Customers Relationships: The Era of the Transaction is Over

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 That is the outdated ‘wham-bam-boom’ model that relies on the prowess of the sales person and still believes in one line closers and slick deal closers.

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?’. That was fine before the global economy fell to pieces.

During the boom years you got the deal and then you move swiftly along to the next – after all it was a big marketplace and the next prospect was ripe for the picking. The life time value of the customer was a cliché, because it was today’s sales commission that mattered.

Your long term success depends on building relationships with customers and potential customers, but you will be measured on your numbers this quarter and pretty much that alone. This is particularly the case in the context of the ever lengthening and increasingly start-stop sales cycles involved in selling high value B2B solutions to large organizations.

Today's relationships need to start before the buying process begins, they need to go higher (C level), deeper (from salesperson to trusted advisor) and wider (dealing not just with IT, but with finance, operations, etc.).

Telemarketing Results Plummet by Up to 75%

The amount of activity required to generate leads today is growing out of control. It is like an iceberg - the what is seen above the surface, is minor relative to the effort that is required.

Take telemarketing for example - it can be a very lonely job if you are targeting C level.

How often would you expect somebody working on it full time might expect to talk to a decision maker?

Well last year, we ran some numbers across a wide range of campaigns in Britain and Ireland. The figures for C level exec in a large organisation were on average one decision maker spoken to every 3 days. So, in a typical month one would expect to talk to 3 or 4 decision makers, with perhaps somewhere around 20-30% being interested in meeting. That would put the telemarketing cost of each meeting at in the region of 3-4,000 euro / pounds.

Are you surprised at those figures? It is important to bear in mind that these are the results achieved by a full time telemarketing person. For those of us who have other jobs to do as well, namely meeting with customers, preparing proposals, etc., achieving the same result could take months.

Everybody knows it has got harder to access C level executives. Again our numbers shows just how much harder. Comparing 2008 to 2003, it takes twice as many calls and twice as many hours of effort to talk to a C level manager. Now, I don't want to even talk about the effect of the current economic slowdown on those numbers - the results are down by up to 75%!

What does all this suggest? Well that cold calling is out and networking is in. That if you want to talk to C Level executives you have to be patient and persistent. That you have to give these managers a compelling reason to want to listen.

Buyers buy from big vendors, Have You Any Hope Selling?

According to professional buyers and some very successful sales people small to medium sized companies have a huge problem selling to big companies right now. So this post raises two questions: Why is this so and what needs to be done?

It’s all about the language you speak

SME product and service providers don’t face the same challenges their prospects face. One sales person sums up the challenge well “working for a large organization we experience the same pressures as the people we sell to, we need to get a 2-3% cost reduction and drive efficiencies while ensuring customer value is maintained and so do our customers. They know that and we know that. We speak the same language as the executives we meet (e.g. capital costs, Capex, Opex, IRR) while most of the smaller specialist providers tends to focus on the benefits their offerings deliver.

Pack up your tent and go home or help the buyer buy?

The buyers and sellers we talk to are not suggesting for minute that SME’s can’t sell successfully to big companies, what they are saying is the SME’s sales teams needs to put a lot of thought into their message and approach when dealing with executives in big organisations. The team targeting an executive in a major corporation needs to be clear that demand creation is their job, the executive won’t say “here are my problems, please help me solve them”. (The Authors of Spin, Huthwaite have some really good papers on the topic of demand creation).

In the current climate big companies are looking to do more with less and the buyer will only work with an SME’s who can prove measurable impact quickly. That means they need to speak fluently about their ability to affect the business case that is being discussed when they are not in the room.

As one buyer noted in a conversation with us last week “the fact right now is big companies are not willing to take risk without an almost guaranteed payback and rock solid business case. A small vendor who doesn’t clearly present measurable benefits and an understanding of costs and risks will not succeed in this cautious environment”.

Fear, uncertainty, doubt– centre stage again

Big vendors are good at reducing fear, uncertainty and doubt and they will not be shy about raising the risk stakes if it means they can take a larger share of project spend from a smaller more nimble provider. You may not believe this but some buyers are still comforted by the fact they can sue somebody big if a project goes wrong.

All is not lost – buyers like to buy from specialists

All of the above, size, trust, risk, the business case, the words you use has implications for your route to market, the people who sell for you (at the right time experience selling to major corporations may be needed in your team), how you target your message and in many cases the SME founders willingness to develop partnerships with established players who can reduce risk in the eyes of the customer.

