I have come across many articles recently that promote selling tips in this recession.  One common thread runs through all of them – chase smaller deals.  Here is an example from Inc.com – 5 Tips for Selling a Service Now:

“The big change for us in 2009 is that we are more flexible on minimum amount of an engagement that we’ll pursue,” says Gay Gaddis, the founder and CEO of T3, an Austin-based advertising and marketing agency that specializes in digital media. In years past, her firm only went after client engagements that were worth between $1.5 million and $2 million. Now, “some larger clients are breaking RFPs into smaller amounts,” Gaddis says, prompting T3 to pursue accounts in the $500,000-to-$1 million range. The company, which had $300 million in capitalized billings in 2008, is still selective, however: “We won’t take just any piece of business,” Gaddis says. “We really want to work with large and midsize companies that are making digital marketing really central to what they do.”

As a sales manager, this approach is counter-intuitive during booming economic times.  I could launch on RFP-based selling (really is quote writing), but I will refrain for the purpose of this post.

Right now we are seeing most companies pursue smaller deals as a means to survive the present economy.  It is a wise pursuit in that it will help keep people working, some cash flowing and new business developing.

However, the caveat in the pull quote is this – don’t pursue every piece of business.  Some deals, no matter how desperate, are not worth pursuing.  Many salespeople will chase a bad deal in a recession for the simple purpose of looking busy.  Forecasts are the means for monitoring effort and focus.  Each prospect should be discussed in detail to ensure that the salespeople are targeting the proper small deals.

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I read this line from an sales employment ad this morning:

Reps are NOT restricted by territory.

The unrestricted territory seems innocuous enough…maybe even valuable.  It usually isn’t.  As a salesperson, I would read this ad with some skepticism in that the company may be trying to add salespeople without a cogent management plan.

Back in my early years I took a job with a company that had no territories.  There were approximately 15 salespeople in there serving the local market.  What I learned is that the “old-timers” had effectively squatted on all of the accounts, whether they had an active relationship or not.  Since there were no defined territories (geographic, market, size, etc.) and weak sales management (completely hands-off), I was left to scavenging like a meerkat to find any lead.

The aforementioned line from the ad may seem like a benefit, but I would suggest that most savvy sales candidates will drill down on that topic for absolute clarity.

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Inc.com is celebrating its 30th birthday with some fascinating articles including an interview with Jim Collins.  The interviewer asked for his definition of entrepreneurship which involves a paint-by-numbers vs. blank canvas analogy.  However, the follow up question and answer was notable:

It has to do with your ability to handle risk, no?

Not risk. Ambiguity. People confuse the two. My students used to come to me at Stanford and say, “I’d really like to do something on my own, but I’m just not ready to take that much risk. So I took the job with IBM.” And I would say, “You’re not ready for risk? What’s the first thing you learn about investing? Never put all your eggs in one basket. You’ve just put all your eggs in one basket that is held by somebody else.” As an entrepreneur, you know what the risks are. You see them. You understand them. You manage them. If you join someone else’s company, you may not know those risks, and not because they don’t exist. You just can’t see them, and so you can’t manage them. That’s a much more exposed position than the entrepreneur faces. But there’s lower ambiguity on the paint-by-numbers path: very clear but more risky. The entrepreneurial path: very ambiguous but less risk. Of course, the truth is that it’s all ambiguous, anyway. If you think you can predict the future, you’re crazy.

That ought to get your mind racing this Monday morning.  As being someone on both sides of the proverbial fence, I know exactly what he is saying.  The key component to managing risk is seeing/knowing the risk.  Ignorance of the risk is tolerable to those who don’t possess the entrepreneurial spirit.

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Shrinking revenue reports are the fear of most sales managers.  This fear is further intensified during this economy.  There are salespeople who are attempting to leverage this fear by submitting an inflated forecast.  These salespeople provide forecasts that are filled with large deals that are welded to the 90 days out category.

The sales managers who buy into this approach are trading accuracy for enormity as they submit the aggregate forecast from their team.  I suppose the sales manager’s thought is that the salespeople will get shot before he or she is shot.  Perhaps, but the business pays a tremendous price for this obfuscation.

