Time to Get Closer to the Customer

‘Close to the customer’ was a buzz word in the 1980s and 90s inspired by one of the biggest management books of all times; In Search of Excellence – the classic study of Americas most successful company by Peters and Waterman.

However, there is one aspect of closeness to the customer that has a major impact on the sales success of many organisations. Companies have successfully sold, installed and supported their solutions. Yet, they often lack detailed information, or even a clear understanding, of the experiences of their customers, at all levels – from end users to managers – of using their solutions.

That impacts on their ability to proactively manage and grow the post sale customer relationship and in selling to new customers leaves them short of information, stories and data on the real and specific benefits and challenges experienced by using their product.

We are always encouraging managers to get more specific regarding the quantifiable business impact of their solutions, such as for example the impact on key metrics such as costs, sales, time to market, etc. Yet, we are amazed to find that most organizations struggle with providing this information, or substantiating it by reference to results achieved by their customers.

We are also encouraging sales people to communicate benefits and features in the most compelling manner possible – by telling customers stories, whether by means of case studies, anecdotes, or customer references. Here again, however, closeness to the customer in terms of the experiences, use cases, etc. of the solutions sold are vitally important.

Could you get closer to your customer? When is the last time you talked to an end user? Do you know all the joys and frustrations experienced by the users? What are they key metrics against which customers measure your solution? What are the stories that you really want prospects to hear?

Bid Losses Offer Clue to Sales Effectiveness Opportunities

The loss of a number of recent bids had heightened competitiveness concerns among the sales team of a leading IT services company.  This was compounded by fears regarding a general economic slowdown.

However it is precisely in depressed markets and among down-spirited sales teams that a focus on sales effectiveness can produce the greatest results.  In particular two key opportunities to increase sales effectiveness were identified:

1.   1.  The sales team was over reliant on proposals to sell.   Most proposals were prepared after an initial short meeting with the customer, or following a phone call or email enquiry.   As a result proposal success rates were low, with limited information gathering / needs analysis, or prequalification before submission and no gauging reaction to price.

2.      2. Hampered by an insufficient flow of sales leads – reps were responsible for generating all their own leads, as a result less than 10% of their time was spend meeting new customers, with just one new customer being met each week by each rep.

In respect of proposals new criteria regarding when they are to be prepared and a policy of greater interaction with buyers before submission reduced the number of proposal generated, but dramatically increased win rates.  

Added to a telemarketing campaign to generate leads and increase the number of prospects being met, the result was a 22% increase in sales growth.  

Managing Sales Cycles To Increase Win Rates

'Many of our potential customers have reigned in spending’ complained the sales manager of a software company selling to the major financial institutions.  ‘It is not that we are losing business to our competitions, it is that more and more buying decisions are stalled’, or delayed he explained.

The turmoil in the financial markets has certainly had an impact on IT investment plans among the big banks, however how the company managed sales cycles also contributed to the number of stalled decisions.

Working with the manager and his team a range of opportunities were identified to improve the management of sales cycles, including:

• More thorough pre-qualification – it was clear that the sales team did not have a full understanding of budgetary and timing factors in all cases
  
  
• More extensive coverage of the buying unit – the sales team was relying on just one or two contacts in the buying organization
  
  
• More systematic needs analysis – in many cases there was insufficient information to complete a business case for the buyer
  
  
• Ensuring more time is spent with the prospect in order to fully understand needs, build relationships and demonstrate commitment - the amount of interaction with the buyer before submitting a proposal was limited
  
  
• Uncovering, with buyers, latent business needs and helping them to create a compelling business case for their resolution with your solution.  In other words, sellers can't rely on buyers knowing exactly what they want, or need.  They must generate awareness of the need, rather that simply serve a ready made demand for their solutions. They have to dig beneath the surface to uncover new problems and educate buyers to needs and solutions that they may have previously been unaware of.  
  
  
• Reducing buyer risk – there was limited use of low risk pilots, scoping, or phased projects that would make it easier for clients to commit
  
  
• Identifying and accentuating points of pain – in most cases the sales team had not helped the buyer to create a compelling case for buying now, as opposed to later.
  
  
• Helping the buying organisation to structure its buying decision making process, including clarifying requirements, criterion, information requirements, etc.

