Beruflich Dokumente
Kultur Dokumente
THE TOP
Selling Strategies from
the Top is a must read
for anyone involved in
professional selling and
sales management
Compiled by
Rob Hartnett
Contains valuable information for today’s market whether you are a small
business selling to big business or a large business involved in complex sales
Selling Strategies from the Top
Contents
4 Contributor Biographies
73 Info n on Miller
75 Info n Selling Strategies Int l
76
*Miller Heiman Inc
Copyright by Miller Heiman, Inc. All rights reserved. No part
of this report may be reproduced in any form or by any electronic
or mechanical means including information storage and retrieval
systems without written permission from the publisher.
Publisher
Miller Heiman, Inc.
10509 Professional Cr., Suite 100
Reno, NV 89521
877‐678‐3389
www.millerheiman.com
**Selling Strategies International
Copyright by Selling Strategies International . All rights reserved. No part
of this report may be reproduced in any form or by any electronic
or mechanical means including information storage and retrieval
systems without written permission from the publisher.
Publisher
Selling Strategies International
Suite 156 66 Kingsway
Glen Waverley, Victoria 3150
61 3 9560 1188
www.selliingstrategies.com.au
Contributors
Rob Hartnett
Rob Hartnett is the Managing Director of Selling Strategies International
and a thought leader in sales, marketing and leadership in Australia. He
has won numerous awards for sales and marketing leadership and is the
author of several books in this area. Rob is also known as an
inspirational and entertaining speaker on sales performance & business
growth.
Sam Reese
Sam Reese has led Miller Heiman to its position as the foremost thought
leader and innovator in the strategy, process and training that drives
sales performance. Since he joined the company in 2000, Sam has grown
Miller Heiman’s revenue by more than 150 percent, expanded product
offerings and e‐learning initiatives and amassed a partner network of
world‐class sales consultants. His passion for achieving results has
inspired individual team members to strive for top performance, and has
contributed to a culture based on ethics and integrity. Prior to joining
Miller Heiman, Sam held executive leadership positions at British
Telecom, Kinko’s and Corporate Express. His experience and success in
sports, business, technology and leadership give him a unique
perspective on what it takes to win in today’s competitive business
environment.
Bill Golder
Bill Golder has extensive sales and sales operations experience working
within complex, multi‐channel,matrix management organizations. His
primary expertise is leading business‐to‐business sales of professional
services, as well as multi‐unit operations management. He has proven
success in leading key change initiatives related to sales compensation,
organizational realignment, sales optimization, training, product
development, and operational improvement. His key strengths are in
driving results, developing and implementing strategy, and managing
and leading sales teams. Bill has a reputation for taking on tough
assignments and successfully turning around difficult situations
Tim Call
Tim Call brought to Miller Heiman impressive experience as a top‐
performing sales manager with a strong track record of sales leadership
04
resulting in double and triple digit percentage increases in revenues.
Tim’s experience includes both B2B and B2C sales management in large
company and startup environments. He maintains a proven record for
closing large, complex deals and has a sound reputation for strong
customer orientation. As executive vice president, Tim leads Miller
Heiman’s efforts and works with the sales vice presidents and sales
consultants to develop stronger and more productive relationships with
the company’s accounts. Tim received his Bachelor of Arts in Business
Administration from the University of San Diego, California
Damon Jones
Managing Director, Strategic Accounts
Damon Jones heads Miller Heiman's global strategic accounts program.
In his role, he develops and implements the strategy behind Miller
Heiman's growing business within existing accounts. Since joining the
company in 1999, he has been instrumental in establishing a strong
international presence for Miller Heiman. His previous roles in the
company included COO, president and managing director of
international, and vice president of international sales.
Damon has more than 25 years of industry experience covering all facets
of business and sales management. His involvement with Miller Heiman
began while at Guardian Royal Exchange Assurance, where he
implemented the Strategic Selling® program as part of an innovative
move to relationship marketing. During his tenure there, the company
saw sales revenues double and sales expenditures cut in half. Damon's
background includes account management, sales management, and
group sales training management.
Robert B. Miller
Thirty years ago, Bob Miller developed and introduced
Strategic Selling®. Since then, his passion for elevating the role of the
sales profession has resulted in several additional methodologies, all of
which are incorporated inThe Miller Heiman Sales SystemTM. He
continues today in a consulting and advisory capacity, focusing primarily
on product development. His mentorship drives innovations in sales
performance that are consistent with the vision for the company he
started three decades ago.
05
About Selling Strategies Interna�onal
Selling Strategies Interna�onal are Australian based Sales Performance
Specialists to Business. As Miller Heiman accredited sales performance
consultants Selling Strategies Interna�onal consult, design and deliver
sales performance strategy and training solu�ons to clients in Australia
and overseas.
06
Introduction
This is eBook is for those who employ, manage or earn their income as
sales professionals.
The specific market for this eBook are those involved in complex business to
business sales whether they involve products, services or a combination of
both which is most common today. You don’t need to work for a large
organisation however the content is focused on those that sell to large
organisations.
The eBook is broken into three sections. Section one is for senior executives
and business owners, Section two for professional sales managers and
Section three for professional sales people. However all three sections are
valuable for anyone involved in the sales process in their organisation.
Good reading and may your selling always take a professional approach.
Rob
Rob Hartnett
Managing Director
Selling Strategies International
Melbourne, Australia
07
Secrets of Winning
Secrets of Winning Sales
Sales Organisations
Organisations
What are the habits of Winning Sales Organisations and
how can you acquire them
Every year for the past five years, Miller Heiman a leading sales
performance company has surveyed sales professionals –
executives, leaders and representatives – to better understand what
differentiates the most effective sales organisations.
This global study contains the input of more than 17,000 participants
to date and is considered the world’s largest ongoing study of
complex, business-to-business selling and sales management
practices. Importantly 46% of the respondents were in sales
management/leadership positions with the balance spread between
senior executives 12%, sales people 32% and human resources,
learning & development roles making up the balance of 10%.
08
Customer Centric Systems
WSO’s excel in the following key areas which are represented in the
diagram below.
Firstly they have the customer at the centre of everything they do.
This is not a clichéd statement. WSO’s understand their customer,
their customers customer, their customers competitors and their
customers key industry issues.
Secondly they also have sales systems that are scaleable and
transportable meaning you can move within divisions or offices and
use the same sales systems which ensures consistency and leads to
improvement in critical areas such as sales forecasting.
WSO’s have systems for creating opportunities, managing
opportunities they deem worth pursuing and systems for managing
relationships once they have won the account they desire.
This is very important in today’s business world where people are
more transient than ever which often results in key account
knowledge walking out the door.
WSO’s also have a consistent approach to protecting and growing
their strategic accounts. This goes way beyond just organising the
sales process. WSO’s align key stakeholders, such as sales,
marketing, product management, and finance with the strategy.
09
An implication for financial services organisations is to maximize vast
amounts of customer information to create more effective sales
cycles. This means an alignment of CRM systems with consistent
sales process and methodologies so they act in a seamless way
which today thankfully should be a thing of the past for those using
leading CRM tools such as Salesforce.com or Microsoft Dynamics for
example.
Internal Systems & Processes
Thirdly they have extensive internal systems that focus on ensuring
their organization and importantly the people that work within their
organization in many cases the biggest assets the organization has
are surrounded by a culture that ensures they can deliver the best
results to their customers.
10
A Formalised, Compelling Value Proposition
According to Tim Call, Miller Heiman’s executive vice president of
strategic accounts, “today buyers are more sophisticated; they’re
bringing in more salespeople, comparing them, and saying, ‘The only
difference is price.’
11
Sales Cycles are Involving More People
While most respondents said they must persuade four to five people
in the typical sale, more than a third report that they need to persuade
six or more people for each opportunity they pursue. The number of
decision makers involved with each sale shifted up by 16 %
compared to last year’s study.
The reason for this increase is the buying process is becoming more
complex, more technical and often include procurement departments
often consult back to IT or other specialist areas of the business
when they make buying decisions.
Secondly, in today’s economy, buying decisions are being escalated
up one or two management levels.. According to Bill Golder, Miller
Heiman’s executive vice president of sales, “They’re getting better at
internal collaboration in decision making.” That not only means more
people involved, but more knowledgeable people.
12
In 2008, the figure decreased to 26 %. It is not easy to go back and
get feedback from someone who has just rejected you. But it is
definitely worth pursuing. You need to take a long term view to major
accounts so you learn what the issues are and you can leverage this
knowledge into new opportunities. In 2009/10 this is even more
important, even when you win. You may be surprised why you won!
13
great sales performers despite the fact that there are today many
profiling tools that can make this exercise simple and easy to execute
on a regular basis for most organizations.
The key is to find out which of your sales team should be on which
account and then to find a way to manage and reward the hunters
and farmers differently and to create a structure that capitalizes on
the strengths of both types and then train them accordingly.
14
Another area of difference was that of training in channel or dealer
management. In North America & Europe there is more of a focus on
developing channel sales managers to understand the dynamics of
channel members and how developing them as profitable businesses
is to the benefit of the suppler. In Australia and Asia especially,
channel managers are often those from strong direct sales
backgrounds who are given a channel to manage as a career
progression without fully understanding the different dynamics of
building healthy channel relationships built on partnerships as
opposed to winning big deals.
Summary
Many organizations do well in a number of the key components in the
WSO Wheel above. What makes the difference is that WSO’s
consistently do well in all components all the time. As we move into
an uncertain economy globally the activities of WSO’s provide
valuable direction for sales leaders to focus.
15
MUSCLE BUILDING
THE SALES TEAM
by Sam Reese, President and CEO
I was speaking at a client event a few weeks ago when hands started going up during
my presentation. The key topic sales leaders wanted to discuss that day was my opinion
on how to determine whether someone on their sales team is going to make it or if it is
time to let them go. It seems this challenging economy has made it difficult for average
performers to hide among the weeds. This is a GOOD THING. In high tide times, it’s easy
to have a great smile and a pleasant demeanor to keep a high income sales position. But
when things get tough, the pretenders fear exposure and will sometimes head for safer
careers. The hard part about muscle-building the sales team is that things aren’t always
what they seem on the surface. You can’t afford to make a bad decision. Performance
evaluation isn’t just looking at their quota attainment and making cuts. If it was that
easy, then we would have no need for sales management.
Over the years, I have seen great sales organizations look at performance as a combination
of three essential things: skills, activities and results. This performance triangle can be
a simple way to help separate the wheat from the chafe in any sales organization. Skills
are best described as the acumen and intelligence to be able to perform the duties of
the job. It is more than just product knowledge and proposal writing. It pertains to the
skills required to navigate complex sales situations: the ability to work within one’s own
corporate structure, the understanding of how to connect company capabilities with
customer requirements, and so on. Activities are the day-to-day movements that take
the business forward such as calling on customers, prospecting, performing follow up
16
What Sales Leaders are Doing Now
actions, organizing next steps, etc. Old school sales managers used to have a myopic
focus on activities. They have this “it’s a numbers game’ mentality. But over the last 10-
15 years, many sales managers have completely ignored any sort of activity monitoring
because it seemed too invasive. You definitely need to know if activities are happening.
