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What follows is some sales advice about asking for special discounts from your sales manager for that prospect with lots of potential.

The not so effective request:

Salesperson to Sales Manager: “I have this great prospect who is going to yield us tons of future business if we can just get the first order. To be competitive they said we’ll have to discount our normal price by 38%.”
Sales Manager to Salesperson: “That’s below our cost! What do you know about them?”
Salesperson to Sales Manager: “All I know is that they need the stuff really badly and they promised us lots of future business. Oh, about our costs, they want 10,000 so we’ll cover the loss with volume. I know how to sell this prospect.”
Sales Manager to Salesperson: ???

The productive request:

Salesperson to Sales Manager: “The XYZ Company says they will buy from us if we can come off our price by 38%. Here is what I know about the decision makers, budget, competition and account potential [realistic and well prepared information provided here]. This is how I plan to demonstrate our added value in order to increase our odds of getting future higher margin business [more good information]. A realistic price quote would be 20% off our normal price. I need your approval for that discount.
Sales Manager to Salesperson: “Approved!”

When you go to your sales manager with reasonable and researched requests you’re much more likely to get a thumbs up. It will also allow you to show off your sales skills and a make for a happier sales manager. Your fellow sales pro’s are frequently going to your sales manager with a continuing chorus of “I need a big discount to get into this prospect that has tremendous future potential.” When asking for a big discount on a prospect, the sales manager needs to feel reasonably confident that the prospect will actually buy in the future and at higher margins. The key is information.

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

[I had the opportunity recently to ask Jim Fowler, CEO of Jigsaw, some questions about his company. Jigsaw is a fast growing company with interesting concepts regarding leads that will be of interest to many sales professionals.]

1. You are the CEO of Jigsaw. What is the history of Jigsaw?

Jigsaw was founded in late 2003 with the mission of mapping every business organization on the planet. The concept was that salespeople could work together to build a gigantic shared Rolodex.

Jigsaw launched in late 2004, has raised $18M in venture funding, currently has ninety employees and has over 500K members (mostly sales professionals) who build and maintain the collaborative database.

2. Who do you consider your biggest competitors and what are the differentiators?

Jigsaw competes most directly with traditional data companies like Hoovers and InfoUSA. Jigsaw differs from them in several key ways:

They build and maintain their own databases. We believe there is no way a few dozen or even a few hundred employees can compete with an army of 500K motivated salespeople who build and maintain the Jigsaw shared Rolodex.

We have many more contacts and they are much better. Specifically, every single Jigsaw contact is complete – including email address and phone number. Seventy-two percent of Jigsaw contact records have a direct dial phone number. Virtually none of our competitors’ records have either an email address or a phone number.

We give our company data away for free. Members can download up to 50K complete company records at a time in the format of all of the major CRM systems.

3. As a sales professional what are some of the compelling reasons for me to use Jigsaw for leads versus more traditional ways of lead attainment such as leads lists and networking groups?

Jigsaw’s data is not only complete, but it is also much fresher than any other lead list. Jigsaw’s 500K members constantly clean the data, updating records and graveyarding dead ones.

Jigsaw is, in essence, the largest networking group around. There are currently almost nine million complete contact records on Jigsaw.

In essence, Jigsaw is doing to the traditional data companies what Wikipedia has done to Encyclopedia Britannica.

4. Is Jigsaw responding to a change in how professional salespeople network and acquire leads?

We prefer to think that Jigsaw is changing the way sales professionals network and acquire leads. Never before have leads of this quality been so easily obtainable. We believe the increase in transparency of data will fundamentally change the way salespeople sell. We believe that it will no longer be about just getting the data, but about how to rise above the noise. We believe salespeople are going to have to become better marketers in order to get a prospect’s time.

5. What is your sales demographic and industry demographic? In other words, are you marketing Jigsaw to certain types of sales professionals that operate in certain industries?

Technology sales professionals were the early adopters, but now sales professionals from all industries and company sizes use Jigsaw. We offer a Jigsaw Team product that allows entire sales teams to use Jigsaw. We have over 600 of these corporate accounts.

