Selling Strategies from the Top

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Selling Strategies from
the Top is a must read
for anyone involved in
professional selling and
sales management. By Rob Hartnett

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  • 1. Selling StrategieS from tHe toP Selling Strategies from the Top is a must read for anyone involved in professional selling and sales management ComPiled by rob 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. 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 Hartn 16 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 Managers 33 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 Professionals 55 Sales Messaging for Success Rob Hartn 59 Improve Your Prosp Techniques Miller Heiman* 62 Phone Prosp Strategies Miller Heiman* 64 Are you being Outlistened? Rob Hartn 66 Are you really losing on price? Rob Hartn 68 for Win-Win Miller Heiman* 73 Info n on Miller 75 Info n Selling Strategies Int l 76
  • 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    **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   
  • 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. 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 Heiman's global strategic accounts program.  In his role, he develops and implements the strategy behind Miller  Heiman's 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. Damon's  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. About Selling Strategies Interna�onal Selling Strategies Interna�onal are Australian based Sales Performance Specialists to Business. As Miller Heiman accredited sales performance consultants Selling Strategies Interna�onal consult, design and deliver sales performance strategy and training solu�ons to clients in Australia and overseas. Selling Strategies Interna�onal Suite 156 66 Kingsway Glen Waverley, Australia 3150 Ph 61 3 9560 1188 h�p:// About Miller Heiman Inc Miller Heiman has been a thought leader and innovator in the sales arena for almost thirty years, helping clients worldwide win high-value complex deals, protect and grow key accounts, manage talent and op�mize sales strategies and opera�ons.With a pres�gious client list that includes Fortune 500 clients, Miller Heiman helps companies in virtually every major industry to build high performance sales teams that deliver consistent sustainable results to drive revenue Miller Heiman Corporate Headquarters 10509 Professional Circle Suite 100 Reno, Nevada 89521, USA Miller Heiman Europe Nelson House No 1 Auckland Park Milton Keynes MK1 1BU, England Miller Heiman Asia Pacific Level 2 12 Waters Road Neutral Bay NSW 2089 Australia h�p:// 06
  • 7. Introduction This is eBook is for those who employ, manage or earn their income as sales professionals. The specific market for this eBook are those involved in complex business to business sales whether they involve products, services or a combination of both which is most common today. You don’t need to work for a large organisation however the content is focused on those that sell to large organisations. Sales is a noble profession. Professional selling often takes a number of different forms depending upon the selling organisation, sales cycle and customer base. You might be familiar with such terms as business development, pursuits strategy, strategic account management, key account selling and the like. However what these all have in common is the word professional. When we think of a professional be it a doctor, lawyer, sportsperson the one thing they all have in common with selling is that without constant and relentless focus on continued learning and study you will not be successful. Unlike the professions of medicine, accounting and law sales does not have a professional body that insists on professional development to maintain your credentials. It is a profession that leaves this to the individual and their employer and this is why true professional selling requires the skills of determination and most importantly discipline. This eBook features some of the most qualified professionals in sales performance from the worlds number one sales performance company Miller Heiman. Much of the content is based upon the continued and contemporary global research of Miller Heiman. The eBook is broken into three sections. Section one is for senior executives and business owners, Section two for professional sales managers and Section three for professional sales people. However all three sections are valuable 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. Rob Rob Hartnett Managing Director Selling Strategies International Melbourne, Australia 07
  • 8. Secrets of Winning Secrets of Winning Sales Sales Organisations Organisations What are the habits of Winning Sales Organisations and how can you acquire them by Rob Hartnett, Managing Director, Selling Strategies International Rob Hartnett, Managing Director Selling Strategies International Every year for the past five years, Miller Heiman a leading sales performance company has surveyed sales professionals – executives, leaders and representatives – to better understand what differentiates the most effective sales organisations. This global study contains the input of more than 17,000 participants to date and is considered the world’s largest ongoing study of complex, business-to-business selling and sales management practices. Importantly 46% of the respondents were in sales management/leadership positions with the balance spread between senior 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 acquisition Of the total number of organizations who submitted information for the 2008 survey only 7% made the cut of exceeding in all three areas above. While there are a number organisations that focus on sales methodologies more than others key industries that seem to do well as a group are Financial Services, Health and IT&T. Due to the size of the financial services industry in Australia I have provided some additional comments as they relate to this important industry category. 08
  • 9. Customer Centric Systems WSO’s excel in the following key areas which are represented in the diagram 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 their customers key industry issues. Secondly they also have sales systems that are scaleable and transportable meaning you can move within divisions or offices and use the same sales systems which ensures consistency and leads to improvement in critical areas such as sales forecasting. WSO’s have systems for creating opportunities, managing opportunities they deem worth pursuing and systems for managing relationships once they have won the account they desire. This is very important in today’s business world where people are more transient than ever which often results in key account knowledge walking out the door. WSO’s also have a consistent approach to protecting and growing their strategic accounts. This goes way beyond just organising the sales 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 ensure global teams are not frustrated by the competing priorities of local country managers however with global executive sponsorship of the sales approach this can be overcome. At financial services organization Allianz, they aligned their processes this way, “Prior to 2003, our four distribution divisions had each adopted their own approach to selling. We recognised that to grow the business we needed to break down our divisional silos and develop a consistent approach to sales and fulfilment that sat across the whole organisation. The process of standardisation initially focused on four key areas: rewriting job descriptions for key sales roles; reviewing reward and recognition systems; streamlining the Account Management process and introducing interpersonal skills training for all sales people.” 09
  • 10. An implication for financial services organisations is to maximize vast amounts of customer information to create more effective sales cycles. This means an alignment of CRM systems with consistent sales process and methodologies so they act in a seamless way which today thankfully should be a thing of the past for those using leading CRM tools such as or Microsoft Dynamics for example. Internal Systems & Processes Thirdly they have extensive internal systems that focus on ensuring their organization and importantly the people that work within their organization in many cases the biggest assets the organization has are surrounded by a culture that ensures they can deliver the best results to their customers. The Miller Heiman Sales System™ 10
  • 11. A Formalised, Compelling Value Proposition According to Tim Call, Miller Heiman’s executive vice president of strategic accounts, “today buyers are more sophisticated; they’re bringing in more salespeople, comparing them, and saying, ‘The only difference is price.’ What we are seeing is commoditisation taking place more than ever especially in competitive areas such as financial services. Therefore creating a position far removed from the perception of being a commodity is a key strategy companies should use to protect themselves from profitability erosion. So it is surprising that while 62 % of WSOs report having a “formalised value proposition that is very compelling to our prospects,” only 34 % of all other organizations say they have such a value proposition. WSOs announce their value propositions, distribute them, print them, talk about them, and remind sales representatives of them at every step in the sales process. Today there is even technology available that allows key sales messages to be made available enterprise wide via rich media to ensure that from the C-level to the street the same key messages are being used and I expect financial services to be one of the first industries to utilise these solutions such the example below from Corporate Visions Inc. 11
  • 12. Sales Cycles are Involving More People While most respondents said they must persuade four to five people in the typical sale, more than a third report that they need to persuade six or more people for each opportunity they pursue. The number of decision 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 more complex, more technical and often include procurement departments often consult back to IT or other specialist areas of the business when they make buying decisions. Secondly, in today’s economy, buying decisions are being escalated up one or two management levels.. According to Bill Golder, Miller Heiman’s executive vice president of sales, “They’re getting better at internal collaboration in decision making.” That not only means more people involved, but more knowledgeable people. Get Accurate Feedback In 2007, less than one-third of respondents agreed with the statement, “Win or lose, we get accurate feedback on all proposals from our customers.” 12
  • 13. In 2008, the figure decreased to 26 %. It is not easy to go back and get feedback from someone who has just rejected you. But it is definitely worth pursuing. You need to take a long term view to major accounts so you learn what the issues are and you can leverage this knowledge into new opportunities. In 2009/10 this is even more important, even when you win. You may be surprised why you won! Sales and Marketing Alignment Forty-three % of C -level (CEO/CFO/CSO/CMO) respondents agree that, “sales and marketing are in alignment in what our customers want and need.” But only 25 % of salespeople agree. This is a major gap. Call suggests that this perception gap occurs because organizations don’t always define the terms they use to describe events. “It’s easy for 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 the definition of a lead.” Or they may not have a system in place to get true data about the quality of leads. So how do WSO’s do it differently? The most successful companies have a strategy and a market focus that is customer-driven, based on customer-response surveys or even regular discussions with salespeople about customer needs. In high performing organizations, the sales and marketing teams know each other, talk, meet, and understand each other’s business.” Leverage Best Practice WSOs are 110 % more likely than other organizations to leverage the best practices of their top performers to improve everyone else’s performance. Yet, less than 50 % of WSOs do this. These findings suggest there is room for improvement across the board in this vital area. What is interesting in many industries and especially financial services is the amount of money spent on technology solutions such as CRM which often dwarf the money spent on analyzing what makes 13
  • 14. great sales performers despite the fact that there are today many profiling tools that can make this exercise simple and easy to execute on a regular basis for most organizations. This is especially intriguing when most C-level people acknowledge that sales people are a particular breed and there are two distinct types. The 'hunters' are intuitive, passionate and often neurotic who focus on winning the next deal and then move on, whereas the 'farmers' befriend the customer and focus on building long-term relationships. Benchmarking the best in each area would undoubtedly show a different make up of person yet as the research shows it is rarely done. The key is to find out which of your sales team should be on which account and then to find a way to manage and reward the hunters and farmers differently and to create a structure that capitalizes on the strengths of both types and then train them accordingly. Few companies do this effectively because of the potential political battles that may arise. How does the world of sales vary? While only 3% of respondents were from Australia and country specific data between respondents is not available at the time of printing there are some differences between regions. In the North America training sales training is seen as a mandatory requirement especially training in a robust sales methodology for winning or retaining key accounts. In Australia based companies sales training tends to be more common around the “21 Techniques to Closing” variety where organisations are looking for a quick fix. This long term approach was also reflected in the induction processes of global companies for new sales people. For example global WSO’s were most likely to have formal sales methodology and processes training, CRM Training and a likely career path communicated to new hires before they even hit the streets. Regular benchmarking for overseas companies against their competition was a common practice compared to Australian organisations. 14
  • 15. Another area of difference was that of training in channel or dealer management. In North America & Europe there is more of a focus on developing channel sales managers to understand the dynamics of channel members and how developing them as profitable businesses is to the benefit of the suppler. In Australia and Asia especially, channel managers are often those from strong direct sales backgrounds who are given a channel to manage as a career progression without fully understanding the different dynamics of building healthy channel relationships built on partnerships as opposed 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 all have a definite focus on growth which they measure consistently. They are also more likely to reward for results and have clear incentives for achieving the objectives they seek. This is especially the case in financial services. Nicola Morley from Allianz said “When developing a new sales culture you need to look at the whole picture. Of course, it's important to have a sales process that you can rely on, but to ensure it is utilised effectively it needs to be linked into an effective accountability and reward system. In addition, you need to have systems and procedures in place to ensure all your sales data is managed accordingly.” In terms of career stability WSO’s are not reliant on just a few accounts and they have sales training programs in both methodologies and techniques as part of their ongoing talent retention programs. For those seeking new opportunities it would be worthwhile benchmarking any new companies that are looking to hire you against the WSO criteria mentioned at the start of this article. Summary Many organizations do well in a number of the key components in the WSO Wheel above. What makes the difference is that WSO’s consistently do well in all components all the time. As we move into an uncertain economy globally the activities of WSO’s provide valuable direction for sales leaders to focus. 15
