s still unopened in my inbox.

The lost opportunity? Even though Joe took the time to reach me, he still has no idea whether his company is valuable to me—or whether I’m valuable to his company. Is there an unwritten rule in Contact-center Land that it’s uncouth to broach the “Q-word”—am I qualified? Or, are humans simply wired to offer marketing material without expecting anything in return?

I’ve worked with more than a few companies that describe a qualified lead in broad terms. Everything from a trade show attendee who signs up for a web seminar, to a prospect with whom they have held an in-depth discussion, and whose needs they think they can fulfill. That’s a wide strike zone, and if I were on the sales force, I’d be understandably jaded every time an email message with “URGENT—New Lead” on the subject line vibrated into my Blackberry.

Why don’t companies capture qualification information early in the contact cycle? Is it because the contact center is measured on how many calls are made, how quickly they’re made, and how many “qualified” opportunities contact center reps pass to Sales? Or is it because what makes a prospect qualified is murky or poorly understood to begin with? Nicholas Carr, in his excellent book The Big Switch quotes George Dyson, a technology historian, as saying “finding an answer is easier than defining the question. It’s easier to draw something that looks like a cat, for instance, than to describe what, exactly, makes something look like a cat.”

Similarly, is it easier to slog down a pothole-filled sales road with a prospect, rather than understanding what, exactly, makes a prospect qualified? Whatever the answers, companies that don’t qualify leads early risk valuable resources on activities that are unlikely to bear fruit. Conversely, the companies that are adept at discovering a prospect “diamond in the rough” possess a huge advantage over competitors standing around the “we’ll-send-you-some-literature” starting gate. Why? They have lower sales risk and faster speed of sales execution. Better lead qualification enables a sales organization to step on the sales process accelerator.

What does qualified mean to me? Here are my top questions:

Solution fit: Does my solution provide an outcome that my prospect values?

Access: Am I able to hold a dialog with people who are influential and have the ability to decide whether to purchase my product?

Financial Resources: Does my prospect have the capability to pay me what I am likely to charge for my product or service?

Timeframe: Is my prospect motivated to purchase from me within a timeframe that matches my planning horizon?

I know. If your product or service is complex, these can be deep questions for a first-time follow-up call. The answers—if you can get them—often aren’t easy to populate into CRM system check boxes, and some believe that it still takes the judgment of an experienced salesperson to understand the qualification nuances. But even if it’s difficult to uncover definite “yes” answers to these questions, isn’t it valuable to at least uncover definite “no’s”? For example, what would it mean if you could subtract from your lead pipeline all prospects that definitely don’t need your solution?

A contact center won’t be able to uncover every risk, but unless sending marketing literature is its primary goal, the point of first contact is the best place to begin the vetting process.

PLEASE Buy From Me--The New Ann Taylor Shopping Experience

2008-09-11T08:18:00.000-07:00

Get ready for a new low in customer experience, brought to you by Ann Taylor and their new Ann Taylor Labor Allocation System, or ATLAS.

Reported in today’s Wall Street Journal “Retailers Reprogram Workers in Efficiency Push,” the article states “because the system awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shoppers to buy things.”

Among the article’s more chilling quotes, consider this one from Scott Knaul, Ann Taylor’s Director of Store Operations: “Giving the system a nickname, Atlas, was important because it gave personality to the system, so (employees) hate the system and not us.” Enamored with the insight ATLAS has helped Ann Taylor glean, Mr. Knaul said “If we know that it takes five minutes to work with a client when they walk in the store, we won’t go over five minutes.” (Mr. Knaul, if you're reading this, please share which business thought leaders have inspired you lately.)

One Ann Taylor saleswoman shared her concerns. “The new system, Ms. Houser says, doesn’t reward her style of selling. It no longer pays to spend time developing relationships with shoppers who might not buy anything on a particular visit, she says. ‘My client (contact) book is fatter than anybody else’s in the store,’ she says. ‘Does that mean I will get a bigger raise next time? No. Not if my (average sales) numbers don’t reflect that.’”

