Monday, June 26, 2017

Negative Customer Feedback is the Greatest Gift

My assistant came in today happy as a clam about the steak she had for dinner last night.  Hoping to score some great Iowa beef, I asked where she bought it.  "They were free" she said "because the chicken I had last week was terrible."  She went on to explain that her horrible chicken meal was such because it was stuffed with apples.  She complained to the Meat Manager who offered to give her an upgraded replacement and promised to be more forthcoming with signs and descriptions in the future. 

This got me thinking about a customer focus group I assisted with last week, where I received an "ear full" of nasty news.  During one of the sessions, one of the customers asked for a one-on-one meeting with me concerning my client. I’m not sure if this particular customer woke up on the wrong side of the bed, was having severe heartburn from the Mexican buffet served prior to the session or was just cranky, but he decided to let me have it with both barrels of nastiness. Here’s the scoop:

The customer had played an active role in the focus group. I asked questions on behalf of my client and this customer provided some great suggestions and offered up a couple of unique thoughts for new services. Our one-on-one (actually the sales manager for "the other side" was there,) however, turned out differently. In the words of the sales manager, the customer “turned on me.”

We walked into the conference room and sat down. After a brief warm up, including comments on how great it was that the sales manager’s company wanted to hear from their customers, the guy shifted the focus on his comments to issues faced when dealing with this distributor. The customer went on to say something like this:

“You know we have been buying from you for a long time, and we have gone through a lot of stuff over the years. But, we need for you to get better with providing us the products we need quickly. Your guys are good with the regular day to day products, but when we discover the need for something just slightly out of the ordinary, your service is getting worse instead of better. As a matter of fact, we never seem to get anything in less than a couple of weeks.”

Here’s where things took a surprising turn. Instead of digging deeper into the situation with questions about the nature of the parts or types of deliveries, the sales manager went on the defensive. The sales manager’s response covered a gamut of issues ranging from the size of the distributor’s inventory and the impossibility of stocking everything to how the customer needs to plan better to eliminate this type of issue. For a guy who has been in the industry for twenty plus years, I found the response to be shockingly emotional and poor. Let’s look at what might have been a better approach.

Acknowledging the feedback is critical…
In this particular situation, I would have recommended the following statement from the sales manager:
“Geeze this sounds like something we need to address for you. Let me get this straight, when you need something out of the ordinary, our service is getting worse instead of better. I can see where this could create issues for you. Thanks for sharing this important concern.”

Taking this approach indicates you are concerned for the customer’s welfare and take the feedback seriously. But just being appreciative probably isn’t enough to solve the problem. To really solve issues, you need details.

Get more clarifying details…
It’s difficult to react to a sweeping statement like “your delivery stinks.” In order to improve, make process changes or solve problems in general, having more details simplifies the task. A customer providing painful feedback should appreciate and understand efforts to gather more background information and detail. Going back to our story, the following could have been a follow up question:
“I want to explore this situation further so we can improve. Would you be willing to share a few recent examples of the long delivery you have experienced?”

This question sends a strong message that you are concerned and you are going to explore solutions to the issues you are causing the customer. Experience dictates, customers typically calm down and get into a spirit of mutual cooperation once you start asking intelligent questions about their situation.

Give the customer a preliminary work plan…
Outlining your plan to drill into the issues presented proves you are taking the situation seriously. The customer understands you don’t have all the information. Providing a quick “off the cuff” solution without further study or work might send the message that you are willing to say anything to get through this tough conversation. Here might have been a good answer:
“Give me some time to research what is going on with our customer service group and the suppliers involved in getting the product to you. This will take me a few days and involves calls to some people who are not always at their desks. I will start gathering data right away and give you a status report in a few days.”

Note we didn’t say a solution, instead we offered a status report. It’s the old “under promise and over deliver” thing. Many times problems like this take much longer to resolve than expected; especially when others are involved.

Provide status reports along the way…
Let the customer know this wasn’t a “hear it and forget it situation.” Status reports typically can be handled with a quick phone call or email. Reports basically let the customer know what you are doing and what you have learned so far. Further, status reports should be ongoing if the problem cannot be solved in under a week. Think of it as a weekly reminder to the customer that you are still putting effort into their issues.

If a perfect solution can’t be found offer alternatives…
Let’s face it sometimes it’s impossible to give customers everything they want. Unlimited free deliveries, massively long payment terms, unlimited return privileges or infinite inventory all come to mind. If the problem can’t be addressed head on, I believe the customer should be given choices as to what actions can be made to at least alleviate the issue.

