Increase Sales: How Do You Establish Value?

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In one of my last posts on pricing your products strategically I discussed the need to understand the value your product or service provides to the customer. Not long after that post was written I had a phone call from a small business owner asking: What is the best way to establish value for our buyers? In this post I will share some advice an excellent example of establishing value.

Before we get to that content I want to ask you a quick question:

Why do 42% of business start up’s fail?

The answer is they launched a business that had no unresolved market need. They did not clearly and completely understand the problem to be solved.

This group of entrepreneurs took the leap and often loose all their savings, their children’s college fund and so on. Why?

They failed to do their market homework before launching their business. Some questions they needed to answer include?

What is the problem you are trying to solve?

Who has this problem?… and how many others are like them?

Is the problem Urgent and buyers feel a pain to solve it?

Are buyers willing to spend money to solve it and how much?

It is not just small companies who make this mistake. Every day products and services are launched because companies can and not because they should.

How do market leaders, regardless of industry or company size consistently launch and grow their business?

They establish a high-perceived value for their products!

To do so they must first intimately understand their market, and the problems their buyers have.

With this information they solve the problem completely.

Then they make a compelling value proposition that resonates with their buyers.

They share this value in communities where there buyers belong.

Lets take a look at a great example of a company that established value: Gunner Kennels.

“Man’s best friend deserves man’s best kennels”

Gunner Kennels makes dog kennels. On the surface that does not sound too interesting. However if you have dogs, particularly hunting dogs they know you. They know the problems you often face when transporting your dogs and they solved that problem brilliantly.

Every detail of this kennel is built to make our traveling experience the best and safest it can be, whether we are on our way to the Mississippi Delta for a duck hunt or just running errands around town. Gunner has been my co-pilot since the day I drove to North Alabama to pick him up.

I built this kennel for my dog Gunner and for anyone else who loves seeing their dogs light up when you ask them to “Kennel,” and they know they are tagging along for your next adventure.

-Addison Edmonds, Founder

I wish I had found this company years ago! The downside of this crazy life of helping company’s fix their sales problems is we moved our family a lot. One of the biggest stress points for us as a family was safely moving our dogs. Will my Labs be safe in the belly of this big airplane? Will the baggage handlers be careful with my family members? What if something shifts in the cargo area and their crate gets crushed? (All these thoughts and more go through your mind)

Check out his video that demonstrates how much this company understand the needs of its buyers and how they establish value.

How about your company….

How do you establish value in the minds of your buyers?

Do you know how to quantify that value?

What techniques have worked best for your team?

When you clearly understand your market, buyers, how they buy, and the criteria they use to make buying decisions you can establish value.

In my next three posts I will be sharing other innovative companies who not only beat the odds of start up failure but also are extremely successful because they established their value in the minds of their buyers.

Why Does Sales Growth Stall?

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Your sales team has been hitting their sales goals and it’s an exciting time for your organization. Your problem to be solved shifted from growing sales to shipping orders on time. Then something happens …what seemed like an ever-growing sales pipeline goes dark. Sales stall and in some cases decrease. Why? What causes sales growth to stall and more important what can you do to prevent sales from stalling?

It was an exciting time. Our sales team had opened the majority of the targeted new dealers we wanted and we were hitting new sales records. The President and CFO were stopping by my office to give me high fives and our senior manager meets had almost a fun playful tone. My sales people were achieving their individual sales goals, hitting bonuses they have never experienced before. Everyone, even the workers on the assembly line who were getting all the overtime they wanted were happy.

Our strategic planning meeting was spent discussing fun things like how will we invest to support this sales growth…. And then everything changed quietly, slowing at first and then our sales stalled. What happened? Why do sales stall and more important what is the plan to get our sales back on that sales velocity of 140% year over year growth we were enjoying?

I have seen the above scenario play out many times in companies. I have heard CEO’s say: “ Mark the reason we are talking to you is sales were growing strong year over year and then we hit a plateau, we are stuck and we can’t seem to get back on the same growth trajectory we one had.”

What Causes sales growth to stall?

If you read my content you know I like to read. Like is not strong enough of a word. I have a passion to read and research topics that impact sales team’s performance. One of my mentors at Frito-Lay used to say, “Leaders are readers and if you want to be a leader the burden is on you to constantly sharpen your saw”. I recently finished an excellent book I highly recommend: When Growth Stalls, How it happens, why your stuck & and what to do about it, by Steve McKee.

A quote that jumped out at me early was …

“One of the biggest challenges any business leader faces is generating consistent, profitable growth. But stalled growth is the rule, not the exception, even for the best-managed companies. That’s especially true in today’s tumultuous economic environment”

The author does a great job of capturing examples of market leading companies who experienced a growth stall like; Home Depot, Bear Sterns, Excite, Lehman Brothers, McDonalds, IBM, Kodak, Lucent Technologies, Sears, Kmart, Sun Microsystems, Tidy Cat, Mercedes, The Gap, Chrysler, and many more. Growth stalls impact both large and small companies. Publicly traded market leaders and privately help family business all experience stalls.

Most companies experience a sales growth stall at some time, and some experience a number of sales plateaus.

So what causes growth stalls?

Want a quick answer?…Look for what changed!

Today’s markets are dynamic. The first question you need to ask if your sales growth stalls is: What changed? The one thing we can all count on is change. If your sales were showing strong sales velocity then stalled I promise you something changed.

Changes can occur outside your organization as well as inside.

Outside your organization you can have a number of factors impact your sales growth…

Economic downturn

Market shift

Changing Industry Dynamics

Aggressive move from a competitor

New technology

Buyers need new criteria to make buying decisions

Buyers use a new buying process

There are also internal changes that can cause a sales growth stall…

Change in service level

Quality of product or service decline

Chance in price model

Lack of management consensus

Loss of Focus

A dated Value Proposition

Loss of company nerve

Inconsistency within your organization

Your culture becomes dysfunctional

Any one of the above can cause what the author refers to as a “seismic shift” that disrupts your sales growth. If your team experiences a number of both internal and external changes your sales growth does not just stall, it starts a steady decline. The longer it takes your team to identify what changed and make a course correction the more difficult and the longer it will take to correct. If internal and or external changes go unchecked long enough you will experience what I refer to as a sales death spiral.

