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Chris R. of Lincoln, Nebraska submitted the following question, “Scott, I’d be interested to hear your take on leveraging social networking to develop prospects and clients.”

What a great and timely question. I’ve noticed recently that many sales professionals are not aware of how much things are changing when it comes to networking for business opportunities. I’m going to provide just an introduction to this important topic.

We’re all familiar with what I call “Legacy Networking.” This consists of schmoozing at your local chambers of commerce, leads groups and professional organizations. These forums work well, but there are new and potentially more effective ways to prospect using, you guessed it, the Internet.

MySpace.com and Facebook.com are the two giants in social networking on the Internet. These sites allow users to store all kinds of information about themselves and share this with others with similar interests. The only problem is that these sites have a social focus and not a business focus. They are trying to have more appeal to business professionals but still need further development in this area.

LinkedIn.com, Plaxo.com and Ryze.com are three social networking sites that are oriented toward business professionals. These sites can be a source for finding information about prospects. However, none of them are specifically designed to aid sales professionals.

Jigsaw.com is a social networking website that is specifically made for sales professionals looking for leads. It works like a leads group but with a lot more horsepower. You build up credits by submitting information which in turn gives you access to information. Because it’s web based the only geographical limit is the planet.

This site is an outstanding tool for those of us in sales and I would encourage everyone to take a look. The larger your geographic sales territory the more you could benefit from a site like Jigsaw.com.

We are in the early stages of social networking sites that are geared toward businesspeople. We are in even earlier stages when it comes to social networking sites that are specific to sales professionals. This is a trend that will continue and is going to provide tools that will ultimately change how we share information about prospects.

Thanks for your question, Chris.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

I am in the fortunate position of receiving many reader questions submitted from the Contact Me page. For today’s post I’d like to answer a question that was submitted to me by Richard F. of Denver, Colorado, with his permission.

“I like reading your blog and many in our office are regular readers. Why do you make such a big deal about prospecting? I’ve been with my company for about a year and am meeting my sales objectives most of the time without doing any prospecting. Why should I care about prospecting?”

Richard,

There are primarily four reasons that we prospect and I think all of them could be applicable to your situation.

1. We prospect because we lose customers. It’s inevitable. No matter how good we are, we will, over time, lose all of our customers for one reason or another. Since you have only been at your employer for a year you most likely haven’t seen significant customer fallout yet. Now is the time to start planting seeds to replace those customers that will ultimately start to wither and die.

2. We prospect to replace bad customers. We only have a limited number of hours in a day. Why would we want to budget our time around customers that are high maintenance, buy little and pay slowly? When we find better customers through prospecting we become more efficient selling machines by using high quality new customers to replace existing bad ones.

3. We prospect because order-takers make less income than consultative sales professionals. If all we do is process orders, we aren’t particularly valuable to our employers. Order taking is a bad habit we don’t want to get too comfortable with either.

4. We prospect to bring in new business in order to increase our sales and therefore increase our personal earnings (commissions). It appears that there might be some periods when you don’t hit your sales quota. Finding new business could help you hit your target more often and increase your income.

Thank you for your question, Richard. I’ve never seen a superstar salesperson that was successful over an extended period because of their order-taking capabilities. They did it because they had well developed sales skills and they were always looking for better customers to either add to their book of accounts or to replace undesirable customers.

Scott

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

I’m a big believer in sales training, but it often leaves out an important, yet not very sexy, fundamental.

If you’ve been in sales for awhile you’ve been exposed to the following training: closing strategies, steps in a sale, making good first impressions, etc. I call this kind of training “sales step training” because it focuses on very clear-cut steps in the sales process and preaches that some of the steps are much more important than others. Normally whatever sales step is being taught at the moment is deemed to be the most important step in the sales process.

While this model is convenient in the classroom, it really doesn’t translate that well to the real world of selling. I can just see the experienced sales professionals nodding their heads in agreement. Sales is not simple and nothing in the sales process is that concrete.

One of the sales steps that is radically overrated in my opinion is the close (more on this in the next post). The fact is, if you have managed everything properly in the sales process, then the close is just the last part of the process. I like to think of the sales process as links in a chain. Meeting the prospect is the first link in the chain and the last link in the chain is the close.

The chain analogy to the sales process is a good one because each link is the same size and is equally important. You break one link and the sales process falls apart, regardless of where it occurs. If we’ve done an outstanding job of managing the sales process but forget a simple thing like returning a couple of phone calls to the prospect, we stand a good change of losing the sale. Each link is very important.