  • 16. MUSCLE BUILDING THE SALES TEAM by Sam Reese, President and CEO I was speaking at a client event a few weeks ago when hands started going up during my presentation. The key topic sales leaders wanted to discuss that day was my opinion on how to determine whether someone on their sales team is going to make it or if it is time to let them go. It seems this challenging economy has made it difficult for average performers to hide among the weeds. This is a GOOD THING. In high tide times, it’s easy to have a great smile and a pleasant demeanor to keep a high income sales position. But when things get tough, the pretenders fear exposure and will sometimes head for safer careers. The hard part about muscle-building the sales team is that things aren’t always what they seem on the surface. You can’t afford to make a bad decision. Performance evaluation isn’t just looking at their quota attainment and making cuts. If it was that easy, then we would have no need for sales management. Over the years, I have seen great sales organizations look at performance as a combination of three essential things: skills, activities and results. This performance triangle can be a simple way to help separate the wheat from the chafe in any sales organization. Skills are best described as the acumen and intelligence to be able to perform the duties of the job. It is more than just product knowledge and proposal writing. It pertains to the skills required to navigate complex sales situations: the ability to work within one’s own corporate structure, the understanding of how to connect company capabilities with customer requirements, and so on. Activities are the day-to-day movements that take the business forward such as calling on customers, prospecting, performing follow up © 2009 Miller Heiman, Inc. All rights reserved. 3 | 1-877-678-0272 16
  • 17. What Sales Leaders are Doing Now actions, organizing next steps, etc. Old school sales managers used to have a myopic focus 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 monitoring because 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 are simply 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 evaluate their teams. The key guiding principle in this process is that 2 out of 3 isn’t too bad. If any one salesperson is capable in two of the three categories, then they should remain on the team. If they are only capable in one of the three, then it may be time to go. For example, a salesperson with high activity levels and critical skills is a keeper - even if he’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 in his current role. Maybe his territory is rich with opportunities or maybe the customer base continues to deliver even if the salesperson is not that strong. A motivated salesperson with strong skills and high activity levels will most likely take this territory to new heights. Inherent in this discussion is the role of the sales manager. A person who brings the right skills and activity levels to the job can succeed in almost every situation. It’s up to the sales manager to make these assessments and to stand behind them when questioned about the success potential of one of his salespeople. The sales manager needs to be the one who makes this determination of his team members. At the same time, he also needs 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 | 1-877-678-0272 17
  • 18. Treating Strategic Customers as Corporate Assets by Robert B. Miller, Founder, Miller Heiman The 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 is its 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 a 300,000 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 medical to move production in-house, leaving Brothers in the testing services, lost a major contract with UnitedHealthcare lurch. 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’s operation 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 amazing In the worst of cases, as with Brothers Gourmet Coffees, how little attention many companies pay to keeping their major the loss can be disastrous if the company can’t replace the accounts. Amazingly, some firms sometimes realize they’re 18
  • 19. Treating Strategic Accounts as Corporate Assets in trouble only after a big customer has already switched of having to educate those customers who are unfamiliar to a competitor. Part of the problem is educational. When with your product). business schools teach students how to manage corporate assets, 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 plagues executives 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; magazine property, such as patents, copyrights and trademarks. publishing; and so on. In banking, for example, one estimate 1 But 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 wireless defection of just a handful of major customers can cripple industry. The annual churn rate for cell-phone subscribers even a large corporation. Sometimes, as with Brothers in the United States has been estimated to be somewhere 2 Gourmet 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 3 Customer 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 ranges from the loss of business, but there are also a number of from $250 upwards. secondary costs. The defections could, for instance, make potential clients think twice about doing business with you. Not surprisingly, customer churn is wreaking havoc with the In 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 4 thumb used in many markets is that the cost of acquiring costing firms there $66 billion a year. That figure includes a 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’t if, for example, the market is saturated and it’s difficult to been studied as extensively for B2B selling, but the dynamics get 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 of not limited to – marketing and advertising costs, sales salespeople working together to land a single account. In expenses (including commissions), and the costs of signing such cases, it could easily take a company more than a year up and servicing new accounts (in particular, the expense and substantial resources to replace the loss of a single | 1.877.678.0274 19
  • 20. Treating Strategic Accounts as Corporate Assets customer – 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 their to regain that major account. existing accounts. But even a slight improvement in retaining existing customers can pay big dividends. According to Losing a key customer has always been a big headache, research by Frederick Reichheld of Bain & Co., the strategy but today the loss is all the more painful because of consultancy based in Boston, just a 5 percent reduction in increased pressures. As a result of greater globalization, customer turnover can lead to an increase in net profits by as 6 the competition has grown fiercer than ever before. In the much as 20 percent. In the banking industry, that same small 7 past, 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 little Internet and foreign firms have now made competition attention many companies pay to retaining their existing a constant threat, 24 hours a day, 365 days a year. You customers. And I am absolutely shocked by how lightly simply 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 IBM executive and author of “Good Service Is Good Business: 7 Interestingly, firms have all sorts of processes for handling Simple 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 in for instance, found that the defection rate had increased the same way – that is, as corporate assets. In fact, many 5 from 33.5 percent in 2005 to 38.6 percent in 2007. That’s organizations consider customers to be basically the sole an increase of more than 15 percent in a relatively short responsibility of the sales department, and the chief sales or period of time. In the B2B arena, as your customers are marketing officer is held accountable. But that’s just asking finding themselves under increasing pressures from their for trouble, because certain customers are just as important customers, they are in turn demanding more from you; and to a business – if not more so – than those other, traditional if 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. And that 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. 20
  • 21. Treating Strategic Accounts as Corporate Assets Not 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’re known adage is that 80 percent of a company’s business lying in bed in the middle of the night and you can’t sleep might come from just 20 percent of its customers. For because you’re worried about work, what customers are some firms, the breakdown might be 70/30 or 90/10 you usually thinking about? Often, the list might be as short instead of 80/20, but the point is that a minority of your as three or four accounts and, interestingly, there’s often a customers 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 of customers might be absolutely essential for your success; the U.S. operations of a large Japanese corporation. When those 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 lunch a “mom and pop” dry cleaner on a street corner or a quickly nodded their heads in agreement. multinational corporation like Unilever, you will have a number of customers who can, quite simply, make or break Strategic accounts are so important that not just the sales your business. Thirty years ago, in the early days of Miller organization knows about them; everyone, including the Heiman, I was well aware that 65 percent of our business CEO and COO will recognize their importance. But the larger was from one customer – Hewlett-Packard. So I made sure point is this: because strategic accounts are crucial to your I had all my bases covered at that account, and I would company’s success, they can’t be treated like any ordinary personally 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 your largest sources of revenue or profit (although they often So, for starters, the management of strategic accounts has are). A “prestige” customer could also be a strategic to have the attention of a high-level executive. Ideally, you account. Years ago, when I was a manager at Kepner- need a very senior person in charge. At Miller Heiman, that Tregoe, a consultancy that specialized in executive problem individual is Tim Call, the executive vice president for strategic solving and strategic planning, one of our clients was Rolls- accounts, who manages various teams that interface with Royce’s jet-engine business, and we worked hard to retain our different strategic customers. Call reports directly to that account because it provided a special cachet that Sam Reese, the CEO of Miller Heiman. At a client of ours established our firm in the marketplace and helped us to – a large shipping and logistics company – the president attract new business. himself oversees the overall process, and each member 21
  • 22. Treating Strategic Accounts as Corporate Assets of his executive circle is in charge of at least one team that Remember that although revenues are important, doing manages 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 when others on their team, and they attend all meetings to keep Bank of America CEO Kenneth D. Lewis wanted to increase up-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’s The important thing to note here is that any program for Global Corporate and Investment Bank unit began to managing strategic accounts must be owned, driven, and target key customers, it didn’t pursue the low-margin overseen from the top. The responsibility can’t reside with relationships it had with large corporations like Wal-Mart the head of the sales operations or the chief marketing and IBM. Instead, it focused on more profitable deals with officer. It has to reside in the C-suite because you need other clients, specifically those companies that needed corporate executive sponsorship. Only someone at that global treasury and cash-management services (for level can help perform certain crucial tasks, including the example, funds collection and financial forecasting) as well following: 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 unit each strategic customer identified, formulate and implement had fallen 4 percent but operating profits had increased 12 an 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” status that will help reach those objectives. at more than one third of its targeted customers, up from 8 just 12 percent in 1999. Identifying Strategic Customers There’s no one best approach to identifying strategic Also keep in mind that potential business from a customer customers. Companies need to use the criteria that make can be just as important – if not more so -- than current the best sense for their own overall organizational goals. business. To assess those opportunities, you can simply ask At Miller Heiman, we use five criteria for selecting strategic customers for their estimates of how much of their business accounts, 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- 22
  • 23. Treating Strategic Accounts as Corporate Assets performance polymers and specialty additives, provides just a handful of customers for the first year of our strategic another incentive. Lubrizol will often encourage a customer accounts program and then we’ve continued to expand it on to provide details of its purchasing by offering complimentary a measured basis. market reports for certain products – information that a 9 consulting 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 functions given 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 multiple professor, 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 and reportedly received a defective laptop computer from Dell legal departments. Each of your strategic customers needs he wrote about his experiences in postings entitled “Dell to assemble a similar cross-functional team that will then Hell.” Soon Jarvis’ ongoing saga was being covered by other interface with your team. The members of the customer’s blogs 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-time press grew, Dell rightly recognized that the situation wasn’t delivery, then your customer should assemble a team simply going to blow over by itself. In response, the company that includes a logistics manager and head of the supply assembled a cross-departmental team to actively scan blogs chain operation. Ideally, the members of your team would so that it could defuse customer issues before they became have their corresponding functional counterparts on the major problems, and Jarvis was invited to Dell headquarters customer’s team. to meet with some of the company’s executives, including none other than Michael Dell, company founder and CEO. To encourage customers to participate in your strategic accounts program, you should emphasize your desire A company might easily have a dozen or more strategic to establish a long-term relationship in which you’ll be customers, 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 your It’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 your want to start small because doing things the right way for competitive strategy, and so on. In short, the huge incentive even a handful of strategic customers will take an enormous for a customer to participate is that they will have access to amount of time and effort. At Miller Heiman, we selected inside information that will enable them to implement your 23
  • 24. Treating Strategic Accounts as Corporate Assets products and services better to maximize their return on of electronic components; it began offering services to help their investments. However, as a cautionary note, you should coordinate its customers’ supply chains and to perform hold off before formally announcing to customers that you’ve engineering design work. All that should have helped make established a strategic accounts program until you’re sure Arrow become a more important business partner, but a that you’ve worked out all the kinks. That is, you might refer decade later it made a startling discovery: the customer to the program internally but not let the outside world know companies that were using those important services on a about 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 customer Moving Up the Hierarchy need to have an open dialogue to determine your true position One of the first tasks for a strategic accounts team is to on the buy-sell hierarchy. Not only will that conversation help determine 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’s perception of what the seller does. From the lowest to the Next, you must develop a plan that will help you either highest 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 will The process of determining your position on the hierarchy a customer’s loyalty increase, the customer will also be might 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, and you’re only at level 2. That’s crucial information because, even invest in your firm. Simply put, a higher position in if you hadn’t learned of the discrepancy, the mismatch in the hierarchy makes you more indispensable and less perceptions could have eventually led to your losing the vulnerable to losing the customer. customer. In some cases, you could discover that you’ve mistakenly been harboring an overly inflated view of the Consider the strategy of KLM Cargo, a unit of KLM Royal value 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 commodity 1980s, for instance, Arrow Electronics tried to move up the (that is, level 1 of the hierarchy). So KLM worked hard with buy-sell hierarchy by becoming more than just a distributor a particular market segment – those firms that needed 24
