Should referral fees be part of your sales strategy?

I’ve maintained, throughout my career, that when selling is done right, it’s one of the most purely beneficial and enjoyable ways to make a living that there is.  And then, there are times that I’m disappointed in the ethics of my profession.  Such an instance happened a couple of weeks ago, and it centered around a referral.

A small business consultant whom I have known for some time called me and said, “Hey, Troy, I have a referral for you.  A client of mine really needs some sales consulting help, and I feel like you’re the right guy for it.”  I thought that sounded good, and we talked.  The more we talked, the better it sounded – until the other shoe dropped.  Within that shoe was a misunderstanding of what referrals really are and what they should be.

The consultant, after we had discussed it for awhile, said, “By the way, I’ll need a referral fee on this one.”  I should point out that I’ve referred him a few pieces of business over the years, and never asked for a fee.  I don’t do that.  It’s against my ethics.  However, I asked him how much he’d need, and when we figured out what the project would be worth, his fee (had I chosen to pay it) would have been slightly more than $1,000.

I explained to him that I neither pay, nor accept, referral fees, because I think they introduce an ethical issue into the transaction.  Over the years, I’ve paid referral fees five times (the last was about six years ago), and every time, the deal has gone sour due to ethical or communication issues on the part of the referrer.  I also reminded him that he had done business from my referrals – which I never charged him for.  He still responded that he was pretty committed to needing the referral fee.

I asked him if, should I not pay the fee, he was going to find someone else who would pay it?  He hesitated and then indicated that he would do so.  “Even though,” I asked him, “you have told me that you feel like I am uniquely qualified to solve your customer’s problems?  Is $1,000 that meaningful to you?”  He grew quiet, and then said that his ‘new business model’ required these fees.  I thanked him for the thought, but told him that if the business could be bought by anyone for $1,000, that I didn’t want it.  I asked him one final question, which I’ll get to in a moment.

What’s disappointing to me isn’t the fact that I won’t get the business; I’m doing well.  Nor is it the fact that I’ve referred him business for “free” in the past.  I might do so again.  He’s good at what he does.  What’s so disappointing to me is that he’s willing to sell out his ethics at all, never mind for such a small amount.  You see, a referral to me involves certain ethical guidelines.  Let’s look at that.

When you refer another service provider to your customer, here is what you are saying:  “I know you have a need that needs to be solved, and I can’t solve it.  However, I care about your well-being, and based upon my experience, I know someone who can solve your needs – and I stake my credibility upon their work.”

Wow.  That’s a heavy statement, isn’t it?  Notice that, nowhere in there did it say “and I’m getting paid for solving this problem.”  In fact, the other question I asked the consultant was, “Does your customer know that your referral depends on who pays you?”  He got very, very quiet when I asked this question.  The truth, I suspect, is that if the customer knew, it would greatly damage his relationship.

When a true referral is made, here is how the three parties involved perceive the referral:
Referral provider:  “I’m doing a good thing here, because I’m solving a problem for a customer (and hopefully deepening my relationship because of it), as well as helping a friend or trusted associate to grow their business.  Hopefully, I’ll get a referral back.”

Referral recipient:  “This is great!  I’m getting a new customer, and the person who is giving me a referral is showing a lot ofconfidence in me.  I need to see if I can generate a referral back for them, to help them as they have helped me.”

Customer:  “Boy, that saved me a lot of trouble!  This salesperson (or associate) whom I trust and respect is introducing me to someone he trusts and respects; I should value this new person’s work and input highly.”

Now, here’s how the parties involved perceive the transaction when a fee is involved:

Provider:  “Well, I can get some cash out of this, which I wouldn’t have if the customer found his/her own solution.”

Recipient:  “I can buy this piece of business.”

Customer:  “Boy, that saved me a lot of trouble!  This salesperson (or associate) whom I trust and respect is introducing me to someone he trusts and respects; I should value this new person’s work and input highly.”

Did you notice that the customer’s perspective didn’t change?  That’s because nobody told the customer that it wasn’t a true referral.  Hence, the customer doesn’t know that it’s a cash transaction instead of an expression of trust.  In many cases, if the customer did know, it would greatly affect the success of the transaction – or even kill it.  In fact, if the customer does learn that a fee was paid for the referral, his trust in both parties tends to drop significantly.

