Top 5 Ways PR Can Support Sales

This post was also featured on PR News. 
For the most part, sales and marketing view PR/Corporate Communications’ role to be high in the funnel. Some would even say that its focus is on “above the funnel” activities.  But if used strategically, PR activities can be very effective in playing a critical role in supporting sales.  Below are five ways PR can help the sales organization:      

1. Creating an impression – Typically thought of as a primary role of PR, but the ability to create a perception that the company plays in a “space” gets the company in the consideration set and the sales force in the door.  A few years ago, we did some research on the key consideration drivers in Tech.  The research showed that relationship with the rep was not a driver…meaning, if the customer perception is that you don’t have product/solution for their need, the rep is not getting a call. 
2. Damage control – As “they” say, “things happen”, and how the company handles it may be the difference between losing and retaining a customer.  PR can help get out in front of an issue, explain the company’s position, and help the sales force navigate what can be a difficult conversation.  Ford’s handling of the corporate bailout was masterful.  As Alan Mullaly’s peers from GM and Chrysler were taking their corporate jets to Washington to ask for a hand out, he and his team were driving from Detroit.  They said “no” to the handout and walked out with consumer confidence, which later turned into market share gains.  
3. Checking a competitor – A huge concern for sales is having a competitor leapfrog ahead with a new solution or product.  PR can create the impression that the company has a similar product or solution when in reality it may not.  Large established companies, like GE and Cisco, turn up the noise to drown out fast moving smaller competitors. 
4. Building momentum– There’s nothing better for a salesperson than a product that “sells itself.”  Creating excitement in the market for a product or solution helps generate inbound leads, which have the highest close rates.  Do you really think that the new IPhone 5 went missing…again?  It’s all about creating a buzz.
5. Enabling and managing Social Media – In certain industries, such as hi-tech, Social Media is owned by PR/Corporate Communication. This important channel for engaging with customers can provide sales with new insights into customer behaviors, needs, and motivations, but that insight has to be carefully managed as to how it is used. 

And for a bonus example – Virtual Coverage - years ago, I conducted research on how well a medical equipment company was covering small customers.  The results showed that their sales force visited customers about once every three months while a competitive sales force came by about twice as much. 
The company couldn't afford to increase the field sales force but could ramp up corporate communications.  A year later when we did the same research, this time customers said that the reps were showing up twice as often.  They weren't, but the increased communication resulted in the perception that they were seeing the reps more often.  

Are Existing Customers 8 Times More Valuable than New Customers?

It’s conventional wisdom  that it is “six to seven times more expensive to gain a new customer than to retain an existing customers.”  Given today’s economic uncertainty, could the inverse also be true?  Could existing customers be six, seven or even eight times more valuable in terms of revenue and growth than new ones?

Frederick Reinchheld of Bain & Company coined the phase based his research on customer retention and acquisition in a study published in the Havard Business Review in 2001.  He would later go on to develop the Net Promoter score, measuring the impact and importance of “loyal enthusiasts” on a company’s performance. 

So for many companies, existing customers are a bellwether investment –  such as gold – in times of instability and uncertainty.  But what the research does not address is the potential existing customers represent.  Many are a goldmine of opportunity for incremental revenue growth that is often missed. 

For example, a financial services company found that because it focused on promoting and selling new products, the majority of new customers acquired in the last 2 years had high penetration of new products (75%) and low penetration of older products (40%). 

The inverse was also true: Customers for more than 10 years had high penetration rates of products older than 10 years at 65%, while new customers had penetration of 37% for those same products.

Marketing promotions, and sales compensation incented behaviors that led to new customers only being exposed to new products.  With existing customers, the company focused on retention and spent little time on trying to sell new products.  As a result, the company discovered a host of cross-sell and up-sell opportunities as a result of this segmentation … opportunities that may exist in many other organizations. I would recommend segmenting your customers by date acquired, and the age of the product they own or use to discover your own goldmine.

This incremental revenue potential, combined with the value a customer represents as a brand advocate (Reinchheld’s Net Promoter Score) powered by social media raises the stakes even further.  It is a solid argument for suggesting that existing customers are in fact, even more valuable than Bain originally suggested ten years ago.

Don’t get me wrong; new products, markets and customers are critical for growth.  I’m not advocating that a company abandon these pursuits, however I am suggesting that given the current situation there might be an overlooked, low-cost opportunity for growth right in the backyard.

You just need to mine it.

Need another reason? At this writing, an ounce of gold is trading at about $1,700..  Two years ago, it traded at $1014, appreciating 68% over this period.  

Treat customers like gold and you might see the same kind of return. 

How Many Channels Does it Take to Sell a Phone?

My daughter’s phone stopped working (at least that’s what she told us) and we decided to get her a new smartphone for her birthday.  The problem was that the contract ran until August, which meant we would have to pay full price for the handset.    

According to the customer service agent, since my daughter’s phone is on my wife’s plan – and my wife was eligible for an upgrade – we could apply the upgrade to my daughter’s account. In order to avoid a $20 charge to transfer the upgrade, I needed to complete the transaction online by first registering the account.

A relatively simple task of inputting basic account information became a complex headache.  The information I was inputting didn’t match existing information that the wireless providers had on file and the customer service rep couldn’t tell me what was incorrect.  Frustrated and irritated by what should have been a quick transaction, I was now headed for a local retail location (sales channel #3 if you’re keeping track). 

I explained my situation to the store associate who said I could only get the upgrade by going online, so off to the in-store kiosk we went.  She figured out the registration issue, but then ran into another problem trying to use the upgrade promotion.  That prompted a call to telesales and another in-store sales associate who overheard the conversation to join in. 

All three sales channels were now all involved with an existing customer’s “rebuy” transaction; a textbook example of “channel stacking.”  Two retail reps, a telesales rep, and the web working on converting an “upgrade” that was intended to be a web transaction completed by the customer. 