The best business book I have ever read is the Bible. The Bible does not say we might face adversity…it says we WILL face adversity. Adversity is a time teams can rally together and grow united or do blame storming and drift apart.

The first step is to identify what changed or as I prefer to call it… throw the skunk on the table. It is very uncomfortable to discuss problems for most teams. Teams with strong cultures openly discuss any issues that could be preventing them from achieving their objectives. Discussing problems, like having a dated value proposition that no longer resonates with buyers, becomes emotional.( been there have the T-shirt)

Someone companies may have developed processes and procedures (web sites) 10-15 years ago and now that person sits in the CEO’s chair. If you have a strong culture and a leader with a high emotional intelligence you will discuss the issues. One sign of an unhealthy culture are what I refer to as PIMS. This stand for: Politically Incorrect Market Secrets. Your team knows the issues holding your teams back from achieving their sales objectives but they do not feel safe to share them. I actually love it when someone who reports to me says…Mark, I just don’t get it, you are asking me to ——- but the market and even the buyers at some of our accounts are saying ——-. Awesome, let’s pivot and win the business!

The author shares how to get your company back on a strong sales velocity track in practical and applicable ways. I highly recommend this book for two kinds of companies:

Companies who have experienced their sales growth stall or decline
Companies who have not experienced a sales growth stall (yet)

How about your company…

Have you seen your sales growth stall?

Has your team thrown the skunk on the table or is still just stinking up the place?

What other kinds of shifts/ changes have you experienced that stalled your team’s sales?

How did you fix them?

If you are in a business experiencing a sales growth stall this book will help you identify places to look that may have changed. It will also teach you ways of getting un-stuck and practical steps you can take to getting sales growth back on track.

Fix Sales Problems: Price Strategically

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If you had to pick one pricing method that consistently produces greater sales increases, increased market share and increased profits what would it be?Your sales team has done the heavy lifting… and they have made it though emails ,voicemails and finally met and presented a targeted buyer. Your team has used social selling and selling tools designed specifically to get to this phase of the sales process and build trust along the journey. The buyer feels your proposal could solve their problem and asks the big question: “how much? What is your price?” Would it shock you to learn most companies spend more time negotiating the lease agreements on their office copiers than they spend on price strategy? There are many ways you can price your product or service.

Price is one of McCarthy’s four P’s of marketing. Pricing is a critical part of any value exchange. Why is it price often receives the least amount of research and strategy?

Let’s start with a few definitions….

What is the definition of price?

Price is the value that is placed on a particular product or service as the result of a number of variables, research and understanding of risk.

What is the definition of pricing strategy?

A pricing strategy looks at market conditions, competitive pricing, industry margins, costs, the dollar value of the sale,the product life cycle, the products uniqueness, as well as other factors.

What are the most common forms of pricing?

Cost Plus Pricing- as the name implies you determine your cost to produce, overhead cost and mark the product up based on the profit you wish(need) to realize. The trouble with this model is it is internally focused and not market driven. With this model you run the risk of pricing your product to low or too high. You run the risk of loosing sales you could have (and should have ) won and not making the maximum profit your product could have realized. Companies who practice this method often ask for “another kick at the can” when they are informed their price was too high. (In my post discussing kick the can I share the reasons this strategy is dangerous.)

Low cost strategy– in this model you price your products low and you have structured your company to have low overhead and low marketing and selling costs. In this model you might hear someone say: “ the margin is low but we will make it up in volume” We often see this in commodity products where price is the only main differentiation .

Predatory pricing- you price your product low to “get your foot in the door” of an account or market. The intent is the price will rise after a specific period of time. Companies struggle in the price increase phase if they have not established a strong value proposition in the mind of their buyers before the price increase occurs.

Premium pricing- you price your product high. This is associated with a product or service that has little or no competition of similar quality and or performance. These kinds of products have clear distinction in the market place and buyers place a high value on them. These market driven, unique products are seen as the best of best and buyers are willing to pay for them.When you hear their names you think best in class; Gunner Kennels, TenPoint Cross Bows, Yeti coolers, InVue Security Products, and many more. Each of these companies have other substitute products in their markets and many competitors. What they all have in common is focus. The made it their job to understand their buyer, the problem the buyer wanted solved, and they solved it completely.

I have seen a number of companies try to be more strategic in their price methodology. Where I have seen some companies struggle is only talking to their current customers when doing market research. This is the most common mistake. The difficulty is, for most companies, your current customers only represent approximately 30% of your total market. If you only speak to your customers you are missing 70% of the market’s voice. Keep in mind that 70% is buying something similar to your product and they are not buying from you for a reason. You really need to know why some buyers buy from you and why some do not. Without this critical market data companies run the risk of becoming internally focused on what they want/ need to make. This one of the four P’s has more emotion tied to it than any other. One of the toughest sales I often have to make is not in the market with large customers, but internally to help companies want to be market driven.

There is an excellent article on the advantages of being market driven you can read here. A quote from the article shares;Your strategy should be driven by the needs of the market. Becoming market-driven is critical to intentional product success.

Some of the advantages of being market driven that i have experienced include, but not limited to:

Quickly deliver new and improved solutions that address the changing needs of your markets.
Quickly identify and understand the changes in your market.
Higher than industry average profits
Faster sales growth than competitors
Higher sales close %’s

The best method of pricing I have found is “strategic pricing”.

-Mark Allen Roberts

In strategic pricing you have done your market homework. You understand the value of your product to your customer and you can quantify it. It is a marketing decision (not an accounting exercise) that is the result of market knowledge, knowing your buyers and buyer personas, competitors, substitute products, buyer process and buying criteria. Strategy work is hard work and it is not done overnight.

As you can see pricing is not as easy as some people believe. It takes a great deal of strategic thought and that is why a number of companies price their products incorrectly.