Quoted in the article, Carl Steidtmann, Chief Economist at Deloitte, said “Because few retail workers belong to unions, it is easier for employers to ‘move people around.’” Hmmm. How do you spell "exploitation?"

I began to wonder who would enlist to work under the ATLAS culture. To help Ann Taylor find the best candidates, I formulated this brief employment questionnaire, along with the desirable responses below.

1) Oh no! Your Aunt Etta fell and she's in the hospital with a broken hip. She needs you to help her complete her Medicare forms. But it's the end of the month, and your store manager says if you miss any time, you'll risk being demoted. Which of the following BEST describes the action you would take?
a) Come in to the store and focus on making my sales number. I'll visit Aunt Etta later.
b) Visit Aunt Etta and see if I can persuade my manager not to demote me.
c) I'd have to think about it.

2) In sales, ethics
a) includes doing what is right for the customer
b) can probably be found in the dictionary somewhere
c) not sure why I would need to know this

3) You’re behind in achieving your weekly sales number. You have a customer who wants a dress and some accessories, but she only has $150 to spend. She likes a dress that’s on sale. You should
a) find out the credit limit on her Visa and steer her toward more expensive merchandise.
b) help her find a suitable combination, even if it means she spends less than $150.
c) tell her that your recommendations are motivated by making your weekly sales quota.

4) Two women enter the store at the same time. One is unkempt and has a fussy toddler in tow. The other one is by herself, holding a Nordstrom shopping bag and a Kate Spade purse. To meet your expected productivity goals, how many seconds should it take you to greet the woman holding the Nordstrom bag?
a) 1 second
b) 30 seconds
c) about a minute
d) don't know. Shouldn't she have time to browse?

5) Essay question: I'm all for offering honest information to customers, except ____________________________ . (use additional pages, if needed)

Correct answers: 1-A; 2-C; 3-A; 4-a

ATLAS is a euphemism for Employee Manipulation. Its use portends some eyebrow-raising sales behaviors. As far as productivity gains for Ann Taylor, a note of caution: be careful what you wish for, you might get it!

The Right Sales Answers Are the Result of Asking the Right Questions

2008-09-09T07:17:00.000-07:00

What happens when we make assumptions? The movie, The Return of the Pink Panther, provides a great lesson. Peter Sellers, playing the immortal character, Inspector Clouseau, sees a hotel clerk holding a dog on a leash and asks, "Does your dog bite?"

The clerk responds "no," and Clouseau reaches to pet the dog, which immediately bites his hand.

‘Ka-ching! I hit what-keeps-me-up-at-night pay dirt!’
"I thought you said your dog did not bite!" he exclaims. To which, the clerk replies, "That is not my dog."

In sales, how do we know if our prospective customers are answering the questions we think we're asking? How do we know if we're asking the best questions—or even the right questions? The Pink Panther vignette illustrates both humorously and poignantly what can happen if we take actions when there are incongruities between questions and perceived answers. I can relate to Clouseau's not-entirely-self-induced folly, and I wondered whether sales questions I've used could be similarly entertaining fodder—or, at the very least, instructive. So I reflected on my inventory of sales calls over 20 years and came up with two examples—one showing failure, the other success—that illustrate what can happen when you're asking questions in selling. My conclusion: Getting to the right answers requires careful thought and constant practice. There aren't any shortcuts, but there are some best practices.

A failure
I worked for several weeks to secure an appointment with the vice president of operations for a large national chain of dollar retail stores, which I'll call Stuff for a Buck. My company's product was a suite of bar code scanning hardware, software, label printers and services. To prepare, I studied the dollar chain's distribution, logistics and competitive challenges. I was ready for The Meeting at Stuff for a Buck.

After asking mostly ordinary empirical questions such as: "How many trucks? How many warehouses? How many shipments per day? And how many stores by region?" I moved to the pain part. (I was told early in my career that a big part of selling is to "find out what keeps the customer up at night.")

