Selling strategy form ok

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Selling strategy form ok

  1. 1. Selling StrategieS fromtHe toPSelling Strategies fromthe Top is a must readfor anyone involved inprofessional selling andsales managementComPiled byrob Hartnett Contains valuable information for today’s market whether you are a small business selling to big business or a large business involved in complex sales
  2. 2. Selling Strategies from the Top Contents 4 Contributor Biographies 7 Introdu n Rob Hartne 8 One – Strategies for Senior Managers 8 Secrets of Winning Sales ons Rob Hartn16 Muscle Building the Sales Team Sam Reese*18 Strategic Customers as Corporate Assets Bob Miller*29 Involving Exec s in the Selling Process Tim Call*33 Two – Strategies for Sales Managers33 How to Forecast Accurately Bob Miller*43 Weekly Forecast and Deal Status Calls Damon Jones*46 Learn from Losing Bill Golder*49 Leveraging Sales Talent Miller Heiman*55 Three – Strategies for Sales Professionals55 Sales Messaging for Success Rob Hartn59 Improve Your Prosp Techniques Miller Heiman*62 Phone Prosp Strategies Miller Heiman*64 Are you being Outlistened? Rob Hartn66 Are you really losing on price? Rob Hartn68 for Win-Win Miller Heiman*73 Info n on Miller75 Info n Selling Strategies Int l76
  3. 3. *Miller Heiman Inc Copyright by Miller Heiman, Inc. All rights reserved. No part of this report may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems without written permission from the publisher. Publisher Miller Heiman, Inc. 10509 Professional Cr., Suite 100 Reno, NV 89521 877‐678‐3389 www.millerheiman.com  **Selling Strategies International Copyright by Selling Strategies International . All rights reserved. No part of this report may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems without written permission from the publisher. Publisher Selling Strategies International Suite 156 66 Kingsway Glen Waverley, Victoria 3150 61 3 9560 1188 www.selliingstrategies.com.au  
  4. 4. Contributors  Rob Hartnett Rob Hartnett is the Managing Director of Selling Strategies International and a thought leader in sales, marketing and leadership in Australia. He has won numerous awards for sales and marketing leadership and is the author of several books in this area. Rob is also known as an inspirational and entertaining speaker on sales performance & business growth.   Sam Reese Sam Reese has led Miller Heiman to its position as the foremost thought leader and innovator in the strategy, process and training that drives sales performance. Since he joined the company in 2000, Sam has grown Miller Heiman’s revenue by more than 150 percent, expanded product offerings and e‐learning initiatives and amassed a partner network of world‐class sales consultants. His passion for achieving results has inspired individual team members to strive for top performance, and has contributed to a culture based on ethics and integrity. Prior to joining Miller Heiman, Sam held executive leadership positions at British Telecom, Kinko’s and Corporate Express. His experience and success in sports, business, technology and leadership give him a unique perspective on what it takes to win in today’s competitive business environment.  Bill Golder Bill Golder has extensive sales and sales operations experience working within complex, multi‐channel,matrix management organizations. His primary expertise is leading business‐to‐business sales of professional services, as well as multi‐unit operations management. He has proven success in leading key change initiatives related to sales compensation, organizational realignment, sales optimization, training, product development, and operational improvement. His key strengths are in driving results, developing and implementing strategy, and managing and leading sales teams. Bill has a reputation for taking on tough assignments and successfully turning around difficult situations  Tim Call Tim Call brought to Miller Heiman impressive experience as a top‐performing sales manager with a strong track record of sales leadership  04
  5. 5. resulting in double and triple digit percentage increases in revenues. Tim’s experience includes both B2B and B2C sales management in large company and startup environments. He maintains a proven record for closing large, complex deals and has a sound reputation for strong customer orientation. As executive vice president, Tim leads Miller Heiman’s efforts and works with the sales vice presidents and sales consultants to develop stronger and more productive relationships with the company’s accounts. Tim received his Bachelor of Arts in Business Administration from the University of San Diego, California  Damon Jones  Managing Director, Strategic Accounts Damon Jones heads Miller Heimans global strategic accounts program. In his role, he develops and implements the strategy behind Miller Heimans growing business within existing accounts. Since joining the company in 1999, he has been instrumental in establishing a strong international presence for Miller Heiman. His previous roles in the company included COO, president and managing director of international, and vice president of international sales.  Damon has more than 25 years of industry experience covering all facets of business and sales management. His involvement with Miller Heiman began while at Guardian Royal Exchange Assurance, where he implemented the Strategic Selling® program as part of an innovative move to relationship marketing. During his tenure there, the company saw sales revenues double and sales expenditures cut in half. Damons background includes account management, sales management, and group sales training management.  Robert B. Miller Thirty years ago, Bob Miller developed and introduced Strategic Selling®. Since then, his passion for elevating the role of the sales profession has resulted in several additional methodologies, all of which are incorporated inThe Miller Heiman Sales SystemTM. He continues today in a consulting and advisory capacity, focusing primarily on product development. His mentorship drives innovations in sales performance that are consistent with the vision for the company he started three decades ago. 05
  6. 6. About Selling Strategies Interna�onalSelling Strategies Interna�onal are Australian based Sales PerformanceSpecialists to Business. As Miller Heiman accredited sales performanceconsultants Selling Strategies Interna�onal consult, design and deliversales performance strategy and training solu�ons to clients in Australiaand overseas.Selling Strategies Interna�onalSuite 156 66 KingswayGlen Waverley, Australia 3150Ph 61 3 9560 1188rob@sellingstrategies.com.auh�p://www.sellingstrategies.com.auAbout Miller Heiman IncMiller Heiman has been a thought leader and innovator in the salesarena for almost thirty years, helping clients worldwide win high-valuecomplex deals, protect and grow key accounts, manage talent andop�mize sales strategies and opera�ons.With a pres�gious client listthat includes Fortune 500 clients, Miller Heiman helps companies invirtually every major industry to build high performance sales teams thatdeliver consistent sustainable results to drive revenueMiller Heiman Corporate Headquarters10509 Professional CircleSuite 100Reno, Nevada 89521, USAMiller Heiman EuropeNelson HouseNo 1 Auckland ParkMilton KeynesMK1 1BU, EnglandMiller Heiman Asia PacificLevel 212 Waters RoadNeutral Bay NSW 2089Australiah�p://www.millerheiman.com 06
  7. 7. IntroductionThis is eBook is for those who employ, manage or earn their income assales professionals.The specific market for this eBook are those involved in complex business tobusiness sales whether they involve products, services or a combination ofboth which is most common today. You don’t need to work for a largeorganisation however the content is focused on those that sell to largeorganisations.Sales is a noble profession. Professional selling often takes a number ofdifferent forms depending upon the selling organisation, sales cycle andcustomer base. You might be familiar with such terms as business development,pursuits strategy, strategic account management, key account selling and thelike. However what these all have in common is the word professional.When we think of a professional be it a doctor, lawyer, sportsperson the onething they all have in common with selling is that without constant andrelentless focus on continued learning and study you will not be successful.Unlike the professions of medicine, accounting and law sales does not have aprofessional body that insists on professional development to maintain yourcredentials. It is a profession that leaves this to the individual and theiremployer and this is why true professional selling requires the skills ofdetermination and most importantly discipline.This eBook features some of the most qualified professionals in salesperformance from the worlds number one sales performance company MillerHeiman. Much of the content is based upon the continued and contemporaryglobal research of Miller Heiman.The eBook is broken into three sections. Section one is for senior executivesand business owners, Section two for professional sales managers andSection three for professional sales people. However all three sections arevaluable for anyone involved in the sales process in their organisation.Good reading and may your selling always take a professional approach.Here’s to win-win outcomes every time.RobRob HartnettManaging DirectorSelling Strategies InternationalMelbourne, Australia 07
