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STORY
The Five Factors of
Top Salespeople, and the Top Four Sales Mistakes
Top salespeople
know their numbers, and TEC speaker John W. Asher III is no
exception.
Check out these
stats. In various parts of his career, Asher has:
- Sold over $2 billion worth of business.
- Managed many hundreds of sales managers, sales
people and sales reps.
-
Trained over 12,000 sales people, sales managers and CEOs of TEC
companies.
As a TEC speaker
for the past eight years, Asher has presented best sales practices to
250 TEC groups, and more than 400 TEC companies have used his sales
training, consulting and assessment services.
MyTEC asked Asher
to filter out the most important things TEC companies should know about
sales.
- The Number-one Skill a Salesperson Needs
- Profile of a Top Salesperson
-
Sales Mistakes TEC-member Companies (and Many, Many Others)
Make
The Number-one
Skill a Salesperson Needs
Consider these two
statistics about business-to-business sales:
- Four percent of the sales people in the U.S. sell 94 percent of
the goods and services, according to two meta studies—one by Harvard
University and one from the Gallup Organization.
- Eighty percent of business-to-business (B2B) transactions are the
result of relationships/consulting type sales, where the buyer has to
like, trust, and get along with the seller, according to current surveys
done by "Selling Power" and "Sales and Marketing Management" magazines.
(Twenty percent are commodity sales where price is the driving factor.
Today, in some industries, nearly all sales are commodity-based.)
The statistics tell
the story: Selling yourself is the most important sale in 80 percent of
the B2B sales.
The most important
skill of a salesperson? Listening.
It seems
contradictory. How can you sell yourself if you’re listening?
It’s simple. Ask
questions. Listen to the answers. Respond with comments that show you
listened, and ask more questions. In the end, suggest your solutions.
"When a sales
person starts out with a presentation, most of us feel like we’re being
sold to. Most of the country’s top salespeople recognize the negative
psychology of that," says Asher.
Instead of
polishing up the perfect presentation, top sales people will ask about
the prospect’s issues, problems, pain and requirements. After they’ve
unearthed all that, they offer a solution. "Now the psychology is
switched around. Once a relationship is established, they act more like
a trusted, helping advisor than an ‘it’s-all-about-me’ sales person."
Profile of a Top
Salesperson
If you were to
create a profile of a top sales person—that four percent of the sales
population that accounts for 94 percent of the sales—you would see five
factors converging.
"It’s what I refer
to as ‘the perfect storm for sales,’" says Asher.
The factors are:
1.
They
are "knowledge giants."
"They know what they’re talking about. They have a perfect understanding
of their product or service. They understand their competition and the
competitive landscape. They come across to prospects as ‘go to’ people
because they really know what they’re talking about, and they can help
prospects solve real business problems."
2.
They
have an aptitude for sales. It’s in the DNA.
"All of us have a natural aptitude for some jobs and won’t do well in
others. In Jim Collins’ book, "Good to Great," one of his bottom lines
is to get the right people in the right seat on the bus, in jobs where
they have natural talent or aptitude," says Asher.
3.
They
have the top 10 skills of the super salespeople, which are generally
unknown to the average sales person.
"Some of these skills are counterintuitive. They do not come naturally
so they must be learned," Asher explains. For instance, someone with a
"driver" personality like Asher’s is not a natural-born listener—yet
listening is the number one 1 skill. So it must be learned.
Another skill is
patience coupled with perseverance. "Most sales people give a lot of
prospects a few contacts. Top salespeople pick a few top prospects and
give them a lot of contacts. When you get a new B2B prospect, you have
to give them on average 12 touches before they will buy," he says.
In Asher’s sales
training experience, when you give a person with a natural talent for
sales the top 10 skills of the super salespeople, you will usually see
an explosive growth in sales by that salesperson.
4.
They
are motivated.
Asher says motivation involves the following considerations:
· Is the person self-motivated? If they test high for sales aptitude,
they are usually naturally self-motivated. If they do not test high for
sales aptitude, they need to be motivated by sales managers.
· What type of sales person are they? The two basic types are
"hunters" and "farmers," and if they are mismatched to the job, their
motivation will suffer. A hunter likes the thrill of the hunt, the
challenge, and will be most motivated by acquiring new accounts. A
farmer likes to have many accounts that he or she can nurture for
up-selling and cross-selling opportunities. If you have a hunter in a
hunter job, he or she will be motivated. Put a hunter in a farmer job
and motivation declines.
· Where is the sales person in his or her life? Are they single and
trying to build wealth, thinking about money all the time? Or, are they
middle-aged, having made a substantial nest egg, and don’t need so much
money? Motivation will be affected accordingly.
