Mar 28, 2016 | Branding, Customers, Marketing, Sales
Virtually any B2B business owner I talk to, one of their key challenges is lead generation.
When you dig a bit, often it is the case that lead generation becomes a problem where there is a shortage of sales, then they react in a short term manner.
Lead generation is a long term proposition, B2B and B2C, the techniques may differ a bit, but when working day to day the only effective tool to get another sale is price, so you lose.
So it seems to me there are three dimensions to effective lead generation:
- The means by which you generate the lead
- The conversation rates at various points through the sales process
- The time taken in the sales process
Lets look at them in a little detail.
Means. This is the essence of marketing, the game is to identify who might be a buyer, why, when, and the means by which you can facilitate and support the transaction then build on it for a longer term. Digital has exploded the techniques available to us but the rules have not changed: Understand how you add value to who, and walk them through the relationship building and sales processes to a transaction. Brand building by another name.
Conversion rates. How do you calculate your sales conversation rates? Digital is now awash with numbers, marketing has changed from the fluffy to the numerical and we are belted over the ears to get with the program.
Marketing Experiments is a shop flogging the notion that marketing experience, creativity and intuition can be turned into a mathematical formulas, and in doing so they have done a fair job of nailing the variables in a digital sale to the extent that they can be nailed:
Probability of conversion = Clarity of Value proposition + (incentive to action – friction associated with the action) – Anxiety.
Whilst a bit convoluted, it does make some sense, and you can weight the factors according to your market, but the essential message is that marketing can be measured. To an extent it can be, but losing sight of the emotion involved would be a mistake, and emotion will always be virtually impossible to measure with any certainty. As Gary Vaynerchuk asked, “what is the ROI of your mother?”
Time. Every business and market is different, as is every potential customer situation so there are no rules in this except one: Only a small number of your prospects will be ready to buy right now.
However, if you extend the time frame to a month, or a year, and there will be many more ready. The challenge therefore is to be talking to them in terms that they are comfortable with at that particular point in their journey to a transaction. Given the reality of this journey, the worst thing to do is make the effort ‘stop-start’. It has to be a continuous marketing effort to ensure that there is a flow of leads into and through the sales process. Take the foot off the pedal and you will have a hole in the sales. Keep talking, build a relationship, guide them through the process. Demonstrate credibility and expertise, so that when they re in the buying mode, you get the call.
Too often we concentrate on finding the few who are ready to buy now, rather than playing the long game. Patience rewards the skilled fisherman, same with sales.
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Feb 29, 2016 | Change, Sales
Most of the businesses I work with are medium sized, at best. Most have a significant functional capability that can deliver great value, but they often do not have the ‘grunt’ in other areas to get over the line with large customers.
Many of them are in businesses where competitive tenders are a fact of life, it is a characteristic of many B2B markets, and whilst it is breaking down, the bias towards ‘The big guy’ remains. As they say in corporations, ‘You do not get fired for buying from IBM’ which is just a way of expressing the risk aversion of those in many large businesses where making a mistake is career-toxic.
So, why celebrate when you lose?
Here are 6 reasons:
- You did well to get on the radar. A key component of B2B marketing is getting on the radar of those in your ideal customers who have some influence, if not always decision making power. Being included in a tender list is evidence that you have succeeded crossing that first hurdle.
- Customer intelligence. The information in a tender necessary for tenderers to adequately meet the specifications can tell you a lot about the business. What are its priorities, their capabilities in your areas of competence, their budgeting and buying rhythm, and how the buying process works. All great information. It is also extremely useful to assess weather or not they are someone you want to do business with. Selling is a transaction, a 2 way process, as the seller, it is your choice to work with a potential customer or not, so do not be afraid to work only with those who will not only pay you, but value what you bring to the table.
- Know the personnel & process. People buy from people, not corporations, the better they know, like and trust you, the greater the chance you have. Getting to know like and trust is a human process, it happens over time, face to face. Preparing and submitting a tender while painful when you lose, is a great way to create other opportunities during the process. Even after you have lost, don’t waste the opportunity to reinforce the relationships that will serve you the next time.
- Follow up intelligence. Keeping in touch with a project you have missed out on can tell you a lot about the client, and also a lot about the winning tenderer. Knowing your competitor better than they know you is always an advantage.
- Other opportunities. If the tender you lost was the first tender you did for the customer, you should not be surprised that you lost. Change is hard, and risky, those managing tenders like a simple easy life, so they tend to stay with what they know. However, it is also in their interests to have options, so being around and interested, making yourself an option, might open up other small opportunities that would just normally get missed. Getting a foot in the door with a small job and doing it really well is the best way I know of to get on the next big tender list.
- You get to know where you are not wanted. Sometimes there are opaque barriers to success. Try as you might, make the tenders truly great, and you still do not win, or even get any useful feedback, get the message. Our time combined with our expertise is the most valuable resource we have, don’t waste it where it is not valued, or where there is some invisible barrier to success. Move on.
