Friday, September 25, 2015

The Attack CFO

Lately the role of the distributor CFO has been on my mind. I see a need for the fundamental role of the CFO to change from staff accounting and backward-focused record keeping to something more powerful. For one thing, the importance of forward looking analytics grows in importance. Caught off-guard by the last recession, many distributors faced financial stress from systems not geared for a 20-30 percent drop in business. Aside from internal analytics, I see need for customer interaction from the financial side of the business. As an example, many of the services distributors provide create massive financial gains for their customers. Few current customer contacts understand the monetary impact of our services. Distributor CFOs must work hand in glove with their counterparts at the customer to lead the charge in establishing reliable financial metrics. I call the position the Attack CFO.

I have a couple of articles scheduled to be published on the topic in trade publications; more on these when they come out. However, I have a couple of thoughts I hoped to share right now.


Based on information presented in Dixon and Adamson’s The Challenger Sale, W.W. Grainger developed a financially based sales pitch around MRO business back in the 90s which impacted the whole of our industry. Many of your probably experienced attacks on your customer-base as a result of this push. (If you have the book re-read Commercial Teaching Case Study #1: W.W. Grainger and the power of planning the unplanned. Page 83)

Grainger has continued this financially focused attack and appears again in an addendum to the NAW Institute’s “Facing the Forces of Change” published by IBM. Here is an excerpt:


In a recent video by Manufacturing Business Technology titled: “How Much Money Is Tied Up In Your Inventory?,” Brian Norris and Kevin Hartler of W.W. Grainger, Inc. reveal that the cost to buy a $10 item actually approaches $75, with the additional expense created by people and time. Additionally, the estimate that about half the items in a customer’s maintenance, repair and operation (MRO) inventory never get used or are inactive, and that 40 percent of resource time is taken up in the “shopping” exercise. They liken the cost of MRO inventory to an iceberg. The price of the item is what you see above water; the cost of acquisition is what is below the waterline.


Experience shows, very few Knowledge-based Distributors use the tool of customer-centric analysis to expand their case with customers. I believe an Attack CFO will work hand in glove with their sales people to better understand the customer’s issues and develop an estimated value to the customer. At some of your most strategic accounts, the CFO will interact with their counterpart at the customer.

Here are a few thoughts:
• What are some of the points of financial analysis important to running your business or growing your sales territory?

• Are there instances where you believe you provide strong non-product advantage to your customers? Has your CFO helped you determine the monetary value of the services to the customer?

• Is your CFO willing to step out of the office to connect with a few well-chosen customers?

• Does your CFO know their counterparts through professional associations or previous jobs?

• Has your CFO talked about how to better understand your own costs?

Finally, if you are not the CFO of your company, forward this article to them.

Friday, September 18, 2015

Measuring Salespeople – Output or Input?

Pardon me while I rant.


One of the original
self-proclaimed experts
I just finished reading an article by a fresh faced, newly minted and self-proclaimed sales expert. Quite frankly, I don’t remember if she called herself a business coach, sales trainer, consultant or something similar, but her message stressed the point of helping salespeople in two ways:

1) Avoid measuring selling activities as these metrics frustrate new salespeople who struggle to get into the rhythm of setting appointments, making follow-up calls and learning about customers.

2) Measure sales output. Things like numbers of orders generated, gross margin and incoming requests for quotes.


I couldn’t believe my eyes. Terrible advice, possibly the worst advice since the neighbor told Noah to
expect a drought. And, the whole thing was prominently published in an online distribution magazine.

Let me explain why I this frustrates me. Coaching salespeople based on their output doesn’t work. Allow me to make a couple of analogies. 

 



If measuring outcomes worked for driving results:

  • Football coaches would simply flash the score of last week’s game and say, “This week let’s score a few more points.” They don’t take that approach. Instead, the coach works on blocking, tackling, passing, play execution and a dozen other activities designed to produce a favorable outcome. The point is, they are focusing on the input to influence the final score.

  • We wouldn’t need to talk to people about diet and exercise. Instead, we would issue them a scale and by weighing themselves enough times they would lose weight. Obviously, you can’t simply wish yourself thin by measuring your weight. Instead, weight loss is driven by input activities. Increase exercise and decrease calories for long enough and the scale’s output will show results.

Sales Managers can stack the deck for success
Focus salespeople on the activities you know will drive longer term success. These activities vary by industry, length of sales cycle and competitive elements in the market.  Most revolve around gathering customer information, interacting with the right customers, positioning for more business in the future and a half dozen other points. Along the way, minor actions become important; things like making appointments, writing proposals and touching the customer build to impact previously mentioned major activities.

Scorecarding
After you’ve thought through the activities key for success, it is crucial to prioritize them. Make sure the sellers know which activities are most important in a time crunch situation. Build a scorecard which allows the salesperson to objectively gage their own work and periodically help them tweak their skills by looking for areas that need fine tuning.

Even experienced salespeople can benefit
Experience often comes
with a pouty face
Experienced sales guys will be very convincing when asked if their manager should measure activities. I often hear a litany of excuses/reasons to leave them alone. Just for giggles, I have included a few common ones:

I have been doing this since the Carter Administration. I know what I am doing, why should I measure and report my activities?
The only issue with this gem is that the world has changed so much many of the things they learned back when Lincoln was a lad are obsolete. The point is it’s not about their experience, it’s about the customer, the rest of the selling team and improving sales process.

Do you want me selling or keeping track of activities?
Another good one. Why are the two mutually exclusive? Many of the activities prescribed will make selling for effective, efficient and profitable.