5.
They
are supported by a process.
"Most top-performing TEC companies have ‘best practice’ branding,
marketing, sales and customer service processes to support the sales
people," says Asher. "You won’t see a great sales person working in a
company with unsatisfactory processes."
How to discover
whether your processes are up to standards? Asher recommends comparing
your best practices to those in the MyTEC Best Practice section on Sales
Force Motivation and Management.
"So the profile of
top sales people is that they’re knowledge giants who help customers
solve real business problems, they have a natural talent for outside
sales, and they have the top 10 skills and use them. They’re
self-motivated and they’re at that point in their lives where they’re
charged up to make more sales. And they’re working in companies where
they are supported by best practice processes for branding, marketing,
sales and customer service. When all five of those are clicking along,
you have a top sales person," Asher says.
Sales Mistakes
TEC-member Companies (and Many, Many Others) Make
What’s not clicking
in some TEC companies that are sales-challenged?
Asher draws on his
experience consulting with 400+ TEC companies, and he identifies these
issues:
1.
Promoting the best salesperson in the company to the position of sales
manager. "Now we’ve shot ourselves in both feet," says Asher.
"We’ve lost our best salesperson and gained a lousy sales manager,
because the aptitude for the manager’s job is not the same as the
aptitude for an outside ‘hunter’ salesperson. It is a rare person who
has the aptitude for both jobs."
2.
Confusing the roles of branding, marketing, sales and customer service.
"It’s actually a fairly simple distinction," Asher
explains. The objectives in each process are:
· Branding: Raising market awareness
· Marketing: Obtaining qualified leads.
· Sales: Making 12 contacts with a qualified lead to close the sale.
· Customer Service/Account Management: Once you’ve got the customer,
delight them and grow the account by upselling, cross-selling and
obtaining referrals.
"The mistake many TEC
companies make is that they have hunter sales people do marketing, sales
and account management, when the company should take care of marketing
and customer service and let the hunter sales people sell."
3.
Failing to have a repeatable process for sales.
"I have 399 out of 400
CEOs telling me this: ‘I want a repeatable process for my sales people,
so that as they go through contacts one through 12, the outcome is more
predictable," says Asher.
The "right" overall
sales process will vary a bit for each company, but the basic sales
processes need to be developed and put in place by top management (CEOs
and sales managers). Most top TEC companies have a "sales manual" that
includes prospecting, qualification, pursuit and closing processes.
4.
Misunderstanding the CEO’s role in locating top salespeople.
"Almost all CEOs want top salespeople, but they don’t take it as their
personal job to find them. It should be one of the CEO's top jobs in
life to find top sales people," he says.
How?
· Identify them. They’re usually within your industry, working
for a competitor or vendor/supplier.
· Build relationships with them.
Personally
stay in touch. Don’t delegate that task.
· Position yourself as the "go to" employer of choice.
When they are in a chaotic situation, they will think of you first.
Asher has one last
piece of advice: Take maximum advantage of all that TEC has to offer.
"I grew a company from
startup to $50 million in sales. The principal reason we were successful
was TEC," he says.
John Asher is a former TEC member and now a TEC speaker.
Created for MyTEC.
Copyright 2005, TEC Worldwide, Inc.
All rights reserved.
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TEC INSIGHT
Solving the Elusive
Quest for IT Value
By TEC
speaker Dave Hartman
Unless your company
offers technology services or is in a high-tech industry like
biotechnology or communications, your information technology (IT)
department probably isn’t generating revenue.
But that doesn’t
mean you shouldn’t expect it to deliver real business value.
It’s estimated that
as much as 85 percent of a typical IT department’s time is devoted to
"run the business" type of activities. If IT departments devote the
majority of their time to these non-project-based requirements (system
support, training, help desk, crisis management), it stands to reason
that in order to address IT value "holistically," one can’t stop at
creating value simply by managing projects more efficiently.
Five key value
areas
To create real
value for your business, the IT department needs to align itself with
business strategy and objectives in five key areas: Planning, people,
processes, projects and customer service.
-
Planning.
Aligning technology with business goals starts
with good planning. Even small companies should commit to an IT Road
Map, an annually revised three- to five-year plan for business
technology integration. This Road Map should encompass as many
organizational levels as possible—but should at least include senior
management throughout the process.
IT planning, budgeting and resource decisions must all refer back
to the Road Map—a holistic plan for defining, delivering and measuring
value in all five key areas.
-
People.