Otherwise, you will be confused when you try to make adjustments. And results are
simply the metrics that measure success - quota attainment, growth, new business,
and income.
Effective sales leaders need to look at all three of these factors when they evaluate
their teams. The key guiding principle in this process is that 2 out of 3 isn’t too bad. If
any one salesperson is capable in two of the three categories, then they should remain
on the team. If they are only capable in one of the three, then it may be time to go. For
example, a salesperson with high activity levels and critical skills is a keeper - even if
he’s not making the numbers yet.
Conversely, if a rep is making his numbers but has weak skills and low activity levels,
then there is probably a huge opportunity cost associated with keeping this person in
his current role. Maybe his territory is rich with opportunities or maybe the customer
base continues to deliver even if the salesperson is not that strong. A motivated
salesperson with strong skills and high activity levels will most likely take this territory
to new heights.
Inherent in this discussion is the role of the sales manager. A person who brings the right
skills and activity levels to the job can succeed in almost every situation. It’s up to the
sales manager to make these assessments and to stand behind them when questioned
about the success potential of one of his salespeople. The sales manager needs to be
the one who makes this determination of his team members. At the same time, he also
needs to coach to ensure his A-players succeed.
17
Treating Strategic
Customers as
Corporate Assets
by Robert B. Miller, Founder, Miller Heiman
The reality: “In addition to traditional corporate assets like people, property, plant,
and equipment, one of the biggest -- and often overlooked -- assets of a company is
its strategic customer accounts.”
S
everal years ago, Brothers Gourmet Coffees Inc., business quickly. And there are trickle effects, including a loss
based in Boca Raton, Florida, saw its annual coffee of credibility and reputation in the marketplace, which could
production plummet from nine million pounds to lead to additional defections. Moreover, Wall Street takes a
300,000 pounds, virtually overnight. The reason? Proctor dim view whenever a company loses a major customer. When
& Gamble, which had been its largest customer, decided Quest Diagnostics, a multibillion-dollar provider of medical
to move production in-house, leaving Brothers in the testing services, lost a major contract with UnitedHealthcare
lurch. As a result, the coffee wholesaler had to shutter in 2006, the company’s stock fell 14 percent. (Meanwhile,
its manufacturing plant in Houston, which had been in Laboratory Corp., which picked up UnitedHealthcare’s
operation since the late 1950s. business, saw an uptick in its stock price.)
The defection of a key customer is every executive’s nightmare. Given all the dangers of losing a key customer, it’s amazing
In the worst of cases, as with Brothers Gourmet Coffees, how little attention many companies pay to keeping their major
the loss can be disastrous if the company can’t replace the accounts. Amazingly, some firms sometimes realize they’re
www.millerheiman.com
18
Treating Strategic Accounts as Corporate Assets
in trouble only after a big customer has already switched of having to educate those customers who are unfamiliar
assets, the subject never includes arguably the biggest For those and other reasons, customer turnover, or “churn,”
asset of any company – its customer base. Thus many is a huge issue in many industries. In particular, it plagues
executives have a good understanding of how to manage many consumer markets, including financial services;
people, property, plant, equipment and even intellectual insurance; cable, direct TV and Internet services; magazine
property, such as patents, copyrights and trademarks. publishing; and so on. In banking, for example, one estimate
1
But they generally know painfully little about managing is that the average annual defection rate is 12.5 percent.
important customers. That’s a huge folly because the And the situation is more than twice as bad in the wireless
defection of just a handful of major customers can cripple industry. The annual churn rate for cell-phone subscribers
even a large corporation. Sometimes, as with Brothers in the United States has been estimated to be somewhere
2
Gourmet Coffees, the loss of a single strategic customer in the range from 26 percent to 34 percent. In other words,
can bring a business to its knees. wireless businesses are losing more than one out of every
Understanding Customer Churn people who switch services tend to be higher margin because
3
Customer defections inflict damage to a company in a they use more add-on applications like picture messaging,
number of ways. Obviously, there’s the drop in revenue and the average cost of acquiring a new customer ranges
from the loss of business, but there are also a number of from $250 upwards.
potential clients think twice about doing business with you. Not surprisingly, customer churn is wreaking havoc with the
In addition, the cost of finding new customers to replace bottom line of many companies. A recent study of the Asia-
the lost revenues can be considerable. The general rule of Pacific region, for example, found that customer turnover was
4
thumb used in many markets is that the cost of acquiring costing firms there $66 billion a year. That figure includes
a new customer is five times that of retaining an existing various B2C businesses such as telecom, insurance, travel,
one. But in some industries, that cost can be much higher and medical services. Unfortunately, customer churn hasn’t
if, for example, the market is saturated and it’s difficult to been studied as extensively for B2B selling, but the dynamics
get the existing customers of other suppliers to switch are likely just as bad, and they could be significantly worse,
their business to you. Acquisition costs include – but are particularly for complex deals that might involve a team of
not limited to – marketing and advertising costs, sales salespeople working together to land a single account. In
expenses (including commissions), and the costs of signing such cases, it could easily take a company more than a year
up and servicing new accounts (in particular, the expense and substantial resources to replace the loss of a single
www.millerheiman.com | 1.877.678.0274
19
Treating Strategic Accounts as Corporate Assets
customer – or to woo back the lost business. When Coca- Amazingly, though, many salespeople still don’t get it.
Cola lost Burger King’s business to Pepsi-Cola in the early They will spend their time pursuing even “pie in the sky”
1980s, it took Coke several years of planning and strategizing prospective deals instead of working hard to secure their
to regain that major account. existing accounts. But even a slight improvement in retaining
Losing a key customer has always been a big headache, research by Frederick Reichheld of Bain & Co., the strategy
but today the loss is all the more painful because of consultancy based in Boston, just a 5 percent reduction in
increased pressures. As a result of greater globalization, customer turnover can lead to an increase in net profits by as
6
the competition has grown fiercer than ever before. In the much as 20 percent. In the banking industry, that same small
7
past, rival vendors might have been nipping at your heels reduction in churn can boost net profits by up to 80 percent.
eight hours a day, but today that pressure is constant: the Given such statistics, I’m continually perplexed at how little
Internet and foreign firms have now made competition attention many companies pay to retaining their existing
a constant threat, 24 hours a day, 365 days a year. You customers. And I am absolutely shocked by how lightly
simply can’t rest for a moment because you could easily some organizations treat their most important accounts –
lose a customer. “It takes years to win a customer and only those customers that are essential for their business.
executive and author of “Good Service Is Good Business: 7 Interestingly, firms have all sorts of processes for handling
Simple Strategies for Success.” And when you do lose any their corporate assets – excess cash, various properties,
business, it’s all the more difficult to replace it. and so on. They might, for instance, have an entire
To exacerbate matters, customer loyalty in many industries and the CFO is typically held accountable for that activity.
is on the wane. A recent study of British wireless customers, But companies don’t always look at important customers in
for instance, found that the defection rate had increased the same way – that is, as corporate assets. In fact, many
5
from 33.5 percent in 2005 to 38.6 percent in 2007. That’s organizations consider customers to be basically the sole
an increase of more than 15 percent in a relatively short responsibility of the sales department, and the chief sales or
period of time. In the B2B arena, as your customers are marketing officer is held accountable. But that’s just asking
finding themselves under increasing pressures from their for trouble, because certain customers are just as important
customers, they are in turn demanding more from you; and to a business – if not more so – than those other, traditional
if you can’t keep up, they will find another vendor that can. assets. As such, those customers need to be managed,
In short, no deal is safe in today’s world. Even contracts nurtured and grown, just as with any other crucial asset. And
that in the past might have been slam-dunks are now being that process needs to have the attention of the CEO, COO,
www.millerheiman.com
20
Treating Strategic Accounts as Corporate Assets
Not Created Equal Whenever I’m explaining the concept of “strategic accounts”
In today’s world, all customers aren’t equal. The well- to executives, I always ask them this question: when you’re
known adage is that 80 percent of a company’s business lying in bed in the middle of the night and you can’t sleep
might come from just 20 percent of its customers. For because you’re worried about work, what customers are
some firms, the breakdown might be 70/30 or 90/10 you usually thinking about? Often, the list might be as short
instead of 80/20, but the point is that a minority of your as three or four accounts and, interestingly, there’s often a
customers will usually account for a proportionately larger uniformity of opinion about the names of those customers.
fraction of your revenues. Moreover, just a handful of Recently, I had lunch with a friend of mine who’s the head of
customers might be absolutely essential for your success; the U.S. operations of a large Japanese corporation. When
those firms are your “strategic” accounts. I asked him the “awake in the middle of the night” question,
Every business has them. I don’t care whether you’re and everyone on his executive team who was at the lunch
a “mom and pop” dry cleaner on a street corner or a quickly nodded their heads in agreement.
number of customers who can, quite simply, make or break Strategic accounts are so important that not just the sales
your business. Thirty years ago, in the early days of Miller organization knows about them; everyone, including the
Heiman, I was well aware that 65 percent of our business CEO and COO will recognize their importance. But the larger
was from one customer – Hewlett-Packard. So I made sure point is this: because strategic accounts are crucial to your
I had all my bases covered at that account, and I would company’s success, they can’t be treated like any ordinary
personally spend two or three days out of every week at customer. Remember that they are your corporate assets –
HP’s various field offices. your company’s crown jewels – and they must be managed
in that way.
largest sources of revenue or profit (although they often So, for starters, the management of strategic accounts has
are). A “prestige” customer could also be a strategic to have the attention of a high-level executive. Ideally, you
account. Years ago, when I was a manager at Kepner- need a very senior person in charge. At Miller Heiman, that
Tregoe, a consultancy that specialized in executive problem individual is Tim Call, the executive vice president for strategic
solving and strategic planning, one of our clients was Rolls- accounts, who manages various teams that interface with
Royce’s jet-engine business, and we worked hard to retain our different strategic customers. Call reports directly to
that account because it provided a special cachet that Sam Reese, the CEO of Miller Heiman. At a client of ours
established our firm in the marketplace and helped us to – a large shipping and logistics company – the president
attract new business. himself oversees the overall process, and each member
www.millerheiman.com
21
Treating Strategic Accounts as Corporate Assets
of his executive circle is in charge of at least one team that Remember that although revenues are important, doing
manages a strategic account. Those top executives are business with a customer should always be profitable.
called “sponsors.” They work with the salespeople and Otherwise, the relationship isn’t win-win. That’s why when
others on their team, and they attend all meetings to keep Bank of America CEO Kenneth D. Lewis wanted to increase
up-to-date on the status of that particular customer. shareholder value back in early 2001, he emphasized
The important thing to note here is that any program for Global Corporate and Investment Bank unit began to
managing strategic accounts must be owned, driven, and target key customers, it didn’t pursue the low-margin
overseen from the top. The responsibility can’t reside with relationships it had with large corporations like Wal-Mart
the head of the sales operations or the chief marketing and IBM. Instead, it focused on more profitable deals with
officer. It has to reside in the C-suite because you need other clients, specifically those companies that needed
corporate executive sponsorship. Only someone at that global treasury and cash-management services (for
level can help perform certain crucial tasks, including the example, funds collection and financial forecasting) as well
following: 1. Evaluate the strategic importance and potential as investment-banking services. The results were stunning:
of accounts to determine a list of strategic customers, 2. For Within two years, revenues for the Bank of America unit
each strategic customer identified, formulate and implement had fallen 4 percent but operating profits had increased 12
an account strategy that is consistent with the company’s percent and shareholder value added had nearly doubled.
overall business objectives, and 3. Get resources allocated Moreover, the business unit had gained “lead bank” status
that will help reach those objectives. at more than one third of its targeted customers, up from
8
just 12 percent in 1999.
customers. Companies need to use the criteria that make can be just as important – if not more so -- than current
the best sense for their own overall organizational goals. business. To assess those opportunities, you can simply ask
At Miller Heiman, we use five criteria for selecting strategic customers for their estimates of how much of their business
accounts, namely that the customer must: is being handled by other suppliers. National Gypsum Co.
