In the last few years,  I have several times been invited, as a prelude to training programmes, to address teams of Sales Managers on how to grow their business without simply sacrificing profitability.  This article is a blend of the content of those addresses.

Your Market Pie

For the sake of this discussion, the pie represents the sales market you compete in, i.e., the available new sales every month.

You get your share of the market, and in a well-developed, highly-saturated market it probably doesn’t vary too wildly.  If you averaged 10% of your market last year, you may go up or down a little this year, but it’s highly unlikely that you’ll get 20% or 5% this year.

The natural tendency, (admittedly often driven by manufacturers’ or business owners’ short term focus on sales targets)  is to try and cut a bigger slice.

Let’s say you normally average 10% of the market and you decide to go for 12%.  The fastest way to try and do this is to sell cheaper.  So you start discounting harder but this doesn’t just affect you – it affects your competitors as well, who may have to match or beat you on price.   It’s not uncommon for every business to have ‘loyal’ customers who will buy from their regular supplier, but will get a comparative price from another supplier, just to check.  As more businesses blindly pursue volume on price, our research shows that they don’t create many more customers, but they give even more money to the customers who were going to buy their product anyway.  Money for nothing!

Imagine that your market is a ‘money pie’ and, having made the first cut into the money pie each month, you are moving the knife into position to make the second cut that will define your slice of pie.   The further you move your knife, the thinner the pie becomes.  So by trying to simply cut yourself a bigger slice, you get less and less pie ‘filling’ and end up with empty pie crust.

The wider you cut, the flatter the pie gets – but not just for you – for all competitors in your market.   This is a compounding problem as you then educate your customers to expect bigger and bigger discounts.  You may even lose your astute customers who are suspicious of this sales desperation and are aware of what this activity does to things like service, attention to detail and (if applicable) resale value.

What to Do?

As a Sales Manager, there are broadly two approaches you can take to get a bigger slice of pie:

1.    Try to Cut Yourself a Bigger Slice as fast as possible

2.    Make the Pie Bigger

Let’s look at these two choices in more detail…..

1. Cutting Yourself a Bigger Slice

This is what you do when you get desperate for sales numbers or market share.  You just try to grab any deals you can.

Some activities associated with this choice include:

•    Taking a broad ‘shotgun’ approach to marketing.  Examples: Advertising on mass-marketing websites, deliberately marketing outside your Prime Market Area.

•    Giving prices other than RRP over the phone or publishing discounted prices on the internet.

•    Letting salespeople sell management instead of the customers.  Example: A customer starts discussions with the salesperson with price and within a minute or two the salesperson is standing in your office with a credit card and a ludicrous price offer, trying to ‘sell’ you on why you should sell at a significant loss.

•    Little or no sales training

1a.Effects of Cutting Yourself a Bigger Slice

•    Detrimental effect on customer service, customer satisfaction.

•    ‘Rewards’ the customer for shopping around, so encourages them to keep shopping around, not buying. Often confuses the customer and gets them to buy the wrong product for their needs.

•    Significantly reduces the profit for yourself and other businesses in your market.

•    Sets new discount benchmark for customers, making future profit even more challenging.

•    Reduced available sales opportunities because there is less profit to invest in creating new business.

•    Less profit to invest in facilities, staff, training, goodwill, stock.

•    Loss of profitable repeat and referral business.

•    Educates and rewards salespeople to be lazy, undisciplined and unprofessional.

•    Detrimental effect on resale values, if applicable to your market (deterioration of another sales advantage v. your competitors’ products)

•    Reduced ability to attract quality sales staff due to reduced remuneration.

•    The size of the pie (and your sales) are at the mercy of the market / economy.

•    If everyone’s trying to cut the pie thinner, but no one’s growing the pie or baking bigger pies, this has a shrinking effect on your potential market size.

2. Making the Pie Bigger

This is what you do when you stay committed to fulfilling the full array of customer needs, selling value over price, and aiming to retain a fair gross profit and build customer satisfaction.

Some activities associated with this choice include:

•    Targeted marketing:    to your existing client base and to your Prime Market Area.

•    Focus on providing personal service and maintaining enough gross profit to keep the business sustainable long-term.

•    Implementing systems and procedures to ensure customers receive professional, effective service and a better experience.

•    Regular training of your sales staff to develop a higher level of sales and customer service skills.

2a. Effects of Making the Pie Bigger

•    Improves customer satisfaction and customer loyalty levels.

