Monday, August 31, 2009

"You Talkin' To Me?"

It’s Nobody’s Fault

As a youngster, when my mother or father asked my brother and I, "Who did this?" We'd answer, "Nobody." "Mr. Nobody" was accused of causing plenty of damage.

In business conversations with owners, executives, managers, and employees, I track how many times "Mr. Nobody" is at fault. For example, one owner said he'd like to talk to us about turnover in a particular job function. Later he told us, "Our operations people could use some help with customer service." Then he added, "And the salespeople need to be able to consult with clients as a partner."
Many organizations engage in similar circular conversations. Owners or executives tell us, "I know we need to improve around here and we're all for it, and the problem is the [department]. We speak with people in that area and they say, "We totally support any change effort, but the real problem is [job function or department]". We visit them and hear, "The real problem is management." Now we're back to management telling us the real problem is people that aren't engaged, don't align with the business strategy, and aren't willing to take ownership or responsibility. My parents would say that's "Mr. Nobody" at work.

Strategyy is management's responsibility. Unfortunately, boards and executives often inadvertently "delegate" responsibility elsewhere. Our most common response from the executive suite is, "Our strategies are great - people just don't execute." However, what passes for strategy is often little more than a wish list or taking last year's numbers and adding 10 or 15 percent. More often than not, data is contaminated with speculation, hypotheses, and opinions. The underlying assumptions behind many strategic plans we review are clearly flawed.

Of course future projections are, by definition, speculative and unproven. However, if strategies do not obviously sit on a framework of reality, trying to execute them is frustrating at best.

Here are a couple of examples:

Stated Strategy: Increase sales by 32% in X market.

Question: Where did the 32% come from? Why not 29% or 35%?

Answer: [After questioning] It's what we need to cover our costs and protect our margins.

Stated Strategy: Penetrate a new and different market with our products/services.

Question: What is your value-proposition?

Answer: [After questioning] We think we can do a better job than others in the market. We have added-value.

Question: What are you bringing to market that is distinct from what's already available? What's your offering?

Answer: We are customer-focused, high-quality, committed, flexible, and willing to go the extra mile.

Question: : Who else can say that?
[Note: Not, "Who else can do that?"]

Answer: Uh, well, I guess everybody else. [OOPS!]

Sorry if this sounds harsh. Reality is an acquired taste!

It is possible to separate strategy issues from execution issues. For example, if the contrast between current reality and the desired future is unclear, most action steps are speculative at best. This requires a high degree of "buy-in" and burns valuable resources of time and money. When the contrast is clear the path of least resistance is towards what you are building not away from it.

End of Part 1

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Saturday, August 29, 2009

Is social media a fad? (Video)

Some people think social media will replace traditional selling. Hardly. More than ever, salespeople need to bring real value to the table beyond describing the features and benefits of their products and services.

Click Here, or on the picture above, to view the video

Friday, August 28, 2009

An unapologetic rant - save your money!

Recently, we received a request for proposal from a global organization requesting training for 200+ professionals. The learning objectives were quite clear and specific. There was obviously some good thinking on the part of the executives at the organization regarding their needs. I was impressed.

Then I read further. Their budget for 200+ professionals was … wait for it …. Less than $126 per person. This is not a joke.

It’s wrong to speculate or assume something you don’t know. However, what are the possibilities here?

a) They really believe this is possible
b) The have such a low regard for training that they are paying lip-service to it
c) They’re naive about what it takes to achieve their objectives
d) They’re trying to trap someone into responding

… or any number of alternative possibilities.

I almost forgot the kicker, – “All additional costs (such as vendor travel and accommodation) must be included.” Thanks!

If this was an isolated example, I’d just smile and move on. But, this is an alarmingly common request. I’m all for getting the most for less. I believe in minimalism – what’s the least we can do to create the biggest result. But this request is flat out ridiculous.

If you genuinely want to produce sales and business results, here are some caveats:

a) Translate behavioral goals into tangible outcomes.

i.e. Instead of: “We want salespeople to become more proactive,” use: “Our goal is to open xxx new accounts by XXX date. We expect to open these accounts by and through our sales force.”