As consumers we are all buyers. Buyers are wired to spend until we experience pain. This is based on the field of neuroeconomics. As a buyer you stop spending when the perceived pain of spending is greater than the perceived gain. Your marketing team must determine that tipping point in their research and apply it to your strategic pricing.

If you want to experience rapid sales growth,increase sales close rates, increased market share and higher profits you must start strategic pricing. The burden is on your team to clearly understand your market and how your buyers make decisions. You must understand your distinctive competence and share it in a value proposition that resonates with your buyers.

What kind of pricing method does your team use?

What are some examples where cost plus pricing may work?

Has your team used strategic pricing? Any stories you can share?

Would you say you are market driven or internally driven?

Fix Sales Problems: Stop Playing “Kick the Can”…with Buyers

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The role of sales has changed significantly over the last 10 years. On the one side we now have buyers who now are 60% to 74% through the buying process before they speak with a salesperson. Buyers today do their research online. They check out your product, what your customers are saying about your company, your products and service, and they are doing searches on the salesperson individually. Over 90% of buyer’s today report they do not respond to cold calls. On the other side of this sales tug of war we have CEO’s and other senior team members concerned sales is leaving money on the table in how they price products. They are commonly concerned the sales team is “selling on price” and not “selling on value.” To respond to this tug of war some salespeople often play “kick the can” with buyers and lose sales they could have won today and in the future.

When I was growing up in Cleveland Ohio a game we often played when the sun went down was kick the can. If you are not familiar with this game it is kind of like hide and seek. One person is “it” and everyone hides. The person who is “it” searches for those hiding and once found they must go back to home base, where there is a small can in the street. The game gets challenging when the person who is it, is out searching for more players, a non-captured player sneaks up to base and kicks the can freeing all those captured to hide once again. If you are “it” this game is very frustrating and would often last until our parents would call us home for the night. The more kids you had playing the more the can would be kicked and the odds of the person who was “it” ever getting to hide and have fun was rare.

When I first started my sales career we had all the information. There was no internet, chat rooms, social selling, LinkedIn industry groups or Twitter. You met with buyers, listened to problems and presented solutions. We had our sales bags with three ring binders full of sell sheets, data sheets and pricing. Buyers had to meet with you, or at least speak with you, to learn about products, and gather competitive information on the products they bought. We built relationships with buyers at target accounts and after answering the buyers’ questions over time you would work your way into an account. Buyers respected the reps who never gave up. Most reps, even today quit the sales process after two contacts but most buyers engage with new sales people after 8-12 interactions. Today however, not only are buyers searching for solutions long before they speak with a salesperson, they can conduct searches from their smart phones at any time of the day in an instant.

Buyers today have researched your product, your competitor’s product and have a perceived market price for your product or service before they speak with a salesperson. As Dave Meerman Scott shared this week’s in his post about the new edition of New Rules of Sales and Service : “many people are failing to engage their audiences by continuing to apply the old rules in a new age “.Unfortunately some salespeople are counting on getting a second chance to quote ( a second kick at the can) and lead with a high price. They are counting on an old rule tactic of “kick the can pricing” and lose sales they could have won.

Not familiar with kick the can pricing?

It goes something like this….

A salesperson has been working an account for some time and gets an opportunity to quote a product or service. This same salesperson has heard from their leadership they need to sell on value and not price. If the salesperson does not know the market value or the value to the buyer for the product or service they quote at a high price with the assumption that if they quoted too high they will get “another kick at the can”, a second chance to quote. The trouble with the second kick at the can belief in today’s market is it just does not work. Just as sales has changed dramatically so has purchasing.

-Buyers are doing research and know a fair market value for your product or solution. Failure to fall in that range, unless you have a significant distinctive competence, breaks trust and you lose the sale (and probably all future quote opportunities).

-Buyers have seen more and more products being added to their responsibilities due to corporate consolidation. Their work load has increased based on the assumption they can leverage technology to do more with less. Buyers today want to source products that meet their buying criteria, solve purchase needs and move on to the next purchase. Kick the can pricing involves opening a purchase they have already solved. If you are trying this tactic, you must have a significant compelling reason to open a purchase they considered closed.

-Many buyers are buying just in time and make buying decisions quicker. By the time you try to kick the can again it probably has moved on.

-There are more people involved in the buying decision, particularly from new vendors. Buyers present their data and make buying recommendations to a team in some cases. The team decides who to purchase from. It is difficult (I have heard near impossible) to ask a buying committee to review a second quote from a salesperson playing kick the can.

-Buyers today often ask for proposals from 3-5 or more vendors and expect sales to lead with a price and service proposal based on the value their product or service provides. Their solution will be compared to the relative the market price the buyer discovered on their buying journey. When sales tries to kick the can, and ask for another try to win the order, they basically release all the prior captured quotes and free every other possible vendor to play the re-quote game.

-Buyers are looking for better solutions, a new supplier with a distinctive competence and if your product lacks one or has a dated value proposition, then all buyers can look at is price.

-Many buyers today have sophisticated purchasing systems that make it difficult to revisit a particular quote and some have estimator tools on what your selling price should be.

What’s the best solution to solve the “kick the can” pricing game in your organization?

Market knowledge…knowing your market, the value your product has to the customer, and having a clear value proposition.

Products today, more than ever before must be priced strategically based on the market value to the customer. Cost plus pricing and kick the can pricing games stopped working when the buying power shifted to the buyers.

Do your salespeople ask buyers for another kick at the can?

Does your sales team understand your value proposition?

Does your value proposition resonate with buyers today or is it dated?

How’s that working for you?

Has your sales close rate gone up or down in the last 12 months?

Do your buyers at your company allow salespeople to take a second (or third) kick at the can when they sell your organization?

How can we price products strategically in this “new world of sales and service?”

Just as buyers have more information readily available to them than ever before, sales and marketing teams also have data if they know where to look and learn to price their products and services strategically.This requires market knowledge , understanding the value your product provides to customers, and positioning . Salespeople sell on price when they do not understand your value proposition or it no longer resonates with your buyers today.