  8. 8. Secrets of WinningSecrets of Winning SalesSales OrganisationsOrganisationsWhat are the habits of Winning Sales Organisations andhow can you acquire themby Rob Hartnett, Managing Director, Selling Strategies InternationalRob Hartnett, Managing Director Selling Strategies InternationalEvery year for the past five years, Miller Heiman a leading salesperformance company has surveyed sales professionals –executives, leaders and representatives – to better understand whatdifferentiates the most effective sales organisations.This global study contains the input of more than 17,000 participantsto date and is considered the world’s largest ongoing study ofcomplex, business-to-business selling and sales managementpractices. Importantly 46% of the respondents were in salesmanagement/leadership positions with the balance spread betweensenior executives 12%, sales people 32% and human resources,learning & development roles making up the balance of 10%.Winning Sales Organisations (WSO) are defined as:• 20 % or more growth in average account billing• 20 % or more growth in revenue compared to previous year• 20 % or more growth in new account acquisitionOf the total number of organizations who submitted information forthe 2008 survey only 7% made the cut of exceeding in all three areasabove. While there are a number organisations that focus on salesmethodologies more than others key industries that seem to do wellas a group are Financial Services, Health and IT&T. Due to the sizeof the financial services industry in Australia I have provided someadditional comments as they relate to this important industrycategory. 08
  9. 9. Customer Centric SystemsWSO’s excel in the following key areas which are represented in thediagram below.Firstly they have the customer at the centre of everything they do.This is not a clichéd statement. WSO’s understand their customer,their customers customer, their customers competitors and theircustomers key industry issues.Secondly they also have sales systems that are scaleable andtransportable meaning you can move within divisions or offices anduse the same sales systems which ensures consistency and leads toimprovement in critical areas such as sales forecasting.WSO’s have systems for creating opportunities, managingopportunities they deem worth pursuing and systems for managingrelationships once they have won the account they desire.This is very important in today’s business world where people aremore transient than ever which often results in key accountknowledge walking out the door.WSO’s also have a consistent approach to protecting and growingtheir strategic accounts. This goes way beyond just organising thesales process. WSO’s align key stakeholders, such as sales,marketing, product management, and finance with the strategy.With global organisations this can become a challenge to ensureglobal teams are not frustrated by the competing priorities of localcountry managers however with global executive sponsorship of thesales approach this can be overcome.At financial services organization Allianz, they aligned theirprocesses this way, “Prior to 2003, our four distribution divisions hadeach adopted their own approach to selling. We recognised that togrow the business we needed to break down our divisional silos anddevelop a consistent approach to sales and fulfilment that sat acrossthe whole organisation. The process of standardisation initiallyfocused on four key areas: rewriting job descriptions for key salesroles; reviewing reward and recognition systems; streamlining theAccount Management process and introducing interpersonal skillstraining for all sales people.” 09
  10. 10. An implication for financial services organisations is to maximize vastamounts of customer information to create more effective salescycles. This means an alignment of CRM systems with consistentsales process and methodologies so they act in a seamless waywhich today thankfully should be a thing of the past for those usingleading CRM tools such as Salesforce.com or Microsoft Dynamics forexample.Internal Systems & ProcessesThirdly they have extensive internal systems that focus on ensuringtheir organization and importantly the people that work within theirorganization in many cases the biggest assets the organization hasare surrounded by a culture that ensures they can deliver the bestresults to their customers.The Miller Heiman Sales System™ 10
  11. 11. A Formalised, Compelling Value PropositionAccording to Tim Call, Miller Heiman’s executive vice president ofstrategic accounts, “today buyers are more sophisticated; they’rebringing in more salespeople, comparing them, and saying, ‘The onlydifference is price.’What we are seeing is commoditisation taking place more than everespecially in competitive areas such as financial services. Thereforecreating a position far removed from the perception of being acommodity is a key strategy companies should use to protectthemselves from profitability erosion.So it is surprising that while 62 % of WSOs report having a“formalised value proposition that is very compelling to ourprospects,” only 34 % of all other organizations say they have such avalue proposition.WSOs announce their value propositions, distribute them, print them,talk about them, and remind sales representatives of them at everystep in the sales process.Today there is even technology available that allows key salesmessages to be made available enterprise wide via rich media toensure that from the C-level to the street the same key messages arebeing used and I expect financial services to be one of the firstindustries to utilise these solutions such the example below fromCorporate Visions Inc. 11
  12. 12. Sales Cycles are Involving More PeopleWhile most respondents said they must persuade four to five peoplein the typical sale, more than a third report that they need to persuadesix or more people for each opportunity they pursue. The number ofdecision makers involved with each sale shifted up by 16 %compared to last year’s study.The reason for this increase is the buying process is becoming morecomplex, more technical and often include procurement departmentsoften consult back to IT or other specialist areas of the businesswhen they make buying decisions.Secondly, in today’s economy, buying decisions are being escalatedup one or two management levels.. According to Bill Golder, MillerHeiman’s executive vice president of sales, “They’re getting better atinternal collaboration in decision making.” That not only means morepeople involved, but more knowledgeable people.Get Accurate FeedbackIn 2007, less than one-third of respondents agreed with thestatement, “Win or lose, we get accurate feedback on all proposalsfrom our customers.” 12
  13. 13. In 2008, the figure decreased to 26 %. It is not easy to go back andget feedback from someone who has just rejected you. But it isdefinitely worth pursuing. You need to take a long term view to majoraccounts so you learn what the issues are and you can leverage thisknowledge into new opportunities. In 2009/10 this is even moreimportant, even when you win. You may be surprised why you won!Sales and Marketing AlignmentForty-three % of C -level (CEO/CFO/CSO/CMO) respondents agreethat, “sales and marketing are in alignment in what our customerswant and need.” But only 25 % of salespeople agree. This is a majorgap.Call suggests that this perception gap occurs because organizationsdon’t always define the terms they use to describe events. “It’s easyfor sales to say, ‘The lead wasn’t qualified,’ and for marketing to say,‘A good salesperson could have closed that sale.’This is because they may not be on the same page regarding thedefinition of a lead.” Or they may not have a system in place to gettrue data about the quality of leads. So how do WSO’s do itdifferently?The most successful companies have a strategy and a market focusthat is customer-driven, based on customer-response surveys oreven regular discussions with salespeople about customer needs. Inhigh performing organizations, the sales and marketing teams knoweach other, talk, meet, and understand each other’s business.”Leverage Best PracticeWSOs are 110 % more likely than other organizations to leverage thebest practices of their top performers to improve everyone else’sperformance. Yet, less than 50 % of WSOs do this. These findingssuggest there is room for improvement across the board in this vitalarea.What is interesting in many industries and especially financialservices is the amount of money spent on technology solutions suchas CRM which often dwarf the money spent on analyzing what makes 13
  14. 14. great sales performers despite the fact that there are today manyprofiling tools that can make this exercise simple and easy to executeon a regular basis for most organizations.This is especially intriguing when most C-level people acknowledgethat sales people are a particular breed and there are two distincttypes. The hunters are intuitive, passionate and often neurotic whofocus on winning the next deal and then move on, whereas thefarmers befriend the customer and focus on building long-termrelationships. Benchmarking the best in each area would undoubtedlyshow a different make up of person yet as the research shows it israrely done.The key is to find out which of your sales team should be on whichaccount and then to find a way to manage and reward the huntersand farmers differently and to create a structure that capitalizes onthe strengths of both types and then train them accordingly.Few companies do this effectively because of the potential politicalbattles that may arise.How does the world of sales vary?While only 3% of respondents were from Australia and countryspecific data between respondents is not available at the time ofprinting there are some differences between regions.In the North America training sales training is seen as a mandatoryrequirement especially training in a robust sales methodology forwinning or retaining key accounts. In Australia based companiessales training tends to be more common around the “21 Techniquesto Closing” variety where organisations are looking for a quick fix.This long term approach was also reflected in the inductionprocesses of global companies for new sales people. For exampleglobal WSO’s were most likely to have formal sales methodology andprocesses training, CRM Training and a likely career pathcommunicated to new hires before they even hit the streets.Regular benchmarking for overseas companies against theircompetition was a common practice compared to Australianorganisations. 14
