Sales Blog with Sales Tips

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You’re more than likely familiar with the concept of customer price sensitivity. In general it’s the relative importance of pricing to the customer. There are two types of price sensitivity, general and specific. General price sensitivity relates to how much emphasis the customer pays to the pricing they receive on all items purchased. Specific price sensitivity takes this same concept and relates it to individual items. Let’s drill down a bit more on specific price sensitivity.

Since “specific price sensitivity” as applied to individual items sounds a little stuffy, let’s call these items Hot Button Items. Hot Button Items are items that the customer knows everything about, especially the pricing. They have purchased these products from every competitor known to you, and then some. They have researched pricing on the Internet and bookmarked all the URL’s. They have exhaustive purchasing records that include purchase dates, quantities, vendor and pricing for the last 12 years. You get the idea.

Hot Button Items are a problem when a customer or prospect uses them to gauge your price competitiveness for all of the products that you sell. They are quite literally just sampling your prices in order to make a judgment about your overall pricing. Now we all know that putting your toe in the water at a swimming pool to judge temperature works well because there is only one body of water. However, when it comes to your entire product line, sampling is not going to give the customer or prospect a true feel for your price competitiveness.

So how do you handle Hot Button Items? The first, and most important, thing you have to do is discover them. Early in your relationship with a prospect they will frequently ask you about pricing on a handful of items that they don’t need. This should be a red flag that these are probably Hot Button Items. A very telling question that can be used to isolate Hot Button Items when a customer or prospect is asking about pricing is simply, “How many of these do you need and when do you need them?” If the customer or prospect says, “I don’t need any right now,” bingo, congratulations, you have identified a Hot Button Item.

When confronting Hot Button Items you’re going to need to sell your value more aggressively, provide a bigger and better representation of your pricing and, as a last resort, heavily discount the Hot Button Items. If you have to substantially discount Hot Button Items, use your margins on other items to help compensate. If they are only wanting to buy Hot Button Items from you, move along to the next opportunity. Your time is more valuable than that. Most importantly, don’t get sideswiped by Hot Button Items because you weren’t paying attention.

There are many decisions that have to be made regarding your sales career and you are the one that has to make them. I think many, if not most, sales professionals go through their entire sales career like an abandoned boat in the ocean, letting the winds and currents steer them at their whim. They define their career as simply “sales” instead of something more specific. While we all know that sales positions can bring large incomes, there’s more to it than that.

The greatest thing about people is that we are all hard wired differently. There is not another salesperson on this planet that has your exact inventory of strengths and weaknesses (yes, we all have weaknesses too). Once you answer the question, “What is the best fit for me in my sales career?” you’ll be better positioned to become content and successful. This was certainly true for me. Once I came to grips with where I fit and what my strengths and weaknesses were I became more satisfied both professionally and personally. I found, and you will too, that it was even easier for me to relate to my customers. Everything was easier. We have to synchronize who we are with our sales careers; you can’t maximize your potential if you constantly go against the grain. What are some of the decisions that have to be made to better define the best sales career for you?

Product, service or intangible sales?
Sell to small, medium or large companies?
Industrial, commercial, institutional or professional sales environment?
Transactional or relationship sales?
Business to business or business to consumer?
Retail or wholesale?
Short or long order cycle?
Small or large average order size?
Small base with high commission potential or high base with limited commission?
Work out of your home or in an office?
Inside or outside sales?

If you feel strongly that sales is the right career for you yet you move from one employer to the next without ever feeling much satisfaction, you most likely have never done your sales career homework. Stop and take inventory. There is a place out there for you, but you just haven’t found it yet. This exercise is especially important if you are starting your sales career, but if you are 40+ and unhappy with how things are going, it’s definitely not too late.

A weed is nothing more than a plant in the wrong place. In the right environment you’ll be in a better position to blossom both professionally and personally. If your sales career is not as rewarding as you would like, do your homework in order to make sure you are in the right place to grow.

The stereotypical salesperson is portrayed as shallow, money hungry and untruthful. Most non-salespeople might be surprised to learn that those are unfair characterizations, especially the last one. Let me give you an example.

Customer: “Debbie, I need these parts and would love to buy them from you, but Bill at XYZ, Inc. down the street has them for, oh, um, let me see, 25% less than you do.”

Salesperson: “I’ll talk with my manager and see if I can meet that price.”

What is going on here? Well, that’s the issue. We don’t know for sure what is going on. Is the customer telling Debbie the truth about XYZ, Inc. or is he manipulating the facts to his advantage (i.e., lying)? After making literally thousands of sales calls, it is my anecdotal observation that some customers modify the facts more frequently than salespeople do.