When people want a ‘piece of my action’ for introducing me, my first thought is to wonder how much business that person is actually doing on their own; my experience has shown me that the value of a referral fee pales in comparison to the value of a reciprocal referral.  However, people who charge for referrals seldom receive referrals of their own, and the reason is simple:  Once the fee is paid, the obligation from one party to the other has been completed.

In many professions, referral fees are illegal, precisely because of the conflict of interest inherent in the process.  Even in professions where they are not illegal, I would strongly recommend not charging them nor accepting them.  A good rule of thumb is this:  If you couldn’t proudly relate the details of the referral to your customer, maybe you shouldn’t do it.

In this case, I lost the business, but kept my ethics and dignity.  You might occasionally lose business, too, by staying “fee free” with respect to referrals – but isn’t your integrity worth more?

Is your company doing well – or are you measuring the wrong things?

Last week, I spoke at a conference in Arizona, and at the evening reception before the education day, I had the occasion to converse with a business owner who was very proud of his performance on his “KPI’s” – his Key Performance Indicators.  He recited survey result after survey result, all very positive.  I couldn’t blame him for being proud.  I asked him, “So, what’s your customer retention rate?”  “Eighty-five percent,” he said proudly.

As you have probably already figured, an 85% retention rate means a 15% customer loss rate – which sounds bad.  That’s because it is bad.  However, it’s worse.  His company runs on contracts of three to five years, which means that in any given year, only 20% to 33% of his customers are even empowered to make a decision to stay or leave.  Hence, his real “customer retention rate” hovers somewhere between 25% and 55%; that represents the percentage of customers who are able to make a positive decision to stay and in fact stay. Oddly enough, retention rate was NOT one of his KPI’s.  It occurs to me that too many businesses measure the wrong things.  Let’s talk about doing it right.

A true “Key Performance Indicator” should be a real measurement of how your company, department, or people are performing at any given moment.  By “real,” I mean that it should be something that you can hang your hat on.  Unfortunately, too many businesspeople (like my contact above) hang their hat on customer surveys.  That’s not real.

Customer surveys ask about an experience in the abstract; i.e. detached from other business decision making criteria.  Here’s an example:  I’m a loyal Southwest Airlines customer.  I  have a one-hour rule; if Southwest can get me within a 1 hour drive of my final destination, I’ll fly Southwest over another airlilne that can get me closer.  That’s because Southwest consistently delivers on my expectations.  They get me where I’m going on time, my baggage shows up (with one past exception), an the people are pleasant and responsive.

Every now and then, however, I have to go someplace they can’t take me.  One such instance happened about a month go.  After I flew, the airline sent me a survey asking about my experience.  I responded honestly – my experience was fine.  Yet, as I’m writing this, I’m in the airport waiting for a Southwest flight, having chosen Southwest over that airline (as well as a few others).  So, did I lie on my survey?  Nope.  I don’t lie on surveys.  However, their survey did not require me to make a purchase to validate my results.  So, I’m sure I helped their “KPI’s,” but I’m buying from their competition.

Repeat after me:  Market Research isn’t real until you ask someone to write a check.  I’ve noted before that one of the most well-researched product launches of the 20^th century was the Edsel; yet, the Edsel was a flop.  The Edsel sounded good to buyers until they were asked to buy.

Hence, your KPI’s should be based on real transactions that ask customers to make an investment – if not in cash, then in their time and credibility.  Here are a few examples:
Customer Decision Rate:  Your Customer Decision Rate (or CDR) should measure the customer’s desire to buy from you (or continue to buy from you) in the framework of other potential buying decisions.  As you’ve seen above, my acquaintance’s CDR landed somewhere between 25% and 55%.  85% is bad; those numbers are ugly.  Incidentally, this number should be different than your proposal close rate, because it should only pertain to current customers.  Your current customers are your best barometer of your ability to keep your customers happy; new customers are different.

Customer Internal Growth Rate:  This should be a measurement of how much, over time, your customers’ business with you grows.  Again, this should be separate from your new customer selling efforts.  Are your salespeople able, on a regular basis, to expand your business within current customers – or are those customers making a decision that you have not earned the right to do more business with them?  Retailers have a measurement called “Same Store Growth” that measures how much their existing stores grow their revenue, independent of new store openings.  This is a parallel to that number.  If you do it right (have a high retention rate and a high internal growth rate), your Internal Growth Rate can offset customer losses, meaning that new-customer sales become pure growth.

