Archive for the ‘Achieving Sales Goals’ Category

Stop spending money and resources on prospects that don’t buy

If you’re like most companies, you have prospects you’ve been trying to sell to for years, only to hear one excuse after another regarding why they haven’t purchased anything from you. You may have spent thousands or even millions of dollars trying to win their business, only to see it go to a competitor time after time.

While persistence is a virtue, there comes a time when you have to recognize that in certain situations, failure, not success, lies on the other side of failure. Before you abandon a prospect like this, I suggest you find out their intentions regarding your company and products. A good way to do this is to arrange a face-to-face meeting with the prospect. Let them know ahead of time that you want to discuss the following:

  1. You’ve invested a lot of money and other resources into the relationship
  2. You haven’t realized a return on your investment
  3. You’d like them to speak honestly about why they haven’t purchased anything from you, and determine their intentions regarding purchasing your products in the future.
  4. How your relationship with the prospect will have to change if they decide not to buy from you.

Note: There is nothing wrong with doing this. You’re in business to make money and have fun, and to continue to invest resources in a losing cause, with little or no hope in winning, doesn’t meet either of these requirements.

Once you’re in the meeting, you want to discuss the following topics:

  1. What current or future advantages does the prospect recognize in your products vs. those of your competitors?
  2. If the prospect says there aren’t any, but they want you to continue to provide quotations and proposals, you need to find out why. (They may be interested in keeping you around just to create leverage with their preferred supplier.)
  3. If the prospect mentions advantages your products have, ask them to be specific about those advantages and what they mean in terms of additional money earned or saved, relative to your competitor.
  4. Finally, ask them if they intend to buy from you in the future, including what specifically they plan to buy and when.

In the end, you’ll be much better off knowing your prospects’ intentions, and adjusting your sales efforts accordingly, than continuing to throw money away hoping for a miracle.

Posted by Don Maher in Achieving Sales Goals, Profitability, Sales Tags:

Sales Competencies

Recently I was asked for my thoughts on the competencies that every capital equipment salesperson should have. The following are what I consider most important:

  1. An understanding of the importance of profit
    In my mind, the number one priority for salespeople is to bring profitable business to their employer. Salespeople should know how their employer makes money; how prices affect margins (including how dramatically even a 1% difference in price affects net profit); and how profitability influences stock prices, bonuses, salaries, career growth, and available resources.
  2. Hardware, service, spare parts and product upgrades knowledge
    Salespeople should know the key competitive advantages and value propositions of every product and service they’re required to sell (marketing should develop these advantages so they’re clear, straightforward, and impossible-to-misunderstand). In addition, salespeople should know specifically how their products and processes help customers to achieve their objectives.
  3. Writing and presentation skills
    Every salesperson should be able to write a concise, coherent email or letter to a customer or a fellow employee. The salesperson should also be able to give a “why should I buy” presentation to a customer on relevant products, processes, services, spare parts, and system upgrades. The salesperson should also be able to clearly position (in the mind of the customer) his or her employers offerings relative to competitors’ offerings.
  4. How to successfully negotiate with aggressive, professionally-trained buyers who use PICOS and other profit-transfer methods.
    This competency should include more than how to conduct face-to-face negotiations. It should also cover the how, where and why aggressive tactics such as PICOS and its’ variations began; how customers are trained in its’ uses; what to expect in terms of customer behavior; how to develop a sales plan when approaching and conducting negotiations; how to keep the customers’ senior management informed of progress, delays and any misbehavior on the part of Purchasing people; and how to work successfully with individuals who employ these methods, without damaging relationships. 
  5. In-depth knowledge of the customers’ and competitors’ environment (and how to acquire that knowledge)
    This should include training salespeople on what to look for in publications like annual and quarterly reports;  how to find out about key changes in management; how to uncover the customers’ top priorities; current capacity utilization and potential changes in that utilization; customer profitability drivers; the process the customer uses to decide which products and services to buy, along with the people who make those decisions; and any specific pressures the decision makers are under from their customers, management, and investors. 
  6. How to establish and build relationships with customers
    The best salespeople in the company should train the rest in how to provide day-to-day support and superior execution on behalf of customers, over and above what competitors’ salespeople are providing, so that customers actually prefer to give your company more and more business.
  7. Sales and order process knowledge
    Salespeople should know how to establish exactly what the customer wants, and how to translate customer requirements into language, forms, etc. that the supplier understands and can work with; how to follow up to ensure that the product or service is moving through the manufacturing process on schedule; and how to prepare the customer if things don’t go according to plan.  
  8. How to manage sales time
    There will never be enough time to handle every demand on a salesperson, and certainly not enough time to do handle those demands equally well. Salespeople need to know how to rank the to-do’s on their plate; how to handle email and other dailies so they don’t become the “all dailies”; how to schedule and make regular progress on long-term initiatives; how to determine when “good enough” is; and how to decide what to do first thing on Monday morning.
  9. How to sell services
    Selling services (where typically no explicit need exists, resistance from the customer is common and demand has to be built carefully) is very different from selling hardware (where demand usually exists and the objective is to position your product favorably against one or more competitors).Many capital equipment salespeople (including me when I first started in sales) tend to view service as an afterthought. But with system margins under constant pressure, suppliers need to take every advantage of their ability to improve the performance of a customers’ installed base, and get paid well for doing it.
  10. Consultative and interpersonal skills
    Sales people need to know how to develop trust with people, and how to use that trust to deliver value to the customer through their knowledge of the business, products and services. They should know how to ask the right questions and discover real needs; how to work with customers as opposed to working for them; how to make customers feel comfortable; and how to offer and deliver real, provable value that solves real customer problems.