There are a number of ways that customers like this stretch the truth a bit sometimes. Here’s a short list (all of which I’ve observed on more than one occasion): a fabrication about why your invoice is not paid; a story about how they didn’t receive those items you shipped - although they really did receive them; creativity applied to “needed by” date on a shipment to provide some padding for them - but killed you to make it happen; how they absolutely did tell you about a certain specification that you must not have written down, etc.

Do all customers get reckless with the truth sometimes in order to get themselves out of a pinch? Thankfully, most don’t. Unfortunately this type of customer behavior happens more than we probably are willing to accept or may be aware of. So what’s the lesson to be learned? Know that a knee jerk reaction is not always required when a customer throws up an objection or problem. Analyze the situation and the customer. Ask yourself if you think they are representing things accurately before you decide on your course of action.

The relationship you have with your customers needs to be a partnership, and partnerships can’t and won’t last without honesty from both sides. Invest your time with customers that trust you, and that you can trust.

Are you considering selling, or do you already sell, to a city, county or state? Are you eyeing that RFP from the GSA? Consider the following as you allocate your selling resources when selling to the public sector.

Everyone competes, or so it seems, for public sector business, which is part of the problem. Just like with very large corporations (i.e., the Fortune 500 and their ilk), public sector entities can require an inordinate amount of selling effort, are slow to pay their bills (ironically with your tax dollars in this case) and require you to sell at very low margins. They are normally worse in these areas than the private sector. If there is ever a time that you need to evaluate the return on your selling effort, it is when selling to the public sector. Put caps on the sales effort you are willing to make and the minimum margins that are acceptable. Build in a “stop loss.”

Have you ever played a game with someone and realized later that your opponent was playing with a different set of rules than you? No wonder you lost. That’s the case when selling to the public sector. Your company has to find customers, keep expenses under control and generate profit. The public sector has no real customers in the traditional sense; tax dollars are allocated to them and they don’t have to show a profit. You are playing a different game here; the motivation of public sector employees can be different than what you might be expecting. For this reason the selling principles that work in the private sector don’t necessarily translate to the public sector. Your everyday “off the shelf” game plan probably won’t work.

Government RFP’s can be interesting, but in most cases you’ll want to avoid their siren song. Unless you have an inside line you stand an almost certain chance of being the “designated loser” before the RFP is even issued. For all the fanfare about vendor objectivity in the public sector, there isn’t any. Give up that dream; move on with your life. Buy a lottery ticket instead. Use your selling time more productively somewhere else, like the private sector.

The public sector frequently buys outside of formal agreements and contracts, despite what their buyers may tell you. I’ve seen too many times where something was needed in a hurry and they bought within hours with no bidding. Witness the repair of the Pentagon after 9/11. There was no formal and tedious RFP process and it got rebuilt, quickly.

The public sector can be a challenge to sell profitably. Before you embark on the odyssey of selling to the public sector be sure to carefully and realistically weigh the costs and benefits. In many, if not most, cases your selling efforts are better spent elsewhere in my opinion.

I was recently asked, “What is the most important strategy when negotiating with customers and prospects?” A number of ideas jumped up, but there was a clear winner.

Before we go on I have to remind everyone that we are always negotiating with customers. You even have to negotiate with customers that you’ve been selling for years. No matter how good the relationship may be, the customer is always assessing their ROI (Return on Investment) in doing business with you and your company. The customer has to get more from you, at least from their perspective, than they give. They will also, if they are smart, want to respect the fact that you and your company must also benefit from the relationship. You, on the other hand, constantly have to ensure that the customer feels that doing business with you is in their best interest while simultaneously taking care that you and your employer financially profit from this customer. This back and forth is negotiation. You give and get; they give and get. If done properly and in balance, everyone wins.

So what is the most important strategy? If you’ve been in sales for any length of time you know that it’s the rule that states, “Don’t be the first one to talk.” What does that mean? It means that when directly negotiating with a customer let them make their demands first. By doing this you will frequently find that the customer’s needs are less demanding than you thought. They are asking for less than what you would be willing to give in the negotiation. Be warned that many savvy customers know this tactic and it can be quite entertaining to watch a buyer and seller stall as they wait for the other to be the first to make their needs known.

There are a number of things to keep in mind when negotiating with customers and prospects. This one has passed the test of time and is a foundational strategy.

Why is it that all salespeople want to sell to really-big-companies? We like nothing better than customer name dropping of really-big-companies at parties or on the golf course. When a really-big-company shows interest in our products or services we can hardly stand the excitement because we’re soon going to get a really-big-company order, make lots of commission and become famous. While some of us have sales positions that require us to sell to really-big-companies, I am not a big fan of them myself.