Referrals and Testimonials From Current Customers:  Referrals and testimonials are another measurement of your customer pleasure.  While these do not (typically) ask the customer to invest money, they do ask the customer to invest their time and credibility.  In some cases, this can be a more significant investment.

Price Index Over Time:  You should be measuring the average prices, or the average profit, achieved in your ongoing customers over time.  Some industries (including the one referenced above) have a “rollercoaster” price effect.  The account is signed at a low price, and then the company increases prices periodically over the term of the contract.  Then, at renewal time, the incumbent must requote prices at a low level to retain the business.  Ideally, we want the customer’s price and/or profit to consistently (if slowly) increase over time.

Ther are, of course, many other KPI’s that you can use.  We haven’t even touched the subject of new customers, for instance.  The ones I referenced are extremely important because they all referencetransactions and price.  Transactions and price are simply ways of quantifying the value of your relationships with your customers.

If you’re measuring the right things, you’ll get the right knowledge; if not, you may have great “indicators” without having real success.

Can you really build a lifetime relationship in 30 minutes?

Recently, while perusing discussions on my LinkedIn groups, I saw a statement that can only be described as a doozy:  another sales trainer posted, “I can teach you to build a relationship, based on trust, that will last a lifetime, and accomplish that within a 30 minute sales call.”  Wow.  That’s quite a statement.  And let me make a statement, as well:  I cannot teach you how, within a 30 minute sales call, to build a lifetime relationship based on trust.

Of course, I suspect that the author of the statement can’t do so either.  In fact, I’m sure he can’t; earning a lifetime’s worth of trust cannot be done within 30 minutes.  People simply don’t work that way.  However, if your sights and your goals are set correctly, you can accomplish some important things in a 30 minute sales call.  Let’s talk about what they are.

Establish Dialogue:  The first task on any sales interaction is to generate a comfortable dialogue for both parties.  Any sales interaction begins with fear on both parties’ sides.  Your customer has a fear of making a bad deal, or at a minimum, wasting time.  You have a fear of not selling and not succeeding.  Within the first 30 minutes, you can put at least some of those fears to the side.  The fear creates a wall between the two of you; if that wall isn’t lower by the time you leave than it was when you started, you’ve missed something somewhere.

Deposit into your Emotional Bank Account:  The Emotional Bank Account is at the center of all of your relationships.  Essentially, the EBA is a measurement of how much “equity” you have earned with the other person.  We are constantly making deposits and withdrawals in our EBA’s; the key is to maintain a positive balance by making more deposits than withdrawals.  We make deposits by making positive gestures toward the other person.  We make withdrawals by asking things of the other person that might be unpleasant, tough, or uncomfortable for them.  In the first 30 minutes, it’s critical to begin making deposits into the EBA; if your balance is zero or negative at the end of the first 30 minutes, your customer is likely to close your account.

Gain Understanding of your Buyer:  One of your first tasks as a salesperson is to begin to understand your buyer – and by that, I mean understanding his/her perspective and worldview as it pertains to business dealings.  You do that by asking good questions about your buyer’s background, the things they enjoy about their work, and good big-picture questions about the company itself.

Align Yourself With Your Buyer:  As important as understanding your buyer is aligning yourself with your buyer.  When the sales call starts, one of the buyer’s assumptions is that you and he are on opposite sides of the table, and not necessarily working in the same direction to a common goal.  You’re a salesperson, and the perception of a salesperson is that of someone who is trying to “push” a product or service off on the buyer without significant regard for the buyer’s well-being and interests.  You can communicate, through word and deed, that you are on the buyer’s side and that you are working in the same direction.

(Maybe) Generate an Opportunity:  This one depends greatly upon your offerings and sales environment – but, yes, it is possible to generate an opportunity for a proposal or even an initial order on a 30-minute sales call.  What’s important is to keep this in perspective; even if you have generated actual business in 30 minutes, it does not mean that you have generated that “lifetime” relationship.  It means that you have generated enough trust with your buyer to give you a tryout; what you do from there will determine if you ever have that opportunity to build a lifelong relationship.

Your business card can either help you – or destroy your credibility.

