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Even if our employer pays our fuel bills and we’re not concerned about recent gas prices, the CFO has noticed the price increases and is working on ways to control this cost. If we are currently paying our own fuel bills we directly feel the pain. Here’s a sales tip to keep in mind; we’ll see many companies in the upcoming months change how they handle fuel expenses. Many will stop paying fuel costs altogether.

The great news is that by necessity we are being forced to better manage our accounts in ways that will help us in the long haul…in ways that represent solid basic sales skills.

“…by necessity we are being forced to better manage our accounts…”

• We need to determine who our best customers are (and by that I mean most profitable) knowing that fuel costs are justified for this class of customer.

• Identifying outside customers that are marginally profitable is a valuable exercise. We can handle these customers through another channel (e.g., inside sales, website, etc.) or fire them with a dull pencil. Firing a marginally profitable customer with a dull pencil simply means we raise their prices until they either become profitable or they quit buying from us. This was one of the most important sales tips I got when I first started in sales.

• Our sales manager is constantly preaching to us to sell more products and services to existing customers. He or she is giving us good sales advice. Now is an excellent time to get more out of our existing customer contacts instead of adding small customers at additional locations.

• We must take control of our calendars. Instead of jumping all over town, we need to plan our customer appointments so that they tend to cluster in the same area on the same day. Our customers understand that it is costly for us to drive to their location and will provide sales help in our scheduling.

We have to manage around the reality of $4+ gas. The things we do to help us control those costs will actually make us better sales representatives by improving our revenue within accounts and sharpening our territory management skills.

Related links: Fire a Customer for Fun and Profit, Cross Selling

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We all know the Pareto Principle, which broadly states that 80% of the effects comes from 20% of the causes. Countless sales organizations have gotten themselves into deep trouble by mindlessly applying this principle to their sales organizations. I call it the Pareto Protocol.

Sales management thinks something like the following, “We’ve done an analysis and find that 80% of our sales comes from only 20% of our sales force. We need to fire 80% of our salesforce, which will lower our overhead and increase our profits!”

They think that if they can increase the sales of the 20%-super-producers by just 25% they won’t see any decline in revenues, while simultaneously realizing an 80% reduction in their base sales payroll. It sounds too good to be true, because it is.

I’ve seen the results when the Pareto Protocol is applied to sales organizations and it is consistently a disaster. I am fully aware that every sales organization has salespersons that need to find another career, or at the least be encouraged to work for a competitor.

I am also fully aware that every sales organization has its high producing heavy lifters, but to think that they can and will do even more lifting, all the time, is an ill-advised sales strategy.

Before your sales organization is tempted to partially or fully implement the Pareto Protocol, please consider the following:

1. Your top producers are in that position because they are already working at high capacity. Do they really have an additional 25%+ of bandwidth to give you?
2. You have salespeople at differing levels of development. Firing 80% of the sales force will undoubtedly nip many future super stars in the bud.
3. After applying the Pareto Protocol your sales force is now theoretically comprised exclusively of superstars; you’ve unintentionally created headhunter heaven. Be prepared for your superstars to be rapidly and easily gobbled up by your competitors.
4. Sometimes sales management tends to put their heads in the sand and pretend that everyone on the sales force has exactly the same opportunities. Not true. Accounts, products, geography, experience, sales management, etc. are variables that have to be accounted for and leveraged for each salesperson.

There is a normal distribution of sales capabilities within all sales organizations. Please see Sales Managers, Invest in Your Average Performers.

Sales management needs to focus on improving/removing the bottom 15%, improving the middle 70% and rewarding the top 15%. Sales management also has to look at its own skill levels at managing the sales force most effectively, but that’s for another post.

If you’re not already a subscriber, <click here> to receive Sales Vitamins™ by email or <click here> to subscribe to the RSS feed. © 2008 Scott R. Sheaffer

Have you ever fired a customer? I have on several occasions. It’s the most liberating and educational thing you will ever do in sales. When I say “fire” I’m talking about this kind of conversation with the not-so-desirable customer:

You: “Mr. Customer, we want to thank you for your business (well, not really but it seems like the kind of thing you should say at a moment like this), but we feel that your needs could be better served by another company (at this point you might want to give them the name of your most hated competitor…which I have actually done).”

Ex-Customer: “What!? You can’t do that. I thought we had a good relationship. Who is going to provide us our widgets/service in the future?”

Early in my career I had a public sector customer that was a pain in the neck to deal with, paid slowly and wanted us to sell them our products and services below our costs. One day the president of the company I was working for at the time blew into my cubicle and said, “Lose this customer. Fire them. Today.” I was a little nervous when I was actually firing them, but here is what I learned:

1. There are many prospects out there; don’t waste your time on bad customers who squeeze you on margins, are high maintenance, tie up resources and don’t pay their bills in a timely manner.
2. Bad customers will frequently try to bluff you into thinking that you are easily replaceable and that you should be happy to have them as a customer. The truth is that your knowledge of how they do business is very valuable to them.
3. You are more powerful than you think when it comes to your relationship with your customers. Don’t abuse this knowledge, but know that a sales/customer relationship is a partnership. A partnership implies parity.

Am I suggesting that you go on a wild customer firing spree? Of course not. But the process of eliminating a chronically high maintenance and unprofitable customer will empower you and free your time to go after profitable and professionally rewarding customers.