The Value Equation

How is the economy impacting your sales efforts in Q4 thus far?

Take this short poll:

http://polls.linkedin.com/p/11743/dfxxo

Taking Advantage of Opportunities in a Bear Economy

For entrepreneurs, the de-leveraging that continues in the capital markets most likely means a weaker economy for 2009, but there are sizable opportunities that come from a bear economy.

1) The opportunity to weed mediocre employees out of your organization. Most experts agree with a 20 percent employee reduction count for larger corporations; with small businesses make cuts with surgical precision within functions and departments not an axe, but only cut once, and cut deeper than you think.

2) There is an opportunity for negotiating on everything from prices and contract lengths, to flexible payment terms. Try bartering as well.

3) Use this opportunity to reinforce your brand attributers, vision, mission, and objectives. Over communicate with everyone from suppliers to employees, partners, and especially customers.

4) Use this opportunity to train everyone in your organization from the receptionist to the board room on how-to sell. Training should include the value-proposition, sales process, and be sure to make it easy for employees to introduce sales opportunities and generate referrals.

5) Teach employees to treat cash as precious: stretch your resources and dollars with social media programs, re-focus on referrals and networking, turn every staff member into a marketer, eliminate internal non-revenue producing functions, and/or evaluate 3^rd party outsourcing providers.

6) Recruit more than your fair share of star performers. Start by comparing the talent at your competitors or substitutes against your own.

7) In years of economic slowdowns top performing companies search for ways to streamline operations, reduce costs and increase efficiencies. They often utilize solution providers to help them achieve their goals. You now have a reason (“excuse”) with employees and partners and thus an opportunity for performance improvement initiatives so ACT NOW.

8) Extend your capabilities through corporate acquisitions.

9) Expand your distribution with partnering and by forming strategic alliances. Look for cross-selling opportunities within your channels.

10) And one final item to be thankful for in a bear economy, the opportunity to forgo or at least spend less on holiday work parties.

In a tough economic climate, the strong will become stronger (i.e. in terms of market position) as the weak struggle.  Providers that squander precious capital have little margin for error and can be purchased at discount prices.  Others will fail altogether.  For top performing companies, a sluggish economy might be the recipe for long-term success.

Technorati Tags: parterning,corporate acquisitions,recession marketing,recession selling

Internet Releases are Marketing Gold for Entrepreneurs

An entrepreneur asked me last week what is the single best marketing method to promote his new company?

The short answer is through a steady stream of Internet Releases (eight or more Internet Releases per year with each release containing two links with your top keyword phrases will ensure results).

With one Internet Release (difference between traditional press releases and Internet releases defined here) this entrepreneur generated 105 external links to his website and secured page one Google placement for his top two keyword phrases!

Internet release benefits include:

1. Link keyword phrases of your choosing to your product and/or company (for example: if you want to be found for the phrase “Perform Business Process” then use that phrase as a link in your Internet releases)
2. Boost your website traffic with direct links from your Internet release to your website landing pages
3. Increase your SEO page rankings
4. Get your news on top sites like Google News & Yahoo! News
5. Track your results including downloads, impressions, placements, external inbound links, and more

Need more proof? The founding case study for Internet releases is Southwest Airlines.

Technorati Tags: Revenue Generation,Customer Acquisition,Marketing Effectiveness,Internet Releases

Entrepreneur Sales Tactics Checklist – Are You Up to the Challenge?

Small businesses are plagued by excessive sales costs. When founders and executives time is factored in these costs are too burdensome to efficiently grow.

The following is a checklist to assess the gaps in your current versus desired state of sales. More importantly, by completing this checklist your organization will reduce your customer acquisition costs significantly (the firms we work with have 20% or lower cost of customer acquisition).

• Highly Define Your Value Proposition - This means identifying your existing position in the marketplace against competitors and substitutes and then partnering to fulfill the holistic value-proposition customers are seeking. For example if you are a benefits broker perhaps you sell benefits, but small businesses are looking for a “complete HR solution” so you partner with a payroll, HRIS (Human Resources Information System) technology, or compliance firm as appropriate to solve the value proposition for your customers.
  
• Define Sales Message by Sales Stage and by Committee Member - For each sales stage of the customer buying process from contact to prospect to lead to sales opportunity there is an appropriate (i.e. relevant and compelling) message.  For each committee member (i.e. a President cares about different things than the CFO or the controller or the VP of Sales) develop a targeted message to mitigate naysayers and create sponsors.
  