In speaking at different trade shows, I receive a great many different business cards from people in many different walks of life and business, and I’m constantly amazed at how many people have business cards that work against them in the selling arena.  Your business card tells your story in a very small and succinct way, and more importantly, it represents you after you leave.  Is it telling the right story?

First of all, let’s remind ourselves of why we use business cards:

Business cards identify us:  A business card is a very quick way to “place us” in the business world.  In a very small piece of heavy paper, we convey who we are, what we do, and for whom we do it.  We also let people know how to get ahold of us.  Go to a networking event, and you’ll meet a bunch of people.  You’ll also collect a bunch of business cards.  You may forget the faces – but the cards remind you of the people.

Business cards are the best leave-behind:  Salespeople love “leave-behinds,” those fancy brochures and packets that are supposed to remind our customers of why they should buy from us.  About 4 out of every 5 of those fancy brochures are in the trash before you make it out of the parking lot – BUT your business card is saved and filed.  That means your business card is usually your only meaningful leave-behind.  It’s also why you shouldn’t attach your card to stuff that’s likely to be thrown away.

Business cards give us credibility:  Business cards establish you as a “legitimate” businessperson.  They begin the process of establishing that you are what you say you are, and can do what you say your can do.  And, in sales, credibility is our main asset.  “Credibility” is that quality that allows people to believe what we say because it is we who say it.
Your customers want to buy from someone who has substance and stability.  Your business card needs to reflect thost qualities.  To do this, it needs to have a few qualities.  These qualities are:

Substance.  Yes, I know; I already said “substance.”  However, some business cards are substantial and some are not.  Here’s a hint:  Anything you run through your home printer isn’t substantial.  Leave the ‘micro-perfed’ blank business cards on the shelf at the office supply store.  Instead, invest in a commercially printed card of at least 12-point cardstock.  Heavier is better.  A good business card from a reputable printer only costs $100 or so for a thousand.  If a hundred bucks is too much to spend in order to protect your image, get out of sales.  By the way – if your company supplies you with cheap, flimsy, lousy cards – it’s still on you to get nice ones.  It’s your career.

Good Contact Information.  The primary purpose of leaving a business card is to help people to contact you, so why wouldn’t you have full contact information on your card?  Contact information includes your name, your title, your mailing address, your e-mail address, phone number(s), and fax number if you have one.  One element I’m seeing more of these days is a Skype username, as well.  The most common problem with business cards is in the e-mail address; let’s deal with that specifically.

The Right E-mail Address.  Somewhere in the neighborhood of half of the cards that I received do not have a professional e-mail address.  What I mean by a “professional e-mail address” is an address that is along the lines of yourname@companyname.com.  Too many people in this industry are still working with a ‘free’ e-mail provider such as Gmail or Yahoo, using an address like myadspecialties@gmail.com.   This pegs you as a small, and perhaps a temporary, player in your industry – and will work against you with buyers.  You need a website with your own domain name, and an email address that is personal and guided through your own domain.  It’s not expensive.  If you like free websites, a WordPress site is free.  Domain names are cheap, and can then be attached to your free WordPress site.  Email hosting isn’t expensive, either. Voila.  A few bucks and a bit of thought, and now you have a professional E-mail address.

For small business, the best marketing material you can have is a quality business card, passed across the desk to a potential customer in a sales call.  However, if yours doesn’t fit the above criteria, it can actually work against you.

For whatever reason, I have spent a lot of my time, particularly within the last three years, working with a lot of companies who have sales engineers – meaning that they hire people with engineering backgrounds to be salespeople.  When I tell people about this fact, they give expressions of horror or sympathy, because of what they perceive as the difficulty of training engineers to be salespeople.  What’s funny is, I love working with engineers.  Want to know why?

It’s simple.  Engineers know their numbers, and they understand repeatable processes.  Engineering is all about creating repeatable processes, and so is selling.  The only difference is that in selling, our processes aren’t 100% repeatable because we sell to human beings who have their own motivations.  That said, every new skill learned, every new technique applied, is designed to raise our percentages.  If a new skill does not raise our percentages, we ought not use it.  There’s a basic formula to calculating your chances of selling success, and it is:

(Quantity of activity) x (Quality of activity) = Results.