  • 25. Treating Strategic Accounts as Corporate Assets to transport perishable goods – in order to move up the not saying that no company should ever lose an important hierarchy. For those customers, KLM Cargo began to provide account. Some defections can’t be helped, for instance, if a point-to-point service: initial pickup by truck to a warehouse, relationship is no longer win-win and the customer isn’t willing transportation 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 to offered three levels of service -- fresh regular, fresh cool, and avoid being caught off-guard. At a minimum, companies fresh 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 your choose “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 with supplier to a provider of an end-to-end business solution, Burger King to Pepsi? Pepsi had shrewdly told Burger 11 thus 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 can The 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 company of that is i2 Technologies’ relationship with Dell Inc. Based might be the only game in town – it might, for instance, have in Dallas, i2 sells sophisticated supply-chain management a proprietary technology – but then lose that edge as the solutions 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., which very business model depends on the efficacy of i2’s dominated the market for minicomputers during the 1970s products, such that the fates of the two companies are fairly and 80s. But DEC’s arrogance and disdain for smaller intertwined. personal computers – espoused by founder Ken Olsen’s infamous remark, “There is no reason for any individual to Avoiding Common Pitfalls have a computer in his home” – left the company woefully Given all the ramifications of losing a major customer, I unprepared for the coming PC revolution. Eventually DEC am continually astonished at how few precautions some was acquired by PC maker Compaq, which itself was later companies take to guard against that possibility. And it’s merged with Hewlett-Packard. remarkable to me that any firm should be shocked (or even surprised) after it loses a major account. Whenever that Part of the problem is that the leading company in a market happens, my immediate reaction is that a number of people frequently gets tagged as being arrogant. “They’re getting just didn’t do their homework. But don’t get me wrong – I’m too big for their britches” and “they’ve become difficult to 25
  • 26. Treating Strategic Accounts as Corporate Assets work 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 your part as a sign of your supposed arrogance. So, especially Note that the questions probe the overall process being used when 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 a you’ve become arrogant or complacent. Otherwise, you review is to start by telling the account manager, “Tell me leave 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 leads often 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, you signs, or they go into denial. In their minds, they might want to coach people so that they can figure out on their mistakenly assume that just because an account has been own what they need to do; you don’t want to do that thinking with them for years, that customer will remain loyal. And for them. that’s another reason why you need a team of people in charge of your strategic customers, because you don’t 3. Missing a warning sign. Whenever there’s an important want to end up paying for the mistakes of a sales rep or change at your or your customer’s company (a reorganization account 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 most The team should regularly conduct account reviews that common ways to lose an account is through a change in will force account managers to confront reality. Some of personnel – say, for instance, that a key executive at your the types of basic crucial questions that need to be asked customer’s firm leaves. Remember that the people at both include 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. 26
  • 27. Treating Strategic Accounts as Corporate Assets Again, regular account reviews can be a very effective program, because they view it essentially as free help in their mechanism here, helping you to catch any early warning efforts to strengthen a customer relationship. signs. The main focus of the reviews should be the customer’s business results. As discussed earlier, you 5. Failing to get support from the top. As I mentioned should always know where the customer perceives you earlier, a program for managing strategic accounts must have to be on the buy-sell hierarchy. In addition, you need to support from the top of your company. Ideally, the CEO, COO have a plan either for securing that position or for moving or some other C-suite executive would be in charge, and that up 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 between that 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 your plan is to move to level 2 (delivering “good” products and/ customer companies won’t be likely to participate if they or services). Then you need to continually monitor your don’t see a similar commitment from the executives at your progress, 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 managers customer 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 flurry process 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 you To prevent that from happening, you need to be mindful of don’t let your customer relationships devolve to the point at the politics involved. At Miller Heiman, each of the strategic- which a client is seriously entertaining sales pitches from account teams has a designated leader who coordinates all your competitors. In other words, the best defense is indeed activities and meetings, but important decisions are made a good offense. As in football, you’ve got to keep possession through group discussions and consensus, taking into of the ball and keep advancing it. One effective way to do consideration any concerns from sales, corporate, and other that is to continually make efforts to secure your position or parties. In addition, all sales reps continue to receive their move up a level on the buy-sell hierarchy. Remember that usual commissions even if one of their accounts is selected your existing relationships with customers should confer as a strategic customer. Because of that, the sales reps you with a substantial advantage (assuming, of course, that want their customers to be placed in the strategic-accounts you’ve maintained good customer relationships). The truth 27
  • 28. Treating Strategic Accounts as Corporate Assets is that inertia is a huge factor: Customers would rather avoid become big obstacles. They have increased the amount the hassles of switching vendors unless they perceive that of negotiation and procedural red tape, leading to an they’re not getting the value that they’ve paid for. So you’ve atmosphere of distrust between buyer and seller. The got to do all that you can to avoid the customer reaching situation is exacerbated by increased globalization and that point. In my experience, the vast majority of customer heightened competitive pressures. Today, it’s easier than relationships break down because of what I call “benign ever for companies to lose important customers. But many neglect,” which can be something as simple as not returning firms still have their heads in the sand, unaware how quickly a customer’s phone call quickly enough. Of course, it’s that a major account could take its business elsewhere. In difficult to maintain the same level of attention and service my view, not having a program that treats your strategic to 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 in an 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. Miller In the best of cases, corporate purchasing departments act Thirty years ago, Bob Miller developed and introduced as a facilitator between seller and buyer. They might perform Strategic Selling®. Since then, his passion for elevating important screening functions like a “better business the role of the sales profession has resulted in several bureau,” helping to qualify vendors so that the buyer has to additional methodologies, all of which are incorporated in consider just a short list of products instead of dozens (or The Miller Heiman Sales SystemTM. He continues today in even hundreds) of options. Or, by understanding the benefits a consulting and advisory capacity, focusing primarily on of strategic partnerships, they might encourage collaboration product development. His mentorship drives innovations in between the seller and buyer to help ensure a long-term sales performance that are consistent with the vision for the win-win relationship between the two parties. Unfortunately, company he started three decades ago. though, some corporate purchasing departments have 1. “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. 28
  • 29. INVOLVING EXECUTIVES IN THE SELLING PROCESS by Tim Call, Executive Vice President People ask me all the time: “How can we get our executives involved in the selling process in a proactive and efficient manner?” The first thought that comes to my mind is to answer their question with more questions: “Why do you want your executives involved in the selling process?” Is it because you need help closing deals? Because they are needed to negotiate pricing? Or because they want to feel they are being supportive? For any organization that wants to begin an executive selling program, the above questions should be asked of senior leadership. In the current climate, decisions are being pushed to higher levels within a company and an executive selling program can help establish and maintain critical account relationships between C-Suites. Many of the successful executive selling programs I have seen solicit input from all of the functional departments so everyone knows the expectations for the program and understands the criteria for success. Your organization may start down the path of establishing an executive selling program only to realize early in the process that there are perception gaps between what the executives think they know about critical accounts and what the sales teams see as reality. In Miller Heiman’s annual sales best practices study, we see a fair amount of differences between C-Level respondents and sales reps. For instance, the responses from these two groups typically indicate a wide perception gap for this simple question: © 2009 Miller Heiman, Inc. All rights reserved. 8 | 1-877-678-0272 29
  • 30. What Sales Leaders are Doing Now We have a disciplined process that is continually utilized to review all large deals. The C-Level is generally less likely to agree that processes are in place to review large deals compared to sales reps. A larger gap exists when we ask our survey participants to weigh in on another topic: Our executive leadership is actively engaged in our selling process. The 2009 Miller Heiman Sales Best Practices Study revealed that 66 percent of C-level executives say they are involved, but only 41 percent of sales reps say the executives are involved. This disparity stems 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 that they will come into deals if, and when, it is necessary. In these cases, the sales force will say that executives don’t bring any value to the client relationship. Because they don’t know an executive’s role in the selling process, they are forced to leave them out of the equation 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 eliminate confusion, your first step to building an executive selling program is to get everyone on the same page. Discuss what happens with these large deals, and discuss how an executive’s involvement might help or hinder these relationships. Here are a few suggestions 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 | 1-877-678-0272 30
  • 31. What Sales Leaders are Doing Now 4. 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 | 1-877-678-0272 31
  • 32. What Sales Leaders are Doing Now 11. 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 is the dedication and commitment to stick to it. © 2009 Miller Heiman, Inc. All rights reserved. 11 | 1-877-678-0272 32
  • 33. How to Forecast Sales Accurately by Robert B. Miller, Founder, Miller Heiman The conventional wisdom: “Sales managers can’t forecast accurately because there are too 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 third forgiven if you thought that businesses had no clue how to quarter. It reported revenues of $10.6 billion, which was a forecast their sales. Every week seems to bring yet another solid increase of 17 percent from the same time period in headline of a firm that missed its quarterly numbers because 2005. But the problem was that those numbers fell short of of some unexpected shortfall in demand for its products. the company’s forecasts and analysts’ estimates of $11.1 Wall Street is generally unforgiving of such lapses, typically billion. CEO Ed Zander explained that the lower sales were punishing 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 of Consider what happened to Motorola. After lagging behind his reassurances, though, the market response was swift Nokia for years, the company had been gaining ground in and unyielding: Just a day after Motorola announced the 2005 and its share price had risen 31 percent. Everything shortfall, its stock price fell $1.21 to close at $23.64, a drop looked rosy the following year as Motorola continued to of nearly 5 percent. 33
  • 34. How to Forecast Sales Accurately To make matters worse, forecasting is becoming all the of some illicit accounting sleight of hand, prompting more difficult because customer loyalty is on the wane and shareholders to claim in 2000 that the firm had misstated global competition has increased such that companies more than $500 million in revenues. After an investigation are less sure of where their future sales will be coming by the SEC found that Computer Associates had routinely from. Moreover, distribution channels have become more included revenues from orders that hadn’t officially complex 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 12 Benchmark Index has found that roughly two-thirds of all years in prison. sales forecasts have a margin of error that exceeds 25 percent. Amazingly, more than 10 percent of forecasts What happened at Sunbeam and Computer Associates have 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 companies In the worst of cases, a potential shortfall leads to continually suffer from sales forecasts that are inaccurate desperation as executives succumb to the temptation of and unreliable. When the projected numbers are questionable remedies, even if they involve some shady unrealistically optimistic, the manufacturing division ramps accounting practices. The classic story here is the tragic its operations up for products that end up sitting in the saga of Sunbeam under the leadership of Al “Chainsaw” warehouse collecting dust. Or, conversely, the demand Dunlap. To keep pace with his aggressive financial for a hot item shoots through the roof but the company projections, Dunlap offered huge discounts to entice is caught off-guard, thus missing a crucial window in the retailers to take on more merchandise than they could market. And it’s not just big mistakes that hurt the bottom sell. The products were then shipped to warehouses line. Sometimes even a small increase in the accuracy of where they sat, and the inventory continued to pile up. your forecasts can lead to substantial savings because But 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 to and Sunbeam investors were rightfully outraged. Dunlap millions of dollars. was shown the door and later agreed to pay $15 million to settle 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 sales Sadly, Sunbeam is hardly the only company that’s tried to group were too accurate, but I have heard countless execs cook its books. Computer Associates, a global software grouse that they simply couldn’t rely on their company’s corporation based in Islandia, N.Y., was also a practitioner sales projections. And an inability to forecast sales 34
  • 35. How to Forecast Sales Accurately usually 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 almost makes a turn in one direction and your firm is still headed closed. All you need to do for those opportunities are to down a different path. The result: You end up developing remove any remaining obstacles (for example, you might and 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 of Okay, 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 who People will just fudge their numbers to game the system. could possibly veto the deal). And above the funnel are For instance, salespeople will underestimate their numerous leads that need further investigation. These projections so that they’ll look good when they make or leads need to be screened to identify which ones should exceed 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 required another exercise in futility? to close the deal will tend to decrease. Second, the probability of your actually closing the deal will increase Excuse me, but that defeatist attitude is nothing but a pot (or, in other words, the uncertainty that you will close the of 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) has forecast their sales, and all the leading organizations do a quantitative metric for the likelihood of the deal closing it because they absolutely need that crucial information. in a given amount of time. That period can be based on a Otherwise, a business can’t be run efficiently. How, typical sales cycle. Let’s say that the typical sales cycle for example, can the manufacturing department plan for your products is eight months (that is, you usually its resource allocation without knowing the volume of take eight months to close a deal from the time you get a shipping orders for the upcoming quarters? The trick to solid lead, such as when a prospective customer requests accurate sales forecasting, though, is that you need the information about your product or otherwise engages with right system in place. you about a solution offered by your company). So, for instance, your potential deals at the bottom of your funnel Understanding the “Sales Funnel” might generally have a 70 percent probability of closing Before you can begin to improve your sales forecasting, within half the sales cycle (or four months). Your prospects you first need to understand a fundamental concept. The in the middle of the funnel might have a 40 percent chance 35