Most salespeople love doing high profile presentations to prospects. We get back to the office after a successful performance feeling higher than a mountain. We run into our manager’s office and remind them of what a great salesperson we are. But getting the order is in the details. While our great presentation skills may have wowed the prospect initially, it’s our follow-through on all the routine elements that will ultimately get us the order. Break a link in a chain, no matter where it occurs, and the chain is broken.

Remember that prospects think you and your company are probably never going to be more conscientious than you are prior to closing an order. They are looking at each and every link in your chain for breaks. If you ignore what you think is a trivial detail in the sales process, you may have just handed the prospect a chain cutter.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

If you’re a sales representative you are skeptical of the leads your company provides to you. If you’re a sales manager, then at one time you were a sales representative and you know exactly what I’m talking about.

Is the world full of sales professionals that are just no good with leads? I don’t think so.

I have seen many sales managers bludgeon their sales team because they weren’t following up on the “good leads” that were provided to them. Studies have shown that 50% of leads are contacted just one time by the assigned sales representative, and then dropped.

Why is this?

1. The quality of the leads being provided to the sales force is bad. It is grossly naive for an employer to think they can just plug a SIC or NAICS code into one of the database services and hope to harvest a wealth of great leads. Come on. Nothing worthwhile is ever going to be that easy. This turns into nothing but a feel-good exercise for the employer and doesn’t help the salesperson a bit.

2. Sales management is fixated on the number of cold-calls and not the results. It’s as if the goal is to make prospecting phone calls and visits, not sales. Sales management thinks that if they throw a bushel of leads at the sales team it will help them increase the number of cold-calls which will then in turn lead to more sales. Talk about a long way around the barn.

3. The employer doesn’t really know where the best fishing places are so the leads are unfocused. Sales management has to know the types of leads that have the best potential in order to make the salesforce most efficient. The sales team needs to prospect where they stand the best chance of hooking up with the right kinds of potential customers.

4. Sales management doesn’t prospect with their sales force in order to show them how to best use leads. When sales managers participate in prospecting it has many benefits: it models the desired behavior, it lets sales management know what is working and what isn’t, it’s a great sales coaching device, it lets sales management evaluate the quality of leads being provided and does a lot for esprit de corps.

What is the fix?

1. Instead of going for quantity of sales leads, go for quality. Sales management can assign someone within the organization to scrub leads and also follow-up on those leads once they’re provided to the salesperson.

2. Provide sales coaching for the sales force on how to get their own leads. These kinds of leads are really the best in my opinion.

3. Ask salespeople on your team about the qualified leads they have in their funnel, not how many cold-calls they made yesterday. Focus on the end result, not the process.

4. Make sure that everyone knows your company’s ideal prospect and then target those companies.

5. Get sales management on the streets and on the phone prospecting with the sales force.

This is a common problem with many sales teams. It’s time to stop making prospecting just a mechanical exercise by throwing a bunch of leads to the salesforce. Start making your lead generation a serious exercise with an end game in mind - making new customers.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

We seem to place a lot of emphasis on sales numbers, but we sometimes ignore what’s going on behind those numbers.

There have been countless studies that demonstrate that it takes a salesperson about six contacts, on average, with a prospect before they start to buy. These studies were done with inside salespeople using the phone as the contact medium. Other studies have shown that it can take somewhat fewer face-to-face contacts before a decision maker buys, but the number is not significantly different.

Why do most decision makers not buy on the first through fifth contacts? Why does it take six contacts on average before prospects buy? Are they just trying to be difficult? Not really. Let’s think about what is going on in the prospect’s head each time they interact with you. What are they trying to discover?

1. Trust. They are gathering information from you so they can at least make an educated guess about the risks of doing business with you and your company. Prospects ask themselves, “Can I trust this company and this salesperson to do what they say they can do?”
2. Service. Each time you talk with a prospect you are giving him or her indications as to the level of service you might provide. Prospects know that your attentiveness will never be better than when you are trying to get their business.
3. Likeability. Potential buyers want to know if they would like doing business with you. This is especially important if you are in a business where repeat sales over a long period could be expected. Each interaction you have with them during these initial contacts will assist them in deciding whether they’d like to interact with you on an ongoing basis.

Many salespeople think of prospecting as just building “mindshare” with the prospect. If someone ran a red light and hit my car, they would definitely get a large amount of “mindshare.” “Mindshare” alone will not do the trick with prospects. We’ve got to provide them information and build a positive relationship if we hope to turn them into customers, not just make them aware of our existence.

I am asked this in one form or another on an almost daily basis, “Scott, isn’t sales just a numbers game? The more contacts we make the higher our sales numbers. Right?” Our real goal is not to make as many contacts as possible; that misses the point.

