Archive for the ‘Economy’ Category

A Question of Business Ethics

December 19, 2010

I was reading a LinkedIn question about business ethics recently and wanted to share with all of you my thoughts on the subject. While the question of ethics in business is not new, I feel that it is an issue that not only will not go away anytime soon, but will play an even larger role in how businesses are run in the next decade as we continue through economic recovery, and as our society seems to come more and more from a position of “entitlement” vs. “work hard, do the right thing, and you will be rewarded by a job well done.”

I believe the measure of a man is what he does when nobody is watching.

I used to work for a company whose definition of business ethics was “If what you did today was the cover story of your hometown newspaper, would you be proud or embarrassed by it?”

Interesting thought, and one that I took very seriously. Sure we all will do dumb things from time to time, but I would think about what my grandmother (who turned 91 recently) would think if she read what I did. Would she know that I, at the very least, tried my best, or would she be thinking that no daughter of hers raised a kid like that? Another friend of mine, Will Webb from Dupree & Webbin Raleigh, stated it this way “When I come home at night, my wife and my little girl will ask me how my day was. I always want to be proud to tell them about my day…every day.”

Unfortunately, posing a question like that is open to a certain amount of interpretation as I learned quickly that different people read different newspapers in the morning. Some read the Chicago Tribune, others the Wall Street Journal. Sadly, still others read the Enquirer.

What are your thoughts on business ethics, and to what level? I was talking to a client yesterday about an issue they were having with a client of theirs who said that they don’t meet with him enough. What he was really saying was that they didn’t take him out to dinner enough. I learned early on that in sales if someone does business with you because you took them to a $50 lunch, someone else will come along and take them to a $100 dinner and take the business from you. However, for some, the business dinner—or at this time of year the holiday gift—is how they develop relationships with their vendors. Where do you draw the line?

I never seemed to do well with the guy who wanted the fancy dinner or to go out to a bar on a Thursday night. Most of my clients are people who, at the end of the day, wanted to go home to their families, so it was pretty easy to find a line to draw. If you interviewed all of the people I have ever done business with, I don’t think you would find one that did business with me because of a fancy dinner I took them out to, although several would probably tell you that it was getting to know each other over lunch that gave them the comfort level to know that I had their best interest at heart.

 

Should You Adjust Sales Compensation in a Declining Revenue Environment?

September 14, 2010

How one adjusts the compensation of their sales force is something many people have been talking about recently, both on business oriented discussion boards online and in person, privately as well as at well attended events.

On the surface, these are simple questions with several variables. In general, I have always been a supporter of lower salaries with the majority of the upside in total compensation coming from commission, especially when the salesperson controls the sale from start to finish. However, if the product or service being sold has quite a long sales cycle, 9-18+ months perhaps, and is a pretty high ticket item, I would usually say a larger base salary is needed because people do need to eat while they are developing a long term relationship.

The deeper question though is why so many companies are considering changing their compensation. Are they paying their sales people too much up front to begin with? Has the sales cycle just gotten too long? Has their sales team started to buy into the “bad economy” excuse and lost their focus on developing new relationships and growing the ones they have? What exactly is making it a “declining revenue environment?”

In over 20 years of selling and managing salespeople, my response to a change in compensation either by the company or by the salesperson is simply “SELL MORE!” While it isn’t nearly that simple, I would look at all factors of the “declining revenue environment” before making any strong consideration on changes. Plus, we have not even begun to discuss the potential for negative reaction from the salespeople. What would they do if there was a change? Would such a change cause you to risk losing too many of the right people and put you in a steeper declining revenue environment?

What Is Your Strategy to Strive in the Recovery?

May 19, 2010

So…what is it? One thing is for certain: even if you continued to grow over the past few years, you will be continuing to look for different ways to reach new prospects and turn them into clients. Have you developed a plan yet?

One of the companies we are working with really understands this. They have been in their field for over 100 years, so they have seen it all. When they first came to us, my thought was “What can we show them that they hadn’t seen before?” This is the usual first question I have when preparing to meet a new sales management prospect. It reminds me to make sure I am asking enough of the right questions to allow us to work with them to develop a customized solution that fits their culture and growth goals. No cookie cutter solutions here.

