On New Year’s Eve, across the United States, almost a million people in person, and tens of millions more on television, watch the crystal ball drop in New York’s Times Square. The actual drop takes but a few seconds, but the preparation begins many days before. In sales it is much the same, management, executives and admiring colleagues may tune in to the successful close of a big sale by dishing out pats on the back, a celebratory ring of a bell strategically placed in the sales area, or a mention in email. But what is not typically rewarded or recognized is the preparation, often months or even years before, that led up to the sale.
Relationship building – that painfully long investment in building trust and understanding – rarely is rewarded with the corporate equivalent of champagne. Instead, it is the careful work the successful sales representative know leads to success.
Customers reveal their problems to a salesperson almost immediately. Little trust is needed to deal with problems, whether a warranty claim needs to be filled or a part ordered – these are communicated without hesitation. However, opportunities the customer has in front of them, and long-term strategies they are implementing, are hidden from sales representatives who call to “touch base” or just “check in”. But opportunities and strategies are often where the money is, and where the competition is easier.
A relationship is built on trust, and knowledge sharing. Trust comes from keeping your word, delivering as expected, and meeting or exceeding quality requirements. Knowledge sharing is dependent on the sales representative asking good open-ended questions and then listening. When knowledge is shared, the salesperson should use that knowledge to help the customer. Perhaps he or she has a white paper to share based on what they learned. Maybe they can propose an incentive program the customer can take advantage of, or introduce an expert within the selling organization that can help the customer. Knowledge sharing must be reciprocal, the customer should gain something by sharing.
The golden opportunity for the salesperson is when the customer calls inbound and says, “we were considering our options, and I was wondering if you could help?” The relationship prompts the inbound call. The relationship caused the customer to think of the salesperson and the selling organization between calls. The “touching base” or “checking in” salesperson is quickly forgotten.
A good telephone salesperson keeps careful notes in their customer relationship management system (CRM) and asks themselves before each call, “what do I need to ask to build our relationship?” Every call has both a marketing component and relationship building component. The answers are documented, the relationship grows, trust is magnified.
“If you could wave your magic wand, what would you change regarding your packaging equipment?”
“When you met with your team for new year planning, what strategies did you create?”
“Tell me about any new projects you’ve been awarded since we last spoke.”
Oh, and “is there anything else I can help you with right now?”, because “problems” do also count.
Happy New Year!
In Meredith Wilson’s “The Music Man”, the anvil salesman melodically tells the people around him on the train “you gotta know the territory.”
For the sales manager of an inside sales force, one of the primary management quandaries is the territory assigned to a salesperson. Typically, a territory may consist of customers, prospects and suspects.
Customers are organizations that have bought something in the past, typically three years. The salesperson is assigned to maintain the relationship and build customer loyalty, to build market share, and to cross- and up-sell other products and services.
Prospects are organization that are not customers, but have expressed some interest in the selling organization. For example, they may have responded positively to an email or postal mail offering, filled in a lead form on the website, or entered information on an inquiry form.
Suspects are organizations the selling organization determines could be customers, because of their demographics and psychographics. Demographics are descriptors such as number of employees, SIC code or location. Psychographics are behavior indicators, such as attending a certain trade show, or subscribing to a periodical or newsfeed.
What is a good blend?
The sales manager probably has a dual focus: short-term and long-term growth. Short term growth is the revenue needed to meet the quota this month and year. Long-term is beyond this time frame. Short term growth is more likely to come from existing customers, and sales pressure may be required to keep the current book of business from shrinking. Many of our clients have found they can achieve a 20% increase in revenue by assigning a telephone salesperson to an uncovered account. Long-term growth is also dependent on adding new customers, both to replace customers that attrite, and to grow the business beyond its current customer base. If the manager knows the total cost of the telephone sales position, the gross profit on sales, and their organization’s internal return-on-investment requirements, it is easy to calculate what revenue the telephone salesperson must generate in a year. Typically, customers will be assigned to this number, based on last year’s revenue and the projected gain from the additional sales pressure (typically 20%).
Second, what is the customer attrition rate or the expectation for growth beyond the existing account base? Prospects should be added first, they’ve already expressed interest. A rule of thumb is normally about 1 out of 5 prospects will convert to customers. Your experience may be different. Determine what your typical first year revenue is from a new account. Is that enough?
Third, if prospects do not produce enough revenue, add in suspects. If you have created a good list (demographic and psychographic qualified), a good rule of thumb is 5 out of 100 will become prospects (show some interest) and 20% of those interested will close. Again, your market may be different.