We must focus on satisfying the trust, service and likeability questions the prospect has about us and our company. If we focus on just making a maximum number of contacts to gain “mindshare,” we’ll be satisfying our need for activity versus the prospect’s need for information about us. Feeling good about the large number of contacts we are making will not inspire a single prospect to buy from us. Making the prospect feel good about doing business with us will inspire prospects to turn into customers.

Our primary goal is to connect with prospects in a way that will turn them into customers, not to just check off how many times we’ve dialed their number or left a brochure on their desk.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

Running up against competitors is a green light, not a red light. Here’s why.

Several years ago I was working with a salesperson and we made a planned call on a prospect. The prospect told us that she was buying from competitor X and there probably wasn’t a reason to talk further. What did this salesperson do in the face of competition? He put his tail between his legs, meekly said “okay” and ducked out of the prospect’s office.

Why did this salesperson run for cover when he was up against the competition? He had no good answers, but I think I do. I have observed that this kind of reaction to competition is common.

Do you feel you or your company aren’t capable of taking on the competition? Do you feel uncomfortable in assertively making your case with a prospect in the face of competition? Very few prospects are going to roll out the red carpet for you if they perceive they are happy with their current supplier. You’ll have to fight for the business. We have to be confident in ourselves and our company. We also have to be able to assertively persuade prospects of our value if we realistically hope to steal business away from the competition.

When we find a prospect that is buying from a competitor we instantly move from home plate to first base. Why? If a company is buying from one of our direct competitors we are virtually assured that we have a qualified prospect on our hands. How convenient.

We’ve all heard this before, “But we don’t stand a chance against X at that prospect because we can’t match their prices.” Virtually every study that has ever been done on why decision makers buy from a particular vendor places price as the fifth or sixth most important criteria. People buy primarily because of quality, service and limited risk. Simply stated, if you can demonstrate to the prospect that you’re stronger in those areas, you’ll get the business.

When you know who your competition is (and therefore their strengths and weaknesses) you know exactly where and how to strike. Competitors lead you to qualified prospects. People buy on quality, service and limited risk, not just price. Now get that tail out from between your legs.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

Summary: If you’ve been in sales for more than a few months you have been bombarded with all kinds of cold calling “tricks” that can be low-rent and make you feel uncomfortable. There is a technique that is adopted from personal relationships that works incredibly well when cold calling.

When I met my new dentist for the first time recently I was pleasantly surprised. I was surprised because he had taken the time to read through my dental records. He had also read the notes in my file that his office staff had written. During our first few minutes he made sure to let me know that he was well-read on Scott R. Sheaffer.

It was music to my ears. I was impressed.

This same technique can open doors for you when cold calling. Knowing something about your prospect before you make your first contact can really amp-up your cold calling effectiveness. The larger the opportunity, the more important this is. This practice of researching prospects before contacting them seems to be forgotten by many sales representatives…and it’s costing them money.

Sales representative to prospect: “Hi, Karen. This is Paula and I’m your account manager with the XYZ Security Services Company. I’m calling you because I’m researching businesses that are a good match with our services. The two new facilities you are building in Denver are going to need security services and one of our largest offices is located there. We are incorporated in the US; I know your company prefers to use US companies. Can you take a second to…”

Prospect to sales representative: [Doesn't know what to say because she is so dumbfounded and impressed that someone cold called her and knew something about her business needs. While Karen temporarily isn't able to say anything, Paula has definitely gotten her attention.]

Here’s what’s crazy; finding background information about prospects is ridiculously easy with the Internet. It takes about 60 seconds to get all kinds of information.

“But Scott, this will take me so much longer and I won’t be able to make my required number of calls.”

Remember, your goal is not to make calls; your goal is to make sales. While the number of contacts you make may diminish, the increase in effectiveness will skyrocket and more than compensate for lost time. If your sales manager is fixated on the number of calls you’re making and not the quality of those calls, please tell him or her to join the 21st century. The sales game has gotten a lot more sophisticated since 1950.

Do you prepare for cold calling? How do you prepare for cold calling?

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

Summary: We need to use the correct terminology when we are talking to sales management about companies in our sales funnel.

Hardly a day goes by without my overhearing someone use the wrong terminology regarding the status of a company in their sales funnel. It really does drive me crazy. Why? It makes them look unprofessional and makes it difficult for everyone to have a clear picture of their funnel activity, including their sales manager.

There are really only five categories of companies (not “customers”) that you deal with on a daily basis.

Name. This is simply, and literally, the name of a company that you need to look into in order to determine if they should move to the next level. If they don’t meet the basic definition of your company’s business target, then throw them out and move on. An example would be any of the names on a list of leads.