•    Educates the customer that shopping around isn’t necessarily the best way to get true value for money.

•    Buoys the profit for yourself and other suppliers.

•   Doesn’t create future unsustainable price expectations in the customer’s mind.

•   Increases available sales opportunities because there is more profit to invest in creating new business.

•    More profit to invest in facilities, staff, training, goodwill, stock, etc.

•    Increase in profitable repeat and referral business from satisfied customers.

•    Educates salespeople to be more service-oriented (instead of price-oriented) and more disciplined.

•    Enhanced resale values (increases sales advantage v. your competitors’ products)

•    Better ability to attract quality sales staff due to better available remuneration.

•    The size of the pie (and your sales) become more insulated against the economy / market.

Some Suggested Actions (for making the Pie Bigger)

Marketing to your existing clients and your Prime Market Area is an extensive topic, so in the limited time we have available today, I’ve chosen some sales enhancement suggestions.

Furthermore, marketing has the potential to be a huge waste of money unless you have the systems and procedures in place to accurately track and convert the resulting enquiry into sales.   Here are some suggestions, or reminders on effective ways to make the pie bigger:

1. Measure the size of your discounts and over-allowances, not your retained gross.

By simply measuring gross, we can congratulate ourselves on the $50,000 gross profit we made for the month, perhaps from making 100 sales.  Instead of counting how much we kept, if we count how much we gave away and aim to minimise it, we are already taking a perspective that is conducive to better gross (having to then justify the price difference, encourages salespeople to professionally justify pricing, focused on the customers’ needs).

2. Test your salespeople’s knowledge of your USPs (Unique Selling Propositions)

Without warning, call your salespeople into your office one at a time. Ensure you won’t be interrupted.

Ask them what is their best selling product in your range (it may vary for different salespeople).

Then ask them what is the most common competitor they are up against on that model.

Then ask them what are the top 5 benefits of their top seller v. its No. 1 competitor.  If they don’t know, or give you fluffy answers like ‘styling’, ‘finish’ or ‘design’ then they are losing you tens of thousands of dollars.

Note: A salesperson knowing the answers to this is not even the ideal situation, as an effective sales professional will be far more advanced from this, but them not knowing is very damaging to your business.

3. Test your salespeople on BEST PRICE demands

Separately from the previous exercise, call your salespeople into your office one at a time.  Ensure you won’t be interrupted.

Tell them you are going to role play a customer and you want them to respond as they would to a customer.

Tell them you’ve just met them (as a customer), and then ask them: “What’s your best price for a (specific product that you sell).”

You can be as blunt as you like in answering any questions they may ask you, but observe their responses.

They get this Best Price question in different versions every day.  This is one of the most basic challenges your salespeople get.  A salesperson not being able to effectively handle best price request in the first five seconds is a bit like a professional boxer not knowing how to avoid being punched.

If they stammer and stutter, or say “aaaaaaaaaah, ummmmmm”, they are leaving thousands of dollars on the table.  They should be able to handle this confidently in their sleep, it is so fundamental to most businesses.

Salespeople who do poorly in this exercise may say that this is not a “real-world” situation and tell you all the reasons why they would do better with a “real” customer, but when put on the spot, salespeople don’t become wildly creative and imaginative.  They default to habit.

Do not ask them how they would handle it – they can probably know and describe what to do without necessarily doing it with a customer.  Make sure it’s a role-play.

As a guideline on how Best Price can be handled more effectively, ask about our ‘best price’ training courses.

4. Customer Needs before Negotiation

Our company offers over 20 negotiation strategies in training, but if you don’t know anything about your customer other than that he/she wants a particular product for a ridiculous price, then effective negotiation strategies (as opposed to rubbish like “let’s meet half way” and “if I could, would you?”) are rendered useless.

To negotiate effectively, we must have accurate information about the client’s needs.

Without information, we are neglecting our customer service duty and most salespeople in our industry put their business into these neglectful situations with customers every day.

Train your salespeople to get more relevant information and better information to get you the right customer focus for completing a sale.

Don’t let your salespeople walk into your office unless they have a list of the customer’s needs (including, but not limited to price).

5. Track your enquiry

Measure every enquiry, even the ‘tyre-kickers’.

At one business I work with in the first month of tracking, the Sales Manager had just accepted that one salesperson was having a particularly quiet month.

He finally analysed his tracking and found that the salesperson had spoken to 71 customers to make one sale, and had dismissed 70 ‘tyre-kickers’.