Sales People at The Top of their Game

We watch 100's of sales presentations every year and still get a kick out of watching the pro at work.

In sport, or indeed in any area of human endeavour it is wonderful to watch somebody at the top of their game. This applies to a sales pro, as it does to any other professional.

And in the case of the sales pro, there is high probability that he/she has received some formal sales training. Whether from Miller Heimann, Sandlier, or anybody else, you can tell within moments of the start of the presentation.

The pro has learned from the best, assiduously practiced their art and perfected it over long periods of time. That performance and achievement is, or at least has the appearance of; ease. It is characterised by confidence, enthusiasm and skill.

Sales Revenues Fall as Sales Effectiveness Slides

There are two key variables that explain the peformance of most sales teams: the levels of sales activity and effectiveness.

The first one is the number of sales leads, meetings, cycles, proposals, etc. The second is the conversion rates at each stage of the sales cycle - from sales meetings to sales cycles, as well as overall win rates. Here is a good example of this in the real world.

A long established business services company dominated its market for more than 20 years growing sales in a manner that at times seemed almost effortless. However, in more recent years sales had shown a dramatic decline.

The sales team pointed to increased competition, changing buying patterns and minimal marketing by the company as the causes of the downturn.

However, further analysis identified that low levels of sales activity and effectiveness as the prime factors involved. For example:

· On average sales reps met only one new customer, or potential customer, every 2.5 months (i.e. 4.8 per annum).

· Conversion rates stood at 25% and average order values of £15,000, posing a real challenge in terms of growing sales

· The sales manager complained that sales people were selling products, as opposed to solutions and pointed to the ability to communicate value as the key challenge.

· There were no targets for growing revenue among existing customers, a siloed approach to selling across divisions and no key account plans. These factors explained declining levels of repeat business among existing customers.

By increasing the level of new customer sales activity by 15% over 6 months, growing average order values by 10% and repeat business by 7%, the company reached its year-end target midway during quarter 3.

Where are the opportunties in your business? What is the potential to increase the level of sales activity, or sales effectiveness?

What will it take to be a better sales person?

Its a new year and that means new year's resolutions. Aside from going to the gym, not working as hard and spending more time with the family, what else are you going to do?

Well, in addition to getting in better shape, or achieving a better life-work balance you may be setting a goal of getting better at your job. Maybe you are resolving to get better at sales and marketing.

But what does 'better ' mean. Well here is what Michael Bosworth and John Holland describe as 'better' in their book Customer Centric Selling.

Better in that you will stop thinking in terms of your products and their features, and start thinking in terms of your buyers and their goals, problems and needs.

Better in that you will stop forcing products on buyers, and instead start allowing them to convince themselves of their need for your offerings.

Better in that you will stop giving long-winded, opinion-laden speeches to lower-level 'buyers' and instead begin to have no-nonsence, results oriented business conversations with decision makers.

If like me you are striving for prefection, but have not quite achieved it yet, then that is a good definition to start with and a worthy resolution for the new year!

WARNING: You Cannot Rely On Market Research Alone

I talked to a entrepreneur today who, buoyed up by initial feedback from market research, was ready to set up a new business line, create a new web site, sign up customers and start offering discounts.  Halt I cried, you cannot rely on market research!  You're going to need more than positive feedback to build a successful business.

While listening to the market, and specifically your customers, is vital. the ability of traditional market research to accurately predict buying intensions is patentently limited.  I know this from 10 years selling the market research services to industry and projects involving more than 20,000 interviews with international business buyers and consumers.

When I urge caution in how market research is interpreted for making decision, I am not talking about issues of statistical validity, or reliability.  I am talking about the fact that just because a buyer tells you that he is interested in buying and you tick the appropriate box on the questionnaire, does not mean that the buyer will in fact buy when your product, or service, when it is launched.

Now it is not that the interviewee is deliberately deceiving you.  It is just that market research questionnaires and real world buying scenarios are two very different things.   I would much prefer to base my decisions on sales calls than questionnaires. 

There are of course things you can do to get a more accurate picture:

1.  The first is get face to face with the customers - telephone interviews and postal or online questionnaires can only do so much.  Next make the call more of a sales call, presenting the customer with more information, including prices, sees visuals/demos, etc. - the things that are essential to him/her making a considered opinion.   

