Greetings and welcome to the New Year. At this point you now know if you made your revenue plan or not for 2011. It’s onwards and upwards into 2012, and now time to take a look at how well your customer facing team is equipped to meet the challenges ahead.

Last month we looked at the quantitative components that Management assesses to identify the producers from the laggards; how you answer the following questions will help determine what skills your sales professionals need to master and execute on a regular basis to meet and exceed plans.

See if you can match the question posed with the corresponding sales skill (answers at the bottom of the article):

1. How many of the qualified opportunities in your current sales pipeline were initiated by the seller?
2. What title(s) most commonly appears in the field for primary point of contact? Is that a decision maker’s title?
3. How well matched are your company’s product (service) capabilities with the prospect’s business objectives?
4. What value (outside of product/price) will the prospect’s organization be able to identify while working with your company?
5. How far into the prospect’s evaluation period of a sale will they engage with a seller?
6. Who in your sales team held the margin line in the negotiations, and who caved to the buyer’s pressure?

How well can the individuals on your teams execute each skill? And if they need additional coaching to be proficient (most do), can their Sales Manager provide tools and techniques to improve? Our customers benefit from a customized sales process that is embedded into a reporting tool that allows for real time review and updates.

By using the questions above, and analyzing the answers, managers identify who has the skills and who doesn’t, and reflects what skills need to be worked on. This is how your qualitative analysis of skills can be analyzed in relation to the quantitative assessment.

We work with a company that calculated the cost of every sales call at $400.00. They discovered that many of the calls were to prospects that would never produce enough revenue to cover the cost of the calls made required from start to finish (1 through 6 above). The managers were then tasked to analyze how well the reps could execute each step, and identify where the coaching was required. As a result, the reps’ overall skills improved, the amount of time spent on the wrong prospects was reduced and revenue results increased with fewer overall calls being made. In essence, the focus is on the quality of the calls versus the quantity of calls conducted.

And as promised, here are the skills that match each question above: 1) New Business Development 2) Accessing Key Players 3) Qualification and Positioning 4) Establishing Value 5) Opportunity Management/Forecasting 6) Negotiation.

In the song “Cheaper to Keep Her”, the words spell out the trials and tribulations of whether to stay in a bad relationship or make the painful decision to cut ties.

Well it’s the end of the year and companies are looking for a big finish; then the analysis begins.  The bottom line seems to get all the attention.  Did we make more money than we did last year?  Every expense gets the once over.  And the biggest expense in selling is walking around on two legs: the sales force.  The compensation, training, travel and entertainment and benefits all add up to the overall expense.  How can companies rationalize the investment in sales people?  When do Managers make the decision to stick with an average contributor, or move them out of the organization?

The three quantitative measurements in relation to expenses that Management needs to look at are total revenue produced, margin on sales, and the mix of products sold.  There are also important qualitative measurements that should be considered, and they will be addressed in the next article early in 2012.

1.  Revenue Production:  The most common quantitative analysis done on sales people is at the macro level; did they hit their revenue number for the year?  The challenge is that some of the sellers who drive revenue have huge salaries and some do not.   In sports, the salary (expense) does not necessarily correlate to how well the athlete performs.  In business, the total expense associated with the revenue production must make sense.

2. Margin: A week after Q4 ends, most management teams can see what the net effect of last minute discounting when the reps buckle to pressure to close year end business. The exercise to protect margins should be built into a coaching formula that includes opportunity review. Once this is embedded, the mechanism should allow managers to know the profit that reps can obtain in closing situations.

3.  Product (and Service) Mix: Product mix will show if the sales person is selling the right products to the correct customers.  Let’s say a sales person consistently sells low on a medical device but the consumables for the device are sold at full price.  It will take twice the volume in consumables to make up for a discounted sale of the device.  These numbers tell a story and will point dramatically to drags to the bottom line.

After watching Moneyball,   the movie that documented the notion that winning in baseball boils down to how many players get on base during a game, you would think there is a scientific formula that could provide the answers to controlling selling expenses.  The good news is, for our customers that mechanism is in place.

Once fully implemented, a well created sales process can provide managers with a lens to look at these, and the related qualitative measurements, to determine if they should invest more time in developing sales people. In this capacity, “Cheaper to Keep Her” means continuously developing the skills with the seller to bring their performance up to speed in relation to the 3 areas mentioned above. Otherwise, it may be time to part ways with that employee, and begin the arduous task of replacing them with new talent.

