Low Margins Are Not Always Better Than No Margins
One of the mistakes that I often see with sales teams that are missing revenue and margin targets is their lack of focus on the Ideal Target Client.
Both businesses and sales teams often operate according to the philosophy that a bird in the hand is worth two in the bush. As a result, they often take an assured and easy low margin sale over a number of possible high margin sales. In my consulting work, however, I’ve found that even two low margin sales aren’t worth the more profitable sale.
It’s all about opportunity cost, the price you pay to choose one activity over another. Because time, money, and other resources are limited, you can’t pursue every sale. Choose the low margin opportunities and you’ll find yourself in a race to the bottom. After all, there’s always someone who can do it cheaper when all you focus on is price. To chase the high margin sales though, you’ll need to move your business toward a particular market bush, and that means targeting your offerings and sales approach. Yes, you forgo the low margin sales now, but the future rewards are great when you align your business with a well-defined and highly profitable niche.
To learn more about finding your own profitable bush and shaking it for all it’s worth, check out my free ebook, Target Sales Focus.
Let me know what you’ve been learning about getting lazer-focused on the attributes and behaviors of your Ideal Target Client. I look forward to hearing from you.
The Steep Cost of a Wide Market
Once upon a time – way back in the 90s – I invested in a hearing aid manufacturing company. Then, as now, the average age of citizens in this country was rising, signaling a growth market. That was the good part. The unfortunate thing was that I and the other investors decided that our market was every clinic that sold hearing aids – hospitals, ENT offices, VA contracts, private practice audiologists, and dispensers in large metros and rural areas alike. We employed a team of eight hard-working salespeople and a list of over 14,000 clinics. We grew 30% every year.
What’s the unfortunate part? ABC’s Nightline investigated the retail side of the industry and painted a very negative picture, prompting the FDA’s involvement. Suddenly, the market contracted. So did our sales – to the tune of a 20% drop in just a month’s time. Our big competitors slashed prices and got more aggressive. Because we hadn’t carved out a market niche for ourselves, we were forced to march to their drumbeat, and we didn’t have the resources to sustain that march for very long.
Fortunately, we came up with a solution, a counterintuitive plan you can read more about in my free ebook, Target Sales Focus. Rather than courting every clinic which might be interested in our products, we decided to pick and choose market targets based on our unique strengths. We customized our message, services, and offerings to cater to those markets. We learned to leave money on the table. And we were ultimately more successful than ever, building a well-disciplined company that we sold to Starkey.
Where’s your focus? Does it need to be fine-tuned?
How to Improve Sales: Turn Down Opportunities and Make More and Better Sales
I’m often stumped on why is it that so many businesses seem to operate on the principle that they should be everything to everyone (or near enough that it doesn’t make much difference,) especially when there’s ample evidence that specialization actually boosts profit potential (have any surgeries lately?)
Clients value businesses that know what they’re good at and are always looking for better ways to do it. When you don’t know your core strengths or aren’t confident enough to put your eggs in that basket, focus suffers – and so do your sales and your margins. Your sales staff loses focus and sales performance deteriorate.
So, what is your company best at? What does your company do that’s unique or better than anyone else?
Drill down and find the markets you’re best for. Command higher rates, enjoy better margins, and have the confidence to stop buying into the idea that it’s best to be everything to everyone (which is impossible anyway.) Work on sales process improvement and see how sales effectiveness soars.
You can learn more about the myths that may be sabotaging your sales efforts in my new e-book, Target Sales Focus.
I’d love to hear your experience about how “focusing” helped grow your sales efforts.
Sales Recruiting: The Interview Is Important…or not?
Interviewing Is Important – But Not as Important as You Think
I’ve been working with a client creating their I.D.E.A.L. Sales Recruiting Process. We’re talking about the proper place of resumes and interviews in the sales hiring process. Here I take it that hiring sales staff is one of the sales processes in place in your organization.
According to a Michigan State University study, over 90% of all hiring decisions are based on an interview, which is only 14% accurate in predicting success. Not to say the interview has no importance – it just needs to be viewed in the proper context. Interviewing correctly is key to winning the hiring game.
Sales Process Improvement: Most Hiring Processes are Upside Down
After significant research and practical experience, Dave Kurlan of Objective Management Group recommends the following sequence when hiring top sales personnel:
| Sequence | Task | Importance |
| 1 | Identify | 1 |
| 2 | Search | 4 |
| 3 | Qualify | 3 |
| 4 | Assess | 2 |
| 5 | Interview | 5 |
Note that the proper sequence of events does not necessarily correlate to their importance. Note especially the importance of searching (gathering resumes) and interviewing.
Searching for salespeople by soliciting resumes is not only one of the least important moves in the hiring game, it’s not even the first one.As a Sales Recruiter clearly and precisely identifying aspects of the ideal candidate for your sales team and for your unique customer base is most important. Ignoring this foundational step is the reason that so many businesses spend so much time and money just to hire the right salespeople. After all, if you don’t know what qualities make for a top salesperson in your organization, what are the odds of hiring one?