Suspect. This is a company that you have most likely not contacted, but have determined that they meet the basic guidelines of your company’s target market. They are worthy of more research. A customer referral could be an example here.

Prospect. A prospect is a company that you have personally contacted and have verified the information you have about them. They definitely fit in your company’s sweet-spot for business development.

Qualified Prospect. This is a prospect that you have communicated with directly and on more than one occasion. The information you gleaned answered all of the following questions in a way that tells you that there is a high probability of converting them into a customer: Do you have access to the decision maker(s)? Is there a good fit for your products/services? Do they have the budget? Are you coming in at the right time in their buying process? Does competitor presence verify the quality of this prospect, yet not preclude further inroads?

Customer. If they have bought goods or services from you in the not too distant past and paid for them, they are a customer, then and only then.

Are you using the right terminology in your office and with your sales manager? By doing so you can improve the accuracy of information you are sharing, as well as looking like the true sales professional you are.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

Summary: Customer referrals and reference customers are some of your best selling tools, but be careful how you use them.

Do you use customer referrals and reference customers to help your sales? How often?

When one of your existing customers provides you with a company name and contact as a potential customer it is known as a customer referral. A customer referral is one of the least used, yet best, prospecting tools in your selling arsenal. For some reason many salespeople ignore getting referrals or have poor follow-up when they get one. Here are some things to keep in mind when soliciting and using referrals:

1. Ask your best customers for a fixed number of referrals and provide them with specifics. “Mr. Customer, as you know, I am always working on building my business with good quality accounts like yours. I’m looking for new companies that manufacture hydraulic products with sales over $300M. Do you think you could provide me with three names?” People respond to specific requests better than vagaries.

2. Ask permission to use the referring customer’s name and see if they will contact the referral before you contact them.

3. Always follow-up with your referring customers to thank them and let them know what happened.

Reference customers are selected current customers that prospective customers can contact in order to check you out before doing business with you. Reference customers can also be name-dropped. “Mr. Prospect, as I get more familiar with your business I see that your needs are similar to the Mega Giant Company that is a customer of mine here in Kansas.” Here are some things to remember when using reference customers:

1. Never ever put a prospect in touch with a reference customer unless you are very sure that the reference customer is currently happy with you. Too often sales organizations don’t take the temperature of their reference customers before sending prospects their way - with disastrous results.

2. Don’t overuse your reference customers and burn them out.

3. If you are going to name-drop a reference customer in order to gain credibility with a prospect, be sure that the reference customer doesn’t consider their vendor sources confidential.

4. Don’t use a reference customer that is a direct competitor of a prospect for obvious reasons.

Customer referrals typically produce prospects that have fewer objections and have a shorter sales cycle. They are absolutely one of the quickest ways to build your business. If you follow-up properly with referring customers you’ll find that over time they’ll provide you a steady stream of referrals, without even asking. Reference customers can be a great tool to lessen the FUD (Fear, Uncertainty and Doubt) of potential customers that might do business with you someday.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer

Summary: Customers prioritize purchases based on a hierarchy of need versus urgency.

There are four levels of need and want when it comes to customers’ and prospects’ sense of buying urgency. They are most likely to buy in a “Need/Now” situation and least likely to buy in a “Want/Future” scenario.

1. Need/Now customer. They need what you sell and they currently don’t have any. This is a situation where something is broken and it needs to be fixed immediately. An example would be a hospital running out of bandages.

2. Want/Now customer. The customer doesn’t really need something, but they would really like to have what you are selling, and they would like to get it now. An example would be new personal computers. They would like to have new personal computers for everyone but the ones they have are working just fine. They’re going to have to start finding things wrong with their current PC’s so the want becomes a need. You, no doubt, will cheerfully help them change the want to a need.

3. Need/Later customer. They need your products and services but they just don’t need them now. If the customer is not very good at managing their purchasing, this could easily turn into a Need/Now. Your job in this environment is to get them lined up to buy from you when they do need to buy.

4. Want/Later customer. They want what you are selling, but they want it in the future. This kind of customer thinks, “Gee, I sure like that widget that Bob is selling; I’m going to have to get one someday.” You have a twofold chore here; show them why they need your product and why they need it now.

There are two things to keep in mind regarding the above hierarchy. The closer a customer is to Need/Now the more urgent the need. As a result you can probably command higher prices and the sales process will go faster. The closer the customer is to Want/Later the harder you’ll have to work to generate urgency and need. Virtually every potential sale falls into one of these categories and an awareness of this will help you prioritize your time and focus your efforts.

To receive this sales tips blog by email <click here> to receive by RSS <click here>. © 2008 Scott R. Sheaffer