Friday, February 28, 2014

Directing the Conversation with Questions

A Question from the Sales Team:
How do I discover information without asking rude and possibly offensive questions?

Leading questions can uncover answers worth celebrating!
I regularly coach salespeople to learn more about their customers.  I often reference a bit from Harvey MacKay’s book from the 1980’s “How to Swim with Sharks without being Eaten Alive”, called the MacKay 66.  It’s basically a 66-question list of things to discover about your customer.  It covers all things personal as well as their thoughts around their company, job and career goals.  Quite honestly, it’s an exhaustive list.  But… I believe a salesperson armed with this information will outperform their competitors. 

And, since I have received the same question from several of my clients’ salespeople in the past few weeks, I feel compelled to address the topic.

One young salesperson stated point blank, “I have been thinking about the questions you have asked me to discover with customers and I am afraid that some of them border on offensive.  I don’t see how I can subject my customers to a game of twenty questions on every visit.”  He makes a good point.  The idea with questions is not necessarily to sit down and interrogate; the point is to prime ourselves to listen better.  More importantly, we need to actively listen.

When we know what our questions are, we are free to listen better.  The pressure to think of the next question is diminished.  We’re able to learn more from our customers and direct the conversation to areas which provide us with the right stuff to enhance the solutions we offer up in future sales calls. 

While this is not intended to be the end-all piece on the art and science of the question, let’s look at a few points around questions.  We all know that people generally enjoy talking about themselves.  Let’s use this knowledge to steer the conversation.  Here are two examples:

Example One:  You meet a new contact at one of your accounts.  You introduce yourself, exchange a bit of small talk about the weather (Dawgoinit, it sure has been cold/hot/rainy/dry this week) then ask:

“How long have you been working for Acme?” 
Using this question, you can lead the conversation to where the person worked before, the customer’s career path, educational experience, their service in the armed forces and lots more.  What’s more the discussion is likely to lead you to this follow-up question:

“What are your areas of responsibility here at Acme?”
The flow of the conversation then takes you into job duties, issues with finding trained people, and reporting structure.  Along the way you can ask for clarification, points of conflict, and bottlenecks in the process.  Listen closely and you get some understanding for politics at the customer.

Example Two:  You’re calling on a customer you have known for some time and see a broken part laying in greasy heap on his credenza.  After taking care of pressing matters you ask the following question:

“I couldn’t help but notice the greasy thing on your back desk.  What’s the story here?”
The customer relates as to how and why the broken part has become a desktop decoration and provides you with information on what it is and how it was broken.

Possible follow up questions include:
“Is this something that happens often?”
“How long does it take to replace the part?”
“Does this impact other areas of operation?”
“Do you have ideas as to the root cause of the failure?”

The point to remember is this…
It’s a conversation not a light shining in the face Gestapo-style meeting.  To steal from a cheesy Humphrey Bogart movie, “Well Mr. Customer, we have ways of making you talk.”
But none of them are about running down a list of questions. 

We have much more to say about questions.  We even have a self-study program called the Art and Science of the Question.  I personally believe questions are the key to success. 
Don’t believe me, email me a question.

Monday, February 24, 2014

Sales Question: How Long Do I Chase an Account?

A Question from the Sales Team:
How long should I pursue an account before I give up?

Chasing money is a timeless art.
A couple of weeks ago I was making coaching calls with a sales guy who possessed lots of potential but less than 18 month’s experience. He’s a smart, aggressive guy with a professional attitude.  He targets his accounts, studies his results and devotes time to prospecting.  But after nearly a year of calling on a couple of major accounts, orders still weren’t flowing.  As our day wound to an end, he asked me point blank, “How long should I pursue an account before I give up and move on?”  Here
are some thoughts for you to consider:

Was the customer properly selected as a prospect?
Is the customer in the right industry, possess the right potential volume and credit worthy?  A lot of this information is available via a little research.  Armed with a manufacturer’s directory, the internet and maybe a D&B report, we can narrow the answers to this question down rapidly.  Experience tells me this step could be completed in the first month of exploring the account.

Was the customer properly qualified?
During the first round of making calls on any new account, one critical task is qualification.  Here we answer this list of questions:
·        Is the account real? 
Sometimes sales offices with no real potential show up on our radar screens.  If your information says 300 employees, you can tell by the parking lot and building size. 
·        Is the company stand-alone or part of a larger organization?
This information is important for multiple reasons.  First, if they are subsidiary of a company that makes your kind of product, purchasing options may not include you.  Secondly, larger Fortune 500 companies often have supply agreements in place which restrict the supplier count.  We’ll talk more about this later.
·        Are your kind of products being used in the quantities you suspected?
A quick walk through the production or work in progress area will typically tell the tale.  Do you see your products being assembled into the machines?   Are there stocked shelves in the storage crib containing the kinds of quantities you need to make this a good account?
·        Are you able to gather information from the customer?
Does the customer share product and company information with you?  It’s impossible for you to do your job without information.  The list of information is long, but you should be able to ask: what they make, who they sell to, current suppliers, lead times required, design standards followed, government regulations and a bit about annual usage.