This time of year brings thoughts of Thanksgiving, Christmas and scary costumes for Halloween.  For some sales organizations it brings a number of scary thoughts and concerns as well.  Will we hit quota, is the pipeline as strong as it needs to be, and do we have the right players in place?  Are our buyers as committed to us as the information reflected in our recent correspondence? Or have they slowed the communication down?

For some, the pressure is mounting to close the year out in a strong capacity and it seems like requests are coming from every direction – senior management, buyers and the sales team.  Don’t panic.  There is time to assess the situation and make some course corrections.  Here are some solid steps you can take to bring in the 4th Quarter business:

1. Grade your Pipeline. Do it early in the quarter (aka NOW) and often if the opportunities don’t seem as solid as desired.  Lower probability opportunities should be re-qualified and moved to 2012 if a Q4 close doesn’t seem to be realistic.
2. Manage your Buyers. Some buyers will let the clock tick to the end of the year for concessions.    If a buyer senses that a seller is too desperate, too needy or tips his hand that he is behind budget, prepare to have your margin eroded.  Seek to establish milestones early in the quarter so buyers don’t feel like they are being pressured at Quarter’s end.  Negotiate from a position of strength.  If a seller reviews milestones with a buyer and offers Quarter 1 target dates, the buyer will believe that you have a full pipeline and may communicate a commitment to close earlier.  The seller must be strategic about allocation of time and resources.  If a buyer is not ready to move, adding them to the 2012 pipeline may be the smartest move.
3. Maintain Business Development Activities. Start to identify opportunities for 2012.  Too often sales teams have moved from crisis to crisis and fail to understand that insufficient business development activities are the cause of the reoccurring nightmare.  Don’t buy the argument that sales staff can only step up their game under pressure.  Every major league coach knows that games are won on the practice fields and that good behaviors and performance are exhibited on game day only after detailed preparation.  Early business development activities insure that sufficient time is available for the lead to be nurtured.
4. Assess your bench. Do you have the right people on the team?  What resources do you need to deploy to close the deals you need to hit quota?  Are additional skills and practice needed to increase your close rate?  What approaches are going to be the most effective with your buyers?  Is there an opportunity to improve the skill set of the sales team?  Can you role play the critical opportunities to maximize the potential for a successful outcome?  Is there a development plan for 2012 that you should be budgeting for now based on the assessments and opportunities for improved performance?

Frequently I am asked by management teams to attend their sales meetings, to give feedback, and to participate in how my customers are developing their revenue engines. These meetings are often designed around team building events on a beach or at a resort with a golf course. Sometimes they are dialed down meetings, designed to set the vision for the company; others are an opportunity to relax with their colleagues. Some are both (my favorites, indeed).

Recently, I’ve sat back to consider what makes a good sales manager great. A manager’s primary role is to develop the sales rep. The sales rep’s primary role is to develop the opportunity and win the business. There are four competencies that a manager needs to master to become great.

1. Set Objectives: I’ve seen managers set objectives based on their own personal experiences with no buy in from the rep. It looks like this: “All sales reps must call on 5 opportunities a week and make 20 cold calls a day.” This approach may work, but the better way would be to set objectives with the sales rep. It looks like this: “Here are the revenue objectives we are trying to meet this year. What do you think we need to do to achieve that objective?” Managers who can get buy in from the rep and set clear objectives will garner amazing performance.

2. Schedule Reviews with Agreed Information Share: Once the objectives are set and the expectations are clear- now what happens? Don’t just leave it up to your sales rep to “wing it”. If the objective is to win $500,000 new business, then discuss with the rep what types of customers they should be talking to. How many of those customers will they need to talk to reach their goal? Have them send you the follow up correspondence they are sending their customers as a checkup. Walk them through the process and the expectations for follow up and you will have repeatable success.

3. Evaluate and Coach: In my experience you can learn a lot about a sales rep’s performance from the prospect’s replies to follow up correspondence. Are the customer’s goals clearly stated? Can the capabilities provided move them closer to those goals? Are enough letters going out to show an ample pipeline? Are they talking to the right people at the company? These letters should tell all these things and more. After the evaluation, choose 1or 2 things to coach them on. It can’t be too many or the little time you have to spend with the rep will seem crowded and your coaching will be overwhelming. Tackle one skill to help them improve at a time. For example, role play with them and listen to how they position your product’s capabilities. Then tackle another skill the next time you talk or meet, soliciting their feedback on how the reinforced skill is developing.

4. Feedback and Reinforce: Look for what the sales reps do well. You’ll need to constantly reinforce the positive and maintain the foundation you’re building on. If the objectives are not being achieved, then focus on what’s going right and how that skill got you 50% there. Then work together on skills that will to get you the rest of the way. If a manager can master this skill they will not just be a great manager but a great leader as well.

