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Fact: You need information about the customer or prospect. You’ve got to have it, and plenty of it, in order to sell. It’s especially important when prospecting. What is an effective way to get information from a customer or prospect? By asking well directed questions, of course. What is the best technique for asking these questions? By asking open ended questions.

What is an open ended question? Here’s my definition: An open ended question is any question that requires an explanation to answer. The classic definition of an open ended question is any question that does not require a “yes” or “no” answer. I like my definition better. Why? How much do you really learn when you ask the following “open ended” (classic definition) question, “When will your current contracts expire?” Compare that question to what I would consider a true open ended question, “How are your current contracts being managed?” I think we would all agree that the latter is going to provide much more information.

Open ended questioning techniques are something that I am regularly called on to teach to new and experienced salespeople. I’ve found that most salespeople, new and experienced, are very deficient in their open ended questioning abilities. Fact is, they can hardly even give an example in many cases.

So, what’s so great about open ended questions? Two things. Open ended questions get you a lot more information to every question that you ask and they help to build the relationship with the prospect or customer. Getting people to talk and explain is a great way to start building a relationship and to get more information.

I get a lot of sales calls each week and almost every one of them is nothing but a series of closed ended questions. It’s unbelievably annoying and the salesperson learns little. Here’s how they almost always go.

Are you in charge of sales training?
Who do you report to?
Do you buy outside training content?
What did you last purchase?
Do you anticipate buying any outside training content in the next six months?
Do you anticipate buying any outside training content in the next 12 months?
Can I contact you again in three months?
Is this a good number to reach you?
What is your email?

You get the idea; they are all closed ended questions. The salesperson on the other end of the line not only hasn’t learned anything, but they’ve annoyed me instead of building a relationship. Think of the difference it would have made if they had asked, “How is your sales training program organized?”

Actively asking open ended questions to your prospects and customers will yield more information and help to build the relationship. The key is to practice this extremely important sales skill; you are probably more rusty than you think. Of the truly top tier sales professionals that I have had the pleasure of working with over the years, I am convinced that one of the key reasons for their success is their finely tuned ability to ask open ended questions.

In my last post we talked about the two primary things we need to get from prospects. The first thing is information and the second is relationship. A relationship with the prospect is almost always going to have to be established before they will buy from you. Unfortunately, relationships take time and we don’t have a lot of time as sales professionals with ridiculously high sales budgets to meet.

Virtually every study that has ever been done (and there have been many) shows that on average it takes about six contacts with a prospect before they start buying from you. Do you honestly think you have worn down the prospect with your repeated phone calls and appointments with them and that is why they start to buy from you? Do you think it’s just your fantastic persistence that is doing the trick? This is only partially true. The real fact is that you have created a relationship with the prospect over an average of six contacts. People buy from people they are comfortable with and that they feel they can trust. There is no shortcut for this.

Instead of thinking of prospecting as a “numbers” game where you need to wear down the prospect, and yourself, think of it as a relationship game. Every type of contact you have with the prospect is helping to build the relationship with the prospect. Focus on relationship building and information gathering when prospecting. Prospecting is more than just seeing how many prospects you can call and how many times you can call each one before they start to buy.

There are two things that we are trying to obtain when we are talking with prospects. There are actually many things we are trying to get, but there are two that stand out. The first thing is information. That’s right, just plain information. You aren’t going to sell that prospect unless you know a lot of things about them (e.g., budgets, product fit, decision makers, timeframes, competition, etc.). This is especially true if you are selling in a consultative environment.

My daughter, for better or worse, has followed in my footsteps and has started her career in sales and marketing. She is selling big ticket services to her customers. It was a fun surprise recently when one of her prospects just happened to be a company where I had worked many years ago. She was smart enough to get with me for the “scoop” before her first meeting. She went into that first call fully armed with information that might have taken her months to get through her own efforts. By using good sales skills and the information she had gained she was able to quickly turn that prospect into a profitable customer. The power of information in sales is everything.

What if you don’t have the advantage of “inside information” with a prospect? You will need to gain information about the prospect the old fashioned way, discovery. Researching the prospect, asking good open ended questions and getting to the right people are ways to get the information you need. The more information you have, the better.

The best investment of your time with prospects, at least initially, is getting information about them. Don’t concern yourself too much with things like getting them collateral material and inviting them to your trade show booth, at least not at first. The foundation of a realistic approach to a prospect is information. The salesperson with the most information about the prospect is almost always the one that will win the business.

Scripting. If you have spent any time in telemarketing then you know all about scripting. Scripting in sales is exactly what its name implies, a script. The employer provides the salesperson with the exact words to say when they are talking to a customer or prospect. Typically the scripts apply to outbound telemarketers, but you see them in all phases of the sales cycle and in all types of selling environments.