  • 36. How to Forecast Sales Accurately of closing within that time. And your prospects above the of dollars annually because the manufacturing group was funnel might have just a 10 percent chance of becoming then able to allocate its resources more efficiently to plan a finalized deal within the typical sales cycle (or eight better for future orders. months). Of course, that aerospace company didn’t just implement Now here’s the part about forecasting. To obtain an the system and magically have the accuracy of its sales accurate projection of your sales, all that you to do is to forecasts improve. Although simple in concept, the sales categorize every one of your potential deals into the right funnel takes a concerted effort and sustained commitment location (bottom, middle or above) of the funnel, along with from everyone in the sales organization. And, as with your estimates of the size of the potential order. Then you other kinds of similar initiatives, the devil is definitely in add 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 Funnel forecast. Okay, you might be skeptical about how such a The first important detail is that you have to classify simple concept could actually be effective in practice, but your customer opportunities accurately. If you’ve been I have seen numerous companies dramatically improve mistakenly placing companies in the middle of the funnel the 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 them Consider the operations of a large aerospace company that will become finalized deals than you’ve expected. This was having trouble years ago because its sales projections then means that your sales forecast will be substantially were all over the map – the average accuracy was just 35 off because of the shortfall. percent. Then the company implemented a program that taught the fundamentals of funnel management. To begin Categorizing customer opportunities correctly is with, managers clearly delineated and codified specific easier said than done. The problem is that many sales criteria that helped define prospective customers. For professionals will fool themselves into thinking that a deal example, a lead had to meet specific objective criteria is closer to being closed than it really is. They’ll be overly before it could be moved to the middle of the funnel. And the optimistic, now realizing the amount of work that needs company conducted formal reviews each week to ensure to be done. So you need to get them to be realistic, and that all the salespeople were using the new system. Within the way to do that is by having some good metrics, both just one quarter, the accuracy of the company’s sales qualitative and quantitative. Everyone has to agree to the forecasts had improved to 60 percent, and it eventually criteria, and each person has to abide by them. You should exceeded 75 percent. That change saved the firm millions consider having a standard form that salespeople would 36
  • 37. How to Forecast Sales Accurately fill out for each solid lead, especially for potentially large thing before: “Because Roger always estimates low and deals, and that form would include questions that help sandbags his numbers, I’ll adjust his forecasts upward by determine the location of that opportunity with respect to 20 percent. And because Marcia is always wildly optimistic, the sales funnel. I’ll cut her projected sales by half.” That’s the kind of game that sales managers often find themselves having to play, You might use an acronym like “DUNCE” to help people but the funnel criteria, when selected properly, will help remember the criteria. “D” is that the customer has dollars prevent that kind of number fudging. allocated to pay for the project; “U” is that there’s urgency on the customer’s part; “N” is that you understand the But you also need someone in charge of the funnel system customer’s true needs; “C” is that you have coaching; and to ensure that all the salespeople are using it and that “E” is that you know the identity of the economic buyer, everyone is abiding by the same criteria. The important or final decision maker. Before a lead can be placed into thing here is that that person has to have enough clout to the funnel, you might stipulate that the salesperson has hold people accountable for their individual funnels. You to satisfy the D, U, and E requirements. And before a can’t turn this important function over to some low-level prospect can be moved from the middle to the bottom staff person, because then the salespeople and account of the funnel, the salesperson must meet the N and C managers will try to game the system or they won’t take it requirements. At a minimum, companies need a list of seriously. You need someone who can hold people’s feet general questions like DUNCE, but they also should have to the fire. That individual might be the head of the sales criteria that make sense not only for their specific industry operation or one of his or her key lieutenants. but also for their own business. For instance, one criterion for moving a potential customer to the middle of the funnel The funnel “meister” should be empowered to hold people might be that a salesperson has to perform a live product accountable. If, for example, customer prospects have to demonstration at the customer’s site. You might need a have a 50 percent probability of closing before they can few iterations to define all the necessary funnel criteria. be placed in the middle of the funnel, then a salesperson You should involve key managers in that process, not only who is closing just 25 percent of those deals needs to because they typically know what criteria are important be taken to task. Could that salesperson, for instance, but also because their participation will enable you to gain be prematurely placing those leads into the middle of their buy-in when implementing the system. the funnel before they’ve been properly qualified? That’s why the criteria need to be specific enough to make such The criteria should be designed to help managers refrain assessments, and you need at least about three or four from the common practice of second-guessing the sales for each funnel location. Interestingly, experienced sales estimates from their staff. We’ve all done this type of managers usually know what those criteria should be 37
  • 38. How to Forecast Sales Accurately because they have a sense for the typical obstacles that more emphasis on recent periods of time. In addition, tend to hold up deals for their company’s products. remember that your sales cycle is just an average. In general, larger deals will tend to take longer to close At the Treasury Management Sales and Commercial because they will usually involve a greater number Business Development for Wells Fargo, managers came of people in the approval process. Also, sales to new up with an “opportunity checklist” to help them conduct customers will typically take much longer than sales to reviews of large potential deals. The checklist contains existing accounts, especially when those deals involve a series of 20 questions such as, “Do you know who all products that are new to the market. the key decision makers are?” The list helps the company to prioritize its prospects and get a better handle of In order for the funnel system to work, salespeople have future sales. For example, when reviewing one particular to manage their individual funnels on a regular basis. The lead, Wells Fargo uncovered two important things: the frequency will depend on the complexity of the typical prospective customer already had a good relationship with deal as well as the sales cycle. For products with long its current supplier and it didn’t perceive Wells Fargo as sales cycles, monthly funnel reviews might suffice. But having any edge over the incumbent vendor. So Well Fargo for other products, daily reviews might be necessary. decided not to expend resources to put together a custom When implementing a funnel system, companies should bid and decided instead to submit a bid that was close to consider having at least weekly meetings for people to give the company’s standard pricing. Moreover, Wells Fargo updates of their funnel activity. The participants basically also omitted that potential deal from its sales forecast. go around the table, one by one, to give their numbers. In this way, peer influence helps to keep people honest to Large businesses like Wells Fargo should consider having their commitments. After the funnel system has become a different funnel for each major product line, especially an ingrained part of the sales process, companies might if the products have very different selling cycles. And you then have the meetings on a less frequent basis, perhaps might also need to have a separate funnel for each major just monthly instead of weekly. Again, this depends on the geographic region, such as North America, Europe, and sales cycle of the product (shorter cycles require more Asia/Pacific. Moreover, you should adjust your criteria to frequent meetings). the changing market. In normal times, for example, your sales cycle might be six months. But in a recession, that After each meeting, you might publish the funnel data on time period could easily balloon to over a year. That’s why an in-house basis to help keep everyone honest. The funnel in volatile markets you’re better off using a sales cycle that reports should be internal and confidential, and you could is adjusted using a moving average over several cycles aggregate the data per region (or district or branch) and or, better yet, a weighted moving average that places per product. The real power of the funnel comes over time 38
  • 39. How to Forecast Sales Accurately when people can track the progress of various potential Some Common Traps deals, and they can identify what’s stalled and then develop World-class sales organizations all place a value on a plan of action for moving those prospects along. process, and accurate forecasting should always be part of that process. To improve your forecasting, the use One way to ensure that salespeople take the funnel system of the sales-funnel concept can help tremendously, but seriously is to tie the accuracy of their forecast numbers to implementing it takes concerted effort and an awareness their sales commissions. Or, at the very least, you can make of the potential pitfalls. In particular, companies should be forecast accuracy a part of their performance reviews. In on the lookout for the following common mistakes: addition, you need to impress upon salespeople how good forecast numbers are ultimately in everyone’s (including 1. Allowing prospects to “whirlpool.” Every sales their own) best interests. When Sean Reese, a demand organization has customer prospects in the middle of the planner for Ocean Spray Cranberries, was trying to get funnel that go round and round but make little progress better information from his company’s sales staff, he made toward moving to the bottom and getting closed. You the following case. He argued that accurate forecasts will might have an uncovered base, such as a key executive help improve the efficiency of the company’s supply chain at the customer company is unconvinced of the need and reduce the possibility that stores would run out of for change. A study by Miller Heiman found that, at product, thus eventually leading to a higher sales volume any given moment, nearly 35 percent of prospects are – and thus larger commissions. That argument helped wasting a salesperson’s time. Often the problem is that everyone get on board with Reese’s program. those prospects have been miscategorized and should be moved from the middle to above the funnel. If your company relies heavily on information from distributors, you might consider encouraging them to 2. Confusing selling with buying. Remember that the provide more accurate data by sharing any resulting savings selling process has seven basic steps: 1) target prospects, with them. Consider Arasco, a Saudi-based supplier of 2) qualify leads, 3) cover the bases, 4) make proposal, 5) animal feed products. In 2006, after Arasco realized that close deal, 6) fulfill order, and 7) up-sell and cross-sell. better forecasting could result in considerable savings in The buying process also has seven basic steps but they storage costs, the company agreed to cut prices by up to are markedly different: 1) monitor status quo, 2) recognize 4 percent for those distributors that agreed to help provide the need to change, 3) define problem, 4) evaluate options, better information about future demand. The program was 5) select best solution, 6) implement solution, and 7) a success as the forecast error fell from 15 percent to 9 assess value of solution. The problem is that there’s often percent, enabling the company to increase its on-time a mismatch in where the seller is versus where the buyer delivery rate from 85 percent to 93 percent. is. The classic mistake occurs when the seller is on step 5 39
  • 40. How to Forecast Sales Accurately (ready to close the deal) while the buyer isn’t even on step one of your potential deals is an order or more larger in 2 (that is, the customer isn’t fully convinced that he has a magnitude. Let’s say that you have a deal in the works that problem). This, unfortunately, happens far too frequently. could bring in $10 million, but your average sale is much You can prevent such occurrences by relating some of less than that. If you close that big deal, your sales will be the steps of the buying process to the criteria you use $40 million for the quarter, but if it falls through then you’re to determine a prospect’s location in the sales funnel. looking at $30 million, substantially less. The best thing With the acronym “DUNCE,” for example, the letters “D” to do here is to separate that $10 million prospect from (the customer has dollars allocated to pay for the project your forecast, perhaps by placing an asterisk next to your and “U” (there’s urgency on the customer’s part) relate quarterly projection. In fact, deals that important require specifically to step 2 of the buying process (recognizing their own individual funnels so that they can be tracked the need to change). separately from the rest of your prospects. 3. Treating all products the same. Companies should 5. Failing to properly prioritize activities. In general, consider ranking their product lines (for example, in order salespeople tend to work the funnel from the bottom up, of potential revenues or profits) so that they can spend concentrating on the surest opportunities first and leaving more time tracking and forecasting those products that the less certain stuff for last. That approach might seem will have a bigger impact on the bottom line. For instance, to make sense, but the truth is that it leads to unnecessary BASF, the German chemical manufacturer, categorizes volatility. Here’s what typically happens: The sales its products into A, B or C, depending on their potential organization is busy closing important deals and works impact. By spending more time on forecasting the A hard to move prospects from the middle to the bottom of products and less time on the C, one business unit at the the funnel. All of that activity takes considerable effort, company was able to improve its overall forecast accuracy and people just can’t find the time to generate new leads by an average of 20 percent. until they realize that the funnel is drying up. Panic then ensues, as everyone scrambles to find new business. But 4. Not making special allowances. Sales forecasts the problem is that those new leads could take months (if based on the funnel concept will be accurate if you have not years) to work their way down the funnel, and that time numerous prospects that are all about the same order lag could result in a sales shortfall and missed forecast. size. In such cases, the law of averages will prevail: some To prevent that, you should always prioritize the three prospects will drop out while others will reach fruition such areas of the funnel in the following way: bottom, top and that everything will even out. But the problem is when then middle (instead of bottom, middle and then top). The some of your sales opportunities are much larger than reason for that is because salespeople dislike the hard others. Consider, for example, the extreme case in which (and seemingly thankless) task of prospecting, so the only 40