How do you price strategically? That will be the topic of my next post.

A cup of tea, and why strategy work is so difficult

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Why is strategy work so difficult? What is the secret to developing strategy that drives profitable sales growth? Why will 90% of strategic plans fail? There is a high probability as you read this post your sales and marketing team have already decided the strategy your senior leadership team developed is not working and have retreated to the way we have always done things around here. Why? …and more importantly what can we do to create strategies that result in repeatable profitable sales growth? In this post I will share why most strategies are doomed to fail and how to write strategies that result in adding value to your business.

First we need to be grounded in common definitions because there is a lot of confusion when it comes to strategy work.

Strategy

Strategy is a careful plan or method for achieving a particular goal usually over a long period of time.

The skill of making or carrying out plans to achieve a goal

Marketing strategy

A marketing strategy is a process or model to allow a company or organization to focus limited resources on the best opportunities to increase sales and thereby achieve a sustainable competitive advantage.

Product Strategy

Is often called the roadmap of a product and outlines the end-to-end vision of the product and what the product will become. Companies utilize the product strategy in strategic planning and marketing to identify the direction of the company’s activities.

Sales Strategy

A sales strategy is a plan by a business or individual on how to go about selling products and services and increasing profits.

Tactics

Means by which a strategy is carried out; planned and ad hoc activities meant to deal with the demands of the moment, and to move from one milestone to other in pursuit of the overall goal(s).

Now that we have some common understanding with words we hear often throughout the day we need to identify the leading reason why 90% of strategies (like those your team is supposed to be executing now) will fail.

One word: ….Hubris

Unlike the words strategy, marketing strategy and tactics, hubris is not a word often used so here is a good definition:

Hubris is from Greek, where it meant “excessive pride, violating the bounds set for humans” and was always punished by the gods. We no longer have the Greek gods, so in English it just refers to over-the-top self-confidence. If you call yourself the best in something, you better have the goods to back it up, since too much hubris can lead to embarrassment and humiliation. It’s an age-old human failing: pride goeth before the fall.

I have been very fortunate to have great mentors in my life that gave me gifts. One gift I use in strategy work ironically came to me through my Karate instructor Sensei Bill Marcum. I was attending Kent State University and I needed a non business elective so I took Isshin ryu Karate. After a few classes the instructor said she thought I seemed to catch on quick and I might consider joining the Isshin Ryu Karate club on campus go deeper than her class can offer.

I joined the club and the first year or so was just the basics and I grew anxious to learn more combinations of moves I could use in a self defense situation. The time came for me to start Kumite which is free style fighting. I found when I practiced all the new moves I was learning I could repeat them without much correction. When I stepped into the ring I went back to boxing which I learned at an early age. Looking back part of it was hubris….pride, not wanting to loose, not wanting to be embarrassed and the bigger part was what I was learning was new and often strange compared to what I have known for years and that I knew worked. However I was never going to become skilled in the new , better techniques if I did not start doing them.

My instructor pulled me aside one day and read me a story titled; A cup of Tea out of a book: Zen Flesh, Zen Bones and it went something like this..

A Cup of Tea
Nan-in, a Japanese master during the Meiji era (1868-1912), received a university professor who came to inquire about Zen.
Nan-in served tea. He poured his visitor’s cup full, and then kept on pouring.
The professor watched the overflow until he no longer could restrain himself. “It is overfull. No more will go in!”
“Like this cup,” Nan-in said, “you are full of your own opinions and speculations. How can I show you Zen unless you first empty your cup?”

Just like Nan-in, my instructor Sensei Bill could not teach me new techniques that will feel and probably look awkward at first until I un-learn what I have been taught and believe to be true. The same is true when doing strategy work to fix sales problems.

I found a great quote in a book I am currently reading by Greg Bustin about accountability I want to share…

How do you develop a strategy that works and results in profitable sales growth? You need a few heretics on your team to challenge truths and beliefs your strategy is built upon. In Art Kleiner’s book titled: The Age of Heretics , Kleiner‘s definition of a heretic is:

“a visionary who creates change in large-scale companies balancing contrary truths they can’t deny against their loyalty to their organizations.”

He discusses how managers get stuck into a rut and need heretics to point out new points of view to get past the deadlock and move forward. Later he describes some as “rebels unwilling to kowtow to the corporate bureaucracy.”

I also have used this quote by Peter Drucker often to keep me motivated…

“My greatest strength as a consultant is to be ignorant and ask a few questions.”

If your team wants to be one of the 10% of companies that have strategic plans that work…empty your tea cup of how you think the market works, how we do things around here, how things have always been… Fill your cup with current market data gathered from both customers and prospects recently sharing why they buy and do not buy today.

Strategy work is difficult so we should not be surprised so many strategies fail to be executed and fail to deliver on their promises to increase sales and profits. To insure your team does not fall into the trap of assuming why buyers buy and why they don’t you must tune into your market on a frequent basis and adjust.

Does your team have a strategic plan that is driving explosive sales growth this year?

When was the last time you conducted a SWOT analysis?

Do you have a culture where your salespeople are safe to share market truths?

When was the last time you adjusted your value proposition?

Are you a salesperson asked to sell with a value proposition that is no longer true? How’s that working for you?

As the leader of your organization is it time to conduct a value proposition gut check?

If you would value more to read on this topic may I suggest?

Report: How to Make Your Number in 2016

Your “gut” and “intuition” are not enough…today

Why do 78% of Sales Strategies Fail? … Culture Must Come before Strategy

Will Your Strategic Plan Work?

9 Easy Steps to Developing a Marketing Strategy that Drives Business Results

Differentiation – Is Yours Real or False?

7 Key Steps to a Growth Strategy That Works Immediately

Are “Politically Incorrect Market Secrets” (PIMS) Stalling Your Sales Growth?

Stop Asking Your Salespeople to “Sell Naked”

Increase Sales and Profits; Create Distinction!

Stop Making Your Salespeople “Assume The Position” …

If you have other content on the subject of how to create strategies that increase sales please add a link in the comments section.