Experience has shown me that the most successful salespersons have a lot of middle sized customers. They have enough customers to cover them if they lose one or two (and you always do) and they aren’t held hostage by a few really-big-companies. Keep in mind that there are only 500 Fortune 500 companies but there are literally millions of not-so-really-big-companies to go fishing for.

So what is not to like about really-big-companies? I have three complaints. One, every competitor and their mother is also trying to sell really-big-companies. The sales effort required (i.e., hassle) to sell these kinds of companies can be significant. Two, despite their apparent size and capital, they can and do beat you down on price to the point that your profit margin can be embarrassing. Three, once you do sell them they can take an extremely long time to pay their bills because of their inherent bureaucracy. I used to work for a Fortune 500 company that told vendors up front that, “If you want to do business with us you’ll have to wait at least 120 days for your bills to be paid.”

There can be advantages to selling to really-big companies. One that comes to mind is that you can use them as a reference company. “Hi, I’m Joe Blow with XYZ, Inc. and we count Really-Big-Company as one of our customers.” Be careful when doing this, however, as some really-big-companies might not want you disclosing the fact that they buy from you. For more information check the back of their purchase order that will contain a lot of extremely small print legalese.

Some of us have sales positions that require us to deal exclusively with very large corporations. But for the rest of us my experience has shown me that you get a lot more return on your sales efforts with medium sized companies. If you construct an account base around lots of medium sized companies you have more insurance against losing that one really-big-company. There is a related really-big-company category that is the mother of them all, governments. But that’s for another post.

We gather our lists of leads. We set aside time to prospect. We have all our materials ready. We’re all ready to go, but we have that little uneasy feeling in our stomach because we’re going to have to actually start talking to prospects, people that may not like us calling them. During these times we can lose our confidence a bit, the very thing we need in order to more effectively prospect. Here’s a list of five things that you want to include in your first conversation with a prospect. The list is simple, disarming to prospects and confidence building for you. It can be a road map when you feel lost.

Who? Always start out prospect calls by telling them your name, title and company. Doing this slowly and deliberately can make prospects less defensive.

What? Provide a very brief overview of your company so the prospect can put you in perspective. There are two very common mistakes made here; avoid them both. First, don’t assume that everyone knows who your company is and what they do. The public is much less informed about your company than you think. I’m including Fortune 500 companies here too. Second, don’t go too long. Have a one or two sentence presentation ready and keep it to about five seconds.

Whole Story. This is my favorite part. Next tell them that the reason you are calling is that you are trying to build your business further and your research indicates (you did do some research, right?) that there might be a good fit between your companies. Why do this? It will make the prospect less defensive, more responsive and appreciative of your honesty (they already knew that you were calling to sell them something anyway).

When? Ask them if they can talk now or if another time would be better. I can’t tell you how often prospects complain about salespeople that have absolutely no courtesy here. When you show this modest amount of decorum you will get one of three types of responses. “Sure, now is a good time.” “Not now, can you call me tomorrow morning?” “Never is a good time; go away and don’t call me back or I’ll get a restraining order.” Two out of three isn’t bad and fortunately you almost never get one exactly like the third.

Why? We saved the hardest for last. This is where you tell them the WIIFM (What’s in it for me?). You’ve got to give the prospect some kind of warm fuzzy as to why they should be investing time in you and how it will benefit them. Prospects want to feel like they are investing time in something that might pay off. They’re selfish like that.

And the most important part of the five W’s is that you don’t sound like the other dozen sales calls your prospect has heard that day. You want to sound different and stand out. Most importantly, be yourself.

Sales funnels (or pipelines) are a list of prospects you are currently working on and hope to close. These funnels may include the names of decision makers, the proposed products and services, the anticipated close date, the percentage chance that the sale will actually close, expected revenue, etc.

With the onslaught of software to help with funnel management (i.e., Sales Force Automation, Customer Relationship Management and Enterprise Resource Planning) the amount of data that is being collected from salespeople is getting out of hand in some cases. Salespeople are being asked to input huge amounts of information to these systems that are basically sales funnels on steroids. I should know; I’ve lived with several of these systems and have mixed feelings about them. Salespeople, I have felt your pain.

The first big ugly secret about these systems is that only a limited amount of this sales funnel information is ever used. The reason for this is because of the second big ugly secret; salespeople can’t see the ROI for the time it takes to input the plethora of data. As a result they make up entries to satisfy the system and save time; thus the data can be unreliable and meaningless. And now for the third big ugly secret. Depending on the size, features and options, companies can invest millions of dollars on these systems; so they find themselves in the we-have-too-much-invested-in-this-to-abandon-it mode.