What I found was exactly the opposite of what I expected—isn’t that always the case?

This company is at the top of their field, so while you might think they would be reaping the benefits of the “smaller guys” not being able to survive, they were seeing the little guys trying to infiltrate their turf—the larger clients. We interviewed several of the key players in the company to get their opinion about this.

“They are just worrying about price,” said one manager. “They are insured if he messes up.”

“We haven’t been writing any fewer proposals,” stated another. “But we are just not getting as many projects as we used to.”

This was a common theme among the people we talked to at the company. Our next step was to talk to their clients and prospects.

“They are top notch. We know when we work with them, it will be done right,” a long time client told us. “They are certainly not the cheapest out there, but neither are we.”

“We have worked with them for years. Sure, the number of projects we have had lately has slowed a bit, but as we continue to bounce back, they will be a part of that recovery. We need to work with good people who make us look good,” was the feedback from another happy client.

We interviewed another prospect who they had done many, many, many proposals for but had never gotten the job, so we asked why not. “Oh, they are always so expensive. We can usually find someone else for 20% cheaper,” he said.

“To do the same work?”we questioned, in hopes of finding a differentiator.

“Yep, same stuff,” was his response.

Hmmm. I’m curious. If they are always so much higher, why do you continue to ask them for proposals?” I asked.

After pondering the question for less than a second, he responded “I know they are the best at what they do, but also the most expensive. If I can get a proposal from them, it keeps these cheaper guys in check.”

We had noticed that this was now the second time he used the word cheaper.

“So what happens to you if the cheaper guy screws up?”

“We have insurance for that,” he stated.

“How often does that happen?”

“Oh, it isn’t too bad, just a couple times a year. In fact, we just changed our policy. It was getting too expensive with the old one.”

Wait…what? “You use your insurance policy a couple of times a year? That must be quite expensive, and probably a pain to keep changing policies.”

“It is. Why do you know a good insurance guy?”

“I do, but I think I know a better way for you to keep these costs in check…”

You can see where this is going. Part of the recommendation we are currently implementing for this client revolves around first looking for the right prospects, which lowered the amount of proposals they wrote but increased the number that they won, and next getting their team to be more comfortable asking more questions to get to the root of the pain of their client. They really didn’t want the least expensive person working on their job, they just didn’t see how much that lower cost option was costing them in claims, increased policy costs, increased administrative time in processing this cost and/or finding a new agent, and the potential for losing their job when they realized the bad PR they were getting by not doing it right in the first place.

By digging deeper to find a customized solution that fit their team, we were able to help them thrive in all seasons.

If you or a colleague are staring the recovery in the face and saying, “What can we do to capitalize on this?” give us a call. Our sales management team would love to talk to you about it further and see if we can be of help. For more information about Randolph Sterling’s sales management options, please contact us at 919-439-3710 or check us out on the web at www.randolphsterling.com.

You Survived the Recession! So Where Do You Go from Here?

May 17, 2010

I have been reading more and more that the recession is over and that we are finally in recovery. I decided awhile back to choose not to take part in the recession (with the exception, of course, of being trapped by a bad real estate economy, but that’s a different story entirely) and to continue to push ahead with our business. Many of my colleagues—clients, referral partners, and members of Vistage and Business Clubs of America—joined me. It is nice to see more and more people coming around.

This strategy was relatively easy for me because we are lucky enough to be in a business that can help clients in different economic times. I say “lucky” because if you know me, then you know that while there was a ton of planning that went into what Randolph Sterling does today, there has always been that entrepreneurial side that says “Sure, let’s give it a try!”

In “bad times,” we are able to help companies who need to find more clients, but just don’t want to invest in more internal staff. Being able to hire an inside sales team that gets paid only for the hours they work is a helpful and cost effective option. In the “recovery times,” we see that skeptical companies are still a bit leery about hiring on the full time staff, while others are excited to be able to increase their staff through outsourcing, and go after much more business that they had been able to before. They see that some of their competitors did not survive the downturn, which means that clients of the now defunct competition understand the value of what they do but need someone to do it for them. These companies may not be calling, asking you to do work for them, but are certainly willing to listen to the companies who, in the past, they had told they were happy with their current supplier.