"What goes wrong in your daily operations?" I asked. The VP responded, "It's quite common to put the wrong load on the trailer. For example, the truck going to Charlotte might actually be carrying the inventory that's supposed to go to Wilmington. It happens quite often throughout our distribution network. We haven't found a way to prevent it."

Ka-ching! I hit what-keeps-me-up-at-night pay dirt! My supposedly keen industry insight caused me to extend his answer into the downstream logistics migraines that Stuff for a Buck must experience: heavy trailer loads of goods shipped in error all over the country. Goods in transit out of control and arriving in unintended locations. Stock outages. Customer service issues. After collecting some more data from the VP and offering him the hope that my proposal would eliminate his problems, we exchanged pleasantries about kids and golf, and I departed his office.

Using what he'd told me, I developed a proposal for a real-time, multi-warehouse inventory control system, including 200 handheld and mobile terminals and dozens of radio frequency access points. Inventory movement would be efficiently and accurately recorded with the simple pull of a scanner trigger. No more mistakes. No more manual data entry. No more paper. All this for $300,000—an excellent value considering the multimillion-dollar scale of the company's inventory and transportation costs. Of course, I forecast my sales opportunity to close in the current fiscal year and received kudos from my district and region managers for having uncovered such a valuable lead. High fives were given all around, and we believed we couldn't lose. I sent the sales proposal to my prospect and awaited the affirmative response, which never arrived.

Why? The major reason was because I hadn't explored or understood the problem's impact on the enterprise. As the VP later explained, "We sell everything for a dollar. Our customers don't expect to see specific items in stock, so it's not a headache if the wrong truckload backs up to the store's receiving dock. They'll unload it and put it out for sale. We don't like it, but it doesn't really matter to us in terms of our financial performance." End of story. My opportunity was lost. My prospect eventually became someone's customer. But not mine.

What did I learn? First, that the VP had answered my question as he heard it. I had asked, "What goes wrong?" when I thought I was asking, "What goes wrong that matters to you?" I misconstrued the gravity of the problem because it was the first one the VP mentioned.

Second, my industry knowledge had mutated into myopia, which prevented me from asking the right follow-on questions. Had I been a little more curious, I would have asked questions that would have helped me gain more insight, such as: "What is the consequence when the wrong goods show up in Charlotte? What does this problem cost per occurrence and annually? What impact do those costs have on overall financial objectives? How will this problem affect strategic goals if unabated?

Third, by tackling the first problem the VP described, I failed to complete the picture. I didn't ask, "What else?" followed by questions that would have not only exposed problems far more consequential to the organization but also provided me with a broader perspective on its operational issues.

Finally, my discovery process should not have been limited to talking with just one individual. I should have taken the time to ask networking questions, by which I could expand my contacts and gain a breadth of opinions and information—like a wiki model in which the value of the answer increases with multiple viewpoints.

A success
At a different company, I sold Oracle integration services to firms in the mid-Atlantic area. Our short-term objective was to sell services for installing the next version of Oracle's operating system, but my company's California-based staff and lack of local references made that challenging. Yet our consulting practice leaders were resolute on promoting such high-dollar, long-term projects. Consequently, my initial prospect-qualification questions centered on whether the prospect planned to upgrade to Oracle 11i in the next 12 months. Most didn't. After a few weeks of cold calling, I finally obtained an appointment with the IT manager of a distributor I'll call XYZ Healthcare Products, though he was reluctant to talk about upgrading.

When I arrived at XYZ, I learned that the IT manager had invited eight colleagues from other departments to join our meeting. We began our discussion about whether there was a business case to upgrade to 11i. The more questions I asked about upgrading, the clearer it became that it wasn't necessary. The conversation began to trail off as people looked at their cell phones and watches. Was it time to end the meeting and check my Blackberry for the Next Opportunity on the way to my car?

