I love the relevance of this quote to the way companies manage their sales performance; often attributed to Captain Bligh of the ship Bounty in the late 1700’s: “The beatings will continue until morale improves.”
So many companies, bosses, sales managers seem to think that their sales performance will improve by figuratively beating the sales people or alternatively increasing the incentive to sell. It’s as if motivation can fix the far greater problem.
As I was planning this post, my mind kept travelling back to the many “carrot or stick” discussions I have been party to. You know how they go. The captain of the sales ship stares across the table: “should we be taking the carrot or stick approach to increasing this company’s sales?”
Most companies have some form of strategic sales in place. Improving motivation and morale won’t have enough of an impact to sustainably increase sales performance if the underlying strategy is poor.
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The board room conversations revolving around “carrot or stick” decisions are missing the point.
Increased compliance with CRM reporting, increased sales activity, changing sales managers or more sales people will not correct the fundamental gap in most company’s sales strategies. This is why managing sales is such a frustrating task.
Before we look into the fundamental gap in sales strategies we will look at:
- a tick list of the items which a typical sales strategy should have
- difference between order takers and order makers
- question the goal of your strategic sales: customer retention or new customer acquisition
- recap the components of the sales cycle
- identify how to prospect
- look at solving the prospecting gap
Tick list of the components of a typical sales strategy, in no particular order:
As a minimum, make sure that your strategy covers all these areas. Each item should be covered to a sufficient level of detail applicable to your company and market complexity. It might also be worth assessing whether you need to be taking each item to a more thorough level. Assuming you are happy that your company has these basics in place, consider the difference between an order taker and an order maker.
Order Takers and Order Makers
An order taker is a sales person who simply processes a sale. These are the sales people who answer the phone, greet people as they walk in the door, or just pitch up at a client to collect an order. The order takers generally:
- Point customers in the right direction within the product offering
- Advise on stock holding
- Advise process
- Provide pricing
- Handle some objections
- Smooth over poor company sales processes
- Support customers emotionally
- Are able to upsell
The successful order takers are well versed in the product, reliable and quick to serve a customer. They rely on the company’s products, reputation, marketing, pricing and location to sell. This is because they are in effect just order takers- people who simply process a transaction. Who are your order takers? They are the first to struggle when times are tough and competitors are encroaching and eroding the organisations value proposition.
Order makers on the other hand are the sales people who are able to source new customers and sell to them. They locate these potential customers and then persuade them to buy as they fulfil the order taking tasks.
The required order-taker vs order maker composition of your company is influenced by what your strategy is trying to achieve.
What is the goal of your strategy?
Most companies I speak to in South Africa are quite good at customer retention. They are good at looking after their existing customers. They run:
- key account management systems,
- appoint their best “sales persons” (actually order takers) to these accounts
- create positive discount structures
- work hard to upsell these existing customers.
Customer retention companies have to constantly expand product ranges and drop margin when times are tough to retain their market share and achieve growth.
Very few South African companies I speak to are aware that their ability to acquire new customers is very poor. Many are struggling with:
- low sales,
- “a quiet market”
- Blind to the slow attrition in their “loyal” customer base.
They forget that every year a few customers leak out the hole in their bucket. Those that are aware of their leaking bucket, spend a lot of time fixing the holes be never put effort into getting more water into the bucket.
If you are evaluating or rebuilding your sales strategy:
You need to ask yourself, should your strategy be one of customer retention or one of new customer acquisition? If the goal is retention, then read no further. Go backwards in the article till you find the tick sheet and make sure you’re 100% on the tick sheet.
For those who are in pursuit of a strategy to drive new customer acquisition, read on.
The steps in a sales cycle vary greatly from sales guru to sale guru. The purpose of “defining” the stages in the sales cycle here is merely to make sure we’re all on the same page. The steps in the sales cycle I mention below are not revolutionary nor impressive. It’s merely to illustrate a point which I will get to further down.
Stages in the sales cycle:
While there is a lot to be said about each stage, we are going to focus on prospecting.
Companies that have sales people who are order takers chasing customer retention, are only qualifying existing leads, presenting, proposing, negotiating and closing. IE they are working from stage two to stage six of the sales cycle. These companies are not prospecting. They are simply qualifying their leads and going through the process of order taking. The ability to prospect is what makes a new customer acquisition sales strategy powerful. In other words, your strategy needs to develop a plan to increase your prospecting.
How does one prospect?
The usual play book for the organisation to prospect as a whole is to work on:
- Conferences
- Exhibitions
- Advertising
- Brand Awareness
The problem is that the above prospecting methods are expensive exercises. For the company to spend large amounts on advertising, exhibitions and direct mail a good return on the investment is needed. The effectiveness of these tools has eroded with the increasingly informed buyer, thanks to the internet. (See this post for more on brand awareness in an internet dominated world.)
The playbook for the individual sales person to prospect is:
- Obtain referrals from existing customers
- Leverage existing personal networks
- Grow personal network
- Cold Calling.
BUT: What if you’re already prospecting with the usual playbook but the sales department is still getting regular beatings?
In our dealings with South African businesses we have found is that the tools of a sales person are also getting too expensive. Personal networks soon dry up and networking takes time. Playing golf during office hours, going for drinks and lunches is no longer seen as productive use of a sales persons’ time. There is no escaping the fact that Prospecting requires vast amounts of wasted time.
In companies where the product is of a technical nature, the sales person is paid a much higher salary and the problem is compounded, not to mention their typical lack of selling skills.
It is very difficult to justify the prospecting requirements of a high paid sales person with technical/ engineering/ MBA grad skills.
How then do we solve the problem of prospecting?
Some companies will turn to marketing to solve it. But Marketing will just ask for more budget because brand awareness is a precursor to generating leads. Brand awareness through regular advertising is now becoming increasingly more expensive and less effective in an internet dominated world.
The solution to a prospecting gap for the whole organisation and the sales person
If prospecting is a gap in your strategy, then you need to look to inbound marketing. It’s a philosophy, a methodology and a set of tools designed to prospect for you in this new internet dominated world. An Inbound Marketing Strategy incorporated into sales strategies will produce qualified leads for your sales people to close. Your sales people only need to be at the order taker level for you to stop taking beatings and improve sales performance… not to mention morale.
Have a look at this guide: What you need to know about Marketing Strategy and Inbound Marketing. It will explain how inbound marketing works and hence you will know how to fill the prospecting gap in your sales strategy by producing leads through prospecting.