The Economy Is Tough? Time to Raise Prices!

October 7, 2009

Wait, did you read that correctly? I meant lower prices, right? Times are tough and we want to make it easier for people to buy from us, don’t we?

No, I don’t live in a bubble and I’m not completely crazy. I understand that times are tough, people are tightening their belts, and spending is down, but we all want a piece of what budget is out there. I just don’t think discounting the price of your services is the way to go. Actually, I am going to make a case for raising prices.

For those of you who know me or have read my blog (hopefully I will have an opportunity to know you one day as well) you know I am not a huge fan of negotiating. It has it’s time and place but I have always been of the mindset that if I understand my customers’ needs and they understand how I can help them and trust that I can, most of the things that are the basis of negotiation have become a foregone conclusion. It’s all about closing at the right time. (Hey, maybe I should write a book about closing deals. I can call it Closing the Deal: Hot Sales Strategies That Will Make You Money.)

So why raise prices? Wouldn’t that just put the price negotiation right back into play? My feeling is that it would not. What I believe it would do is eliminate the customers, the people who buy from you but aren’t really in it for the long haul, and bring out more clients, the people you will partner with for success and who are willing to make an investment in doing it right. Here are a few experiences to illustrate my point.

I have mentioned in the past that when I started out, my main goal was to help people. As a result, I found a lot of people who needed help—they needed a miracle actually. They would come to us at Randolph Sterling with a few hundred dollars hoping we could find the one client they needed to help them stay afloat for another year. My intentions were good, I wanted to help them, so I would lower our prices to maybe allow us to work with them for six weeks rather than four. All that did was delay the inevitable. The problem wasn’t that they didn’t have that one client to save their year, their problem was that they truly had no idea what their value was to the world. The one client we would find wasn’t going to save them. They needed a complete overhaul.

I found that I had priced our services to try to be all things to all people, which we certainly are not. If you want a strong inside sales team to help you define your ideal client, develop a strong relationship and help your sales team continue to grow the business, we are the ones to talk to. If you are looking for a $10/hr. college kid to telemarket for you, we are not the people for you. If you want a sales manager to help you build process for your growing sales team, work directly with them on their own personal development, and run a sales meeting where the entire team gets involved, grows, and holds each other accountable, we are the people to be speaking with. If you are looking for a consultant to give you a report on general ideas or a trainer with the latest 12 step program to building sales clones, we are not. If you want your sales reps to interact with other sales professionals in a roundtable meeting where they are all learning, teaching, and working together to achieve more professionally, give us a call. If you want another networking event to hand out business cards, we are not the resource for you.

I realized that by trying to help everyone rather than working with the growth minded clients we needed to be working with, we had put ourselves in competition with everything that we are not, so four years ago, we decided to raise our prices to reflect the solutions we provided for our clients.

The best way I can describe the results is that we went from working with people who would ask “tell us about what you do” to people who said “this is what we are looking to do.” They knew that we were in it for the long haul and that we were a partner, not just a service provider. I also noticed that clients and prospects started speaking about us using words like inside sales team instead of telemarketer, outsourced sales management instead of consultant, and peer advisory group rather than networking group. They realized that those other groups, while good for some, were not really competition for the type of work that we are passionate about.

I know it sounds strange to recommend not going after every piece of business you can during this time of recovery, but before taking that smaller job or discounting your prices, consider the time that project will take, how long it will be until you get paid, and other factors that may eat into your profits. I’ll bet most times you will find that you are probably better off saying no to the person looking for the cheap solution and using that time to find the client who is a better fit.

Closing New Business in a Recession

September 14, 2009

The other day I let you in on my response to a discussion question on LinkedIn: How has the recession changed the way you look for and close new business? What I posted yesterday was part one of my answer to this two part question. As promised, here is part two, dealing with closing new business. And, when you are finished reading, please tell us what think. Tell us your response to the question.