1. Be an existing account. uses that approach and reports that it receives accurate
2. Have the ability to generate revenue in the coming year. figures more than 90 percent of the time. Of course, some
3. Provide a win-win environment. customers will want to know what’s in it for them, that is, what
4. Desire a long-term relationship. they’ll receive in return for their cooperation. The obvious
5. Provide access to all buying influences (that is, access answer is that the data will help you respond better to their
to key execs at the customer firm). future needs. But Lubrizol Corp., a manufacturer of high-
www.millerheiman.com
22
Treating Strategic Accounts as Corporate Assets
performance polymers and specialty additives, provides just a handful of customers for the first year of our strategic
another incentive. Lubrizol will often encourage a customer accounts program and then we’ve continued to expand it on
A strategic account could also be a customer who has involving sales, marketing, operations and other functions
given you a black eye in the marketplace, regardless of the that are pertinent for that particular account. For example,
volume of his business. Consider Jeff Jarvis, a journalism if your relationship with a customer involves multiple
professor, who might at first glance seem like your typical structured deals that are specified in complex contracts,
Dell customer. But Jarvis is a popular blogger, and after he your team needs to include people from your finance and
reportedly received a defective laptop computer from Dell legal departments. Each of your strategic customers needs
he wrote about his experiences in postings entitled “Dell to assemble a similar cross-functional team that will then
Hell.” Soon Jarvis’ ongoing saga was being covered by other interface with your team. The members of the customer’s
blogs as well as by the mainstream media, unleashing the team will depend on the specifics of your relationship. If,
wrath of other disgruntled customers. As the tide of negative for example, you provide value by offering just-in-time
press grew, Dell rightly recognized that the situation wasn’t delivery, then your customer should assemble a team
simply going to blow over by itself. In response, the company that includes a logistics manager and head of the supply
assembled a cross-departmental team to actively scan blogs chain operation. Ideally, the members of your team would
so that it could defuse customer issues before they became have their corresponding functional counterparts on the
major problems, and Jarvis was invited to Dell headquarters customer’s team.
none other than Michael Dell, company founder and CEO. To encourage customers to participate in your strategic
A company might easily have a dozen or more strategic to establish a long-term relationship in which you’ll be
customers, but my strong recommendation is that you select providing direct access to key people in your organization.
no more than a handful for the first year of your program. In other words, the customer will gain a window into your
It’s a matter of resource allocation. Remember that strategic operations – what products are coming down the pipe,
customers need to be treated like corporate assets, so you areas in which you’ll be investing in the future, details of your
want to start small because doing things the right way for competitive strategy, and so on. In short, the huge incentive
even a handful of strategic customers will take an enormous for a customer to participate is that they will have access to
amount of time and effort. At Miller Heiman, we selected inside information that will enable them to implement your
www.millerheiman.com
23
Treating Strategic Accounts as Corporate Assets
products and services better to maximize their return on of electronic components; it began offering services to help
their investments. However, as a cautionary note, you should coordinate its customers’ supply chains and to perform
hold off before formally announcing to customers that you’ve engineering design work. All that should have helped make
established a strategic accounts program until you’re sure Arrow become a more important business partner, but a
that you’ve worked out all the kinks. That is, you might refer decade later it made a startling discovery: the customer
to the program internally but not let the outside world know companies that were using those important services on a
about it until you’re sure that it’s ready for prime time. regular basis didn’t even know that Arrow was providing
10
them! The crucial thing here is that you and the customer
Moving Up the Hierarchy need to have an open dialogue to determine your true position
One of the first tasks for a strategic accounts team is to on the buy-sell hierarchy. Not only will that conversation help
determine the organization’s true position on the buy-sell correct any misperceptions, it will also help build trust.
perception of what the seller does. From the lowest to the Next, you must develop a plan that will help you either
highest level, the buyer could view the seller as secure your position on the hierarchy or get you to a higher
The process of determining your position on the hierarchy a customer’s loyalty increase, the customer will also be
might not be as clear-cut as it may seem. Sometimes, you more willing to endorse your product in the marketplace,
might believe that you’re on level 3 but your customer thinks collaborate with you on new product development, and
you’re only at level 2. That’s crucial information because, even invest in your firm. Simply put, a higher position in
if you hadn’t learned of the discrepancy, the mismatch in the hierarchy makes you more indispensable and less
perceptions could have eventually led to your losing the vulnerable to losing the customer.
mistakenly been harboring an overly inflated view of the Consider the strategy of KLM Cargo, a unit of KLM Royal
value you’re delivering. Other times, the customer might Dutch Airlines that supplies cargo space on aircraft.
not have a full appreciation of your importance. Late in the Customers viewed this service as essentially a commodity
1980s, for instance, Arrow Electronics tried to move up the (that is, level 1 of the hierarchy). So KLM worked hard with
buy-sell hierarchy by becoming more than just a distributor a particular market segment – those firms that needed
www.millerheiman.com
24
Treating Strategic Accounts as Corporate Assets
to transport perishable goods – in order to move up the not saying that no company should ever lose an important
hierarchy. For those customers, KLM Cargo began to provide account. Some defections can’t be helped, for instance, if a
point-to-point service: initial pickup by truck to a warehouse, relationship is no longer win-win and the customer isn’t willing
transportation by plane, and then storage in a warehouse to work with you on correcting that. The problem, though,
followed by final delivery to the customer. KLM Cargo also is that many firms don’t take the necessary precautions to
offered three levels of service -- fresh regular, fresh cool, and avoid being caught off-guard. At a minimum, companies
fresh supercool -- depending on how perishable a product need to watch out for the following five common traps.
is. A flower trader might, for example, opt for “fresh cool”
service to transport orchids while a fish wholesaler might 1. Becoming complacent. The loss of a customer to your
choose “fresh supercool” for sushi-grade tuna. As a result, biggest rival is actually more common than you might think.
KLM Cargo was able to reposition itself from a commodity Remember how Coca-Cola initially lost its business with
supplier to a provider of an end-to-end business solution, Burger King to Pepsi? Pepsi had shrewdly told Burger
11
thus moving itself significantly up the buy-sell hierarchy. King that, “You’ll never be number 1 with Coca-Cola
The ideal situation is when the customer is strategic to you be number 1 with us.” And that’s how even entrenched,
and you are strategic to the customer. The perfect example leading vendors get usurped. Sometimes, a company
of that is i2 Technologies’ relationship with Dell Inc. Based might be the only game in town – it might, for instance, have
in Dallas, i2 sells sophisticated supply-chain management a proprietary technology – but then lose that edge as the
solutions that enable Dell to efficiently assemble computers market matures and competitors offer competing products.
that consumers can customize and order online. Dell’s The classic example here is Digital Equipment Corp., which
very business model depends on the efficacy of i2’s dominated the market for minicomputers during the 1970s
products, such that the fates of the two companies are fairly and 80s. But DEC’s arrogance and disdain for smaller
Avoiding Common Pitfalls have a computer in his home” – left the company woefully
Given all the ramifications of losing a major customer, I unprepared for the coming PC revolution. Eventually DEC
am continually astonished at how few precautions some was acquired by PC maker Compaq, which itself was later
companies take to guard against that possibility. And it’s merged with Hewlett-Packard.
surprised) after it loses a major account. Whenever that Part of the problem is that the leading company in a market
happens, my immediate reaction is that a number of people frequently gets tagged as being arrogant. “They’re getting
just didn’t do their homework. But don’t get me wrong – I’m too big for their britches” and “they’ve become difficult to
www.millerheiman.com
25
Treating Strategic Accounts as Corporate Assets
work with” are the common complaints, whether they’re • Are there any basic issues that we need to address
justified or not. In fact, some customers will even look for that for the customer?
part as a sign of your supposed arrogance. So, especially Note that the questions probe the overall process being used
when you’re the leader in a market, you almost need to bend to manage the account as opposed to any specific items.
over backwards to fight even the slightest perception that A common mistake that executives make in performing a
you’ve become arrogant or complacent. Otherwise, you review is to start by telling the account manager, “Tell me
leave yourself vulnerable to the competition. what’s going on here.” And then after being given the status
2. Succumbing to denial. Interestingly, sales reps are I’d do the following.” But that type of approach only leads
often the last people to realize that they’re in trouble with to account managers feeling like they’re being second-
an account. The problem is that they misread the warning guessed. In other words, when conducting reviews, you
signs, or they go into denial. In their minds, they might want to coach people so that they can figure out on their
mistakenly assume that just because an account has been own what they need to do; you don’t want to do that thinking
with them for years, that customer will remain loyal. And for them.
charge of your strategic customers, because you don’t 3. Missing a warning sign. Whenever there’s an important
want to end up paying for the mistakes of a sales rep or change at your or your customer’s company (a reorganization
account manager who’s in denial mode. or shift in strategy, for example), you need to follow up to
ensure that all your bases are still covered. One of the most
The team should regularly conduct account reviews that common ways to lose an account is through a change in
will force account managers to confront reality. Some of personnel – say, for instance, that a key executive at your
the types of basic crucial questions that need to be asked customer’s firm leaves. Remember that the people at both
include the following: your and the customer’s company will frequently change.
