 Track Selling Times - November, 2000
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Track Selling Times
The Voice of the Sales Profession
Issue No.132
November 1, 2000
Published by Max Sacks International,
Home of 100% Guaranteed World Class Sales Training
Developers of the Track Selling System™.
Author/Editor: Roy Chitwood, President, MSI
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Feature:
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Keeping customers at any cost?"
by Roy E. Chitwood, CSP, CSE
Learn the criteria for when it's encouraged to do the unthinkable: drop a large, current paying client.
Sections:
Newsletter Archives
"Keeping customers at any cost?"
by Roy E. Chitwood, CSP, CSE |
Winning new accounts is one of selling's biggest challenges. If this needed proof, recently while driving I was listening to the radio and heard a sales research analyst reveal that statistically, across all industries, it's six times more difficult to land a new client than retain an existing one. This was staggering yet as I began considering the number of cold calls required to make a single appointment, and the number of appointments to make a single sale, its validity was obvious. So I set my mind to touch base with clients I hadn't had regular contact with over the last six months as it was too costly not to.
The following week, one of my clients called me, seeking my opinion concerning a dilemma he was facing with one of his largest clients. Specifically, he was pondering what sales people should do with a client who pays its bill but is never satisfied despite the concessions and extra effort made. In the face of the time and money spent acquiring an account, he asked, "Is there a scenario when it's okay, or even preferable, to resign a client other than for lack of payment or blatant dishonesty? And if so, what's the criteria?"
I reflected again on the sales analysts' research yet began thinking about the rationale of keeping a client at all costs. My client was right: Acknowledging the time and money investment a salesperson and her company makes to acquire a new account, she surely doesn't want to just give one away. Or does she?
Now, very intrigued, I asked my client for the background and it was quickly understandable why he was debating cutting this client loose. In short, my client had hung himself by over servicing this client on one occasion. Several months back, his client was in a bind and needed a rush delivery. Since it was a low ebb period at my client's company, he rushed a large order in an incredibly short period of time without extra charges. During normal production times, this quick turnaround time wouldn't have been possible. Moreover, a hefty rush order fee would be applied due to the bumping of other orders. My client's client believed that if it could be done once, it not only could be, but should be done every time without exception. When my client tried to explain that he fulfilled this one order as an act of good faith and explained that it wasn't physically or fiscally possible to do so regularly, his client only balked. The client demanded he receive this service with every order time or threatened to walk without any regard for my clients need for profitability.
Was this illegal? No. Unethical? Perhaps. Unprofessional? Unquestionably. My client's client decided this one exception should become the norm, exploiting the good will previously established.
But resigning a large client who pays on time is a difficult business decision for many reasons. From a practical standpoint, a salesperson is often in a comfort zone with such a client. Barring a major goof by the salesperson, he can count on a specific amount business during a specific time period. This means he'll have steady sales resulting in steady commissions and big steps towards regularly meeting quota. And from an emotional standpoint, the account is the result of his hard work. He earned it and it's very hard to just let it go, especially considering the amount of time and lost commissions it will take to replace it.
As I advised my client, however, I firmly believe that a salesperson in a similar situation or in one where the following conditions exist, is warranted in dropping the client:
- You're spending twice as much time on this client than any other of similar size without twice the sales.
- You're regularly providing concessions such as rush orders without charge, higher than average price breaks, and/or 'freebies' to sweeten each sale.
- The customer often threatens to switch to a competitor if you don't meet their demands.
A customer's decision to buy your offering as well as your decision to sell it should be nothing less than mutually beneficial and respectful. As much as clients feel they're in control of the relationship, they cannot be overly controlling. Remember your product or service is secondary to the expertise and professional guidance you provide. Don't underestimate the added value your wisdom and experience offer. As Austrian economist Ludwig von Mises observed, "Value is not intrinsic; it is not in things. It is within us."
As a skilled, sales professional, the client should view you as a trusted consultant and never hold you hostage. There's nothing wrong with ethically playing hardball and pushing for the best deal. However, parameters must be established from the start and respected by both parties.
As I acknowledged, resigning a hard-earned client is a difficult decision that ultimately, however, can be very liberating. First, doing so will immediately pry you from your comfort zone and demand that you exercise many of the sales skills you likely hadn't routinely been using. Second, it can improve your self-esteem and emotional well being. Happiness and fulfillment are often contingent on your focus thus removing negative influences lets you spend energy on positive areas: namely, winning new accounts. And third, the lesson learned is a valuable tool to be added to your sales toolbox. When a similar scenario arises, you'll know how to handle it expertly.
You should never be held hostage by a client or a client by you. If a client is determined on being your captor, surprise him. Exercise the famous line: "Don't walk away mad. Just walk away." My guess is he won't be satisfied with any vendor.