Remember as well that those awarding tenders are just people, they like to he liked and valued. They like to think that they are awarding business to those who really want it, and are determined to do a great job. So, be persistent and committed, although never ‘needy’, seek to assist them in ways not necessarily associated with a tender, it will help keep you on the radar, and build a relationship.
Jan 13, 2016 | Customers, retail, Sales
Words are wonderful things, they allow us to communicate meaning.
However, some words are easily interpreted in differing ways, making the shared understanding challenging, and sometimes the differences are exploited in a selling situation.
One of the common “pea & thimbles” I see when small FMCG (CPG to my American friends) businesses are negotiating with chain retailers is the variable use of mark-up and margin, particularly by retail buyers in a high pressure sales situation where the supplier is being put through the wringer.
Following is a quick explanation of the generally accepted meaning of the two terms.
Mark-up reflects the number, absolute or more generally percentage that an item sells above its cost.
If an item costs you $1.00, and you sell if for $1.50, the mark-up is 50%
Mark-up = profit/Cost
Margin is the profit made as a proportion of the sale price. Using the simple example above, profit is .50 cents, the selling price is 1.50, so the margin is 33%.
Margin = gross profit/revenue.
Imagine you are negotiating a promotional deal with a buyer, a discount for a period of time against an agreed purchase volume by the retailer. The buyer uses the terms interchangeably, referring to his margin as only 33%, when his minimum allowable is 45%, conveniently forgetting that one is margin, the other mark-up. He uses that as a means to persuade you to dip deeper into your pocket to fund the promotion based on the significant orders you will be receiving, and might even do a ‘once-only, just between us’, deal where he accepts 40%.
He has not done you a favour, but he has enhanced his margins, which is generally the retails KPI, considerably.
Dec 15, 2015 | Branding, Leadership, Sales
Reckitt Benckiser did everything right, and they did everything wrong with their Nurofen brand.
How can that be?
The ACCC has now successfully prosecuted Reckitt Benckiser in the federal court for misleading consumers with their Nurofen brand of painkillers, requiring them to pull product off the market within three months.
There will also be a fine, potentially a significant one to drive home the message.
In the process, years of investment in the brand will be trashed.
Who will ever trust Nurofen again?
On one hand, I have absolutely no sympathy for a corporation of any type that knowingly and deliberately perpetrated this sort of misleading communication. The writing has been on the wall some time after Nurofen won Choice magazine’s coveted “Shonky Award” which garnered a fair bit of publicity at the time, including a star appearance on the ABC’s ‘Checkout” program. That Reckitts chose to ignore the ‘social warnings’ and voluntarily adjust their communication is a huge failure in leadership.
The marketing however has been very good over a long time.
Having run large corporate marketing departments, I can understand exactly how it all evolved.
An experiment with a brand extension generated added market share, consumer preference and retail shelf space at premium prices and margins. The marketing people responsible were recognised and rewarded by their employer and peers. Who would not take the next step, and seek new segments?
Back pain, period pain, migraine relief, et al, commercially seductive stuff.
Nobody would tinker with that sort of success. Anyone who dared to suggest that it was wrong, and they should walk away from the measurable short term success in favour of being a brand worthy of long term trust, a truly difficult notion to measure, would find themselves seeking other opportunities very quickly.
The failure is in the leadership of Reckitt Benckiser.
Reckitt Benckiser management simply failed to reconcile the short term financial benefits of successful brand marketing with the long term benefits of having a brand and business that demonstrated leadership by building trust. They failed the basic test of personal leadership which is to do what is right, even when it is not necessarily expedient.
Clearly the ‘leaders’ of Reckitt’s were there not as leaders, but as managers. They are undoubtedly good at managing the numbers, negotiating the deal, maneuvering amongst the corporate politics, but would you want them beside you when the going got really tough? Instinctively you know it would be all about them, they would not ‘ have your back’
It is easy to forget that business is about people, not corporations.
People buy products from people, not businesses.
While we all talk about ‘relationships’ endlessly, particularly in the digital and social spheres that now so dominate our lives, we tend to forget just how hard it is to maintain a real relationship.
One night stands are pretty easy, there is no real personal investment, marriage is hard just because there is that investment required.
We should never forget the difference.
Nov 9, 2015 | Customers, Sales
www.customerthink.com
Small and medium businesses usually struggle with the challenge of scaling their sales efforts. Most start with a group or network who know them, and their expertise, and are happy to use their services, but what next?
How do they build from the small base of the founders network?
Often someone on staff is turned into a ‘salesman’ usually reluctantly, or someone is hired who claims to have intimate knowledge of the market niche, and left to their own devices with little direction or discipline. Neither option works very well, and usually comes with a litany of hidden costs and problems.
Following are 6 of the biggest barriers I have encountered over the years that cause the greatest headaches.
- Compensation.
How you pay a salesperson is always front and centre, and is often a witches brew of trouble and unintended consequences. The default is usually a base plus some commission, depending on the business and its circumstances, but is often not the best option.
Within considerations about the compensation plan, there are a number of subsidiary questions that need to be asked.
- What behaviour are you motivating for? Is the objective new customer acquisition, retention of existing customers to reduce churn, increases in share of wallet of existing customers? Whatever it is, it makes sense to manage the compensation towards that objective.