Is there some reason why you cannot do business?
Everybody already has a supplier; some have good suppliers.  Count your blessings or place a strong hand over your wallet anytime a customer tells you they were looking for somebody just like you and the day you walked in the door was a gift from a higher power.  A relationship with a competitor may slow down your work; probably making your work harder.  But, it’s not a reason why you cannot do business.

However, there are several good reasons why you cannot do business a potential customer.  Here’s a short list:
·        The company has a long term supply contract with a competitor which is strongly enforced.
·        The company is part of a larger organization with sister divisions producing your kind of products
·        The company has shared ownership with a competitive distributor.
·        The head of engineering, purchasing or some other high ranking person at the company is related to your competitor.
·        The customer is purely price driven and your offering is not the “low price” brand. 

Back to the original question:  How long should I pursue the account?

The answer is complex.  The simple answer is this; until you discover a reason why you cannot sell to the account, you should continue to pursue the business.  In the meantime, most salespeople manage a territory.  It’s a game of juggling and balancing time.  Current business is important.  However, many salespeople make the mistake of pushing this type of account to bottom of their priority list.  If the volume is right and if the customer matches well with your value proposition, it is in your best interest to continue to mine for information.  Sales opportunity could be just around the corner.

Friday, February 14, 2014

Pricing Process: 10 Simple Questions

Some questions demand an answer, they literally jump up and down screaming for intelligent action. The problem is this; many times these questions develop over a long period of time. Because they develop slowly over time, they become invisible. Life’s like that. My dad used to say, “We’re too busy picking up acorns to see the tree.” I think we’ve gone past the tree and are neck deep in forest.

Last week I had the opportunity to address the leadership teams from a select group of distributors at the SPA Strategy Session in Fort Lauderdale. I was the final speaker, and the meeting was running long. To cut my talk short and put a little life into the meeting, I cut my presentation down to ten simple questions. I feel each of these questions demands an answer. Together, they demand action.

Question 1: Do you believe our business environment is changing?
It’s pretty hard to justify any kind of answer except for a resounding… yes. Our customers want more services, faster responses, more solutions and tons of other things. We’ve got more competitors. The big national chains are pushing into the sacred waters of our product niches. Amazon and Google are eyeballing the green grass we once claimed as our own.

Supply Partners want more from their distributor partners. We find ourselves doing some of the tasks once performed by their field sales teams. Besides these obviously sales related functions, suppliers want POS data, online order capabilities and extensive customer training capabilities.

Technology is a wonderful thing, but the internet has changed the role of selling from human search engines capable of coming up with specification and application data to complex problem solvers. Phone systems and voicemail have created a world where everybody is hard to reach. Technology is now available to everybody regardless of company size and type.

Even the people we work with has shifted. Boomers are marching off to the retirement sands at a rate of 19,000 a day. Generation X and the Millennial Generation aren’t behaving or thinking like the old timers ahead of them. Demographics shifts make our world spin like a broken boomerang.

Question 2: Does your own company need to change keep up?
“Eliminate the Middleman and save”, for some reason I can’t seem to get the picture of that old billboard along Route 151 out of my head. It’s an American axiom that’s only true if we distributors fail to change and morph our business model to match the needs of the folks we deal with, both customers and suppliers. Distribution is a change business; not changing brings death to our industry. Or, it brings extinction to our own organization.

To me the answer has to be yes. We need to be in a constant state of change.

Question 3: Does it work better if everyone in our company changes in the same direction?
As leaders, our job is to direct the change. When everybody flies in formation, we are more efficient, more effective and more profitable. All departments, all our branches, our technology resources and our culture has to change in the same direction and at roughly the same time.

I find any argument for changing in divergent direction questionable. So again the answer must be yes.

Question 4: Is it harder to change when you don’t know what you’re doing today?
The answer to this question comes via my dash-mount GPS unit. Before providing any driving directions to my destination, it goes through a series of steps called “finding current location”. Most distributors feel like they know what they are doing today. But deep analysis indicates they aren’t really sure how things work in the sales department.

I concur with my GPS on this one. We need to know where we’re at and what’s going on before we start making any changes.

Question 5: What’s the difference between your accounting and sales department?
Some say, “She’s was a natural born salesperson”. I’m not going to get into that argument, but I wonder if it’s feasible to say, “He was born an accountant”? True some folks have natural skills with numbers, they like to keep track of things. But, would you trust your accounting functions to a “natural” if they didn’t have a strong understanding of standard accounting procedures?

Tax codes, financial institutions and others insist on specific procedures and distributors are pretty good at following them. As leaders, we insist on it. But when we get to sales, we have few procedures, no measures of success in building customer relationships. Many of us have a hard time explaining if a salesperson is successful because of their regimented activities or if they happen to have a “lucky territory”.