  • 41. How to Forecast Sales Accurately way to ensure that it gets done is to prioritize it ahead Many companies, for instance, use a “blue sheet” or other of the work that needs to be done in the middle of the internal process to track the status of customer prospects. funnel. Of course, that’s not to say that you can afford Much of the information required by a funnel review can to neglect customer prospects in the funnel’s middle. be obtained from such a system. For example, blue sheets Somehow, though, people will find the time to work on typically require salespeople to fill in the names of the key the middle of the funnel (after paying the proper attention decision makers at a customer account -- information that to the funnel’s top), whereas they always seem to be too is crucial for any funnel review. Moreover, such important busy to concentrate on finding and qualifying leads above data can be transferred directly to a customer relationship the funnel unless they’re absolutely forced to do so. management (CRM) system that a company might already be using. Miller Heiman, for example, has a tool called 6. Not having a funnel “meister.” You need someone Sales Access Manager that enables salespeople to avoid in charge of the funnel system and that person has to having to re-key any data; they just enter it once into a blue- have a lot of clout. He or she can’t be a low-level staff sheet application and the information can be transferred person, because then the process becomes just a clerical automatically to a CRM system from Oracle, Salesforce. function. You need someone who knows the process com, SAP or another vendor. Those CRM applications, in and is familiar with the different customer accounts so turn, typically have their own capability to perform sales that he can keep people honest by asking questions like, forecasting, and that information can then be used in your “How can this customer be in the middle of the funnel funnel reviews. when you don’t really know who the final decision maker is?” In other words, the funnel meister can’t just blindly 8. Over-relying on CRM. That said, you should also accept information from salespeople; he or she needs to be careful about relying too much on data from a CRM constantly question the funnel info because salespeople system. According to research by Miller Heiman, 72 are absolutely notorious for being overly optimistic about percent of sales organizations report that their CRM their prospects. application does not provide accurate forecasting. As with any type of application, the software is only as good as 7. Making the funnel process burdensome. On the the input data. In other words, “garbage in, garbage out.” other hand, you don’t want to make the funnel process Specifically, when a CRM application is too cumbersome an onerous or thankless chore. The funnel has got to be a or difficult to use, salespeople will often input inaccurate tool that enables the sales force to work more efficiently information, for instance, quickly checking off boxes on and effectively. Otherwise, people will do everything a form without really thinking about what they’re doing they can to avoid using it. So the trick is to integrate the because they just want “to get the task over with.” Such funnel process with what the sales force already does. faulty data will then lead to wildly inaccurate forecasts. 41
  • 42. How to Forecast Sales Accurately To prevent that, sales managers have to be involved in foresee and prepare for every possible contingency the design of the CRM tool and should never completely because nobody’s crystal ball is ever that clear. But relinquish that job to the IT department. If they do, they that’s not what I’m talking about. I am asserting that the risk ending up with a system that salespeople don’t sales function is a definable, repeatable process that can really take seriously because the perceived benefits do be tracked and managed using a simple concept called not outweigh the effort required to use it. A good rule of the sales funnel. And if a process can be tracked and thumb is that, if you can’t teach salespeople the basics managed, then you can certainly monitor it regularly to of how to use a CRM system within five or ten minutes extrapolate the future from the present. The basics are so that they can at least hit the ground running (later, really quite straightforward, but unfortunately many sales they can learn additional functionality), then the system managers are either too lazy or they lack the discipline is probably too complex. Any sales application needs to to implement such a system. Alas, for them, sales be intuitive enough so that people can essentially learn forecasting will always be an unreliable process like tea- how to use it simply by using it. And ideally the software leaf or palm reading, and that is certainly no way to run should interface with other tools that your salespeople a business. regularly use, such as Microsoft’s Outlook, as well as portable devices like the iPhone and Blackberry. In short, About Robert B. Miller both usability and accessibility are crucial. Thirty years ago, Bob Miller developed and introduced Strategic Selling®. Since then, his passion for elevating Of course, sales forecasts will always have some degree the role of the sales profession has resulted in several of uncertainty. After all, predicting the future is, at best, an additional methodologies, all of which are incorporated in inexact science. And there can certainly be valid reasons The Miller Heiman Sales SystemTM. He continues today in for a sales shortfall. A big customer could go belly up a consulting and advisory capacity, focusing primarily on or be acquired by a company that uses another vendor. product development. His mentorship drives innovations Or new governmental regulations could dramatically in sales performance that are consistent with the vision increase the length of your sales cycle. Indeed, you can’t for the company he started three decades ago. 1. “Manage or Damage: Is Your Funnel Ratio Up to Par?” (Miller Heiman Sales Secrets, 2008). 2. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management Review, July 7, 2008). 3. “Fast Forward: How Sales Leaders Can Ensure Forecast Accuracy,” The Sales Performance Journal (Miller Heiman, March 2006): p. 9. 4. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management Review, July 7, 2008). 5. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management Review, July 7, 2008). 6. “Funnel Management Best Practices” (Miller Heiman, 2006). 7. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management Review, July 7, 2008). 8. Robert B. Miller, “Taming the Volatile Sales Cycle,” MIT Sloan Management Review (Winter 2006): pages 10-13. 9. “Fast Forward: How Sales Leaders Can Ensure Forecast Accuracy,” The Sales Performance Journal (Miller Heiman, March 2006): p. 8. 42
  • 43. WEEKLY FORECAST AND DEAL STATUS CALLS by Damon Jones, President and Managing Director of International Getting accurate forecasts has been a quest for many organizations for some time, but in the current economic climate, this subject has increased in importance and in many instances, in difficulty. All sales managers will probably relate to the following dialog: Manager: “Joe, how are we doing on that big deal with XYZ?” (Slight Pause) Salesperson: “Great boss. I think we’ll have it signed in the next week or two.” Quite often this conversation carries on for the next few weeks until the manager abruptly learns the account has been lost to a competitor when the expectation was that the rep was close to securing it. Suddenly the poor sales manager is faced with taking this out of the forecast and having to explain to his boss what went wrong. The good news is that there are some things you can do to avoid this situation in the future. I’d like to start by talking about some of the problems that contribute to this and provide some ideas on what can be done about it. Some of the problems that cause poor forecast accuracy and what you can do. �� No standard definition for the opportunity or deal. Everyone in the team needs to work from the same definition. At a minimum, you need to include the deal size, your solution, the customer and the expected close date. The closer the opportunity © 2009 Miller Heiman, Inc. All rights reserved. 12 | 1-877-678-0272 43
  • 44. What Sales Leaders are Doing Now moves to closure, the more important it becomes to confirm the accuracy of information. Managers should check the accuracy of deal sizes, ask questions about expected close dates and make sure they feel comfortable with where the opportunities are moving and how they are being dealt with. �� Lack of common understanding of the sales and buying process. This is one of the biggest issues I see in organizations: the definition of both the selling and buying processes. Most organizations only focus on the former. But this is only looking at half the picture. You need to understand what the customer’s buying process looks like and more specifically, what actions the customer has to take to move the opportunity through the funnel or pipeline. There will be multiple, definable steps an opportunity will go through from the starting point up to winning the sale. This is often the root of the biggest disconnect. The sales rep believes the opportunity is farther down the funnel than it is in reality. Unless you also have a screen that looks at where the customer is in the process you run the risk of forecasting business that is far from certain. �� Poorly qualified deals. When I talk to customers about forecast accuracy the typical challenge is that forecasts are too optimistic or aggressive. In essence, the forecasts over promise and under deliver. One thing you can do to prevent this is to ensure you only forecast adequately qualified deals. This means you need to develop and apply consistent criteria. Many companies develop some form of criteria for defining what an ideal customer looks like. Any deviation too far away from that ideal customer presents a red flag and should be investigated. �� Lack of understanding of the opportunity. As a manager, it’s unlikely for you to be close to every deal belonging to each of your reps. To scale your opportunity management, you need some type of system for determining which deals you will get close to. Deal size and proximity to closing are good starting points. Once you have decided which deals you want to zero in on you can ask some simple questions. You can keep these consistent for every deal. Your reps will soon catch on and will be better prepared with answers once you have done this a few times. Here are some questions you can ask: �� What is the customer trying to fix, accomplish or avoid? �� How will our solution address that and how does it sound different from other options the customer has? © 2009 Miller Heiman, Inc. All rights reserved. 13 | 1-877-678-0272 44
  • 45. What Sales Leaders are Doing Now �� What is the customer’s decision-making process? Have we met all the decision makers? �� What are the biggest red flags that would stop us from winning this deal? I’m sure you can see a common pattern from my previous thoughts. Getting some common standards and language is really important if you want to get more consistency and accuracy in reports. If you’re thinking this sounds like a lot of work and doubt if it is truly worth it, let me answer that. It doesn’t have to be complicated. You should try and keep it as simple as possible to encourage these check-ins to continue because the value goes well beyond more accurate forecasts. Once you work with good information, you can start to make much better decisions. You will start to see more quickly where your reps need help and which deals you should get personally involved with. For many organizations, resources have become more scarce, so it is vital to ensure you have a solid basis for determining where you should direct those precious resources. One of the worst things an organization can do is spend considerable time and resource on the wrong opportunities. Losing slowly is something that should be avoided at all costs. The difference between losing and winning a deal can be the correct allocation and timing of resources on a deal. Finally, make sure this information comes to you in one format and is the same from everyone. You don’t have time to learn what different reps and managers mean by, “It’s close to closing.” You need them to tell you where it is in the selling and buying processes and what needs to happen for the deal to close. A standardized process and common language will buy you more time, time that you can use to help get business closed! © 2009 Miller Heiman, Inc. All rights reserved. 14 | 1-877-678-0272 45
  • 46. LEARN FROM LOSING: WHAT SALES AND MARKETING LEADERS CAN LEARN FROM LOSING A DEAL By Bill Golder, Executive Vice President of Business Development Everyone who has ever been in sales can remember the outstanding feeling of winning their biggest deal. In business, there aren’t many things like landing a big client that can create that kind of excitement and triumph within an organization. Big deals can often make a company’s month, quarter or year and put their competitors on notice. It’s fun to be a part of the team that makes those winning moments in business happen. Those involved have no trouble reflecting on how it all went down with amazing clarity: the incredible strategy, the flawless execution, the collaborative team, the competitor’s mistakes. We remember it all, and it gets better every time we tell the story. When it comes to the ones that got away, most individuals (and organizations) seem to have amnesia. In fact, it’s amazing how quickly we all move on without another word on lost deals. It’s as if they never existed. Most shocking is these deals typically take longer and use more resources than the ones we win, so they should be pretty memorable. I’m in a fortunate position to be able to see how some very good organizations capture findings and learn from both won and lost deals. It’s safe to say that far fewer have applied a real discipline toward understanding the latter. Those that do tend to be higher performing organizations and are learning things that are helping them sustain performance. © 2009 Miller Heiman, Inc. All rights reserved. 5 | 1-877-678-0272 46
  • 47. What Sales Leaders are Doing Now These organizations aren’t just talking about lost deals; they are incorporating a loss review into the sales process. The outcomes help sales and marketing take away key nuggets that shape overall client acquisition and relationship management strategies. So What Does a Loss Review Process Look Like and What are Companies Learning From It? Let’s start with the meaning of a lost deal. We all tend to think about losing a deal in a very linear way – the deal moves all the way through the funnel and the customer makes a decision. In fact, most lost deals don’t work out that way at all. I’m surprised by the number of deals that fall out of the funnel long before they reach the proposal stage and how often they are “lost” to other factors such as competing priorities or internal resources versus a true competitor. Companies who understand this want to learn just as much about those that fell out of the funnel early as they do about those that follow the stereotypical pattern. It’s important to get everyone on the same page as to what “lost” means. It may also help to create other definitions such as “no interest” or “on hold” to begin understanding and categorizing what happens when you don’t win. Assuming everyone is on the same page with defined funnel stages and the definition of a lost deal, you can put a repeatable review process into motion. The best examples of clients we see executing a loss review process typically incorporate the following elements: �� Criteria for deal sizes �� A standard format for capturing the attributes for each deal and a scoring system to evaluate the strength of each attribute in comparison to scenarios when you win �� Involvement of both sales and marketing in the process for identifying key factors that can impact how you attract new opportunities as much as how you manage existing opportunities �� A culture of discovery vs. blame – candor will be critical in having meaningful findings that help to improve overall conversion and effectiveness �� A mechanism to cascade key findings to sales and marketing that can benefit the organization. © 2009 Miller Heiman, Inc. All rights reserved. 6 | 1-877-678-0272 47
  • 48. What Sales Leaders are Doing Now My observation has been that organizations with a loss review process that includes the above elements seem to be much more effective in the following areas: 1. A well understood value proposition. Sales and marketing teams are better aligned as they learn, through a deal review process, what is resonating and when it is resonating with potential clients regarding their solutions. Sales feels better supported by marketing when this is dialed in and marketing can see its lead creation efforts making an impact – a rarity in most organizations. 2. A more strategic prospecting plan that focuses the organization on ideal profiles of potential clients. This is especially impactful on potential investments being made in both time and money for the pursuit of new business. 3. Results. A clear impact can be made on both conversion and velocity through a diligent deal review process. 4. Operational efficiency and customer satisfaction. It’s amazing what happens when you engage with prospects that are a better fit for your organization’s offerings. The organization leverages unique strengths instead of trying to make round pegs fit into square holes. Loss reviews help you understand whether or not you are chasing bad business and potentially draining resources needlessly. 5. Organizational alignment. It becomes much easier to make decisions on segmentation strategies when you know your ideal customer and prospect. Loss reviews become a critical component of understanding the types of resources and talent needed to win business, and how to avoid investing resources in prospective business that may never close. Certainly, loss reviews alone aren’t the answer. They need to be part of a much larger strategy centered on the diligent pursuit of understanding the customer. However, it is a component that I’ve seen deliver terrific value when incorporated into the rigor of your sales and marketing organization. Don’t avoid it, embrace it! © 2009 Miller Heiman, Inc. All rights reserved. 7 | 1-877-678-0272 48