Some of our SME’s clients are selling to the big boys; their success seems to be based on their willingness to;

• Find the right solution for their customer,
• Align to their buyer’s decision making process,
• Learn how to speak their customer’s language,
• Work with bigger partners who compliment their offerings,
• Adopt a road warrior mindset.

Food for thought.

10 Questions Than Reveal What You Must Do To Win The Sale

The professional salesperson is a student of buying. This is particularly important at a time when buying decisions have become increasingly complex. The success of a deal depends on understanding now only how the buying decision will be made, but also the business decision that so often underlies it.

With this in mind we have put together 10 of the most important questions that salespeople need to answer in respect of each opportunity in their pipeline. Answering these questions and considering the implications of each has the potential to significantly increase your chances of success.

Questions To be Asked	Implications To be Considered
1. Who are all the stakeholders?	Do we understand the requirements of all stakeholders, not just technical, for example? How can we ensure access, without by-passing agreed channels?
2. Who are all the decision makers & influencers?	Have we had contact with all the decision makers? Do we understand their personal, as well as business drivers? How are we positioned with each?
3. Is there a clear definition of requirements?	Is the requirements definition clear? How has it been gathered? Is it complete – are there needs that we can additionally address? Has it been validated? Have requirements been prioritized, with any contradictions and tradeoffs addressed? Is the weighting of requirements reflect our strengths and minimize our weaknesses, or can be influence it to do so?
4. What is the buying process? What are the key steps? How long will it take?	How sophisticated is the buying process? What stage is the prospect at now: ·Recognition of need? · Search for a solution? · Selection of supplier?
5. What about competing projects (that includes ‘do it in-house’)?	Are there competing projects for the same budget? Could the project be delivered in-house? Could the project be delayed till next quarter, or next year? What factors will determine the selection of these options?
6. Is a business case required? What format will it take? Who will write it?	Can we provide information that will help build the business case, in terms of: Costs? Benefits? Risk? (including implementation) That includes a model to create quantify benefits and total cost of ownership.
7. What is the role of procurement?	Have we had contact with procurement? Do we understand their requirements?
8. Is there a shortlist of vendors? How many? What is the criterion?	How do we rate on the shortlist criteria? Can we help shape the criterion?
9. At what level is final sign-off required?	If this requires board level sign-off for example – how will this impact on selection? How does our proposal connect with strategy? Has our proposition being CEO proofed? Can we have access to / inform board members in advance of the decision?
10. Who is in the role of business analyst – that is the bridge between technical and business – whose role it is to create the business case?	Who has this responsibility? If there is no person (for example the IT director is creating the business case) then this raises issues regarding how the proposal will be reviewed at board level, for example.

So, for each opportunity in your pipeline, ask each of the questions outlined above, considering the implications of your answers for your next steps in managing that opportunity to the point of closing.

Are Buyers and Sellers Really on the Same Page?

You know the song 'you say tomato, I say tomatoe - let's call the whole thing off!'.  Well buyers sometimes feel that way when dealing with salespeople.

For example, when it comes to looking at orders and how they are won, there is a fundamental duality between vendors and buyers.  Here is why:

Vendors are concerned with: •        Proposals •        Negotiation •        Closing Getting the deal is the objective!

Buyers are concerned with: •        Costs •        Benefits •        Risks / constraints The objective is to establish the business case and correspondingly to make the right decision.

One consequence is that vendors enter negotiations that focus on costs, without considering the vital costs -benefits - risks equation that drives buyers.  Another is that sellers write proposals that don’t reflect the information that buyers must present in order to get the purchase approved.  Take for example the structure of the typical vendor proposal, compared to the structure of the buyer's business case, or purchase approvals document.

Vendor Proposal •        Introduction •        Problem •        Solution •        Benefits & Features •        Cost •        Team, Company & Credentials

Buyer’s Business Case •        Introduction •        Strategic rationale •        Alternatives: –       Costs –       Benefits –       Risks & Constraints •        Recommendation •        Implementation

Why is this important?  Well, as we have discussed in many articles, managers must now present a business case for purchases of as little as 10,000 or 20,000 euro.

