Want More Sales? Learn to Pull the Trigger


Let’s face it, the market’s completive and everyone is out to make more sales and trying to hit their sales plan. We have heard for years: a sale is about being at the right place at the right time with the perfect solution. Most salespeople work their market like a bread route hoping to fall upon, or fall into an urgent problem someone is willing to pay to solve. How do market leading teams create repeatable sales velocity each year? Why do market losers keep kicking their sales team’s in the butt and getting no where when market leaders hit plan year after year? It’s because market leading sales teams have learned how to “Pull the Trigger”.

One of the industries I served was handicapped accessible vehicles. It was a really rewarding job helping those with physical challenges drive again with a lowered floor mini van they could drive from their wheelchair or a stowage lift fitted to their current vehicle. I was tasked with growing our sales in the face of a huge dominant market 800lb gorilla that seemed to have a media and advertising budget that was limitless. Our team was forced to sell smarter since we would never have the marketing budget of our competitor who seemed to spread a blanket over all trade publications, the web, trade shows and even local TV advertising. The first thing we did was start interviewing our past customers and current customers to understand their buying process. We needed to know what made them buy, why they bought, why they chose us and so on. In doing so we identified events that cause (trigger) this market’s buyers to seek a new handicapped accessible vehicle. We found trigger events like;

  • a recent injury
  • a medical condition
  • completing rehabilitation and needing new transportation
  • caring for a parent or other loved one in a wheelchair
  • military veterans returning home with physical challenges
  • past customers who have experienced a change in their physical condition
  • tax returns, customers receiving tax returns and they waited for their tax return to be a down payment on a handicapped accessible vehicle
  • aggressive OEM automotive rebate programs
  • their current vehicle needing an expensive repair
  • their current vehicle breaking down and leaving them stranded or missing work or important medical appointment
  • their current accessible vehicle moving out of the manufacturers warrantee

There are ways to reach each of the above consumers who are experiencing what I call a trigger event however we were forced to eliminate those that required large marketing budgets. So we reviewed our interview notes and found one of the most common trigger events was buying a new vehicle just before the manufacturers warrantee expired. We also saw a high correlation of sales when the OEM manufacturer offered new car incentives like rebates or aggressive financing programs. We created a very simple letter that said we see your vehicle (based on our sales database  and service records) was about to go out of the manufacturers warrantee and shared any OEM automotive rebates or finance programs currently available. The results?… After about 90 days our quote volume tripled and after six months our averaged monthly sales revenues doubled.

Trigger based marketing and sales increases quote volume and closed sales revenues.

Triggers are nothing more than occurrences that define conditions that warrant action. Good trigger-based marketing strategies leverage these occurrences to present solutions at the right place and time. The two key factors to trigger based marketing and sales is timing and relevancy.

What are the triggers that make your buyers want to take action?

Below are some other industry examples I have experienced to help get your trigger list started.

Training Seminars – new employees joining the team, employees being promoted, large companies publicaly missing a revenue objective, merger or acquisition, competitor launching innovative product or service they should have launched

Snack foods – Super bowl, Fourth of July, back to school

Loss prevention industry – new product with high value with small shelf footprint launching, packaging change like videos moving from cassette to DVD, Compact Discs in 12” cardboard packages moving to just the CD jewel case, new store opening in high crime area, local crime reports

Consulting services – new executive, merger or acquisition, dip in quarterly earnings, high sales turnover, high executive turnover

Pension and 401k industry– sale of a business, employee buy out, April- right after business owners had to pay taxes that could have been avoids with a properly designed defined benefit and or defined contribution strategy

Mechanical equipment – plant expansion, new plant manager, new plant, and state grant awarded for job creation, landing large high profile customer, change in technology, and change in government regulations, current equipment failure, incentives for energy savings equipment

Physical fitness – consumers turning 50 years of age , mothers who just had babies

Tanning Salons – weddings and prom’s

Window cleaning – sale of a home, graduation parties, wedding announcements

Understanding your market and specifically your buyers and their buying process is key to trigger based marketing and sales. While market losers keep cold calling, hoping to fall into an opportunity your team will be targeting known buyers with a high probability of having a problem you can solve and they are urgently seeking to solve it. With technology today you can establish alerts through Google Alerts that will send you a message when a trigger event occurs.

What events trigger buyers to take action in your industry?

Is their an industry that trigger based marketing and sales would not work? Why?

Trigger based marketing and sales is not expensive and will produce measurable sales increases once you identify the leading buying triggers and refine you message and sales tools to solve those buyers problems.