Pic credits http://www.freshesttea.com/black-tea

Will Your Strategic Plan Work?

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Why do 90% of strategic plans fail to produce the desired results? Why do only 14% of CEO’s say they do a great job when it comes to strategic planning? If this is true it should not surprise us when we hear 95% of most organizations employees do not understand the organizations’ strategy. Strategic planning is not as complicated or as time consuming like most people makes it out to be. In this post I will share the back of the napkin basic approach to writing a strategic plan that adds value and positions your team to achieve its goals. In future posts I will drill deeper in each of the common steps to insure your team is not one of the 90% who fail to execute…again.

If you ask 12 business leaders to describe strategic planning you will hear 12 different answers. People will often answer that question based on the discipline they are in and their experience. What I have seen with a number of leadership teams is each team member will describe what they feel the plan is specific to how it impacts their department. For example a CFO may share a plan that shares the financial costs and estimated financial forecasts when we hit “the plan”. The COO may share more of an operations type view that discusses aligning the business operations to support “the plan”. CEO’s will often speak in specific deliverables they promised the board… and so on. It’s only human nature to view the world through the lens of your personal experience and background. The trouble is true strategic planning is when each disciple comes together with an over arching plan. Once the plan is in place follow up meetings are scheduled to review KPI’s and make adjustments as needed. If your team is new to strategic planning the first mistake they will make is jumping to quickly into the weeds and sharing tactics and not doing the strategy work. The result will be a failure to execute the plan, because the plan lacked a foundation in a strong strategy.

Nothing frustrates CEO’s more than spending time on a strategic plan no one executes.

Over the holidays I had a chance to catch up with some friends and past clients. Jason, ( not his real name) the President from one of the companies I helped years ago invited me to lunch. Once we caught up he shared the reason he reached out to me: “I think we have a good strategic plan this year, can you take a look and get back with me?” From the nature of the question I was already concerned. So I asked a few questions…

Do you think the plan is strong and will deliver the results the board is asking for?

That’s the trouble Mark, I thought the plans for the last few years were spot on and we failed to hit plan each year. The team clearly knew the goal and failed to hit it. I am losing credibility with the board and some of my senior team and I cannot have another year where we fail to achieve our goals.

If I asked your senior team what strategic planning is could they answer me?

I hope so…I think they should since we have been doing it for years.

In the last calendar year did your plan fail or did your team fail to execute the plan?

(long pause) … that’s a great question , I never thought of it that way ( but did not answer the question)

OK, let me know what you thought would happen if no one on your team did anything new, anything different than the prior year?

I’m not sure off the top of my head… we clearly identified that…. but I can get you that number.

What did you need to hit last year?

( very quick answer, almost before I finished the question) We needed to achieve $X million in sales and $ gross profit and $ net profit. (based on how fast and clear he stated the answer this was a goal he owned)

What was the delta? The GAP between what you should hit and need to hit?

We needed to grow our sales 18% at X% net margin to hit our goal.

How did you plan to cover the GAP?

We planned to hit the goal based on growing current customers and opening new customers.

What is your team’s distinctive competence, the thing that makes your team unique that your plan was built on?

I’m not sure I understand what you are asking. You did work with us a while ago; you know we have the best service, best people, best products, best quality …. We just need to sell more!

… And that’s where the wheels fell off the strategy train for me. The rest of the discussion was specific to each business unit and ended with how sales …”just didn’t make it happen”. So I took a napkin pictured above and shared the basics, the root of any good strategic plan.

What do you think will happen?

What do you want (need) to happen?

What is the delta? The Gap between what you should do and need to do?

How will you fill that gap?

What will you leverage to achieve it? What is your distinction in your markets(s) you plan to leverage?

It is the last question is the most important indicator of future plan success or failure It is the one question most companies fail to answer. If they do answer the question they pick what they feel is what makes them unique in their market. Some teams share what it was or believe they can will it to be.

Very few teams can clearly share their value proposition in a short elevator pitch that resonates with their buyers today. When strategic planning is done properly and is communicated every team member should know your distinctive competence and how you plan to leverage it.

I connected Jason with a friend who also does strategy work following the same model I have used. I recommended he use my friend to facilitate the meeting discussions and gave him a list of questions to ask his customers and prospects prior to the meeting.

“The leading reason why 90% of strategic plans fail is they lack marketing strategy.”
– Mark Allen Roberts

How about your company…

Do you have a Strategic plan you feel will work this year?

Does your team have a history of hitting or missing your strategic objectives?

Is there a common reason why you miss plan?…or did sales just not make it happen again?

The gathering of market data and each business disciplines home work is the easy part of strategic planning. Unfortunately where most teams fail is in identifying the “how” they plan to achieve the objective…the strategy. The reason in most cases is they lack or have a dated value proposition they can leverage and have not been taught strategic planning. In my next few posts I will drill a bit deeper into this very important topic and I welcome comments and questions.

Does Your Website Clearly Convey Your Brand Promise?

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How do you compete with huge accounts that seem to have bottomless pits when it comes to advertising and media buys?…Smart internet marketing! The average buyer decides if a web site is right for them in 3 seconds to 1 minute. As I shared some time ago: you have a minute to win it when it comes to online sales. How do market leading companies insure buyers find what they are shopping for quickly, stay on their website and buy? I found a new company that clearly understands how to sell products online: Buffalo Head Leather.

As I watch retailers scrambling for position in the minds of buyers for black Friday sales I can’t help but be somewhat amused by the poor branding and positioning. Do these retailers who now sell online not understand marketing and positioning or they have become so lazy and complacent they just hope throwing it on the wall to see if it sticks is good marketing? Are they now aware that up to 60% of the buying process is completed online before a buyer interacts with your company?

When I look at the ads and the visual imagery chosen to sell a particular product I often wonder what if any consideration occurred for the brand of the retailer and the product when designing the communication? Who are their buyer personas? How well do they know them? The ads that now fill my newspaper, television and websites I visit are all the same. They have dumb-ed down their marketing, positioning and branding as if they assume “everyone “could be a customer.