Let’s take this further and look at some of the headings and terms buyers are likely use in writing a business case – taking the guidelines for seeking central funding for UK road projects:

Current situation	Future situation	Scope
Problems	Objectives	Targets
Exclusions	Risks	Tolerances
Assumptions	Actors / stakeholders	Assessment of alternatives
Sensitivity analyses	Consultation & participation	Option Testing
Benefit Cost Ratio (BCR)	Non-monetised impacts	Cost estimate robustness
Project Plan	Constraints	Deliverables

The question is how widely used are terms, such as; risks, benefit-cost ratio, stakeholders, assessment of alternatives, etc.  in sales proposals?  Well, the reality is not very common.    The leads to the question - how valuable is the content of the sales person’s proposal in helping the buyer in getting projects approved and building the business case?    Again the answer is not as helpful as they could be.  For those salespeople who recognize the importance of this issue, there is a real opportunity to improve win rates and success.

How to Spot Sales Opportunities in Trouble - The Tell Tale Signs

In a tighter market, there is increased pressure to maintain, if not improve win rates. This can be a challenge in the face of increased competition.

Visibility and Predictability Can Be A Challenge

Managers and their teams tell us they fell less in control of sales opportunities, or sales cycles, than at any time in the past. They complain of having less visibility and predictability in respect of what deals will close and when.

Salespeople tell us that they are increasingly taken by surprise by events and setbacks in respect of key opportunities. We know however that in many cases however results from a failure to recognize the early warning signs of a sales opportunity in trouble. To put it another way, as salespeople focused on getting the deal across the line, we fail to see when yellow and amber lights that are flashing.

You would imagine that as organisations place more attention on managing sales opportunities, including pipeline reviews surprises would be reduced. However, the nature of most opportunity, or pipeline reviews, mean that salespeople are generally not comfortable in openly expressing their concerns, or anxieties, regards an opportunity. They can certainly be reluctant to reduce the probability figure on an opportunity in the pipeline forecast.

Looking out for red lights?

Below is a list of the most common red, or yellow flags. We encourage salespeople to openly acknowledge and proactively address these issues:
• Don’t have access to stakeholders
• Don’t have all the information you need
• Covering old ground (same issues keep resurfacing)
• Salesperson is doing all the running (buyer does not complete his actions)
• Delays, setbacks, or surprises
• Last minute, or rushed changes in requirements, or specifications
• Price issue arises too early (before requirements / scope has been set)
• The temperature of the relationship appears to have suddenly changed
• You hear conflicting stories
• Credibility questions are continually being asked about your company
• You don’t have a champion / coach
• Sudden internal changes (people, priorities, mergers, etc.)
• You don't feel you are being respected (e.g. buyer turns up late for meetings, etc.)

This is a useful checklist to have by your side when reviewing pipeline opportunities. When red or yellow flags appear the salesperson must slow down and take care. Yellow and red flags are to be welcomed, this is particularly the case when they are indentified early in the sales cycle – that is in time for the underlying issues to be addressed, or for the salesperson to decide to walk away.

Why Sales People Should Think in Terms of Buying Cycles

A cycle is defined as 'a series of events that are regularly repeated in the same order'. Thus the term fits well with the modern world of buying and selling, with buyer and seller increasingly adopting a structured and systematic approach to their work. In this article we discuss the many reasons why we have used the term cycle as part of the sales and marketing engine (shown below).

Don’t miss the cycle. If you go straight from sales meeting to sales proposal, you miss a vital step. That is the essential step where you confirm, clarify and shape needs, establish the requirements of stakeholders, explore solutions and gain a shared commitment to take action. It is where you sell your solution, people and processes. 

Don’t sell too early, because:

· Selling in initial sales meetings or in cold calls is ineffective. Buyers don’t like it. You have to use a more effective means of getting their attention. Simply delivering your traditional, feature led, sales pitch will not work.

· A proposal written without sufficient interaction with the prospect runs the risk of failing to accurately understand needs, or to build ownership of the solution among the prospect.

· You cannot sell until you know what is required. Even if you already know, you cannot sell until you show you are interested.

· You cannot fast track the buying decision, or the building of a relationship.

Buying decisions are complex, indeed increasingly so. Cycles connotates this well. There are many people involved in the buying decision, multiple stakeholders, complex requirements (some of which may be conflicting), competing priorities and projects.

Buying cycles do not necessary correspond with sales cycles. Buyers call sales people to the table later and later, often after requirements have been determined and the business case created. To avoid this sellers have to look beyond those who have a need and a budget, that means selling to satisfied.

Buyers don’t just arrive at decisions; they go through a process of decision making. We look at organisations who are at 3 stages:

· Recognition of need

· Search for solution

· Selection of supplier

The salespeople must think in terms of the buying cycle. The sales approach should vary depending on the stage the buyer is at. The sales approach has to blend each stage. For example, if a prospect is looking for training it is beneficial to look beyond that solution to the need – that is what the training is expected to achieve. This examination may enable the ideal training solution to be defined, or indeed enable looking beyond training to other solutions.