  15. 15. Another area of difference was that of training in channel or dealermanagement. In North America & Europe there is more of a focus ondeveloping channel sales managers to understand the dynamics ofchannel members and how developing them as profitable businessesis to the benefit of the suppler. In Australia and Asia especially,channel managers are often those from strong direct salesbackgrounds who are given a channel to manage as a careerprogression without fully understanding the different dynamics ofbuilding healthy channel relationships built on partnerships asopposed to winning big deals.So what’s like working for a WSO?Working for a WSO has some major advantages for a sales leader.WSO have structure behind their thinking and planning and they allhave a definite focus on growth which they measure consistently.They are also more likely to reward for results and have clearincentives for achieving the objectives they seek. This is especiallythe case in financial services. Nicola Morley from Allianz said “Whendeveloping a new sales culture you need to look at the whole picture.Of course, its important to have a sales process that you can rely on,but to ensure it is utilised effectively it needs to be linked into aneffective accountability and reward system. In addition, you need tohave systems and procedures in place to ensure all your sales data ismanaged accordingly.”In terms of career stability WSO’s are not reliant on just a fewaccounts and they have sales training programs in bothmethodologies and techniques as part of their ongoing talentretention programs.For those seeking new opportunities it would be worthwhilebenchmarking any new companies that are looking to hire youagainst the WSO criteria mentioned at the start of this article.SummaryMany organizations do well in a number of the key components in theWSO Wheel above. What makes the difference is that WSO’sconsistently do well in all components all the time. As we move intoan uncertain economy globally the activities of WSO’s providevaluable direction for sales leaders to focus. 15
  16. 16. MUSCLE BUILDINGTHE SALES TEAMby Sam Reese, President and CEOI was speaking at a client event a few weeks ago when hands started going up duringmy presentation. The key topic sales leaders wanted to discuss that day was my opinionon how to determine whether someone on their sales team is going to make it or if it istime to let them go. It seems this challenging economy has made it difficult for averageperformers to hide among the weeds. This is a GOOD THING. In high tide times, it’s easyto have a great smile and a pleasant demeanor to keep a high income sales position. Butwhen things get tough, the pretenders fear exposure and will sometimes head for safercareers. The hard part about muscle-building the sales team is that things aren’t alwayswhat they seem on the surface. You can’t afford to make a bad decision. Performanceevaluation isn’t just looking at their quota attainment and making cuts. If it was thateasy, then we would have no need for sales management.Over the years, I have seen great sales organizations look at performance as a combinationof three essential things: skills, activities and results. This performance triangle can bea simple way to help separate the wheat from the chafe in any sales organization. Skillsare best described as the acumen and intelligence to be able to perform the duties ofthe job. It is more than just product knowledge and proposal writing. It pertains to theskills required to navigate complex sales situations: the ability to work within one’s owncorporate structure, the understanding of how to connect company capabilities withcustomer requirements, and so on. Activities are the day-to-day movements that takethe business forward such as calling on customers, prospecting, performing follow up© 2009 Miller Heiman, Inc. All rights reserved. 3 www.millerheiman.com | 1-877-678-0272 16
  17. 17. What Sales Leaders are Doing Nowactions, organizing next steps, etc. Old school sales managers used to have a myopicfocus on activities. They have this “it’s a numbers game’ mentality. But over the last 10-15 years, many sales managers have completely ignored any sort of activity monitoringbecause it seemed too invasive. You definitely need to know if activities are happening.Otherwise, you will be confused when you try to make adjustments. And results aresimply the metrics that measure success - quota attainment, growth, new business,and income.Effective sales leaders need to look at all three of these factors when they evaluatetheir teams. The key guiding principle in this process is that 2 out of 3 isn’t too bad. Ifany one salesperson is capable in two of the three categories, then they should remainon the team. If they are only capable in one of the three, then it may be time to go. Forexample, a salesperson with high activity levels and critical skills is a keeper - even ifhe’s not making the numbers yet.Conversely, if a rep is making his numbers but has weak skills and low activity levels,then there is probably a huge opportunity cost associated with keeping this person inhis current role. Maybe his territory is rich with opportunities or maybe the customerbase continues to deliver even if the salesperson is not that strong. A motivatedsalesperson with strong skills and high activity levels will most likely take this territoryto new heights.Inherent in this discussion is the role of the sales manager. A person who brings the rightskills and activity levels to the job can succeed in almost every situation. It’s up to thesales manager to make these assessments and to stand behind them when questionedabout the success potential of one of his salespeople. The sales manager needs to bethe one who makes this determination of his team members. At the same time, he alsoneeds to coach to ensure his A-players succeed.Unfortunately, there is no shortcut for muscle-building sales teams.© 2009 Miller Heiman, Inc. All rights reserved. 4 www.millerheiman.com | 1-877-678-0272 17
  18. 18. Treating StrategicCustomers asCorporate Assetsby Robert B. Miller, Founder, Miller HeimanThe conventional wisdom: “Corporate assets include people, property, plant,equipment and intellectual property, such as patents, copyrights and trademarks.”The reality: “In addition to traditional corporate assets like people, property, plant,and equipment, one of the biggest -- and often overlooked -- assets of a company isits strategic customer accounts.”S everal years ago, Brothers Gourmet Coffees Inc., business quickly. And there are trickle effects, including a loss based in Boca Raton, Florida, saw its annual coffee of credibility and reputation in the marketplace, which could production plummet from nine million pounds to lead to additional defections. Moreover, Wall Street takes a300,000 pounds, virtually overnight. The reason? Proctor dim view whenever a company loses a major customer. When& Gamble, which had been its largest customer, decided Quest Diagnostics, a multibillion-dollar provider of medicalto move production in-house, leaving Brothers in the testing services, lost a major contract with UnitedHealthcarelurch. As a result, the coffee wholesaler had to shutter in 2006, the company’s stock fell 14 percent. (Meanwhile,its manufacturing plant in Houston, which had been in Laboratory Corp., which picked up UnitedHealthcare’soperation since the late 1950s. business, saw an uptick in its stock price.)The defection of a key customer is every executive’s nightmare. Given all the dangers of losing a key customer, it’s amazingIn the worst of cases, as with Brothers Gourmet Coffees, how little attention many companies pay to keeping their majorthe loss can be disastrous if the company can’t replace the accounts. Amazingly, some firms sometimes realize they’re www.millerheiman.com 18
  19. 19. Treating Strategic Accounts as Corporate Assetsin trouble only after a big customer has already switched of having to educate those customers who are unfamiliarto a competitor. Part of the problem is educational. When with your product).business schools teach students how to manage corporateassets, the subject never includes arguably the biggest For those and other reasons, customer turnover, or “churn,”asset of any company – its customer base. Thus many is a huge issue in many industries. In particular, it plaguesexecutives have a good understanding of how to manage many consumer markets, including financial services;people, property, plant, equipment and even intellectual insurance; cable, direct TV and Internet services; magazineproperty, such as patents, copyrights and trademarks. publishing; and so on. In banking, for example, one estimate 1But they generally know painfully little about managing is that the average annual defection rate is 12.5 percent.important customers. That’s a huge folly because the And the situation is more than twice as bad in the wirelessdefection of just a handful of major customers can cripple industry. The annual churn rate for cell-phone subscriberseven a large corporation. Sometimes, as with Brothers in the United States has been estimated to be somewhere 2Gourmet Coffees, the loss of a single strategic customer in the range from 26 percent to 34 percent. In other words,can bring a business to its knees. wireless businesses are losing more than one out of every four of their customers every year! To make matters worse,Understanding Customer Churn people who switch services tend to be higher margin because 3Customer defections inflict damage to a company in a they use more add-on applications like picture messaging,number of ways. Obviously, there’s the drop in revenue and the average cost of acquiring a new customer rangesfrom the loss of business, but there are also a number of from $250 upwards.secondary costs. The defections could, for instance, makepotential clients think twice about doing business with you. Not surprisingly, customer churn is wreaking havoc with theIn addition, the cost of finding new customers to replace bottom line of many companies. A recent study of the Asia-the lost revenues can be considerable. The general rule of Pacific region, for example, found that customer turnover was 4thumb used in many markets is that the cost of acquiring costing firms there $66 billion a year. That figure includesa new customer is five times that of retaining an existing various B2C businesses such as telecom, insurance, travel,one. But in some industries, that cost can be much higher and medical services. Unfortunately, customer churn hasn’tif, for example, the market is saturated and it’s difficult to been studied as extensively for B2B selling, but the dynamicsget the existing customers of other suppliers to switch are likely just as bad, and they could be significantly worse,their business to you. Acquisition costs include – but are particularly for complex deals that might involve a team ofnot limited to – marketing and advertising costs, sales salespeople working together to land a single account. Inexpenses (including commissions), and the costs of signing such cases, it could easily take a company more than a yearup and servicing new accounts (in particular, the expense and substantial resources to replace the loss of a singlewww.millerheiman.com | 1.877.678.0274 19