I didn't because something piqued my curiosity: Why were there were eight people assembled to discuss something that appeared all but decided? Although I didn't ask that question, I decided to ask a different one: "Assuming that technology and finances posed no constraints, what would you change right now about your business processes and operations?" The IT manager shared that a significant unsolved problem was that the company needed to produce a customer-ready invoice that could be placed in the shipment box during final packing, and Oracle's "vanilla" software couldn't provide that capability, causing XYZ to delay invoicing. His response surprised me because superficially the problem seemed minor, but his comment elicited nods from his colleagues.

That answer meant that the massive consulting project I needed to close had just devolved into a few billable hours to provide this seemingly-prosaic modification. Considering how insistent my practice managers were about selling upgrade work, I could have lost my sales resolve. Instead, I wanted to know more. What was it about this issue that created such visceral pain among these managers? As my mind filled with questions, I asked, "What does this limitation mean for your operations?" Their answers exposed issues ranging from customer service to logistics to receivables administration.

Probing the receivables challenges yielded insight into perhaps the greatest strategic challenge XYZ faced. The invoicing delay caused significant cash-flow problems. "Why haven't you fixed this already?" I asked. "We thought it couldn't be done, and, up to now, no one has taken the time to come here to meet with us." I explained that providing the change they requested was not complicated. XYZ's president was then called to join the meeting, and he excitedly corroborated what his managers had told me. The company signed a contract for the modification and became a client.

What did I learn? First, my central qualification question, "Do you plan to upgrade to 11i in the next 12 months?" was based only on what I wanted to sell; it risked missing opportunities because it ignored uncovering the outcomes my prospects required. By asking the right questions, I was able to learn that the immediate burning issue could be located in an unexpected place, and by providing a solution to address that issue, I could create a new sales path toward my higher-dollar work: the 11i upgrade service package.

Second, by removing constraints from the possible answers, I was able to eliminate boundaries that prospective customers often impose on themselves. Similar to vendors, prospective clients develop myopia based on perceived technical, financial or resource limits. Gathering requirements information that is unbound by those limits is important early in the sales process because discovering what the prospective customer wants is more valuable than discovering what he thinks he can get. Both questions must be asked, however, because the answers matter—and are often different.

How can salespeople improve discovery skills? The president of a large local real estate company recently told me that he views asking questions as the single most important selling skill—and that few agents do it. Extrapolate that problem to other industries, and it's no wonder that many companies suffer from low sales productivity.

What are the key habits for success?:

Bring an insatiable curiosity to your appointments.
Don't assume you know the answers to your most important questions.
Endeavor to see the world through your client's eyes. This empathetic view requires one to ask questions.
Listen for unexpected answers, probe further and have the agility to capitalize on the resulting opportunities.

In August, I performed a nationwide survey of sales professionals about how they use questions to discover customer needs. The answers revealed a wide range of patterns, techniques and favorite questions, suggesting that there are many pathways to successful discovery. The best idea I received was this one: "If I'm unclear about who, what, when, where and why, I keep asking questions."

The Winner's Curse: Sometimes It's Better to Lose a Sale

2008-09-08T07:09:00.000-07:00

The happiest event in a salesperson's life is winning a major sale against an archrival competitor. The second happiest is losing a sale to your competitor—and learning that the prospect became your competitor's worst support nightmare. We call it the Winner's Curse.

I know. I've been on both sides.

Having a customer engagement you'd have been better off without is more demoralizing than losing a coveted opportunity. For the also-ran sales teams, buyer remorse over a rival's product can provide a windfall boost to sales—without investing penny in marketing, product development or additional sales expenses. And no one can ever accuse a salesperson of mudslinging when he or she shares a bona fide negative reference about a competitor.

‘Worst of all, a new competitor had the opportunity to become a hero.’
A company I worked for many years ago was a premier systems provider to manufacturers and distributors but had little presence in the healthcare market. My employer wanted a beachhead account in this important and growing market. I won a substantial contract to supply a records management solution to the radiology department of a large, multi-site healthcare client I'll call Mega Health Services or MHS.

MHS wanted its new system to record an admission, print a barcode label, scan the label and track an X-ray jacket. Every admission. On demand. Thousands of times per day. We placed the order, and the barcode equipment was delivered and set up in every MHS radiology center.