Now you can decide what behaviors/skills/competencies are required to achieve that outcome. Incidentally, instead of asking for “more-better”, specifically quantify desired outcomes.

b) Decide if you want people to “learn something” [i.e. learning objectives] or want people to perform at a higher level. These two outcomes are not synonymous. Assuming that “knowing” automatically translates into “doing” is incredibly naive.

c) If you’re not willing to take responsibility for performance improvement – keep your money. No training can replace a manager’s responsibility for the team’s performance. If you want support in helping people increase their skills and results – fine. But sales results from training rests clearly on your shoulders as a manager. With a manager’s engagement and support, effective training increases its result by over 80%. [Yes, we can substantiate this with research and we did say EIGHTY percent.]

d) Don’t fall for a trainers pitch on how effective they are [were] as a sales person. The issue is how good are they today at coaching others to improved their performance. Metrics should not be passive. i.e. Sales went up during the training/coaching, therefore the training/coaching created that increase. Not true. The question is, “To what extent did this training/coaching directly contribute to this result?

e) Be relentless about sustainability. Don’t expect any training/coaching to last forever, but be aware that most standard training programs wear off in 90 days or less. This means that results will be worse after 90 days, people are fundamentally unchanged and you may become, with them, skeptical of further training/coaching initiatives.

f) Don’t buy into the hype on CRM. It’s a necessity for sales in today’s market. However, 65% or more of CRM installations are unsuccessful. We’ve heard horror-story after horror-story about disappointing results from technology that can, when implemented correctly, dramatically increase sales results. A clue here – it’s the sales process, not the technology that’s critical. Don’t let the software train you. Don’t let over-priced “experts” sell you a “customized” solution until you’re clear on your sales process, and have a good idea as to the level of competency of your sales force. Then, and only, then can you choose software that suits YOUR needs. One size does not fit all and [the dirty little secret] the best solution is rarely the most expensive.

A Short, true story: “Like most women, my wife buys nail-polish remover. She always bought the most expensive under the impression she was buying quality. Then she learned that the cheapest nail-polish remover came from the same batch as the most expensive. She was actually shown the line at the manufacturer. You guessed it, she now buys the lowest-priced product. This is not illegal – just buyer beware and do your homework."

It’s a minefield out there with everyone making claims. [i.e how many “Canada’s [America’s] top sales trainers” can there be? [Answer: One] But how many books, seminars and websites make this claim? I rest my case.

We’ve prepared a report on what questions to ask when seeking training/coaching to improve performance. It’s yours for the asking.

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Thursday, August 27, 2009

Follow The Money - Part Two

We pick up from where we left off giving specific action steps to follow.

Suggestion: Seek out forward-looking customers. Listen carefully to their viewpoints and visualize the picture they communicate. No one can predict the future, but these rare visionaries see what others do not see until it’s a commodity. Find out what books they are reading and read them yourself. Look for industry shaping publications, not “faddish,” rearview mirror-type books. Once a topic becomes trendy, bookstores are flooded with a wave of rehash publications that are of little value in uncovering potential future profits.

Aggressively uncover your client’s business model – how they make money and what they truly value. We ask our clients to review how their organization's make money. One CEO told us, "There are about 5 people here who actually know how we make money. That's a bit scary."

Be cautious about excessively fixating on market share. Some nameplate market share leaders are no longer making money. Some are money-losers and have sunk into bankruptcy or are undergoing massive restructuring. Collaborating with customers to anticipate and create genuine future value is a stronger profit model. This customer focused approach requires a detailed understanding of how profits are created for your customers. It also requires tough choices based on a sharper focus on where profits will be created in the future. Consider, for example, the downward spiraling profits in computer hardware and the increased profit potential in providing genuine, cost-effective service to executives dissatisfied with their investment in technology. A “market-share” mentality may move you away from mining potential future profits.