Members use Jigsaw for two main purposes – to find prospects and to map organizations in order to understand the buying influencers for deals farther in the pipe. Our market must almost always perform one or both of these tasks on a regular basis.

We also sell our CRM cleaning and maintenance services to CRM owners/administrators. This is the fastest growing part of our business.

[Thank you, Jim, for answering my questions. I think many readers will be interested in looking into Jigsaw further. Scott]

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

[I recently interviewed Gary Halliwell, CEO of NetProspex. This company is representative of the tools and resources that are increasingly becoming available to sales professionals and are fundamentally changing how we work.]

1. You are the CEO of NetProspex. What is NetProspex and how did it all start?

I’ve been a part of several successful online business information companies (President of Thompson Financial/Intelligence Data and President of ZoomInfo) that all shared one thing in common - technology transition - which always lets you do things differently and find new ways to deliver value to an online community. The power of user-contribution and Web 2.0 blew me away as soon as I saw it. While user contribution increases quantity tremendously, the lovely chaotic creative environments of sites like MySpace lack an aspect critical to the business user. Simply put, a business user needs accurate information. Why? Because they are going to take important actions in their workday on the basis of that information.

We thought there was a great opportunity to leap ahead of the competition by solving this issue. Jeff Clewley (NetProspex’s CTO and co-founder) and I both come from backgrounds in financial electronic markets where quality is paramount because the information is used to support multi-million dollar decisions. Our experience serving business users made us very aware that success in the space was going to be dictated not just by the amount of data collected but also by the quality of the information presented back to the user. We believe the majority of the early entrants were more Web 2.0 than Business 2.0 and have lacked this appreciation. NetProspex is a B2B sales contact exchange marketplace built on the premise that sales people need accurate content so they don’t waste important time in the sales process.

Fundamentally, Jigsaw relies on the user community to “clean” their data. We don’t think that makes sense. Sales people don’t want to spend precious hours fixing problems in a sales contact database; they have a job to do and that is to make money. NetProspex takes responsibility for cleaning data completely off the shoulders of users. Our trading system is designed to be quick and easy so users can upload contacts in less than 1% of the time it would take on Jigsaw. Then we put the data through rigorous quality processing, so that only validated contacts are added to the system. The result is that new contacts added to NetProspex are 100% validated when they are added to the database.

Before a contact is made available to users it undergoes a validation process that is the most rigorous in the industry. And we don’t stop there. Contacts are assigned an accuracy rating based on their age between 1% and 100%. When we add a contact to the database, it is 100% validated. Then, as the contact ages in the database we know the probability of that person being in that role decreases. This reflects the issue that people turn over at companies, and any group of contacts will get progressively inaccurate. We know this happens at an average rate of 20% per year, so we provide an accuracy rating to the contact that reflects the average accuracy for contacts as they age in the database.

Anything less than 50% is simply thrown out. Over time we continuously re-validate and re-score each contact. Because contacts are a perishable commodity, like fish, they go off after a while, so we purge all contacts more than two years old.

Yes, technologies like NetProspex provide a definite evolution of traditional sales processes, improving and scaling those processes to the point where information useful to business is becoming more network-like, rather than created by a single source. To illustrate, cooperation in the sales environment has always happened at a human level. If you knew someone who could help you get into an account, you’d probably ask them for the name and contact of that person. Executive directories grew out of this fundamental demand. The change is that the community is clearly prepared to share certain types of information like contact information, and the common benefit is that we can now start to see more deeply into a wider array of target organizations and find mid-management decision makers. That’s a big change and benefit to a sales person that speeds up the sales cycle enormously.

We cover a very wide range of industries as our customer is basically anyone who needs to find and reach another business person or group of business people. That is a fairly broad user base when you think about it. We have concentrations in B2B industries such as technology and business services, but we also range into healthcare, financial and manufacturing. The sales demographic is very broad and includes most transactional B2B sales environments where the sales person simply needs a targeted, accurate contact name.