Integrity Pays:
"Opening the books."
by Jason Higgins
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Jason Higgins directs design and assembly for Exhibits Northwest Inc, a premier regional provider of quality display creations for tradeshow events and exhibits with offices in Seattle, Wa., and Portland, Ore, and distributor of Abex Display Systems. The company ensures its clients' tradeshow success by selling, renting and servicing standard and customized booths and displays for all exhibit needs. For more information, please visit www.exhibitsnw.com.
If your clients are like ours, price undoubtedly is an oft-voiced concern. In a competitive environment, customers want as much as possible for as little as possible. And they'll work diligently to get it from you, or a willing competitor. Sometimes customers become so absorbed solely with a product's price, however, that it's difficult for them to consider anything else.
A specific example of this comes to mind whenever a customer unknowingly pushes for a product at or below our cost. The chuckle it provides is equaled, I think, by the value of the point it makes.
Several years' back, I had a prospect that persisted on a lower price despite my being at the floor of profitably. I quickly realized that I was dealing with a creative talker when he said he had received a much lower bid from one of our direct competitors. What the prospect wasn't privy of was the good-natured relationship we had with this competitor. We often referred business to one another and I knew their pricing structure. I knew the price the prospect quoted was inaccurate and that he was angling for the best deal. Although to refute this with questioning his honesty or math ability warranted some creative action of my own as I only wanted to inform, not offend.
Now wearing my creative thinking cap, I asked if he would answer this one question honestly. His reply was, "Sure." I asked, "At your company, what's an acceptable, not optimal, markup?" He hesitated, glaring suspiciously, and I repeated, "Truthfully, what's an acceptable markup?" After a few moments he replied, "I suppose 30%, or thereabouts."
I replied, "Perfect," and opened my distributor price list. Grabbing a yellow highlighter, I highlighted our product costs and turned the book towards the prospect. I then wrote down the shipping and labor charges for this order and slid it across the desk. I asked the gentleman to add these charges to the product costs, which he did. I then asked him to subtract this amount from my quoted price and asked him what our markup was. Turning the price list over, he began computing. He shook his head and then asked for my calculator. Continuing to look perplexed, I could have given him an abacus by this point and it wouldn't have changed reality. I bailed him out, stating matter-of-factly, "At your company an acceptable markup, not an ideal markup, is at least 30%. For this order, our markup is only 20% without shipping and labor charges being deducted. Our actual profit is likely 12-14%. How reasonable is this?"
By "opening the books," I made the point debating couldn't have. With total clarity, I showed that my company, like his, wasn't a not-for-profit organization. A profit margin had to exist to allow us to supply him with quality products and service. As you might guess, he placed the order and we won a lasting customer. While this tactic should be used on only rare occasions, the example shows that complete disclosure can be your most effective close.
World Class Sales Management:
"Getting company communication on 'Track'"
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Joel Mahupin works in inside sales for Seattle, Wa., based LizardTech. LizardTech develops imaging software and solutions that simplify and enhance the distribution, management and control of digital images and documents. LizardTech is focused on innovative solutions that provide users of all levels with bandwidth optimization and instant access to high-resolution, multipurpose digital images and multimedia content. LizardTech is an industry leader and has been voted the most promising company by the Washington Software Alliance. For more information, please visit www.lizardtech.com.
Clarity in internal communication is one of the greatest obstacles in any organization. It's common for individual departments to design their own communication processes and establish parameters specific only to their needs. Doing so works great for intra-department communications but can make murky inter-department dealings.
With this in mind, we wanted to implement the most seamless communication tool possible for our newly implemented database. Our company believes one its most important success factors is our willingness to invest in our people and infrastructure. Therefore, we train our sales people in the Track Selling System, highly valuing its seven steps. Additionally, we've implemented a powerful, highly scalable customer database with a price that demands ensuring maximum value.
When we began implementing the database, we realized we had a challenge. We were having difficulty communicating coherently across all departments. This was particularly magnified within our telesales department where our reps weren't sure where a prospect was in the in the sales cycle.
Since our salespeople were all versed in the Track Selling System, we decided to incorporate it into the database. Doing so would allow all of our people to check the status of a lead and know exactly where it was in the sales pipeline. This has been a tremendous help in forecasting the potential of each lead. Because we established different values for each stage of the sales cycle, namely using Track Selling's seven steps, we can now also forecast the probability of winning the account. For example, if a prospect is at step six, our "Act of Commitment" stage, we can forecast an 80% probability of closing the sale.
By implementing the steps and principles of the Track Selling System internally, we believe our people are communicating using the same language. It's being transformed from purely a sales tool to a corporate communication tool with the benefits being increased efficiency and improved lead tracking that will result in more sales.