Add Inside Sales…Fix Sales Problems

"serving customers with inside sales"

by Mark Allen Roberts

In my last post I shared how salespeople need to learn their A B C’s in terms of account segmentation to insure their salespeople  are spending time in areas that match your sales plan and insure sales goals are achieved. Nothing drives your CEO crazier than finding out your sales team is not hitting plan, and six months into the year he discovers sales is not executing the go-to-market plan everyone agreed to follow. One way I have used to insure sales teams execute sales plans is the implementation of inside sales. The first reaction I always receive when presenting inside sales is:we can not afford it. My answer is always;

You Can Not Afford Not To Have Inside Sales to Hit Sales Goals

In this post I will share my thought process on why inside sales is even more critical in today’s selling environment than ever before, how inside sales can turn cold calls into warm calls, increase sales with your C accounts, increase new customers, and reduce your current cost per sale and add more profit to your bottom line. Inside sales also offers a number of other benefits we will discuss, but I hope the above mentioned benefits are enough to keep you with me.

How has the sales environment changed in the last 5-8 years?

I used the same process I would use in a market trying to determine shifts, I interviewed a number of sales people and listened to what they are experiencing selling products in today’s market. Some of the common comments included:

My buyers have to justify each expenditure to the “higher ups”

C-level executives need to sign off on all orders

About 70% of what marketing gives me I do not use.

I have to speak with all kinds of people I never had to sell before; CTO, CMO, CEO, CFO…

Customers are not stocking up and they are taking much longer to buy, while our marketing programs try to reward customers to buy volume, but they are buying Just In Time

My buyers have the C-suite recommending competing vendors to our products and my buyers are spending time chasing these leads the C-suite read about or heard about at the country club…

My buyers say they are “cautiously optimistic” about our economy and therefore are not cutting Purchase Orders

Couple some of the above with the studies that indicate 70% of buying is occurring before the buyer makes contact with a salesperson even the most adamant skeptic must agree buyers are buying differently today and the sales process must adapt if you plan on hitting your sales numbers.

Inside Sales can turn Cold Calls into Warm calls

In addition to staying in contact, touching, your C Accounts, inside sales can establish trigger alerts through Google Alerts that give them a heads up when a trigger event occurs that may indicate a sales opportunity. For example, let’s say a manufacturing plant expanding has been proven to be a trigger event for turning suspect customers in to prospects and even quotes. Inside sales can establish a limitless number of Google Alerts to let them know when a trigger event occurs in the market. Your alert would look something like; “Ohio Plant expansion”. When that alert is triggered inside sales can search Linked in by company, make phone calls and send your product information to the right person ant the right time. Marketing should provide template tools to insure the communication connects to possible buyer pain points for this type of buyer by market. If the alert is for one of those large accounts, in your market sweet spot you have wanted to sell, inside sales will send information and make contact then introduce the field sales person. A common transition would sound something like ; “ as we have discussed it sounds like you are exploring products to support your plant expansion, we have our product specialist in your market on September 15th, would you like me to set up a time for him to meet with you and better understand how we can help you? “ I recommend providing inside sales a finder’s fee bonus on accounts they feed to outside sales that turn into orders. I often use some % of the first order’s profit.

Increase sales with your C accounts

Working with the VP of Sales and marketing you can establish strategic touches. Some that I have used include;

  • “thank you for your recent order, people who purchased ____have also purchased _____”
  • “I noticed you have not ordered since __________ and I wanted to check in on you”
  • “You asked to be kept in the loop on new products, did you see our _______ click the link in this email and it will send you to product information”
  • Promotions – I recommend a quarterly product focus, and have inside sales send an email and within 7 business days call to follow up, “did you see we are running a promotion on _______”

The key focus is service not sales. Inside sales tone and voice should be about helping the customer. All communications must feel relevant to your buyers and timely. When I say timely I am referring to communications that feel like they came just when the buyer needed them, like you know them.

Increase new customers

As we discussed above, inside sales will be constantly being alerted to triggers that may lead to new business. In addition, now that field sales have only A and B accounts, they can work the targeted accounts in their market opportunity profile.

Reduce your current cost per sale and add more profit to your bottom line

What does it cost your company to have a field salesperson call on an account?  For years I have used $500 as the cost of a call, but it may have gone up. You need to add the salesperson’s base, expenses, medical and all overhead to determine a cost. I have heard some people tackle this different way by having a daily cost of a salesperson model. Whatever you use, there is a cost. What is the cost of losing a key customer? The cost of losing a C account? What does an inside salesperson cost? In most cases their targeted compensation is 1/2 that of a field salesperson, and their only expenses are added phone calls and postage.

If you do not have inside sales today, I recommend a phased approach with regards to field sales commissions. In some cases, which will be an eye opener to many, the C accounts are the vast majority of your field sales commissions. Let me say that again in a different way; the majority of the commissions you are paying your best and brightest field salespeople who are not growing current accounts or opening targeted new accounts would have probably come in anyway, even without a field salesperson. I often implement a split commission structure in the first year as we transition to inside sales and this gives field sales time to refocus and not realize too much of a hit on their targeted compensation in year one.