As John D. Rockefeller said, “Good management consists in showing average people how to do the work of superior people.” By mastering these 4 skills managers will get superior people with superior results. My management workshops are an in depth development of these skills, and I welcome an opportunity to discuss them with you.

One of the members in our workshop described on of her sales calls.  This was a meeting a buyer that represented a very large piece of revenue.  This was the biggest “fish” she’s ever tried to catch.  She said her first meeting with the buyer was scheduled for 30 minutes.  She was in the waiting room with several other companies’ sales people.  Nerves were high.

When she got into her meeting with limited time, she began to ask questions.  She asked business questions.  She asked questions about how they operated and ran their business.  She didn’t rattle off why her product was better than everyone else’s in the waiting room.  She knew the questions to ask to position her product properly.   After the first few questions the buyer stopped her and startled her.  “Why are you asking me these questions?  No sales person has ever asked me these questions.”

The way she was selling her was already differentiating her not just from the sales people in the waiting room, but also from all the sales people he’d seen in a while.  She explained why the answers to these questions were important for them to discuss.  His whole demeanor changed towards her.  He settled in and started taking these questions seriously.  He spent 1 hour and 15 minutes with her.

Many of her competitors in the waiting room were rescheduling their appointments, when she walked out   Let us help you with those questions to ask all the fish not just the big ones.  This will help you sell in a way that differentiates you from the crowd.

Buyers are often more sophisticated than sellers may give them credit for.  They are also more risk adverse.  The key to driving revenue in the current environment is to give the buyer permission to buy.  Simply stated, buyers are not going to buy until they are comfortable that they have all the information they need to make a good decision.

There are 4 ways to help the buyer give themselves permission to buy:

1. Understand needs.  Ask targeted questions, developing a logical process for organizing all the information.  Buyers don’t like to be told what to do and developing trust in the seller is an increasingly important criteria.  If a buyer senses the seller is genuinely interested in helping the buyer solve a problem or address a need, the buyer is much more receptive to sharing. When a seller appears desperate or pressuring the buyer to make a purchase decision, the buyer becomes wary of the seller’s intentions and may actually defer the decision or say no.
2. Help buyer discover for themselves the solution.  By asking the right questions you will be able to paint a picture of how the buyer will use your product.  They need to get to the “aha” moment where they can actually picture who will use the product and how.
3. Establish value to overcome barriers. Buyers will come with barriers based on value. They can do research on the internet to overcome enough of them to engage in a conversation.  Once in the conversation, the key for the seller is understanding what the buyer perceives as value of your product and build more value on that basis.
4. Cost of NOT doing business today.  There was a time when sellers were being encouraged to “close” early and often.  That may have worked in some situations, but experience has proven that in today’s tight market place this no longer works.  Buyers are increasingly risk adverse and decision making has often expanded to include a larger group of people. Help the buyer calculate how much their waiting would cost them in a week’s time, a month’s time or a year’s time.  The actual figure will help underscore the need to close quickly.

When sellers have identified and addressed the needs of the various stakeholders and value of your product has been established then the buyer and their organization will not only give the buyer permission to buy but will demand the solution offered by the seller.

On return from a recent trip, I was making an international connection in an airport and passing through security for the second time. The security guard asked me the same standard questions, but the last question she asked me I found to be most curious. She said, “Should I trust you?”  I paused and then answered in the affirmative, but it got me thinking.

When meeting with a prospect for the first time, how do you establish trust?  This is not the same type of trust that you have with a family member or loved one, but the trust that allows someone to have a candid conversation about their business issues.

There is plenty written about how not to do it, such as being pushy, talking too much or just falling into stereotypical selling behavior. But in that critical window of time (some say as short as a minute) how do you make a connection that allows the prospect to feel comfortable sharing information with you.

In his recent book “The Speed of Trust”, Stephen M.R. Covey identifies trust as the one thing that changes everything. He defines trust as confidence, confidence that the words that come out of a salesperson’s mouth show genuine interest in understanding the situation before a “spray and pray” feature dump.

Here are a few simple steps to follow to make sure that you can earn initial trust:

1-    Be prepared with questions geared towards the prospect’s organization and needs, not statements or brochures around your product, service or organization.

2-    Allow the prospect to set the pace for the meeting, and only offer suggestions for items to review after they have expressed their priorities.  Help the prospect discover needs by listening to what they say.  A few well -constructed questions will help the prospect come to their own conclusion.