Focus on improving your closing ratios, not finding more people from other PMAs to talk to.

I continue to be amazed at how many businesses I discover that do not measure or track their sales activities in any meaningful way.

Here are some of the guiding principles I recommend for businesses that are introducing sales tracking.

1. Salespeople must log as much enquiry as possible.

• Even customers who are, for example, browsing to dream of a lottery win
• If we’re getting 10% lottery dreamers, something is wrong and need closer scrutiny.
• I’d suggest that the word ‘nowhere’ be refused in salespeople’s reports: it allows salespeople to lazily pre-qualify.
• Set language guidelines for your salespeople, encouraging positive assessments and articulate descriptions of customer needs.

If we’re genuinely getting lots of long-term buyers etc., we can reassess our advertising brief, our sales training agenda and other aspects of our business planning.

2. Assess if it’s being logged:

• Randomly (but at least once a week) check if enquiries just in have been logged
• Organise a phantom shopper simply to see if the enquiry gets logged.
• Perhaps offer rewards to anyone who logs 100% (based on your checks) for the month

3. We May Not Get 100%, but 95% is better than 50%

All judgments based on tracking results, from staff feedback to training to advertising, can be made with greater commitment and confidence with more accurate tracking results.  So aim to get 100% of all enquiry tracked so that you have the largest possible sample size of enquiries (and maximum follow-up opportunities) to work with.

4. Introduce, and Use Religiously, Mechanisms to Log Everything

As an example:

• For Walk-In enquiry you may use:    Computer prospecting system, Salespeople Activity sheets, Showroom Visitor’s Book
• For Phone-In enquiry you may use:     Receptionist tracking (and strategic placement of calls), Computer prospecting system, Salespeople Activity sheet, One of the Several Excellent Phone Training Systems on the market
• For e-mail  enquiry you may use:    Computer prospecting system, Automated mail tracking, Salespeople Activity sheets

5. Management must avoid using tracking to ‘punish.’

If salespeople are punished for their tracking figures, especially early on, they are more likely to manipulate the figures to avoid further punishment.  The focus of feedback should be to acknowledge what’s being done right and to improve what’s not yet being done right.

6. Telephone Enquiry must be verified the same day

Leaving Sales Managers’ verification 24, or up to 48 hours mean salespeople have too much time to forget, to dilute accountability, or to recall inaccurately. Even worse, urgent customers can be neglected and they buy elsewhere.

If we make the salespeople accountable ASAP after each contact for what they did with that contact, we improve our chances of getting accurate information.

7. Many salespeople do more of what’s inspected, not what’s expected

If reception puts through an e-mail to the relevant manager saying that a phone enquiry has just been put through, the manager can track it earlier and more effectively.

Then salespeople know that they have to provide their Sales manager with a report on the phone call within five minutes of finishing the call.  The Sales Manager knows if they do this or not because he’s been notified of the enquiry.  When the average dealership spends more than $600 to generate one enquiry, no salesperson should be allowed to judge whether or not someone is a ‘genuine buyer’.

Every customer who has done your business the courtesy of contacting you deserves the courtesy of being treated as a serious customer until they prove themselves to be otherwise.

]]> https://seanmorahan.org/training/principles-for-successful-sales-tracking/feed/ 1 https://seanmorahan.org/training/the-best-place-to-learn-to-swim-is-in-the-water/ https://seanmorahan.org/training/the-best-place-to-learn-to-swim-is-in-the-water/#comments Wed, 12 Mar 2014 16:09:28 +0000 http://seanmorahan.org/?p=130

I am often asked by clients for advice about the best place to conduct training.

My advice varies depending on the client’s individual circumstances but one of the most reliable guidelines I follow on recommending training venues is that ‘the best place to learn to swim is in the water’.

Learning to Swim

Imagine you are teaching people to swim.  You can teach them all of the theory and all of the techniques and motions of swimming, but until they get in the water, that learning is useless and in some cases detrimental to real learning relative to the desired outcome (an ability to swim).  I recall my own early swimming lessons as a child.  The swimming class we were in spent the first two weekly lessons practising stroke and head position standing next to the pool.  In the third lesson, the teacher was replaced by a new teacher who started us back at square one.  So by the time I got in the water, I had had almost a month of ‘learning to swim’ in the air.  The comfort I had learned to feel mimicking swimming movements in air felt completely unnatural in the water and I swallowed a lot of water and was panicked by the experience.  Several of my friends in the class had a similar experience and we were put off swimming for years.  When I resumed swimming lessons at 11 years of age, I had a great teacher who got me straight into the pool every lesson and got me feeling comfortable in the environment where my learning had to be translated into action.  Yes, we still practised, discussed and trialled techniques standing next to the pool, but most of each lesson was spent in the pool.

