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  • The New Solution Selling: The Revolutionary Sales Process That is Changing the Way People Sell
    The New Solution Selling: The Revolutionary Sales Process That is Changing the Way People Sell
  • The Solution-Centric Organization
    The Solution-Centric Organization
  • The Solution Selling Fieldbook: Practical Tools, Application Exercises, Templates and Scripts for Effective Sales Execution
    The Solution Selling Fieldbook: Practical Tools, Application Exercises, Templates and Scripts for Effective Sales Execution
Wednesday
20Jan2010

Recurring Revenue within Existing Accounts vs. Acquiring New Customers

What Happens When Sales Organizations Focus Exclusively On Recurring Revenue within Existing Accounts vs. Acquiring New Customers?

We have all heard of – and many of us follow - the supposition that selling to existing customers is easier and a more cost effective way to generate revenue and thus a great way to grow business. Based on a recent observation I would like to offer a contradictory theory to this widely held perspective.

At SPI we have recently started working with a client that is a venture capitalist. The principals of this firm worked as executives in some of the top software companies in the world so they focus on their comfort zone; acquiring and turning around failing software companies. Among all of these failing companies that get acquired I have observed a consistent theme:

Apart from having no repeatable sales process, misalignment of their marketing efforts, and ineffective pipeline management they had little to no focus on selling to new customers and spent all their time servicing the existing by pushing renewals and upgrades. In fact, the only new logo business would come via unsolicited RFP’s (Tenders). And we all know the low win rates associated with sellers who live their lives as “Column Fodder”. Of course, based on the “compensation drives behavior” theory the sellers were compensated on this approach. To drive renewals sellers would do things like discount high profit items, namely services, to get the additional licensing revenues. In my humble opinion their poor performance was preordained by their approach.

I cannot and will not advocate a complete reversal of their approach but I will make the obvious recommendation that balance is the key to their salvation. Not backing the truck up to their loading dock and dumping your products and then running like hell for the next logo, but a “healthy pipeline” of net new and existing customer opportunities supported by effective and attentive customer service is the best practice.

Thursday
14Jan2010

Overcoming Buyer Risk in Major Purchases

The risk associated with making a major purchase is not a new emotion to buying and selling, however, it appears to have taken on more significance given the current economic conditions.

The first step in overcoming buyer risk is to recognize that risk is a natural emotion within a buying process. When making a purchase, most buyers go through a need  analysis and budgeting phase, then a solution-evaluation phase and finally they weight the consequences and benefits of a purchase-decision. In this final phase, they experience and work through risk.

During the risk phase, buyers ask themselves questions such as: “What are the consequences of taking action?”… “What if we don’t see the results we expect?”… “What if the offering or service doesn’t work the way we expected it to?”… “What if a better alternative comes along?”

Risk is the concern that causes buyers to slow the decision down and maybe not make a decision at all. It’s in this phase that salespeople lose deals without knowing why. The salesperson may have been winning the opportunity up to that point, but because they didn’t understand the risk phase and because they weren’t looking at a potential purchase from the buyer’s perspective, they say and do the wrong things and lose the sale.
   
For example, the salesperson tries to mitigate the risk by saying “Don’t worry about those things, everything will work out, trust me.”… “The economy is going to rebound.”… “We need to get this signed by the end of the week or our special pricing is off the table.”  Or they do things that they think will get the buyer over the risk but actually throw them into more risk – such as “drastically dropping the price” which in some cases can throw the buyer in further risk because it causes them to question the original price offered (i.e. “Why did they drop the price all of a sudden, is there something I should be worried about?”). In all these cases, the seller can seem insincere and focused on what is good for him or herself, not the customer.

The key is to recognize that risk is a positive buying signal (yes, a positive signal). It means the buyer has naturally gone through their buying process and is serious about making a purchase. They just are at the end of their process where risk naturally shows itself. The seller should smile and recognize they are close to a win. They just need to consultatively and empathetically help the buyer through the risk by doing a few simple things… recall the business issues driving the purchase, how they helped the buyer understand the scope of the issue and how they demonstrated how their solution can help address the buyer’s business issues. Then reassure the buyer that they understand the decision is a big one but that it is a good one. 