  20. 20. Treating Strategic Accounts as Corporate Assetscustomer – or to woo back the lost business. When Coca- Amazingly, though, many salespeople still don’t get it.Cola lost Burger King’s business to Pepsi-Cola in the early They will spend their time pursuing even “pie in the sky”1980s, it took Coke several years of planning and strategizing prospective deals instead of working hard to secure theirto regain that major account. existing accounts. But even a slight improvement in retaining existing customers can pay big dividends. According toLosing a key customer has always been a big headache, research by Frederick Reichheld of Bain & Co., the strategybut today the loss is all the more painful because of consultancy based in Boston, just a 5 percent reduction inincreased pressures. As a result of greater globalization, customer turnover can lead to an increase in net profits by as 6the competition has grown fiercer than ever before. In the much as 20 percent. In the banking industry, that same small 7past, rival vendors might have been nipping at your heels reduction in churn can boost net profits by up to 80 percent.eight hours a day, but today that pressure is constant: the Given such statistics, I’m continually perplexed at how littleInternet and foreign firms have now made competition attention many companies pay to retaining their existinga constant threat, 24 hours a day, 365 days a year. You customers. And I am absolutely shocked by how lightlysimply can’t rest for a moment because you could easily some organizations treat their most important accounts –lose a customer. “It takes years to win a customer and only those customers that are essential for their business.seconds to lose one,” notes Catherine DeVrye, former IBMexecutive and author of “Good Service Is Good Business: 7 Interestingly, firms have all sorts of processes for handlingSimple Strategies for Success.” And when you do lose any their corporate assets – excess cash, various properties,business, it’s all the more difficult to replace it. and so on. They might, for instance, have an entire department devoted to managing their real-estate holdings,To exacerbate matters, customer loyalty in many industries and the CFO is typically held accountable for that activity.is on the wane. A recent study of British wireless customers, But companies don’t always look at important customers infor instance, found that the defection rate had increased the same way – that is, as corporate assets. In fact, many 5from 33.5 percent in 2005 to 38.6 percent in 2007. That’s organizations consider customers to be basically the solean increase of more than 15 percent in a relatively short responsibility of the sales department, and the chief sales orperiod of time. In the B2B arena, as your customers are marketing officer is held accountable. But that’s just askingfinding themselves under increasing pressures from their for trouble, because certain customers are just as importantcustomers, they are in turn demanding more from you; and to a business – if not more so – than those other, traditionalif you can’t keep up, they will find another vendor that can. assets. As such, those customers need to be managed,In short, no deal is safe in today’s world. Even contracts nurtured and grown, just as with any other crucial asset. Andthat in the past might have been slam-dunks are now being that process needs to have the attention of the CEO, COO,hotly contested. CFO, or some other top-level executive. www.millerheiman.com 20
  21. 21. Treating Strategic Accounts as Corporate AssetsNot Created Equal Whenever I’m explaining the concept of “strategic accounts”In today’s world, all customers aren’t equal. The well- to executives, I always ask them this question: when you’reknown adage is that 80 percent of a company’s business lying in bed in the middle of the night and you can’t sleepmight come from just 20 percent of its customers. For because you’re worried about work, what customers aresome firms, the breakdown might be 70/30 or 90/10 you usually thinking about? Often, the list might be as shortinstead of 80/20, but the point is that a minority of your as three or four accounts and, interestingly, there’s often acustomers will usually account for a proportionately larger uniformity of opinion about the names of those customers.fraction of your revenues. Moreover, just a handful of Recently, I had lunch with a friend of mine who’s the head ofcustomers might be absolutely essential for your success; the U.S. operations of a large Japanese corporation. Whenthose firms are your “strategic” accounts. I asked him the “awake in the middle of the night” question, he immediately answered with three customer names,Every business has them. I don’t care whether you’re and everyone on his executive team who was at the luncha “mom and pop” dry cleaner on a street corner or a quickly nodded their heads in agreement.multinational corporation like Unilever, you will have anumber of customers who can, quite simply, make or break Strategic accounts are so important that not just the salesyour business. Thirty years ago, in the early days of Miller organization knows about them; everyone, including theHeiman, I was well aware that 65 percent of our business CEO and COO will recognize their importance. But the largerwas from one customer – Hewlett-Packard. So I made sure point is this: because strategic accounts are crucial to yourI had all my bases covered at that account, and I would company’s success, they can’t be treated like any ordinarypersonally spend two or three days out of every week at customer. Remember that they are your corporate assets –HP’s various field offices. your company’s crown jewels – and they must be managed in that way.But strategic customers don’t necessarily have to be yourlargest sources of revenue or profit (although they often So, for starters, the management of strategic accounts hasare). A “prestige” customer could also be a strategic to have the attention of a high-level executive. Ideally, youaccount. Years ago, when I was a manager at Kepner- need a very senior person in charge. At Miller Heiman, thatTregoe, a consultancy that specialized in executive problem individual is Tim Call, the executive vice president for strategicsolving and strategic planning, one of our clients was Rolls- accounts, who manages various teams that interface withRoyce’s jet-engine business, and we worked hard to retain our different strategic customers. Call reports directly tothat account because it provided a special cachet that Sam Reese, the CEO of Miller Heiman. At a client of oursestablished our firm in the marketplace and helped us to – a large shipping and logistics company – the presidentattract new business. himself oversees the overall process, and each memberwww.millerheiman.com 21
  22. 22. Treating Strategic Accounts as Corporate Assetsof his executive circle is in charge of at least one team that Remember that although revenues are important, doingmanages a strategic account. Those top executives are business with a customer should always be profitable.called “sponsors.” They work with the salespeople and Otherwise, the relationship isn’t win-win. That’s why whenothers on their team, and they attend all meetings to keep Bank of America CEO Kenneth D. Lewis wanted to increaseup-to-date on the status of that particular customer. shareholder value back in early 2001, he emphasized operating profits over revenues. So as the company’sThe important thing to note here is that any program for Global Corporate and Investment Bank unit began tomanaging strategic accounts must be owned, driven, and target key customers, it didn’t pursue the low-marginoverseen from the top. The responsibility can’t reside with relationships it had with large corporations like Wal-Martthe head of the sales operations or the chief marketing and IBM. Instead, it focused on more profitable deals withofficer. It has to reside in the C-suite because you need other clients, specifically those companies that neededcorporate executive sponsorship. Only someone at that global treasury and cash-management services (forlevel can help perform certain crucial tasks, including the example, funds collection and financial forecasting) as wellfollowing: 1. Evaluate the strategic importance and potential as investment-banking services. The results were stunning:of accounts to determine a list of strategic customers, 2. For Within two years, revenues for the Bank of America uniteach strategic customer identified, formulate and implement had fallen 4 percent but operating profits had increased 12an account strategy that is consistent with the company’s percent and shareholder value added had nearly doubled.overall business objectives, and 3. Get resources allocated Moreover, the business unit had gained “lead bank” statusthat will help reach those objectives. at more than one third of its targeted customers, up from 8 just 12 percent in 1999.Identifying Strategic CustomersThere’s no one best approach to identifying strategic Also keep in mind that potential business from a customercustomers. Companies need to use the criteria that make can be just as important – if not more so -- than currentthe best sense for their own overall organizational goals. business. To assess those opportunities, you can simply askAt Miller Heiman, we use five criteria for selecting strategic customers for their estimates of how much of their businessaccounts, namely that the customer must: is being handled by other suppliers. National Gypsum Co. 1. Be an existing account. uses that approach and reports that it receives accurate 2. Have the ability to generate revenue in the coming year. figures more than 90 percent of the time. Of course, some 3. Provide a win-win environment. customers will want to know what’s in it for them, that is, what 4. Desire a long-term relationship. they’ll receive in return for their cooperation. The obvious 5. Provide access to all buying influences (that is, access answer is that the data will help you respond better to their to key execs at the customer firm). future needs. But Lubrizol Corp., a manufacturer of high- www.millerheiman.com 22