So What About Sales Teams?

So when it comes to training sales teams, the best place to train them (in most circumstances) is on the sales floor.

Training at a remote location usually involves a different (often unfamiliar) environment, sometimes different dress requirements, different training participants .  Yes, salespeople can have enjoyable learning experiences away from their sales floor, but you have added a significant step between their learning of skills and their use of those skills in their day-to-day role.

Some Advantages of On-Site Training Include:

• Learning new skills in on-the-sales-floor training means that the salespeople are more likely to raise, and have answered, their ‘real-world’ objections to aspects of the training.
• There are significantly fewer steps to processing, adapting and implementing sales techniques from training to the floor when the training is conducted on the floor.
• The salespeople are conditioned by their environment, so having the training on the floor helps ‘condition’ the new sales behaviours.
• It also ‘conditions’ salespeople that the sales floor is a learning environment, so they may learn more from their customer interactions on the sales floor.

Some Disadvantages of Off-Site Training Include:

• The extra time and cost involved in transporting sales teams to the training venue.
• Extra steps and work required by sales teams to adapt and utilise the new knowledge and/or behaviours to the sales floor.
• Some unscrupulous trainers may exploit some dealers’ beliefs that salespeople going away and coming back with any difference must necessarily mean an improvement.
• Training courses of more than a day off-site often induce idiotic behaviour in some salespeople (excessive alcohol, late nights, dangerous driving, showing off, etc.)

Naturally, Planning is Required

Of course, training has to be conducted at times when the sales floor is not full of customers, or an area of the sales floor may be cordoned off for training.  training may make use of a nearby office for group discussions and other exercises, but this should be done with the focus on getting back on the sales floor immediately to practise the skills learned, before trying them with a real customer.

Don’t Throw Them in the Deep End!

I am not advocating a policy of sink or swim.  Lazy and stupid sales managers waiting for salespeople to make a mistake and then criticise them is not true ‘on-the-floor’ training.  It’s not even training, although I have encountered many sales managers who believe their ‘seagull management’ approach is sales training.  It’s not.

Just like children learning to swim, salespeople should be carefully monitored and encouraged, and training should be flexible to address their particular needs.

Occasionally there is merit, or logistic necessity for training to be held off-site, but I have consistently found that sales training conducted on the sales floor gets the best and fastest results.

I was driving between appointments today and listening to music.  In my playlist was a song called “Hard Act to Follow” by Split Enz.  This song was a favourite of mine in the early 1980s and I started singing along.

As I drove and sang it occurred to me that I was singing some incorrect lyrics.

I stopped at the bank and while I was parked there, I Googled the lyrics on my phone.  I laughed at how much the correct lyrics varied from my version of the lyrics.

When I started singing along to this song back in 1981, a printed confirmation of the lyrics was not easy to obtain so I sang what I interpreted the lyrics to be and I had been singing the incorrect lyrics over and over, every time I heard the song.

Noting how much more sense the correct lyrics made, I resumed driving and resumed singing and I noticed something significant.

It was extremely difficult to stop singing the incorrect lyrics (which have been in my head for over thirty years)!

Even though I knew ‘my’ lyrics were wrong, when the song was playing it was incredibly difficult to sing what I now knew to be the correct lyrics.

I immediately phoned a sales trainer who I have been teaching and shared the story with him.

He had recently been frustrated with some of the sales teams he was working with and how they had been taught and shown the correct way to conduct certain sales behaviours and yet were slow to change.

I pointed out that my experience today with the Split Enz song was a graphic example of how hard it can be to change long-held behaviours, even if you readily admit that they are wrong.  I advised him that he had to remain focused on helping his sales teams change their behaviours without falling into the trap of making them bad and wrong.

I also highlighted that learning the lyrics to a song correctly if you wanted to learn it today was easier because the lyrics are usually available online, so you don’t have to guess the lyrics as I did back in 1981.  Similarly, it is often easier to teach a sales trainee to do the right thing, than to try and have an experienced salesperson ‘unlearn’ bad habits learned over many years.

In sales and song-lyrics, long-held habits are a hard act to follow!