This Selling Power article title made me laugh – Are You Using a Funnel or a Sieve?  I laughed because my son is a hockey goalie so the word “sieve” carries a special horror.  That horror is compounded by the fact that we just returned from a hockey tournament in Winnipeg where I expected to hear some rowdy crowds and perhaps a sieve chant towards my son.

My fears were unfounded as the Canadians were extremely pleasant.

Hockey colloquialisms aside, this article makes many excellent points before turning into an advertisement.  This entire graph is valuable:

It’s an issue that makes sense from a cost standpoint as well. Karam says it costs about one-sixth the amount of money to nurture a lead that has fallen out of the funnel than it does to find a brand new one. Most sales managers know this but are so quarter-driven that funnel leakage tends to hold a low priority on their to-do lists. And until recently, that’s worked just fine. Prior to the recession, sales teams could “focus on the hot stuff and they’d make their numbers. Well, now there’s not enough hot stuff,” says Karam. In light of all this, he adds, “there’s been a lot of attention recently on recovering leakage and re-mining or re-farming leads.”

Finding qualified leads is an expensive process which is why I focus extensively on qualifying ability.  When you are hiring salespeople, there is no greater urgency then to discover the candidate’s qualifying ability.  It is the backbone of successful selling.

I couldn’t agree more with the statement that most sales managers are aware of “funnel leakage” due to their quarterly revenue responsibilities.  I would go further and say a percentage of the forecast error is funnel leakage and the other is blue-sky forecasting.  Many a rep has been known to submit an inflated forecast in the hope of keeping their job for another quarter.  I suspect the salesperson is simply buying time with the hope that they will close a large deal during that bonus time.  It rarely happens.

Re-farming leads is a valuable exercise for any sales department in any economy.  Again, the costs associated with new lead development are far greater than re-farming leads.  One question I often ask sales candidates is for them to provide me with an example of when they went back to close a “dead” lead.  This question provides some insight into the candidate’s tenacity, strategy and ability…and it is easy to spot a fabricated story.

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SellingPower.com’s article - Help for Your Pre-Call Prep – makes a bold statement in the opening sentence:

When you get right down to it, sales are won or lost on preparation.

I would argue that sales are won or lost on execution.  Give me a salesperson who executes flawlessly any day over one who prepares flawlessly.  Again, the context is in terms of where deals are lost.  Be that as it may, the article has an interesting statistic found in one of the later graphs.

At a time when relatively few initial discussions with a client are progressing further into the sales cycle (40 percent of organizations say only 25 – 50 percent of initial discussions progress to a presentation; 30 percent say 51– 75 percent of discussions do so, according to CSO Insights), the issue of pre-call preparation deserves some attention. After all, it’s the quality of your preparation that largely determines whether or not the client agrees to a second meeting.

Ok, I take umbrage with the over-emphasis on pre-call prep.  Salespeople who show up and throw up are the main reason suspects do not move into prospects.  I thought this number was shocking – up to 50% of initial discussions progress to a presentation.  This fact could be that salespeople are better qualifiers in lean economies.  Perhaps they are qualifying suspects more thoroughly to eliminate the tirekickers from their pipeline.

In other words, a lower number moving into the pipeline could be construed as better qualifying.

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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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Here is an interesting story from abcnews.com - What Do iPhones and Designer Jeans Have in Common?  The answer is found in the subheading - They Keep Selling, Even in Recession.

Here is a list from the article in regards to hot-selling products during this recession:

The iPhone
Designer jeans
Wal-Mart and Costco
McDonald’s
Internet access
High-definition TV sets

An odd list, wouldn’t you say?  The low-price options are logical, the other ones not-so-much.  The explanation from the article:

“Even in down times,” said Michael Gartenberg, vice president for strategy and analysis at Interpret LLC, “people still have some discretionary income. What happens is that they spend it more carefully.”

So they look for things that will last for them — which means, for instance, that a television set will look more appealing than, say, a vacation. “They’ll get several years of use from the TV,” said Gartenberg, “but when the vacation is over, well, you have your memories, and that’s it.”

Now that makes sense…though I have young kids so the memories of those vacations are worth quite a bit to me.

Recently I have found functional upgrades to be better sales approaches than outright new purchases.  What I mean is that companies are still investing in their production capabilities if there is a defined return on that investment.  This approach occurs in any economy, but it is the strongest play in this economy.

I have seen companies tighten spending in “new” areas, but continue to budget for enhancements in existing areas.  One such company I encountered was in the midst of a slowdown like many other companies.  The production team decided this was an opportune time for some needed upgrades to their capital equipment that normally would be in use for 3 shifts.  The salesperson got the deal to upgrade it and the customer got a better price since it didn’t have to be completed over a weekend.

This approach is consistent with the article – companies still have some discretionary funds and they are looking for long-term improvements to their bottom line.  As a salesperson, this is the first place to start your approach with a prospect.

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I was a psych major in college which seemed to be the perfect preparation for a sales career.  I believe it was.  To this day I am still intrigued by the psychology of selling which could truly be described as persuasion.

That background helps explain why I found this ManageSmarter.com article completely gripping - Mastering the Psychology of Persuasion.  You will have to read the entire article to appreciate the depth of it, but let me pull out a couple of points.