I think it is without a doubt one of the worst things to ever come out of sales training. Scripting is really only a slight improvement on automated calling machines. The problem with scripting is that it wrongly assumes the following:

1. That every customer or prospect is the same.
2. That the salesperson’s personality must be suppressed at all costs.
3. That the salesperson that was just hired is not smart enough to put together a dialogue with the customer or prospect.
4. That the customer or prospect is always 100% predictable.
5. That the customer or prospect will actually not know that the salesperson is reading from a script. Think of those scripted telemarketing calls you get at home.
6. That the salesperson will really be able to shine and be comfortable when reciting someone else’s words.

One argument for scripting is that it’s difficult to find salespeople that are good enough to navigate the sales process without scripting. Here’s a response to that argument; spend more money to get better sales people and train them better. This will result in a much more effective sales force. In short, even with fewer people your total sales will probably skyrocket.

Does the basic idea of scripting have any merit? Well, yes. Just don’t write a dialogue word for word. I have no problem with sales managers and trainers providing guidelines for a sales dialogue, but don’t remove the salesperson and their personality from the selling process.

Sales aptitude tests do not work when it comes to hiring sales people. Period. When my daughter was young and would bring me some wild eyed story I would sit down with her and ask her to give it the “common sense test.” The “common sense test” was to take what she already knew to be true and see if the claims even remotely matched up to that prior knowledge.

So let’s do that for sales aptitude tests.

1. Considering the cost of turnover in a sales department and the importance of sales in an organization, don’t you think that if there were a sales aptitude test that even remotely worked that everyone would be using it and the inventor would be seen as a sales god?
2. There are a million different sales aptitude tests out there, maybe more. One of them must work really well (and we just haven’t heard about it) or none of them are very effective. The fact that there are so many should be enough to scare you off.
3. Do any of them give any ironclad guarantee as to their effectiveness? Will they reimburse the new hire’s salary if their test gives you a thumbs up but their performance is a thumbs down?
4. Virtually all of these sales aptitude tests will tell you that the test results should only be considered a variable in the hiring decision. They will tell you to use the test results as only 10 – 50% of the decision making process.

Hiring sales professionals is too difficult and has too many variables to rely on just a written test. Save your money and use your time and resources in some other hiring areas that I will cover in future posts.

Now this is a hot one. Sales staff turnover. This little number will tell you volumes about a company and its sales staff. So what is turnover? Turnover is typically represented as the percentage of the sales staff that leaves a company each year. For example, if a company has 100 salespersons and 17 leave in a given year then they have a 17% turnover rate. The higher the rate, the greater the concern should be for the sales manager and salesperson alike.

What is an average turnover rate for the sales department for most companies? As you can imagine that varies a lot by industry. Transactional sales type environments normally have higher turnover rates than relationship or consultative sales environments. I’ve worked for companies with turnover rates that are less than 10% and for others that were greater than 50%. Generally speaking an average would probably be around 20%. A 20% turnover rate means that the average salesperson had been there five years.

Can you have a turnover rate that is too low? Yes. A sales position is only a temporary position at every company. How effective can your sales staff be if the average person has been there 20 years? Some turnover is good for a company, and can be good for the salesperson that leaves too.

What some companies do to make their turnover rate look better is to count multiple changes in a sales position within one year as only one. For example, if during one year there were three different salespersons in a sales territory they would count it as just one. This happens because they only look at sales position changes once a year and note it as only one change. Bottom line, most companies under represent their turnover rates.

If you’re a sales manager and your turnover rate is substantially higher than 20% then you have problems whether you want to admit it or not. The problems could be coming from many different sectors. If you are a job applicant always be sure to ask what the turnover rate is in the sales department. If it’s high I can almost guarantee you there are problems. If they won’t or can’t tell you the number I can absolutely guarantee you there are problems.

Every sales manager prods their sales staff to prospect, prospect, prospect. Sales managers provide all kinds of goals and instruction when it comes to prospecting, but what follows is the real truth and one that sales managers don’t want to hear or admit.

Most sales managers don’t like prospecting and really hate the idea of prospecting with their sales force.

Think about it; sales managers make sales calls every day with individual salespersons. How hard is that? The salesperson sets up the appointment and the salesperson has already created the relationship. The sales manager walks in and everyone is all grins because the “boss” is there. When it comes to prospecting with the salesperson, however, things are different. The sales manager doesn’t really like to prospect anyway; if he or she has to demonstrate their prospecting skills with an audience (the salesperson) then things get downright scary.