Inside sales helps focus  on creating the greatest return on sales investment

Quick numbers…. Let’s say your field sales team member is costing you $700 per day. Let’s assume, because the field sales person has time to work current customers they increase their base key account sales by only 3%. Let’s also assume you reduce your account attrition by one key account per territory, and the salesperson only opens 4 new key accounts per year. In addition, as I experienced personally, your C accounts are now feeling you care about them , that they are important , and you are reaching out frequently with solutions to problems they were surprised you knew they had and C account sales grows over 10%. Inquiries from the internet speak to a live person and have their questions answered quickly and all inquires are treated like they could be customers. Your cost to support C accounts has decreased by 50% increasing your ROI on sales compensation invested…..I’ll say it again ;

You Can Not Afford Not To Have Inside Sales to Hit Sales Goals

The last benefit I also realized from inside sales is it often becomes your farm team for field sales. Your inside salespeople gain valuable experience often dealing with some of your most demanding customers. They learn your product lines and the problems they solve, your markets, and as your team grows often they can be called on to serve in a field sales capacity. They also learn to rely on the buying process you have taught them and when they venture out into the market follow it because they have experienced how having a sales process that mirrors how customers want to buy drives sales results.

So how about you…do you have an inside sales model?

What benefits have you realized from having inside sales?

What do you do strategically to insure inside sales and field sales work well together?

Given the shifts in how buyers are buying today, an inside sales position is key to insuring your sales team makes quota.

Are your Salespeople Focused on Landing Elephants While Rabbits and Squirrels Run to Buy?

Are your Salespeople Focused on Landing Elephants While Rabbits and Squirrels Run to Buy?

By Mark Allen Roberts

hunting smaller accounts

In my previous post I discussed a problem: “One common problem I am observing in the market today is salespeople are “hunting elephants with BB guns” and getting frustrated when they fail to bag their trophy. The market is tough and salespeople are hired to make it happen, make the sales number. Far too many salespeople focus on selling elephants to help bring their sales to quota back in line and this tactic backfires.I shared how ill equipped and poorly trained most  salespeople are calling on large key accounts ( elephants) , and they are not only destined to fail, but there is a high probability they are also damaging your brand in the mind of key account buyers. Another,  problem  that compounds the focusing in on elephants is the opportunity cost lost  rabbits and squirrels running to buy.

Do your salespeople clearly understand the market they serve and the opportunities that exist?

What I have personally experienced helping sales teams is everyone knows who the elephants are. This is a problem as all your competitors are just as likely focusing their scopes right now to bag what you thought was your elephant.

In the background of your market, there are smaller accounts, (rabbits and squirrels) running to buy.

I like selling smaller accounts as well as elephants.

Why do I like selling smaller accounts?

  • sales cycle is much shorter
  • the equipment and training is less expensive
  • you are dealing with the economic buyer ( the owner) in most cases
  • they are busy, and value your consultative approach as an expert in the solutions you provide
  • they are more profitable as a % of sale than elephants
  • they appreciate your solutions to their problems more
  • the buyer is in the market you are hunting in and not “corporate” some where
  • higher close percentage, higher probability to win the sale
  • they rarely use RFP’s
  • they are less likely to source complimentary products, accessories and parts
  • the salesperson does not require a great deal of training and experience
  • they often grow into bigger accounts

Market leading sales organizations balance their focus on elephants, rabbits and squirrels.

How about your sales team? Do your salespeople have a balance of elephants, rabbits and squirrels?

Does your sales team focus only on landing elephants or do they also fill their commissions on rabbits and squirrels?

Have you segmented accounts by lifetime sales opportunity?

Do you have an inside sales model that helps identify where the rabbits and squirrels are hiding?

As the sales leader, are you equipping your salespeople with a complete market opportunity profile, or is your lack of market knowledge showing?

Insure your salespeople hit their numbers by providing a market opportunity profile that includes elephants, rabbits, squirrels and any other varmints you can land in your market.

Failure to do so and you are setting your salespeople up to be road kill in their year end performance review.

Want to Jump Start Sales and Morale? Write a “Passion Statement” For Your Business….

 

Business leaders for years have been taught to write a mission statement, a values statement , distinctive competence, and their Unique Sales Proposition. Leadership teams are sequestered off to three-day retreats to write these statements only to often return and go right back to practicing what prompted the retreat in the first place…Why? The reason is far too often is the “work” they did at the retreat was all “head work” and lacked “heart work”.

The quickest way to jumpstart sales as well as the morale of your team is to create a “Passion Statement”.

 

So what is a passion statement? A passion statement is something I help my clients to create that explains;

  • what problem your product or service solves?

 

  • who do we solve it for? Who are our buyer personas?

 

  • what emotion does our solving the problem create in our clients?

 

  • what emotion does solving our clients problems create for us?

 

If you study companies who have become market leaders they very seldom set out to build huge profitable companies. In the majority of the cases they saw a problem that someone had and set out passionately to solve that problem. Their focus was not as much a business as it was a quest.