The fourth and biggest ugly secret is that many implementations are not successful. The guesstimates on the amount of unsuccessful implementations go as high as 90%. The amount of cognitive dissonance for companies that install these things and aren’t pleased with the results must be unreal. “We have invested tons of money and time on this and we know it works so we expect our sales professionals to use it. They should be thanking us for this great sales tool! It will revolutionize how we go to market!” Right.

I’m a big believer in automating everything possible and removing selling obstacles from salespeople. Sales force automation tools and their related products can and do benefit sales organizations around the globe. However, and this is a big “however,” before jumping in it is critical that your company determine exactly what funnel information needs to be gathered and will actually be used. Next, an ROI analysis needs to be performed that will measure the benefits against the opportunity costs for the sales force and your organization as a whole. Here’s an idea for management that virtually none do when implementing sales force automation; talk to your salespeople before buying anything. You don’t always have to buy the Boeing 747 model of the software. Sometimes less is actually more.

To be sure, there are successful implementations of this kind of software. They are ones that are well thought out in relation to ROI, where the amount of information being gathered from salespeople is realistic and there is a real need for the information.

There are four elements that make up the core of a salesperson. Zig Ziglar and Dale Carnegie were blessed with all four, especially the fourth. All four of these elements are interdependent although one of them is so important that it renders the others almost insignificant by comparison.Intelligence. This is a given and is fixed. When you were hired as a salesperson they assumed you had an adequate IQ to perform the job well. Sales requires that you not only be smart, but you must also be able to think fast and multitask like there is no tomorrow.

Job Skills. If your employer didn’t think you had, or could attain, the necessary sales and product skills to do the job he or she would have never hired you in the first place. You have your sales position because of the skill and potential you bring to the table in this area.

People Skills. Generally speaking, but not always, salespeople are good with people. People skills are essential for the job; you need them to work with customers and you need them to get support from the back office.

Communication Skills. This skill trumps the others and is where sales managers focus when making hiring decisions (or they should if they don’t). The other three skills are almost taken for granted when stacked up against this one. This can separate the men from the boys and the women from the girls in a sales career. The ability to articulate ideas and convincingly communicate them with both your customers and other employees will greatly influence your sales success. Have you ever seen a top salesperson that had poor conversation or presentation abilities? Probably not.

Not surprisingly these four ingredients are also required of top executives and politicians, with communication skills once again being the biggest determinant of success. No one’s communication skills are ever at 100%. There is always room to improve. A safe place to practice these skills and get really honest feedback is at Toastmasters. This non-profit organization has helped salespeople, and others, around the world improve their communication skills. For more information about Toastmasters International go to their website to find a local club.

Sales managers should occasionally review the salespeople that work for them and see where each fits in the following four categories. If you are a salesperson you might want to take a look at these categories and see which one applies to you. This can be a real eye opener for both salespeople and sales managers.

The Angel. The low maintenance high producing salesperson is one that brings home the bacon and doesn’t need a lot of his or her manager’s time to do so. This is where you want to be if you’re a salesperson and where you want all of your salespeople to be if you are a sales manager. The only cautionary note I have is that sales management tends to forget these people sometimes and not give them enough positive feedback and attention. This can be a big mistake. Other companies want to hire these people.

The Handful. The high maintenance high producing salesperson is the individual who can generate the revenue numbers but who needs a lot of attention from sales management. While their sales numbers are good, they might need someone to frequently hold their hand through troubled customer waters and provide them a lot of positive feedback. These salespeople may require more management time, but sales managers shouldn’t complain. They’re worth the time.

The Under the Radar. The low maintenance low producer is the salesperson that requires little to no management time, but isn’t exactly setting the world on fire with their sales numbers. In fact they rarely hit their numbers. These people can become invisible on occasion because they aren’t getting anyone’s attention with their results and they don’t demand a lot of management time. Sales managers can’t ignore this group (as is frequently the case) or just write them off; they need to make the decision to either attempt to get them producing or replace them.

The Devil. The high maintenance low producer is the salesperson that is the worst of both worlds. They take more than their fair share of sales management time, especially considering their results. They also rarely, if ever, even get close to their sales budget. These are sales management’s best choice to replace, and quickly. If there isn’t an unbelievably compelling story regarding how they can be rehabilitated you’ll be further ahead by not having them on your team, even if you don’t replace them.

So there you have it. Just about every salesperson (and sales manger too for that matter; just ask VP’s of sales) fits neatly into one of these categories. The new year will soon be here, time to review where you or your sales force fits.