Sales professionals are most assuredly affected by this. They ask themselves, how important can prospecting really be when my sales manager only gives it lip service? Here is the Rx for sales managers.

1. Admit to yourself and to your sales staff that prospecting is not your favorite thing.
2. Admit to yourself and to your sales staff that you could stand to work on your prospecting skills, and will.
3. Schedule and make prospecting calls with your sales staff.

The sales manager will grow as a result of this and prospecting efforts will mushroom with the sales staff.

When it comes to goals, are there any winners when it comes to setting sales budgets or quotas? The answer is “no” of course. If the sales manager sets the budget too high the sales professional feels defeated from the outset and can become quite frustrated. If the goal is too low then they may not be challenged enough. How about the sales person who is a high achiever and the company feels compelled to push them beyond reason each year based on past successes?

I’m going to share some truths about sales budgets:

1. It’s not how you are doing against your budget, it’s how you are doing compared to everyone else. If you are at 30% of budget for the year and you should be at 80%, you may not be in as much trouble as you think. Look around, if everyone else is averaging 24% of budget, don’t worry. They aren’t going to fire the entire sales force.

2. If the majority of a sales force is significantly under budget then something is broken. It can only really be three things. One, the budgets are set too high. This is an issue for sales management to fix. Two, the hiring and training process is not working too well. This also is an issue for sales management to fix. Three, there is a fundamental problem with the marketability of the product or service that the company is offering. This is an issue for sales management to fix as well as a host of other departments. For most companies it’s a lot easier to beat up the sales force to sell more than to actually fix some of these issues. These issues, if left unresolved, will result in sales persons voting with their feet; they leave the company.

Am I saying that sales budgets are not important? Absolutely not. But they are relative…very relative. Chronic sales budget issues with a majority of the sales force are always an issue with management, not the sales force.

If you read my last post you know that I am a big proponent of calculating how much money you want/need to make on an annual basis as a primary goal for sales professionals. This principle should also be used by sales managers to motivate their people. It’s simple, determine what your income goal is and then see what you need to do in order to achieve that goal. This sounds easy to calculate, and is, by using the following formula. Reality check: Calculating the goal is easy, getting there is where the real work comes in. As we all know, if you don’t have a target…

Your Total Pay = Your Base Salary + Your Annual Commission

Let’s break it down one more step.

Your Total Pay = Your Base Salary + 12(Monthly Average Order Total X Commission Percentage)

Using the assumptions above you can calculate how much you need to sell each month to reach your annual income goal by using the following formula.

Monthly Average Order Total = (Your Total Pay – Your Base Salary) / (12 X Commission Percentage)

Here’s an example.

Debbie wants to make $83,000 per year, her base pay is $45,000 and her company pays her 15% commission on each order. How much does she need to sell each month to reach her goal? (And you thought you’d never use those word problems from junior high algebra.)

Monthly Average Order Total = ($83,000 - $45,000) / (12 X .15)
Monthly Average Order Total = $21,111

Debbie needs to sell $21,111 per month to make her annual income goals. How she is going to do it is where the real work comes in.

Welcome to my brand new sales idea blog called Sales Vitamins. I will be updating this on a regular, if not daily, basis. I’ve been in sales, sales management and sales training for over 20 years and one thing that I know is that busy sales professionals don’t have a lot of time to read sales books, view sales CDs or even read long sales blogs. I’m going to keep these posts “short and sweet”…and meaningful to you.

Keeping Score. Your boss is always talking about “sales goals.” These goals are normally broken down by revenue amount, new business attainment, product category, SIC code, etc. This is true whether you’re brand new to sales or the VP of Sales for a Fortune 500 company. Coming up with these goals usually takes about 30 seconds, which is a testament to how valuable they are. The most important goal, however, for the sales professional and sales manager to focus on is the one that actually means something to the person tasked with the goal: compensation. If a company has a sales compensation program that is not broken (many are), then sales personnel will be rewarded for the selling behaviors that the company desires. If the sales employees are making the compensation they need to make, then the company should be reaching its goals as well. Again, this is based on a compensation program that is actually rewarding sales staff for selling the revenue amounts, products and types of customers that the company desires. So…why not work it backwards? How much money do you want/need to make? Set your compensation goal and see what has to be done to reach that goal. If you’re a sales manager, then do it for your entire group. This way you will be working toward a goal you care about.

Hint to sales management: your sales staff does not care about any goals other than this one despite what they may say in order to be politically correct. It’s time to get real with them.

Oh, and by the way, if you work it backwards and you find that Superman could not possibly sell enough to reach your goal then I don’t need to tell you that it’s time to do some soul searching.

To be continued tomorrow.