For years we have heard; “fake it until you make it” , unfortunately however you can not fake a passion to serve your clients and your market.Your customers will quickly detect inauthentic commitments to serve.

An authentic passion ( quest)  to serve your markets unresolved problems takes your business to another level in the minds and hearts of your market.

 

Let me give you two examples of companies I have helped. One is a typical stale example without passion often find after interviewing their team and their customers, the other a passion statement we all can rally behind.

Example A

 “our business’s purpose is to create wealth for our owners and shareholders. We plan to accomplish this by charging the maximum price the market will bear for our product and service and we plan to hold our employees and partners accountable to this objective…” ( don’t worry once the CEO understood this was his teams’ perception ( and his customer’s) of why they were in business we helped them to change this )

 

Client Name not shared for obvious reasons

 

Example B

 

“Our passion is to helping consumers with physical disabilities from the waist down experience the rush and  freedom that results from riding a motorcycle.We are committed to helping our clients connect to their passion or riding”

 

Mobility Conquest

 

 

Which company would you like to buy from?

Which company would you like to work for?

Which company is “selling” you and which company is “helping you buy”?

 

If you had to state your company’s passion statement today…is it more about what you want? Or is it about serving an unmet need of your customers? ( by the way, I do not mean the statement written on posters, shared in quarterly meeting …I mean the mission your team ( and your customers) perceive it to be)

 

Who would you rather compete against… company A or B? Why?

Ok …I hear you CFO’s and bottom line driven CEO’s out their saying …”Ya… but…” so let me assure you that if you study the most profitable market leading companies they have a passion statement.

Still not a believer? In my next post I will share the signs that you need a Passion Statement.

Top 20 Entrepreneurial Best Practices to Make Sure 2010 is a Profitable Year

 imagesCAO622DS

When I wrote my EBook: 50 Ugly Truths About Owning and Running Your Own Business…and 5 reasons why you should do it anyway I was responding to a number of misperceptions I was hearing from entrepreneurs.

Historically, at any given time six out of ten US adults is thinking about starting their own business. A number of new entrepreneurs are emerging that  I refer to as “necessity-preneurs “who were downsized and can not find new employment, are deciding to launch their own businesses as they want a much more active role in the security of their careers. The last group are cashing in their 401k and or borrowing from friends or family to buy an existing business and in a short amount of time realize they really just bought a job and they are quickly running out of cash.

One thing I have learned over the past 25 years of identifying roadblocks impeding businesses profitable growth is there really is not any new creations in terms of problems and strategies to grow a profitable business. Peter Drucker simplified it even further; there are only two considerations; innovation or marketing.

Just as I shared 12 mentor moments that I have used personally over the years to help businesses grow profitably, I have the Top 20 entrepreneur best practices that I have observed and lived over the years.

#1 “More” Sales or “Create Sales Velocity”?

#2 Dismiss or Distribute “Yafo’s” quickly …

#3; If Sales are Scary, You Can NOT Afford to NOT get Creative..

#4 Remember “The Law of the Locker Room”… it truly is a small world after all

#5 Tailor Questions for your buyers that Illustrate your Expertise and Prepare you to Serve their Needs

#6 Learn To Cut Bait …early

#7 You are Not Your Market

# 8 When Sales Get Rough…Look for Diamonds

#9 Don’t Let the Two Most Important Plates Drop

#10 “How” you “CHASE” New Business Matters….Do you want pepperoni with that new checking account?

#11 Follow the leader is a dangerous game, particularly when you follow Hippos…

#12 An “Idea” is not a product…and it’s definitely not a business

#13 Hire Strategic Partners… Not “Marketing Tools”

#14 Customers will Stiff you…But Don’t Let Them Burn you…

#15 Beware of “Smores”…Social Media Whores

#16 “Make a Wish” come true with Focused Passion

#17 intentionally reward the customer behaviors you desire …

#18 You will Receive Your Best Tips To Grow Your Company From Prospects Who Do Not Buy From You…

#19 Interview those who Exit and identify Roadblocks to Achieving Your Strategic Objectives…

#20 Exercise Your Power of Choice in Choosing Your Role on the Team…If Your Gift is Being a Duck….Be a Duck!

 

The above are by no means an all inclusive list of every entrepreneur best practice but they are some of my favorites. The post that seemed to resonate the most and create the greatest number of discussions was the difference between creating “more” sales versus “creating sales velocity” ( entrepreneur best practice #1).

 

 

How about you….do you have an Entrepreneurial Best Practice you use regularly and would like to share?

 

 

Of the above which best practice(s) resonate most with you?

 

 

Which of the above do most entrepreneurs struggle the most with based on your observations?

 

 

Is there a Key best practice not identified? (If so please add to the discussion)

 

 

As we move into 2010 which of the above Best practices do you feel will resonate most? Why?

