Selling in Bad Economic Times!
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Selling in Bad Economic Times!
Managing Sales in Tough Times!
Introduction
This Article or White Paper is based on:
1. My personal experience as a VP Sales, where, in 3 different companies, I was faced with sales targets that seemed even less attainable than usual, as the economy was in a major downturn;
2. As a Consultant, helping over 20 of our Customers increase sales in adverse economies.
Situation Summary
• You have a Revenue and Profit Plan predicated on sales growth through the year
• The economy is in the dumper, and many of your customers are hurting
• Confirmed orders are being delayed
• New sales are not closing
• Your sales force is throwing up its hands saying, “What can I do?”
• Your revenue forecasts keeps slipping; and the Board wants to know “Why? And what are you doing about it?”
Deduction:
“Joining the dots” above, you quickly deduce that:
1. You will be facing cut backs in expenses and/or head count unless you can ramp sales up
2. Either way, you need a reliable process to predict revenues.
List the Challenges that you face due to the Slowing Economy?
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How do Companies typically Address the above?
Time after time when sales take a downturn, I have seen the Sales & Marketing Executives react with what I call “point solutions”, especially for their sales force, eg:
• Let’s get a motivational speaker in (to boost morale)
• Let’s give sales some different sales training (to boost morale and improve skills)
• Let’s boost the sales compensation plan (to boost morale and incent sales more)
• Let’s fire all the low producing sales reps (to cut costs and send a clear message to the rest)
• Let’s automate sales or implement a CRM System (to increase sales efficiency)?
You may ask, “What’s wrong with these?”
My response would be nothing to the first 3 as long as it is understood that these will be short term hits in productivity, at best; and the 4th may reduce your cost base, as well.
The last one will almost certainly cost you sales in the short term (and sometimes in the long term too, as many CRM implementations are not paying off in terms of increased sales).
However, the overriding negative is that none of these scenarios address the real problems caused by the slowing economy, and so companies try to throw “the silver dart”… and miss!
How can you address the Situation any better?
By now, you will be asking yourself, “So what? There’s nothing new here." “What gives you the right to assume that you can address these problems in any better way?”
Well the simple truth is that neither I nor anyone can “fix” the economy overnight.
However, as a VP Sales of a $120 million technology company faced with the exact same challenge, I found that there was an internal and an external opportunity, ie:
1. There were a significant number of, “simple to fix” opportunities for improvement within most sales and marketing organizations which allowed me to improve sales 20-30% within 2-3 months by identifying and addressing these.
2. I also had to quantify the real value of our products, services and solutions for our clients, to show them why they should buy, especially in a slowing economy.
Normally this involved some careful work on “Value Propositions” backed up by customer references, followed by training for the sales force on who to sell these value propositions to, and how.
Often this identified a major change for sales in terms of their need to sell to executive decision makers, and sell based on business value, versus product features and benefits.
So the rest of this White Paper focuses on:
1. What are these “simple to fix” opportunities for improvement within most sales and marketing organizations (including the implementation of a discipline around forecasting to better predict revenues), and…
2. Value based selling.
Opportunities for Improvement within most Sales and Marketing Organizations
As I am not trying to be a “holier than thou” preacher, let me confess that no sales organization is perfect (including the ones that I have managed).
However, to illustrate my point, let’s review some extracts from a “live” feedback from a company that completed our “Sales & Marketing Health Check”.
Overall Status re: Planned Sales Revenue Quota at the half year point: About 90% of YTD Plan, which is expected to project to year end.
Behind this, our Health Check probes at a number of areas to which some of the responses might be:
Sales & Marketing Planning
The Company didn’t have a documented Sales Strategy & Plan, (ie: the sales targets were considered “The Plan”) and within this…
• No clear, defined list of target accounts to sell to
• Key buyers and buying influences were unknown, and the value propositions were not widely known by sales?
• A need to develop plans to penetrate key markets, but no Market Segment Plans to support this
Pipeline or Funnel Management
The Sales Pipeline or Funnel Status was less than 1.2 times coverage for the $ needed to make year end Quota
No consistent Company Wide Sales Forecasting System, and so the Pipeline Status above was a guess
Account Development
No Key Account Program to sell, higher wider and deeper to existing major customers, or to penetrate new ones
Personnel Strength
The Sales Force Strength Index* was estimated at below 60% (* this Index calculates the percentage effectiveness of your existing sales force compared to a team of perfect sales people)
There was a need to improved Sales Skills in 2 key areas
NB1: Our “Health Check” probes at a number of other areas, but the above extract gives a feeling for a typical set of Sales & Marketing issues that we might find.