• Economic Efficient Sales Model – Benchmark your marketing, sales, partner, and overall sales efficiency and costs (both labor and programs) against competitors and substitutes (contact us and we can size this for you in a short-call).
  
• Create Steady Demand Generation from at least 5 different lead sources (we have written about the economic cost-justification before here).
  
• Only Spend Direct Sales Resources on Sales Opportunities with 40% or Greater Probability of Closing – Failure to be diligent about this leads to excessive sales costs as sales people are typically the highest labor cost in an organization.
  
• Implement Process Based, Measurement and Metrics Sales Approach Focused on Closing Gaps and Bottlenecks in the Pipeline – Weekly attention to progress made on the sales pipeline will direct your sales and management efforts. A management scorecard is also a good idea.
  
• Establish Communications Rhythms – A scheduled, weekly pipeline meeting plus ad-hoc training and executive reviews is a key ingredient for success.
  
• Conduct Yearly Win–Loss Analysis - This is a great way to learn, train new sales hires, and reengage lost prospects.
  
• Build Marketing Assets – Creating a ‘Prospective Business Pool℠’ – Profile, segment, and build a marketing database of your qualified prospects including demographic, psychographic, and infographic characteristics of your buyers plus keep track of all sales and marketing data. Nurture and repeat.
  
• Create Alternative Distribution including regional partners, networking groups, and channel partners - Significant revenue should come from strategic alliances and partners.
  
• Support Your Sales Team With 30 ‘Raving Fans’ (i.e. well-known“lighthouse reference” accounts).
  
• Hire Proven Star Performers From Competitors and Substitutes – 80% of new sales hires fail!

Notice hiring sales personnel is last on the list.  Unless all of the above is established or at least in the works hiring new sales employees is wasteful. 

Technorati Tags: Sales Tactics,Revenue Generation,Customer Acquisition,Sales Cost,Sales Model,Entrepreneur sales,sales management,sales effectiveness

The Real Value of Outsourcing for Entrepreneurs

While the typical “Promise of Outsourcing” is three-fold:

I. Outsource for cost-savings - which should produce 20% to 60% reductions (a number of readily available research studies validate these savings). Costs have historically been the primary reason mid and large companies begin outsourcing followed by vertical and domain competence including the following:

II. Access to best-in-class business processes and methodologies, technology, tools, major enterprise systems, and knowledge banks.

III. Resource savings (focus employees on revenue-generating and competitive advantage producing activities, save executives and managers significant time {nearly 33% in some cases}, risk management as providers assume risk, move from fixed to variable cost-savings, free training and adoption of measurement and metrics including scorecards, benchmarks, and SLAs (service level agreements) are established). Resource savings is the main reason small businesses outsource.

The real value of outsourcing is capability development of a function, department, or competency area so that entrepreneurs have on-demand centers of excellence that can scale with their business such as distribution, manufacturing, marketing demand generation, or inside sales, but their business models and cost structures are still economically efficient and still agile and flexible.

The value of outsourcing is realized typically over a 12 to 24 month time period. As an organization realizes all of the above mentioned benefits and is at the point where growth slows or it makes economic and service quality “cents and sense” an outsourcing function should be brought in house.

One more added benefit of outsourcing: both Lou Gerstner with IBM and Garry Meier utilized outsourcing to build an internal capability in a peripheral function and then translate those lessons learned and capabilities developed back in-house across the organization.

Many enterprises are making the transformation from an administrative and reactive view to utilizing outsourcing as a key value driver for the business.
While companies face a multitude of daily challenges from cash, to customers, to employees; the effective use of resources including outsourcing to achieve best practices is THE critical success factor for those that wish to grow.

Technorati Tags: outsourcing best practices,resource savings,cost-savings,Garry Meier,value of outsourcing,capability development,management best practices,entreprenuer best practices,small business best practices

Highly Recommend “Blueprint to a Billion” as a Must-Read for Every Entrepreneur

This week at a Houston EO event I had the pleasure of meeting and listening to David G Thompson speak on his new book, “Blueprint to a Billion” which maps how companies grow from a million to a billion dollars. David and his findings reveal “7 Essential Attributes” of these companies in a scorecard format.

Key takeaways:

• Only 5% of companies have the essential high growth attributes.
  
• On average, 32 US companies cross the billion in revenues threshold every year regardless of bear or bull market conditions (i.e. great companies flourish in tough economic conditions). 
  
• Financial economics needed include a) positive return on invested capital, b) improving cash flow (must be cash flow positive), c) 20% EBITDA, d) 55% Gross Margin (I would add 20% cost of customer acquisition or less).
  