  23. 23. Treating Strategic Accounts as Corporate Assetsperformance polymers and specialty additives, provides just a handful of customers for the first year of our strategicanother incentive. Lubrizol will often encourage a customer accounts program and then we’ve continued to expand it onto provide details of its purchasing by offering complimentary a measured basis.market reports for certain products – information that a 9consulting firm might charge more than $40,000. The next step is to assemble teams for managing the strategic accounts. Each team should be cross-functional,A strategic account could also be a customer who has involving sales, marketing, operations and other functionsgiven you a black eye in the marketplace, regardless of the that are pertinent for that particular account. For example,volume of his business. Consider Jeff Jarvis, a journalism if your relationship with a customer involves multipleprofessor, who might at first glance seem like your typical structured deals that are specified in complex contracts,Dell customer. But Jarvis is a popular blogger, and after he your team needs to include people from your finance andreportedly received a defective laptop computer from Dell legal departments. Each of your strategic customers needshe wrote about his experiences in postings entitled “Dell to assemble a similar cross-functional team that will thenHell.” Soon Jarvis’ ongoing saga was being covered by other interface with your team. The members of the customer’sblogs as well as by the mainstream media, unleashing the team will depend on the specifics of your relationship. If,wrath of other disgruntled customers. As the tide of negative for example, you provide value by offering just-in-timepress grew, Dell rightly recognized that the situation wasn’t delivery, then your customer should assemble a teamsimply going to blow over by itself. In response, the company that includes a logistics manager and head of the supplyassembled a cross-departmental team to actively scan blogs chain operation. Ideally, the members of your team wouldso that it could defuse customer issues before they became have their corresponding functional counterparts on themajor problems, and Jarvis was invited to Dell headquarters customer’s team.to meet with some of the company’s executives, includingnone other than Michael Dell, company founder and CEO. To encourage customers to participate in your strategic accounts program, you should emphasize your desireA company might easily have a dozen or more strategic to establish a long-term relationship in which you’ll becustomers, but my strong recommendation is that you select providing direct access to key people in your organization.no more than a handful for the first year of your program. In other words, the customer will gain a window into yourIt’s a matter of resource allocation. Remember that strategic operations – what products are coming down the pipe,customers need to be treated like corporate assets, so you areas in which you’ll be investing in the future, details of yourwant to start small because doing things the right way for competitive strategy, and so on. In short, the huge incentiveeven a handful of strategic customers will take an enormous for a customer to participate is that they will have access toamount of time and effort. At Miller Heiman, we selected inside information that will enable them to implement yourwww.millerheiman.com 23
  24. 24. Treating Strategic Accounts as Corporate Assetsproducts and services better to maximize their return on of electronic components; it began offering services to helptheir investments. However, as a cautionary note, you should coordinate its customers’ supply chains and to performhold off before formally announcing to customers that you’ve engineering design work. All that should have helped makeestablished a strategic accounts program until you’re sure Arrow become a more important business partner, but athat you’ve worked out all the kinks. That is, you might refer decade later it made a startling discovery: the customerto the program internally but not let the outside world know companies that were using those important services on aabout it until you’re sure that it’s ready for prime time. regular basis didn’t even know that Arrow was providing 10 them! The crucial thing here is that you and the customerMoving Up the Hierarchy need to have an open dialogue to determine your true positionOne of the first tasks for a strategic accounts team is to on the buy-sell hierarchy. Not only will that conversation helpdetermine the organization’s true position on the buy-sell correct any misperceptions, it will also help build trust.hierarchy. There are five levels, depending on the buyer’sperception of what the seller does. From the lowest to the Next, you must develop a plan that will help you eitherhighest level, the buyer could view the seller as secure your position on the hierarchy or get you to a higher level. This process has also got to be transparent between 1. Delivering a commodity that meets specifications. you and the customer: you present your goals and get the 2. Delivering “good” products and/or services. customer’s feedback. Moving up the buy-sell hierarchy 3. Providing “good” service and support. has its advantages because, as you’re able to go from 4. Contributing to business issues. one level up to the next, your competition will decrease 5. Contributing to organizational issues. and price sensitivity will lessen. Moreover, not only willThe process of determining your position on the hierarchy a customer’s loyalty increase, the customer will also bemight not be as clear-cut as it may seem. Sometimes, you more willing to endorse your product in the marketplace,might believe that you’re on level 3 but your customer thinks collaborate with you on new product development, andyou’re only at level 2. That’s crucial information because, even invest in your firm. Simply put, a higher position inif you hadn’t learned of the discrepancy, the mismatch in the hierarchy makes you more indispensable and lessperceptions could have eventually led to your losing the vulnerable to losing the customer.customer. In some cases, you could discover that you’vemistakenly been harboring an overly inflated view of the Consider the strategy of KLM Cargo, a unit of KLM Royalvalue you’re delivering. Other times, the customer might Dutch Airlines that supplies cargo space on aircraft.not have a full appreciation of your importance. Late in the Customers viewed this service as essentially a commodity1980s, for instance, Arrow Electronics tried to move up the (that is, level 1 of the hierarchy). So KLM worked hard withbuy-sell hierarchy by becoming more than just a distributor a particular market segment – those firms that needed www.millerheiman.com 24
  25. 25. Treating Strategic Accounts as Corporate Assetsto transport perishable goods – in order to move up the not saying that no company should ever lose an importanthierarchy. For those customers, KLM Cargo began to provide account. Some defections can’t be helped, for instance, if apoint-to-point service: initial pickup by truck to a warehouse, relationship is no longer win-win and the customer isn’t willingtransportation by plane, and then storage in a warehouse to work with you on correcting that. The problem, though,followed by final delivery to the customer. KLM Cargo also is that many firms don’t take the necessary precautions tooffered three levels of service -- fresh regular, fresh cool, and avoid being caught off-guard. At a minimum, companiesfresh supercool -- depending on how perishable a product need to watch out for the following five common traps.is. A flower trader might, for example, opt for “fresh cool”service to transport orchids while a fish wholesaler might 1. Becoming complacent. The loss of a customer to yourchoose “fresh supercool” for sushi-grade tuna. As a result, biggest rival is actually more common than you might think.KLM Cargo was able to reposition itself from a commodity Remember how Coca-Cola initially lost its business withsupplier to a provider of an end-to-end business solution, Burger King to Pepsi? Pepsi had shrewdly told Burger 11thus moving itself significantly up the buy-sell hierarchy. King that, “You’ll never be number 1 with Coca-Cola because McDonalds is a customer of Coke. But you canThe ideal situation is when the customer is strategic to you be number 1 with us.” And that’s how even entrenched,and you are strategic to the customer. The perfect example leading vendors get usurped. Sometimes, a companyof that is i2 Technologies’ relationship with Dell Inc. Based might be the only game in town – it might, for instance, havein Dallas, i2 sells sophisticated supply-chain management a proprietary technology – but then lose that edge as thesolutions that enable Dell to efficiently assemble computers market matures and competitors offer competing products.that consumers can customize and order online. Dell’s The classic example here is Digital Equipment Corp., whichvery business model depends on the efficacy of i2’s dominated the market for minicomputers during the 1970sproducts, such that the fates of the two companies are fairly and 80s. But DEC’s arrogance and disdain for smallerintertwined. personal computers – espoused by founder Ken Olsen’s infamous remark, “There is no reason for any individual toAvoiding Common Pitfalls have a computer in his home” – left the company woefullyGiven all the ramifications of losing a major customer, I unprepared for the coming PC revolution. Eventually DECam continually astonished at how few precautions some was acquired by PC maker Compaq, which itself was latercompanies take to guard against that possibility. And it’s merged with Hewlett-Packard.remarkable to me that any firm should be shocked (or evensurprised) after it loses a major account. Whenever that Part of the problem is that the leading company in a markethappens, my immediate reaction is that a number of people frequently gets tagged as being arrogant. “They’re gettingjust didn’t do their homework. But don’t get me wrong – I’m too big for their britches” and “they’ve become difficult towww.millerheiman.com 25