Don’t get me wrong, I appreciate the fact that they are putting the customer first and saved me the $20 fee, plus another $50 rebate on the phone (which was another promotion that complicated the deal), but this is the kind of situation that makes a CFO’s head spin.  

A multi-channel sales model is essential in today’s environment, both for businesses and consumers.  The problem in this situation was that the offer did not fit the channel.  And this is a critical point for effectively and efficiently managing a multi-channel approach.  

The promotion upgrade, phone rebate and price were available only as online offers.  And that’s fine, unique offers aligned to single channels entice customers to use them.  The offers on there own were simple but when combined they became too complex for the channel that carried them.  When that happens customers will cross channels when given the opportunity.   

To effectively use a multi-channel sales model you must:

• Align the product, offer and/or both to fit the channel - In the case of the web that means simplifying them.  The web is intended to be a self-directed user channel.  If you can’t simplify the product or offer, then it’s the wrong channel.  
• Map the customer buying process – learn, shop, buy and support. This will help define the user experience, which will be helpful for the next step. 
• Anticipate user issues -  add coaching points and/or use existing customer information to auto-populate fields.  This will require testing...it's worth it.

The phone arrives today.  Remember I couldn’t get it at the store because it was an online promotion.   It will add $20 per month to our monthly bill.  The contract is for 24 months.  The total value of the transaction is $580  --  $480 in fees, plus the $100 for the phone.  Total cost of the transaction to the service provider…they don’t want to know; it’s not good for the CFO’s health.

5 Steps for Driving Growth

The good news is that economy is on the mend; consumer and customers are buying again.  The bad news is that many companies will struggle to capture that opportunity.

Changes made as a result of the recession may now restrict companies from growing.  During the recession, marketing budgets were cut and the sales force chased any customer willing to buy -- at any price.  Most likely, sales territories, products in the bag, etc. were expanding, either as a result of downsizing the sales force, and/or expanding opportunities so that they could have a chance to make quota…either way they have a lot of ground to cover. 

The question facing many organizations today is how to align sales and marketing activities, investments and resources, against the biggest growth opportunities while still covering the expanding set of customers and products.  How can the sales force, and/or our marketing resources to do more?   The classic -- do more with less scenario. 

Well, the answer this time is you can’t. The reason is that the recession lasted so long (20 months) that everything that could be stretched…has been stretched.  It’s now time to reset sales and marketing strategy.  Here are five steps to get you started:

1. Move the "low hanging fruit" – During the downturn many organizations allowed sales organization to count EVERYTHING towards quota.  It’s now time to start moving inbound orders (rebuys) and sales of a certain size (small) somewhere else (most likely telesales) to free up sales force time.  Move it quickly, consider incenting them during the first 6 months to migrate transactions to insides sales or partners. Capacity needs to be freed so that it can be redirected to growth.  If you are concerned about not being able to move fast enough, just stop paying commission on small or inbound deals and/or do not count them towards quota…nature will run its course. 
2. Relocate and recondition small customers – Along with small orders, small customers (who often require more than their share of attention) need to move as well.  They may have grown accustomed to the special attention they’ve received as a result of the downturn. However, it’s now time to ‘right size’ the cost to manage them with the opportunity they represent.  You may want to incent them to self-service via the web or transfer the relationship to a business partner.  Do your homework by evaluating customer profitability and set a new higher target.  
3. Push Sales into bigger deals – After you’ve freed up Sales’ time, focus on increasing the pipeline and average deal size.  Turn marketing back on to help (see my post on the Pipeline).  It’s also time to ramp up your analytics, segmentation and data mining operations.   Build models to help identify opportunities to cross-sell and up-sell products and customers.  Corporate Marketing will need to update corporate positioning and the messaging architecture to align with where the market and customers exist. Product marketing has to develop solutions and messaging to drive larger deals.
4. Increase price points  – This is related to the point above: stop discounting products and services immediately.  Wind down incentive pricing, and start developing new offers with customer, and market aligned value propositions.  This will be a challenge to manage as the sales force and customers have become conditioned to expect a “good deal," despite the fact that it has been shown to be ineffective.  Invest in research to determine how their expectations have been impacted because of this practice.
5. Expand your channels – this will be important to several reasons.  First, a new “home” for small transactions and customers is needed.   The second is that you may not be able to reach or capture the market because it has shifted (e.g. new technology/innovation, competitors, etc.).   Invest ahead of the curve as good sales people are hard to find and there is going to be a run on them.  Along with reps, get your partners up and running now, and grow into full productivity later. 

Lastly, don’t over look the need for change management.  According to the Corporate Executive Board, 25% of high performers indicated that they are interested in changing companies as the economy recovers.  Invest time in evaluating the impact of implementing the steps mentioned inside your organizations. 

Customer and rep behaviors have changed, as well as markets.  The recession was one of the longest in our history.  It’s a mistake to just snap back to the way it was.  Be smart and invest in research on your customers, competitors and markets.  Set a three year plan to double revenues, price points, etc.  Create aspirational goals and get the organization excited again…it’s been a long time coming.  

Sales and Marketing Integration Post Recession and Social Media Adoption

For the last few months, I've been leaking sections of an upcoming white paper we've been writing.   Well, it is now ready for prime time and available for download.   To complete the tease, I'm giving the ending away.
OUTLOOK //
With smaller marketing budgets and aggressive user adoption of Web 2.0 tools, social media will continue to make progress on the fringes of the sales process (see Figure 7). Companies will find new application of social media for increasing awareness and opportunity creation with targeted audiences and continue to deploy tools to listen, interact and support customers.

As a result, sales and marketing teams need each other more than ever: Sales needs the customer insight and connection that marketing captures to accelerate the buying process; and marketing needs sales results to be able to show measureable evidence to defend and expand social media deployment and activities.