A structured sales process is important. We wanted a term that related to a sales process, as well as buying process. This is important for two reasons firstly it helps with pipeline visibility, predictability and control. Secondly it helps to determine if an opportunity has proceeded though the standard steps of the sales process, for example;

· needs analysis across all stakeholders,

· defining buying requirements,

· covering the buying unit,

· prequalification of the opportunity (in terms of budget, timing, etc.).

Selling is complex. We wanted a term that recognized that sales process is not a straight line. The salesperson may at certain times feel like good progress is being made, while at other times he or she may feel that the deal is getting further away, as opposed to closer.

Buyer trumps seller, every time. We wanted to focus attention on buying process, as opposed to sales process – but not just about trying to corral the buyer into a process that suits the sales organization. Indeed, often the seller is not at the centre of the buying process.

Avoiding confusion. We could have called this cylinder opportunities, or prospects. Here is why we didn’t:

· Both terms are hard to define and can be highly subjective

· Both terms tend to suggest that you can go straight into a pipeline forecast after a meeting or two

· we wanted a term that was buyer – seller neutral –that is relevant to either side

Your work is never done, until the decision is made the salesperson must continue to build the relationship, understand the needs and so on. If the seller stops then he may be leaving the way open for a competitor.

The sale is not the end. The cycle in a way, has no beginning and no end. The relationship is more important than the order, or the transaction. Even if vendor does not win one order, it does not mean that the relationship should not be maintained. The lifetime value of the relationship is what is important. Suppliers disappoint their customers all the time, so by maintaining the relationship, in spite of not winning the order, the salesperson can ensure that he, or she is in pole position for the next purchase.

Both sides now! We also like the term cycle because it fits well with what we call 360 degree selling –where the salesperson is able to make a 360 degree wing from the sellers side of the table to the buyers side of the table and back again - thereby facilitating a better understanding of the buyer’s requirements and capable of adopting the position of trusted advisor. This is also reflective of a bi-lateral approach to the sale, where buyer and seller engage in a joint process of exploration and problem solving. This is particularly important in an environment where buyers are increasingly keeping salespeople at arm’s length.

Bi-Cycle or uni-cycle. We like to think of cycles (either buyer, or seller) as being two types, that is; bi cycle, or uni cycle. The later involves the salesperson, or buyer alone, while the former involves both in equal partnership. Two wheels are better than one - it is what others have called Joint Venture selling, or a bi-partisan approach.

For an overview of the sales engine and its role in setting sales and marketing priorities click here.

Why LEADS Are Out and CONTACTS Are In!

Old fashioned lead generation dies a death.

Managers need to stop generating leads and start developing and nurturing contacts. That means nothing short of a revolution in terms of their approach to finding new customers, one that is essential to building a sustainable sales pipeline. Tomorrows sales opportunities won’t be generated by yesterday’s lead generation techniques. They will require a process of ongoing contact and nurturing.

Say Bye bye to LEADS, hello CONTACTS

We have stopped using the term leads. That is because almost everybody we know has some form of baggage when it comes to lead generation. The term leads is just simply too troublesome:

• The number one cause of tension between sales and marketing is the quality of leads provided
• The number one complaint managers have about salespeople is that they don’t spend enough time generating new leads
• The number one complaint of sales managers relates to the quantity and quality of sales leads.

The term leads means different things to different people. Some people call them prospects, others call them suspects. It is all too confusing. For some leads are simply raw names on a target list, for others they are people who have engaged with the business (e.g. registering on a website, or demonstrating interest on a cold call).

More importantly the term leads and all that is associated is outdated and old fashioned. It is not longer sufficient to ensure a sustainable sales pipeline.

Quite simply, yesterday’s lead generation methods are not generating enough sales opportunities, particularly high quality opportunities. They are not enough to lure increasingly sophisticated buyers. However, not only are they inadequate of themselves, but they are being overused and abused. Typical of this is the growth in the volume of generally unwelcome cold calling and email marketing.

The Problem with LEADS…

Lead generation is the Cinderella of sales and marketing, but there is an unmistakable relationship between what goes in at the top of the sales funnel and what comes out at the bottom.

Most organizations lack a plan, budget and target for lead generation, they are over dependent on cold calling and a limited number of sources. Furthermore, there is often a lack of clarity regarding who is responsible for lead generation.