 

Thanks for hanging with me  in this series of posts and I want to particularly thank those who have reached out to me personally to discuss this series of posts. As I have discussed, I enjoy helping entrepreneurs realize profitable growth and the strategies discussed are not new. One of my goals in blogging is to help business owners who may not be able to afford outside help at this time and I hope this blog adds value.

If you are wired to take on the 50 Ugly truths of starting and owning your own business and you have intentionally chosen to do it anyway I hope the above best practices were of value to you and your team.

Entrepreneurs will lead our country to economic recovery and I am proud to serve this innovative group of passionate problem solvers along with my other clients.

Entrepreneur Best Practices: #14 Customers will Stiff you…But Don’t Let Them Burn you…

money burning

The majority of customers are honest hard working people, like you, looking for someone to help them solve their problems. They do not have a problem paying for the value exchange they receive from you. There are however those low life’s out there who will engage with you and have no intention of paying you. I included this in my eBook: 50 ugly truths about starting your own business…and why you should do it anyway, as it often shocks and infuriates new entrepreneurs. Although these low life’s will attempt to stiff you, you don’t have to let them burn you.

I can still remember the first person who failed to pay me. Although it was many years ago, it was one of those tough leadership muscle building lessons during bootstrapping. I was asked by an investor to engage with one of his portfolio companies to figure out what was wrong and turn it around. I have played this role a number of times serving VC’s and Angel investors and I enjoy the assessment and turnaround of entrepreneurial teams.

When I first met the young CEO at the helm of this organization my gut said run away. He was an arrogant young man who was irritated that I was even asked to help fix his team’s poor performance. He was irritated the board and the investors did not seem to buy his explanation that the reason for his shortfall to goals was: a poor economy. He was concerned that I would share what I find with the investor who brought me in to serve his team, and for the first two months he instructed his team to run their answers to all my questions by him prior to answering me. (Another sign I should have run away)

I tried to build trust and I advised this young CEO the issues I discovered and made recommendations. One recommendation was the need to explain the problems he solves for his clients with an aggressive messaging plan targeting his optimum buyer personas. His response was one I have heard by CEO founders before…” we do not need marketing…the market clearly understands what we have…I just need hungrier salespeople.” (So he cut their base pay to make them hungrier) He could not have been more wrong. Since he instructed his team to not openly share information with me I went into his market and interviewed his past, current, and targeted new customers. I found the market was in fact aware of his business, but they consistently did not understand how this business could solve their problems…the market branded his business by default.

After a number of months the retainer payments were paid later and later and eventually they stopped. While he told me and his team the business was really struggling, he personally leased a Hummer, bought himself an expensive laptop and went on a trip internationally with his wife. (But that’s another post)

I was so connected to helping this team and investor; this company properly brand the business in the market I failed to pay attention to his not paying me. What started out as “ I will pay you next week…turned to next month…and after two months I was informed he can not pay, and he was actually shocked I would ask for the payment of my small retainer given the difficulties the business was having as he shared at a recent board meeting I was asked to attend”.

There are two schools of thought with customers who do not pay you. The first says write it off as bad debt and move on. In this case this young CEO went on to say “you don’t want to be known as someone who sues his clients do you?” (I later found he had said many times before, and had I done my homework on him this could have been prevented)

The only thing worst than not having customers is selling customers who do not pay.

The second thought is you have provided a value and you should expect payment. Customers who fail to pay will be sent to collections and or sued. I actually do want to have the reputation of suing clients who do not pay as this will help weed out the low life’s who become time vampires sucking the life out of you with no intent on paying. So I went to the courthouse filled out the proper paperwork and we went to court. The judge provided a judgment in my favor and as we left the courthouse this young CEO went on to say …” good luck collecting you @# hole” Sure enough after multiple attempts to collect he failed to pay . The next phase of this process required an attorney and we won that judgment as well with interest.

 

 

This young CEO stiffed me. However where I blew it was I became angry, I allowed it to stick to me.

 

Anger is an acid that only burns the container that tries to hold it.

 

beliefs

 

I let this young man’s poor ethics personally affect me. Anger left unchecked can turn to depression and leaves us feeling bitter. As I worked with new clients I built processes and procedures for the less than 1% of business owners out there who are the low life’s like this young CEO. That unchecked bitterness stayed with me and became a frequent thought; small business owners will stiff you if you fail to protect yourself. This thought repeated over and over again became a belief, stemming from one unethical young man. It failed to recognize a sea of very prosperous relationships I have enjoyed with past customers over the past 25 years, and it tainted my outlook. My coach eventually brought this bitterness to my attention and explained I needed to forgive this young man and move on… Not for his sake, but for mine.

 

 

What should you do if a customer stiffs you?