If you have questions, or would like to discuss these competencies further, please feel free to contact us at 650-862-0688 or at www.mahermarketing.com.

Thank you.

Posted by Don Maher in Achieving Sales Goals, capital equipment sales, Motivating Salespeople, Profitability, Sales Tags:

PICOS: what it is, how to deal with it

Are you familiar with PICOS? While you may not recognize the acronym, you probably would recognize PICOS in practice, especially if you regularly deal with aggressive and well-trained purchasing department representatives.

PICOS stands for Program for the Improvement and Cost Optimization of Suppliers. It’s a supply chain management process that was developed at General Motors in the late 1980’s with the goal of dramatically reducing suppliers’ product and service prices, transferring as much supplier profitability to the buyer as possible.

PICOS-trained buyers develop and use well-orchestrated, company-wide plans to convince sellers that their offerings are no different or better than those of their competitors, and that getting a low price is the overwhelming factor in the customers’ purchasing decision.

PICOS-trained buyers repeatedly bring up price during negotiations, and frequently resort to threats to end negotiations, buy from a competitor, or complain to supplier executives when salespeople try to hold the line on discounts and giveaways. You may be thinking “most of our customers use these tactics; how is PICOS different?” It’s different because PICOS training materials specify the use of exaggerations and outright lies as acceptable means to a desired end.

While there is a lot more to understanding PICOS, there are some tactics that sellers can use to successfully combat it. Following are three of them:

  1. Know your offerings and their value relative to your competitors, the customer and the situation. Unless you know what your products and services are worth to the customer in terms of the additional profit your customer can earn using your products vs. those of your competitors, you won’t be able to convince yourself or the customer that your offerings are special and deserve a higher price. When Purchasing responds to your claims of superiorityby saying something like “competitor X can deliver the same results”, your response needs to be along the lines of “no, they can’t; we’re the only company that has proven it in the marketplace at customers A, B and C.”
  2. Never negotiate one item at a time; always think in terms of final context and package. At the beginning of a negotiation, an agreement to provide 80/20 payment terms instead of your standard 90/10 terms may seem like a small concession to make. However, that concession won’t seem insignificant at the end of a negotiation when it’s combined with other concessions such as lower prices, giveaways, additional field support, and tighter specifications. When the customer says “I need better payment terms”, your response should be “that’s certainly possible if you’re willing to agree to the price we’ve quoted”, or you can say “we’ll need to know and consider all of the concessions you’re looking for before we commit to any specifics.”The takeaway: you can give as many estimates as you want, but don’t make firm commitments on pricing, delivery, specifications, terms, field support, spare parts, or software until you know what’s really most important to the customer.
  3. Keep in touch with the real decision makers and the ultimate users of your products. Once a week, send a well-written, fact-filled email to all the key people involved in the negotiation, including customer executives, users of your products, and your own management, documenting any agreements and commitments made by both sides during the previous week. You might also include any threats made by purchasing representatives. If purchasing people object, and they will, you can simply say that your management insists that you document the proceedings in detail and keep everyone informed of the status of the negotiation. Doing this will also incentivize everyone involved to be more civil and honest, and to keep the rhetoric to a minimum.

For more on how you can work successfully with PICOS-trained customers, contact us here.

Posted by Don Maher in Achieving Sales Goals, Motivating Salespeople, Profitability, Sales

Are your largest customers as profitable as you think they are?

Your top five to ten customers likely deliver the majority of your revenue, and in some cases, the majority of your profitability as well. However, when all of the costs of doing business with these customers are accounted for, you may discover that some of these customers are a lot less profitable than you think. That’s what a capital equipment company discovered when it added up all of the costs associated with supporting one of its’ largest customers. In the following example, I’ll refer to the large customer as Customer A.