That's when things started to go wrong. The printers started to jam. Many times. In many locations. Calls from upset radiology technicians and nurses poured into my cell phone. "My printer is jammed! It needs to be fixed! Now!" In a face-to-face meeting I can't describe as cordial, the corporate radiology manager spelled out her expectations to me: "Delivering the highest level of service to our patients is paramount to our organization. We expect our vendors to enable that. Period."

No one's fault
My local service manager offered no relief. "There's not much I can do," he told me. "Next time one of the printers jams, have them bring it in (to the service center)."

"You don't understand," I said. "They can't do that."

The service manager had fulfilled his forensic obligations—at least according to his job description. The situation worsened. More printers failed, and the phone calls I received became shriller.

Eventually, a manager in my company's consumables division told me the jamming problem might be related to a series of quality incidents at our manufacturing plant. He said that the thousands of labels I sold to MHS were wound too tightly onto the paper cores. That problem cascaded. The over-tightened labels had small amounts of oozing adhesive. At MHS, that adhesive adhered to the print heads as the labels passed through the machines. The labels peeled inside the printers and got stuck. To free the stuck labels, harried employees used whatever they could find—including metal implements, which caused the electrically-conductive print heads to short out. My company's warranty didn't cover that problem.

"Fiasco" doesn't come close to describing the outcome. The concomitant problems took months to sort out, and MHS eventually replaced my company's equipment with a competitor's. The label revenue? Gone, too. Worst of all, a new competitor had the opportunity to become a hero, without incurring prospecting expenses, engineering costs and proof-of-concept costs. I had underwritten all of that, as part of the initial system sale.

What cauldron of issues created this Winner's Curse?

The general ledger account silos. When it came to revenue and expense accounting, my company didn't share anything between departments. In this Winner's Curse scenario, only one department received revenue credit for equipment: sales. The service manager's revenue came from service contracts, and he believed that warranty support was an expense to be controlled and minimized. And because support expenses weren't costed to sales, I had little incentive to reduce the risks. The Consumables division? It didn't receive credit for hardware sales or service contracts, even though its revenue was dependent. What kind of experiences do these accounting silos create? Just ask MHS's corporate radiology manager.
Prospect qualification. This focused on getting the sale, instead of gaining a valuable customer. My investigation traded off asking other valuable questions, including "will this prospect become a valuable customer for our organization?" or: "Can this prospect implement our solution?"
Poor customer expectation management. In client meetings during the sales process, we didn't discuss risks and minimized MHS' obligations. Many Winner's Curses begin when a vendor over-promises and under-delivers—instead of the other way around.
Lack of coordination and performance measurement. Quality control problems at the label plant. Equipment failures. Viscerally unhappy customers. Was anyone watching these not-so-disparate events and preparing a coordinated response? Each department had a separate set of performance measurements, none of which mitigated the risk that the customer might be completely dissatisfied.

By any analysis, this Winner's Curse was my company's self-inflicted debacle. But in many situations, customers are complicit because they fail to see beyond their own self interest. They don't recognize that a valuable business relationship provides mutual benefits. Customers benefit from what a product provides—and vendors must make a meaningful profit providing it.

Some sales engagements aren't worth winning. How can you know? There are two keys. First, have a clear picture of what a Winner's Curse looks like and what it means for your organization. Second, ask the right questions to expose the risks. Those questions must be asked not only at the beginning but also throughout the customer relationship.

"That's not our policy--and no, we don't want to hear from you!"

2008-09-03T07:19:00.000-07:00

How’s this for a conundrum?

Help the customer or Enforce company policy. Enforce policy or help the customer.

Office Depot’s management created this very quandary when my friend Elena visited their brand, spanking new store in Albuquerque last week.

She wanted a copy of a two-page color document, but she was told she had to wait because the store’s policy was to service register customers first. Watching customer after customer enter the store and leave with a purchase, she gave up waiting after one hour. The manager overseeing the few overworked employees could hardly have been less contrite. After she complained about the long wait, he offered “you can come back later this afternoon and pick up your copy.” How’s that for service?