GETTING STARTED //

Buyer behavior has shifted permanently, and a result, companies need to adapt to this change. Research shows that 70% of companies will increase their social media investments in 2010 and 61% of marketers do not know how to get started . Included below are seven recommendations to consider while responding to the latest economic and technological changes:

1. Recognize that a permanent change has occurred. 

Social media and the effects of the recession are not going away any time soon. Customers are now more likely to start their buying process on a social media site than a company site, and that trend will only continue. Budgets will remain tight and customers will need to know that they are making the best decisions for their respective organization. As a result, they will continue to rely on objective third party experience with products and services.

Figure 7

2. Do not ignore the opportunity. 

The value of social media is not that it fills an existing gap, or breaks new ground, as much as it is an enhancement to something that already exists—for B2B organizations social media enhances word of mouth, customer engagement, and relationship management. To determine the value of social media, business leaders have to experiment with applying social media to those three areas. According to the Marketing Leadership Council, CMO’s who advocate for and lead social media efforts are three times as likely to drive business results as those who do not.

3. Understand the difference between inbound and outbound. 

Customers may share information with other customers, as well as employees in the organization that are not their Account Manager. Enabling the organization to digitally listen to customer conversations can provide the sales force with a whole new view into customer preferences and opinions.

4. Plan and coordinate the Customer Experience. 

Social media offers a host of new channels for customers to interact with the organization and with other customers. Companies will need to determine how they will interpret, filter and aggregate inbound information, and if, how, and where they will respond. According to recent research, the customer experience has four times more impact on preference and intent to repurchase than does the quality of individual touch points.

5. Make it about them. 

Business executives primarily use social media to stay current on news, network with other peers, and to advance their careers. As a result, organizations need to understand how to meet this need, and how facilitating this interaction can help them better understand customer’s behaviors, interests, and motivators. Sales and marketing should work together to determine how the organization’s products and services could support and enhance the customer in their role.

6. Demonstrate the value to sales. 

The sales organization will want to understand how social media activities will create a tangible business impact on leads, sales, and retention. Marketing will have to translate how customer engagement can have an impact—current research will further this aim as leading work is already demonstrating a strong link between engagement levels and retention.

7. Think about Relationship Management 2.0. 

Moving forward, sales,marketing, service and customer communities may all play a role in managing certain components of customer relationships. As a result, organizations should segment and map customer buying behavior and channel preferences on a regular basis, which may challenge the way organizations currently cover and manage their customers.

To download the full report click here.  

The Top 10 Laziest Sales Tactics

The amount of "lameness" on the part of sales people (and some marketers) has now come to a point that I think a public flogging is in order. To those Michael Scott’s of the world (and I like Michael), know that we are on to you. The following tactics have never, and will never, produce a lead.

1. Filling out a company's contact form on the website with ”contact me if you need…” Yep, I’ll get right on that.

Mike, for example, was able to jam an entire spam email onto our company contact form...impressive.  Sure, I will take the time to read the entire message box and get back to you. 

But wait, sensing that I might not take him seriously, he submits the form again 2 minutes later.

2. Sending an email blast with the generic intro of "Dear Sir." Forget everything you've learned about 1 to 1 marketing, personalization, relevancy, this just might work.  Just get a list, and go.  

3. Even better, the telemarketing version of the "no effort" approach.  Cold calling and asking; “can you please tell me who handles…”  Instead of you doing your job, you're now asking me to do it for you -- beautiful. 

4. Some telemarketers have taken it to a whole new level. Love the folks who leave a message without saying why they are calling, but then ask you to call them back. And my personal favorite -- the rep who invented the "I'm returning your call..."   It's like the guy you knew in college that spent hours figuring out how to cheat for a test, instead of using the time to study.

5. Advertising your services in the comment section of a blog.  Let's take Jeff D, he didn't even try to hide it in a link.  He went straight for the kill.                

It's not all bad because he does give me "props" at the end of the ad..."I like your information it is helpful to me."  Mmm, is it helpful because it gives you an opportunity to display spam?   Apparently so, because Jeff D comes back 6 days later, this time pimping new services, Website design and development.  Notice I get no "props" this time.  Pretty tricky changing the name of the company, almost didn't catch him.  

To Jeff D, and all the other spammers, know that bloggers decide whether or not to post your comments.  The comments above never made it public, I saved them for my own personal enjoyment, and this blog post.   Also, know that Blogspot, as well as other platforms, now have enable spam filters.  Good luck on future postings. 

6. Posting a discussion within a Linked-in group that isn’t a discussion, but rather, an advertisement for your company…it’s not a discussion; it’s spam, and it’s annoying.

Take Mr. Gupta for example, at Web Box Office. He's advertising "Learn the secrets to success with attendee-funded webinars." Sounds good, huh. Guess who's paying for the webinar...you are, Mr. attendee, if you register.

7. Using the yellow pages as your prospect database. I’m not kidding, people are still using it. Just wait until they find out about the internet.

8. Offering something FREE, unless it is truly FREE.  Taking a credit card number so you can start billing a customer after a "free" trial is not free.  This is not selling, it's scamming.   There are rules, some people call them laws, governing this practice.  See FreeCredit Report.com for an example of how not to do it.   

9. Any email coming from Nigeria, or any other country, offering a fortune if you could just help them  by giving them your social security number, bank account number, etc.  To good to be true, something for nothing?  Any of this ringing a bell?  Ok, maybe I'm a little bitter because I'm still waiting for my $1M from the British Lottery Authority.

10.  Actually, couldn't think of a 10th, but I'm sure there's one or more out there.  I'd love to hear your experiences.  Add your "Top 10" story in the comment section, but please easy on the spam.  Jeff D takes up a lot of my time.    

Cloud Computing - Vaporware?