First one of the set-up questions:

• Are left-handed people more prone to some mental illnesses, accidents, or seeking positions of power?

And from later in the article:

And while these questions may at first appear to have clear yes or no answers, in reality, there are no definable correlations to them. All of these questions have exceptions to the rule. “It depends,” is the best practical answer. And yet, all answers you came up with in your head may have value if you’re in the sales and management profession.

Let’s take a look at some of these questions more closely. With regard to left-handed people and power: George H.W. Bush, Bill Clinton, and Barack Obama are all lefties. Power hungry? Maybe.

Ok, the left-handed piece hits close to home for me since my wife and son are left-handers.  Yet you see the point – discovering the prospect’s correlation is important for persuading them.

Here are the most recognizable persuasive elements we experience in society:

Habitual patterns. Trigger words or fixed action patterns, automatic behavior patterns, and biases help people organize thoughts and actions.
Consistency and commitment. MacDonald’s hamburgers taste the same from Russia to Denver.
Reciprocation. “I love you. Will you buy my guitar?” The person may be more influenced to buy the guitar as a way to return the gesture of the stated love. Guilt falls under this category.
Likeability. We like people like us. First impressions, and all.
Social proof. Everybody is buying, saying, eating, reading, etc., so I must also.
Authority/power. Law is law and rules are rules.
Scarcity. The more we want something and can’t get it, the more valuable it can appear.
Fear or gain. Research shows fear of loss is stronger than the desire for gain.

The last two are critical to successful selling.  Scarcity is a strong motivator for moving prospects through a qualifying process.  The beauty of it is this – it creates demand in the prospect’s mind in spite of the salesperson.  I have seen some grossly under-developed salespeople thrive based on the perception of scarcity of their solution.

Fear of loss is similar to pain.  The same principle applies here – people move faster to remove pain than to gain pleasure.  The importance of this principle cannot be overstated.  This fact is why features/benefits selling is wasted if the benefit does not remove pain or create the fear of loss.  If your salespeople can combine scarcity with the fear of loss in their qualifying, you will have one highly-developed sales team.

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This sales-focused article from the Salesopedia.com website discusses the power of telling stories when selling:

Think about it: If you were in the audience for another sales person’s sales presentation, which kind would you rather listen to: one in which the presenter simply recited a list of features and benefits, facts and statistics, or one that included a stimulating, engaging, riveting, or inspiring story about how you helped another customer solve a problem similar to the one with which you’ve been wrestling, or achieved an outcome you’re looking to achieve? Which would move you, and which would bore you? Which would be memorable, and which would be forgettable?

Stories are far more effective than feature/benefit data dumps.I used to work for a sales trainer who is a master of telling an engaging, purposeful story and people remember them.  In fact, one customer went through the training more than 5+ years ago, but he still remembers a very specific story about commoditization.

This approach is also supported by CopyBlogger in this post.  Brian couches the discussion around truth-telling which is clearly relevant in sales (though not as widely practiced).  The take-away:

But if people reject what you say, truth or not, you’re back where you started.

Guys like Buddha and Jesus had this problem.

The solution remains the same.

Tell a story.

The power in the story is the ability to make a direct point indirectly.  When dealing with difficult sales situations, this is a tremendous tool for a salesperson to use.  One other note – the salesperson’s ability to use this tool is evident in a well-structured sales interview.

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I receive many email approaches each day which often leads to studying each one’s strategy.  Here is the opening line from one I received today:

WANT TO GROW YOUR BUSINESS?

Lazy.  Insulting.  Those are the first two words that come to mind when I read that opening.  I suspect the author’s belief is that everyone will agree to the opening question so it will be effective.

It isn’t.

The opening approach needs to warrant the reader’s attention, but don’t do it in an insulting manner.  The question has a subtle intimation that the person doesn’t know how to do it…but you do.  That is a bad position in which to place yourself on the first approach to a cold prospect.

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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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We’re fans of Jeff Thull here at The Hire Sense and his latest article on the Salesopedia.com only supports our belief.  Anyone who has been in sales longer than a day has seen a sea change in the customer relationship over the past couple of years.  Rapid commoditization is a huge problem even for “unique” solutions.

Here is the crux of what is happening (emphasis mine):

Seeking competitive differentiation through increasing uniqueness and complexity can be a deadly double-edged sword, especially if building that differentiation exceeds the needs and understanding of your customers.  You and your competition may believe you have a high-value product or service, but if your customers can’t comprehend, calculate or measure that value, they see a sameness and will respond by ignoring the features they do not need or simply won’t care.

Many sales hours are wasted building differentiation that may, or may not, be of vital interest to the prospect.  This is also known as qualifying and it is in great demand in this economy.

Thull provides 4 suggestions for handling the downward spiral to commoditization.  Here is a taste of one suggestion:

In the complex sale, the search for a mythical buyer - “the decision maker” - is fruitless. Today the majority of decisions, quality decisions, are the result of a consensus building effort – an effort that the best of sales professionals orchestrate with multiple people either deciding on or influencing the decision to buy. It is your responsibility to manage the issues of the transaction from multiple perspectives. You must connect your unique value offer to each individual in the context of his or her job responsibilities and their own self-interest. Using the same approach from middle management up through the C-Level will prove to be futile.

Read the entire thing…

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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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