Notice that I didn’t use variables like “luck” or “economy” in there.  Those are factors that might skew your results somewhat in the short term, but over the long haul, your success in selling depends entirely onhow much selling work you do, and how good you are at it.  Although that sounds simple, there are a lot of salespeople – and a lot of companies – that do not get it.  Salespeople will look forever for a “magic button” to improving their results without measurably improving their quantity or quality of sales activity.  Hence, with this in mind, let’s take an engineering-focused approach to a sales improvement plan for 2014.

Step One:  Optimize Quantity of activity.

You will notice that I didn’t say “Maximize” quantity of activity.  Sometimes, the “maximum” level of activity isn’t desirable; you then find yourself rushing through calls just to put up numbers.  You increase your Quantity, but you can actually decrease your Quality of activity enough that your results are worse.  Consider this:  Most B2B salespeople have about 40 hours of meaningful selling time to work with in any given week.  Let’s look at two simple ways to maximize your “Between the lines” time:

Cut the BS.  Look, I’m no saint when it comes to sales activity.  I have been known to make personal calls, pick up dry cleaning, etc. during that 40 hour window.  But whenever I do those things, I first consider the penalty for lost selling time.  Too many salespeople don’t.  Make a log, in fifteen minute increments, of how you spend your selling time during the week.  What can you cut out, and more importantly, what meaningful selling activity can you plug in?  Push as much personal junk off to the after-hours, and optimize your selling time.

Delegate.  Every task has a value, and every person in a company also has a value.  If the value of the task doesn’t match the value of the person, you have an inefficient allocation of resources (gee, that phrase sounds like the engineers are rubbing off on me, too).  Essentially, we want tasks delegated to the lowest salaried level that can carry them out well.  Hence, if your time is better spent outside making calls than sitting at your desk writing sales letters, perhaps you might work with your manager to find someone to write those letters for you.  Can a customer service department or inside salesperson process that order?  Give it to them, and get back to what you do best.  In doing these things, you will optimize your activity.

Step Two:  Improve Quality of Activity.

This step differs from Step One, because in Step One, there’s a limit to how much you can streamline your workday.  There’s no limit to how much you can improve your skills – yet I see salespeople who have been selling for 25 years and obviously haven’t learned anything new in the last 20.  This is a process ofcontinuous improvement, gang.  The selling environment never stops changing.  When you stop changing, you are giving up.

Get up to speed with technology.  I thought about putting this under step one, but the truth is that technology can improve your quality of activity much more than your quantity.  I’ve already made myself clear on social networking (and if you haven’t read those articles, they’re archived on my site in the blog section), but you should be using technological tools like Jigsaw and ReferenceUSA to find new prospects, Google News Alerts to keep up on current customers, and tools like Constant Contact to stay in touch.  If you’re not on game with these, all the Tweeting in the world won’t help you.  Selling in today’s world is a battle of information, and the salesperson with the most customer information usually wins.

Commit to a program of self improvement.  You should be a continuous digester and user of selling information; fortunately today’s technology puts more of this at your fingertips than ever before.  Commit to learning one new skill every two weeks.  Week one is to research and read about the skill; week two is to practice and adopt it.  Repeat the process every two weeks for the rest of your professional life.  Sometimes these skills don’t work in your environment; have the professional discipline to toss them out.

No Donut Calls.  The “Donut call” is the lowest common denominator of selling activity; it’s “Hi, here are some doughnuts.  Can I have an order?”  There’s no effort at relationship building here.  Don’t be that guy or gal.  Instead focus on building the relationship with every customer you have, and developing them to their maximum.

Well, this plan is simple to write, but it’s not simple to execute.  However, if you COMMIT yourself to executing these steps on a continuous basis, 2014 will be a lot better than 2013 – even if your 2013 was pretty good.  Hopefully that’s a repeatable process we can all get behind.

If your customers are constantly “beating you up on price,” maybe it’s not their fault.  Maybe it’s yours.  Bad selling reduces achieved price, and most of the time, salespeople don’t even know that they’re doing it badly.  Today, I’m going to show you six ways to increase your price through better selling.

One of the most common questions that I get sounds something like this:  “Troy, all this stuff you talk about is great, but in my industry, everybody just buys on price.  What do you do about that?”  I like to ask them to recite their teleprospecting approach; i.e. what are they saying to get appointments?  Invariably, they say something along the lines of, “We provide (such and such a product) at a (good/competitive/low/cheap) price.”  It’s not surprising that they end up with price, since that’s where they start.  In any endeavor, how you start will be a big determinant in how you end.