The Merriam-Webster’s Online Dictionary defines a cloud as a “visible mass of particles of condensed vapor.”  According to CIOs interviewed for an article in the June edition of the Harvard Business Review magazine, cloud computing might as well be defined as “vaporware.” 

The article includes research by Gartner Group VP, Mark McDonald, who found that CIOs interest in the cloud has grown from 5% in 2009 to 37% earlier this year.  However, three out of four respondents who said they were interested, reported little interest in the three key technologies it entails: server virtualization, service-oriented architecture and SaaS (software as a service). 

These figures may entice you to conclude that this is a great opportunity for a salesforce to provide value in explaining the Cloud and define a company’s solution; a rare situation where the salesforce can be “solution sellers”. Unfortunately, this is not necessarily the case, according to a Forrester’s Technology Buyer Insight Study: Are Salespeople Prepared for Executive Conservations?

IT executives interviewed for the April 19, 2010 study, only 15% of executives believe that their meetings with salespeople are valuable and live up to their expectations.  

Reasons given according to the report:

• Business leaders (24%) don’t believe salespeople are knowledgeable about their specific business.   
• Only 34% of buying executives said salespeople understand their roles and responsibilities. 
• And across the board, only 38% feel that reps are prepared to answer their questions. 

Could this be a case of the blind leading the blind?  Confusion around cloud computing even occurs at the highest levels of leading Information Technology conglomerates. One story accounts for the CEO of a large information technology firm asking his senior executives to explain cloud computing to him. When no one could convey a clear answer, the CEO fired back that if they can’t sell it to him, then their company cannot sell it to customers.

There is no doubt that the Cloud is making as much noise as any good thunderstorm.   Companies are reallocating resources and investments to the Cloud.  Countless marketing dollars are being spent to get companies in the consideration set.  As with any good technology trend the hype exceeds the reality.  

The real challenge seems not to be marketing the Cloud, but rather selling it.   Those companies who best enable their sales people to break through the noise will reap the greatest benefit.   

Why Product Companies Can’t Build Solutions - Reason #1

I’m working on my umpteenth “transition the organization from being product led to solution focused…” project. In today’s market environment, I imagine other organizations are pursuing this strategy as a way to improve margins, increase sales, etc.

The challenges facing companies that venture down this path are fairly consistent and complex…and certainly not easily described or solved in a post. With that said, I thought it might be helpful to describe how organizations get themselves into this situation and share some ideas on how to get moving in the right direction.

“Solutions” typically evolve in two ways at product oriented organizations, none of which are strategic.

• Internally - Someone in the product group or sales organization notices a trend - if a customer buys one product they most likely will buy another related one (if this, then that).
• Externally - Customers force the organization to integrate products and/or services (something Lou Gerstner took note of when he was at Amex that eventually led to the greater focus on services when he came to IBM).

The company then realizes (usually late) that this can lead to premium pricing and higher margins, increased share of wallet and customer loyalty, etc., and thus the journey begins. The problem is that they over estimate the ease of scaling solutions because:

• The last mile - no one trains the sales force, or the sales force doesn’t have the skill set, and/or no one has figured out how to comp on selling a “solution”…I’ve seen the last one a dozen times. 
• The solution is TOO customized – really good solutions are typically highly customized, you build the “solution” with the customer.  The challenge then becomes finding another customer and/or group of customers that looks like that one.  As a result, you can’t scale the solution. Put your hand up if you’re heard that one before.

So what do you do about it? The scenarios I described are symtematic of the “dipping the toe” approach to solution development. To successfully transition the first thing has to happen is that the company must make the COMMITTMENT.

It sounds easy but this is where most organization fall down. You will not be successful if you only “half ass” it. Building real solutions that scale requires time, investment, a new group/organization and probably new people. Understand why companies fail now?

 Some thoughts on how to do it right

I've commonly seen two successful approaches to starting the transition. The first is internally focused and involves evolving the product group. Best-in-class organizations that have made this journey start by adding or creating an “application” group.  This is commonly seen in the Hi-Tech industry.

This group begins collecting market data on customer trends looking for broad based technology, competitive or usage trends. The goal is anticipate and understand how the company’s portfolio of products and services can and/or will be used when applied to certain situations (use cases).  This then begins the solution development process.

The upside to this approach is that the products typically “snap together” seamlessly and are easy to install. The downside is that they sometimes miss the mark with customers because products get over engineered and lose sight of customer needs.

The other approach is to evolve from external side and develop a segment marketing group.  In organizations that can’t, or won’t, evolve their product organizations, I have helped companies build a segment marketing group that integrates products into market aligned solution sets.

The group is aligned to unique customer segments and uses customer research, feedback from the sales channels, etc. to develop solutions based on the specific needs of that segment. This approach is commonly seen in the financial services and communication industries. 

The upside of this approach is that solutions developed at the segment level have very compelling value propositions because of the tight alignment with customer needs. The downside is the solutions don’t always live up to the hype.

Whatever path your organization takes is a step in the right direction. It shows that the organization is committed...but it is also only a starting point.

More detail on how to complete the journey in future posts.

Unclogging the Pipeline

This post was recently featured in an article on MarketingProf's

Pipeline slowed to a trickle? Opportunities backing up, lead-to-close time seem like forever…yea, welcome to the recession. With customers delaying and/or postponing decisions altogether the ol’ pipeline ain’t what it used to be.

Here are 7 Pipeline Management Best Practice tips taken from leading companies that might help:

1. Weekly Pipeline Meetings with Sales AND Marketing - yes weekly…and with Marketing, do it in country and at the region level. You may also do it at the corporate level with the CEO , like IBM.
   