Monday
11Jan2010

Sales Kickoffs - How to Keep them Motivated All Year

We all hope our 2010 Kickoffs will get our team motivated and provide them with new information to help them increase sales for the New Year ahead. The problem is that more often than not that excitement doesn’t last.  According to Keith Eades, Founder and CEO of Sales Performance International (SPI), “Sales people are typically enthusiastic training participants, but once they’re back at their sales organization old patterns and pressures are imposed, they’ve got to close deals and meet their quotas, so the new learning is often lost.”  

This is a problem that all sales managers deal with, not only with Sales Kickoffs for the New Year, but for sales training events in general. In fact, studies have shown that 86% of knowledge retention is lost within 90 days of sales training events without specific reinforcement vehicles and integration with business practices. And yet, thousands of companies continue to take a train and hope mindset, with little consideration for legitimate success criteria.

So, how do we keep this from happening? Here at SPI we believe that you should take a Continual Learning approach to sales training. It is not about one big event, it is important that you are continually providing and reinforcing knowledge to your sales people throughout the year. In the image below you can see some of the key elements involved in creating a continual learning environment. All of these elements are critical in attaining World Class Sales Training and Continual Learning status.

The Solution Selling Continual Learning Framework

By attaining this status you can achieve up to:

  • 9% higher quota attainment
  • 7% higher win rates of forecasted deals
  • 5% less turnover

In the study previously mentioned, SPI Senior Consultant Bob McGarrah said, “What emerged from our study is a growing recognition not only of the pressing need for post-training reinforcement, but also the necessity to do more than periodic refresher training. Instead, the reinforcement has to be integrated with the sales organization’s day-to-day work and there should be more of a common methodology among all those on the team, what’s sometimes called a sales process. At a minimum, this means a shared perspective, language, skills and tools, so that as the team functions the learning continues and gradually takes hold.”

Although it is important to get your team motivated for the New Year, if you don’t continue to reinforce and integrate best practices in your sales process throughout the year you will not reach your potential.

For more information on continual learning watch the webcast, Preserving the Training Investment Through Continual Learning.

Wednesday
30Dec2009

Want to exceed revenue targets without adding headcount? Focus on seller productivity.

Sales productivity consists of two components; utilization and effectiveness. The utilization level of a sales person is reflective of how much time the seller devotes to sales activities as opposed to ‘non sales’ activities. Sales activities include face to face or phone time with prospects, proposal preparation time, and email follow-up with prospects. ‘Non sales’ activities include travel time, internal meeting time, automation tool updates, mandatory training time, and the like. In most sales organizations, the utilization level of a typical seller is no more than 60%.

The other side of the productivity coin is the effectiveness level of the seller. That is, when the seller is actively engaged in the sales process, what type of skill and effort does he or she display. Think of the skills possessed by seemingly naturally born sales people. They have a natural ability to ask good questions, not lead with product, and do a thorough job of understanding the prospect’s problems before offering a solution.  Naturally born sales people make prospects feel at ease and never pressured. Compare this to a low performing seller who leads with product, never asks questions of the prospect, and loves doing presentations about his or her company’s products.

If the effectiveness of the naturally born sales person is 80 or 90 percent, the effectiveness level of the low performer is probably in the 30 to 40 percent range.

Both seller utilization and seller effectiveness are controllable by sales management. Low utilization is reflective of bad habits in the sales organization. These bad habits include organizational dependence on unnecessary meetings, poor automation tools, lack of performance metrics, and poor territory layouts. Low seller effectiveness is the result of poor hiring practices and lack of investment is sales skills training.

In the typical sales organization, overall sales productivity is abysmally low. Even in the best managed sales organization, seller utilization and seller effectiveness rarely exceed 50%. Overall sales productivity languishes in the 25 to 30% range.  Even a modest increase in sales productivity can result in tremendous upticks in revenues and margins. 

Friday
18Dec2009

Solution Selling Cartoon: Make Yourself Equal Before You Make Yourself Different

This is what happens when you don’t participate in the customer’s vision of a solution first, before you try to re-engineer to a better solution that features your unique capabilities…

You can find more tidbits of Solution Selling wisdom like this in the Solution Selling Fieldbook.