Here’s the truth.  As my Smooth Sailing Coaching clients learn, most price negotiation is initiated, and in many cases prolonged, not by the customer but by the salesperson.  Salespeople begin the price negotiation process by saying lots of anti-profit phrases, even when they don’t recognize it.  The “at a competitive price” word vomit is only the tip of an iceberg that has nonsense phrases such as “I want the last shot at the price” near the bottom.  Keep in mind – when you cut price, you ONLY cut profit; you seldom reduce cost of the item delivered.  Why do we do this?  Well, there are a number of reasons and none are particularly good ones:

FEAR.  Fear is the all-time biggest motivator for bad selling tactics.  Salespeople are scared of losing deals, of losing customers, of being rejected, of any sort of failure indicator.  This fear causes salespeople to go to the lowest common denominator to sell – and make no mistake, price is the lowest common denominator.

LAZINESS.  Hallmark Cards used to have the slogan, “When you care enough to send the very best.”  In selling, when you DON’T care enough to do your best job of selling, you dive to the bottom with price-selling tactics.  When you sell on price, you don’t have to do the hard (and beneficial) work of really discovering customer needs, of matching the right product with the needs, and then selling on the value generated. You simply do a comparison of product and then a comparison of price.  It’s easy and cheap in more ways than one.

IGNORANCE.  A lot of salespeople price-sell not because they’re bad salespeople, but because they don’t know any better.  If you don’t know or understand how value is generated, how needs are discovered, and how product solves needs, you will price-sell because that’s all you have.  That’s where the six ways to increase your price through better selling come in.

The bottom line here is the bottom line.  Your company must make a profit; you can’t lose money on each sale and make it up on volume.  Want six ways to increase your price through better selling?  Here they are:

1.  Ask your best/happiest customers why they buy from you and how they “win” with their purchase.
2.  Convert those answers into written testimonials.
3.  Convert the testimonials into case studies.
4.  From the studies, define at least three nonprice ways that your company helps its customers.
5.  Use those to develop teleprospecting talking points that really work.
6.  Look for needs in common with your best customers, and sell to those needs.

It’s really not tough, but it does require a mindset change.  Even if you sell a “commodity,” remember another one of my rules:  Everything is a commodity – until somebody screws up.  Even with pure commodities, there are people who do the job a little better, and a little worse.  “Better” can, and should, be monetized.  Anything can be commoditized through pure price-selling tactics, and anything can be rescued from commodity status through value-selling tactics.  It’s entirely up to you.

THE BEST STRATEGY TO HOLD PRICE:  Present a reasonable, profitable price in a strong, confident fashion (too many salespeople present price as a question, not a statement). Don’t encourage negotiation.

THE WORST STRATEGY TO HOLD PRICE:  Present a too-high, unrealistic price using the old “you can always negotiate down” strategy.  When you do this, you DEMAND that your customer cut your price.  At some point, you have to rebuild your price discipline and your credibility to hold price – why start with a price that kills your credibility?

Salespeople cost themselves millions, if not billions, of commission dollars every year through bad selling tactics.  Don’t be one of them.  It’s not that much more work to hold profit, but do it wisely.  Where you start can determine where you end.

There’s a sales lesson in the Winter Olympics.

Ah, the Olympics.  A wonderful time of year.  It’s a time when people suddenly become raving fans of sports that they either ignore or chuckle about for the 47 and one-half years between Olympics.  Sports such as….curling. Yes, curling, a sport that combines the skills of good janitors with outfits apparently designed by Herb Tarlek’s tailor.

Don’t get me wrong.  I’m not putting down curling or curlers. I like to bowl, which isn’t exactly known for great physiques or sartorial excellence.  What I’m commenting on is that, although curling is done in anonymity most of the time, during the Olympics it’s broadcast in prime time and watched by millions.  And there’s one reason for it, and it might be the most important lesson that any salesperson can learn.  I can sum it up in one word.

Context.

What makes curling popular right now is the context of the Olympics.  Curling is like numerous other sports that are not sufficiently important on their own to gain a large audience – but within the context of the Olympics, they are important.

