Posts Tagged ‘Economy’

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.

 

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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?

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.