I believe evidence points to a simple answer to this question. Accounting has a process. Sales does not.

Question 6: What happens when you try to change the sales group?
Screaming, kicking, gnashing of teeth? Most distributors discover the one department which should be a harbinger of change is the most resistant. What’s worse, salespeople can be pretty darn convincing. They offer up dozens of excuses; customer issues, competitive issues, supplier issues and some even more convincing.

The very nature of their work puts them outside the eyes of supervision. Some say they’ve changed, but don’t; silently biding their time until management relents. Others use their commission plan as a trump card against change. A good many will go underground. Their company begins charging for delivery on nickel and dime sized orders, and they take time from selling to personally run all over the territory delivering from their car.

The point of all this is we’ve got to anticipate pushback. And, as leaders, we’ve must hold our ground.

Question 7: Why is it important to document your direction?
Thinking about sales department pushback, one of the things the sales guys will say is “our boss goes out and hears some slick talking consultant (who probably has never sold) and comes back with a hair-brained idea and tells us to go forth and follow the plan”. It’s the old idea of the month thing.

Documenting slows down the whole activity. It forces us to rethink the idea. It helps us refine the course. But there’s more… Documenting the direction helps others better understand the direction. It allows better and faster training. It steadies the course removing distractions along the way.

Question 8: Why measure your progress?
“That which is measured improves, that which is measured and documented improves exponentially”
Pearson’s Law
In a world filled with distractions, measuring progress keeps you moving in the right direction. One client of mine is fond of saying, no coach trains their team to the final score; no football coach says we need to score more touchdowns. Instead, they work on blocking, tackling, first downs and lots of little steps that lead to better scores. They realize it’s the little things that drive success.

For the leaders of a distributor, it’s about the steps that lead to more customers, customer retention, more efficient handling of orders. Simply stated, if we only measure the final gross margin, we miss out on the things that drive customer orders.

Question 9: What’s the difference between coaching and managing?
For one thing coaching is about personal development; helping each and every person perform to the best of their ability. Coaching is one-on-one. Coaching is the first approach to growing your team. Coaching is about building playbooks and organizing the players so everyone is in the right place. It’s about getting the most from everyone on team.

Managing is the next step. Sometimes coaching involves setting harsh reality that a player doesn’t belong on the team. Managing sometimes involves jettisoning a person who refuses to respond to management.

Ideally, both managing and coaching is based on objective metrics. People aren’t judged on personality or attitudes. Instead, decisions are made based on performance data. Are they following the documented procedures? Are they performing in the small steps needed for larger success?

Question 10: What can we do today?
This is the question that needs the greatest thought. Doing nothing is easy. Doing the right thing involves the evaluation of risks and rewards. Doing something right now is important. There may be a lot to do.

Here are some points to ponder.

First, in a well thought out plan, the processes are interactive. Improving one thing typically improves a many other points along the way. Everything in our business interacts with the things they touch. Here’s an example.

When you build a pricing process, one of the typical first steps is segmenting customers by size, business type and ease of doing business. The activity of segmenting improves marketing, sales effectiveness and planning. Different pieces of the puzzle, but each is improved. Building a real process is important.

Three parts of a real process
First, there is no such thing as an informal process. Many distributors lull themselves into believing they have a process but it’s done on a person by person basis. Not so….

To be a real process it must have three important ingredients.
1. Documentation – a detailed written document which describes how the process works, who is specifically responsible for each phase of the process, how success is measured and who has the ability to modify the process in exceptional cases.
2. Metrics – metrics take the subjectivity out of the equation. We can understand if progress is being made. Our team can easily understand their own personal improvement, without management intervention.
3. Coaching and management points – the metrics give us places to help our team improve along as the organization moves through the growth plan. Coaching and managing is predictable and without opportunity for personality to come into play.

Let’s get moving
I am often asked how and where to start in building a process. I believe there are a two places that stand out in comparison with others. Here’s my criteria. First, they carry major impact to the distributor’s bottom line. Secondly, they interact with the greatest number of other processes within the organization. In other words, do a good job with these, and the interaction affects the rest of the business. Here they are…

Companies who work a real, and vibrant targeting process are 47% more effective in reaching their sales goals. They understand their value. And, more importantly, they know which customers are most likely to benefit from their value. Salespeople plan better, bring new products to market faster and waste less time. Managers have more and better coaching points and measures of success. New salespeople especially get traction faster and with less thrashing around.

Pricing Process
I have had the opportunity to closely observe the work of David Bauders’ Strategic Pricing Associates for the past two or three years. Their clients typically drive two full points to their bottom line. The cool thing about gross margin improvement comes because most of it (80% is a good estimate) falls to the distributor’s bottom line. We see instant profit improvement for the home team. And the Pricing Process improves the distributor’s work in segmentation, value selling and overall operational efficiency.

We’ve asked you a lot of questions. Do you have a question for us?