2. Apply BANT – CRM is great at increasing visibility into opportunities but it tells you nothing about why opportunities aren’t advancing. BANT will. By qualifying and re-qualifying opportunities based on Budget, Authority, Need and Time you will get to the bottom line on why leads are not advancing. Reps will say that it’s “B” but I wouldn’t assume that. Companies are still spending (not as much) but now it takes a C-Level to approve (is your sales force getting to “A)? Budgets have moved higher in the organization and have been centralized. Also, business cases are required for EVERYTHING so if you aren’t submitting one with every proposal you’re not address “N”. Timing (T) of course, things are slow so you need to find out as much as you can about when budgets might get released and then check again, then again...


3. 90 day Movement Limit – this is one of my personal favorites. If a lead (that is truly a lead) does not advance within a 90 day window it moves back to the previous stage in pipeline or is killed. Given that lead cycle times have lengthened…considerably, you may want to make the window 120 days. Up or Out…learn it, live it, love it.
   
4. Define a lead and stick to it – look, it’s going to be difficult road but be honest with yourself on what is truly a lead. A response to a campaign offering a free gift card, or a download of a white paper off the website, aren’t leads…they’re responses and should be treated that way. Leads are defined by meeting a BANT criteria…see above. People will want to get fast and loose with the facts to satisfy the sales force or make marketing targets but don’t let them…stay firm, you’ll thank me when the recovery starts.
   
5. Response Management – so now that you’ve removed the “junk” out of the pipeline it’s time to do something with it. In reality responses aren’t “junk” (well, some are), they’re potential leads that just need to be nurtured…for a long time in today’s environment. Don’t disregard them, I’ve seen too many companies do nothing with this group. In the good times most of them would be leads. How to find them? Simple, ask this question during you pipeline call; “who owns responses that aren’t qualified leads…” wait for the silence. Bingo, there’s your answer. Take the last 6 months of campaign response and start digging.
   
   Sort through the “junk” and find the diamonds in the rough, pick out the ones who are in the right companies or have the right titles and work them. These are folks who are in the learning process, they may see the need but may not have the funding or approval yet. Make an effort to nurture it will pay off in the long run.
   
6. Lead Gen to Sales Enablement – it’s time to move marketing down the pipeline. Lead generation aimed at acquiring new opportunities is a waste of money in a recession. The cost of a qualified lead has skyrocketed…don’t believe me go do the analysis you will be surprised and in some cases shocked. So it’s time to invest against sales enablement and helping the sales force move opportunities already in the pipeline. Here’s another fact for you…B2B sales channels create 80-85% of all leads so cutting lead generation programs will not hurt you…I’ll say it again, redirecting investments away for lead gen activities will not hurt the pipeline. What is sales enablement, and how does it help the sales force? Well, it’s things like business tools that can prove a ROI, sales presentations loaded with proof points (case studies) on your value, and a robust customer reference program (see the graph above). By aligning marketing activities to moving the BANT levers you will be investing marketing dollars were they can have the greatest return…and your sales force will thank you for it.


7. Comp on or Emphasize Customer Meetings – if you build comp plans based on revenue and lead targets/production you may want to consider over emphasizing face time in front of the customer for the first half of the year. You’re probably saying to yourself, “but Scott, why would I do that if customers aren’t buying?” Right, but they can tell you why, when things might loosen, and who you need to get to (see my rant on BANT in bullet #2). It’s during these times that you need to have your reps in front of customers so they can collect the information needed to provide you with update during the weekly pipeline call. Use your sales enablement team (see paragraph above) to provide them with high value material to share with customers in order to get those meetings. See how it all connects?

I hope this helps. Unfortunately, it looks like we’re going to be stuck in this situation for all of 2009. Be strong…the bad times, just like the good times, don’t last forever.

The Goldmine in Your Backyard

This post was recently featured on the DemandGen Report
How to Identify Opportunity in Your Existing Accounts

In my blog post on December 16th (The Myth of the Foot in the Door) I shared with you some thoughts on where NOT to look for new business.

So it’s only fair that I share some ideas on where to look for new business…we try to keep it “fair and balanced” here the B2B S&M Knowledge Sharing channel. And this one is a winner. A guaranteed tip that works 100% of the time or your money back. And the reason it works 100% of the time is…because sales force behavior is predictable and consistent regardless of industry, company, etc.

Here’s why:

• Show me the money – a good sales force sells what they GET PAID on…we like to think of them as “good corporate citizens” but they’re not. And they don't have to be, they're trained and motivated to sell those things that retire quota. Ever heard of the expression…”tell me how I get paid and I’ll tell you what I’m going to do” Who do you think created it?
• Company priorities – good companies pay comp on priority products/solutions. Many times those products are new. Typically, companies have three priority products and/or reps sit on a patch that they need to grow by an incremental 5-10% a year. The best way to achieve that goal for most…sell a few new customers or new things to existing customers.
• Shiny New Thing – sales forces love the latest and greatest. Whether it’s a new product/service and/or customer…if it’s something new to talk about (we’ve done research on this see my blog post, the 2008 Sales Effectiveness study is being released soon). Combine those to ingredients, stir and voila, you have the makings of a goldmine in your backyard.

Here’s how to discover the goldmine:

• Segment your customer database into date acquired using ranges (0-2yrs, 3-5 yrs, etc.
• Segment your products based on when they were launched using ranges (same as above)
• Then create a cross segment with the two sorts (see below)

What I really love about this analysis is that it is simple and actionable. You don’t need to get the Ph.D propeller heads involved who have a tendency to overcomplicate things. Do the analysis and here’s what you will find:

• New customers will be well penetrated with new products (see reasons above)
• Old customers will be well penetrated with older products (ditto)
• As a result, you will most likely find opportunities for new products in older customers and… yes, you guessed it…older products in new customers

We discovered this pattern years ago when building out new sales channels for companies. To avoid channel conflict we had to find “white space” to create opportunity for the new channel. If you have dedicated product specialists this pattern will be even more extreme. You’ll need to do some work on the products (in particular, the older ones +5 years) to see if they’re still relevant. It’s particularly useful for finding opportunities for products that are “rev. 2.0, 3.0, etc". Sales reps tend to take a pass on a product enhancement or extension.

