Maybe You’ve Heard …
Unless you’ve been living in Ted Kaczynski’s old shed the past several months, you’ve likely heard, “It’s a global financial crisis, definitely a recession (confirmed 12/01/08, duh), the worst since the Great Depression.” For sales professionals and the executive teams of their respective companies, the reality is that turbulent times cause chaos for sales. No matter how many years of selling you have under your belt, the uncertainty that comes with each economic slowdown (real or imaginary) will test you to the core.
A Tougher Ride with Fewer Horses?
Many companies are not looking to hire new people. A sneak peek at our 2009 survey responses show one-half of firms expect to remain the same size or decrease, the highest number since 2005. And yet there is little appetite in these same companies to reduce the overall revenue target; only 14% of these companies expect their 2009 target to be the same or lower. At the recent Sales 2.0 Conference held in San Francisco last month, only a handful among the 150 attendees raised their hand when asked if they expected their revenue target for 2009 to be lower. So how do you plan to make your number when times are tougher, targets are somewhat higher and headcount is, at best, the same?
There is always a good argument for coaching/developing sales rep skills but it is always more urgent in turbulent times. A CSO once told us that, “A multitude of sins are hidden by rising revenues.” Many of those “sins” will be and are being unmasked by the extra scrutiny and increased competition every opportunity is seeing today.
Many sales managers continue to misdirect their expertise and energy, focusing on “what it will take to do this deal (now)” and often involving themselves in trying to close every piece of business. This is playing catch-up ball and realizes essentially no leverage, let alone optimizing effort. Managers should sit down with each of their sales reps right now and review their execution numbers—as opposed to their results numbers.
How do this rep’s conversion figures compare with the group’s average and what would lift the overall performance numbers further? If less than half of presentations with a particular rep go on to final proposals and the average is, say, 70%, then clearly the group knows something—or knows how to do something better—than this individual. Digging in and figuring out what each individual needs to specifically improve to have highest payoff is an ongoing job and one that needs special attention now. Do you have a specific coaching plan in place now with agreed upon measures for each rep and regular sessions to review this particular skill development?
Our “Secret Sauce” Should Not Be an Internal Secret
Firms often talk about their “secret sauce,” the value-added insights and experience the company has amassed over time. This body of (sales) knowledge is a competitive advantage and differentiator but only if your sales reps know about it and can readily/reliably get their hands on it. Amazing to see, nearly half (47%) of firms reporting still feel they need improvement in sharing best practices. And nearly three-quarters (72%) report some hunting to significant effort required to find customer objection handling information. How do your reps most effectively deal with buyer objections, are they able to readily access these and are all your reps up to speed using this information?
Here’s one simple example, on the issue of price; a company we profiled was the high-priced alternative in their space (medical products). They had prepared for each of their higher priced offerings and available to each rep three responses to the objection: Your price is too high. Their experience showed that buyers often gave up their objection and bought at the higher price before they exhausted all three objections. If the buyer still persisted after three individual and relevant responses to a price objection, then the rep simply acknowledged the point and let it go. Even some of these buyers went ahead and purchased after making their point!
In this month’s Selling Power lead editorial, Gerhard Gschwandtner recaps ten observations of speakers for the conference noted above. Observation #4: This isn’t the time to lower our price. If we cut price, we look like we’re having a fire sale. The best strategy is to lower the risk of buying.
How do your reps lower the risk of buying? Have you and your team identified what the main risk generators are—or are perceived to be—for your buyers? And have you assembled your team and gotten their best thinking, tactics, responses and then shared these across the group? If not, it’s a great place to start.
When All Else Fails: Ask the Customer
Another great asset available to you, assuming you’re not a brand new start-up, is sitting down and interviewing several of your key customers. Ask them directly about how they perceive their situation, risks associated with it, and specifically with your area of business (and you as a solution/services provider). Then figure out together how you can best minimize this risk to them.
Retention, renewals, upgrades and increased share of wallet are all important aspects of hanging onto and increasing business with your current customers. This is the most fertile field your reps can work. The percentage of business from new versus existing customers overall remains around 40%/60%. In 2009 with fewer new logos added, we feel making the most of every opportunity and getting the most from every existing customer will be key to your doing well. Firms that exceeded expectations in renewing business were outnumbered by those needing to improve by nearly 2:1.
The mix of existing/new customers was 60%/40% for the group needing to improve (64%/32% for those meeting expectations) and 68%/32% for those companies exceeding expectations in this vital area. This translated into a big difference at the rep level. The percentage of reps meeting/beating quota was 56% versus 65%, respectively. Some companies dedicate inside sales teams to renewals, or team inside sales with field sales to communicate with and renew/upgrade customers. There is no single or even right answer but having a conscious, consistent and continuously improved process for addressing this with your customers is key.
2009 will offer new and increased challenges for sales. As you prepare for and execute during this coming year, remember the sage observation of one of my earliest sales mangers: Sales is the highest paid hard work and lowest paid easy work to be found.