• David calls them “Marque Customers” we have referred to them as lighthouse references or raving fans and their testimonials are critical for credibility, feedback, innovation, and recurring revenue streams.
  
• Leverage “Big Brother Alliances” – call them partners, distribution channels or whatever you want, but having strategic partners is key.
  
• Private companies needs well-rounded boards including internal executives, a community member, strategic alliance partners, and veteran gray-hair experience. 

“Blueprint to a Billion” is the next “Good to Great.”

Why 4 Out of 5 Sales Hires Fail

80% of small business sales hires never match the envisioned sales targets because entrepreneurs attempt to duplicate themselves or other ‘Star Performers’ they have known and do not adequately setup the new hire for success.

What it takes for a founder to sell successfully is light-years different from what it will take for the first sales person to succeed. The requirements change as drastically again for the 5^th and again for the 25^th sales hire.

Three Requirements for Successful Sales Hires:

1. Right System – Without a highly defined value proposition, product/services offering, well-defined partners, and fine-tuned sales pitch by sales stage and by committee member your direct sales hire is doomed to fail.

2. Right Support - Until executives have established a “sales playbook” (i.e. a step-by-step instruction manual), high-volume inbound lead environment, established referrals and networking, and created marketing and sales support materials including proposals, presentations, case studies, reference sheets, and ROI calculators new hires will not be successful.

3. Right Profile – I have a colleague that has hired 9 sales people in the last 16 months and all 9 failed to produce the expected results; the right profile means that the sales person should succeed within the first 90 days, i.e. produce measurable results, without a support system. What is the easiest way to ensure you are hiring the right profile? Hire someone who has recently, had measurable success selling your exact type of product/services to your exact target audience. We also suggest using a simplified version of “Topgrading” for your interview methodology. 

Unless all of the aforementioned resources are in place, what you are really looking for is a “partner.” “Partners” bring opportunities to the table from day one, “partners” open new markets. “Sales people” convert qualified leads to contracts.

There are literally thousands of articles, books, and blogs on how-to hire the right sales people. Our experience has taught us that they key is improving the probability of their success by eliminating all obstacles. Increasing the probability of success for a new sales person should include setting reasonable expectations and performance based monthly goals. Establish objectives and metrics the sales hire can achieve the first few months to give them confidence, failing out of the gate is a recipe for disaster as sales confidence is fickle but required component

We recommend that small businesses only put a sales person in front of a qualified, interested prospect with a 40% probability of buying. Why? Because sales people are expensive resources (typically sales and marketing is the 2^nd highest cost in labor intensive service businesses in the budget)!

Technorati Tags: revenue generation,sales,sales profile,sales hire,staffing,recruiting,talent management,sales probability

The Only Client Satisfaction Measures Needed for Entrepreneurs

Don’t mistake inward facing quality assurance measures for client satisfaction. Yes, quality measures are needed, but let’s stop wasting client’s time and call them what they really are which is internal benchmarking measures.

The only two client satisfaction measures B2B professional, technology, and labor-intensive service businesses need are as follows:

1. Referencability – Will your client be a reference, i.e. provide a testimonial for your website, PR and marketing materials, and do they actively refer business? No matter how great your credentials or how much experience you've had, people pay more attention to what others have to say about you. (Hey, don’t take our word for it, listen to HBR.) Plus, referrals are the major revenue generator for many businesses, especially staffing, PEO, accounting, and most outsourcing providers as 1 out of every 1.5 deals per sales rep per month comes via referrals (either client, networking or partners).

2. DSOs – (Days Sales Outstanding) – How early or late your client’s pay you is a primary indicator of how much they appreciate and value your service.

Many believe in customer satisfaction surveys, but are surveys indicators of the lowest common denominator i.e. quality assurance or are they accurately predicting revenue opportunities?

Think about the last client satisfaction survey filled out at your repair shop or local restaurant - were the questions about their quality assurance (i.e. an internal facing quality control measure) or were they genuinely interested in improving your experience at that moment?

The main problem with client satisfaction surveys is that they set the bar too low–i.e. quality as opposed to revenue or other indicators that impact a company’s results. Surveys are further plagued by omitting direct people interaction between decision makers and your business. Every client interaction whether executive to executive, receptionist to executive, or via automated email response counts towards your client’s experience!

Technorati Tags: client satisfaction,customer satisfaction survey,raving fans,revenue generation,operating excellence,key performance indicators,measurement and metrics