  1. Seek first to understand
  2. determine if this a deadbeat with a history of treating partners like this or someone who needs you to work with them
  3. cut bait early, with the first missed payment, services must stop
  4. if they refuse to pay, start collections proceeding immediately
  5. ask yourself what lesson ( often expensive lesson) can you learn for this experience to insure it does not occur again
  6. forgive their unethical behavior for your sake, not theirs
  7. move on, as the Bible says, “dust off your sandals and move on” As 99% of customers are ethical people
  8. do not allow this bad experience to taint how you treat current and new customers

 

Anger if left unchecked is like acid, and it only damages the container that tries to keep it contained.

 

As an Entrepreneur customers will stiff you but they need not burn you. One of the best ways to prevent serving someone that does not pay you occurs at the beginning of the relationship. Just as your customers are qualifying you early on, you too must qualify them.

 

Ask yourself…

 

 

Is this someone I want to work with?

 

What does the market say about this company? This person?

 

 

Do I trust this person with my money?

 

 

If you gut says “no” to any of the above move on to others who would truly value your product or service.

 

 

 

How about you and your organization….

 

 

How do you deal with deadbeats who try to stiff you?

 

 

Do they just stiff you…or do they also burn you?

 

 

Have you established processes and procedures that screams your lack of trust in new clients based on your bitterness?

 

 

Do your current processes and procedure cater to the 99% of ethical customers or the 1% who are the low life’s?

 

 

If a deadbeat makes it through your pre engagement qualification process, and if they do stiff you I recommend you engage the various collections procedures within the law, and you personally forgive them and move on to serving the 99% of those in the market who will value your product or service.

 

As an aside I bumped into the investor who asked me to help this young CEO and now the list of vendors he has stiffed is very long and his business continues to suffer missing key performance indicators and has high turnover. I call it “Business Karma”; others say “what comes around goes around.”

 

Markets. like people, trust or do not trust businesses. When markets hear often enough that someone in their community of service providers is a deadbeat, the market ostracizes that owner, that business, which only further accelerates their death spiral into personal and business bankruptcy.

 

Entrepreneur best practices: #12 An “Idea” is not a product…and it’s definitely not a business

idea

At any given time 6 out of 10 US adults are thinking about starting their own business. Half of those will attempt to launch their own business. As I discuss in my eBook; 50 Ugly truths about starting your own business …and why you should do it anyway, they often enter into their own business with a false set of expectations. One of these false expectations is their “idea” is a product and even more disturbing is when they start investing to support their idea as a business. Recognizing the majority of those who launch a new business will fail within 18 months, one of the common contributors to their demise is not asking the right questions.

Before you ask friends and family for start up money, before you tap into your home equity and 401k, and definitely before you quit your day job…you need to play “20 questions”.

You must verify your “idea” can be monetized into a viable business before you launch.

 

20 questions to ask before you invest;

#1 what problem does your product or service solve?

 

#2 how big of a market is there for this problem? This pain and or need?

 

#3 how are those who have this problem solving it now?

 

#4 clearly articulates your secret sauce, other words what is your unique selling proposition?

 

#5 is there replacement products in existence that could solve the problem?

 

#6 who is the market leader in the space you plan to enter?

 

#7 how many other competitors are there in this space?

 

#8 what is your level of understanding of this market?

 

#9 is your idea a product or IP that can be patented?

 

#10 what stage is this market in terms of its lifecycle? Infancy, growth, mature..?

 

#11 what level of support will be required to serve this market? Do you personally have expertise in running a business?

 

#12 what are the distribution channels of this market?

 

#13 what is the buying cycle?

 

#14 what is the common payment terms for this market?

 

#15 Do the potential buyers of your new product have the ability to pay for it?

 

#16 is there any legal and or compliance issues this product must pass prior to launch?

 

#17 what do you estimate is the total costs per unit of sale, transaction

 

#18 what is the anticipated number of units sold in year one? What % of the market opportunity does this represent?

 

#19 what is the number of units needed to break even with your upfront investment?

 

#20 How much cash will you need, based on the buying cycle, the costs, payment terms and distribution channels to launch this product or service?

 

Once you have answers to the above we can start to have a good discussion about your new idea and how you may be able to monetize it. Unfortunately however far too often entrepreneurs get that rush, that “buck fever” and they stop asking rational , needed , questions and they attach their focus on the days when…

 

When they become millionaires…

When they are recognized in their community…

When they sell their business for millions and retire without a care in the world

All of these When’s can become a reality if you spend the time upfront understanding the market, its buyers and their needs.

Entrepreneurs must understand: You are not your market.

Although this idea you have may be so obvious to you, you can not assume nor extrapolate that assumption across the market without real market data.

If you have an idea, that may be the next iPod, do yourself a favor and play 20 questions before you invest one dime in making your idea a product or service.

How about your organization….

Do you launch new products or services because one of your Hippo’s says so, without market data?

Have you launched products that failed to meet ROI targets?

If you are in sales, how did it make you feel when you were given a goal, and told to make it happen …only to find out your marketing needed to “create a need for it”?

If you are the president or CEO, what processes and procedures do you have in place to insure your teams are asking at least 20 questions?