Questions to ask include:

“Who are our most profitable clients?”
“Who are the clients best poised for future growth?”
“Within that group, which have the highest potential for growth?”
“What mix of products or services could best serve their future needs?”
“Are we pushing products (services) or genuinely assisting clients in identifying and helping them solve problems to create future profits?”

The latter question is the most challenging for businesspeople. In our work, we conduct a “Reality Check” that, in a surprisingly short time, reveals often hard to accept realities. For example, a group of owners in a well known, and highly successful retail chain, discovered that as much as they “talk” about the importance of their customers, their business is actually designed around internal factors. Becoming more efficient with their current business model obviously is a low-return pursuit. The opportunity for profit growth is in a greater share of wallet based on seeing things from their customer’s perspective. When they walk into their own stores they see and focus on things that are of little value to their customers. They invest inordinate amounts of time on these internal issues. Together we are searching for, and creating, a new business model that creates genuine value for customers and positively impacts the retailer’s profitability.

Key Questions:

“What do our customers value?”
(Clue: It’s not always the lowest price, even though price is a factor.)

“What will they value enough to allow me to make a profit providing it?”
(Clue: There is value in relationships and customer knowledge as well as in
competitively priced products.)

“What can I create that “inoculates” my customers against the competition?”
(Clue: It’s usually more than an ‘innovative’ product.)

“How do I move towards providing future customers with what they will want
and need without adding additional costs to my product or service?”

Of course we are only scratching the surface here. We invite you along this road less traveled. Let’s leave behind those tinkering with their costs, products, and services and move into the true future profit zone. Follow the money!

What are the initiatives at your organization that require a shift in thinking?

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Follow The Money - Part One
When asked, virtually all executives we interview complain that their margins are shrinking. This is a concern, since our market is a global, hyper competitive commodity and price driven, margin-battering place. How you made money last year may not make you money this year.

We’re fascinated when we hear business people say they are customer focused or customer driven, yet their profit models are focused on their needs rather than creating genuine wealth for their customers and sharing in that wealth. Even their business structure tends towards an “inner” view. Thirty years ago the customer didn’t really matter. I know this sounds weird, but it’s true. Customer demand was higher than capacity and the seller was in the driver’s seat. They set their business goals based on their targeted profit margins. Today our capacity to produce is greater than demand and, unless you have a distinctly innovative product or service, the customer has a confusing amount of choice. Rarely can we set our own prices due to increased, hungry competitors. Protecting margins involves much more than increasing prices and tinkering with administrative costs.

In reality, the customer is now at the centre of our business universe. It's about them finding you, not you marketing to them.

Dale Carnegie said: “Try honestly to see things from the other person’s point of view.”

It’s time to scrutinize whether we actually live this principle or just pay lip service to it.

Unfortunately, traditional market research is of little help since it uses what we call a “rearview mirror” approach. Usually customers are given a series of multiple choice questions. Even when augmented by interviews, the questions often do not get at clients’ genuine future issues.

Why is thinking from the customer’s point of view so hard? Mostly it’s because we’ve been trained to continually focus on improving our products or services. An all too common model is designing a product (service) that we think serves a need and aggressively taking it to market with traditional techniques. Invariably the market responds with apathy, or strong resistance. [Do you remember Crystal Pepsi?]

As an organization grows, the natural, organic flow is away from customers. A recent survey indicates that senior managers spend seventy percent of their time dealing with internal issues, and a high percentage of the remaining thirty percent involves dealing with non-customer issues.

Believe it or not, the best customers or prospects with whom to invest time are the ones most demanding, difficult, or dissatisfied. Over 20 years ago, a successful retailer taught me to actively pursue complaining customers. “Dave,” he said, “a complaining customer is doing you a favor. They are telling you they want to do business with you, but they’re frustrated or irritated at something. They represent at least fifty other customers who, for whatever reason, are reluctant to bring their complaints to your attention. The best ideas to dramatically improve my business came from complaining customers.” He taught us the direct, inexpensive customer focus process we still use for both ourselves and our clients.