NB2: * Sales Force Strength Index and other Key Performance Indicators are derived from PERFORMAX’s Sales Management Model. For more info on this contact me at peterm@performax.com
By the way, if the above wasn’t enough?
As we started working with this particular company, we found some other interesting sales culture issues, eg:
• Several sales people and sales managers had not made their targets in 3 years, but were still plodding along, and getting annual raises (Accountability?)
• The sales force was mainly a reactive group of “farmers” who were mostly incapable of developing new business, or new accounts (Reactive?).
In fact, there was little discipline, accountability and focus; the backbone of any successful sales organization.
Based on the above, perhaps you can now see that, “Yes” there may be a need for some sales skills development, but there are also a number of key areas which can be addressed quickly to gain control of, and manage sales & marketing more effectively.
And, by the way, without accountability, raising skills won’t do much for results.
To find your Opportunities for Sales & Marketing Effectiveness Improvement, please contact me about our “Sales & Marketing Health Check”.
I know what my Problems are…What Next?
When confronted with a list of issues such as the ones revealed by the “Health Check” above, we have developed a rapid deployment methodology to address these in a structured manner.
This is facilitated via an easy to customize sets of etools, training and eprocesses, eg: Sales & Marketing Templates, an Opportunity Planning, Management & Forecasting System, a Key Account Planning Process etc., plus a series of workshops which we use as the implementation vehicle for these.
For example, we might assemble a phased Program that includes:
Phase 1: Help to develop a Company Sales / Marketing Plan that really shows how the targets can be exceeded (using one of our etemplates)
Phase 2a: Customization of our Opportunity Planning & Management System (which includes Sales Forecasting) or your already purchased CRM
Phase 2b: Training for Managers and Sales Staff around the above
Phase 2c: Implementation of the System, along with Management Coaching.
Phase 3: Customization of, and implementation of a Key Account Planning Process
Phase 3b: Training for Managers and Sales Staff around the above
Phase 3c: Implementation of the Process to produce “Live” Account Plans
NB: The above is a sample for illustrative purposes, and here is a feedback from a VP Sales who partnered with us to implement the above…
“The PERFORMAX SYSTEM takes a very simple and systematic approach to:
• Creating Accountability (in black & white) for $ targets
• Planning the selling Activity on how to achieve or exceed these targets
• Tracking and Forecasting the Sales Funnel through Opportunity Management to see if they could make their targets, and if not, take appropriate actions- before it was too late.
Post training & implementation, we saw immediate, and over time, key improvements:
• 19% Sales increase in the first year, 28% Sales increase the second year”
Even our customers commented on how our sales people sold more effectively."
Value Based Selling - What does that mean?
Let’s start with the need to develop and sell high value products services, or offerings.
With the falling off of revenues and/or margins from traditional or older offerings, most companies have reacted to this by creating new high value products and service offerings; as one of our customers said:
eg: “Simware, like many software companies, arrived at a crossroads, where, in order to prosper, it became necessary to invent a new product line, change our marketing approach, and change our sales model from a product push to a solution/partner pull.”
Glen Brownlee, CEO of Simware, Ottawa
So, our definition of a high value offering is a product or service or solution, which can be shown to directly impact the value of a customer’s stock price by impacting their revenues and/or costs favourably.
If you now look for the next level of drivers that affect these outcome variables, you list what we call the “Big Picture” Drivers or Key Performance Indicators (KPIs) of any company, eg:
• Time to Market with new Products or Services
• Cost of R&D
• Sales & Marketing Costs
• Size of the Sales Funnel
• Win ratio of Sales
• Customer Satisfaction
• Overall Cost Reduction
• Overall Personnel Productivity, etc, etc.
For example, in addition to selling hardware, major computer manufacturers now offer:
1. Complete Industry Solutions by selling their hardware with or through software companies who may specialize in just one Industry Segment and be perceived as experts in that segment.
2. Complete Outsourcing of the IT functions in a Company.
Both of these examples can be brought down to a business justification (eg: a whole streamlining of the company’s operations) and can therefore be shown to affect 2 or 3 of the KPI’s above.