• Do we have our bases covered with all the buying In some industries, for instance, the annual turnover rate is
influences? For example, do we know who gives more than 25 percent (and sometimes as high as 50 percent)
final approval for our deals? for sales personnel. And this is yet an additional reason why
• What are our strengths that we can leverage in having a team of people to handle your strategic accounts
serving this account? makes so much sense. When an account manager leaves,
• Do we know what the customer is trying to fix, for example, the rest of the team members will still be able
accomplish, or avoid by using our solution? to provide a reassuring sense of continuity to the customer,
• What are the red flags for this account? helping to ensure that business will proceed as usual.
www.millerheiman.com
26
Treating Strategic Accounts as Corporate Assets
Again, regular account reviews can be a very effective program, because they view it essentially as free help in their
mechanism here, helping you to catch any early warning efforts to strengthen a customer relationship.
customer’s business results. As discussed earlier, you 5. Failing to get support from the top. As I mentioned
should always know where the customer perceives you earlier, a program for managing strategic accounts must have
to be on the buy-sell hierarchy. In addition, you need to support from the top of your company. Ideally, the CEO, COO
have a plan either for securing that position or for moving or some other C-suite executive would be in charge, and that
up a level. The account reviews should then take a hard person would get other high-level executives to participate.
look at your progress in that process. Say, for example, The surest way to strengthen the relationship between
that for a particular customer you’re currently at level 1 your and your customer’s firms is to get top executives at
(delivering a commodity that meets specifications) but your both organizations involved. But the top managers at your
plan is to move to level 2 (delivering “good” products and/ customer companies won’t be likely to participate if they
or services). Then you need to continually monitor your don’t see a similar commitment from the executives at your
your implementation of just-in-time delivery enabling that 6. Relying on defense instead of offense. Sales managers
customer to slash its inventory costs? will often tell me about an important customer that they’re
4. Not obtaining “buy in.” Although every company should “What should we do?” I’m sorry to report that, at that stage,
set up a program to manage its strategic accounts, the they may have already lost the account and even a flurry
process can trigger resistance from the sales group. At of heroic “firefighting” activity won’t be enough to save it.
worse, a turf battle could ensue between corporate and sales. So the lesson here is that you have to make sure that you
To prevent that from happening, you need to be mindful of don’t let your customer relationships devolve to the point at
the politics involved. At Miller Heiman, each of the strategic- which a client is seriously entertaining sales pitches from
account teams has a designated leader who coordinates all your competitors. In other words, the best defense is indeed
activities and meetings, but important decisions are made a good offense. As in football, you’ve got to keep possession
through group discussions and consensus, taking into of the ball and keep advancing it. One effective way to do
consideration any concerns from sales, corporate, and other that is to continually make efforts to secure your position or
parties. In addition, all sales reps continue to receive their move up a level on the buy-sell hierarchy. Remember that
usual commissions even if one of their accounts is selected your existing relationships with customers should confer
as a strategic customer. Because of that, the sales reps you with a substantial advantage (assuming, of course, that
want their customers to be placed in the strategic-accounts you’ve maintained good customer relationships). The truth
www.millerheiman.com
27
Treating Strategic Accounts as Corporate Assets
is that inertia is a huge factor: Customers would rather avoid become big obstacles. They have increased the amount
the hassles of switching vendors unless they perceive that of negotiation and procedural red tape, leading to an
they’re not getting the value that they’ve paid for. So you’ve atmosphere of distrust between buyer and seller. The
got to do all that you can to avoid the customer reaching situation is exacerbated by increased globalization and
that point. In my experience, the vast majority of customer heightened competitive pressures. Today, it’s easier than
relationships break down because of what I call “benign ever for companies to lose important customers. But many
neglect,” which can be something as simple as not returning firms still have their heads in the sand, unaware how quickly
a customer’s phone call quickly enough. Of course, it’s that a major account could take its business elsewhere. In
difficult to maintain the same level of attention and service my view, not having a program that treats your strategic
to an account that you gave when the customer first came customers like corporate assets is simply asking for trouble,
on board. But companies that drop the ball in managing and those companies that fail to see that are going to be in
an account will eventually find themselves having to play for a rude awakening, probably sooner rather than later.
as a facilitator between seller and buyer. They might perform Strategic Selling®. Since then, his passion for elevating
important screening functions like a “better business the role of the sales profession has resulted in several
bureau,” helping to qualify vendors so that the buyer has to additional methodologies, all of which are incorporated in
consider just a short list of products instead of dozens (or The Miller Heiman Sales SystemTM. He continues today in
even hundreds) of options. Or, by understanding the benefits a consulting and advisory capacity, focusing primarily on
of strategic partnerships, they might encourage collaboration product development. His mentorship drives innovations in
between the seller and buyer to help ensure a long-term sales performance that are consistent with the vision for the
win-win relationship between the two parties. Unfortunately, company he started three decades ago.
1. “The Cost of Customer Churn: What’s at Stake for Banks in the Competition for Customers?” Financial Publishing Services.
2. Lisa Pierce, “What the Cost of Customer Churn Means to You,” Network World (November 12, 2001).
3. Charles S. Golvin, “Who’s Winning and Losing Mobile Subscribers?” Forrester Research (2005).
4. Victoria Ho, “Customer Churn is Businesses’ Greatest Fear,” ZDNet Asia (March 19, 2008).
5. “Pitney Bowes Group 1 Software Customer Churn Report” (2007).
6. Frederick F. Reichheld and Thomas Teal, “The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value” (Harvard Business School Press, 1996).
7. “The Cost of Customer Churn: What’s at Stake for Banks in the Competition for Customers?” Financial Publishing Services.
8. James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.
9. James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.
10. Das Narayandas, “Building Loyalty in Business Markets,” Harvard Business Review (September 2005): 131-139.
11. James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.
www.millerheiman.com
28
INVOLVING EXECUTIVES
IN THE SELLING PROCESS
by Tim Call, Executive Vice President
People ask me all the time: “How can we get our executives involved in the selling
process in a proactive and efficient manner?” The first thought that comes to my mind
is to answer their question with more questions: “Why do you want your executives
involved in the selling process?” Is it because you need help closing deals? Because
they are needed to negotiate pricing? Or because they want to feel they are being
supportive?
For any organization that wants to begin an executive selling program, the above
questions should be asked of senior leadership. In the current climate, decisions are
being pushed to higher levels within a company and an executive selling program can
help establish and maintain critical account relationships between C-Suites. Many of the
successful executive selling programs I have seen solicit input from all of the functional
departments so everyone knows the expectations for the program and understands the
criteria for success.
Your organization may start down the path of establishing an executive selling program
only to realize early in the process that there are perception gaps between what the
executives think they know about critical accounts and what the sales teams see as
reality. In Miller Heiman’s annual sales best practices study, we see a fair amount of
differences between C-Level respondents and sales reps. For instance, the responses
from these two groups typically indicate a wide perception gap for this simple question:
29
What Sales Leaders are Doing Now
We have a disciplined process that is continually utilized to review all large deals. The
C-Level is generally less likely to agree that processes are in place to review large deals
compared to sales reps.
A larger gap exists when we ask our survey participants to weigh in on another topic: Our
executive leadership is actively engaged in our selling process. The 2009 Miller Heiman
Sales Best Practices Study revealed that 66 percent of C-level executives say they are
involved, but only 41 percent of sales reps say the executives are involved. This disparity
stems from a misalignment regarding what involvement means to these two groups.
Most executives consider involvement as an awareness of the sales representatives’
activities, knowing one or two people in the client organization, and an expectation that
they will come into deals if, and when, it is necessary. In these cases, the sales force will
say that executives don’t bring any value to the client relationship. Because they don’t
know an executive’s role in the selling process, they are forced to leave them out of the
equation because in the past they have hurt more than they have helped.
Creating an executive selling program doesn’t need to take years. But to eliminate
confusion, your first step to building an executive selling program is to get everyone
on the same page. Discuss what happens with these large deals, and discuss how
an executive’s involvement might help or hinder these relationships. Here are a few
suggestions to get started now:
1. The Right Level. An executive should only get involved in relationships that are peer
to peer. They should not be asked to come to a meeting with lower-level buying
influences where tactical or logistical solutions are being discussed. The sales rep
needs to ensure all possible bases are cover before involving an executive.
2. The Right Time. Executives are often expected to step in to try and save a sale that
is in trouble. Get executives involved when they can provide the greatest value, not
salvage something that is likely already beyond repair. Drawing in an executive will
likely look to the customer as if you are in panic mode, and may potentially worsen
the situation.
3. Maintain Schedule Integrity. Make sure executives don’t skip out of a sales call
because something more important has happened in the office. If they are committing
to the initiative, then they must stay committed to all scheduled meetings.
30
What Sales Leaders are Doing Now
4. Thorough Preparation. The sales team needs to take the time to review the customer
relationship, current opportunities, and the meeting objectives with the executive
before a customer meeting. The better prepared an executive is, the more value he
or she can add to the relationship and the better the coaching s/he can provide.
5. Provide Strategic View. Without a strategic perspective, executives will not bring
much to the client in the way of value. Don’t let the executive talk about a product or
service. They should be asking questions or providing high-level industry knowledge
during these meetings. Clients love it when you bring new information or introduce
new ideas related to the important issues they face.
6. Get Things Done Internally. It is easy for an executive to go back to the office and
delegate all of the next steps to the rep. But executives need to own at least one
of the next steps. Ideally it should relate to the point from the meeting that is of
strategic value to the customer.
7. High Level Information Conduit. Most executives are aware of changes in the
company before everyone else. Make sure that new and relevant information is
shared from one executive to another, as this type of knowledge has the potential
to undermine their authority if divulged by someone on a lower tier.
8. Mentor or Coach. The executive should be the person in these critical deals
providing coaching and mentoring sales reps. This should not be the same type of
coaching the reps might receive from their sales manager, but coaching on high-
level issues, industry intelligence, and solutions important to the customer.
9. Hold Executives Accountable. The executive should be held responsible for his role
in the success of the customer relationship. Without a certain level of accountability,
resentment may build and potentially jeopardize future internal interactions. It’s
crucial to remember that rep and executive are on the same team and need to pull
their respective weight.
10. Share Success Stories. When executives stay involved with clients, it can be
perceived as a positive opportunity for your company. Take advantage of the
publicity that can be generated by promoting and sharing the success stories as a
result of executive involvement.
31
What Sales Leaders are Doing Now
11. Maintain Executive Status. Many reps may jump at the chance to tout their executive
at a social call, but this is not the best use of their time. Unless a client specifically
requested it, bringing an executive may seem a thinly veiled attempt to solidify a
client relationship or secure additional commitment.
12. Avoid Exclusive Meetings. Executives should not attend sales meetings alone,
unless a request has been made. The goal is to develop the standing and credibility
of the rep, and sending an executive in alone makes him or her the de facto rep,
undermining that goal.
An effective program will ultimately serve to bring clients closer to your organization.
But the most important contributing factor to a successful executive selling program is
the dedication and commitment to stick to it.
32
How to Forecast
Sales Accurately
by Robert B. Miller, Founder, Miller Heiman
The conventional wisdom: “Sales managers can’t forecast accurately because there are
too many uncertainties involved.”
The reality: “Sales forecasting can indeed be turned into an accurate, reliable process.”