2.  Even if you are at concept stage, create a visual, or prototype, however simple, that will enable your customer to give a more considered and informed reaction to your product.  People have limited time and attention, so make it easy for them to get to the nub of the issue - whether they want your product, what features they really need, etc.

3. Ask the right people, at the right time and in the right way.  For example, if you want to ask people about domestic appliances, then the best place to do so is in a electrical retail outlet - after all the people there are potential customers and are in 'the buying zone'.

No matter how accurate your picture of the market is, the interpretation is everything.  Most importantly scenario-based sales forecasting is key and in particular the assumptions you make about the percentages that are actually going to do what they said in the questionnaire and the implications of the same for your business.

Sales Success - from transactions to relationships

Three quarters of the sales world still operates on the basis of transactions, not relationships.  That is the outdated 'wham-bam-boom' model that relies on the prowess of the sales person and still believes in slick one line deal closers. 

You get the deal and then you move swiftly aloneg to the next – after all it s a big marketplace and the next prospect is ripe for the picking.  The life time value of the customer is a cliché, because it is today's sales commission that matters.

Picture this; a sales person waits his turn at the sales meeting.  Then when asked for an update he launches enthusiastically into describing the 4 great meetings that he has had over the past 4 weeks, the 5 new high level contacts made, the great conversations, the burgeoning relationships, the trust built, etc. 

Tapping his pen impatiently on the desk the sales manager can hold back no longer and asks with impatience 'are you going to reach your number for this quarter?'

While long term success depends on building relationships with customers and potential customers, most salespeople are measured on their numbers this quarter and pretty much that alone.   Other signs of this are the lack of a process for nurturing leads, the lack of a process for growing key accounts, an over-reliance on traditional proposals prepared in isolation of the prospect, etc.

Lessons from the demise of Woolworths

For many years Woolworths was one of the biggest advertisers, a household name and a brand that survived through two world wars and into its 97^th year. Then it just disappeared.

It is too easy to blame Woolworth's demise on the credit crunch, or the global downturn. Yes, the dizzying rate of growth in retail spending has been quickly transformed into a significant fall off, but the roots of Woolworth's failure run much deeper than the present economic woes.

Woolworths as a brand did not stand for anything anymore. It had lost its way. Just ask any 5 consumers what was great, special, or even different about Woolworths and I bet they will universally struggle to give you an answer. The product mix, the marketing message and the market segmentation were off.

Over the years Woolworth's distinctive appeal had been eroded and its customers were tempted to a wide array of new comers offering the customers something more and something different. The new comers segmented the high street, as well as the retail park.

What is the lesson for us all? Well, there are many, but the first is stand for something - something different - something distinctive - something special. Decide on your segment and be the leader in that space and beware of trying to be everything to everyone. Finally, the most obvious one of all don't get left behind in a fast changing market.

Insights on the demise of Waterford Wedgwood

These are interesting times indeed.  At a time where one third of the UKs major banks have been nationalized (or part nationalized depending on your perspective), auto makers are being bailed out and major household brands, such as; Woolworths and Waterford Wedgewood are going to the wall.

It is fashionable today to blame it all on the credit crunch and associated global downturn.  But, while these events can certainly exacerbate failure, there are generally additional underlying factors that explain the demise of a once successful business.  Indeed, for the past 5 years the company had been substaining heavy losses.

When it comes to Waterford Wedgewood I must declare an interest, or at least a little insider information of a sort.  Way back in 1996 / 97 I led a project by one of the many cheeky upstarts that had started to nibble at Waterford Wedgewood's success.  In this case it was the Belleek – Galway Irish Crystal group owned by a wealth Irish American businessman, which even back then imported glass cost effectively from Eastern Europe and simply cut it in Ireland.

I remember well talking to buyers, in US organizations, such as; Macy's, as well as other much less glamorous / prestigious outlets about how they and their customers could be tempted away from the Waterford Wedgewood giant.   They talked about changing customer buying patterns, new outlets and channels and of course new designs, price-points, packaging and promotions.  We listened.  The market moved, so too did the business model.  

What are the lessons for us in sales and marketing.  Well, the first is that even your biggest competitor is vulnerable.  That is a positive thing.  The second is that the needs of buyers and customers are continually changing.  The third that being smaller makes it easier to change and adapt.