  26. 26. Treating Strategic Accounts as Corporate Assetswork with” are the common complaints, whether they’re • Are there any basic issues that we need to address justified or not. In fact, some customers will even look for that for the customer?kind of behavior and misinterpret every tiny miscue on yourpart as a sign of your supposed arrogance. So, especially Note that the questions probe the overall process being usedwhen you’re the leader in a market, you almost need to bend to manage the account as opposed to any specific items.over backwards to fight even the slightest perception that A common mistake that executives make in performing ayou’ve become arrogant or complacent. Otherwise, you review is to start by telling the account manager, “Tell meleave yourself vulnerable to the competition. what’s going on here.” And then after being given the status of an account, they’ll follow up by saying, “If I were you,2. Succumbing to denial. Interestingly, sales reps are I’d do the following.” But that type of approach only leadsoften the last people to realize that they’re in trouble with to account managers feeling like they’re being second-an account. The problem is that they misread the warning guessed. In other words, when conducting reviews, yousigns, or they go into denial. In their minds, they might want to coach people so that they can figure out on theirmistakenly assume that just because an account has been own what they need to do; you don’t want to do that thinkingwith them for years, that customer will remain loyal. And for them.that’s another reason why you need a team of people incharge of your strategic customers, because you don’t 3. Missing a warning sign. Whenever there’s an importantwant to end up paying for the mistakes of a sales rep or change at your or your customer’s company (a reorganizationaccount manager who’s in denial mode. or shift in strategy, for example), you need to follow up to ensure that all your bases are still covered. One of the mostThe team should regularly conduct account reviews that common ways to lose an account is through a change inwill force account managers to confront reality. Some of personnel – say, for instance, that a key executive at yourthe types of basic crucial questions that need to be asked customer’s firm leaves. Remember that the people at bothinclude the following: your and the customer’s company will frequently change. • Do we have our bases covered with all the buying In some industries, for instance, the annual turnover rate is influences? For example, do we know who gives more than 25 percent (and sometimes as high as 50 percent) final approval for our deals? for sales personnel. And this is yet an additional reason why • What are our strengths that we can leverage in having a team of people to handle your strategic accounts serving this account? makes so much sense. When an account manager leaves, • Do we know what the customer is trying to fix, for example, the rest of the team members will still be able accomplish, or avoid by using our solution? to provide a reassuring sense of continuity to the customer, • What are the red flags for this account? helping to ensure that business will proceed as usual. www.millerheiman.com 26
  27. 27. Treating Strategic Accounts as Corporate AssetsAgain, regular account reviews can be a very effective program, because they view it essentially as free help in theirmechanism here, helping you to catch any early warning efforts to strengthen a customer relationship.signs. The main focus of the reviews should be thecustomer’s business results. As discussed earlier, you 5. Failing to get support from the top. As I mentionedshould always know where the customer perceives you earlier, a program for managing strategic accounts must haveto be on the buy-sell hierarchy. In addition, you need to support from the top of your company. Ideally, the CEO, COOhave a plan either for securing that position or for moving or some other C-suite executive would be in charge, and thatup a level. The account reviews should then take a hard person would get other high-level executives to participate.look at your progress in that process. Say, for example, The surest way to strengthen the relationship betweenthat for a particular customer you’re currently at level 1 your and your customer’s firms is to get top executives at(delivering a commodity that meets specifications) but your both organizations involved. But the top managers at yourplan is to move to level 2 (delivering “good” products and/ customer companies won’t be likely to participate if theyor services). Then you need to continually monitor your don’t see a similar commitment from the executives at yourprogress, specifically in terms of how improvements on your own firm.end are helping the customer’s business. Is, for instance,your implementation of just-in-time delivery enabling that 6. Relying on defense instead of offense. Sales managerscustomer to slash its inventory costs? will often tell me about an important customer that they’re losing to a competitor. Then, half-panicked, they’ll ask,4. Not obtaining “buy in.” Although every company should “What should we do?” I’m sorry to report that, at that stage,set up a program to manage its strategic accounts, the they may have already lost the account and even a flurryprocess can trigger resistance from the sales group. At of heroic “firefighting” activity won’t be enough to save it.worse, a turf battle could ensue between corporate and sales. So the lesson here is that you have to make sure that youTo prevent that from happening, you need to be mindful of don’t let your customer relationships devolve to the point atthe politics involved. At Miller Heiman, each of the strategic- which a client is seriously entertaining sales pitches fromaccount teams has a designated leader who coordinates all your competitors. In other words, the best defense is indeedactivities and meetings, but important decisions are made a good offense. As in football, you’ve got to keep possessionthrough group discussions and consensus, taking into of the ball and keep advancing it. One effective way to doconsideration any concerns from sales, corporate, and other that is to continually make efforts to secure your position orparties. In addition, all sales reps continue to receive their move up a level on the buy-sell hierarchy. Remember thatusual commissions even if one of their accounts is selected your existing relationships with customers should conferas a strategic customer. Because of that, the sales reps you with a substantial advantage (assuming, of course, thatwant their customers to be placed in the strategic-accounts you’ve maintained good customer relationships). The truthwww.millerheiman.com 27
  28. 28. Treating Strategic Accounts as Corporate Assetsis that inertia is a huge factor: Customers would rather avoid become big obstacles. They have increased the amountthe hassles of switching vendors unless they perceive that of negotiation and procedural red tape, leading to anthey’re not getting the value that they’ve paid for. So you’ve atmosphere of distrust between buyer and seller. Thegot to do all that you can to avoid the customer reaching situation is exacerbated by increased globalization andthat point. In my experience, the vast majority of customer heightened competitive pressures. Today, it’s easier thanrelationships break down because of what I call “benign ever for companies to lose important customers. But manyneglect,” which can be something as simple as not returning firms still have their heads in the sand, unaware how quicklya customer’s phone call quickly enough. Of course, it’s that a major account could take its business elsewhere. Indifficult to maintain the same level of attention and service my view, not having a program that treats your strategicto an account that you gave when the customer first came customers like corporate assets is simply asking for trouble,on board. But companies that drop the ball in managing and those companies that fail to see that are going to be inan account will eventually find themselves having to play for a rude awakening, probably sooner rather than later.defense, which is what you don’t want to be doing. About Robert B. MillerIn the best of cases, corporate purchasing departments act Thirty years ago, Bob Miller developed and introducedas a facilitator between seller and buyer. They might perform Strategic Selling®. Since then, his passion for elevatingimportant screening functions like a “better business the role of the sales profession has resulted in severalbureau,” helping to qualify vendors so that the buyer has to additional methodologies, all of which are incorporated inconsider just a short list of products instead of dozens (or The Miller Heiman Sales SystemTM. He continues today ineven hundreds) of options. Or, by understanding the benefits a consulting and advisory capacity, focusing primarily onof strategic partnerships, they might encourage collaboration product development. His mentorship drives innovations inbetween the seller and buyer to help ensure a long-term sales performance that are consistent with the vision for thewin-win relationship between the two parties. Unfortunately, company he started three decades ago.though, some corporate purchasing departments have1. “The Cost of Customer Churn: What’s at Stake for Banks in the Competition for Customers?” Financial Publishing Services.2. Lisa Pierce, “What the Cost of Customer Churn Means to You,” Network World (November 12, 2001).3. Charles S. Golvin, “Who’s Winning and Losing Mobile Subscribers?” Forrester Research (2005).4. Victoria Ho, “Customer Churn is Businesses’ Greatest Fear,” ZDNet Asia (March 19, 2008).5. “Pitney Bowes Group 1 Software Customer Churn Report” (2007).6. Frederick F. Reichheld and Thomas Teal, “The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value” (Harvard Business School Press, 1996).7. “The Cost of Customer Churn: What’s at Stake for Banks in the Competition for Customers?” Financial Publishing Services.8. James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.9. James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.10. Das Narayandas, “Building Loyalty in Business Markets,” Harvard Business Review (September 2005): 131-139.11. James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49. www.millerheiman.com 28