Market leaders understand the importance of building new products and services from the market need up, versus the ivory tower down.

Market losers have a; ready – fire – aim launch process.

Entrepreneur Best Practices: #10 “How” you “CHASE” New Business Matters….Do you want pepperoni with that new checking account?

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I have heard entrepreneurs say; “any marketing is better than no marketing at all…” and they can say this…but they would be wrong! Entrepreneurial leaders must insure the marketing vehicles and tactics  they use support their brand and do not create an interruption.

 

 

Market leaders understand their buyers, their buying process and buying criteria.

 

Market leaders create sales velocity because everything they do has continuity with their brand.

 

 

Market losers create a variety of marketing tools and “throw them against the wall” of their market and wait to… “see what sticks”.

 

Market losers scare business away, and their energy and budgets are used to grow competitors’ businesses.

 

I Love being a Chase Bank customer.

 

I have used a number of banks over the years…Bank of America, Key Corp, and so on. However the service I get from Chase Bank seems to feel different, it’s as if they know me, and they answer my questions before I ask them. Just yesterday my wife and I met with Dennis at our local branch and he was obviously trained to serve his clients. When other banks have made us feel like we were putting their associates out , Dennis was like the Van’s Golf employees name tags that say “sure not problem” Even the experience of walking into one of their locations “feels” different in how you are greeted and guided to the right person to help you. So imagine my surprise after a doctor appointment to come out to my car and see a windshield flier under my wiper from Chase Bank. This was an interruption for me.

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Marketing interruptions make current customers pause…and bad things happen when customers pause.

 

For example, at first I smiled and threw their flier in my trunk to throw away later. As I drove to my next appointment however my mind wandered…

I have been reading about banks in trouble

 

Is my bank…Chase Bank, in trouble?

 

Should I maybe check out Wells Fargo or maybe open an account with Bank America again just to play it safe?

 

Didn’t I just read they were downsizing?…. ut oh

However my mind quickly came to terms with what has a higher probability of truth; It was the end of August ( end of the month race to hit numbers), and some salesperson , a hunter by nature ( which is awesome) needed business. So as opposed to sitting in the branch waiting for business to come to them, they took initiative and made some purple fliers and more than likely spent hours in the 104 degree Arizona heat stuffing them under windshield wipers in hopes this would drive new business. I had a pizza shop as a client years ago that could ramp up or down his sales by the number of windshield fliers he would have his drivers place. It became a predictable outcome for him over time.

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However, the way a pizza shop or even a gas station chases new business is significantly different than what I would expect from my trusted bank, and the two should never be confused.

As I discussed, entrepreneurial leaders have bad things happen when they “assume”. “Well if windshield fliers work for pizza shops and gas stations…why not…” The “why not” is whatever you do must be intentional and have continuity with your brand image, your brand promise in the minds of buyers in your market.

In defense of Chase Bank, I have had rogue sales guys and even sales managers do much worst over the years. As I said I have to smile that at least they tried! Leaders, no matter what the size of their organization, must remember;

If marketing does not create tools that help salespeople hit their objectives, sales will create their own…and although you appreciate their “be a part of the solution” attitude it may cause your market to pause. When markets experience a pause, an interruption in the brand image …bad things happens.

 

 

How about your company…..

 

Are your salespeople creating their own tools to hit their numbers?

…Are you sure?

 

What policies and procedures do you have in place to insure your brand image is protected and reinforced?

 

Have you ever had your salespeople create their own tools…tell me about it.

 

 

From the number of fliers blowing around in the parking lot now as “marketing litter” I could tell most of the people who had fliers under their wipers did not value this communication attempt by Chase Bank. I would be interested to know from Chase Bank if this tactic is a marketing approved new business program or if I was correct a local branch went off the marketing reservation. If this tactic does in fact drive needed new business at moth end that is greater the negative impact it has on their brand in the mind of the market.

Entrepreneur Best Practices: #7 You are Not Your Market

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Entrepreneurs often make a common mistake …they assume, and then they extrapolate.

They assume because they are a member of a market and they have a problem others too want to pay to have this problem solved. Secondly they fail to do research (after all it’s expensive right?) so they extrapolate.

When Entrepreneurs assume and extrapolate they lose.

When leaders rely on their personal experience, their gut and intuition they become one of the 90% of small businesses launched each year that fail within 18 months. When leaders with an entrepreneurial spirit in large organizations launch without current market data, their products are discontinued and removed from the shelf within 12 months…(and sometimes the leader joins their products in the recycle bin.)

Keep in mind: YOU ARE NOT YOUR MARKET!

 

How about your organization…

 

 

 

Do you have entrepreneurial leaders who shoot from the hip based on their past experience, their gut and intuition?

 

 

 

Have you ever launched something you, your wife, and all your golf buddies thought was brilliant only to sell 1/10 of what you forecasted in the ROI to justify production?