- What are the capabilities of the personnel? Not that are they nice people, but are they able to deliver what is being asked. Sales people like all people have a range of behaviours and capabilities. In my experience an important axis of sales performance is what I call the “hunter/gatherer index”. Very simply, ‘hunters’ get their kicks from the chase, identifying an opportunity and chasing it down, once caught they move on. By contrast the “gatherers” tend to stay close to home and what they are familiar with, nurturing what they know without putting themselves at “risk” by inviting a “No”. Most sales organisations need a mix.
- What is the mix of behaviour drivers in the sales force? Here hides the minefield. People are motivated by different things to different degrees. In general once the basics are covered, and people consider that they are being “fairly” compensated, the absolute amount drops down the list of behaviour drivers. However, some are motivated more by money than others, some react to targets and thresholds differently to others, and some prefer non cash rewards more than others. However, everyone responds to acknowledgement of effort and achievement, this is deep in our DNA. In the absence of acknowledgement, the importance of the absolute amount of money paid increases geometrically.
- How easily understood and ‘gamed’ is the compensation plan? I have yet to see a compensation plan that will not be gamed by at least some sales staff, and that includes senior sales management staff. The answer to this is almost always simplicity and transparency, the simpler the plan is the better, and the more transparent the plan the better.
- Hunter Vs annuity is a common problem. A customer who was sold ages ago, is a loyal and repeat customer, yet the commissions paid for sales to him are the same as commissions on sales to a new customer that took time sweat and tears to prospect, research, engage and convert. Why? One is hard, challenging work, one is akin to babysitting. Flat rate commissions alone rarely work for this reason.
- Alignment.
Unfortunately this word has become a bit of a cliché. “Sales” has an inherently short term meaning for most, conditioned as we are by our experience, and the recognition that sales is about “closing”. Almost every sales training course I have seen has a module about the close and how important it is, which is not in dispute, but the standard tactics to generate a close by any means are inherently about “NOW” and is unfortunate. In most cases thinking beyond the transaction on the table currently pays great dividends. The key is to ensure that the effort is in every case aligned with the objectives and strategies of the organisation. It is surprising to me just how often there is a misalignment between what the board room wants to happen, and what is actually happening at the coal face.
- Induction
How often have I seen a new hire in sales being given a quick tour of the factory, being given a folder with product specs and prices, and a list of customers in the territory, the keys to the car and sent off into the wild blue.
Nowhere near enough. Not even remotely enough, even to be selling paper clips to blind men.
- Direction & governance
Managing a sales function is often like herding cats. It takes a combination of the carrot and stick motivation, as well as directing and mentoring the individuals and the group. The last thing you should allow to happen is “set and forget”.
There are a few things that can help with a bit of consideration.
- Defining the roles of sales people is crucial. Some people are naturally hunters, they want to be out there chasing, the thrill is in the chase, once caught, they get quickly bored. However, we often have these people doing administrative stuff that may be necessary, but that the hunter salesperson does badly. The converse is also true. Why do we think some-one who is a “nurturer” by nature is going to be happy and perform in a role that requires hunting?
- Sales management is not sales. Too often we promote our best salesman to be sales manager, only to find the results are lousy, and neither party is happy. Many valuable sales professionals fail to be managers, they do not make the jump. In my experience the most common cause of the failure of a good sales person to be a good sales manager comes from 3 sources:
(a) The new sales manager wants to “keep his hand in”, so keeps an account or territory so as well as being the manager, he is the sales competitor to the rest of the sales team.
(b) The second reason is the tendency to micro manage the sales force, to get them to do things the way that was successful for them as a sales person, rather than being a coach, mentor and manager.
(c) Inadequate leadership being directed towards the new sales manager. In most growing SME’s this is almost a given, as the “Boss” is usually very functionally oriented, not having had a lot of exposure to sales, so in effect is learning on the job as much as the new sales manager is.
- Customer relationships
Building relationships with customers is like building any other sort of personal relationship. It takes time, effort, and commitment, as well as there being strong mutual benefit as the foundation. However, unlike personal relationships, B2B sales relationships almost always involve multiple people in the customer organisation, and a procurement process that needs to be administered. Mapping out these relationships and processes in some sort of sales plan is essential, and for the small group of strategically important customers, those who will generate the 80% of the profits of the future, it should be an exacting process. I usually call this process ‘SKAP’ for Strategic Key Account Planning, but the importance is in the development of a process by which to manage the allocation of resources across the tasks of paying the bills today, as well as into the future.
- The sales model
The choice of sales model is simply a function of the business model, but differing models require differing selling infrastructure and capabilities and collateral and marketing material.
Selling to distributors is a different animal to selling to end users. The former is usually interested only in margin, and what you as the principal are going to assist them to move stock, whereas selling direct is about delivering value to the end customer. When you identify these challenges in your business, we should have a coffee and come up with a plan.
Don’t ever forget that the success of the business depends on the ability of the sales function to deliver, and everyone in the business makes a contribution to the sale.