There are a number of tools and processes designed to help you paint a picture of an ideal new player for your sales team, a picture you’ll refer to often as you assess your candidates (from qualified resumes, steps two and three) in the fourth step of the process. In this phase, you’ll match up the qualities you’ve identified as leading to sales results for your business to candidates using a variety of psychological and behavioral sales assessments, in combination with tests that measure aptitudes, values, integrity, and belief systems.
But why put so much effort into assessing candidates before you even interview them? As mentioned before, resumes are of limited value, especially when many companies are fearful of legal reprisals and when the National Referencing Corporation reported a number of years ago that 30 million people have secured employment by lying on them. Therefore, you need to double-check using the sorts of assessments mentioned above. Only then are you ready to interview.
The Sales Lesson: When sales leaders recruit sales staff they need a sales process to ensure that they have identified their ideal candidate before assessing and interviewing.
The Sales Question: What does your organization’s hiring process look like? Have you been successful in recruiting the right sales staff?
Leadership Paradox Poem, 2nd
Based on some comments, feedback and insights from you, this is the revised Leadership Paradox Poem. What are your thoughts? What changes would you make? Which do you like better? I value your comments and insights.
On Reins and Rainmakers
Matter-of-fact results of the business kind
Result from matter-of-course kindness to employee dreams
and the foresight to value farsight
Leading with a bright vision
Means serving with a heated passion
and dropping our torch along the path for followers to pick up
The promise of opportunities draws closest
When the threat of risk is held closer
and dispersed with the light of reason
Creativity is the key
To the cage of discipline
and to turning bars of gray into channels of playful pragmatism
Outward strength fools the eye
If inward fear binds the I
and blinds leadership
Tomorrow is not yours
Unless today is
and what’s real is what’s seen
Blackening the bottom line
Begins with firing you, ltd.
and feeding the flames of us, unbounded
Resources are finite only
For those who forget the Infinite
and turn away from a Well filled with water for all time
And in the final reckoning
Defeat is not
When the will to go farther is
And the next step
is the one step
that matters most
to Success
© Copyright 2009, Danita Bye, Sales Growth Specialists, All Rights Reserved.
Sales Recruiting: Hiring Successful Salespeople by the Numbers
Any sales management leader knows that the sales game is a numbers game. The bigger your sales funnel the more sales you’ll ultimately score. Unfortunately, though, many of those same sales managers apply that philosophy to sales recruiting, figuring that they’ve got to work their way through a deck of promising, yet eventually disappointing, salespeople to find the few who’ll put consistently winning sales on the board. In other words, these sales recruiters view hiring as a roll of the dice. After all, resumes and interviews can only tell you so much about how a hire will perform in your company, selling your products and services – right?
Absolutely right – on both counts. Hiring high-performing salespeople is a numbers game, though not in the same way that sales is. Resumes and interviews are poor predictors of sales success. But if sales managers are right about those things, where are they going wrong when they hire? For the answer, let’s look at a few numbers:
- According to a recent CSO Insights, managers report that almost 50% of their sales force need improvement and only around 5% exceed expectations.
- According to Jacques Werth, President of High Probability Selling, only 3% of customers buy based on good rapport with their salespeople.
- Based on Objective Management’s research, 60% of a salesperson’s success rides on being accountable for results.
From these numbers, we can deduce that:
- If sales managers could more accurately predict sales effectiveness, they’d save their businesses considerable cash currently wasted on an overactive hire/fire/rehire cycle.
- A likeable interviewee does not translate to sales success.
- Sifting out candidates who aren’t likely to take responsibility for their results would mean fewer rehires, a much stronger sales team, and far easier and more productive sales management. Utilizing the correct sales assessment can greatly assist with this sales process.
The Sales Lesson: Getting your sales recruiting right the first time is critical for building a winning sales team in the most cost- and time-effective manner possible. Using an effective Sales Management Process for sales recruiting will put you on the road to success.
The Sales Question: What’s your hire-right-the-first-time ratio?
Leadership Paradoxes
Thought I’d share some of my musing with you through this “Leadership Paradoxes Poem.”
Leadership Paradoxes
In times of adversity—
We focus on delivering our business results;
We’re expected to be strong leaders with a compelling vision;
However, to inspire the vision, we must serve our client, employee and constituents.
We inspire and create new opportunities;
And, yet, we also need to provide resource and reduce risk.
We create discipline to guide decisions and actions;
And, yet, that discipline is useless without the creative talents of our teams.
We exude external, confident strength to our teams;
And, yet, we can’t delude ourselves—we must be intensely in touch with our own internal misgivings and fears.
We’re called upon to stir a strong faith-in-the-future for our followers;
And yet, we’re called upon daily to deal courageously with the facts-of-current-reality.