Part 2- Closing New Business

As for closing new business, my experiences have somewhat remained the same. The current economic climate has actually helped us close new business with the type of clients we like to work with.

If you go for the close at the right time, your chances of landing the business increase dramatically. When is the right time, you may ask? Well, there are many sales books which will provide a theory, including mine, Closing the Deal; Hot Sales Strategies That Make Money. While I always appreciate adding another person to the growing list of people who are the answers to the question I posed when asked to write the book, “who would ever buy a book authored by me?” I will give you my Cliff’s Notes version of knowing when is the right time to close a sale.

While some sales take years to close and others take minutes, every deal is closed when you have been able to find out the following:

Do you know who the decision maker is for what you are trying to sell, and any people who influence his decision?

Do you have a good understanding of the client’s need and does he/she/they have a good understanding of your solution and how it will help them?

Do you have a good understanding of the budget process? Do they have the money to implement your solution?

And last but certainly not least…do you know when they are able/willing to implement your solution?

Many people think that most deals are won and lost over price. However it is my contention that very few are lost over price. I see more deals lost because the decision maker does not feel a level of comfort in the fact that the salesperson can do what they say they are going to do (often because they tried to close too soon) and a remarkable amount because they simply did not realize the process needed to implement the solution and because it was taking longer than expected, they simply gave up and moved on to another deal, leaving money on the table.

Think of it this way. I have a client who sells rather large manufacturing equipment and another that is a mid sized accounting firm. The clients for the manufacturing equipment company will plan out projects 12-18 months in advance, allocating funds to equipment, manpower, etc. Do they want to spend $300,000 for a piece of equipment today, only to have it sit idle for 17 more months? Of course not! They still need the product, but will wait until they are closer to purchase the equipment, allowing that $300,000 to gain interest in their account rather than risk a piece of equipment losing value on their shop floor (or heaven forbid, have a change in work scope during planning that would render that piece of equipment obsolete.) Speaking of interest, unfortunately many sales reps will lose interest during that time and when it is time to buy, maybe the prospect calls him and maybe some other company happens to call at the right time and get the business.

As for the accounting firm, it is even simpler. One of the services this firm provides is audits for proprietary schools (trade schools.) Many times, they will meet a school at a trade show and they have just had their audit completed. While they are not 100% happy or another reason comes up that they have decided to find a new firm, it may be another full year until my client does work for them. Again, if they do not stay in touch, they will risk losing a perfectly good opportunity, not to another firm but to impatience.

Finding New Business in a Recession

September 13, 2009

How has the recession changed the way you look for and close new business? The question came up in a group I belong to on LinkedIn and I thought I would share my responses with all of you. The first deals with finding new business. The second, which I will post here tomorrow, deals with closing new business. And, when you are done reading one or both posts, please tell us what you think. How do you answer the question?

Part 1, Finding New Business

I am actually finding that the current economic climate has helped us at Randolph Sterling to find more of the clients we like to work with. As an outsourced inside, outside sales and sales management group, our ideal client is a growth oriented firm. Before the downturn, we would find a lot of companies who really didn’t have “their act together” and were looking for us to come in and perform miracles for their sales. Today, we find more companies who realize one or more of these issues:

  1. They have grown quickly and “threw money at the sales problems” by hiring more people but not necessarily developing any process to the sales function
  2. Their sales team is spending the majority of their time keeping current clients happy, trying to either keep or grow them while neglecting new business development
  3. The sales team has generally been reporting to a manager or even the company president who is not a sales manager (Usually a problem in manufacturing)
  4. They have grown to a point where they are considering making one of their top salespeople the sales manager
  5. The reps do not have an open dialog with the company or sales management and/or the company has no plan for the increased development of their sales team.

In addition to finding clients who have a better definition of their needs, we have also found that they better understand that the best way to bring in new business is to define their ideal client and focus energies–both in marketing and in sales–in finding them. This sounds easy enough but how many people REALLY understand the traits of their ideal client? For a firm like us, who works with companies in manufacturing and service from used equipment to accounting, we define our ideal client less by an SIC code and more by their level of growth and company culture.