I was reminded of this a week ago, when I was speaking in Dallas.  I was asked how a salesperson can make “this product” important enough that the buyer will take the time to evaluate and purchase, instead of simply sitting on the proposal.  The answer is simple – the product itself is not necessarily important….but it might be important within the context of the buyer’s entire situation.  The problem is that the salesperson doesn’t know or understand the buyer’s entire situation –and by the time the proposal is issued, it’s too late to ask.

The problem is that we salespeople fall in love with our products and services. On the one hand, that’s good; we need to believe in our own ‘stuff’ in order to be passionate advocates for it, and for our companies.  On the other hand, that’s bad.  It’s bad because it gives us tunnel vision.

Our products are the most important things in the world to us, because they are the core of how we make our living.  We want to believe that they are just as important to everyone we deal with, hence when we go into meet with our buyers, we focus the conversation completely around our stuff.   We ask product-centric questions and give product-centric (or service-centric) presentations.  What’s missing from the dialogue?  You guessed it….

Context.

You see, our products and services are only important to our customers within the context of their own companies, responsibilities, and spheres of influence.  Notice that I didn’t mention “features and benefits.”  Most salespeople know the features and benefits very well.  What don’t they know?

• Most salespeople know nothing about the overall goals of the customer’s company.
• They seldom ask about their contact’s responsibilities.
• They never ask about the departmental priorities.
• Most don’t know what results the buyer is attempting to generate.
• And they definitely have no idea of how their product fits into the overall picture.

Yet, they fuss and get upset when customers don’t consider their products ‘important.’  The truth is that salespeople usually sell their products in a vacuum, as if no other priorities exist for their customers.  They don’t know anything outside of their product’s sphere, so they have no idea where it falls in degree of importance.

Would you like to change that?  You can.  Simply remember the word “context” and then ask questions of your customer that help you understand what the context is.

Ask “Big Picture” questions about the overall needs and driving factors of the company.

Ask about your contact’s responsibilities.  (Helpful hint:  Asking “are you the decision maker” is not asking about their responsibilities.)

Understand the Priorities of the company and the department.

Make sure you know what the Result is that the buyer is seeking.

And ask how important that Result is to your buyer, in the grand scheme of things.

This sounds like a lot of work, doesn’t it?  Well, it is.  But it’s what salespeople have to do in order to earn our spot in the customer’s buying process. Face it – whatever you’re peddling (and if you’re just talking product, you’re a peddler), your customer can buy online without your intervention.  So, you have to do things and provide expertise that your customer cannot get online.  And understanding the context of your proposed sale is one of those things you need to do.

Context is everything in sales, just like it is in the Olympics.  Now, let me see….the Biathlon is on TV, and Curling is next!  I can’t wait!

Turnover is one of the least recognized ways that companies lose sales revenue.  Here’s why.

I answered the phone this afternoon, and an earnest voice said, “Hello, Mr. Harrison?  This is Chris (last name eliminated), and I’m your new representative with (Company X).  I’m calling to introduce myself, and to see if we could set up a time to chat, so I could learn about your business and we could see if (Company X) could do more for you.”

Company X is a vendor with whom I have done business for six years.  I’m loyal to them because they provide a service that helps me a lot.  I spend quite a bit of money with them, and I’m sure that when Chris looked at my account, he figured he had a pretty solid customer and a good sales call.  That’s why I’m sure that my response was a huge surprise to him (and it might be to you, as well).

“I’m sorry, Chris, but that wouldn’t be a good use of my time or yours,” I told him.  Chris was clearly shocked, so I decided to explain more fully.  “You see, I get a call just like this every six months from your company.  About every six months, more or less, I have a new rep who wants to spend time being a ‘resource’ to me.  I’ve had several of these conversations, and I just don’t have the time for another.  I’m already buying what I need from your company, so there’s no upsell potential for you.  I wish you the best, I have your contact information, and if I need you, I’ll call.”

He said, “Well, I do appreciate your candor.”  I told him, “I’m not trying to be rude.  I’ll tell you what – call me on your one-year anniversary, and I’ll give you all the time you want.”  Chris was disappointed – but I meant what I said.  And I doubt, based on past performance, that I’ll get that call on his one-year anniversary.

