All Work & No Play
For Chad McClennan, the only thing that's changed about selling is everything. Compared to a year or two ago, says the 35-year-old Chicago entrepreneur, leads are harder to get, and fewer turn into prospects. It takes more time to turn those prospects into customers, and, if they buy at all, it's usually for different reasons than in the past. He's paying his salespeople differently-while hiring more of them-and investing more in training, supervision and technology to support sales.
"We've changed organizationally and technically, and we've changed the sales process and compensation," says the president and CEO of The Customer Group, a 25-person customer service consulting firm. "And we're beginning to see results."
McClennan's sales experience reflects the changes sales experts and entrepreneurs have seen sweeping through selling in recent months. New developments have ranged from the emergence of savvier but less patient customers to the availability of more but sometimes less qualified candidates for sales jobs. Overriding everything is a profound change in the ability of many customers to buy in the manner and amount they used to. "Our current and potential customers are saying to us 'Right now, we're not doing any business. We're waiting to see how our numbers are going to look,'" says Pat Cavanaugh, CEO of Cavanaugh, a 44-person promotional products firm in Pittsburgh. "It's a holding pattern."
"Today, sales is heavy on marketing, customer insight and systematic selling, and light on taking orders, taking clients to lunch and taking breaks."
Out With the Old
Though the recession may be behind us, its effects can still be felt. Clearly, selling in a recovery economy is not the same as selling during the thriving economy of a few years ago.
Things have changed, but entrepreneurs must still find new ways to sell. McClennan said his list of valid prospects doubled during the first three months of the year. Cavanaugh, 35, who was named the country's top salesman-CEO by a trade magazine last year, expects to continue a growth track that's increased sales 4,000 percent over the firm's past seven years.
How are they doing it? They're not doing what they did a while back. They're not wasting prospects' time with chitchat. They're not looking for easy, quick closes. They're not cold-calling. They're not selling solely on price. They're not just peddling products and services. And, above all, they're not waiting one minute for buyers to come to them.
"We were getting a lot of business through word-of-mouth," recalls McClennan, who started his company in 1999. "There was such a great demand for consulting services from businesses feeling the need to be competitive, but now supply outpaces the demand. So we're doing e-mail campaigns, we're doing targeted mailings. We never had to do that before." Today, sales is heavy on marketing, customer insight and systematic selling, and light on taking orders, taking clients to lunch and taking breaks. "It's not as easy to get orders," says Atlanta sales consultant T.K. Kieran. "You must create demand instead of just fulfill demand."
What's in It for Me?
Creating and fulfilling demand these days starts with changing your sales strategy. It's not enough to be the cheapest, not enough to be newest, not enough to be fanciest, not enough to be an interesting idea. Customers are looking for solutions to problems, and those solutions have to relate to cutting costs or increasing profits.
"If it can't make you money or save you money, I wouldn't bother trying to sell it," says Blair Singer, a Zephyr Cove, Nevada, sales consultant and author of Sales Dogs (Warner). "Because that's where people are."
If salespeople present products and services in that light, they have to know how their customers generate sales and profits. And that's the second major shift in sales: Now salespeople must understand customers in a way that was optional a year or two ago. "People don't have the time to hear what you have to offer," says Cavanaugh. "People want to hear, 'Here are your needs, here's the solution.'"
To get insight into solutions, salespeople have to study customers thoroughly before they even meet them. Cavanaugh directs his people to scan company Web sites, read corporate annual reports, and talk to competitors in the industry so they can get a feel for prospects' issues. McClennan assigns employees to interrogate nonsales contacts in organizations where he hopes to get sales. "They ask questions about challenges they're facing today and what initiatives they have underway," he says.
The need for knowledge is exacerbated as customers seek greater oversight on spending, salespeople must sell to higher-level managers now more than ever before. Senior executives have less time to spend listening to salespeople, and it takes salespeople longer to get a chance to be listened to. That means every presentation is more valuable, and it's more important not to fumble it. "The first meeting you're in," says Cavanaugh, "you'd better have options for them."
|Take a Closer Look|
When sales are hard to come by, experts and entrepreneurs recommend hiring more salespeople. Luckily, there are more available today than there were a few years ago-although the market is a long way from being loose. But you have to look beneath the surface of today's sales job applicant. Internet companies and telecommunications firms, two hot-growth industries of the late 1990s, are the source of many of the unemployed salespeople available now. Try to keep that in mind when you are scanning applicants, warns New York City sales consultant Stephan Schiffman. "I see these resumes where they increased the company's sales by 100 percent. But anybody could in those days. The thing to ask now is, 'Could they do it today?'"
He and others recommend looking for sales experience extending beyond the go-go years, as well as evidence of solid sales training and business understanding, before taking on a new salesperson.
Once they are aware of the issues facing a company, salespeople must develop solutions. That calls for more and different sales training. Salespeople need less training on products and features, and more on how CEOs and other high-level executives address the problems they face. "The product training is great, but what they really need is to understand more about what is driving the company they're trying to sell to," says Kieran. "They need to be able to think like an executive."