[Thank you to Gary Halliwell, CEO of NetProspex, for answering my questions. If you are currently using NetProspex please feel free to provide us with your review of the site and its benefits by commenting on this post.]

Please tell your business associates about Scott R. Sheaffer’s Sales Tips and Sales Advice Blog. To subscribe: <click here> to receive by email or <click here> for the RSS feed. © 2008 Scott R. Sheaffer

Every customer you have was once a prospect. Either you, or someone in your organization, had to initially get a decision maker’s attention. The following are some things I have learned about doing it simply and effectively.

What I’m talking about here is what is commonly called an Elevator Speech because it represents how much time you have to show the prospect your value when you first meet. An elevator ride is usually no longer than 30 seconds, which should be the maximum length of your Elevator Speech.

I first met many, if not most, of my best customers in the most unexpected places (car dealerships, weddings, drivers license office, etc.) where having a good Elevator Speech in my hip pocket paid off. It can also be used effectively in routine prospecting.

Decision makers have two things you want: attention and time. You’ve got about 30 seconds to get their attention. Here are the basics to start crafting the two different types of Elevator Speeches that you’ll need (you’ll use one of the two depending on the situation).

1. Someone asks you what you do for a living.

a. Introduce yourself if you haven’t already.
b. State one or two key standout value propositions that you and your company provide to your industry. Please do not sound like you are reading from the Yellow Pages. Boring! I do not believe these value propositions necessarily have to be unique in your industry; they just need to be compelling.
c. Tell them the bare bones basics about your company and its products/services.
d. Ask for their Elevator Speech, which will help qualify them and provide you with their contact information (not to mention that it shows you have some interest in them, which never hurts).

2. You initiate the conversation. Basically this just represents some important changes to the sequence.

a. Introduce yourself.
b. Ask for their Elevator Speech. You can optionally skip the next two steps if they are absolutely not a prospect for you.
c. State one or two key standout value propositions.
d. Tell them about your company.

This is one skill that requires a lot of practice. My wife used to make fun of me for practicing my Elevator Speech prior to going to a prospect rich event until she saw the positive results. I eventually even got her to play the role of the prospect when I was practicing.

Please tell your business associates about Sales Vitamins™. To subscribe: <click here> to receive Sales Vitamins™ by email or <click here> for the RSS feed. © 2008 Scott R. Sheaffer

For us to be most effective in attacking our target markets we must first define them and, secondly, be able to identify individual companies within them. This sounds really simple but it is amazing how many companies haven’t taken the time to do this.

One of the primary ways that we have traditionally identified markets and individual companies within those markets is by assigning them SIC codes. You remember SIC (Standard Industrial Classification) codes; they’ve been around since the 1930’s. The problem with SIC codes today is twofold. They were created when the U.S. was predominantly a manufacturing oriented country and SIC codes only have four digits, which can be limiting.

SIC codes needed to be updated to better reflect a changing North American economy and provide more options for classification. To do that, NAICS (North American Industry Classification System) codes were created and are replacing the old SIC codes. This industry coding system was jointly developed by the U.S., Canada and Mexico and has six digits. The Federal Government has been using NAICS codes since 1997.

NAICS codes can help us in several ways:

1. SIC codes are falling out of favor and are being rapidly replaced by NAICS codes. What a golden opportunity for us to take a fresh look at how we segment our markets.
2. Many industry reports that are now available either from public or private sources use NAICS codes. If we are still using SIC codes we won’t be able to use this new information very effectively as a benchmark for our own businesses.
3. NAICS codes can open our eyes to many service industry opportunities that were missing in the old SIC codes, which could play a prominent role in how we re-segment our markets.

CRM (Customer Relationship Management) systems are giving us increasing abilities to segment our markets through automation and NAICS codes are playing a key role. NAICS codes can be a very helpful tool in helping us focus our sales efforts. For a complete list of NAICS codes please see 2007 NAICS Codes.

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

Allow me to introduce you to a tried and true warehouse operations technique that can also work beautifully in sales.