Lead generation tends to be relative unsophisticated and overly dependent on techniques, such as cold calling, that are fast going stale. It is typically short term in focus i.e. ‘we need lead this quarter to fill our pipeline’ rather than with a view to building a relationship and creating a dialogue.

The principal tools used in ths area revolve around the sales pitch and the elevator script – which are difficult to distinguish between suppliers and to tell the truth are of little real interest to buyers.

Lead generation is aimed at sniffing out where there is a demand, as opposed to shaping or creating demand where it is latent. It is aimed at selling to those with a need and a budget.

Move over LEADS…

So, what is the difference between LEADS and CONTACTS. Well, both are aimed at generating sales meetings with potential customers, however the latter is the more contemporary and sophisticated method. Some of the differences are outlined in the table below:

LEADS	CONTACTS
Leads are generated and prequalified.	Contacts are nurtured.
Leads require a campaign.	Contacts require a conversation
Leads are fed a sales pitch, or elevator scripts.	Contacts are provided with useful information, and insights.
Lead generation is typically start stop, adhoc and reactionary.	The development and nurturing of Contacts is ongoing.
Short term focus – get the meeting / sale	Long term view – relationship / dialogue
Leads go stale.	Contacts last forever
Small number of sources	Multiplicity of sources used
Typically poorly organized	Live in a database /CRM system
Traditional marketing focus	Underpinned by a relationship marketing approach
The lead is seen as a cost	Are an investment
Is often interruption based	Are permission based

Based on sources that generate lower conversion rates and less predicatable results - advertising, cold calling, etc.

Emphasis on sources that deliver greater returns and higher conversion rates - introductions, networking and referrals

'In the Dark' Sales Managers Cause Alarm

Many sales mangers don't have access to vital information regarding sales performance and potential. That effectively means they are driving in the dark and running the risk of an avoidable accident.

Sales is a Numbers Game!

We like to talk about numbers. We pull the calculator out wanting to really understand sales performance and potential and bypass hours of talking around the issue.

The fact is what gets measured gets managed, we want to talk to managers about their metrics. That is those variables upon which they will be judged and rewarded.

Managers want to talk about numbers too, but there is one big problem. A lot of the time they don't have them and cannot get them.

So when we ask managers about win rates, the number of sales meetings in the last quarter, the number of sales required next quarter we are often greeted with silence and a frown. When we ask about how these metrics vary across product lines, markets, or sales people the frown is even more intensive. Quite simply managers don't have access to key information regarding the performance and potential of their sales teams.

Managers Don't Have All the Information they Need.

Imagine driving without a dashboard telling you the speed you were travelling at, whether you had enough petrol to get you to where you are going.

Imagine not having the instruments to tell you if the breaks, lights, oil levels, or any of the functions important to staying on the road needed attention. Well this is what many well respected sales managers are doing when they don't have the information on the number of leads, meetings and sales cycles their team needs to work on at any one time. This lack of metrics is having major implications on how effectively they can manage communications with their peers, their team, their executives and their customers.

Visibility, Predictability & Control of Sales.

Sales forecast accuracy and sales reporting have long been a hot topic, and something that we are quite passionate about. We use the terms visibility, predictability and control because people can relate to them better. That is:

- Visibility of what is happening year to date (that is historical sales activity levels, sales revenue and margins).

- Predictability of what is going to happen to year end and thereafter (including booked and forecast sales, required activity levels and conversion rates).

- Control, that is the ability to impact on the level and effectiveness of sales activity, thereby immediately correcting any gaps and continually optimising people and process performance.

How to Achieve Greater Visibility?

Greater visibility comes at a price. It generally requires:

- Better Systems - that is the implementation of reporting systems, stricter forecasting methods, and even sales database, or CRM systems

- Better structures - such as a more structured approach to sales meetings, sales reporting and customer reviews

- Better plans and more importantly an approach to planning and target setting that sets out targets and metrics, not just based on sales, but on levels of activity (e.g. number of sales meetings required) and effectiveness (i.e. conversion rates throughout the sales cycle and ultimately win rates).

- Better processes - a more structured approach to the management of sales cycles so as to enable more accurate pipeline forecasts and the rating of individual sales opportunities.

Visibility is a Challenge.

We feel it is important that sales managers move from subjective measures to ratings based on the completion of specific elements of the sales process (e.g. documentation of needs analysis, contact with all members of the buying unit, or presentation of ROI model).

Many of these items will generate a kick back from salespeople and will require considerable commitment, effort and discipline to bed in successfully.

What is the alternative? Well, it is to keep on driving in the dark.