J
udging by the continual news of company after company increase its market share and its stock jumped another
missing its quarterly numbers, you would easily be 16 percent, but then the company hit a snag in the third
forgiven if you thought that businesses had no clue how to quarter. It reported revenues of $10.6 billion, which was a
forecast their sales. Every week seems to bring yet another solid increase of 17 percent from the same time period in
headline of a firm that missed its quarterly numbers because 2005. But the problem was that those numbers fell short of
of some unexpected shortfall in demand for its products. the company’s forecasts and analysts’ estimates of $11.1
Wall Street is generally unforgiving of such lapses, typically billion. CEO Ed Zander explained that the lower sales were
punishing the company with a drop in stock price. due, in part, to an unexpected delay in capital spending by
Consider what happened to Motorola. After lagging behind his reassurances, though, the market response was swift
Nokia for years, the company had been gaining ground in and unyielding: Just a day after Motorola announced the
2005 and its share price had risen 31 percent. Everything shortfall, its stock price fell $1.21 to close at $23.64, a drop
www.millerheiman.com
33
How to Forecast Sales Accurately
To make matters worse, forecasting is becoming all the of some illicit accounting sleight of hand, prompting
more difficult because customer loyalty is on the wane and shareholders to claim in 2000 that the firm had misstated
global competition has increased such that companies more than $500 million in revenues. After an investigation
are less sure of where their future sales will be coming by the SEC found that Computer Associates had routinely
from. Moreover, distribution channels have become more included revenues from orders that hadn’t officially
complex and the lifespan of products has decreased, all been booked, eight CA executives pled guilty to fraud,
resulting in greater uncertainty. Indeed, research by Sales including CEO Sanjay Kumar, who was sentenced to 12
Benchmark Index has found that roughly two-thirds of all years in prison.
percent. Amazingly, more than 10 percent of forecasts What happened at Sunbeam and Computer Associates
have a margin of error of greater than 75 percent! is perhaps the most egregious examples of accounting
In the worst of cases, a potential shortfall leads to continually suffer from sales forecasts that are inaccurate
desperation as executives succumb to the temptation of and unreliable. When the projected numbers are
questionable remedies, even if they involve some shady unrealistically optimistic, the manufacturing division ramps
accounting practices. The classic story here is the tragic its operations up for products that end up sitting in the
saga of Sunbeam under the leadership of Al “Chainsaw” warehouse collecting dust. Or, conversely, the demand
Dunlap. To keep pace with his aggressive financial for a hot item shoots through the roof but the company
projections, Dunlap offered huge discounts to entice is caught off-guard, thus missing a crucial window in the
retailers to take on more merchandise than they could market. And it’s not just big mistakes that hurt the bottom
sell. The products were then shipped to warehouses line. Sometimes even a small increase in the accuracy of
where they sat, and the inventory continued to pile up. your forecasts can lead to substantial savings because
But the problem was that Sunbeam was booking those your distribution chain will be returning fewer products,
sales as if they had actually been made. Eventually, the thus decreasing your shipping, handling and storage fees.
entire accounting house of cards came tumbling down For large corporations, such savings could amount to
was shown the door and later agreed to pay $15 million to
settle a shareholder lawsuit. Let me put it this way: I have never heard a CEO or senior
Sadly, Sunbeam is hardly the only company that’s tried to group were too accurate, but I have heard countless execs
cook its books. Computer Associates, a global software grouse that they simply couldn’t rely on their company’s
corporation based in Islandia, N.Y., was also a practitioner sales projections. And an inability to forecast sales
www.millerheiman.com
34
How to Forecast Sales Accurately
usually means that you’ve lost touch with your customers typical sales process is like a funnel (see accompanying
-- a deficiency that can lead to disaster when the market illustration). At the bottom are deals that you’ve almost
makes a turn in one direction and your firm is still headed closed. All you need to do for those opportunities are to
down a different path. The result: You end up developing remove any remaining obstacles (for example, you might
and marketing products that nobody wants. need to meet with the final decision maker to iron out the
Okay, I’ve heard it all before. According to the naysayers, the funnel are other prospects that are in the works. Here,
organizations that believe their sales group can make you need to do important background work (for example,
accurate forecasts are setting themselves up for failure. identifying all the people at the prospective customer who
People will just fudge their numbers to game the system. could possibly veto the deal). And above the funnel are
For instance, salespeople will underestimate their numerous leads that need further investigation. These
projections so that they’ll look good when they make or leads need to be screened to identify which ones should
exceed those numbers. So why even pretend that you can be pursued. As a prospective deal moves down the funnel,
forecast sales accurately when the process will be just two important things happen. First, the time required
another exercise in futility? to close the deal will tend to decrease. Second, the
Excuse me, but that defeatist attitude is nothing but a pot (or, in other words, the uncertainty that you will close the
of crock! Let me be clear: It’s a cop-out for sales managers deal will decrease).
The simple truth is that companies can indeed reliably Each location of the funnel (bottom, middle or above) has
forecast their sales, and all the leading organizations do a quantitative metric for the likelihood of the deal closing
it because they absolutely need that crucial information. in a given amount of time. That period can be based on a
Otherwise, a business can’t be run efficiently. How, typical sales cycle. Let’s say that the typical sales cycle
for example, can the manufacturing department plan for your products is eight months (that is, you usually
its resource allocation without knowing the volume of take eight months to close a deal from the time you get a
shipping orders for the upcoming quarters? The trick to solid lead, such as when a prospective customer requests
accurate sales forecasting, though, is that you need the information about your product or otherwise engages with
right system in place. you about a solution offered by your company). So, for
Understanding the “Sales Funnel” might generally have a 70 percent probability of closing
Before you can begin to improve your sales forecasting, within half the sales cycle (or four months). Your prospects
you first need to understand a fundamental concept. The in the middle of the funnel might have a 40 percent chance
www.millerheiman.com
35
How to Forecast Sales Accurately
of closing within that time. And your prospects above the of dollars annually because the manufacturing group was
funnel might have just a 10 percent chance of becoming then able to allocate its resources more efficiently to plan
a finalized deal within the typical sales cycle (or eight better for future orders.
months).
Now here’s the part about forecasting. To obtain an the system and magically have the accuracy of its sales
accurate projection of your sales, all that you to do is to forecasts improve. Although simple in concept, the sales
categorize every one of your potential deals into the right funnel takes a concerted effort and sustained commitment
location (bottom, middle or above) of the funnel, along with from everyone in the sales organization. And, as with
your estimates of the size of the potential order. Then you other kinds of similar initiatives, the devil is definitely in
add up those opportunities for each location of the funnel the details of implementation.
The total sum of those numbers will then be your sales Managing the Sales Funnel
forecast. Okay, you might be skeptical about how such a The first important detail is that you have to classify
simple concept could actually be effective in practice, but your customer opportunities accurately. If you’ve been
I have seen numerous companies dramatically improve mistakenly placing companies in the middle of the funnel
the accuracy of their sales forecasts by implementing it. when they actually belong above, then of course they will
Consider the operations of a large aerospace company that will become finalized deals than you’ve expected. This
was having trouble years ago because its sales projections then means that your sales forecast will be substantially
were all over the map – the average accuracy was just 35 off because of the shortfall.
taught the fundamentals of funnel management. To begin Categorizing customer opportunities correctly is
with, managers clearly delineated and codified specific easier said than done. The problem is that many sales
criteria that helped define prospective customers. For professionals will fool themselves into thinking that a deal
example, a lead had to meet specific objective criteria is closer to being closed than it really is. They’ll be overly
before it could be moved to the middle of the funnel. And the optimistic, now realizing the amount of work that needs
company conducted formal reviews each week to ensure to be done. So you need to get them to be realistic, and
that all the salespeople were using the new system. Within the way to do that is by having some good metrics, both
just one quarter, the accuracy of the company’s sales qualitative and quantitative. Everyone has to agree to the
forecasts had improved to 60 percent, and it eventually criteria, and each person has to abide by them. You should
exceeded 75 percent. That change saved the firm millions consider having a standard form that salespeople would
www.millerheiman.com
36
How to Forecast Sales Accurately
fill out for each solid lead, especially for potentially large thing before: “Because Roger always estimates low and
deals, and that form would include questions that help sandbags his numbers, I’ll adjust his forecasts upward by
determine the location of that opportunity with respect to 20 percent. And because Marcia is always wildly optimistic,
the sales funnel. I’ll cut her projected sales by half.” That’s the kind of game
You might use an acronym like “DUNCE” to help people but the funnel criteria, when selected properly, will help
remember the criteria. “D” is that the customer has dollars prevent that kind of number fudging.
on the customer’s part; “N” is that you understand the But you also need someone in charge of the funnel system
customer’s true needs; “C” is that you have coaching; and to ensure that all the salespeople are using it and that
“E” is that you know the identity of the economic buyer, everyone is abiding by the same criteria. The important
or final decision maker. Before a lead can be placed into thing here is that that person has to have enough clout to
the funnel, you might stipulate that the salesperson has hold people accountable for their individual funnels. You
to satisfy the D, U, and E requirements. And before a can’t turn this important function over to some low-level
prospect can be moved from the middle to the bottom staff person, because then the salespeople and account
of the funnel, the salesperson must meet the N and C managers will try to game the system or they won’t take it
requirements. At a minimum, companies need a list of seriously. You need someone who can hold people’s feet
general questions like DUNCE, but they also should have to the fire. That individual might be the head of the sales
criteria that make sense not only for their specific industry operation or one of his or her key lieutenants.
but also for their own business. For instance, one criterion
for moving a potential customer to the middle of the funnel The funnel “meister” should be empowered to hold people
might be that a salesperson has to perform a live product accountable. If, for example, customer prospects have to
demonstration at the customer’s site. You might need a have a 50 percent probability of closing before they can
few iterations to define all the necessary funnel criteria. be placed in the middle of the funnel, then a salesperson
You should involve key managers in that process, not only who is closing just 25 percent of those deals needs to
because they typically know what criteria are important be taken to task. Could that salesperson, for instance,
but also because their participation will enable you to gain be prematurely placing those leads into the middle of
their buy-in when implementing the system. the funnel before they’ve been properly qualified? That’s
The criteria should be designed to help managers refrain assessments, and you need at least about three or four
from the common practice of second-guessing the sales for each funnel location. Interestingly, experienced sales
estimates from their staff. We’ve all done this type of managers usually know what those criteria should be
www.millerheiman.com
37
How to Forecast Sales Accurately
because they have a sense for the typical obstacles that more emphasis on recent periods of time. In addition,
tend to hold up deals for their company’s products. remember that your sales cycle is just an average. In
At the Treasury Management Sales and Commercial because they will usually involve a greater number
Business Development for Wells Fargo, managers came of people in the approval process. Also, sales to new
up with an “opportunity checklist” to help them conduct customers will typically take much longer than sales to
reviews of large potential deals. The checklist contains existing accounts, especially when those deals involve
a series of 20 questions such as, “Do you know who all products that are new to the market.
