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FIQ – Fred Inspired Questions

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Wow.  I feel like Lloyd Bridges in “Airplane.”  I definitely picked the wrong week to discontinue the Hot Question in the Navigator Newsletter.  Yesterday’s article on Fred provoked quite a few questions emailed to me, and I’d have had enough material for a couple of months.  But alas, the Hot Question is no more, but those questions need to be answered.  So let’s answer them here, and call them “Fred Inspired Questions.”

This was the most common:  Troy, are you saying that we should only sell and accept business from our Freds?  No.  I’m not saying that.  What I am saying is that those accounts that we pursue with dogged determination, the accounts we chase, emphasize in our prospecting – those accounts should be our Freds.  Accept business from acceptably profitable accounts, but don’t put the same effort into them that you put into a Fred.  I’m constantly amazed at the misallocation of time and resources that I see out there.  Two years ago I was in a client’s sales meeting in Wisconsin, and the SALES MANAGER was discussing an account that she had been chasing for over two months.  The account was tiny – so small that it shouldn’t have even been accepted, much less pursued, and it only would have accounted for 15% of one week’s expectation from a rep – but there she was, explaining her sales methodology, chasing it like it was a Fred.  Pure stupidity.  If you have salespeople doing that, STOP.

Is it possible to have multiple Freds?  Yes.  I do, in fact.  I have my Freds, and then I have a second type of Fred – the executive directors of trade associations that have a high percentage of Freds as members, and that are likely to book me to speak in front of them.  If you chase multiple verticals of equal profitability, for instance, you’ll have different Freds for different salespeople.  The key is to make sure that all of your Freds are your MOST DESIRABLE customers.

You said that a big portion of being a Fred is attitudinal.  How can you learn that except through selling efforts?  This is the key.  Many times, you can’t.  That’s why it’s important to develop a quick qualifying process….and I’m getting ahead of next week’s article.  Sometimes you can find out the attitude of a Fred by the types of articles that they read of the events that they attend.

Who should be involved in choosing a Fred?  Well, first of all, Freds choose themselves – they rise to the top of your company’s profitability rankings.  That said, this is an important enough topic that all key managers and the salespeople should be involved in defining your Fred.  If all the key managers are involved in the process, then all the key managers will be on the same page – and when the sales department says, “This is a Fred,” everyone knows that that means to the company.

Have you ever had a Fred that was actually named Fred?  Yes, I have, and it always gave me a little chuckle.

There are more, but most of them centered around how to find Freds, how to sell to them, etc., and if I answered that here it would spoil the next column.  Here was the second most common:

Troy, what’s your Fred?  This is the one I debated over the most.  Telling everyone what my Fred is would discourage non-Fred business, and that’s the last thing I want to do.  Truth be told, few companies could survive, thrive, and grow without a lot of non-Freds surrounding some really good Fred business.  My company is included in that.  Still, I don’t like to be asked a question and not answer it, and my Fred – and my methodology for getting there – can add a lot to your knowledge of this issue.

So here’s what I’m going to do.  I’m going to make you work for it.  I’ve put another blog post up entitled, “My Fred.”  However, this one is password protected.  When you click on the headline you will be asked to put in a password.  Your password is TROYSFRED.  Put that in, and you can read who my Fred is, and how I got there.  CLICK HERE.

Are You a Profit Center or a Profit Drain?

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When I consult with customers, or give sales management seminars, one of the things that I urge sales managers or company owners to do is to start thinking of their salespeople not as revenue generators, but profit generators. Think about it – the only thing we (business owners) can actually spend is the dollars generates as profit from our business operations.

Invariably, salespeople are either profit generators or profit drains. For some reason, “break even” salespeople have been very rare in my career. There’s a deeper level for us salespeople, though. The two questions we must ask ourselves are: Is our employer better off for having us represent them? And… Are our customers better off for doing business with us?

Whenever I’ve met a truly successful salesperson, the real answer to both those questions is, “yes.” Unfortunately, a lot of salespeople either don’t know the answers or don’t understand the concept. Several years ago, I was in Dallas interviewing a salesperson who proudly told me that his territory generated just over $300,000 per year in revenue. Sure, $300K sounded like a lot of money, until we started talking profits.

I knew a little about his business, and that it had small margins. Sure enough, he said his average gross margin was about 15%, so I knew that he was generating about $45,000 annually in gross margin dollars. Without mentioning his GM dollars, I asked what he was making. He proudly told me that he made $55,000 annually! That meant that, just subtracting his income from gross margin dollars (not thinking about benefit costs, delivery, overhead, or any one of a dozen other things that eat into gross margin), he was a $10,000 annual profit drain for his company – and he didn’t realize it.

