February 2, 2010

Tough It Out

By Henry Canaday

Turmoil in the markets, tough times for sales managers, reps staring at impossible goals…This is no time for sissies. Instead of crying into your beer and thinking you have no control, get back to basics. That’s what you’ll find in this article – all basics, all the time. Remember, salespeople sold their way through the Great Depression, two world wars, the Cold War, Vietnam, and the last bank collapse. They did it by going back to the basics, and you can, too!

What a year, right? For sales managers, challenges are everywhere in every market, across the entire spectrum of the management function. So what’s the best medicine in a market like this? Tough times call for getting back to basics: demonstrating a high level of competence in every customer contact and persistence in making contact with every customer. 

Motivated to Sell 

Tom Knight is a sales effectiveness consultant with Axiom. While he works with managers who are dealing with the challenging economy every day, in addition he must help keep Axiom’s own team motivated to sell.

Knight sees three main trends among the managers he works with and their companies. First, in order to deal with flat or declining markets, companies are trying to take costs and customer hassle out of selling.

“In a shrinking market, order size is smaller, but customers order more frequently, they order just what they need, and they want it quicker,” Knight says. This drives up the frequency of sales calls and causes problems in the sales process. “You have to touch base with customers many times and then rush to get it done when the order comes.”

Second, managers are trying to streamline the sales process under these pressures. Some are transferring contacts to lower-cost channels, creating new sales roles or sales-support positions. Knight compares this with the efforts of such firms as Cisco to shift costs down to more economic channels during the dotcom bust. “You have to clean up and declutter the process,” he says.

Goal setting is also getting a lot of attention, partly for motivational reasons. Though some goals were reset toward the end of 2008, there is still work to be done. “They must predict where demand will shift and by how much. There is nothing more demotivating than a miscast or outrageous goal,” asserts Knight.

One way to win the trust of reps in this resetting process is to engage them in efforts to adjust goals for the coming year. And Knight urges managers to get as close to their customers as possible: “Learn how their demand will vary and why.”

Making realistic demand forecasts is essential before compensation plans can be readjusted. Knight argues that many companies still attach too much importance to history, not causal factors, in projecting future demand.

Dollar Values

For compensation, managers are adjusting payout curves on performance comp to keep reps motivated. “You want to make sure they can get as close to target income as possible,” Knight says. Maintaining target income may be very difficult in some markets due to the general pressure to economize.

“If you have to dial them back due to cost of sales, make sure you start paying performance comp at a lower threshold,” advises Knight. A plan that started incentives at 70 to 80 percent of goal prior to the downturn might now need to start at 50 to 60 percent.

Axiom consultants are talking to their own clients much more frequently. They are looking for only the hardest problems the clients need help with. “We look for things we can help with while they reorganize, and we are more creative in what we can do to help,” Knight explains.

Axiom thus looks only for projects that give clients a fast payback. “We have a bias to the quicker jobs. And instead of taking over a task for clients, we can coach and work over their shoulders,” Knight adds. This kind of emphasis means more short-term projects, but Axiom still gets business and adds value. “It is the way things are, and we can still make an impact.”

To keep motivation up, Axiom’s selling consultants talk frequently about where they are headed, and they celebrate both wins and new ideas that may lead to future wins. In addition, the company does more brainstorming now about possible offers, and it recognizes that tough times also present opportunities to develop the business expertise of junior staffers. “Do not be blind to what is going on, but do not obsess about the bad news in the papers,” Knight stresses.

Finally, Knight notes how many companies now in the Dow Jones average started up during or shortly after recessions. “If you can spot those companies that will start up in the recession, you will really be ahead.”

Alphabet Soup

Steve Giglio is a sales consultant who works mostly with sales teams in publishing. His clients are facing two tough challenges now: the recession and the movement away from print advertising. Giglio trains and coaches sales leaders to sharpen what should be normal best practices, as they are now practices that matter much more in severely challenging times.

“First, you have to determine where your talent is – the A, B, and C players,” Giglio says. “The A players can almost sell autonomously, but they still have to be stretched and acknowledged.”