the key decision makers are?” The list helps the company
to prioritize its prospects and get a better handle of In order for the funnel system to work, salespeople have
future sales. For example, when reviewing one particular to manage their individual funnels on a regular basis. The
lead, Wells Fargo uncovered two important things: the frequency will depend on the complexity of the typical
prospective customer already had a good relationship with deal as well as the sales cycle. For products with long
its current supplier and it didn’t perceive Wells Fargo as sales cycles, monthly funnel reviews might suffice. But
having any edge over the incumbent vendor. So Well Fargo for other products, daily reviews might be necessary.
decided not to expend resources to put together a custom When implementing a funnel system, companies should
bid and decided instead to submit a bid that was close to consider having at least weekly meetings for people to give
the company’s standard pricing. Moreover, Wells Fargo updates of their funnel activity. The participants basically
also omitted that potential deal from its sales forecast. go around the table, one by one, to give their numbers. In
Large businesses like Wells Fargo should consider having their commitments. After the funnel system has become
a different funnel for each major product line, especially an ingrained part of the sales process, companies might
if the products have very different selling cycles. And you then have the meetings on a less frequent basis, perhaps
might also need to have a separate funnel for each major just monthly instead of weekly. Again, this depends on the
geographic region, such as North America, Europe, and sales cycle of the product (shorter cycles require more
sales cycle might be six months. But in a recession, that After each meeting, you might publish the funnel data on
time period could easily balloon to over a year. That’s why an in-house basis to help keep everyone honest. The funnel
in volatile markets you’re better off using a sales cycle that reports should be internal and confidential, and you could
is adjusted using a moving average over several cycles aggregate the data per region (or district or branch) and
or, better yet, a weighted moving average that places per product. The real power of the funnel comes over time
www.millerheiman.com
38
How to Forecast Sales Accurately
when people can track the progress of various potential Some Common Traps
deals, and they can identify what’s stalled and then develop World-class sales organizations all place a value on
a plan of action for moving those prospects along. process, and accurate forecasting should always be part
forecast numbers are ultimately in everyone’s (including 1. Allowing prospects to “whirlpool.” Every sales
their own) best interests. When Sean Reese, a demand organization has customer prospects in the middle of the
planner for Ocean Spray Cranberries, was trying to get funnel that go round and round but make little progress
better information from his company’s sales staff, he made toward moving to the bottom and getting closed. You
the following case. He argued that accurate forecasts will might have an uncovered base, such as a key executive
help improve the efficiency of the company’s supply chain at the customer company is unconvinced of the need
and reduce the possibility that stores would run out of for change. A study by Miller Heiman found that, at
product, thus eventually leading to a higher sales volume any given moment, nearly 35 percent of prospects are
– and thus larger commissions. That argument helped wasting a salesperson’s time. Often the problem is that
everyone get on board with Reese’s program. those prospects have been miscategorized and should be
distributors, you might consider encouraging them to 2. Confusing selling with buying. Remember that the
provide more accurate data by sharing any resulting savings selling process has seven basic steps: 1) target prospects,
with them. Consider Arasco, a Saudi-based supplier of 2) qualify leads, 3) cover the bases, 4) make proposal, 5)
animal feed products. In 2006, after Arasco realized that close deal, 6) fulfill order, and 7) up-sell and cross-sell.
better forecasting could result in considerable savings in The buying process also has seven basic steps but they
storage costs, the company agreed to cut prices by up to are markedly different: 1) monitor status quo, 2) recognize
4 percent for those distributors that agreed to help provide the need to change, 3) define problem, 4) evaluate options,
better information about future demand. The program was 5) select best solution, 6) implement solution, and 7)
a success as the forecast error fell from 15 percent to 9 assess value of solution. The problem is that there’s often
percent, enabling the company to increase its on-time a mismatch in where the seller is versus where the buyer
delivery rate from 85 percent to 93 percent. is. The classic mistake occurs when the seller is on step 5
www.millerheiman.com
39
How to Forecast Sales Accurately
(ready to close the deal) while the buyer isn’t even on step one of your potential deals is an order or more larger in
2 (that is, the customer isn’t fully convinced that he has a magnitude. Let’s say that you have a deal in the works that
problem). This, unfortunately, happens far too frequently. could bring in $10 million, but your average sale is much
You can prevent such occurrences by relating some of less than that. If you close that big deal, your sales will be
the steps of the buying process to the criteria you use $40 million for the quarter, but if it falls through then you’re
to determine a prospect’s location in the sales funnel. looking at $30 million, substantially less. The best thing
With the acronym “DUNCE,” for example, the letters “D” to do here is to separate that $10 million prospect from
(the customer has dollars allocated to pay for the project your forecast, perhaps by placing an asterisk next to your
and “U” (there’s urgency on the customer’s part) relate quarterly projection. In fact, deals that important require
specifically to step 2 of the buying process (recognizing their own individual funnels so that they can be tracked
3. Treating all products the same. Companies should 5. Failing to properly prioritize activities. In general,
consider ranking their product lines (for example, in order salespeople tend to work the funnel from the bottom up,
of potential revenues or profits) so that they can spend concentrating on the surest opportunities first and leaving
more time tracking and forecasting those products that the less certain stuff for last. That approach might seem
will have a bigger impact on the bottom line. For instance, to make sense, but the truth is that it leads to unnecessary
BASF, the German chemical manufacturer, categorizes volatility. Here’s what typically happens: The sales
its products into A, B or C, depending on their potential organization is busy closing important deals and works
impact. By spending more time on forecasting the A hard to move prospects from the middle to the bottom of
products and less time on the C, one business unit at the the funnel. All of that activity takes considerable effort,
company was able to improve its overall forecast accuracy and people just can’t find the time to generate new leads
by an average of 20 percent. until they realize that the funnel is drying up. Panic then
4. Not making special allowances. Sales forecasts the problem is that those new leads could take months (if
based on the funnel concept will be accurate if you have not years) to work their way down the funnel, and that time
numerous prospects that are all about the same order lag could result in a sales shortfall and missed forecast.
size. In such cases, the law of averages will prevail: some To prevent that, you should always prioritize the three
prospects will drop out while others will reach fruition such areas of the funnel in the following way: bottom, top and
that everything will even out. But the problem is when then middle (instead of bottom, middle and then top). The
some of your sales opportunities are much larger than reason for that is because salespeople dislike the hard
others. Consider, for example, the extreme case in which (and seemingly thankless) task of prospecting, so the only
www.millerheiman.com
40
How to Forecast Sales Accurately
way to ensure that it gets done is to prioritize it ahead Many companies, for instance, use a “blue sheet” or other
of the work that needs to be done in the middle of the internal process to track the status of customer prospects.
funnel. Of course, that’s not to say that you can afford Much of the information required by a funnel review can
to neglect customer prospects in the funnel’s middle. be obtained from such a system. For example, blue sheets
Somehow, though, people will find the time to work on typically require salespeople to fill in the names of the key
the middle of the funnel (after paying the proper attention decision makers at a customer account -- information that
to the funnel’s top), whereas they always seem to be too is crucial for any funnel review. Moreover, such important
busy to concentrate on finding and qualifying leads above data can be transferred directly to a customer relationship
the funnel unless they’re absolutely forced to do so. management (CRM) system that a company might already
6. Not having a funnel “meister.” You need someone Sales Access Manager that enables salespeople to avoid
in charge of the funnel system and that person has to having to re-key any data; they just enter it once into a blue-
have a lot of clout. He or she can’t be a low-level staff sheet application and the information can be transferred
person, because then the process becomes just a clerical automatically to a CRM system from Oracle, Salesforce.
function. You need someone who knows the process com, SAP or another vendor. Those CRM applications, in
and is familiar with the different customer accounts so turn, typically have their own capability to perform sales
that he can keep people honest by asking questions like, forecasting, and that information can then be used in your
“How can this customer be in the middle of the funnel funnel reviews.
when you don’t really know who the final decision maker
is?” In other words, the funnel meister can’t just blindly 8. Over-relying on CRM. That said, you should also
accept information from salespeople; he or she needs to be careful about relying too much on data from a CRM
constantly question the funnel info because salespeople system. According to research by Miller Heiman, 72
are absolutely notorious for being overly optimistic about percent of sales organizations report that their CRM
7. Making the funnel process burdensome. On the the input data. In other words, “garbage in, garbage out.”
other hand, you don’t want to make the funnel process Specifically, when a CRM application is too cumbersome
an onerous or thankless chore. The funnel has got to be a or difficult to use, salespeople will often input inaccurate
tool that enables the sales force to work more efficiently information, for instance, quickly checking off boxes on
and effectively. Otherwise, people will do everything a form without really thinking about what they’re doing
they can to avoid using it. So the trick is to integrate the because they just want “to get the task over with.” Such
funnel process with what the sales force already does. faulty data will then lead to wildly inaccurate forecasts.
www.millerheiman.com
41
How to Forecast Sales Accurately
To prevent that, sales managers have to be involved in foresee and prepare for every possible contingency
the design of the CRM tool and should never completely because nobody’s crystal ball is ever that clear. But
relinquish that job to the IT department. If they do, they that’s not what I’m talking about. I am asserting that the
risk ending up with a system that salespeople don’t sales function is a definable, repeatable process that can
really take seriously because the perceived benefits do be tracked and managed using a simple concept called
not outweigh the effort required to use it. A good rule of the sales funnel. And if a process can be tracked and
thumb is that, if you can’t teach salespeople the basics managed, then you can certainly monitor it regularly to
of how to use a CRM system within five or ten minutes extrapolate the future from the present. The basics are
so that they can at least hit the ground running (later, really quite straightforward, but unfortunately many sales
they can learn additional functionality), then the system managers are either too lazy or they lack the discipline
is probably too complex. Any sales application needs to to implement such a system. Alas, for them, sales
be intuitive enough so that people can essentially learn forecasting will always be an unreliable process like tea-
how to use it simply by using it. And ideally the software leaf or palm reading, and that is certainly no way to run
portable devices like the iPhone and Blackberry. In short, About Robert B. Miller
both usability and accessibility are crucial. Thirty years ago, Bob Miller developed and introduced
Of course, sales forecasts will always have some degree the role of the sales profession has resulted in several
of uncertainty. After all, predicting the future is, at best, an additional methodologies, all of which are incorporated in
inexact science. And there can certainly be valid reasons The Miller Heiman Sales SystemTM. He continues today in
for a sales shortfall. A big customer could go belly up a consulting and advisory capacity, focusing primarily on
or be acquired by a company that uses another vendor. product development. His mentorship drives innovations
Or new governmental regulations could dramatically in sales performance that are consistent with the vision
increase the length of your sales cycle. Indeed, you can’t for the company he started three decades ago.
1. “Manage or Damage: Is Your Funnel Ratio Up to Par?” (Miller Heiman Sales Secrets, 2008).
2. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management
Review, July 7, 2008).
3. “Fast Forward: How Sales Leaders Can Ensure Forecast Accuracy,” The Sales Performance Journal (Miller Heiman, March 2006): p. 9.
4. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management
Review, July 7, 2008).
5. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management
Review, July 7, 2008).
6. “Funnel Management Best Practices” (Miller Heiman, 2006).
7. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management
Review, July 7, 2008).