So imagine my delight in finding a new company online: Buffalo Head Leather. This new company makes and sells leather belts, wallets, key holders and accessories made from buffalo hides. When you visit their website they clearly understand the importance of imagery to support your brand and positioning. In addition this site loads fast. More searches are now done on mobile devices than desktops. I have read studies that share you web site has 3 seconds to load or a consumer will quickly bounce to the next site listed in their Google search. This site loads quickly and it was designed to be mobile friendly. Web sites that are not mobile friendly are quickly becoming invisible as I shared in a post titled; Is your web site invisible.

When I found this new company they obviously have done their homework in terms of marketing specific to branding, positioning, their ideal customer and buyer personas. The imagery found on this site says to me;

We make a high quality product that is competitively priced
Our research shows to target men
Our products for successful people who value quality
We did research and it showed consumers have a concern that Buffalo’s are endangered
The shopping experience is easy and fast
We believe in creating images and content so our customers can easily share us
We are not the cheapest

This site reminded me how new companies often execute better than companies who have served markets for years. New companies understand the market today and do their research. New companies take the time to define their buyer personas and their imagery and content supports their brand and positioning. I just ordered a book titled Exponential Organizations: Why new organizations are ten times better, faster, and cheaper (and what to do about it). I look forward to reading this book and discussing this topic future posts.

I was so impressed by marketing strategy well executed and the quality of their products I reached out to the company. I spoke with one of their owners who has experience in marketing buyer personas and visual imagery. I asked if my perception of what he was communicating online was correct and I think he was surprised how much I knew about his brand after just a few minutes on his website.

Below are a few of the questions I asked:

Any challenges in his market verification stage? He shared that when they tested their messaging prior to launch a common concern buyers expressed was a perception that buffalo leather was stiffer than cow hide leather and actually the opposite was true so he directed me to a web page that shares the difference and how products made from buffalo are actually softer.

I noticed you are not the only site or the first site, how do you plan to compete? Authentically sharing who we are, what we represent and everything we do is about a total quality experience. We are committed to knowing are targeted buyers and helping them buy , helping them shop.

What else? We believe in speaking to communities, the “tribes” Seth refers to. We have a facebook page, a newsletter, pinterest and instagram presence.

Why pinterest and instagram when your buyer persona is successful men who value quality products? Our research showed men want quality products, accessories if you will. Some shop searching for imagery and clicking pictures that match what they are looking for hoping the image brings them to a site to purchase. More importantly, we found successful men are hard to buy for, and women often shop for gifts for them on line. So based on how many women use pinterest and instagram we had to establish a presence there.

How about your web site?

Does the imagery speak to your buyer personas?

Does your web site proactively speak to concerns your buyers have that interrupts their buying process?

Is your web site mobile friendly?

Is your company at risk of a branding and positioning savvy new competitor entering your market and being 10 times better and faster?

Does your website imagery and content clearly convey your brand promise?

Congratulations to the buffalo head leather team for doing your market work prior to launch and positioning your products. It is time we all take the time and clearly understand our markets, buyers and buyer personas. We must create content and imagery that quickly resonates with our targeted buyers or they will find another site that does.

How do I correct sales problems after a market shift?

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Your sales team was aligned and equipped to have a strong sales growth year. Your team created sales playbooks, buyer personas and new sales tools to insure you hit your sales goal (this time). Your team was building a strong momentum and then it feels like someone turned off the sales faucet. What just happened? What probably occurred is your team has experienced a market shift. How do you fix sales after a market shift? In this post I will share the strategy I have used when we experienced a market shift. ( and it’s not likely you are starting in the right place)

Before we discuss the strategy to refocus your sales efforts I want to remind you of a quote from my last post that shared various caused of market shifts. I used the below quote for years as a filter when asked to help companies in the middle of a market shift or more often after a market shift.

“Are you prepared to stake everything, change anything, and do whatever it takes— even if it means altering long familiar habits, redeveloping precious programs, and redeploying sacred assets?”

– Tom Bandy

A market shift will cause your company to change and adapt to the new reality. The degree of the shift and the severity of the shift’s impact on sales performance will determine just how much your team will need to adapt.

I can hear some skeptics saying …”We have been doing business this way for 15 years and we do not need to change, we need to wait until the market goes back to normal” The trouble is when your market shifts, you will never go back to normal.

Don’t believe me when I say how much markets change and shift? OK, how many people reading this have a Myspace account? From 2005 to 2008 Myspace was the most visited website in the United States, even more than Google! Today? Myspace is ranked 1272 on most visited website. What happened? A shift! New companies felt the shift and created products buyers wanted to buy.

Or listen to a leader who transformed shopping with Zappos.com.

“There’s a trans-formative shift in business, and what worked before is no longer an option. It’s time for evolved entrepreneurs, visionary creators, and change makers to rewrite the rules of business for the 21st century.”

Tony Hsieh, CEO of Zappos.com

Or read one of my past posts about when sales plans fail and how to adapt.

Do you agree markets shift ?

Assuming you are willing to adapt and change: “how we have always done things around here” in this post I will share the process I have used over the years to help sales teams fix sales problems due to a market shift.

Meet with your key customers who represented 80% of your sales opportunity before the shift. What you are looking for in these meetings is to clearly understand what shift occurred, when, and more importantly how your buyers plan to react to this shift. Having faced market shifts many times the first reaction for most sales teams is to target new customers. You may need to do this if your current market is not likely to produce sales to meet your sales goals. You must clearly understand what changed, how your buyers are and have reacted to that change.

Improve overall buying experience. Take the information you have gathered and update the way you deliver solutions to your market based on the way they want to buy and receive them.

Explore for technology shifts. Was the shift due to a technology shift? (72%) of business leaders think technology will transform their company’s competitive landscape in the coming years according to an IBM report .