  • 49. Leveraging Sales Talent A Successful Model for Identifying, Developing, and Retaining Top Sales Performers ARTICLE 49
  • 50. LEVERAGING SALES TALENT ARTICLE 1 ��������������������������������������������������������������������������������� ����������������������������������������������������������������������������������� ����������������������������������������������������������������������������� ��������������������������������������������������������������������������� ������������������������������������������������������������������������������������� �������������������������������������������������������������������������������������� �������������������������������������������������������������������������������� ����������������������������������������� ������������������������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������������ ������������������������������������������������������������������������������������������� ��������������������������������������������������������������������������������������������������� ����������������������������������������� �� ��������������������������������������������������������������� �� ������������������������������������������������������������������������������ �� ����������������������������������������������������������������������������������������� ������������ ������������������������������� ������������� ����������������������������������������������������������������������������������������������� ���������������� ���������������������������������������� �������������� ������������������������������������������������������������������������������������������������������ ����������������� ���������������������������������������������������������������������������������������������� ��������� ������������������������������������������������������������������������������������������������ ��������������������������������������������������������������������������������������������������������� �������������������������������������������������������������������������������������� ��������������������������������������������������������������������������������� �������������������������������������������������������������������������������������������� �������������������������������������������������������������������������������������� 50
  • 51. LEVERAGING SALES TALENT ARTICLE 2 ������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������� ���������������������������������������������������������������������������������������� ���������������������������������������������������������������������������������������� ������������������������������������ ����������������������������������������� ���������������������������������������� �������������������������������������� ��������������������������������������� �������������������������������� ��������������������������������������� �������������������������������������� ������������������������������������ ������������������������������������������� ��������������������������������� ����������������������������������������� �������������������������������������� ������������������������������������� ����������������������������������������� ����������������������������������������������������������������������������������������� ��������������������������������������������������� �������������������������������������������������������������������������������������� ���������������������������������������������������������������������������������������� ��������������������������������������������������������������������������������������������� ����������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������� ��������������������� ������������������������������ �������������������������������������������������������� 51
  • 52. LEVERAGING SALES TALENT ARTICLE 3 �������������������������������������������������������������������������������������� ����������������������������������������������������������������������������������������������� ����������� �� ������������ �� ������������ �� �������������������� �� ������ �� �������������������� �� ������������������� �� ������������������ ������������������������������������������������������������������������������������������������ ������������������������������������������������������������������������������������������������ ������������������������������������������������������������������������������������������� ���������������������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������ ������������������������������������������������������������������������������������������ ������������������������������������������������������������������������������������������ ���������������������������������������������������������������������������������������� ��������������������������������������������� �������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������� ����������������������������������������������������������������������������������������� ��������������������������������������������������������������������������������������������� ���������������������������������� ����������������������������������� ���������������������������������������������������������������������������������������������� ���������������������� 52
  • 53. LEVERAGING SALES TALENT ARTICLE 4 ���������������������������� ���������������������������� ��������������������������� ������������������������ ������������������������������ �������������������������� ������������������������������ �������������������������� ���������������������������� �������������������������� ���������������������������� ���������������������������������������������� ������������������� ������������������������������������������������������������������������������������������ ��������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������� �������������������������������������������������������������������������������������� ���������������� ������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������� ����������� ������������� ����������������������������������������������������������������������������������� ������������� ����������������������������������������������������������������������������������������������� ������������� ����������������������������������������������������������������������������������������������� ������������������ ����������������������������������������������������������������������������������������������� ���������������������������������������������������������������������������������������������� ������������ ������������������������������������������������������������������������������������������������ ����������������������������������������������������������������� ����������������������������������������������������������������������������������������������� ��������������������������������������������������������������������������������������������� ����������������� ������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������ ����������������������������������������������������������������������������������������� ����������������������������������������������������������������������������������������� 53
  • 54. LEVERAGING SALES TALENT ARTICLE 5 �������������������������������������������������������������������������������������������� �������������������������������������������������������������������������������������� ������������������������������������������������������������������������������� ��������������������������������������������������������������������������������������������������� �������������������������������������������������������������������������������������������������� ���������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������� �������������������������������������������������������������������������������������������� ������������������������������������������������������������������������������������������� ������������������������������������������������������ �������������������������������������������������������������������������������� ����������������������������������������� ���������������������������������������������������������������������������������������������� ����������������������������������������������������������������������������������������� ��������������������������������������������������������������������������������� ���������������������������������������������������������������������������������������������� ������������������������������������������������������� 10509 Professional Circle, Suite 100 Reno, NV 89521 1-877-678-0504 54
  • 55. Sales Messaging for Success Why Having a Client Centric Value Proposition is Invaluable by Rob Hartnett, Managing Director, Selling Strategies International Defining Your Ideal Customer Before you can construct a value proposition you must know to whom you are constructing it for. Too many organisations try to be all things to all people and most end up simply confusing all prospective customers. To truly add value to a customer prospect we must be able to demonstrate that we not only understand our customer but also the customers customer and the environment in which they operate. The value proposition must represent the tangible outcomes your customer can expect. It is not a benefits list of what you are selling. So who are your ideal customers? Can you define them simply and elegantly about what makes them ideal. This definition should include a set of demographic and psychographic criteria. For example I saw a business define their clients as “owners or managing directors of non retail businesses located in metro Sydney with a turnover of 10-30 million dollars”. This definition is a good start however it only includes the demographic components. Psychographic information such as honesty, openness, technically competent and realistic are all examples of criteria that if missing could turn an ideal customer prospect into a less than ideal opportunity. Defining Your Sales Message Once we know who our ideal customer criteria is we can then start to construct a value proposition that means something to the prospect. A simple test you can apply to your own business is to ask if your sales people can answer these three questions succinctly from a customer’s point of view? Who Are You? Most sales people are able to answer this one quickly and easily. 55
  • 56. What Do You Do? This next question begs some more questions and if you have a board or several partners looking at this question get ready for a number of responses and a few surprises. Why Does It Matter? This is question is harsh but the most important question. The answer to this question is the one your customers care most about. That is why do you matter to your customers, what do you do that makes you so special and unique to them. If you are answering this question with regard to a specific product or service, a test to your answer is the three D’s of marketing. 1. Can you differentiate yourself from the competitors? 2. Can you defend yourself in the market place? 3. Can you distinguish yourself in a crowded market place Source: The Brand Gap & Selling Strategies International Are you Seen as Above or Below the Line? Put more simply does your prospect or client see you as someone who adds to their revenue or profits or as someone that represents a cost to their business. Getting on the right side of the profit and loss statement can make an enormous amount of difference to how you are viewed by the buying organisation. If you look at the diagram below you can see there are just seven ways to drive profit in any business and these are made up of either increasing revenue or decreasing costs. Above The Line - 5 Ways to Increase Revenue 1. Increase number of leads 2. Increase the conversion into sales 56
  • 57. 3. Increase average sales value 4. Increase number of times p.a. that clients buy 5. Increase the profit margin per sale Below The Line - 2 Ways to Decrease Cost 6. Decrease variable cost per sale 7. Decrease fixed overhead Clearly it pays to be seen as someone who drives above the line performance and not below the line performance. The recent Global Financial Crisis was evidence of this. Those suppliers who were seen as a cost had their business cut while those who were seen as contributors to above the line or top line performance were retained. The table below also demonstrates how much difference a small increase of 10% across the five areas can deliver a significant result to profitability. Understanding how your products and services can assist a prospects profitability in a table such as the one below is very compelling. Above The Line In Action Current 10% incr. #1 Leads / Enquiries x 100 110 #2 % Conversion to Sale = 10% 11% Number of Customers x 10 12.1 #3 Average Sale Value = $1,000 $1,100 Sales Turnover x $10,000 $13,310 #4 Repeat Sales per Year = 4 4.4 Annual Turnover $40,000 $58,564 #5 Profit Margin 50% 55% Annual Gross Profit $20,000 $32,210 Increase in Net Profit 62% Source: Better Business Institute 57
  • 58. Examples of Value Propositions Here are some examples of value proposistions that have proven to be successful in getting engagement with a new prospect. Note how they use the language and metrics that their prospects use and care about. We help mid sized companies reduce their employee costs without impacting the benefits they receive. This has been critical to the success of our mid sized clients as they survive the challenges of an economic downturn and retain key staff. One of clients reduced over half a million from employee costs and saw an increase in average employee tenure during the same period. After implementing our sales and marketing alignment strategy one of our clients was able to discover and close a major opportunity in under 90 days. This represented a shortening of the sales cycle by 60% and an ROI of 200% with a bonus of having an increase in employee satisfaction during the same period in their go to market team. Sales & Marketing Alignment Once the value proposition is developed and agreed upon it is vital that other functions such as marketing are brought in to ensure it is communicated consistently across the organisation. Too often the sales message delivered in person by sales is not reflected in key customer communication tools such as websites, brochures, advertising and direct marketing campaigns. This is the joint responsibility of both sales and marketing. Not surprisingly in the recent Miller Heiman research on what makes a Winning Sales Organisation sales and marketing alignment was a key attribute of the most successful sales organisations. 58
  • 59. SPECIAL EDITION Best of Sales Performance Tips: Improve Your Prospecting Techniques 59
  • 60. Miller Heiman | Best of Sales Performance Tips: Improve Your Prospecting Techniques Improve Your Prospecting Stop product pitching. People don’t want to hear about how great your product or service is. Techniques Think about what’s likely going through the mind of your prospect. What issues and challenges are they facing? Introduction Reflect. Specifically, how can I help this person? This issue features three articles that focus on the critical steps required to be successful at prospecting in today’s selling Effective prospecting requires a relentless pursuit toward environment; some helpful advice to win more business by understanding your prospect’s Concept - a fundamental pursuing only those opportunities that reflect the qualities of principle of Miller Heiman’s Conceptual Selling® workshop. your ideal customers; and tips to help you identify and access the senior-level decision maker in your sale. Concept is something that develops in your prospect’s mind. In many cases, you can contribute to defining your Get Out Of Your Shoes And Into Your Prospect’s. How prospect’s Concept by helping them understand what they many times have you started to leave a voicemail for a need to fix, accomplish, or avoid. If you don’t identify your prospect or began a sales presentation with the words, “let prospect’s Concept, you’re losing business. me tell you a little bit about our company”? Chances are, you’re probably doing it all the time. By getting out of your shoes and into your prospect’s, you’ll begin to move from product-led selling to a true customer- How To Identify Ideal Customers. Most salespeople have centric approach, in which you become a trusted advisor a high level of sales activity as a result of prospecting. But and business consultant, and not a product-pusher. we also see many of them chasing down opportunities that have a low probability of closing. This activity is damaging. Remember, key decision makers are tired of salespeople Time is wasted when it could have been spent finding taking an ineffective approach to prospecting. They want prospects resembling the profile of your top customers. salespeople to truly understand their problems in order to deliver a meaningful solution. Identify the Economic Buying Influence. The first step in executive-level selling is to find out who holds the purse strings in your sale. The ultimate decision maker is the person who gives final approval to buy or veto your sale. How To Identify Ideal Customers What if you could duplicate your best customers? Get Out Of Your Shoes And Into Most salespeople have a high level of sales activity as a Your Prospect’s result of prospecting. But we also see many of them chasing down opportunities that have a low probability of closing. This activity is damaging. Time is wasted when it could have Step 1: Get Out of Your Shoes and into Your Prospect’s been spent finding prospects resembling the profile of your top customers. Selling isn’t about you. It’s about your prospects. If you’re not getting out of your shoes and into your prospect’s, you’re missing the boat. How to Identify Ideal Customers How many times have you started to leave a voicemail for a 1. Make a List of Your Best and Worst Customers prospect or began a sales presentation with the words, “let me tell you a little bit about our company”? Chances are, Think about your customers for a minute. Which customers you’re probably doing it all the time. do you wish you had a thousand more of just like them? Who are the customers you wouldn’t lose sleep over if they Your prospects aren’t interested in you and your product. went to your competitor tomorrow? On a piece of paper list What they do care about is their problems and the things your best customers on the left, and your worst customers they want to fix, accomplish, or avoid. on the right. 2. List the Characteristics of Your Best and Worst Stop. Think. Reflect. Customers © 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | 60