8. Robert B. Miller, “Taming the Volatile Sales Cycle,” MIT Sloan Management Review (Winter 2006): pages 10-13.
9. “Fast Forward: How Sales Leaders Can Ensure Forecast Accuracy,” The Sales Performance Journal (Miller Heiman, March 2006): p. 8.
www.millerheiman.com
42
WEEKLY FORECAST AND
DEAL STATUS CALLS
by Damon Jones, President and Managing Director of International
Getting accurate forecasts has been a quest for many organizations for some time, but
in the current economic climate, this subject has increased in importance and in many
instances, in difficulty. All sales managers will probably relate to the following dialog:
Manager: “Joe, how are we doing on that big deal with XYZ?”
(Slight Pause)
Salesperson: “Great boss. I think we’ll have it signed in the next week or two.”
Quite often this conversation carries on for the next few weeks until the manager abruptly
learns the account has been lost to a competitor when the expectation was that the rep
was close to securing it. Suddenly the poor sales manager is faced with taking this out
of the forecast and having to explain to his boss what went wrong. The good news is
that there are some things you can do to avoid this situation in the future. I’d like to start
by talking about some of the problems that contribute to this and provide some ideas
on what can be done about it.
Some of the problems that cause poor forecast accuracy and what you can do.
�� No standard definition for the opportunity or deal. Everyone in the team needs to
work from the same definition. At a minimum, you need to include the deal size, your
solution, the customer and the expected close date. The closer the opportunity
43
What Sales Leaders are Doing Now
�� Lack of common understanding of the sales and buying process. This is one of the
biggest issues I see in organizations: the definition of both the selling and buying
processes. Most organizations only focus on the former. But this is only looking
at half the picture. You need to understand what the customer’s buying process
looks like and more specifically, what actions the customer has to take to move the
opportunity through the funnel or pipeline. There will be multiple, definable steps
an opportunity will go through from the starting point up to winning the sale. This is
often the root of the biggest disconnect. The sales rep believes the opportunity is
farther down the funnel than it is in reality. Unless you also have a screen that looks
at where the customer is in the process you run the risk of forecasting business
that is far from certain.
�� Poorly qualified deals. When I talk to customers about forecast accuracy the
typical challenge is that forecasts are too optimistic or aggressive. In essence,
the forecasts over promise and under deliver. One thing you can do to prevent this
is to ensure you only forecast adequately qualified deals. This means you need
to develop and apply consistent criteria. Many companies develop some form of
criteria for defining what an ideal customer looks like. Any deviation too far away
from that ideal customer presents a red flag and should be investigated.
44
What Sales Leaders are Doing Now
I’m sure you can see a common pattern from my previous thoughts. Getting some
common standards and language is really important if you want to get more consistency
and accuracy in reports.
If you’re thinking this sounds like a lot of work and doubt if it is truly worth it, let me
answer that. It doesn’t have to be complicated. You should try and keep it as simple
as possible to encourage these check-ins to continue because the value goes well
beyond more accurate forecasts. Once you work with good information, you can start
to make much better decisions. You will start to see more quickly where your reps
need help and which deals you should get personally involved with.
For many organizations, resources have become more scarce, so it is vital to ensure
you have a solid basis for determining where you should direct those precious
resources. One of the worst things an organization can do is spend considerable time
and resource on the wrong opportunities. Losing slowly is something that should be
avoided at all costs. The difference between losing and winning a deal can be the
correct allocation and timing of resources on a deal.
Finally, make sure this information comes to you in one format and is the same from
everyone. You don’t have time to learn what different reps and managers mean by,
“It’s close to closing.” You need them to tell you where it is in the selling and buying
processes and what needs to happen for the deal to close. A standardized process
and common language will buy you more time, time that you can use to help get
business closed!
45
LEARN FROM LOSING: WHAT SALES
AND MARKETING LEADERS CAN
LEARN FROM LOSING A DEAL
By Bill Golder, Executive Vice President of Business Development
Everyone who has ever been in sales can remember the outstanding feeling of winning
their biggest deal. In business, there aren’t many things like landing a big client that
can create that kind of excitement and triumph within an organization. Big deals can
often make a company’s month, quarter or year and put their competitors on notice. It’s
fun to be a part of the team that makes those winning moments in business happen.
Those involved have no trouble reflecting on how it all went down with amazing clarity:
the incredible strategy, the flawless execution, the collaborative team, the competitor’s
mistakes. We remember it all, and it gets better every time we tell the story.
When it comes to the ones that got away, most individuals (and organizations) seem to
have amnesia. In fact, it’s amazing how quickly we all move on without another word on
lost deals. It’s as if they never existed. Most shocking is these deals typically take longer
and use more resources than the ones we win, so they should be pretty memorable.
I’m in a fortunate position to be able to see how some very good organizations capture
findings and learn from both won and lost deals. It’s safe to say that far fewer have
applied a real discipline toward understanding the latter. Those that do tend to be
higher performing organizations and are learning things that are helping them sustain
performance.
46
What Sales Leaders are Doing Now
These organizations aren’t just talking about lost deals; they are incorporating a loss
review into the sales process. The outcomes help sales and marketing take away key
nuggets that shape overall client acquisition and relationship management strategies.
Assuming everyone is on the same page with defined funnel stages and the definition
of a lost deal, you can put a repeatable review process into motion. The best examples
of clients we see executing a loss review process typically incorporate the following
elements:
�� A standard format for capturing the attributes for each deal and a scoring system to
evaluate the strength of each attribute in comparison to scenarios when you win
�� Involvement of both sales and marketing in the process for identifying key factors
that can impact how you attract new opportunities as much as how you manage
existing opportunities
�� A culture of discovery vs. blame – candor will be critical in having meaningful findings
that help to improve overall conversion and effectiveness
�� A mechanism to cascade key findings to sales and marketing that can benefit the
organization.
47
What Sales Leaders are Doing Now
My observation has been that organizations with a loss review process that includes the
above elements seem to be much more effective in the following areas:
1. A well understood value proposition. Sales and marketing teams are better aligned
as they learn, through a deal review process, what is resonating and when it is
resonating with potential clients regarding their solutions. Sales feels better supported
by marketing when this is dialed in and marketing can see its lead creation efforts
making an impact – a rarity in most organizations.
2. A more strategic prospecting plan that focuses the organization on ideal profiles of
potential clients. This is especially impactful on potential investments being made in
both time and money for the pursuit of new business.
3. Results. A clear impact can be made on both conversion and velocity through a
diligent deal review process.
4. Operational efficiency and customer satisfaction. It’s amazing what happens when
you engage with prospects that are a better fit for your organization’s offerings. The
organization leverages unique strengths instead of trying to make round pegs fit into
square holes. Loss reviews help you understand whether or not you are chasing bad
business and potentially draining resources needlessly.
Certainly, loss reviews alone aren’t the answer. They need to be part of a much larger
strategy centered on the diligent pursuit of understanding the customer. However, it is
a component that I’ve seen deliver terrific value when incorporated into the rigor of your
sales and marketing organization. Don’t avoid it, embrace it!
48
www.millerheiman.com
Leveraging Sales Talent
A Successful Model for Identifying, Developing,
and Retaining Top Sales Performers
ARTICLE
49
LEVERAGING SALES TALENT
ARTICLE
1
���������������������������������������������������������������������������������
�����������������������������������������������������������������������������������
�����������������������������������������������������������������������������
���������������������������������������������������������������������������
�������������������������������������������������������������������������������������
��������������������������������������������������������������������������������������
��������������������������������������������������������������������������������
�����������������������������������������
�������������������������������������������������������������������������������������������������������
������������������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������������
���������������������������������������������������������������������������������������������������
�����������������������������������������
�� ���������������������������������������������������������������
�� ������������������������������������������������������������������������������
�� ����������������������������������������������������������������������������������������� ������������
�������������������������������
�������������
����������������������������������������������������������������������������������������������� ����������������
����������������������������������������
��������������
������������������������������������������������������������������������������������������������������
�����������������
����������������������������������������������������������������������������������������������
���������
������������������������������������������������������������������������������������������������
���������������������������������������������������������������������������������������������������������
��������������������������������������������������������������������������������������
���������������������������������������������������������������������������������
��������������������������������������������������������������������������������������������
��������������������������������������������������������������������������������������
50
LEVERAGING SALES TALENT
ARTICLE
2
�������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������
����������������������������������������������������������������������������������������
����������������������������������������������������������������������������������������
������������������������������������
�����������������������������������������
����������������������������������������
��������������������������������������
���������������������������������������
��������������������������������
���������������������������������������
��������������������������������������
������������������������������������
�������������������������������������������
���������������������������������
�����������������������������������������
��������������������������������������
�������������������������������������
�����������������������������������������
�����������������������������������������������������������������������������������������
���������������������������������������������������
��������������������������������������������������������������������������������������
����������������������������������������������������������������������������������������
���������������������������������������������������������������������������������������������
�����������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������������
���������������������
������������������������������
��������������������������������������������������������
51
LEVERAGING SALES TALENT
ARTICLE
3
��������������������������������������������������������������������������������������
�����������������������������������������������������������������������������������������������
�����������
�� ������������
�� ������������
�� ��������������������
�� ������
�� ��������������������
�� �������������������
�� ������������������
������������������������������������������������������������������������������������������������
������������������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������������
����������������������������������������������������������������������������������������������������
������������������������������������������������������������������������������������������
������������������������������������������������������������������������������������������
������������������������������������������������������������������������������������������
����������������������������������������������������������������������������������������
���������������������������������������������
��������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������
�����������������������������������������������������������������������������������������
���������������������������������������������������������������������������������������������
����������������������������������
�����������������������������������
����������������������������������������������������������������������������������������������
����������������������
52
LEVERAGING SALES TALENT
ARTICLE
4
����������������������������
����������������������������
���������������������������
������������������������
������������������������������
��������������������������
������������������������������
��������������������������
����������������������������
��������������������������
���������������������������� ����������������������������������������������
�������������������
������������������������������������������������������������������������������������������
���������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������
��������������������������������������������������������������������������������������
����������������
�������������������������������������������������������������������������������������
������������������������������������������������������������������������������������������� �����������
�������������
�����������������������������������������������������������������������������������
�������������
�����������������������������������������������������������������������������������������������
�������������
�����������������������������������������������������������������������������������������������
������������������
�����������������������������������������������������������������������������������������������
���������������������������������������������������������������������������������������������� ������������
������������������������������������������������������������������������������������������������
�����������������������������������������������������������������
�����������������������������������������������������������������������������������������������
���������������������������������������������������������������������������������������������
�����������������
�������������������������������������������������������������������������������
������������������������������������������������������������������������������������������
�����������������������������������������������������������������������������������������
�����������������������������������������������������������������������������������������
53
LEVERAGING SALES TALENT
ARTICLE
5
��������������������������������������������������������������������������������������������
��������������������������������������������������������������������������������������
�������������������������������������������������������������������������������
���������������������������������������������������������������������������������������������������
��������������������������������������������������������������������������������������������������
����������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������������
��������������������������������������������������������������������������������������������
�������������������������������������������������������������������������������������������
������������������������������������������������������
��������������������������������������������������������������������������������
�����������������������������������������
����������������������������������������������������������������������������������������������
�����������������������������������������������������������������������������������������
���������������������������������������������������������������������������������
����������������������������������������������������������������������������������������������
�������������������������������������������������������
54
Sales Messaging
for Success
Why Having a Client Centric Value Proposition is Invaluable
Before you can construct a value proposition you must know to whom you are
constructing it for. Too many organisations try to be all things to all people and
most end up simply confusing all prospective customers. To truly add value to a
customer prospect we must be able to demonstrate that we not only understand
our customer but also the customers customer and the environment in which
they operate. The value proposition must represent the tangible outcomes your
customer can expect. It is not a benefits list of what you are selling.