Asking the right questions is critical. It is important to uncover our most demanding client’s needs, aspirations, and future business focus. Just asking them how they like our service is vague and weak. Asking them about their “needs” is not enough. Prospective customers usually don’t know their future needs. They operate in the same dynamic business climate as the rest of us.

Ineffective, order-taking salespeople, for example, contend that they do think from the customer’s viewpoint. They tell us, “All our customers care about is price. The customers don’t want what we sell; there is no demand for it.”

History gives us many examples of the flaw in this mindset. Years ago, vacuum cleaners were unknown and, when approached, retailers claimed there was no demand for them. However, once a few early-adopters began using the contraptions they purchased from a direct salesperson, demand increased. Now, almost every major retailer carries vacuums. This tells us is that “demand” is after-the-fact and often ineffective in capturing future opportunities.

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Tuesday, August 25, 2009

How To Lose Your Best Employees or High Producing Salespeople

Here are 7 ways to get rid of your best performers:

1. Do not talk specifically with them about their performance. Simply tell them you’re happy or unhappy with their work.

2. Spend all your time working on problems and leave top performers alone.

3. Invest 80 – 90% of your time trying to make marginal employees productive.

4. Spread renuneration around like peanut butter – evenly distribute it over everyone.

5. Design and conduct contests to “motivate” people to perform at a higher level.

6. Avoid having performance conversations with anyone.

7. Follow every fad going – regularly give people a new, hot book to read.

A manager was extremely distressed when their best employee unexpectedly resigned. In an exit conversation the employee felt there was no challenge in their work. Another employee became enraged when the executive to whom she reported gave her an annual “review” by simply saying, “You’re doing great work keep it up.” The employee quit immediately saying, “If that’s all he can say after a year working for him, I’m out of here!”

High performers love feedback on their performance. They want consistent, constructive, feedback. If you doubt this, scrutinize top performers in any field – especially the arts. They constantly review how they’re doing relative to desired outcomes. They actively seek out coaching and respond best to specific, performance-based feedback.

Taking an employee from a 3 to a 4 on any scale, takes more effort and produces significantly less than taking an employee from an 8 to a 9. The former is approximately a 14% improvement while the latter is 50%. Despite this, many managers invest excessive time and energy working with so-called “non-performers.”

Remuneration is a contentious and fuzzy subject. In a recent meeting with 26 up and coming leaders, the topic of “incentives” raised its ugly head. It became clear to us that these young managers believe that “incentives” work. Their question was, “What is the incentive to get people to work on these projects? How can we motivate others to make a contribution?”

There is NO evidence that incentives produce long-term results and there is strong evidence that an incentive-based system actually lowers performance. Once high performers reach a certain level their motivation is intrinsic, not extrinsic. With low performers, incentives actually mask incompetence. Even if incentives work, the results are related to the “bribe” rather than improved competency.

Yes, a person’s compensation is important to them and it’s imperative that it is tied in some way to performance. However, trying to bribe performance out of high performers drives them out the door. Incentives rarely motivate low performers. During a flashy roll-out of a sales contest I heard one person mumble, “That prize will look good in Charlie’s [the top producer] living room.” By conducting regular one-on-one’s, your “Charlie’s” can buy their own big screen TVs.

Fads. What a subject! How many times have we heard groans from people as they mumble about a new book the boss is reading? They see no relevancy to their business or day-to-day activities. He or she rushes from one “hot” idea to another with no apparent strategy or structure. Most business books are still three to five years behind current reality. Books are a great resource but, like every other tool, they are often abused. If there is no clear strategy in place, applying the “latest” management theory will have little, if any, effect.

Action Tips

In contrast to our opening tongue-in-cheek list, decide what results are most important to your business future.

o Connect others to two or three key strategies.

o Engage in performance conversations around competencies and performance.

o Give your direct reports regular feedback about their contribution to the overall strategy.

o Design your organization or department around creating what you want rather than reacting to circumstances or applying the latest fads.

“If you can’t measure it, you can’t manage it. However, if you don’t create what is truly important, you have nothing to measure or manage.”

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