While meeting with your key accounts ask if there are other departments within their organization that would value your team’s distinctive competence. Why? One of the reasons why buyers do not buy is risk. Can this new vendor execute what they are promising? Is their quality as good as they say? Will it be easy to work with them of difficult? The more a buyer feels there is risk the less likely they are to engage with a new vendor. The exception occurs when you are a:”vendor of record”. Your company is in their system. You are set up to receive purchase orders, get paid and so on. Assuming you have done a great job you can share your on time service statistics, your billing accuracy and have your other buyers refer you.

Based on meeting with your accounts you need to gather what you learned and create the following I shared In a post some time ago :

Write a market truths document based on gathered current data

Highlight strategies and tactics in your current sales plans that are no longer in alignment with the market of today

Asses your internal truths, capabilities, discard action items that do not support your objectives

If your team lacks a motivation to serve your market, create one

Determine your ideal customer profile

Write a plan you will execute based on the information you have gathered from the market and your capabilities. (allow some flexibility, design your sales plan to be Agile)

Once you complete the above you need to determine if making adjustments in your current markets with current customers will provide sufficient sales opportunity to achieve your sales goal. If yes proceed with executing your plan and you will not need the following steps.

After you have gathered your current market truths and internal truths and you determine your market does not have the opportunity necessary to achieve your sales goals please continue with this process and complete the following steps:

Find other accounts in the same market you have not sold yet. In most of the companies I have helped their “customers” have represented 20% to 30% of the entire market. In this step you will identify other accounts in the same market that are likely to have similar problems as the account(s) you have been selling. Keep in mind when business slows down buyers have time. They have time to meet with new vendors and they often have new goals like specific cost savings targets. When you discover this to be the case make sure the solutions you propose are shared in a way that speaks to the buyer’s company and personal goals.

Explore surrounding markets that include accounts buying products like those you supply. I look for adjacent markets that are interconnected to the markets I have been serving.

Expand your search for new markets that have similar problems your current market has. The key is to clearly understand your companies’ distinctive competence. What is your product or services’ value proposition? Is that value transferable into new markets? Ideally you want to find one to three accounts and test your assumption. In this process you will learn new information and a new language for the new market. Assuming your test clearly demonstrates value, you will want to scale that solution in the language of this new market.

Design new Innovate solutions if your current products no longer solve your current customer’s problems.

Share innovative new products in your current markets.

Share product innovations in adjunct markets

Share product innovations in new markets

As you lead your team through the above process you need to stop when a step will achieve your desired sales goals. For example, let’s say as you explored adjacent markets and you found a number of new accounts who agree with your value proposition, have agreed to buy your products and their sales will help you meet goal. Stop and execute. Stop following the steps and focus on executing in the adjacent market. Why? Why wouldn’t you have us do all of the above just to play it safe? Three reasons;

Focus – you want to lead your sales team with as clear a focus as possible. When you lack focus your team will be “very busy” but fail to achieve desired results.

ROI- The farther your team expands from your known core business the less RIO you will realize in the short term.

Timing – Often when sales teams experience a problem they have a short window to fix the sales problem. The farther you move from your core the longer it will take to win sales.

Have your sales taken a downward turn?

Did your sales team experience a recent market shift?

How does your sales team fix sales problems due to a market shift?

We serve dynamic markets and we need to expect them to change. When you experience a market shift the key to reacting and fixing your sales is clearly understanding the shift and having a systematic approach to finding new sales to insure your sales goals are still achieved. Most inexperienced sales managers will quickly launch into a new market. Why take this strategy that has a history of the slowest contribution, lower ROI per sales transaction and highest risk when a current market or a market close to your core will fix your sales problem? The above is the process I have used for years and I welcome comments on other processes and advice for when market shifts occur.

Increase Sales/Fix Sales Problems: Do a Midyear Sales Gut Check

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Last year approximately 70% of sales managers achieved their sales goals and of that approximately 10% surpassed their goals. So that leaves 30% of the sales manager’s not hitting plan in 2013 and in 2014 their sales regions received another increase.

What can those at plan do midyear to insure they close the year at plan?

What can those not at plan through the end of June do to insure they hit plan year end?

Quick question: How are your sales performing to goal? If you are like most companies this year’s goal was difficult as we scratch and claw our way out of the recession and you just might hit plan. How can you be sure you not only hit your sales plan but exceed it? You need to perform a midyear sales gut check.

I have been leading sales and marketing teams for more years than I like to admit. (over 30 years… but who is counting) I have used a simple process that has often resulted in a dramatic increase in underperforming sales regions as well as keep the momentum building in regions at or above plan: a midyear sales gut check. What we do is basically review each sales region’s performance to the sales playbook you prepared when the year began. Now that half the year has passed we need to review how the region performed to the sales plan we developed to hit sales objectives. Change and the rate of change is constant in our dynamic markets and as Sales Benchmark Index shared in a recent review on Jill Konrath’s new book Agile Sales discusses:

“Fighting these changes, or denying they exist, is pointless. You need a new skill to cope with being an overwhelmed worker. The skill needed to exceed in this environment is agility.”

If you have never done this process I want to share how I have done it in hopes it adds value to you and your salespeople. I also highly recommend you buy Agile Sales. As David Meerman Scot shared in his recent post; Agile Sales Requires a Real Time Mind Set. Good sales leaders are always asking questions and practicing what I refer to as: Clean Sales Management. Your midyear sales gut check needs you to direct your questions internally as well as externally.

What did we set out to do this year? (restate goal(s) and how we agreed we would achieve them)

What are our goals in dollars and profit dollars contributed from sales?

Where did we expect them to come from?

How has this region performed through the end of June to the goals you established for the current sales year?

What is working? (and you need to do more)

What did you think would work, has not produced the desired sales impact and you need to stop doing?

What have we learned?

What are the results on key performance indicators that drive top line results? (discuss each)

Has the market experienced any strategic shifts that can be trigger points for new sales or challenges to existing sales?

Based on the data discussed what will be your three key focus areas for the rest of the year?

If you had to pick just one, with the intent that perfectly executing that one would make the other two obsolete…what would it be?

A midyear gut check is something I like to perform both for the businesses I am serving but also personally and I have added this process to every team I serve. If you have not tried this process I highly encourage you to do so.