What could have been the outcome if the store manager wasn’t conflicted in his goals? What if he were empowered (to use a now-popular term) to offer to courier Elena’s document to her or to ship it overnight? Instead, the policy shackles at Office Depot prevailed, to everyone’s detriment.

During Elena’s wait, she purchased a few items, and decided to voice her complaint via the website printed on her receipt, which helpfully shared how much Office Depot values her opinion. After carefully crafting an informative message about her poor Office Depot experience, her transmission was promptly rejected. Why? She declined to include her gender and annual household income among the information she submitted. Clearly, any mantra espousing customer centricity isn’t mounted in a frame at the home office.

My friend Elena left Office Depot without her color copies, and without Office Depot learning about her experience. She won’t visit the store again. And yes, she will tell twenty people about her experience.

Office Depot, are you listening? Maybe Staples will!

Don't Bother Me With Social Media Strategy--I Have to Sell Something

2008-08-15T07:39:00.000-07:00

By Andrew Rudin, Outside Technologies, Inc.

It’s old-school thinking, but I hear it all the time:

“If we can just get our product in front of the right people, it sells itself.” Or “we just need to get our foot in the door!”

To carry out that mission, does the image of a money-motivated, aggressive salesperson jump into your mind? Maybe a salesperson who “has the right contacts?”—codespeak for someone with a shortcut to a decision maker, obviating the need to perform other sales and marketing fundamentals.

What fundamentals am I talking about? Knowing where your company’s voice must heard, and developing strategies to get in the conversations.

Until just a few years ago, we assumed conversations meant face-to-face communication. In a group setting, we needed a few drinks along with great icebreaker patter to help us get into a dialog.

We don't make those assumptions anymore. With Web 2.0, or Social Media, conversations aren’t just face-to-face. Technology plays a big role, and it means everything to salespeople who can’t afford to wait for an invitation to join in.

For salespeople, why has participation in Social Media conversations become so important? First, through online conversations, people discuss problems well in advance of the salesperson’s first call. In Social Media conversations, as with face-to-face conversations, questions are raised. Insight develops and becomes shared. Social connections are made inside and outside of organizational boundaries. Patterns of influence are established. Issues are aired and ideas are exchanged. What’s different from face-to-face conversations is that in many cases, the discourse is completely open and public! In a metaphorical sense, as a salesperson, at what point would you want to pop a breath mint and sidle up to enter the conversation? If you said “when I’m telemarketing from a prospect list,” you might want to examine how your strategy pits against your social-media savvy competitor, who has participated in the discussion since it was a wee, little thought.

Second, today’s social-media conversations are larger than we ever imagined—called a network effect, according to John Todor, an expert in using Social Media for business strategies. In one example he mentions, “over 50,000 people (sites) have RSS feeds to ezinearticles.com and many of these sites re-post content and are picked up by thousands of others through their RSS feeds.” You’d need to shake hands very fast to make that many contacts at your next business council meeting.

What does this mean? Three things. First, companies must re-think the boundaries of their sales process. Those that have defined the process as beginning before the salesperson’s first call have a healthy advantage over those stuck using the old-school paradigm in which selling begins with the first prospecting call. Second, salespeople—not just Marketing—must adopt technology tools that provide the Internet equivalent of joining a conversation. Reciprocally, Marketing must recognize that the “one-to-many” vs. “one-to-one” delineation of Marketing vs. Sales blurs with Social Media. It’s not heresy for salespeople to initiate and manage one-to-many conversations. Third, Social Media shifts control of conversations outside of selling organizations. Salespeople must learn how to manage when that control is relinquished. They must learn new ways to use Social Media conversations to gain insight and exposure. What change could be more profound for those of us who grew up selling when we owned the information and were constantly coached in better ways to direct discussions?