 

 

 

How do entrepreneurial leaders build their discernment muscles to rely more on market data and less on their gut?

 

 

 

Every once in a while someone will get lucky and hit the market with a product that solves a pain they had, and luckily many others have. However I would prefer to mitigate my risk by doing more homework upfront…

 

 

 

How about you?

 

Entrepreneur Best Practices: #6 Learn To Cut Bait …early

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Not all customers are good customers, and not all new business is good new business. Entrepreneurs are often faced with a dilemma; do I compromise my price, and or my service to make the cash register sing?…in these economic times I probably should right?

 

The answer is a definitive: NO.

Market leaders provide value and realize a fair value exchange from their customers.

 

Market losers chase every sale, and often learn to regret those they should have passed by.

 

 

 

When you land an account, a customer you should have “thrown back” they often bring a new set of problems;

 

They are often “time vampires”…sucking the life out of you

 

They do not value your work and will always be working you to discount what your do

 

They become service nightmares

 

They often short pay you

 

They often become a collections problem

 

Sometimes you do the work and they never pay you (I particularly hate this one)

 

 

 

…that is why we must learn how to “cut bait” and get back to fishing.

 

 

 

 

 

 

I enjoy fishing. I can spend hours out fishing enjoying nature and the quiet. It’s one of the few things I do that helps quiet my busy mind like church. Often times when I fish in a new fishing hole I am not familiar with… I get snags. You know …you have your bait in the water, and something takes the bait. It could be a fish, (and you hope based on how your fishing rod is bending a BIG fish) but more often than not you have a snag.

 cat fish

 

On rare occasions it actually is a large fish. One time I was convinced I must have snagged my bait on an underwater log and much to my surprise found a large cat fish on the other end of my line.

 

More often than not though whatever has my bait is a distraction, a snag and it is something that is taking me away from doing what I love to do…fishing and catching fish.

 

 

What we must build as entrepreneurs is the discipline to “cut bait” early and get back to fishing.

 

 

cut bait

We often waste too much time “hoping” we have a large fish on the other end of the line when there is a high probability you have a YAFO snag.

 

For example, ever since my eBook about the 50 ugly truths of being an entrepreneur came out and the pod cast with the struggling entrepreneur, I have been receiving email and phone calls.

 

I received a call from a local financial planner whose business revenue from fees has dropped over 40% in the last year and wanted to know if my 10 step process would work for a financial planner. The answer was quickly yes as I used this process in the financial industry serving a 401k third party administrator and we quickly grew his business. Keeping with my fishing analogy, I had a nibble.

 

After answering his questions he asked if he could take me to lunch to learn more…I have one on the line…(I think) As we enjoyed some great Chinese food, he wanted to know my 10 steps and how it works. I explained that that is what people pay me for, however I will be happy to share some success stories I have had using this process. As we closed lunch he asked I send him a proposal and he said …”but remember I am a financial advisor and not one of those big companies you help.”

 

To a fault I love helping people, so I wrestled with a price model that would drive the growth he needed and compensate me fairly for the time I would be giving his project. I developed a program that had a modest upfront cost, a monthly retainer and an aggressive compensation for me on every new account my work landed for him.

 

I compromised my standard price model to help him. We went back and forth for days with emails and eventually he asked for only the small upfront fee and no compensation on the business my work would bring him or monthly retainer….and I almost took it, bur instead…

 

I quickly cut bait.

 

I should have cut bait even sooner as in the flurry of emails I quickly learned he was more attached to the “cost” and not the “outcome “of my work. He has been paying a coach a modest amount per month for years and thought I should match or beat this price. I asked him to read all the nice comments people I have helped in the past put on my web site, linked in, and so on. I even gave him some past customers to call….but his attachment was on cost not benefits, and he definitely did not have a strong enough desire (yet) to have his problem ( pain) solved.

 

Where I blew it was not cutting bait sooner. As I have shared, I just love helping people, particularly leaders with an “entrepreneurial spirit”. However after I shared my compensation model and I modified it to meet his needs that we discussed, and he “snagged” I should have cut bait earlier.

 

 

While you wrestle with snags other fish are swimming by…often big hungry ones.

 

Market leaders know the value of cutting bait early and getting back to fishing.

 

Market losers chase every deal and compromise their business models, products and or services and are always disappointed in the end.

 

Having reeled in my share of tree limbs in my days on the lake, you spend time that could be out casting into better waters only to reel in something that at the end of the day does not put food on your table.

 

 

The opportunity cost of chasing bad business is too great.

 

 

How about your company….

 

 

 

Do you chase every deal …compromise your model to accommodate every snag?

 

 

 

How’s that working for you?

 

 

 

Have you trained your salespeople in the value of qualifying new business early, and the power in cutting bait?

 

 

 

Are you currently struggling with what you hope is a big fish….but you know has a probability of not putting food on your table?

 

 

 

 

 

CUT BAIT NOW…you will thank me…

 

 

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