Give it a try, and if you do, please report back your findings. The need for "easy to access" opportunity couldn’t be greater in today’s economy and, as everyone knows, the value of gold goes up in a recession.

Are You a Better Seller than a 6th Grader?

What a Girl Scout can teach us about the customer experience...and how to sell

Last week I had the pleasure…to my surprise…of hearing my 6th grader work the phone selling Girl Scout cookies. She’s been a Girl Scout for a number of years and has achieved “Cookie Diva” (Cookie VIP this year) status numerous times by selling more than 150 boxes of cookies. Although I had helped her over the years by selling some cookies at work, I never actually got to hear her sales pitch, until last night.

Sure, it’s hard to resist a Girl Scout selling cookies, but as a sales and marketing consultant for the last 12 years, I was struck by how well a simple, honest approach to selling worked. It was an interesting and enlightening 30 minutes.

Here are some of things I heard:

• Niceties/Pleasantries – started every conversation with “happy new year”, and talked about their holiday, children, etc. She invested the time in catching up with them even though she had limited time to make calls between homework and bedtime. She didn’t jump to “getting the order.” It made me think about how often I rush through this important step because of time constraints, pressure on revenues, and/or proposals. If customers think that the only time you call them is when you want something...this certainly confirms it.
  
• Customer Knowledge – no sophisticated databases, profiling or scripts. She did her homework by knowing what they ordered last year, what girls were no longer Girl Scouts, etc. which made it easy for customers to place orders because she knew them well.
  
• Attitude – sometimes people consider sales as a “dirty job” and/or that we may be they are inconveniencing/imposing on someone by pitching them…like a stalker (maybe that’s just me). Could this stem from the fact that perhaps we don’t believe in our product or the value it can deliver to our customers. Listening to my daughter, I heard her talk about how good some of the cookies are and know how much they and/or their children love them, how she likes to put the “Thin Mints” in the freezer because she likes to eat them cold or dunk the “Do-Si-Dos” in a glass of milk before bed. Having seen boxes of GS cookies disappear from our shelves, I can attest to how much she loves her product.
  
  She’s not imposing on others, even though she caught some folks at dinner, she’s turning others on to a great product that she loves. What a difference that makes…
  
• Product Knowledge – not only did she know all the cookies, including the new and classics, but also how many where in a box and how they were packaged. The best part was describing how to consume them…see above. I can’t tell you how many marketers I’ve worked over the years that don’t know the products their companies sell. I’m convinced that this lack of product knowledge is the leading reason why sales organizations dismiss or don’t respect marketing/marketers. Want to improve sales and marketing integration, train your marketers on products and see what happens.
  
• Reference/Customer Testimonies – when her personal testimonials weren’t getting the job done she started to talk about others in the family and/or someone they knew. It made me think, do customers really care to hear reps experience with their own products? Maybe not, but do they listen to how convincingly or passionately they’ll testify…you bet! Customer testimonies are always the best --the more relevant the situation the better, but they also judge reps consciously or unconsciously on how well reps make their case (see the bullet above).
  
• Handling Objections & the True Decision Maker – she went after a new customer who told her that they usually buy from a girl in the neighborhood. She then asked for the lady of the house recognizing the dad/husband was not the real decision maker (home schooled on this trick). She got an order but not the full order…the girl in the neighborhood will still get hers...but it will be a couple of boxes short.
  
  How often do our reps stop at “no” or get stuck dealing with the first contact vs the real decision maker? We all know that we’ll have to work harder to get the order than in the past, maybe we don’t go for the home runs as often, and settle for few singles instead.
• Incentives – simple and straight forward, no complicated % or calculations…sell this much…get this. A compensations consultant’s dream, straight forward and easy to implement. On the order sheet, it lists the prize the girls receive based on their sales. As she reached certain level (25 boxes, 50 boxes, etc) she would tell us what prize she was won and what she was going for next. But the big one, the President Club, the one that screams “I’m the Diva” was the Cookie VIP patch.
  
  Good old fashion recognition for a job well done that lasts all year. Oh, how we’ve complicated incentives plans over the years. The search for the ultimate motivator has many times led us down the wrong path. Is it time to simplify, not sure, but I would bet it’s worth investigating.
  
• Connecting it to Social Causes – this is the primary fundraising vehicle for the Girl Scouts and people know it. Can you write off the $3.50 per box as a donation? No, but you do feel good about placing you order, sure. We’re all so socially aware nowadays, are there opportunities to connect your products to the “greater good?” You may have seen the latest ads from IBM and how they’re products and services can help companies “go green.” It’s time to add this to the value proposition…or at least consider it.

Yes, I know that many of us have much more complicated sales processes and products/services, but how much of that is self inflicted? At the end of the day, don’t all customers want the same thing…a good product or service that satisfies a need/want representing good value acquired through a pleasant experience?
During this difficult economic environment, listening to my daughter was a good reminder of how well having a good product, knowing your customers and believing in the value that you’re providing can work. Is it time to simplify our products, value proposition, how we compensate our reps? It may depend on the company, the situation, the market…but I would bet it wouldn’t hurt.
At the end of the night, ten phone calls, 10 closes and over 70 boxes of cookies sold in the matter of 30 minutes (pleasantries, product description, and an order every 3 minutes). Not bad for a junior telemarketer with no training. The GS’s will sell over 200 million boxes of cookies over the next month…more than any cookie manufacturer will sell the entire year.
Does simple work…for some, extremely well. The question is will it work for you?

The Myth of the "Foot in the Door"

Given our average deal size we used to think we needed to have a scaled down offer to get a foot in the door. Once in, we could then grow the account. We were wrong.