Building sales and marketing organizations ready for this challenge requires shifting energy away from leading discussions through features and benefits messages to ones in which meaningful questions are asked. Social Media’s power can be fully harnessed when organizations discover how to exploit signals from these conversations for new strategic or tactical directions.

When it comes competing more effectively on today’s sales gridiron, which emerging Social Media technology tools can salespeople take into their own hands and use? Stay tuned. That’s the subject of my next blog

Asking to Send Literature is not Lead Qualification

2008-05-23T07:52:00.001-07:00

Here's a link to my latest blog on CustomerThink:

http://www.customerthink.com/blog/asking_send_literature_not_lead_qualification

A Telecom's CRM System Shouldn't Add Static to the Contact Center

2008-05-23T07:49:00.000-07:00

Here's my latest article on CustomerThink:

http://www.customerthink.com/article/dont_add_static_contact_center

Is There "White Space" in Your Customer Relationships

2008-05-02T07:37:00.000-07:00

When managing sales relationships with major accounts, is it better to have more points of contact between vendor and customer—or fewer?

The answer depends on whether value is added to or subtracted from those sales interactions, according to Rob Cross, an author and expert in social networking, who led a symposium I attended last week, “Leading in a Connected World.”

More than "fuzzwords," social network value added and value subtracted are measurable and meaningful in financial terms. Yet C-Level executives don’t think that way when creating CRM processes, account teams, and collaborative sales models. Oddly, the same companies that routinely scrutinize the cost of airline tickets don’t track efficiency of collaborative activities—a potentially far greater expense. That irony was underscored when the majority of the symposium attendees indicated that well over half of their time was undocumented, and spent in internal meetings, on the phone, or answering email.

Ever since the words “social” and “networking” were joined to mean informal channels of communication, CRM practitioners have offered conflicting ideas about how to make collaboration more effective. One Symposium insight: sometimes, “less is more.” This is because not every interaction produces value. Which interactions are the most valuable? According to Professor Cross, the best opportunities for value-producing collaboration are best-practice knowledge transfers, innovation, and revenue generation activities. The absence of those value-producing activities might be considered “white space” in the customer relationship. In Professor Cross’s words, effective collaboration doesn’t mean “everyone in the woods singing Cum By Ya to each other.” By uncovering where value is added or subtracted in collaboration, companies can garner the right resources, manage staffing, and organize teams.

So where is collaborative value added and where is it subtracted? Value is added when tacit knowledge for best practices, innovation, and revenue generation is exchanged between individuals. As for subtraction, there are two major sources. If the outcome of collaborative activities provides neither productivity improvements nor cost reductions, then those activities are value-subtracting to an organization. Second, consistent negativity from even one employee can have a measurable, cascading impact on the value an organization produces. And the impact is magnified in organizations that depend on collaboration for executing strategy.
In a PowerPoint slide, Professor Cross illustrated a basic social network. When individuals in a large, multinational company were asked the question “who do you receive information from and provide information to,” the network’s visual similarity to a giant hairball was stunning. From that picture, it’s easy to get the impression that everybody talks to everybody. I would be challenged to explain to a CFO how that picture portends to drive value for his or her company.
But underneath that picture, communication silos exist. These silos are losing favor, particularly for business development operations. One symposium panelist, Tracy Cox, Director of Performance Consulting for Raytheon Corporation, debunked the idea that selling activities should be the exclusive domain of the sales department. He recommended that companies consider different collaborative routes to engage with high-potential prospects, noting that it’s important to “understand the key influencers and reputation holders in the customer community and how to leverage those connections for new business.” It’s myopic to think of the Account Executive as the focal point for facilitating those connections.

When more specific relationship questions are asked to produce the social network model, the lines in the amorphous hairball social network strip away, yielding valuable insight. Who energizes you in your business activities? Who do you go to in order to generate revenue? Who gives you a sense of purpose? When these connections are mapped, patterns emerge that are highly predictive in how real value is transferred within and between companies. Not surprisingly, for these questions, the best performing account teams not only had strong client connections, but also better networks into their own organizations.