That’s music to any sales manager – “you gotta know the territory”.
Slugger Joe hit 50 home runs last year. He also had a golden glove, snatching sizzling grounders and fielding slow moving bunts between his position at third base and home plate. At a management meeting that winter, the general manager of Joe’s team had a great idea – let’s move Joe over to coach third base. After all, he opined, Joe has all the skills, and as coach, he can share with the whole team.
Many sales organizations make the same mistake. They take their best salesperson and make them a manager, hoping the brilliance he or she shown as a salesperson will rub off on the rest of the organization. Many times, however, what happens instead is a reduction in production, and ineffective management. The new manager may see their role as helping everyone else in the sales department to close sales – after all, that is what they have been great at, selling is what earned them the promotion.
But sales management is more than just closing sales – it is assembling the right team, constructing the rules of the road, and building a great sales culture.
Selecting the right team is a particularly significant challenge. The universe of salespeople who can effectively build business-to-business relationships over the phone is small. Without the lack of visual clues and body language, many talented field salespeople struggle in the role. Individuals who are great at customer service may be to considerate to generate interest at the beginning of the call.
Constructing the rules of the road helps the sales manager take themselves out of the day-to-day decisions that need to be made. What discounts can be offered? How do we deal with a customer complaint? Some sales managers cherish the “fire fighter” mode, and therefore their day is consumed by rapid fire interactions with the sales group – interactions that could be significantly reduced by setting guidelines.
Finally, building a sales culture. A new representative will come into the department and take their cue from what the current sales reps are doing. If culture supports high performance, the new rep is likely to highly produce. A sales culture can be built through storytelling, sales meeting, compensation and adequate emotional nutrition. Emotional nutrition is provided by a sales manager who recognizes the investment of energy required to dial the phone fifty or sixty times a day, and to generate interest on every call.
Now, many managers were good salespeople in their day, but if you are choosing a sales manager, perhaps the best candidate is not the best salesperson. Perhaps your best producer should continue to excel at serving customers, while your best manager takes the helm. Look for an individual skilled at motivating others. Key your eye out for someone who can run a dynamic system by putting processes in place that will support the organization’s goals. Uncover someone who brings out the best in others.
Okay team, batter up!
When you were a child, did you start out each ad hoc game with your friends by discussing the rules? Perhaps the neighbor’s flower bed was out of bounds, the alley was the goal line and anything over the sidewalk was a free play. Rules help define the parameters of the game, and reduce disputes, because everyone knows the boundaries.
Telephone sales management also should incorporate rules. A manager who has no rules must make all the decisions: “Can I offer this discount?”, “A shipment didn’t arrive, what can I do for this customer?”, “Can I add Acme Lending into my territory?” These decisions take a lot of time, and leave the manager open to criticism if they tell one representative one thing and the next another. On the other hand, rules that are too restrictive bind the representative’s hands, and cause customers to say, “can I talk to your manager?” Most of us have had the experience of asking a customer service agent to put their manager on the line. It isn’t healthy to bind a telephone sales representative too tightly because customer’s question their value, and answering questions burns the manager’s time; time better spent in growing sales.
So, what constitutes a good set of rules?
Start with the 80/20 rule. Design rules so that they cover 80% of the situations your telephone salespeople encounter daily. For example, if a package is lost or destroyed, can the representative ship a replacement by overnight carrier? Perhaps up to a certain weight or dollar amount? If a service person misses an appointment, can the representative offer a $ 15 discount? Can you publish a discount schedule for large orders? Can you give the salespeople some latitude to negotiate with customers?
A good way to come up with the 80% rule is to keep track of all the questions representatives are asking the manager over say a monthly period, and to keep track of how long the manager is invested in answering the questions. Start by tackling the most prevalent issues, and work backwards.
The second half of the 80/20 rule is the 20%. Keeping a small portion of the situations open to a discussion between representative and manager keeps the manager up to speed on the situations his or her salespeople are encountering. It encourages the development of a sales organization that is flexible and adjusts to new information and new marketplace realities. It tells the salespeople their organization listens, and tries to react accordingly, and values the relationship it has with its customers.
Now your mix may be 90/10 or 70/30, each sales situation and each sales department is different. But don’t tie yourself down in firefighting all day long if a few rules could make your life easier. And don’t bind the sales group too tightly, after all, we have salespeople to react to customers, to be creative and to solve problems.