If you’re trying to decide whether you’re a profit center for your company, you need to have an understanding of how your company makes money. Sometimes that’s tough, because companies don’t share that information. HINT to company owners and sales managers – if you want the best out of your salespeople, share with them how the company makes its money. It’s a little scary the first time you do it, but your salespeople really do have a better understanding of how their duties fit into the big picture – and they perform better.

I usually coach business owners that, as a rough guideline, sales compensation should be between 25% and 50% of the profit dollars generated by that salesperson. Depending on gross margins and company expenses, some companies may be less than 25% in order to generate net profit, and some may be more than 50%. What’s important for both company owners and salespeople is that there is a mutual expectation of what is appropriate.

With knowledge comes power, and with power comes responsibility. Salespeople, if your company shares this information, it’s now your responsibility to self-evaluate and make corrections to be a profit center and not a profit drain. What separates the winners from the whiners is this: The winners have the ability to see themselves as a valued resource for their company and customers, and the whiners see sales as a series of activities that fill up time in a work week. I don’t have to tell you which is more successful.

For now, start thinking about your own profitability to your company, and decide if you’re a profit center or a drain. Come up with some ways to either become profitable, or to increase your profit.

Five Ways to Make Your Questioning More Effective

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One of the minor ironies of my profession is that, when I’m booked to speak at trade shows and conventions, one of the most popular topics requested is “How to Give a Great Sales Presentation,” or something of the like. It’s also one of the most requested articles. The problem is that I can’t teach people how to give a truly great presentation without teaching them how to be great questioners. The key to the great sales presentations is in the questions you ask beforehand.
That’s because great sales presentations make the customer feel like it’s their sales presentation and not yours. Customers buy from their presentations – not yours. And the only way you can do this is by asking great questions beforehand to build your presentation. So, consider this the supplement to so many of those speaking programs I give. Here are five ways to make your questioning (and therefore your presentations) much more effective:
1. Be direct. I’m always amazed at salespeople who will come up with five indirect questions to get (or, in many cases, attempt to derive) a piece of information when the customer would be more than happy to answer the direct question. Your customers understand that these questions are key not only to your success but to theirs; why not enlist them as a partner by asking them questions that get directly to the heart of the matter? One of my favorite questions is, “What will make this a successful purchase for you?” It’s hard to get more direct than that.

2. Be thorough. Along with the above piece of advice, being thorough is key to effective questioning. What I mean by being thorough is this: Don’t leave key questions unasked or important information unknown. From time to time, salespeople will describe a particular situation or response to me, and then say, “What do you suppose he meant by that?” Don’t ask me (or your boss or co-workers) – ask the customer. Your customer has all the information you want – or can get it.

3. Drill down. This follows from #2. Drilling down is one of the most important, yet least used, skills in questioning. Sometimes customers will give incomplete answers to questions – not because they’re trying to deceive but because it doesn’t occur to them to give a more complete answer. Now it’s on you – drill down. Drilling down is simple; “Can you tell me more about that?”; “Why is that?”; and the like will get you where you want to go.

4. Use set-up questions. “Set-up questions” can be very important, particularly when you have a specific feature or benefit that you want to accentuate in your presentation. Set-up questions work like this: Let’s say that you have a particular credential that your competitors don’t; perhaps all of your salespeople are degreed engineers and the competitor’s aren’t. You can aske a question like, “How important is it to you that your salesperson is also a qualified and degreed engineer in order to help you implement this program?” Notice I didn’t ask, “Is it important (a closed ended question)”, I asked “How important is it (an open ended question).” Set-up questions should be open ended whenever possible to allow your customer to degree and prioritize.

5. Lose the fear! This might be the most important. Salespeople who bypass good questions oftentimes do it out of fear. They’re afraid that they might ask “too direct” of a question and offend their customer. Stop it! There is no penalty for asking direct and probing questions, as long as they relate to the business situation at hand. The worst your customer will do is refuse to answer. That’s OK. It just means that you haven’t earned the trust that goes with that answer yet. You’ll get there in time.
Do you want to really give great presentations? Then be a great questioner. Great questioners beat great presenters all the time. And if you’re wondering if I say that during those presentation programs – yes, I do. And now you know some ways to be much more effective with your questioning.