In addition to the Raytheon panelist, two other panelists, Lisa Vertucci, Managing Director, Global Head of Talent Development of Lehman Brothers; and John Helferich, former Vice President of Masterfoods USA shared how their organizations have used social network modeling to create value through collaboration. The operational decisions they made began with asking these questions:

How can we make invisible value visible to our customers?
How can we create the most effective cross-boundary relationships?
How can we identify key new business opportunities?
How do we uncover which people provide greater than average value in cross-selling products and services?
What is the most expedient way to “grow the conversation” about an important topic?

As with forensic sleuthing for suspicious financial transactions, following the money path in a social network context provides a good starting point for figuring out what’s valuable—and what’s white space—in your customer relationships.

Does Your Company Differentiate by Offering Good Products With Virtue?

2008-04-24T09:07:00.000-07:00

If you want to become wealthy, “create good products with virtue.” The man who made that recommendation, Ted Leonsis, should know. As co-founder of America Online, he has repeatedly used that idea to build a financial empire.

But today’s world is so full of non-virtuous products and customer experiences that there are websites, blogs, and government agencies dedicated to sharing information about the perpetrators. Given that, could simply creating good products with virtue provide a major differentiator for a high-performance brand?

As Mr. Leonsis observes, with the unparalleled amount of customer sentiment available to producers today, “there is no reason to have bad products or services.” If only it were so easy. Companies spend many billions of dollars in pursuit silver bullets in the name of Sustainable Differentiation—often with little results to show for the effort. So whenever I uncover a “good product with virtue,” it seems awesomely different.

Do we chronically have examples of non-virtuous products because managers and investors don’t care about having virtuous ones? Because companies don’t know how to produce good products? Because many really smart people simply talk too much? What makes a product “good and virtuous” in the first place? And how can an enterprise exploit such differentiation through its sales and operational strategies?

An example provides help toward answering these questions. I thought back—before Web 2.0, viral marketing, email, data warehouses, even before Internet itself—and remembered how a grocery retailer, Giant Food Corporation of Maryland—deployed “good and virtuous” as a formidable competitive weapon for over thirty years. What differentiated the company? Consistent delivery of quality, value, and service to every customer. More than mere words, these differentiators created complex operational challenges in a demanding, highly competitive business serving a wide demographic.

One highly-effective resource the company used was a Consumer Board, a low-technology tool that was radical and controversial during the early ‘80’s, when I served as a board member for two years. As remarkable as it was at the time for a retailer to provide consumers a voice, I learned what was more significant was how Giant delivered its “good and virtuous” differentiation, gaining the largest share of the grocery market in the Washington DC area in the process.

Four important tactics stand out most in my mind:

1. Bring the consumer’s voice to the executive suite. Before any of its rivals did so, Giant not only recognized the primacy of the consumer, but organized its management and operations accordingly. The Giant consumer executive at the time, Odonna Mathews, had the authority to enact recommendations that the board made. Other boards simply provided information to a corporate representative who lacked decision-making authority.

2. Direct senior management involvement with consumers. Izzy Cohen, the Giant CEO at the time, regularly attended our meetings.

3. Tight focus on the needs of individuals and communities. In creating “good and virtuous” differentiation, Giant understood that short-term profits were worth exchanging for customer loyalty. One prominent example was the Consumer Board’s recommendation for Giant to offer tabloid- and candy-free checkout lines, which the chain implemented well before the rest of the industry.

4. Independence between quality initiatives and store-level financial performance measurements. For example, if an ailing freezer needed replacement, the store’s manager wasn’t penalized with the cost of the equipment. Giant’s expenses toward quality differentiation never impacted a store’s profitability. Internal conflicts were eliminated.
The esteem that Giant Food held in the communities it served cannot be overstated. The most compelling story occurred during the riots in Washington, DC following the assassination of Martin Luther King Jr. When hundreds of other businesses were destroyed or damaged, community activists protected the Giant Food stores, all of which survived unscathed. That relationship and commitment could not have been achieved without creating “good products with virtue.” The financial rewards speak for themselves.