3-    Be sincere.  Being sincere means doing what you say you are going to do. The first way to establish sincerity is a prompt, written follow up after an initial meeting that captures the important components for the prospect and their organization.

Some think trust takes years to cultivate and develop.  The security guard in an airport thought it could take one second, a reaction to a question.  One thing is certain; establishing trust is a central component to all healthy relationships.

After workshops many of my clients often come to me with a specific skill that needs to be addressed like:

• My people give away too much in the end.  We should focus on their negotiating skills.
• We are working on an enormous opportunity and could use an outside look.
• Our people seem to be wasting their time with unqualified opportunities.
• We need a reminder of how and what to prepare for sales calls.

The one day refresher workshop is a great option to sharpen these skills and other skills that you and your sales team identify.  This will be a customized, one day workshop around your needs.  The workshop format will be lecture, group discussion, skill practice and other participatory exercises.

This workshop could easily be added on to an already existing sales meeting.   If you have a small group or large give me a call, let’s get started today.

Contact info:
John E. Flannery
858-518-7039
john@drive-revenue.com

On Thursday, March 17, join John Flannery for an executive briefing that will explore how to turn the cost cutting of 2010 to revenue building in 2011.

Over the past few years buying behavior has changed.  This has had an impact on many companies’ ability to generate revenue.   He will share insights into key revenue drivers and techniques for jump-starting your sales process.  Successful strategies used by top performing companies will be shared.

Topics to be addressed:

• How do I focus our company’s sales resources to get the maximum ROI?
• How can marketing and sales work together more effectively?
• How do I improve the performance of the bottom half of my sales organization?
• How do I improve accuracy of my sales forecast?

Seating is limited.  Please email mindy@drive-revenue.com or call (858) 350-6223 to reserve your seat.

March 17, 2011 from 7:30 – 9:30 a.m.  A light breakfast will be served.

AMN Healthcare Boardroom
12400 High Bluff Drive
San Diego, CA 92130

Reflecting on the past year is a common occurrence during January.  Did results meet expectation, what improvements can be targeted for the coming year, what learning took place?  These are all common questions that managers and leaders should be asking themselves.

As the financial reports are getting finalized, more precise metrics are also available to judge past performance.  Were margins and profits sacrificed to meet sales quotas?  Quarter end and year end discounting are not uncommon but they do tend to diminish the margins that had been targeted in the profit plan.  We believe that this is an avoidable trap that can be addressed with advance planning, discipline and training.

The time to protect your margins is now.  By reviewing the opportunities in your pipeline you can determine the following:

1. Do you have enough opportunities to provide you the revenue that you will be targeting at quarter end or year end?
2. What is the confidence that those opportunities will close on the targeted timetable without needing to offer a steep discount?
3. Do you have enough bandwidth to focus on all the potential opportunities or are you better served by grading them and focusing on the highest margin opportunities?  Let your competitors dissipate their resources chasing the low margin deals.
4. Do you need to dial up business development to get more opportunities in the pipeline?

During a phone conversation with a VP of Sales in December, he told me that his team was busy “cutting deals” to hit their annual revenue plan. This is not selling, and the words chosen made my skin crawl. If your team seems to rely on discounting to get orders, maybe you need to focus more attention on your sales process and developing your team to sell value.  The value the customer will receive by using your product or service, not the discount they will get from price list.   Building the discipline to ask the customers the right questions to qualify them as a high or low margin opportunity is a learned skill.  It takes restraint for sales people who have been conditioned to close, close, close.  We know that margins can be improved with well trained sales teams and we’ve seen that happen hundreds of times.

Maximizing your profit margin doesn’t happen by accident.  It won’t happen by sending out a memo targeting desired margins for the coming reporting period either.  It is a result of leadership identifying the development plans needed for the sales team, providing the training, giving feedback on performance and ongoing coaching to reinforce the process that has been identified to close deals without needing to resort to deep discounts.

Revenue is important and sales quotas are an important part of a business plan.  Discounting adds risk as it increases the amount of products to manufacture or services that need to be delivered to achieve a given profit goal.  Start today to protect your margins in future quarters.  Having regular deal reviews will open your eyes to the reliability and quality of the opportunities in your pipeline.  Want to buy some margin insurance?  The time is now.

Flannery Sales Systems helps organizations develop and implement a repeatable sales process.  Improving the effectiveness of your sales organization is the key outcome we provide to clients.  We would welcome an opportunity to explore your needs and understand where your team could benefit from improved skills and sales processes.  Flannery Sales Systems works with a broad cross section of industries and we are confident we can enhance your results.