Central to any effort at gaining IT value is
developing people who are highly motivated, well-trained and, most
importantly, understand their company’s business. At a healthcare
company where I once served as IT director, the IT staff was so familiar
with the company’s business and objectives that other departments sought
them out for assistance with initiatives that had nothing to do with
technology. (Retention of these highly motivated employees wasn’t a
problem.)
-
Processes.
Improving critical system support processes is
another vital part of creating IT value. This support needs to be
customer-focused. Identify the level of support and performance that the
customer expects (sales, service, operations, etc.), establish metrics
for measuring performance, and then regularly communicate performance
(good and bad) to these departments.
- Projects.
Providing "unforgettable" help desk service is
another crucial piece of the value equation. Employees often see help
desk personnel as too technical, unwilling to listen to their issues and
too quick to blame them for problems. Unresponsive or incomplete IT help
desk support is the fastest and easiest way to sour the perception of
value that IT brings to a company. Like anything else, once trust is
compromised, it’s very difficult to restore.
- Customer service. A great way to ensure that critical system
support and response meets (and exceeds) customer expectations is by
establishing service level agreements (SLAs) with key operational
departments. An SLA defines standards for service with respect to a
particular system or functional area and metrics for defining and
monitoring the quality of service.
The business of
technology
While your IT
department may manage technology, its real mission is helping the
company conduct business more profitably. Creating IT value starts with
IT leadership that understands this distinction and includes executives
committed to delivering IT value as a company-wide priority.
When your IT
department is aligned with your company’s business objectives, others in
the organization begin to see it as part of the strategic team—rather
than overhead.
TEC speaker
Dave Hartman is president of Hartman Business Technology, a
strategic technology consulting firm based in Elkridge, Md.
Created for MyTEC.
Copyright 2005, TEC Worldwide, Inc.
All rights reserved.
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TEC NEWS
Basic Pricing
Strategies
- The Five Pillars of Pricing Strategy
- Pricing Principles
- Fighting the Wal-Marts of the World
-
Annual Pricing Review
The Five Pillars of Pricing Strategy
According to
pricing expert Eric Mitchell, profit is a function of three
factors -- price, margin and cost. Of these, pricing represents perhaps
the most difficult to get right. Part of the problem, notes Mitchell, is
that many CEOs approach pricing as a tactical activity, something you do
just before taking a product or service to market. In reality, pricing
is a strategic function that encompasses far more than just the
cost of making and delivering the product.
Before developing a
pricing strategy, Mitchell recommends giving serious thought to five
critical factors:
1.
Competition.
Who is your competition, what is their cost structure, and how do they
price? This information is especially important if your business submits
bids or responds to requests for proposal in order to make a sale.
2.
Customers.
According to Mitchell, no two customers buy for the same reasons. Plus,
they often perceive different value from your product or service. In
today's world, more and more companies are implementing different
pricing structures for different categories of customers.
3.
Financials.
What are your gross margins? What do they need to be? Does your
cost structure allow you to achieve those margins? The higher your
margins and the lower your costs, the more flexibility you can have in
your pricing strategies.
4.
Perceived value.
Do your customers consider you a value-added provider or a commodity? Do
they see you as different from your competitors? If so, are they willing
to pay for the difference(s) you offer?
5.
Marketing objectives.
Is your goal to
increase market share? Drive out competitors? Introduce a new product?
Open a new market? Boost profits? Most important, what does the ideal
customer for your business look like, and are you putting together a
pricing package to attract that kind of customer?
Pricing Principles
When developing a
comprehensive pricing strategy, says Mitchell, it pays to heed the
following principles:
- Set prices according to your market, customer and
competitive needs. Do not set prices based upon your costs or profit goals. Costs do
not determine what your customers will pay; they simply establish a
floor below which you cannot make a profit.
- Adopt a long-term pricing perspective.
Every pricing decision should be based on your company's need for
stability, controlled competition in key markets, and the loyalty of
established customers.
- Find creative ways to reward retention.
In many businesses, 80 percent of sales come from 20 percent of the
customers. Rewarding retention will insure that key accounts do not
exert uncontrolled downward pressure on your margins.
- When in doubt, start high.
In general, customers buy new products based on their new technology,
performance, capabilities and reliability. For that reason, price is
often a secondary consideration. Established and familiar products are
more price-sensitive than new products aimed at new markets.
- Collect information about major competitors.
Review trade publications, collect price lists, spot-check sales
information from the sales staff, and interview personnel newly hired
from competitors. Compile the information in a database and
comparatively analyze it against your own price/product offerings.
- When possible, set internal target prices.