There are two antidotes to this inflated approach:  1.) Budget qualification and 2.) Salesperson close ratio.

Budget Qualification
Many salespeople suffer from a money weakness.  They have difficulty discussing price with prospects and customers.  This weakness is problematic in a strong economy, it is deadly in a recession.  Any salesperson who places a prospect into the pipeline needs to have the money portion fully qualified.  Any lack of clarity on this topic should immediately lead to the salesperson having to go back and clean up that bit of qualifying.

Close Ratio
Most sales managers know that each salesperson has a unique close ratio.  Some salespeople are overly optimistic and require a multiplier of <1.  Others are pessimists and typically close more than their forecast (there are far fewer of these salespeople, but they do exist).  The key is to know the historical ratio of the salesperson when analyzing their forecast.  If their close ratio is <50%, you know they best have a large number of suspects in the early stages of their pipeline.

One last note – sales cycles are extended in most industries so pipelines need to be extended also.  Since it is March, this seems like a trivial point.  However, if your normal sales cycle is 3 months and it has not been extended to 6 months, your salespeople do not have much time to establish their 2009 numbers.  The next quarter will determine whether it is a successful year or not.  This is an important point no matter how short your sales cycle.

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SellingPower.com offers up a spot-on short article about maintaining customer relationships in this economy.  The pressure on salespeople is extremely high right now in two regards – there are limited opportunities to close new business and the business world continues its radical information shift thanks to the Internet.

First off, companies have slowed down their purchasing, but they are still purchasing.  I think this fact gets lost in the doom-and-gloom reporting that saturates our senses.  The tactical truth is that salespeople are going to have to unhook business from their competition to increase their sales.  Many order-taking salespeople will fail miserably in this endeavor.

Second, prospects are far more informed than at any time in history.  They are able to research companies, products, services and solutions.  Companies that are small and nimble can use the Internet as a force multiplier to compete with larger companies.  Prospects no longer start out in discovery mode – their first approach is usually a fairly educated question and discussion about your solution.  The prospect probably has your competition’s value proposition sketched out also so salespeople leap right into an intense qualifying call.

These two factors make customer retention even more critical today.  The author of the article makes a salient point (my bold):

Little “r” relationships. These are the interpersonal relationships between members of a selling team and members of a buying team. They are built gradually, over time, and rooted in “a salesperson’s ability to demonstrate that he or she is trustworthy, competent, and credible as a business consultant and advisor,” says Emde. These relationships are most effective when they’re built not with just one or two people in the buying organization, but with an entire network of people who come to view the sales rep as a trusted business partner. To build little “r” relationships, Emde says reps must know how to establish credibility, build trust, demonstrate the value of the relationship on every call, and be savvy about identifying the right people with whom to forge connections.

What’s the cost of not building these little “r” relationships? When your relationships are weak, or you’ve eroded them with substandard performance, you leave the door wide open for your competitors, warns Emde.

Exactly.  I have seen this play out firsthand in the marketplace.  This problem is most evident with order takers.  They simply wait for the phone to ring and provide a quote.  This approach, in this economy, requires the company to be perfect.  Perfect product/service, perfect delivery, perfect terms, etc.  The second the perfection falters, a competitor moves in and the battle is on.

The key is to make sure you hire salespeople who have the ability to nurture the little “r’” relationships while closing the deal.  If you are not assessing your sales candidates, you are risking more than you know.

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I was recollecting about a job I took in which I felt I did everything right.  It is doubtful I did, but it is my recollection so bear with me.  I qualified the opportunity, the sale, the expectations and the ramp time.  All of the responses were a good fit to my abilities.

The ramp time was 6 mos. before getting to a steady revenue stream according to the hiring manager.  I knew I could beat that and I did by cutting it in half.  I had closed a handful of fairly sizeable deals within 3 mos. and was chasing a handful of large deals.

And then I was laid off less than 6 mos. into my employment.  There were other factors involved including the company losing some large customers, but I never even got through the ramp-up time.

The company got it wrong – they should have never hired me.

I’ve seen companies hire salespeople simply because they were from their industry, not because the salesperson was a good fit.  I’ve seen companies hire salespeople for one position and then try to force them into a different position once they start.  I’ve seen companies hire hunters and give them farmer tools.