Focus on the Professional -
"Christine Dickson"
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Christine Dickson is advertising sales manager in the San Francisco office of one of the most visible high tech companies, Infospace, based in Bellevue, Wa. Infospace is a leading global Internet information infrastructure services company that provides commerce, information and communication infrastructure services to wireless devices, merchants and Web sites. Its recent announcement that it has completed its merger with Go2Net positions Infospace to tap the market for broadband wired (DSL and cable) and broadband wireless (2.5G and 3G) services, such as interactive gaming, television and other entertainment services. For more information, please visit www.Infospace.com.
1. What is the focus of your position and how is it affected by working for such a highly recognized company like Infospace?
As a sales manager in advertising sales, my major focus is finding prospects who are considering advertising online. However, it's my philosophy to delve deeper than just selling advertising space. As best as I can, I attempt to completely understand my clients marketing objectives and overall business goals. I've found that when advertising is a direct link to these, its focus is more acute which makes it more effective.
2. What's your experience with the Track Selling System?
Wow, it's funny that you ask that because now I have to really think about it, as it's become such second nature. I've completed the workshop twice during the past six years and it's amazing how it continues to serve as an instruction tool on the job. Its effectiveness is so quickly experienced after completing the workshop that you can't help but use it.
3. Now that we're in the 21st century, how applicable and/or effective is the Track Selling System in a high tech industry like Infospace's? Why?
As I learned throughout the program, selling really is just selling. Sure, you have to have the industry and technical knowledge to compete in our niche. However, the tangible selling skills required for success are the same in high tech as they are selling investments, machinery, service contracts, industrial products or any other product or service.
For example, to effectively sell advertising I must thoroughly qualify my prospect by asking the right questions to determine her needs. I must then demonstrate convincingly that my recommendation will meet those needs. And, in the end, I must close the sale with techniques that work. So you see, the core skill set necessary to be a high tech success is much the same as in any other industry.
4. In your opinion, what are the most important concepts or skills a person takes away from the program?
The two that I would emphasize are keeping it (selling) simple and asking questions. My philosophy is to get in and get to work. If I keep a keen focus on uncovering a client's true needs, and ask the right questions, I don't waste time. And if I'm asking the right questions, I'm listening much more than I'm talking which makes the sales cycle much shorter and more prosperous.
Book Review -
The Loyalty Effect : The Hidden Force Behind Growth, Profits, and Lasting Value
by Frederick F. Reichheld
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As explored earlier, losing hard-earned clients should be minimized as much as possible. Accordingly, it should be a salesperson's conscious decision to resign a client only during the most extreme circumstances. That said, in attempting to increase sales, a majority of companies and their sales people wrongly focus on recruiting new clients rather than retaining existing ones. In The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value, Frederick Reichheld imparts the fallacy of this practice and proposes loyalty towards employees, customers and investors should be its immediate successor.
Reichheld cites that companies routinely lament an increasing turnover rate yet aren't accountable when sweeping staff and budget slashes are made, when plants are closed and jobs sent abroad. He believes increased loyalty towards employees, customers and investors can significantly impact the bottom line. The implication being that a company cannot expect loyalty without first being loyal. Loyalty breeds loyalty. Ultimately, the difficulty management has with this truth, he contends, is that loyalty can't be shown as a tangible line on a balance sheet. That is, its value is difficult to quantify but unquestionably real. Those companies who realize and embrace this will become more successful than otherwise possible.
The Loyalty Effect isn't a quick, easy blueprint for rapidly increasing sales. To an open mind that sees the bigger picture, however, it can be a gold mine for growing positive, loyal relationships and, consequently, revenues.
| Ask Roy
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Trish Robbins of Louisville, Kentucky asks:
"What steps do you recommend for building a relationship with a prospect who has potential but won't sign a contract in the immediate future?"
Roy's Answer:
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Ah, the challenge of building relationships. It's akin to a rookie asking, "How can I gain experience if a sales organization requires that I first have experience?" Much is the same with a prospect that has potential but isn't ready to buy now.
The single most effective action I've found is to become an unexpected advisor to the prospect. Become another pair of eyes and ears she can utilize. For example, actively look for useful information she can use. When you run across an article or story about her industry, about her direct competitor, etc., clip it and mail it with a business card and a post it note that reads, "I ran across this and thought it might be of interest." That's all you write. Don't include, "I'll call you soon" or "Perhaps we can get together to discuss your needs." Those imply a self-serving motive that will nullify your intent. Additionally, if you learn of any new information, technique or product that will help her more easily perform her job let her know. Doing so will soon categorize you as a counselor in her mind, an ally, and potentially jump-start a sales cycle that otherwise may have remained dormant.
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