Considering the current economic situation, I know that many companies may be tempted to come up with a “door opener.” A subscale and/or entry level product/service intended to get a foot in the door with a new client and/or a new business division. You’re also probably thinking about going down market into smaller accounts. Although this shift may help satisfy short term revenue needs it will do little to nothing in helping grow your business. Most likely those accounts will not expand and/or even be retained next year.



Here’s how I know. Looking back at the new accounts acquired over the last four years we found some interesting trends and confirmed some things that we knew intuitively (click on the image). When we measured the value of customers in their first year against the average time spent engaged with the client a few key insights emerged. First, three “clusters” of accounts emerged;

1. Customer that grew to beyond $800K in their first year
2. Customer who had first year revenues between $350-$600K
3. Customers who represented under $250K in total billings from the year.

Let’s start with the bottom and work our way up. Customers in cluster 3 had an average value of $150K. Accounts on the lowest end of the spectrum in the “One and Done" zone” (under $10K for example) were “workshop”…our “foot in the door” offer. Guess what, of the 8 that fit that description zero, zippy, nada, grew beyond the initial workshop. The other bad news…only 2 accounts led to follow on work and no company in that grouping was retained the following year.
I was speaking with Larry Emond, CMO of the Gallup Organization the other day and he mentioned that they saw a similar trend; “We found that only 4% of customers who were acquired under a certain price point grew to be substantial customers.”

On the other end of the spectrum are the occasional customers who are big right out of the gate. The “Rare Birds” zone in cluster 1 includes those few customers who start big and for the most part remain large customers YOY. The key to success with this cluster is that they had/have a tendency to have a need for multiple service lines and/or desire a complex solution. This group was looking for a strategic partner versus a vendor for an immediate need. Year over year retention was also good at over 50% and if they used multiple services lines it was almost a sure thing they be retained….and grow.

As Larry also mentioned; “Our big customers today came in as big customers…”. We’ve had the same experience and have grown our top 5 largest accounts by an average of 90% over the last two years.

Customers in cluster 2, the “Sweet Spot” represented the best of both worlds. Although their value was not as high as the “Rare Birds” they were more plentiful. They also had higher price points, high percent of follow on work and YOY retention than the “One & Dones.” Retention rates although not as high as the "Rare Birds" was good (a little over 33%). Bottom line – they represent the model that we need to build our coverage and services bundle against. We have also realigned our resources to help account development/retention activities against this group.

Why do low price point and short engagement acquisitions perform so poorly? We discovered five main reasons for this;

• Length of the engagement – too short to learn business/issues/meet folks/create a relationship, etc.
• They get the “B” team - the "A" team is on existing accounts, as a professional services firm that measure FTE productivity this will always be the case.
• Short term need vs long term problem - we were successful in building a relationship with target buyers within targeted accounts. So much so that they decided to “give us a try.” The problem with that is that it was usually a piece of work that wasn’t strategic.
• Size matters – our win rate and retention rate dropped dramatically on companies that had under $1B in revenues. The only exceptions were situations we were able to sell a solution as the first engagement.
• Culture/Attitude – some companies just don’t have a culture of working with outsiders. This very difficult to know until you’re in the door.

So as you are thinking about 2009 focus on aligning resources and efforts on;

1. Retaining and expanding your biggest customers with new lines of business.
2. Find your "sweetspot” based on this type of analysis…what is the right mix of services and price.
3. Targeting big companies with big needs…there are many out there now just make sure you have the right offer.

Because at the end of the first engagement…a foot in the door just isn’t enough.

2007 Sales Effectiveness Study

After four straight years of economic expansion, companies are now developing and implementing plans to capitalize on changes in their competitive markets. The “Sales Effectiveness” study, fielded in Q4 2006 by MarketBridge in partnership with Sales & Marketing Management magazine, identifies the most effective sales strategies for maximum growth, while revealing major sales challenges going forward.

The insights of nearly 200 sales and marketing executives and managers generated some provocative findings, among them:

• More than half of respondents said their sales forces spend 50 percent or less of its time actually selling. Furthermore nearly three-fourths said their sales forces spent 50 percent or less of its time in direct contact with customers.
  
• Top three strategies for growth: Introducing new products or product extensions (45 percent); reorganizing the sales organization (39 percent); changing the focus on customer or market segments (35 percent). That said, exactly one-third said they had “high confidence” in their companies reaching their growth goals in 2007.
  
• Greatest customer demands: Companies are strained to offer “new products at reduced prices,” and to follow up on those offerings with “better service.” Further, more than a third (34.7 percent) said they were just “somewhat prepared” to deliver on those customer demands.

The findings of the study were highlighted in the May edition of Sales & Marketing Management magazine. For more informatin on the survey results see our website.

Telecom Sales Effectiveness Study

Here's an upcoming Webinar you may be interested in joining

Telecom Marketing & Sales Outlook

Join industry experts for 30-minutes of informative discussion and audience interaction on marketing and sales challenges, strategies, trends and best practices in the telecommunications space.

What: Complimentary “Driving Telecom Marketing And Sales Effectiveness,” Webinar, presented by MarketBridge, Telephony Magazine and the Kellogg School of Management.

When: Tuesday, April 19, 2007, 1:00-1:30 p.m. (EST)

Who: Mark Donnolo, Senior Vice President of MarketBridge head of our Telecommunications Practice, Estelle Conover, VP Alliance Channels, AT&T Southeast, and moderator Dan O’Shea, editor-in-chief of Telephony Magazine

Why: This event is based on the first annual “Driving Telecom Marketing & Sales Effectiveness Survey,” which gathered insights from 350 marketing and sales executives and managers from 160 leading Telecom Carriers, Wireless Providers, Cable Companies and Equipment Manufacturers.