  29. 29. INVOLVING EXECUTIVESIN THE SELLING PROCESSby Tim Call, Executive Vice PresidentPeople ask me all the time: “How can we get our executives involved in the sellingprocess in a proactive and efficient manner?” The first thought that comes to my mindis to answer their question with more questions: “Why do you want your executivesinvolved in the selling process?” Is it because you need help closing deals? Becausethey are needed to negotiate pricing? Or because they want to feel they are beingsupportive?For any organization that wants to begin an executive selling program, the abovequestions should be asked of senior leadership. In the current climate, decisions arebeing pushed to higher levels within a company and an executive selling program canhelp establish and maintain critical account relationships between C-Suites. Many of thesuccessful executive selling programs I have seen solicit input from all of the functionaldepartments so everyone knows the expectations for the program and understands thecriteria for success.Your organization may start down the path of establishing an executive selling programonly to realize early in the process that there are perception gaps between what theexecutives think they know about critical accounts and what the sales teams see asreality. In Miller Heiman’s annual sales best practices study, we see a fair amount ofdifferences between C-Level respondents and sales reps. For instance, the responsesfrom these two groups typically indicate a wide perception gap for this simple question:© 2009 Miller Heiman, Inc. All rights reserved. 8 www.millerheiman.com | 1-877-678-0272 29
  30. 30. What Sales Leaders are Doing NowWe have a disciplined process that is continually utilized to review all large deals. TheC-Level is generally less likely to agree that processes are in place to review large dealscompared to sales reps.A larger gap exists when we ask our survey participants to weigh in on another topic: Ourexecutive leadership is actively engaged in our selling process. The 2009 Miller HeimanSales Best Practices Study revealed that 66 percent of C-level executives say they areinvolved, but only 41 percent of sales reps say the executives are involved. This disparitystems from a misalignment regarding what involvement means to these two groups.Most executives consider involvement as an awareness of the sales representatives’activities, knowing one or two people in the client organization, and an expectation thatthey will come into deals if, and when, it is necessary. In these cases, the sales force willsay that executives don’t bring any value to the client relationship. Because they don’tknow an executive’s role in the selling process, they are forced to leave them out of theequation because in the past they have hurt more than they have helped.Creating an executive selling program doesn’t need to take years. But to eliminateconfusion, your first step to building an executive selling program is to get everyoneon the same page. Discuss what happens with these large deals, and discuss howan executive’s involvement might help or hinder these relationships. Here are a fewsuggestions to get started now:1. The Right Level. An executive should only get involved in relationships that are peer to peer. They should not be asked to come to a meeting with lower-level buying influences where tactical or logistical solutions are being discussed. The sales rep needs to ensure all possible bases are cover before involving an executive.2. The Right Time. Executives are often expected to step in to try and save a sale that is in trouble. Get executives involved when they can provide the greatest value, not salvage something that is likely already beyond repair. Drawing in an executive will likely look to the customer as if you are in panic mode, and may potentially worsen the situation.3. Maintain Schedule Integrity. Make sure executives don’t skip out of a sales call because something more important has happened in the office. If they are committing to the initiative, then they must stay committed to all scheduled meetings.© 2009 Miller Heiman, Inc. All rights reserved. 9 www.millerheiman.com | 1-877-678-0272 30
  31. 31. What Sales Leaders are Doing Now4. Thorough Preparation. The sales team needs to take the time to review the customer relationship, current opportunities, and the meeting objectives with the executive before a customer meeting. The better prepared an executive is, the more value he or she can add to the relationship and the better the coaching s/he can provide.5. Provide Strategic View. Without a strategic perspective, executives will not bring much to the client in the way of value. Don’t let the executive talk about a product or service. They should be asking questions or providing high-level industry knowledge during these meetings. Clients love it when you bring new information or introduce new ideas related to the important issues they face.6. Get Things Done Internally. It is easy for an executive to go back to the office and delegate all of the next steps to the rep. But executives need to own at least one of the next steps. Ideally it should relate to the point from the meeting that is of strategic value to the customer.7. High Level Information Conduit. Most executives are aware of changes in the company before everyone else. Make sure that new and relevant information is shared from one executive to another, as this type of knowledge has the potential to undermine their authority if divulged by someone on a lower tier.8. Mentor or Coach. The executive should be the person in these critical deals providing coaching and mentoring sales reps. This should not be the same type of coaching the reps might receive from their sales manager, but coaching on high- level issues, industry intelligence, and solutions important to the customer.9. Hold Executives Accountable. The executive should be held responsible for his role in the success of the customer relationship. Without a certain level of accountability, resentment may build and potentially jeopardize future internal interactions. It’s crucial to remember that rep and executive are on the same team and need to pull their respective weight.10. Share Success Stories. When executives stay involved with clients, it can be perceived as a positive opportunity for your company. Take advantage of the publicity that can be generated by promoting and sharing the success stories as a result of executive involvement.© 2009 Miller Heiman, Inc. All rights reserved. 10 www.millerheiman.com | 1-877-678-0272 31
  32. 32. What Sales Leaders are Doing Now11. Maintain Executive Status. Many reps may jump at the chance to tout their executive at a social call, but this is not the best use of their time. Unless a client specifically requested it, bringing an executive may seem a thinly veiled attempt to solidify a client relationship or secure additional commitment.12. Avoid Exclusive Meetings. Executives should not attend sales meetings alone, unless a request has been made. The goal is to develop the standing and credibility of the rep, and sending an executive in alone makes him or her the de facto rep, undermining that goal.An effective program will ultimately serve to bring clients closer to your organization.But the most important contributing factor to a successful executive selling program isthe dedication and commitment to stick to it.© 2009 Miller Heiman, Inc. All rights reserved. 11 www.millerheiman.com | 1-877-678-0272 32
  33. 33. How to ForecastSales Accuratelyby Robert B. Miller, Founder, Miller HeimanThe conventional wisdom: “Sales managers can’t forecast accurately because there aretoo many uncertainties involved.”The reality: “Sales forecasting can indeed be turned into an accurate, reliable process.”J udging by the continual news of company after company increase its market share and its stock jumped another missing its quarterly numbers, you would easily be 16 percent, but then the company hit a snag in the thirdforgiven if you thought that businesses had no clue how to quarter. It reported revenues of $10.6 billion, which was aforecast their sales. Every week seems to bring yet another solid increase of 17 percent from the same time period inheadline of a firm that missed its quarterly numbers because 2005. But the problem was that those numbers fell short ofof some unexpected shortfall in demand for its products. the company’s forecasts and analysts’ estimates of $11.1Wall Street is generally unforgiving of such lapses, typically billion. CEO Ed Zander explained that the lower sales werepunishing the company with a drop in stock price. due, in part, to an unexpected delay in capital spending by customers in Europe, the Middle East and Africa. In spite ofConsider what happened to Motorola. After lagging behind his reassurances, though, the market response was swiftNokia for years, the company had been gaining ground in and unyielding: Just a day after Motorola announced the2005 and its share price had risen 31 percent. Everything shortfall, its stock price fell $1.21 to close at $23.64, a droplooked rosy the following year as Motorola continued to of nearly 5 percent. www.millerheiman.com 33