We are laser-focused on delivering bottom-line results;
And, to deliver those results, we also focus on nurturing relationships of with those around us.
We access all the resources and talent that we can;
While relying on the Almighty for wisdom and insight.
Copyright 2009 by Danita Bye, Sales Growth Specialists. All rights reserved.
How to grow your Sales with “SISU”
Got “Sisu?” What the Finnish teach us about Achieving Sales Results
I spent the weekend at the Hostfest in Minot, N.D., the largest Scandinavian festival in the United States. It was an incredible time watching the rosemaling (Norwegian rose painting), wood carving, silver crafting artisans; listening to the folk singers; dining in Oslo Hall; listening to some great musicians, country, bluegrass, The Oak Ridge Boys and Ray Stevens; and understanding my Finnish/Danish heritage.
However, the highlight of Hostfest was learning about the word,“sisu.”
Let me explain. I grew up in a Finnish community in North Dakota. And, yes, true to our heritage, we took saunas, not the wimpy saunas that you often find in North American hotels, but real saunas where we stoked the wood stove in order to get over 176 °F. Invigorating! Since we didn’t have the modern convenience of running water when I was a child, the every-Saturday-evening sauna was a “must” event, not a luxury. Little did I know that this half-a-football-field trek that we often took in the middle of snowstorms when it was 20 below zero and the wind was howling through the Knife River Valley was “sisu” training.
What’s sisu? It means unreasonable, uncompromising will, determination, perseverance, courage, tenacity, and persistence. You’ll want to read what Wikipedia has to say: http://en.wikipedia.org/wiki/Sisu
As I reflected on sisu, I realized that this is the character trait that we want in our CEOs, presidents and sales management leaders, isn’t it? It’s also what we want in our salespeople: Unreasonable, uncompromising will, determination, perseverance, courage, tenacity, and persistence to accomplish the task, isn’t it?
The sales process tool that I’ve found comes closest to helping CEO, presidents and owners determine who on their sales teams have sisu and who can be counted on to grow sales even against difficult economic, market, or competitive pressure are the Sales Assessments done by the Objective Management Group. They have a Sales Evaluation by Objective Management Group and also a Sales Express Screen that helps identify sales candidates who can — and WILL — grow sales even during difficult times. Sales people who have sisu.
The Sales Lesson: To grow sales even during difficult times require salespeople with SISU. Sales Assessments will help you identify these people.
The Sales Question: Do you have sisu? Who on your leader team has sisu? What about your sales team?
Servant Leadership: The First Shall Be Last – Even in Sales Leadership
As I finish up thinking about the many paradoxes we balance as leaders, I ask myself, “Why do we so often speak of great political and military leaders
who serve their countries well? Or star athletes who serve their teams well? Or topnotch business leaders who serve their firms and their customers well?
Well, the answer is that leadership is measured in terms of service. Really, leadership is a deeper and more involved kind of service. After all, isn’t the whole point of leadership to serve those you lead? If not service, then what? Self-aggrandizement and the pursuit of personal power? That’s tyranny, not leadership, and that sort of behavior will drive your business right into the ground.
Servant Leadership
Robert K. Greenleaf, in his essay, The Servant as a Leader, coined the phrase “servant-leadership” to describe what effective leadership is all about. According to Greenleaf, service leadership is a natural feeling that inspires one to serve first and only then make the conscious choice to lead based on that service. In this way of thinking, leadership is an outgrowth of service, a chance to take even more responsibility for those you serve.
Examples of this kind of leadership culture are relatively rare but instructive. Author and management consultant Peter Drucker found one in Frances Hesselbein, former CEO of the Girl Scouts and now Chairman of the Leader to Leader Institute. Hesselbein described leadership as “circular” and that its highest form consisted of the leader embracing their organization and everyone in it. According to Hesselbein, her real motivation has always been her love of service and what she does.
Or consider Alan Mulally, CEO of Ford and former CEO of Boeing: Leadership according to Mulally isn’t about oneself but the people one works with, all of them great in their own ways. Incidentally, Mulally overcame great adversity to rise to the ranks of leadership, but rather than wear a face of grim determination, he serves with a smile on his face and radiates a childlike enthusiasm that’s hard not to catch – not that you’d want to avoid catching it.
Finally, take the example of Jesus Christ, who in many eyes is the Leader of leaders. Yet he washed the feet of his disciples. More than that, his entire life was service.
It’s important to remember that in each of these cases, service was not a task to be dispensed with as quickly as possible so that the leader could get on with business. Service is the business, and each of these individuals found great joy in it. It’s as if they said to themselves, “Leadership affords me the opportunity to be of greater service, and experience greater satisfaction.”
Paradoxically, the first becomes last and the last becomes first. Sales management leaders who use their position to serve become greater leaders. Leaders who don’t serve, don’t lead.
Really, it’s as simple as that.
Where are you serving and leading?
How are you serving and leading?
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