Let me leave you with a few questions that may make you want to try this process…

How is your team performing to plan YTD?

What did you plan for this year and it worked?

What did you plan and it did not work?

Based on what you have learned what changes have you made to insure the sales plan is achieved year end?

( if I served on the board of your company this is one question I have asked that has left the best CEO’s pale and at a loss for words)

As the team who has been tasked many years with” just making it happen” we need to have the desire and process to gather current market data and agilely approach our markets to insure we achieve and surpass our sales objectives.

Does your team practice agile sales?

How to Create “Sales Velocity”; Turn “Street Legal Salespeople” into Servant Salespeople

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It’s not enough to just be “street legal”

I am often asked by business owners and leaders; “What is the best way to create sales growth that becomes repeatable and predictable?” I prefer to phrase this somewhat differently to achieve what the business leaders really want;

“How can I create real Sales Velocity?”

When I hear someone say;

I want more sales

I need more sales

How do I increase sales quickly?

What I immediately think is ; how do we create sales velocity for this team? In this post I will share one way to insure you build a foundation for achieving and often surpassing your sales goals by creating Servant Salespeople .

So what is “sales velocity”? In a previous post I said;

Sales Velocity is Sales Acceleration, with Direction and creates Momentum.

Sales velocity is not just “more sales”. When you ask your team to “go get more sales”, or my favorite with regards to hitting their sales growth goals; “just make it happen” you are in essence saying any sale is a good sale. We all know this is not true, but what will happen is sales will take a shotgun approach to the market and often bring in business you may not want and worse yet may not be able to execute effectively and create brand damaged buyers. In addition to often permanently damaging your brand in the marketplace you also run the risk of turning your salespeople into “snake oil salesmen” and they will make all kinds of promises your product or service was never meant to do. If left unchecked you will receive crazy orders you never should have received from customers you will never extend credit to and your team will jump through costly hoops to try to fulfill them.

When I used to conduct sales and marketing seminars, I would share the worst kind of business to win is one order. Once you win that “one order” you now have the liability of servicing it, hearing customer complaints (often now through social media), and sales assumes the position you want more orders like this.

I was in church last Sunday at Grace United Methodist Church and Pastor Don was talking about how it’s not enough to be a “street legal Christian”. Don does a great job of telling stories that have analogies to help people understand the message. In this message he shared how he and a buddy when they were 16 years old had this old beater of a car. He shared how the steering wheel had about 90 degrees of play in it and how the floorboards were all rusted out and you could see the pavement while driving. They had a rear brake light broken out so they covered it with cellophane and used red paint to make it look and somewhat work like a brake light. The car had all kinds of issues but technically it was “street legal”. The car met the basic requirements to be on the road, but really should not have been driven as it was an accident waiting to happen.

Don later pulled this analogy full circle and shared how Jesus taught us we are not to just be street legal Christians that go to church, maybe read a bible once in a while and go through the motions. As I drove home it dawned on me I have seen this many times over the past 30 years in leading sales turnarounds with “street legal salespeople” too. They have the title of sales and they go through the motions of sales but really do not have the heart to serve their clients and solve their customer’s problems.

What is a Street Legal Salesperson you might ask?

Received some basic product training.

They have some understanding of how to reach buyers.

They want to hit their sales goals and corresponding commission checks.

They often have some bad sales habits.

They come close to hitting their sales goal each year, not terrible but not sales super stars.

They try hard.

They are often commission junkies. (not their fault by the way)

At or below the acceptable targeted profit margin for your product or service.

Have problem customers, who complain, pay late or not at all.

When you hear them on the phone with a customer you cringe, but if it works… ah what the heck…

They go through the motion of sales…

The role of sales has evolved over the last 30 years from my perspective. At one time the salesperson was the keeper of the information keys. They did not need to be as good at listening and understanding customer needs as they needed to be aggressive and persistent and know their product inside and out. The salesperson had all the product information and used their sales product binders to answer questions as they arose. They worked hard on relationship selling. Back in the day we taught salespeople the objections buyers would probably make and how to overcome objections.

Next we saw sales consultants/ consultative selling emerge as product experts who would help buyers understand how their product or service might solve the buyers’ problems. In essence they were sales translators who translated what their products did in a language buyers understood once they found a problem they can solve.

Then the internet shifted the power from the salesperson to the buyer. The buyer now can Google almost anything and now has access to the product information keys. We have seen social selling emerge as buyers investigate products and their salespeople with tools like LinkedIn, blogs, online case studies and industry group forums where they openly share poor buying experiences. Buyers are connecting with companies who are seen as thought leaders and they make it their quest to understand buyer problems, criteria and buying processes.

I believe the next sales person emerging is the Servant Salesperson.

What are the characteristics of Servant Salespeople?

They understand the various buyer personas in their market.

They understand why buyers buy and how buyers buy.

They understand the buying process and criteria buyers use to buy.

They are constantly sensing their market for any changes in how buyers buy.

They listen for problems buyers’ share that can be solved by their product or service.

They have a continuous improvement approach to both product and sales training.

They do online research prior to reaching out to a potential customer.

They have large social networks with many customer referrals praising their service.

They ask open ended questions to understand buyer problems.

They seek first to serve and believe if they solve customer problems income will follow.

The days of snake oil salesmen promising their products and services do whatever the buyer needs is over. Buyers are seeking authentic sales servants who seek to win their business by completely solving their problems,providing the best total buying experience, and salespeople who help them buy. Buyers today see a commission junkie coming from a mile away. Aggressive salespeople are blocked and filtered with email, voice mail and gate keepers. Buyers are looking for salespeople who are focused on serving them.

What stage of selling is your sales team in today?

Would a “servant salesperson” be welcome in your organization? Why or why not?

Why wouldn’t a buyer in your industry welcome a “servant salesperson”?

Just as we are not designed to be “street legal Christians” buyers today do not want “street legal salespeople” who go through the motions of trying to solve the buyers problems.

Servant Salespeople create sales velocity because they authentically seek to solve buyer problems.