In the case of my sales manager friend, some of the following may have been good alternatives:

  • The sales manager offers alternative products from suppliers with very good delivery mechanisms and creates a list of similar products which might be substituted for those which are difficult to obtain in a timely fashion.
  • The sales manager assigns a person for expediting products coming from suppliers who are not normally part of the distributor’s business.
  • The sales manager offers to work with the customer to develop a plan for better anticipating the unusual items required for a job.

Applying Scientific Theory from Human Sigma: Managing the Employee-Customer Encounter…
Mistakes happen, it is the nature of human encounters. Research outlined in the book point to a couple critical thoughts. First, customers who have problems (and provide negative feedback) which are handled properly are more loyal than a customer who encounters no problems. Secondly, employees (typically outside and inside employees) need to be trained and empowered to handle negative feedback.

Negative feedback is the greatest gift…
When you receive no negative feedback, you should assume something is wrong. Every organization, regardless of its business prowess, makes mistakes. Customers who take the time to tell you about mistakes are giving you the opportunity to save the business and build a better long-lasting relationship. Thinking back to my assistant and her terrible apple chicken.  Had she kept quiet, others may have been just as unpleasantly surprised to receive the same meal.  She provided negative feedback and changes were made for her and future customers.  She will continue to shop at that location.  Customer retention is huge for distributors. Accept the gift and make something good of it…

Monday, June 19, 2017

The First Time Call

Let’s face it, for most salespeople getting into a new prospect
is a tough job.  It takes persistence, requires lots of phone calls and typically puts the seller through an emotional wringer.  Discussions with hundreds if not thousands of distributor salespeople indicate this is one of the most difficult parts of their job.  First, it takes multiple (actually, our research shows seven) phone calls and email messages just to get to the right person.  Sadly, sellers, who are faint of heart, give up before the actual contact is made.  Many would rather put the task off and procrastinate for weeks.  Some, with established territories, simply refuse to make this kind of call until their managers apply massive pressure to open new accounts.

The point is, lining up this kind of call is not on anyone’s top ten list of things to do.  There are dozens of articles on the topic of getting the appointment; my intent is not to provide a tutorial on the topic.  Instead, let’s assume through hard work and “true grit," an appointment is secured.  

Let the selling start?  Not really.  Salespeople who come into the prospective new customer’s office with six guns blazing and a hundred catalogs under their arm are destined for failure.  I recommend a different approach.  

Exploring new accounts is an interview…
As weird as it may sound, you’re not here to sell anything.  Instead, the first time call is an opportunity to find out where we might be able to harness our products and services to provide something of value to the customer.  Just taking this customer-centric approach differentiates you from the dozens of other “drive-by salespeople” who have probably wasted the customer’s time in the past.  

Previous experience has conditioned the customer to politely give you a few fidgety minutes then start looking for an excuse to get you out of their office and back into your car heading down the highway.  You’re going to throw them off by not selling.  I recommend starting the conversation off with this statement: “I promise not to try to sell you anything today.  Instead, I want to learn a bit more about you and your company.”

Come prepared…
Nothing can turn off a potential client more than a seller who has not taken the time to learn about the account.  Back in the old days, this was a pretty hard task.  Today, the internet contains dozens of resources for discovering more about the potential customer.  Things like products, company history and industries served are right there for the taking.  Asking dumb questions labels you as a time waster.  Good questions; however, are still the key to success. 

Why leave success to chance?  Since selling is an emotional sport, nerves often get in the way of great questions “off the top of your head."  Prepare for the call by developing a list of questions you would like to have answered by the customer.  These are both personal and professional in nature.  Here is a short list:

(Not too) Personal questions
Can you give me a quick overview of your career?  Where have you worked?  What kind of education prepared you for the job?
In what are the areas do you work?  What are your responsibilities?  Are there other areas in the company with people doing similar tasks?
What kind of information is important to you?  Are there areas where you might benefit from training?

The Company
Who are your end customers?  What do they like about your company?
What is the company best known for?  
Can you describe the processes used within your organization?  
Are there areas where you are working on improving the process?
What types of engineering issues do you face?
What do you look for in a supplier?

Getting off to the right start… because a lot of folks ask.
Here is a short couple of sentences to jump start your efforts with this kind of a call:
“Thanks for taking time to see me today.  I appreciate and value your time.  I represent a distributor who provides a number of products and services that I suspect may be of interest to you and others in your organization.  I’m not going to try to sell you anything, or for that matter bore you with a long list of the things we do.  Instead, I would like to learn more about you.  This gives me an opportunity to think about your situation and then, if it makes sense, come back with some thoughts and potential recommendations.  I am going to leave you with a single company brochure that shows the many things we have to offer, but that’s not my main purpose today.”