Topics to be discussed:

• Focus on Enterprise, SMB, Consumer


• Growth Strategies


• Focus on Customers and Prospects


• Key Challenges

How: To register (complimentary) click here

The “Driving Telecom Marketing & Sales Effectiveness” final report will be available for download on the day of the webinar. For a brief overview and interpretation of the key findings, listen to the podcast with MarketBridge’s Mark Donnolo and Telephony’s Dan O’Shea. We hope you will join us for what promises to be an informative event!

After the Party: The Corporate "Hangover" Caused by High Demand

Remember when you had a unique product, a top-notch sales force, customers who couldn’t get enough of your product and were willing to pay anything for it. Sales reps coudn't close deals fast enough and the factory couldn’t keep pace with the orders. Little to no inventory cost, high margins, an incredibly productive sales force, big bonuses, soaring stock, etc...things couldn't be better. But what happens when demand begins to slip?

One of the first things to occur is that your best customers, who in the past had no leverage, begin to feel the advantage shift their way and sales reps (unknowingly and for the most part unwillingly) help that transition.

As demand cools, good sales reps who are trained negotiators and born manipulators, begin turning their finely tuned sales skills on the organization. Feeling the pressure to close business and meet quota, reps begin "selling" the organization on what they need in order to get the deal done. Instead of driving customers into existing solutions with a premium price, they take the course of least resistance, demanding that the organization bend to meet the customer’s (not the company’s) requirements. The company “customization” party goes on for as long as the sales quotas exceed market demand for the product.
The Hangover Effect

What does the company look like after the party? Unfortunately, like most good parties, the news of the festivities grows and involves most of the organization. At the end, it is not a pretty site and it take years to clean up. Here's a list of the mess left behind:

1. Large contract departments – When demand is high, customers typically agree to standard terms and conditions in order to get the product as quickly as possible. As demand slows customers begin to try to gain leverage by modifying the “T’s & C’s” of a contract to their advantage. Reps desperate to get the deal signed before the end of the quarter apply pressure to the legal and contract departments to accept customer terms. This results in contracts so complex to manage, that additional staff is needed to administer them.

In one hi-tech firm, for example, it takes a staff of four to perform administrative tasks related to just one large customer contract. Multiply that by twenty large customers and you begin to see the problem.

2. Complex product and price configurations – In the eyes of the customer, the value of the rep shifts from problem solver and solution provider to personal customer advocate. The same demand for customization of “T&C” is applied to product configuration and pricing arrangements. The result is highly customized solutions, hard-to-write service agreements, and complex payment terms that may end up costing the company money.

The response from the product management team of an ATM manufacturer working on standardizing product configuration was: “We have been trying to do this for years, but the sales force wouldn’t let us.”

3. Order Taking vs. Order Making -- A nasty side effect of this hangover is that when demand slows it reveals flaws that would otherwise had been hidden. One of those is seen in the quality of the sales force. The difference between “order takers” and “order makers” becomes apparent in a slow marketplace. In this environment of longer sales cycles and fickle customers, sales reps must work harder than ever for the sale that doesn’t hold much appeal for reps who are used to making quota without much effort.

A sales rep at a one-time highflying manufacturer of telecom and web equipment was overheard saying in the hall to a colleague; “...I’m afraid we are back to the bad old days when customers required a business case and ROI for every purchase decision...”

4. A Service Nightmare – When product configuration becomes so highly customized, it limits the number of service reps who have the competency to work on the equipment. This results in long service times. Worse yet is when service reps turn over, new reps, which lack the knowledge of the original configuration, begin applying short term service “band-aids” that sacrifice product performance.

In addition, complex product configurations bring complex service agreements. As is the case for orders, service contracts become incredibly difficult to administer and manage. For example, one customer of an equipment manufacturer demanded that each component of the product have its' own unique service agreement…all 200 parts.

5. Remarketing vs. Marketing – Marketing gets the opportunity to host the party. Because demand for most products already exists, marketers focus their efforts on having fun catering to big customers and satisfying the whims of the sales organization (big expensive customer events, sponsorships of sporting events, etc.). Their activities are nothing more than “remarketing” to existing customers to keep the party going.

As the downturn comes, marketing is stuck with pre-conditioned customers and reps who are looking for "fun" and "fluff". Unfortunately in this environment, marketing never develops the types of programs and core competencies needed to effectively sell products and acquire new customers right when the company needs it the most.

Best Cure for the Hangover
It’s not the hair of the dog that bit you that’s for sure and unfortunately, this hangover does not respond to a quick fix like a couple of aspirin or a new technology. Here are a few tips for getting started:

1. Map out a plan – you didn’t get into this overnight and you're not getting out quickly. Start small and stay focused.

2. Find/Create opportunities to standardize and/or simplify– force events such as technology implementation or new product introduction to standardize process, price and services.

3. Understand that not everyone is going to make it – the hiring profile for reps and managers 10 to 20 years ago when the sales force was built may not make it – order takers vs. order makers. The service and marketing departments may also need retooling. New competencies, skill sets and training are also necessary for those who make it.

4. Utilize new sales and marketing channels and retrain existing channels – introduce and pilot new sales and marketing channels that increase customer coverage, reduce overall sales cost, and improve customer acquisition. Help field sales reps find their “sweet spot” (closing large complex orders in new accounts) by providing training on multi-channel coverage models.

5. Draw a line with customers – Analyze and determine the profitability of your customer base. Segment it into three groups:

1. profitable customers
2. unprofitable but could be profitable given some minor changes
3. unprofitable with no hope

Begin the process of re-conditioning the way customers in segment #2 buy. You’ve created the monster and now you have to tame it. In segment #3, begin the process of terminating the relationship.

In the end, it is like any hangover. You feel terrible, you have a few (or a lot) of regrets, you promise to yourself and others that you'll never do it again -- but...it was fun while it lasted.