I should be teaching others my techniques not following yours…
Some sales people rebel against their sales managers. Sometimes this is complete insubordination, other times it is well deserved criticism. If you are a sales manager and you run into this issue, get some objective feedback. And, if you’re requests are justified – stand your ground.

Ah, ranting is good for the soul. I feel better already.


Tuesday, September 8, 2015

Fairy Sales: The Princess and the …


As with all fairy tales, this one happened once upon a time in a land not so far away. There, of course,
was a princess who was quite obviously a mix of hillbilly and ridge-runner descent. Her mother, in a fit of rage or depression, named her Gerpruda, Princess Priscilla Gerpruda XIII to be exact. Anyway, this Princess Gerpruda (the thirteenth) lived in Never-Never Land. (Never-Never turn down a Sales Opportunity and Never-Never think outside the box-land-that is.)

Gerpruda lacked typical royal charm and beauty. At the age of 37, her parents thought an intervention was necessary to find a proper suitor.

A decree was made and a call went throughout the land for a suitable prince to wed the lovely Priscilla Gerpruda. After twelve years and two months, it appeared there was truth to the rumor that all of the potential “Prince-ton” material had been turned into frogs by a neighboring wizard.
In ‘88 the Wizards and Warlocks Frog Turning Competition had been held on the palace lawn, causing a disturbing disappearance of men of reproductive age.

There was also buzz that the enchanting Princess (affectionately known as PG-13) had a penchant for groping reptiles and amphibians. The only cure for her fatal attraction was to kiss the right frog that would turn into her prince charming.

And after countless cold blooded dates, Gerpruda began to wonder if a “happily-ever-after” solution existed. She was still determined to find out.

Frog kissing, as you can imagine, is an art. Our Princess, however, was no artist. After embracing countless frogs, the aggressive paramour realized that every frog kissed does not a prince make. And the warts left from locking lips from multiple frog partners made Godzilla’s back look smooth and refined.

Despondent Gerpruda felt helpless and alone. She debated suicide or a career change. She even thought about becoming a purchasing agent. But after a stern talk with herself and the royal psychiatrist, she opted to try her luck at the local watering hole. Her reputation grew quickly as she began swapping spit with even more frogs, and anything remotely green with a pulse.

It was upon a drunken journey home one evening when Gerpruda came across her Fairy Godmother in the roadway leaning against a rusty Oldsmobile (it really was a long time ago.)

“Gerpruda,” warned her godmother, “Let me give you some advice. Stop wasting your pucker power on every Tom, Dick and Harry frog you come across.”

Fairy Godmother waggled a bony finger under Gerpruda’s nose - avoiding the warts. “You can’t keep doing this,” she scolded. “I don’t care what tradition or fairy stories tell you. You can’t keep throwing yourself at everything that hops. You need strategy.”

Gerpruda wiped frog spit from her moustache. “But Fairy Godmuscher,” she slurred through the bourbon. “How do I know which frogs to kishsh? I’m no expert you know.” She weaved clinging to a leaning lamp post.

“You’re a mess” opined the disgusted FG. She whispered into Gerpruda’s ear, “Perhaps you should think about looking at the articles I’ve been sending you about targeting prospects. Try kissing frogs with a greater interest in becoming a prince?”

Failing in looking indignant or even standing erect, Gerpruda retaliated hotly, “Get loshht you old hag. You jussht wait and schee, FG. I’ll find my prince charming. Now get out of here before I call a cop,” slurred the sloshed pedigree.

After waving her wand and tossing a hand full of magic targeting dust upon the stumbling Princess, FG departed.

Surprisingly, the next morning, Gerpruda was up and about, humming an off-key tune of indescribable agony and appeared to be ardently mapping out some sort of strategy.

Taken from Fairy Godmother's Guide to Targeting a Frog Prince, her results looked something like this:

Attributes of Frogs that might be Prince Charming:
• Upon lilly pads close to the Castle
• Eating flambĂ©’ not flies
• Sporting crowns not caps
• Wholesome complexion: NOT warty
• Fine, not flea bitten

A half hour later, Gerpruda took her station upon a bench near the castle lily pond. After patiently observing for a few minutes, a likely looking candidate in white knee socks, sneakers, Lycra sport shorts and a “toad top crown” hopped on the bench next to her. Never known for being coy, Gerpruda blurted quickly, “Want to be a prince?” as she scooped him up in her hand and planted a wet one on the terrified amphibian’s puss.

“Poof!” burst the frog. But rather than a handsome prince, there squatted a pot-bellied, cigar gnashing itinerant clothesline salesman in a cloud of blue smoke. “No way,” growled Gerpruda kicking him aside with her foot, “I can do better than that.” Gerpruda revisited her list....

Twenty minutes later, she had finally landed the Big One. He
was no George Clooney, but from a distance and in the right light, he may have slightly resembled Matt Damon, with his shades and if he didn’t speak or smile. Bells rang throughout the kingdom. The people rejoiced and wetlands increased by forty percent. Compound W sales tripled and everyone lived happily ever after. But that’s not the end…


The moral of the story?

(1) Never kiss just for the sake of kissing. There are lots of frogs out there. Spend time describing your perfect prospect and you will save yourself lots of effort and a face full of warts.
(2) Count your costs. Don’t settle for a pot bellied, cigar smoking partner in a knee socks when there are royals to be had for the price of a kiss in the right place.
(3) Customers can be cold blooded until you find the one who responds to what you’re offering. The right connection can be a marriage made in the Enchanted Kingdom.

It’s all about spending a little time up front targeting your market. Stop kissing every donkey you see and check out the frogs next door. Listen to your Fairy Godmother or in this case your GF … Godfather Frank.