The key is to prepare for your next sales hire.  I tell companies not to hire a hunter unless you are prepared for one to join your team (read: most companies are not ready).  The little things should be handled before the salesperson arrives (business cards, laptop, email, CRM, etc.).  The big things like product training, key accounts, support people, etc. should be the initial focus.  Finally, call reports, travel, presentations, etc. should be the last piece of the ramp-up piece.

Unfortunately, companies often fail at setting these targets up.  It is usually at this point that the compass starts spinning and the salesperson is in trouble.

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That is the number I continue to hear from salespeople in a variety of markets when I ask them how are sales?  That is a staggering number when you think about it.  Unfortunately, those are the times we live in for now.

I continue to believe that the best method for offsetting this decrease is to go take business from your competition.  Who are their top customers?  Those accounts must always be your top prospects in any economy.

In today’s economy, I believe it will be difficult to persuade companies to invest in new purchases.  However, if they are currently buying from a competitor, salespeople need to unhook the business.  The company has already committed to spending those dollars so the money issue is an easier qualification/justification.

If you are selling a new product or service to them, you best jump right into return on investment (ROI).  Features and benefits selling will lead you right into tirekicking paradise without any closed deals.

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Great title from Justsell.com, don’t you think?  From their monthly newsletter (sorry, no link):

Top 3 activities that can hobble a sales day…

1. Talking with people who can’t move the sales process along

2. Unnecessary research activities

What’s too much? There’s really no definitive answer. It’s particular to your sales world. Many people start to get a gut feel for when they should move on. The key is to act on it and make the call (rather than making sure every little thing is known before the call – fine line, of course). You might be surprised what you can learn by asking a straightforward question of the person who answers the phone or responds to an email.

3. “Crafting” or “drafting” a script, email, or letter

Needs to be done, but almost never during the money hours.

Always remember…

A real sales day is made of contact with people.

Number 1 is so important in this bad economy.  The tirekickers are out in force right now so qualifying decision makers is a top priority.  Safe to say that most decision making has been elevated to a higher level so salespeople will have to navigate up within a company.  Mid-level managers are probably upset with their loss of power so it take a tactful salesperson to elevate the discussion.

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I have noticed this of late – salespeople are having more discussions on their cell phone while in the office.  Maybe they go into a conference room, a hallway, lunch room, etc.  Is there a greater clue that they may be looking for  a new opportunity?  Granted, these calls may be nothing more than a personal call and not an employment opportunity.  However, I always become suspicious when I see that behavior inside an office.  Just an observation.

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These are skittish times, aren’t they?  I have seen this among reps and myself – every little item is scrutinized.  Communication, email, reports…I find myself looking for subtle clues in all of them.  Is a layoff coming?  How bad is it?  What is going to happen next?

These are not productive thoughts.  As a manager, how do you quell these fears?  There isn’t one move, tool or approach that will cure it, but a concerted effort will help to minimize your team’s anxiety.

Selling Power offers up an article that has some feel-good points that I question.  However, there is something in the article that caught my eye:

Don’t make promises you can’t keep. Your mother probably told you this growing up and it’s just as important today. Manning says she often sees managers make the mistake of promising a desired outcome rather than acknowledging uncertainty. For instance, don’t tell your staff there won’t be any layoffs at your company because you can’t possibly make that guarantee. “Make no promises,” says Manning. “Don’t build up false expectations because that just creates more fear.” Instead, be honest about what you know, even when – especially when – the news isn’t good. Your reps would rather have the hard truth than a pleasant lie.

Those last two lines are straight-up truth.  The best way to allay these fears is to be forthright with your team.  I believe managers often error in thinking their employees cannot handle the truth of the present situation.  This is a leadership mistake that creates distance between the manager and the employee.

I will close with the next suggestion from the article – it is a good one:

Start a blog. Blogging is a great way to keep your people updated because it has an informal, conversational feel and reps can check it at their convenience. Manning says she knows of several CEOs who are having “tremendous success” with blogging right now, using it as a vehicle to keep employees posted on what’s going on, answering their questions and correcting rumors. Sales managers, she says, could expand those topics to include sales successes, news about products and so on.

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