Turnover in sales is a sales killer and a relationship killer.  Sooner or later your customers get tired of hearing, “I’m your new salesperson.”  Or, for those salespeople that jump jobs and are saying, “I’m now with a new company,” your customers get tired of that, as well.  In both cases, credibility and relationships are the victims.

The reason I wouldn’t speak with Chris was exactly as I told him – it wouldn’t be a good use of my time.  History shows that by the time he’s getting it figured out, he’ll be gone, and I’ll be getting a call from yet another new salesperson.  I like to train salespeople – but only when I’m paid to do so.

Here are the raw facts.  There is a learning curve for salespeople in any job.  Stats say that salespeople reach basic competence in six months, become profitable for the hiring company between month 12 and month 18, and don’t reach full productivity until year three or year four.  When salespeople change jobs inside that 3-year window (or worse, the 1-year window), that tells me that they don’t know what it’s like to reach full productivity.

Ultimately, excess turnover is a problem for our profession, but there are a few things that salespeople, sales managers, and company owners can do to curb it.

For Salespeople:

• Stand and fight:  There are many “stated” reasons for salespeople short-timing on a job; however, the main reason is that things get a bit tough and the salesperson bails.  Sales isn’t always an easy career – but the best, most successful salespeople fight through the problems and emerge victorious on the other side.
• Stop chasing shiny objects:  One of the biggest reason for turnover is that salespeople chase.  What do they chase?  Shiny objects. Or, to put it another way, the new opportunity that seems oh-so-much-better than the current job.  More money, better technology, different territory, etc.  I recently interviewed a guy who said that he was a ‘chaser of the best technology in my space at any given time.’  This was to explain six job changes in the last ten years, none of which produced significantly better results or income.  Don’t get me wrong; I know that there are times when the only way to advance your career is to make a change – but those changes should be infrequent and well thought out.

For Sales Managers:

• Hire smart:  Too many hires are simply future turnover in the making.  Sales managers, lacking a good basis or tools for hiring, simply do ‘gut hires’ that don’t produce results.  Lower turnover is the result of good hiring practices.
• Coach before firing:  Once you have hired someone, you owe it to yourself, as well as to your hire, to give them every reasonable opportunity to succeed.  That means that termination should be a last resort, not a first; the first resort is to troubleshoot and coach your salesperson’s performance.  Only when you can honestly look at yourself in the mirror and say that you gave them an honest shot should you terminate.  I would be remiss if I didn’t mention that both hiring and coaching are well covered in my Unconventional Guide to Sales Management audio course.

For Company Owners:

• Take a long term approach:  Building a quality sales force isn’t something that happens week by week, or necessarily quarter by quarter.  It’s something that happens over the long haul.  In the case of the sales rep that contacted me, I’m sure that ownership or upper management has set up a set of standards that basically wash out new sales reps after about six months, hence my frequent calls from new reps.
• Hire a quality sales manager:  Quality sales managers have the skills of coaching and improving sales performance; they are drivers of the sales effort rather than passengers.  If that’s not your sales manager, it’s time to rethink (and maybe invest in coaching or training for that person).

Turnover has many costs, but it doesn’t have to be a sales killer.  The right approach to building a sales force can greatly reduce turnover – which puts profit on your bottom line.

The most fun calls I get are calls from happy clients.  This is one such call.

Two days ago, I got an excited call from Jill Biesma of Environmental Advisors and Engineers, in Kansas City.  I’d just worked with Jill that morning, and one of the things we’d discussed was referral generation.  I have a lot of fun working with Jill; she’s one of those clients who is a blast.  She’s also someone that has a tendency to overthink and analyze.  In her capacity as an environmental engineer, that’s a terrific trait.  As a company owner who is selling and marketing herself, it can be more challenging.

In any case, we’d discussed a way to broaden her contact base, and Jill began analyzing all the ramifications.  I reminded her that “Imperfect action beats perfect planning every day of the week.”  She laughed and said that she’d try this technique at a lunch she had planned for that day.

Afterward, she called me excitedly and said, “Troy, that was GREAT!  I used the technique that you suggested, and he named several names that I should meet and offered to set up the meetings himself!  It worked like a charm – and you can quote me on that!”

So, quoting her I am.  Why am I putting this up here?  Two reasons.  One, because she asked me to, which is always fun.  Second, because it might help some of you who are perpetual planners.  Pull the trigger and ACT.  And if you’d like to write your own success story, contact me today.