  34. 34. How to Forecast Sales AccuratelyTo make matters worse, forecasting is becoming all the of some illicit accounting sleight of hand, promptingmore difficult because customer loyalty is on the wane and shareholders to claim in 2000 that the firm had misstatedglobal competition has increased such that companies more than $500 million in revenues. After an investigationare less sure of where their future sales will be coming by the SEC found that Computer Associates had routinelyfrom. Moreover, distribution channels have become more included revenues from orders that hadn’t officiallycomplex and the lifespan of products has decreased, all been booked, eight CA executives pled guilty to fraud,resulting in greater uncertainty. Indeed, research by Sales including CEO Sanjay Kumar, who was sentenced to 12Benchmark Index has found that roughly two-thirds of all years in prison.sales forecasts have a margin of error that exceeds 25percent. Amazingly, more than 10 percent of forecasts What happened at Sunbeam and Computer Associateshave a margin of error of greater than 75 percent! is perhaps the most egregious examples of accounting schemes gone wild, but the fact is that many companiesIn the worst of cases, a potential shortfall leads to continually suffer from sales forecasts that are inaccuratedesperation as executives succumb to the temptation of and unreliable. When the projected numbers arequestionable remedies, even if they involve some shady unrealistically optimistic, the manufacturing division rampsaccounting practices. The classic story here is the tragic its operations up for products that end up sitting in thesaga of Sunbeam under the leadership of Al “Chainsaw” warehouse collecting dust. Or, conversely, the demandDunlap. To keep pace with his aggressive financial for a hot item shoots through the roof but the companyprojections, Dunlap offered huge discounts to entice is caught off-guard, thus missing a crucial window in theretailers to take on more merchandise than they could market. And it’s not just big mistakes that hurt the bottomsell. The products were then shipped to warehouses line. Sometimes even a small increase in the accuracy ofwhere they sat, and the inventory continued to pile up. your forecasts can lead to substantial savings becauseBut the problem was that Sunbeam was booking those your distribution chain will be returning fewer products,sales as if they had actually been made. Eventually, the thus decreasing your shipping, handling and storage fees.entire accounting house of cards came tumbling down For large corporations, such savings could amount toand Sunbeam investors were rightfully outraged. Dunlap millions of dollars.was shown the door and later agreed to pay $15 million tosettle a shareholder lawsuit. Let me put it this way: I have never heard a CEO or senior manager complain that the forecasts from his or her salesSadly, Sunbeam is hardly the only company that’s tried to group were too accurate, but I have heard countless execscook its books. Computer Associates, a global software grouse that they simply couldn’t rely on their company’scorporation based in Islandia, N.Y., was also a practitioner sales projections. And an inability to forecast saleswww.millerheiman.com 34
  35. 35. How to Forecast Sales Accuratelyusually means that you’ve lost touch with your customers typical sales process is like a funnel (see accompanying-- a deficiency that can lead to disaster when the market illustration). At the bottom are deals that you’ve almostmakes a turn in one direction and your firm is still headed closed. All you need to do for those opportunities are todown a different path. The result: You end up developing remove any remaining obstacles (for example, you mightand marketing products that nobody wants. need to meet with the final decision maker to iron out the specific financial terms of the contract). In the middle ofOkay, I’ve heard it all before. According to the naysayers, the funnel are other prospects that are in the works. Here,organizations that believe their sales group can make you need to do important background work (for example,accurate forecasts are setting themselves up for failure. identifying all the people at the prospective customer whoPeople will just fudge their numbers to game the system. could possibly veto the deal). And above the funnel areFor instance, salespeople will underestimate their numerous leads that need further investigation. Theseprojections so that they’ll look good when they make or leads need to be screened to identify which ones shouldexceed those numbers. So why even pretend that you can be pursued. As a prospective deal moves down the funnel,forecast sales accurately when the process will be just two important things happen. First, the time requiredanother exercise in futility? to close the deal will tend to decrease. Second, the probability of your actually closing the deal will increaseExcuse me, but that defeatist attitude is nothing but a pot (or, in other words, the uncertainty that you will close theof crock! Let me be clear: It’s a cop-out for sales managers deal will decrease).to claim that sales forecasting is inherently impossible.The simple truth is that companies can indeed reliably Each location of the funnel (bottom, middle or above) hasforecast their sales, and all the leading organizations do a quantitative metric for the likelihood of the deal closingit because they absolutely need that crucial information. in a given amount of time. That period can be based on aOtherwise, a business can’t be run efficiently. How, typical sales cycle. Let’s say that the typical sales cyclefor example, can the manufacturing department plan for your products is eight months (that is, you usuallyits resource allocation without knowing the volume of take eight months to close a deal from the time you get ashipping orders for the upcoming quarters? The trick to solid lead, such as when a prospective customer requestsaccurate sales forecasting, though, is that you need the information about your product or otherwise engages withright system in place. you about a solution offered by your company). So, for instance, your potential deals at the bottom of your funnelUnderstanding the “Sales Funnel” might generally have a 70 percent probability of closingBefore you can begin to improve your sales forecasting, within half the sales cycle (or four months). Your prospectsyou first need to understand a fundamental concept. The in the middle of the funnel might have a 40 percent chance www.millerheiman.com 35
  36. 36. How to Forecast Sales Accuratelyof closing within that time. And your prospects above the of dollars annually because the manufacturing group wasfunnel might have just a 10 percent chance of becoming then able to allocate its resources more efficiently to plana finalized deal within the typical sales cycle (or eight better for future orders.months). Of course, that aerospace company didn’t just implementNow here’s the part about forecasting. To obtain an the system and magically have the accuracy of its salesaccurate projection of your sales, all that you to do is to forecasts improve. Although simple in concept, the salescategorize every one of your potential deals into the right funnel takes a concerted effort and sustained commitmentlocation (bottom, middle or above) of the funnel, along with from everyone in the sales organization. And, as withyour estimates of the size of the potential order. Then you other kinds of similar initiatives, the devil is definitely inadd up those opportunities for each location of the funnel the details of implementation.and apply the appropriate probability and time period.The total sum of those numbers will then be your sales Managing the Sales Funnelforecast. Okay, you might be skeptical about how such a The first important detail is that you have to classifysimple concept could actually be effective in practice, but your customer opportunities accurately. If you’ve beenI have seen numerous companies dramatically improve mistakenly placing companies in the middle of the funnelthe accuracy of their sales forecasts by implementing it. when they actually belong above, then of course they will take much longer to close and a smaller percentage of themConsider the operations of a large aerospace company that will become finalized deals than you’ve expected. Thiswas having trouble years ago because its sales projections then means that your sales forecast will be substantiallywere all over the map – the average accuracy was just 35 off because of the shortfall.percent. Then the company implemented a program thattaught the fundamentals of funnel management. To begin Categorizing customer opportunities correctly iswith, managers clearly delineated and codified specific easier said than done. The problem is that many salescriteria that helped define prospective customers. For professionals will fool themselves into thinking that a dealexample, a lead had to meet specific objective criteria is closer to being closed than it really is. They’ll be overlybefore it could be moved to the middle of the funnel. And the optimistic, now realizing the amount of work that needscompany conducted formal reviews each week to ensure to be done. So you need to get them to be realistic, andthat all the salespeople were using the new system. Within the way to do that is by having some good metrics, bothjust one quarter, the accuracy of the company’s sales qualitative and quantitative. Everyone has to agree to theforecasts had improved to 60 percent, and it eventually criteria, and each person has to abide by them. You shouldexceeded 75 percent. That change saved the firm millions consider having a standard form that salespeople wouldwww.millerheiman.com 36

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