Once you’ve set the stage, get started with the questions you have already prepared.  Try to stay conversational, it’s not an interrogation, instead think interview.  

Some things to think about…
Regardless of how you might be tempted, stick with your no sales pitch promise.  There will be times when you are tortured by this commitment, but the only time to talk products or services is if the customer flat asks you; ie: do you stock left handed widgets.  Otherwise, wait till a later time.

Take notes.  Nothing shows your interest more than taking a
few notes.  Further, I have discovered that customers actually say more when you ask them if they mind if you take a few notes.  It reinforces the importance you place on their answers.

Let them know you want to think about their situation.  Ask if it might be possible for you to pay a short visit in a couple of weeks to talk about a couple of opportunities for your companies to work together.

Before we go…
If you are wondering about other questions to ask, I would be willing to share a chapter from my soon to be released book Customer Based Strategic Planning.  It guides the seller through a lot of questions they might find valuable.  Shoot me an email to receive your copy!

Friday, June 9, 2017

Explaining Sales to the New Executive

An Irishman, a Cowboy and a Salesman walked into a bar…

Remember those jokes from days gone by?  It’s been a long time since salespeople needed to have a couple of good jokes up their sleeves.  And for some reason, I could never remember the punch lines.  Thankfully, the world changed and jokes soon fell out of favor with customers and sellers alike and my career didn’t suffer.  But, sometimes life mimics old jokes.

Recently, I ran into a business executive in a local bar.  During the ensuing conversation, she shared her situation.  After years of climbing the corporate ladder and being groomed for bigger and better things, she finds herself in charge of her company’s sales effort.  Congratulations to her, but there was a problem.  She had no previous sales experience, no real exposure to the selling in any form and was struggling to understand how to make a difference in her new department.  

I quipped that I work with sales groups throughout the country.  Her eyes lit up and she asked me to give her the lowdown on sales.  To sweeten the pot, she bought me a beer.  How could I say no?

In the next four minutes, allow me to share my explanation.

Selling isn’t what you probably expect…
Common wisdom paints selling as a sleazy business where
customers are tricked, cajoled or somehow bribed into making a purchase.  With the possible exception of timeshare tours and used cars, this applies to every form of selling.  This is especially true in B2B sales, which is precisely where she lives.   Instead, selling is about skillsets and orchestrated team play.  For distributors, the team play revolves around specialists, inside salespeople, application engineers and even sales management.

Since selling is about skillsets, we can assume that
salespeople are developed and not, as common wisdom sometimes dictates, born.  During my forty year tenure in sales and sales management, I have seen successful sellers with all kinds of personality types; introverts, extroverts, techno-geeks and many more.  The differentiating fact between the best and average typically boils down to work ethic, skills and process.  Further, as one VP of Sales shared, “In today’s team selling environment, I won’t hire a cowboy superstar.  We have worked hard to develop a team, and there’s no place for prima-donna behavior on our team.”

Since sales skills are important, one would expect sales organizations to constantly reinforce the right skills.  At the same time, real sales skills are rarely taught.  I told her to review the agendas of the last few team sales meetings.  Did sales methods and sales skill refreshers even make the list?  This is an epidemic issue across the entire sales industry.  Sales meeting have digressed to technology reviews, community bulletin boards and product trivia.  Skills need constant refreshers, coaching and review.  

Sales people work without a great deal of oversight.  In most organizations, sales managers rarely make customer calls with their team; with two or three times a year being the norm.  Because there is little time/opportunity to gauge skills in action, there is a need for mid-stream measures of success which look into the progress.  Most sales managers focus on sales totals rather than the actions which drive sales.  This is a mistake.  

Sales is about determining the right customers…
Most sales organizations have more “prospects” than they can handle.  Many invest mass quantities of resources chasing down customers who probably won’t turn out to be profitable customers.   Companies who spend the time to identify the right best potential customer and focusing efforts on these “targets” are 47 percent more likely to meet their sales goals than those who blindly chase every lead possible.  

Many times the right customers are already doing some business with your company.  Sales experts, armed with research data, indicate it is five times easier to sell more to an existing customer than to pursue and open a new account.  The point is to evaluate existing customers for new opportunities and missed sales.  In the world of distribution, this is called a gap analysis.  (I have an example, I would share for the asking.)

Sale is ultimately about driving profitable sales…
Don’t confuse gross margin or sales volume with profitability.  Based on analysis of most organizations’ sales, the cost to service many of your accounts is higher than the gross margin generated by the account.  This takes into consideration things like technical support, order size, amount of handling and the overall hassle factors associated with dealing with the customer.  