  • 61. Miller Heiman | Best of Sales Performance Tips: Improve Your Prospecting Techniques What makes these companies your best or worst customers? placed on how your solution addresses what the Economic Consider the demographic features of these customers, like Buying Influence wants to fix, accomplish, or avoid. number of people, deal size, etc., but also think about the psychographic characteristics such as values and culture. Access the Economic Buying Influence Write these underneath your list of best and worst customers. Once you’ve identified the final decision maker in your sale, 3. Select Your Top Five you’ve got to create a compelling reason for him or her to meet with you. In Miller Heiman’s Conceptual Selling® When finished making your list of characteristics, you’ll need program, this is called the Valid Business Reason. to prioritize. Which five traits of your best customers would you consider the most important in replicating? Are there A strong Valid Business Reason: any features of a best customer that you see the reciprocal of on the right side? · Clearly defines why the executive should meet with you. · States the purpose of setting an appointment. For example, if you listed your best customers as typically · Links directly to what the Economic Buying Influence having growing product life cycles, perhaps you may have wants to fix, accomplish, or avoid. listed that your worst customers have mature product life cycles. If so, this could be an indication that the quality of a In order to get in the door of your executive-level decision growing product life cycle should be among the top five criteria maker, your Valid Business Reason must impact what the that you choose to become your ideal customer profile. executive wants to solve in the organization. Instead of focusing on the features and benefits of your product or Using this formula to pursue new prospects will keep you service, focus on understanding the issues of the executive. focused on those companies more likely to do business with you. Better yet, you will stop wasting time pursuing You need to explain why your sales call is such a high priority prospects that have a low probability of closing. and state “what’s in it for me?” from the perspective of the executive. And finally, the Valid Business Reason should be short and concise enough to be left on a voicemail or with an Identify The Economic Buying assistant. Influence This selection is supported by Miller Heiman’s workshops, ® ® SM Strategic Selling , Conceptual Selling and Executive Impact . With 3 out of 4 opportunities now requiring executive-level If you have questions relating to this topic, and would like to approval, you probably know that executive-level selling is hear from an expert, you may call us at 877-678-0391. You mandatory to succeed in today’s selling environment. But may also visit and subscribe to receive what you may not know is that you simply can’t rely on using Sales Performance Tips each month via email. your own executives to sell for you. Instead, you need to master executive-level selling yourself so you can consistently win the decisions of high-level About Miller Heiman executives without depending on internal resources. Miller Heiman has been a thought leader and innovator in the sales arena for almost thirty years, helping clients worldwide Identify the Economic Buying Influence win high-value complex deals, grow key accounts and build winning sales organizations. The first step in executive-level selling is to find out who holds the purse strings in your sale. The ultimate decision The company is headquartered in Reno, Nevada and has maker is the person who gives final approval to buy or veto offices around the world. More information can be obtained by ® your sale. In Miller Heiman’s Strategic Selling program, visiting the company’s website at: this person is called the Economic Buying Influence. There is only one Economic Buying Influence per sale, although there can be a board or committee in some instances. The Economic Buying Influence is concerned about the bottom line and return on investment. At this level, price pressures are significantly reduced, and a sharp focus is © 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | 61
  • 62. SPECIAL EDITION Best of Sales Performance Tips: Phone Prospecting Strategies To Get Your Foot In The Door 62
  • 63. Miller Heiman | Best of Sales Performance Tips: Phone Prospecting Strategies To Get Your Foot In The Door Phone Prospecting Strategies 3. States “what’s in it for me” to the recipient 4. Is clear, concise, and complete To Get Your Foot In The Door An additional suggestion is to start the message with your name, company name, and phone number. The tendency Introduction of the recipient is to start writing down your information before they even know what you want. If you back that up In this issue, we focus on a necessary exercise required with a solid VBR, and repeat your name and number at the of “hunters” and business development professionals that end, you are much more likely to get a call back. they dread doing – calling a prospect. With telemarketing on the rise and an increasing number of people screening their incoming calls, phoning a prospect and hoping to get Warm Up to Cold Calling an appointment with him or her require new techniques. Cold calling and call reluctance are very real issues Increase Your Call Back Rate By Leaving Better for many sales organizations. Here are three tips for Voicemail Messages. When leaving voicemails for overcoming your fear of cold calling. prospects or clients, you can dramatically increase your callback rate by adjusting your message to your client’s 1. Target properly perspective instead of yours. Before picking up the phone, it is vital to understand what your ideal customer profile looks like. Many salespeople Warm Up To Cold Calling. Are you anxious about picking make the mistake of starting too high or too low within up the phone? You’re not alone but you can do something an organization. Also, many salespeople approach to overcome your fear of cold calling. companies that just aren’t a “fit” for the products or services they’re trying to sell. Know whom you’re going Increase Your Callback Rate after and why they are a fit. Has your company had success in a particular industry? Who are truly the key by Leaving Better Voicemail decision makers as it relates to your product or service? Do you understand how purchases are made within the Messages target company? Research. Research. Research. “Please leave a message...” 2. Have a valid business reason Once you’ve identified whom you are going to call, you As sales professionals, we leave a lot of voicemails in our better have a clear understanding of what is in it for them. pursuit to drive revenue and build client relationships. Why should they take time out of their busy schedule to When leaving voicemails for prospects or clients, you can speak with you? What is the real business need you can dramatically increase your call back rate by adjusting your address? What value do you offer? Know what you are message to your client’s perspective instead of yours. going to say and clearly articulate why this person should spend their time with you. One of the most common mistakes salespeople make when leaving messages for prospects is talking too much 3. Schedule a time about themselves and their company. If you catch your prospects at their desk, don’t assume Using a Valid Business Reason (VBR) is an effective way they have all the time in the world to talk to you right that to craft a compelling reason for your client or prospect second. Instead, request to set up a 30-minute conversation to call you back. The person you are calling is as busy at a later date to ensure that when you do finally have a as you are, so messages longer than 20 seconds will conversation, all attention is focused on you. start to decrease your chance of a call back right off the bat. Being concise is key. Selecting what information to Final words: If you’re still anxious about picking up the include in that brief message is what a VBR will help you phone, just think about the process of cold calling one accomplish. step at a time. At the end of the day, it’s a numbers game. If you target properly, have a valid business reason for Criteria for a good VBR: making the call, and respect the time of your prospects - you’re much more likely to experience success. 1. Impacts what your recipient wants to accomplish 2. Sets the call as a high priority © 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | 63
  • 64. Are You Being Out Listened? Are You Being Out Listened? Rob Hartnett by Rob Hartnett, Managing Director, Selling Strategies International Working in a today’s complex selling environment means that competition is high and your sale relies more and more on the approval of multiple decision makers. In the online world , it is also likely that customers already have a description of your product from your website or your competitors and may even have people cheering for them internally. This situation presents a perfect opportunity to benefit from a well-built relationship. Customers need assurance that you understand their needs and that you are more interested in helping them find a solution than pushing your product. Unfortunately, most salespeople do not spend enough time letting their customer talk to develop a solid relationship. In fact global sales performance company Miller Heiman tell us that on many sales calls, the salesperson talks 80 percent of the time, leaving almost no time to listen. In addition they found that 80 percent of what we say has no relevance to our customer's needs or interest. Miller Heiman call this 80 Percent Syndrome. The 80 Percent Syndrome can be very damaging to your business relationships, causing your credibility to flounder and your opportunities to decrease significantly. Suppose you have one hour to spend with your customer. Your time is likely broken down as follows: • Thirty-one minutes spent telling the customer about your product or service • Eight minutes spent on idle chat • Nine minutes spent asking questions • Twelve minutes spent listening to the customer talk Instead of spending the majority of the valuable time your client is investing with you talking, start your conversation by asking him questions. Give your customers time to answer and continue to ask questions until you are certain that you understand their challenges. Good questioning helps you determine the breadth of the opportunity and can even open the doors to new opportunities. A great conversation can motivate and sustain your customer's interest, stimulate ideas and become the building blocks that form a strong relationship. 64
  • 65. ������������������������������������������� Just recently I had a meeting with a CFO (Chief Financial Officer) clearly a decision maker and key buyer. This was an important meeting for my company. He did the majority of the talking especially about his business and I chipped in with as many astute questions as I could to further my understanding of his issues. At the end of the meeting which went for over an hour I really felt I hadn’t offered him many solutions at all. As we shook hands he said “well you seem to understand our business and you have some great ideas so lets get together again in a week with some of my key people”. The reality is that we listen at 600 words per minute and talk at around 150 words per minute. We should keep these ratio’s in mind when making a sales call. Next time you make a sales call either on the phone or in person, remind yourself to stop talking and start listening. 65
  • 66. Are You Really Losing on Price? Are You Really Losing on Price? by Rob Hartnett, Managing Director, Selling Strategies International Rob Hartnett There are many reasons why a client will choose not to buy from you: perceived product performance, poor past track record, credibility issues, an inability to create the right solution, timing or any combination of these. If price was the main reason for losing a sale, it would be a lot easier to win by simply dropping it. The reality is, there are solutions clients will pay a premium for. Ultimately, clients decide to buy from you because they believe you brought to the table something that has value to them and cannot be obtained elsewhere. Learn Why You Lost The only way you will know the real reason is to ask. Understanding why you lost represents a great opportunity to improve your future performance, especially considering that so many salespeople do not conduct this follow through activity. In Miller Heiman’s annual research of Sales Best Practices, barely a quarter of respondents agreed with the statement, "Win or lose, we get accurate feedback on all proposals from our clients." Analyzing the key factors of a winning account has value, but knowing why you lost an account can help you avoid the same mistakes, increasing your success rate. This research was also supported by the 2008 CSO (Chief Sales Officer) Insights Research that showed that those organisations who conducted frequent win/loss reviews ultimately had better sales results than those organisations who did not. From Excuse to Action But is price really the issue? Here are three common rejection responses you've probably already heard and what they really mean. "Our budget was cut at the last minute." You may not have reached the right level of decision maker to insulate your sale from this outcome. A higher level decision maker may have been able to reserve a budget if your proposed solution is critical enough to their business issues. "We didn't need all the features included in your solution; it was too expensive for what we need." Better evaluating the needs of the client can help you focus on the elements of your solution that they consider most valuable. Identifying features that have no value to them may allow you to eliminate items that inflate the perceived wasted cost. This is a response commonly given by people who can say no to you but cannot say yes because they don’t have the authority to buy in most cases. 66
  • 67. ������������������������������������������� "Your solution doesn't give us everything we need to accomplish our objectives." In this case, you may have actually had the lowest price, but because you did not offer a solution that fits what the client is trying to accomplish, you were not selected as the best option. “Your solution looks ok but we don’t have budget this year” In this instance the client is trying to be nice but really saying we don’t have enough trust established to move forward. Improve Your Results The knowledge you can gain from understanding the sometimes veiled reason why the client did not choose your solution provides can actually bolster your credibility, showing genuine interest in why your solution was not selected and how you can better understand the client’s needs. A great way to test the price issue is to provide pricing options – a good range is three. This allows the client to engage in a dialogue about the features and benefits of your offer with you and through this you will get a “feel” for the budget the client has. In terms of budget excuses this is another buying signal. Asking about financial year up front and whether funding is approved and from a capital or expense area will also eliminate this excuse later on as you can provide finance options or payments spread over two fiscal years for example in your proposal. Believing you are losing because of price negatively impacts your chances to affect your future performance. Become more proactive at developing your skills by identifying and acknowledging the real reasons behind past lost sales and take action to improve your results in the future by eliminating them or at least reducing them up front. Rob Hartnett Business Performance © 67