Have you ever heard the term Cycle Inventory or Perpetual Inventory? It’s a concept used by companies that have a large warehouse of goods that require a high degree of inventory accuracy.

Let’s say a company has 25,000 items that they stock in inventory. Instead of doing the inventory all at once they break it up into pieces and do a little each day.

If they wanted to inventory their entire warehouse every six months they would only need to inventory 192 items per day using this technique. They make it a manageable task.

Prospecting is no different. If we Cycle Prospect or Perpetual Prospect we can take a time consuming and challenging chore and break it into much smaller pieces. At the end of a month, quarter or year we can achieve some remarkable numbers without ever having to binge prospect.

Here are the steps to make this happen:

1. Calculate how many new customers we want to add in a month.
2. Calculate what our personal closing average is (i.e., for every 100 prospects we contact how many turn into customers?).
3. Divide the number of new customers desired by our closing average.
4. Take this number and divide by 22 (the average number of work days in a month).
5. This number represents how many prospects we need to contact each work day in order to achieve our new customer goals for the month.

Example:

Jill wants to add five new customers each month and her closing average is 10%. She takes the number of desired new customers (five) and divides by her closing average (.10) and the result is 50. Next she’ll divide 50 by 22 to see how many prospects she’ll need to contact each work day, and the result is 2.3. By contacting just 2.3 prospects each day Jill can realistically expect to add five new customers a month.

With discipline and time this technique can break down a sales chore into reasonable chunks and yield nice long term returns.

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

When we are prospecting by phone, one of the most common dismissals we hear is for the prospect to say, “I’m familiar with what you do and we don’t need any of that product/service now.”

We’re left with the feeling that they actually probably don’t have the slightest idea what we’re selling. Frequently we’ll respond to this dismissal by forcefully trying to tell them about all the added value our company brings to the table.

The prospect becomes even more disinterested at this point, but there is a very effective and simple way to handle this situation by using the following question:

“Just so I can be sure we’re talking about the same thing, would you tell me your understanding of what my company does?”

Not only does this question pour water on the dismissal, but it gets the prospect talking. Note that this question is an open ended question which is effective at getting information from prospects and building relationships with them (our two main goals when prospecting).

Yes, I know, this question could potentially be viewed as a little offensive by the prospect. Your tone of voice and demeanor can soften how it comes across over the phone.

We all know that it’s easier for prospects to blow us off on the phone versus when we’re face to face with them. The prospect has already dismissed us when they tell us they know everything about us and don’t want any of what we sell. We really have little to lose by trying this effective response.

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

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.

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

As the number of subscribers increases for Sales Vitamins™ 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

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

Here are two things that I absolutely hate to overhear salespeople say to customers or prospects:

1. “My schedule is wide open next week. I can meet with you at any time.”
2. “I sure hope you need to reorder those filters. I’m having a terrible month.”

Why do I hate hearing things like that? This kind of verbiage is counterproductive because we always need to look busy and successful to our customers and prospects. Many studies have confirmed that people feel more confident buying from sales professionals that they view as in demand and very successful.

Do you want to be treated by a doctor that drives a 20-year old station wagon and is always available? Our customers and prospects feel the same way. They assume that if we are busy and come across as successful that we must know what we are doing. The psychological term for this is cognitive consonance. If we’re busy and successful looking, then we must be busy and successful.

What should we do if a customer or prospect asks us about our availability and we have nothing scheduled on our calendar? We answer by asking them what a good time would be for them. “You want to meet at 2:00 on Wednesday? That will work perfectly; that slot is available in my calendar.” There are a million ways to handle this, but the rule of thumb is not to give them the perception that we’re twiddling our thumbs.

How do we answer a customer or prospect when they ask us if sales are good? Regardless of how bad or good things are going, answer with something that sounds like, “Things continue to go very well for me here at the XYZ Company. Thanks for asking.”

People like to deal with successful people. We can make the buying decision easier for our customers and prospects by coming across as a winner.

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