By the way, this topic is heresy within most sales organizations.  The prevailing attitude is every sale is a good sale and every customer an important cog in the wheel.  While this model may work for establishments like Amazon where there are no sales professionals, for the majority of selling organizations, the need to understand this profitability thing is high.  

The more you understand your sales cycle, the better…
I have seen company presidents hire new salespeople and begin budgeting for increased numbers within months of the new salesperson’s arrival.  For the most part, everybody is disappointed and here’s why.  It’s called the sales cycle.  

The sales cycle is the time line from the introduction to the purchase of a product.  In many instances, the sales cycle is longer than most believe.  For example, if you are selling components which will be incorporated into an original equipment maker’s (OEM) product, the sales cycle includes OEM’s design and engineering time.  There may be testing, trials and other aspects in the evaluation.  Further, many OEMs only change their designs every few years.  The sales cycle is long.  For End Users of products the sales cycle can be shorter.  Keeping this in mind, let’s look at the error made by the previously mentioned company president.

Even with end users, the time required to determine the right person to call, build a relationship, earn trust and suggest new product alternatives takes months.  Only a small number of these relationships can be worked on during the early months.  With typical sellers (in distribution) averaging something just shy of 15 sales calls per week, this means that a maximum of only 60 accounts might be explored during the first month of the salesperson’s service.  Unfortunately, it doesn’t work this way, as the first call is mostly introductory and it generally takes at least four to six calls to develop even a modicum of trust.    

Without knowledge of the sales cycle, it’s tough to forecast sales growth or even budget for new sellers.  Minimize the cycle and success comes more rapidly.  Most companies, regrettably, don’t take the time to explore even this one principle area for improving performance.

Why a sales process is important… 
Without a process you can never focus on the right area for improvement.  No activity/task is completed the same way, so it’s impossible to understand what went right or wrong with each customer.  Improvement is difficult and continuous improvement is impossible.  A couple of years ago, we surveyed nearly 100 sales managers on their use of sales process.  The most common “process” listed by these managers was “informal.”    The problem is “informal” doesn’t really match the description of process.

What is a process?  The definition requires documentation, training, metrics and coaching/management points throughout.  There has to be a measures for intermediate steps in the sales activities.  Rather than focus entirely on whether sales are up, down or flat, the process allows for understanding opportunities as they work their way through the sales cycle described above.  

A process has a common vocabulary; it speeds the accuracy and efficiency of communications.  For example, what is your definition of a “prospective customer?”  For some, it means anyone possessing enough money to make a purchase whether they have been identified, researched or contacted.  For others, a prospect is a customer who has been identified and qualified in some material way.  The same applies to terms like “target account” and “key account.”  Without company-wide classifications, it’s impossible to discuss the landscape.  

River Heights Consulting has developed some definitions.  We use them to clarify conversations with our clients.  However, you may have definitions of your own.  For instance, Miller-Heiman has developed the following terms to describe people within an account:
The Economic Buying Influence – The guy with the budget.
The User Buying Influence – The person who will be actually using your product.
The Technical Buyer – This is the engineer or expert determining if your product meets the specification.
The Coach – A person within the account who wants you to get the business.  They are a guide.

Getting back to my new friend…
By the time we finished our conversation, I could tell she was in information overload.  And, since my beer was pretty close to dry, I left here with this thought:

Since you have managed manufacturing operations in your company, you probably already know it’s important to understand some of the operational details of the group.  You probably asked, what is our maximum capacity, how much time is lost to downtime, what is our reject rate, where are our bottlenecks and a dozen other questions.  In a good sales operation you need to ask a similar set of questions.  Here are my top six:
  1. In as much specific detail as possible, how would you describe your ideal customer? 
  2. How many of these customers currently counted in your selling efforts?
  3. How many “ideal customers” do you lose every year?
  4. How many “ideal customers” have you identified and begun building relationships?
  5. Do you know of potential “sales opportunities” which could materialize in the next year and what is the probability of them buying from you?
  6. If you don’t know the answer, why not?  

I am interested in the things you would have had her explore.  Email me your suggestion and I will send you a postcard from Iowa…. 

For those who jumped ahead to read the punchline of the previously mentioned joke, here it goes:
An Irishman, a Cowboy and a Salesman walked into a bar and the Irishman ordered them all a whiskey.
When the bartender delivered the drink, the salesman asked, "Where is everybody?" The bartender replied, "They've gone to the hanging." "Hanging? Who are they hanging?" "Brown Paper Pete," the bartender replied.
"What kind of a name is that?" the cowboy asked. "Well," said the bartender, "he wears a brown paper hat, brown paper shirt, brown paper trousers and brown paper shoes."
"Weird guy," said the salesman. "What are they hanging him for?"

"Rustling," said the bartender.