  • 68. Equal Pain or Equal Gain? Negotiate for Win-Win Every sale involves negotiating—starting with your first contact with the client. Miller Heiman’s Negotiate SuccessSM workshop shows the best way to begin, essential areas of focus, what to do first and last, how to avoid pitfalls and ways to handle typical “tactics.” Call: 877-678-3386 to find your next step to successful negotiation. © 2006 Miller Heiman, Inc. All Rights Reserved 68 |
  • 69. Equal Pain or Equal Gain? Negotiate for Win-Win Preparation: Equal Pain or Equal Gain? Negotiate for Win-Win The Ultimate Negotiation Tool By Anne Stuart The best salespeople clearly under- If there’s one thing everybody knows about sales, it’s that serious stand the importance of knowing as negotiation starts when you and your customer or prospect sit down much as possible about what their together to close a deal. Right? customers need, what they worry Think again. In any successful negotiation, the real work begins long about and how they do business, ac- before either party comes to the table. cording to Miller Heiman research. “When people hear the word ‘negotiation,’ they think ‘Oh, that hap- More than 2,200 sales profession- pens at the end of the sales process,’” says Grande Lum, author of als participated in the 2006 Miller The Negotiation Fieldbook: Simple Strategies to Help You Negotiate Heiman Sales Performance Study, Everything. In fact, he and other experts say, the best salespeople which is part of the world’s largest start thinking about negotiation much earlier--sometimes even be- continuous research project on sales fore they’ve made the first contact. performance. Among other findings, this year’s study identified the char- Specifically, top performers prepare for those at-the-table talks by acteristics of key players in Winning learning as much as possible about the other party’s needs and Sales Organizations (WSOs). concerns. “You have to look for their underlying interests,” says Lum, a nationally known authority on negotiation who has partnered The study indicated that, when with Miller Heiman to integrate negotiation into their sales system. compared with less-successful “You need to understand what their personal motivators are, what salespeople, top performers: they’re really after.” Clearly grasp the specific chal- It’s equally important for salespeople to understand their own inter- lenges their customers face in their ests, Lum says: “As a salesperson, what is it you want to get out of industries 20 percent more often. the negotiation?” The simple answer, of course, is selling that prod- uct or service. But the best salespeople tend to have bigger-picture Focus on solution-led selling goals, such as building the foundation for a long-term new rela- 26 percent more. tionship or expanding an existing one. And, as the results of Miller Heiman’s own research indicates, the top performers achieve those Understand their customers’ buy- objectives by equipping themselves with knowledge (see sidebar: ing processes 25 percent better. “Preparation: The Ultimate Negotiation Tool.”) Win the approval of senior “Too often, salespeople don’t dig enough to find the customer’s decision-makers 32 percent real interests,” notes Damon Jones, who, as Miller Heiman’s Chief more Operating Officer, is responsible for the firm’s global sales opera- tions and international growth. “They need to find out whether the Source: The 2006 Miller Heiman client’s focus is around price, or around the terms and conditions, or Sales Performance Study © 2006 Miller Heiman, Inc. All Rights Reserved 69 |
  • 70. Equal Pain or Equal Gain? Negotiate for Win-Win around something else. They need to understand what’s driving the customer—for instance, is it that they’ve just bought a similar product or service somewhere else?” Developing that deep understanding of both parties’ interests is just the first of four elements that Lum calls critical to preparing for any type of negotiation. Those building blocks make up what he calls the ICON Negotiation Model, a framework developed from the best practices of successful executives, salespeople, More Information on Negotiation diplomats and others skilled in negotiation. Each letter in the Negotiate Success SM program acronym “ICON” summarizes one of those four key elements: Miller Heiman’s Negotiate SuccessSM Interests: The subjective needs, goals, concerns, fears and workshops provide a simple, easy-to-fol- desires of each party. low blueprint for using negotiations to im- prove the sales process. The workshops Criteria: Objective benchmarks, precedents and standards for offer a proven process for making sure judging and filtering potential options. everyone involved in a sales negotiation walks away satisfied. Among other things, Options: Possible solutions that satisfy all parties’ interests, participants learn proven methods for making them agreeable to all concerned. overcoming objections without resorting No-Agreement Alternatives: The actions each party can take to price reductions—while still building if they leave the table without formally agreeing to any option. long-term relationships that ultimately In these cases, negotiators often strive for what’s known as a bring their companies more business. BATNA—“the best alternative to a negotiated agreement.” The Negotiation Fieldbook: Simple Strategies to Help You Lum, who describes those interlocking elements in more detail Negotiate Everything in his Fieldbook (see sidebar: “More Information on Negotia- by Grande Lum tion” ) says that, together, they provide a proven road map for planning any type of negotiation. By consciously and thorough- The fieldbook is included with the Negoti- ly addressing each element beforehand, and by understanding ate Success® workshop and is written how each can be used as a source for creating more value, by one of the world’s foremost experts savvy salespeople will come to the table better prepared—and on the topic. This straightforward how-to more likely to succeed. guide offers proven practices and tools for successful negotiation. It includes And, again, “success” means more than just making the sale. reusable worksheets and checklists, Business, after all, is about long-term relationships—as we know real-life examples, a glossary and other all too well, it’s typically more profitable to work with existing resources. Click here to learn more customers than to find new ones. Done correctly, negotiation about the workshop. can be a powerful tool for maintaining and expanding those © 2006 Miller Heiman, Inc. All Rights Reserved 70 |
  • 71. Equal Pain or Equal Gain? Negotiate for Win-Win high-value connections. But, Lum warns, the reverse either an agreement or alternative resolution (which, also holds true: When done poorly, negotiation can Lum notes, may well involve walking away, at least do more harm than good. for a while). No matter how the negotiation ends, both parties should leave the table feeling confident “Many sales professionals view building relationships that they were treated honestly and fairly—and, within the sales process as a form of collaboration,” ideally, that they’re better off than they were before Lum says. “But when it comes to negotiation, that’s they sat down together. Miller Heiman’s Negotiate when it can all fall apart. The salesperson believes, or Success SM workshops focus on teaching salespeo- the customer believes, that you have to be manipula- ple how to achieve those objectives through a sim- tive, deceitful or misleading” to close the deal. Jones ple, non-manipulative, customer-focused process agrees with that observation: “Many people on both designed to make everyone involved in a negotiation sides view negotiation as involving an adversarial come out a winner. approach, which is counter to building a long-term relationship,” he says. “If the process left a bit of a If there’s a sales-specific caveat on negotiation, it’s bad taste in somebody’s mouth the last time around, this: “Salespeople have a tendency to capitulate too that doesn’t bode well for future discussions.” quickly,” Jones notes. “In the spirit of trying to get the deal done, they discount too quickly or leave dol- So what’s the key to negotiating well? It may sound lars on the table, which they didn’t need to do. They like a cliché, but it’s nonetheless the only method take shortcuts. It’s easier to just discount something that works: Strive for a win-win outcome. Or, as Lum than to go through further discussions to find new puts it: “Create the best solution that will meet your value—which takes far more salesmanship.” (In fact, interests and mine.” Miller Heiman’s study found that 69 percent of sales leaders and 75 percent of salespeople felt increasing Ending up at that point requires starting with the pressure from existing customers to cut their prices.) ICON road map, first by obtaining that all-important insight into the customer’s interests. Then establish Lum says that when salespeople cave on discussions objective criteria. “You use criteria to help establish involving prices, it’s typically because they haven’t a common basis for the discussion,” Jones says. explored the customer’s interests thoroughly enough. “Until you’ve agreed on criteria, it’s really hard to get “If you haven’t discussed value, then any price is go- a consensus to move forward.” Such benchmarks are ing to sound too high,” he notes. particularly handy for getting over seemingly impass- able hurdles, Lum adds. “You can resort to objectiv- “A successful salesperson can see beyond the ity rather than force of will. You can be persuasive smokescreen of price and rigidity,” he continues. “Be based on data outside yourself,” such as information like a detective. Ask good questions.” Based on the provided by an independent source, he says. “That answers, suggest alternatives, he says: “Bottom line: way, neither side feels that they’re being taken.” It’s about being a problem-solver rather than just pushing a product.” A clear understanding of interests and criteria will lead both parties toward options, and, ultimately, © 2006 Miller Heiman, Inc. All Rights Reserved 71 |
  • 72. Equal Pain or Equal Gain? Negotiate for Win-Win About the Author Anne Stuart is a Boston-based freelance writer who specializes in writing about business issues. Grande Lum is the author of The Negotiation Field- book and co-founder and managing director of Ac- cordence, a Burlingame, Calif.-based firm. Damon Jones is Chief Operating Officer for Miller Heiman. He has more than 25 years of industry experience covering all facets of business and sales management. About Miller Heiman Miller Heiman has been a thought leader and innova- tor in the sales arena for almost thirty years, helping clients worldwide win high value complex deals, grow key accounts and build winning sales organizations. With a prestigious client list, including Fortune 500 companies, Miller Heiman helps clients in virtually every major industry to build high performance sales teams that deliver consistent sustainable results to drive revenue. The company is headquartered in Reno, Nevada and has offices around the world. More information can be obtained by visiting the company’s website at: © 2006 Miller Heiman, Inc. All Rights Reserved 72 |
  • 73. Miller Heiman Sales Solutions Accurate Diagnostics and Powerful Solutions
to Drive 
 Sales Performance The Miller Heiman Sales System is our framework to diagnose issues for our clients and to organize our solution portfolio. Our Sales System drives sales performance through disciplined processes to effectively create and manage opportunities and manage relationships. This involves analysing deals and accounts, preparing strategies, and identifying specific actions, accountabilities and timelines needed to execute the strategy. Our programs and tools can be delivered via facilitated or online delivery or a combination of both. Create Opportunities Conceptual Selling
Customer Interaction Strategy for Winning Complex Sales Executive Impact
Strategy for Securing Executive Approval Securing Strategic Appointments
Effective Contact Strategy for Generating Quality, High Value Appointments Manage Opportunities Strategic Selling®
Comprehensive Strategy for Complex Sales Strategic Selling® Government
Comprehensive Strategy for Winning Government Business Negotiate Success 
Win-Win Sales Negotiations that Strengthen Customer Relationships Manage Relationships Large Account Management Process (LAMP®) 
Strategic Planning for Protecting and Growing Key Accounts Channel Partner Management
Optimizing Results from Indirect Distribution 73
  • 74. People and Organization Sales Excellence Assessment
Fact-driven Sales Management and Coaching Solutions Predictive Sales Performance 
Hiring Solutions to Build Outstanding Sales Teams Support and Enablement Sales Access Manager
Miller Heiman Sales Process Enablement Through CRM Integration Web Reinforcement 
eLearning modules to reinforce Miller Heiman's sales processes and support adoption throughout the selling organization Management Execution Tools Funnel ScoreCard®
Opportunity Evaluation and Loss Review Process Sales Benchmarking 
Benchmark your sales organisation against peers, industries, and top-performing sales organizations. Strategic Selling® Coaching
Advancing Adoption of the Strategic Selling® Process for sales managers Conceptual Selling® Coaching 
Advancing Adoption of the Conceptual Selling® Process for sales managers Strategic Selling® Funnel Management
Implementing Customised Funnel Management We invite you to learn more about our programs and tools. If you have a particular problem that you'd like to discuss with us please contact Rob Hartnett, for a free preliminary consultation or call on 613 9560 1188. 74
  • 75. Rob Hartnett Rob Hartnett is the managing director of Selling Strategies International (SSi) a leading sales performance consultancy. Starting his working life at age seven in the family automotive business Rob went on to work at Apple Computer where he secured the first single corporate order in excess of a million dollars, Hewlett-Packard, where he won the Asia Pacific High Achiever Award, and award winning advertising agency Publicis Mojo. Rob is best known today for assisting senior executives, sales professionals and business owners around the world in focusing on their top line sales performance through his speaking, workshops and consulting. Rob holds a Bachelor of Business and a Post Graduate in Applied Finance & Investment, is a member of the Institute of Management Consultants, Australian Institute of Company Directors and is an Associate of the New York State Speakers Association. Rob is also a Miller Heiman accredited International Sales Consultant. He is the author of three books, “Fast Times Ahead”, “What Marketing People Know About Sales” and “Small Business, Big Opportunity” which has over 130,000 copies in print. Rob currently appears on Channel 7’s Kochies Business Builders as a sales performance specialist. Contact Information Selling Strategies International In Partnership with Miller Heiman Inc. Ph 61 3 9560 1188 75
  • 76. Testimonials on Rob Hartnett’s Sales Performance Keynotes & Workshops “You definitely exceeded your testimonials and background info.!!! Thanks for helping us to make the Conference the great success that it was.” Sales Director - Automotive Industry "Thanks for your time with the sales team - you were a real hit! I will schedule some future spots for you." Channel Manager – IT&T Industry “Rob delivered an excellent presentation that meshed perfectly with our brief. Rob took the goals of our workshop and weaved his own personal experiences and wisdom around them to provide a fantastic reinforcement to our more formal sessions.” General Manager - Manufacturing Industry “Thanks for the training, the feedback afterwards was excellent, and we have agreed to run fortnightly meetings to ensure concepts are embedded.” Sales Director - Healthcare “Thanks so much for your contribution to our sales conference. Everyone today has made reference to points from your presentation.” National Sales Director – Fashion Industry "Thank you for the thorough way in which you worked with our sales team. Various team members have mentioned that your efforts are extremely positive and helpful." Managing Director- IT&T Industry “Rob it has been a real pleasure working with you as finding people who really understand the sales process is very difficult, so to have the chance to work with such a professional as yourself has been rewarding and enlightening.” Global Sales Director – Communications Industry “I invite Rob Hartnett to speak to my business audience every year. Rob's message is motivating, inspiring and very informative. The feedback from my guests is always brilliant and he is approachable and a pleasure to work with. Managing Director – Events Industry "Rob, you far exceeded my expectations of a speaker in our Masters Program. The discipline of great preparation and content delivery was explict, and it balanced perfectly with sincere enthusiasm and creating some very funny moments. It was a joy watching the master at his craft." Head Lecturer University Masters Program 76
  • 77.