One of Cavanaugh's gambits is to try to demonstrate that an investment in his products and programs will provide an attractively positive return. "We're going to do a cost-benefit analysis with them to show that if they spend X, they'll get Y in return," he says. For example, a company with low employee morale and poor attendance would be shown how one of Cavanaugh's programs could cut the number of temporary employees needed to replace absent workers. From there, it's straightforward to quantify cost savings in fewer temp salaries and, hopefully, justify the buy.
To think of that kind of objection-beater, salespeople need training in general business management and in specific problems facing their target companies and industries. Kieran recommends coaching salespeople on competitive pressures, regulatory issues, supplier conflicts and other sensitive issues executives encounter. Says Kieran, "If you take a 360-degree view of what that company is facing, you can get pretty adept at figuring out what [the executive is] going through."
Mixing It Up
Some experts say the fence between marketing and sales has to come down. "Salespeople used to be take leads from marketing or generate their own from cold-calling," says Singer. "But the days of cold-calling are numbered. Today, a salesperson needs to know how to do direct marketing, how to write a headline, how to do a sales letter, and how to generate leads without picking up the phone."
Singer recommends salespeople get training in conducting e-mail campaigns, publishing client newsletters, writing print and radio ad copy and more. "It's always been sales on one side and marketing on the other," he says. "But marketing is the same thing as sales. It's just sales in a different medium, in print, audio or e-mail."
McClennan echoes Singer's call for more marketing-oriented salespeople. He's training his to develop marketing lists and use e-mail client letters created with contact management software to stay in touch efficiently with large numbers of prospects. "We've also found we need to make sure our marketing and sales [efforts] are well-coordinated," he adds. "Our salespeople need to understand what the marketing message is and see that it finds its way into sales scripts."
At the root of what entrepreneurs and sales pundits are talking about is the need to approach sales as a process. Rather than calling prospects and expecting to close a deal upon first contact, salespeople are expected to systematically learn a market, develop leads, prepare solutions and present them effectively.
"A lot of salespeople tried to hit holes-in-one," says Stephan Schiffman, CEO of sales consulting firm DEI Management in New York City. "There was a time when you could do that. But now you have to go back to the process and be good at it," adds Schiffman, the author of many sales books, including one he considers particularly appropriate to today's selling environment, Make It Happen Before Lunch: 50 Cut-to-the-Chase Strategies for Getting the Business Results You Want (McGraw-Hill).
Salespeople can't expect golf outings and other forms of entertainment to yield rapid results-or that time-pressed clients will even accept such offerings. "Entertainment is on the wane," says Schiffman. "Unless there's already a relationship, taking someone to lunch doesn't serve a purpose."
Developing and executing a sales process can takes a while. Eighteen months ago, an opportunity that did not pan out after four to six weeks would have been labeled a low priority. "A sales cycle of three to four months is now mainstream," Schiffman says.
It may take twice as many contacts to close a sale today, says McClennan. And surprisingly, both entrepreneurs and experts agree sellers can't always shortcut the process by just dropping the price.
"The old method of selling by price is falling by the wayside," explains Dennis Kyle, a sales consultant with Positive Results in Avon Lake, Ohio. "Organizations are willing to pay more if the product's value is evident. They won't pay a dollar for anything if they don't see the value."
The good news about paying salespeople today is that you can peg a higher percentage of compensation to performance. The bad news is, old measures of performance may not be good enough.
Entrepreneurs today are having less trouble keeping good people and hiring new ones at lower base salaries than in years past. But they are also finding less justification for paying straight commissions for new orders. Instead, they're basing compensation on more exotic, harder-to-figure measures such as profit margin per order and customer satisfaction. The revised approaches do more than save money, although total sales pay may actually be shrinking from previously inflated levels.
Most important, they make sure salespeople aren't making the wrong sales. Paying based on profit margin keeps sellers from cutting prices just to get an order. And basing pay on customer satisfaction means salespeople won't promise features and delivery dates the company can't provide.
In the Now
It looks as if the future of selling resembles the distant past more than recent history. If there is a theme to this new selling environment, it's this: back to basics. "The philosophy of going in and finding out what customers need dates back to 1980," says Schiffman. "Now they're returning to what worked years ago, which is seeing people and establishing relationships."
One major difference between 1980 and today is the Net. Some see it will play a major role in one shift: that is, to deploy salespeople only to those accounts identified as having the biggest potential. The rest will move to less costly Web-based sales interfaces. "The top accounts are going to get the attention and the others, unfortunately, aren't," says Kieran.
Meanwhile, entrepreneurs forced to cope with the effects of September's terror and the 2001 recession are now looking on the bright side. They've dusted off sales tricks they haven't tried in years. And they're not sorry. "The marketplace dictated we do this," says McClennan. "I wish we had done it a lot sooner."
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Mark Henricks is Entrepreneur's "Books" and "Smart Moves" columnist.