Obviously, in an economic downturn, it’s worth thinking about how your offerings can help your customers either grow revenues and/or reduce costs, and for customers who cannot grow revenues, perhaps you should focus on the latter.
What are your Company’s High Value Offerings?
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Which of these can help grow revenues for your customers (in this economic downturn)?
Which of these can cut costs for your customers (quickly and without huge investment)?
Selling High Value Products & Services; What’s the Problem?
Based on our working with a number of companies in the high tech, and telecommunications industries, after a company releases its new, ‘high value’ offerings the next wave of problems arises in the sales force, and for a number of reasons, eg:
• The sales force are typically used to selling the traditional products and services of the company, and have built up great relationships to service the “wants” of traditional customers
• The sales force was probably trained on relationship selling and by matching customer “wants” to the features of their products or services
• The new high value offerings may need to be sold to new buyers with whom your sales force may not have any relationship, ie: you are back to selling from scratch
• Sometimes the old relationships may not help you be perceived as a serious supplier by new buyers
• Many times, to offer a complete and attractive “Value Proposition” requires you to partner with other companies who have specific expertise to complement your offerings
• The selling model for Value Based Selling requires that you are able to demonstrate the probably business impact of your offering, which means a very different orientation to the traditional “product push”. It means the sales force must have the ability to translate a range of business issues into how their offerings can help improve or address these issues, and generate an ROI estimate
• The buyers of high value propositions most often lie in the Executive Management Team, who are the people who worry most about the kind of KPI’s listed here. Many sales people are not used to and not skilled at calling on Executives
• The kind of product training that helped sales people give great product presentations and demonstrations is not the consultative skill set required to understand complex business interactions, develop solutions, and sell to Executives.
So now we come down to the root cause problems for your sales people:
• They probably haven’t been trained in a way that helps them sell value
• Your sales force’s existing relationships do not help them, and may even hurt them, as the buyers of value may not trust them
• They may be well outside of their personal “comfort zones”.
To illustrate the above points, for example, the Account Managers of a computer hardware manufacturer used to selling mainframe computers to the IT Director found that they had a whole plethora of other things to sell, eg:
• PC’s…. bought by end user department from resellers
• Outsourcing of the whole IT Function
• Departmental Application Solutions that run on mid range Computers
• Engineering Workstations and Applications.
Since the IT Directors of companies were often seen as No: 1 enemies by Departmental Managers, these Account Managers often had a tough time getting to see the Departmental or Engineering Managers, who preferred to buy from competitors.
When selling Outsourcing versus mainframe hardware, it was extremely difficult for these Account Managers to go to the Buyers of this Service (typically the CEO or CFO) without offending their old friend and Ally who had bought hardware from them for years, the IT Director.
What are the Challenges for your Sales Staff to sell your Value?
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What about Sales Management?
By the way, so far we have only focused on the Sales Staff themselves, but what about your Sales Managers? Do they understand this change and can they give the necessary leadership, planning and coaching needed to help sales sell differently.
Many times we find that Sales Managers are in worse shape than their sales teams, as often they are having trouble coping with the old world, let alone being flexible enough to change and adapt to the new.
What are the Challenges for your Sales Managers to ensure you sell your Value?
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To learn how you might address the set of Challenges you have in selling your company’s value, please read our White Paper “The Ideal Sales Person for Selling High Value” on our website: sell-or-die.com/downloads/white papers and/or email your specific concerns to myself at peterm@performax.com.
Summary and Conclusion
As last thoughts, when the economy downturns:
1. Neither you nor I can fix the economy, by ourselves
2. However, in any sales and marketing organization, we could and should:
• Identify the obvious strategy, organizational, process & skill gaps, and take steps to address ALL the critical ones; versus just trying point solutions
• Implement a competitive culture based on accountability, discipline and focus
• Implement a disciplined sales forecasting system
• Understand and sell the right value propositions to the right customers
My experience is that, even in tough times, IT CAN BE DONE AND WORKS LIKE CRAZY! (see our references that follow) And even if the sales targets prove to be unrealistic, its amazing how much can be achieved.
By the way, why not do the same thing in good times too?
Selling in Bad Economic Times - To learn more about this author, visit Peter Michie's Website.
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