In most years, Customer A accounts for between 5% and 10% of the capital equipment company’s overall revenue. Most everyone in the company just assumed that Customer A was very profitable, because the revenue from Customer A was typically greater than from other customers.

When the company embarked on a project to identify and add up all of the costs related to doing business with each of its’ ten largest customers, it was surprised to learn that the business from Customer A was actually less profitable, on a total dollar and a percentage of revenue basis, than the business from all but two of the company’s other top ten customers.

It turned out that the company had devoted hundreds of employees and tens of millions of dollars of equipment to supporting Customer A. In addition, Customer A demanded that the company adopt unique manufacturing procedures, specifications and techniques that together took a tremendous amount of work to manage, and benefited no other customers. The company also provided large, no cost spare parts inventories, multi-year pricing commitments with guaranteed year-to-year price reductions, and very lenient payment terms to Customer A. There were numerous other previously-unaccounted-for costs, but by now you get the picture: Customer A cost the company a fortune to do business with.

Of course, the potential exposure and prestige of having your products and services adopted by an industry leader can certainly be worth the investment, as it can often influence sales with your other customers and prospects. My point however is this: you should know as much as you can about the true costs and benefits of working with each of your largest customers before you negotiate the next contract with them. Add up all of the costs of serving these customers, and don’t be afraid to point them out in your negotiations. You’ll end up with a much better, more profitable deal in the end. 

Posted by Don Maher in Achieving Sales Goals, Profitability, Sales

Email Marketing:
A critical part of your marketing mix

What comes to mind when you hear the term “Email Marketing”? If you’re like a lot of people, the next word you think of is Spam. Or perhaps you think of it as the stuff you see in your in box each morning that you delete without reading. Maybe you’ve tried Email Marketing once or twice without success, or maybe you haven’t tried it because you don’t think it would work for your company, products or industry.

With the exception of companies that can count their customers on two hands, I believe that Email Marketing, combined with a professional, content-rich web site, should be a part of every company’s marketing mix. Following are the reasons why:

Your customers are online and use email nearly every day

Customers around the world are now experienced with educating themselves on just about any subject, investigating potential options, and purchasing products and services on line. If you have or can build a solid, online reputation for sending timely, content-rich, and helpful emails to customers, those customers will not only allow you to send those emails, they will look forward to receiving them, and in some cases, will visit your web site, ask for more information, ask to set up a meeting with you, or even purchase what you’re offering.

Emails are opened more frequently than you might think

According to a number of published studies, and my own experience, open rates for email marketing efforts range from 5 – 20%. However, those open rates are for unsolicited email. If you already have a relationship with a customer and that person allows you to send emails to his or her in box, open rates will almost certainly be higher. And once the email is opened, your well-written and convincing content can encourage the reader to learn more and take action.

Email gets your message across quickly and consistently

Let’s say, for example that you manufacture capital equipment and that you have an installed base of 500 units of various configurations working in 50 manufacturing facilities around the world. You have just developed a hardware upgrade that can dramatically increase the productivity and output of 20% of the units in the installed base. The upgrade costs $25,000 to build, but it’s worth at least $200,000 in increased profit per year to each customer.  You’ve decided to price the upgrade at $100,000 per unit.

Even the world’s greatest field sales force would have a tough time reaching all the customers who could potentially buy this upgrade in a timely manner, let alone with the same exact message. So what is the best way to inform each of your customers about the upgrade, explain how it will help them, convince them that it’s worth $100,000, and do it quickly and consistently?  I would suggest that sending a detailed email to all of the customers involved in making or influencing purchasing decisions is the most effective first step you can take.

Email is more than affordable; it’s cheap

Effective email marketing campaigns can be done with very little money, relative to the cost of using virtually any other method to reach customers. Although the costs of developing the content of each message will vary, the act of sending the information can be done for between one and two cents per email.

Email can help you reach out to those difficult-to-visit but very profitable customers

Almost every business has a number of highly-profitable customers who happen to be located in places that are difficult and expensive to get to, and therefore, can’t be supported with frequent face-to-face visits.  Using email can help to keep these customers informed and aware of not only new products and services, but also of any new information you have regarding your existing products and services.

While nothing can adequately replace in-person contact, email can help you establish and maintain an ongoing conversation with your customers and prospects, and might even spare you from ever hearing the dreaded “we purchased from your competitor because we hadn’t heard from you and didn’t think you cared”.

So, if you haven’t started communicating with your customers and prospects with email marketing yet, I have just one question: What are you waiting for?

Posted by Don Maher in Achieving Sales Goals, Email Marketing, Marketing, Sales Tags: , ,