Regularly review your costs, pricing history, competition and market
trends to help you select target prices with key customers.
- Convey target prices to your salespeople.
If an account is important to your company, establish special pricing
controls when you set a target price. For example, you may give
salespeople (or your sales manager) discretion to drop the cost up to
five percent below your target price. Be very clear about how low they
can go with any given customer or class of customers.
- Design and budget for promotional pricing.
When properly designed, promotions can often improve market share
without risking a competitive price retaliation. Promotions can be
rotated among products/product lines and tested geographically prior to
a national roll-out. This strategy reduces the risk of giving away too
much price in a promotion and allows for market feedback. Keep in mind,
cautions Mitchell, that price promotions will not cure inferior
products. Use pricing promotions only as tactical devices, not as a
strategic tool for turnaround.
Fighting the Wal-Marts of the World
What happens when
Sam Walton or some other "600-lb. gorilla" moves in next door and
decides to gobble up your market for lunch? The last thing you want to
do is lower your price and battle the big boys head-to-head.
"In the '90s, when
the huge retailers first began entering smaller markets, they tended to
use their brand as the primary competitive weapon," explains Mitchell.
"Now they use a combination of brand -- which consists of image and a
promise of service -- and low price to come in and squash the small
players in an industry. In a very short time, large companies have
learned they can use low price to steal market share from smaller
competitors."
Instead of trying
to compete on price with someone who can sell a product for less than it
costs you to make it, Mitchell recommends a two-pronged approach:
1.
Study
your customer base to determine which niches and distribution channels
are most secure. Then focus all your resources on dominating those
areas.
2.
Attack
on service. Huge companies may have economies of scale but they can't
respond as quickly as small companies or provide anywhere near the same
level of service.
"The key is to find
a niche you can excel in and defend it with everything you have,"
advises Mitchell. "Focus on delivery, performance, response time,
engineering specs or some other service area that the big guys can't
match. Make your service tangible by offering a guarantee that
eliminates low cost as a factor in the buying decision. Make the big
boys the commodity and pitch them as the bad guys while positioning
yourself as the value-added provider."
Annual Pricing Review
For many companies,
especially those in commodity industries, pricing is primarily a
function of managing margins and costs. In particular, says Mitchell, it
involves cutting out costs that customers don't give you credit for.
"Increasingly, we
live in a price-driven costing world, where more and more companies are
price-takers, not price-makers," states Mitchell. "If you don't have any
room to move your price, you'd better focus on your margins. That means
identifying things embedded in your cost structure that don't matter to
the customer and eliminating them from your product/service offering.
"As CEO, you need
to establish and 'own' a minimum margin. By that I mean when salespeople
come to you and say that clients will walk if you don't lower the price,
you need to set a rock-bottom margin and let them walk away if they
refuse to meet it. Create a minimum target and a series of average
targets for different customer groups and make sure your salespeople
adhere to those targets. In this way, price management becomes margin
management."
To support this
process, Mitchell recommends conducting an annual profit-price review.
This involves a half-day meeting with your CFO or controller and other
management team members to review your overall pricing strategy and
accomplish three specific goals:
-
Review the costs embedded in your structure.
Ask three critical questions: Are we doing things the customer doesn't
value? Are we doing things for free that we ought to be charging for?
Are we doing things that we can't charge for but the customer takes for
granted? If you answer yes to any of these questions, your cost
structure needs adjusting.
-
Review your volume discounts.
Over time, some high-volume customers tend to do less business with you,
for a variety of reasons. However, unless someone pays attention, they
continue to get the same pricing discounts. The goal with pricing
discounts is to encourage customers to add more volume, not buy less. If
your pricing program isn't helping to grow your business, cut back on it
or develop a new one.
-
Conduct a bottom ten review.
Identify your ten worst customers and evaluate whether it makes sense to
continue doing business with them. If not, let them take their business
elsewhere, so you can free up more resources to focus on your more
profitable customers. Before cutting someone loose, however, charge them
what you need to make a profit and see if you still get the business.
Finally, Mitchell
suggests identifying a "captain of pricing," someone whose main focus is
to track the effectiveness of your pricing strategies in the short and
long term.
"This person should
have a wide range of responsibilities, including researching competitor
pricing, making sure you respond quickly to quotes, bids and proposals,
keeping up to date on pricing trends and helping you implement
day-to-day margin management," he explains. "Without someone paying
attention to it on a regular basis, pricing tends to get put on the back
burner. When that happens, you can end up leaving a lot of money on the
table."
Created for MyTEC. Copyright 2002, TEC Worldwide, Inc. All
rights reserved.
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