Giglio believes many managers spend too much time on their C players, rather than working with the B’s to become A’s.

Your C players can only be improved if they make a commitment and there is a practical plan for improvement in one quarter. Otherwise, Giglio says, “there is a lot of sales talent out there, and you can pick it up inexpensively in a recession.”

During recessions, reps must stay very close to customers, even overcommunicating with them. “Determine what adds value to their business, whether it is a discount or something else to maintain the long-term relationship. Know where they are spending money and their specific goals and challenges. Salespeople should be living with these customers almost daily.”

Especially during recessions, sales teams must know all the decision makers and decision influencers at top accounts. Reps must be able to quantify the value they bring to accounts. “If competitors come in to try to buy the business, you must be able to defend it with quantified value,” Giglio stresses.

Giglio’s third emphasis is that the sales team should always speak with one voice: “[The team members] must know the message so the senior VP of sales can sleep well at night.” And listening before selling is key to both establishing the right climate for sales and understanding specific challenges.

Giglio trains for tough sales in three basic steps. First is physical delivery. “Looking the customer in the eye with enthusiasm and no monotone makes a difference; you are judged in the first thirty seconds.” He videotapes reps’ delivery and reviews it with them privately.

Second is researching each account, a process that must be tailored for each market. The aim is to enable the right probing questions and a dialogue that surprises a prospect with the rep’s detailed knowledge of the business.

Next is making sure the agreed-upon message can be delivered concisely, in no longer than 14 minutes, according to Giglio’s rule. Responses to questions and objections should be reviewed with senior executives to make sure they are consistent with the company’s message.

The Next 10 Yards

Curt Nelson is a sales manager with Quadrant Systems. Quadrant makes high-end, customized audio and video systems for new construction in both commercial and residential markets and is the largest provider of security systems in Oregon.

“Business has not been great, especially with housing down, but recently it has gotten better,” Nelson says. Quadrant is experiencing challenges in keeping all its employees motivated – not just its salespeople – because everyone is being inundated by media reports of bad economic news.

“But our owner says we are going play this like a football game, ten yards at a time,” Nelson says. “So we set goals and work toward these goals, and so far it has been working.”

Some of Quadrant’s competitors have not been doing well, and one just went out of business. That is unfortunate, but it does open up some running room for a team focused on the next 10 yards. Quadrant has also gained from its diversification in both residential and commercial markets. “If one goes down, we can still make our numbers,” Nelson notes.

He has not had to lay off any salespeople recently. Quadrant has slightly reduced its overall workforce, but these layoffs have been in administrative positions. “We are holding on to our salespeople,” Nelson emphasizes. “I will do anything not to lose salespeople or technicians. They are too expensive to train.”

In fact, he is looking at hiring some new salespeople now, but of a different kind. Most of Quadrant’s high-end business is sold through relationships developed and strengthened over time. “But I am looking for some reps who, I don’t want to say are cutthroat, but are willing to be more abrasive, to sell in the commercial markets. You know, people who can knock on doors, get the doors slammed in their faces, and go on to the next door.”

Quadrant has also changed its sales comp to deal with the slowdown. Traditionally, the company paid a base salary, plus commission on sales. Now it is offering a portion of incentive comp for the number of bids a rep submits. Explains Nelson, “There is a strong correlation between bids and closed sales, so we are doing this to keep our bid numbers up.”

The downturn has made all sales very competitive, and some of Quadrant’s rivals are cutting prices. “But we know if they cut their prices they will not be around very long, so we are trying to hold the line on that.” To avoid lowering prices, Nelson’s team must sell value – a more difficult effort. “You have to be extremely clear on your value proposition.”

Selling value also requires making sure all prospects are comparing apples with apples in judging different bids. “Even for run-of-the-mill jobs, if a competitor seems cheaper, we ask politely if we can compare our bid with the competitor’s bid. Then we point out that the prospect is not getting this or this or this [with the competitor’s offer].”

And this in turn requires extra effort and time. Quadrant used to email its bids to prospects. No more. “Now we are pretty insistent that we go over the bids in a sit-down meeting,” says Nelson. “We had gotten a little lazy about doing that.” •