So who are your ideal customers? Can you define them simply and elegantly
about what makes them ideal. This definition should include a set of
demographic and psychographic criteria. For example I saw a business define
their clients as “owners or managing directors of non retail businesses located in
metro Sydney with a turnover of 10-30 million dollars”. This definition is a good
start however it only includes the demographic components. Psychographic
information such as honesty, openness, technically competent and realistic are
all examples of criteria that if missing could turn an ideal customer prospect into
a less than ideal opportunity.
Once we know who our ideal customer criteria is we can then start to construct a value
proposition that means something to the prospect. A simple test you can apply to your
own business is to ask if your sales people can answer these three questions succinctly
from a customer’s point of view?
55
What Do You Do?
This next question begs some more questions and if you have a board or several
partners looking at this question get ready for a number of responses and a few
surprises.
56
3. Increase average sales value
4. Increase number of times p.a. that clients buy
5. Increase the profit margin per sale
57
Examples of Value Propositions
We help mid sized companies reduce their employee costs without impacting the
benefits they receive. This has been critical to the success of our mid sized
clients as they survive the challenges of an economic downturn and retain key
staff. One of clients reduced over half a million from employee costs and saw an
increase in average employee tenure during the same period.
After implementing our sales and marketing alignment strategy one of our clients
was able to discover and close a major opportunity in under 90 days. This
represented a shortening of the sales cycle by 60% and an ROI of 200% with a
bonus of having an increase in employee satisfaction during the same period in
their go to market team.
58
SPECIAL EDITION
59
Miller Heiman | Best of Sales Performance Tips: Improve Your Prospecting Techniques
Improve Your Prospecting Stop product pitching. People don’t want to hear about how
great your product or service is.
Techniques Think about what’s likely going through the mind of your
prospect. What issues and challenges are they facing?
Introduction
How many times have you started to leave a voicemail for a 1. Make a List of Your Best and Worst Customers
prospect or began a sales presentation with the words, “let
me tell you a little bit about our company”? Chances are, Think about your customers for a minute. Which customers
you’re probably doing it all the time. do you wish you had a thousand more of just like them?
Who are the customers you wouldn’t lose sleep over if they
Your prospects aren’t interested in you and your product. went to your competitor tomorrow? On a piece of paper list
What they do care about is their problems and the things your best customers on the left, and your worst customers
they want to fix, accomplish, or avoid. on the right.
© 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | www.millerheiman.com
60
Miller Heiman | Best of Sales Performance Tips: Improve Your Prospecting Techniques
What makes these companies your best or worst customers? placed on how your solution addresses what the Economic
Consider the demographic features of these customers, like Buying Influence wants to fix, accomplish, or avoid.
number of people, deal size, etc., but also think about the
psychographic characteristics such as values and culture. Access the Economic Buying Influence
Write these underneath your list of best and worst customers.
Once you’ve identified the final decision maker in your sale,
3. Select Your Top Five you’ve got to create a compelling reason for him or her
to meet with you. In Miller Heiman’s Conceptual Selling®
When finished making your list of characteristics, you’ll need program, this is called the Valid Business Reason.
to prioritize. Which five traits of your best customers would
you consider the most important in replicating? Are there A strong Valid Business Reason:
any features of a best customer that you see the reciprocal
of on the right side? · Clearly defines why the executive should meet with you.
· States the purpose of setting an appointment.
For example, if you listed your best customers as typically · Links directly to what the Economic Buying Influence
having growing product life cycles, perhaps you may have wants to fix, accomplish, or avoid.
listed that your worst customers have mature product life
cycles. If so, this could be an indication that the quality of a In order to get in the door of your executive-level decision
growing product life cycle should be among the top five criteria maker, your Valid Business Reason must impact what the
that you choose to become your ideal customer profile. executive wants to solve in the organization. Instead of
focusing on the features and benefits of your product or
Using this formula to pursue new prospects will keep you service, focus on understanding the issues of the executive.
focused on those companies more likely to do business
with you. Better yet, you will stop wasting time pursuing You need to explain why your sales call is such a high priority
prospects that have a low probability of closing. and state “what’s in it for me?” from the perspective of the
executive. And finally, the Valid Business Reason should be
short and concise enough to be left on a voicemail or with an
Identify The Economic Buying assistant.
Influence
This selection is supported by Miller Heiman’s workshops,
® ® SM
Strategic Selling , Conceptual Selling and Executive Impact .
With 3 out of 4 opportunities now requiring executive-level
If you have questions relating to this topic, and would like to
approval, you probably know that executive-level selling is hear from an expert, you may call us at 877-678-0391. You
mandatory to succeed in today’s selling environment. But may also visit www.millerheiman.com and subscribe to receive
what you may not know is that you simply can’t rely on using Sales Performance Tips each month via email.
your own executives to sell for you.
© 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | www.millerheiman.com
61
SPECIAL EDITION
62
Miller Heiman | Best of Sales Performance Tips: Phone Prospecting Strategies To Get Your Foot In The Door
© 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | www.millerheiman.com
63
Are You Being
Out Listened? Are You Being Out Listened?
Rob Hartnett
by Rob Hartnett, Managing Director, Selling Strategies International
www.sellingstrategies.com.au
Unfortunately, most salespeople do not spend enough time letting their customer
talk to develop a solid relationship. In fact global sales performance company
Miller Heiman tell us that on many sales calls, the salesperson talks 80 percent
of the time, leaving almost no time to listen. In addition they found that 80 percent
of what we say has no relevance to our customer's needs or interest. Miller
Heiman call this 80 Percent Syndrome.
Instead of spending the majority of the valuable time your client is investing with
you talking, start your conversation by asking him questions. Give your
customers time to answer and continue to ask questions until you are certain that
you understand their challenges. Good questioning helps you determine the
breadth of the opportunity and can even open the doors to new opportunities.
A great conversation can motivate and sustain your customer's interest, stimulate
ideas and become the building blocks that form a strong relationship.
64
�������������������������������������������
Just recently I had a meeting with a CFO (Chief Financial Officer) clearly a
decision maker and key buyer. This was an important meeting for my company.
He did the majority of the talking especially about his business and I chipped in
with as many astute questions as I could to further my understanding of his
issues. At the end of the meeting which went for over an hour I really felt I hadn’t
offered him many solutions at all. As we shook hands he said “well you seem to
understand our business and you have some great ideas so lets get together
again in a week with some of my key people”.
The reality is that we listen at 600 words per minute and talk at around 150 words
per minute. We should keep these ratio’s in mind when making a sales call.
Next time you make a sales call either on the phone or in person, remind yourself
to stop talking and start listening.
65
Are You Really
Losing on Price?
Are You Really Losing on Price?
by Rob Hartnett, Managing Director, Selling Strategies International
Rob Hartnett
There are many reasons why a client will choose not to buy from you: perceived
product performance, poor past track record, credibility issues, an inability to
create the right solution, timing or any combination of these.
If price was the main reason for losing a sale, it would be a lot easier to win by
simply dropping it. The reality is, there are solutions clients will pay a premium
for. Ultimately, clients decide to buy from you because they believe you brought
to the table something that has value to them and cannot be obtained elsewhere.
This research was also supported by the 2008 CSO (Chief Sales Officer) Insights
Research that showed that those organisations who conducted frequent win/loss
reviews ultimately had better sales results than those organisations who did not.
"We didn't need all the features included in your solution; it was too expensive for
what we need."
Better evaluating the needs of the client can help you focus on the elements of
your solution that they consider most valuable. Identifying features that have no
value to them may allow you to eliminate items that inflate the perceived wasted
cost. This is a response commonly given by people who can say no to you but
cannot say yes because they don’t have the authority to buy in most cases.
66
�������������������������������������������
“Your solution looks ok but we don’t have budget this year” In this instance the
client is trying to be nice but really saying we don’t have enough trust established
to move forward.
A great way to test the price issue is to provide pricing options – a good range is
three. This allows the client to engage in a dialogue about the features and
benefits of your offer with you and through this you will get a “feel” for the budget
the client has.
In terms of budget excuses this is another buying signal. Asking about financial
year up front and whether funding is approved and from a capital or expense
area will also eliminate this excuse later on as you can provide finance options or
payments spread over two fiscal years for example in your proposal.
Believing you are losing because of price negatively impacts your chances to
affect your future performance. Become more proactive at developing your skills
by identifying and acknowledging the real reasons behind past lost sales and
take action to improve your results in the future by eliminating them or at least
reducing them up front.
Rob Hartnett
Business Performance ©
67
Equal Pain or Equal Gain?
Negotiate for Win-Win
The best salespeople clearly under- If there’s one thing everybody knows about sales, it’s that serious
stand the importance of knowing as negotiation starts when you and your customer or prospect sit down
much as possible about what their together to close a deal. Right?
customers need, what they worry
Think again. In any successful negotiation, the real work begins long
about and how they do business, ac-
before either party comes to the table.
cording to Miller Heiman research.
“When people hear the word ‘negotiation,’ they think ‘Oh, that hap-
More than 2,200 sales profession-
pens at the end of the sales process,’” says Grande Lum, author of
als participated in the 2006 Miller
The Negotiation Fieldbook: Simple Strategies to Help You Negotiate
Heiman Sales Performance Study,
Everything. In fact, he and other experts say, the best salespeople
which is part of the world’s largest
start thinking about negotiation much earlier--sometimes even be-
continuous research project on sales
fore they’ve made the first contact.
performance. Among other findings,
this year’s study identified the char- Specifically, top performers prepare for those at-the-table talks by
acteristics of key players in Winning learning as much as possible about the other party’s needs and
Sales Organizations (WSOs). concerns. “You have to look for their underlying interests,” says
Lum, a nationally known authority on negotiation who has partnered
The study indicated that, when with Miller Heiman to integrate negotiation into their sales system.
compared with less-successful “You need to understand what their personal motivators are, what
salespeople, top performers: they’re really after.”
Clearly grasp the specific chal- It’s equally important for salespeople to understand their own inter-
lenges their customers face in their ests, Lum says: “As a salesperson, what is it you want to get out of
industries 20 percent more often. the negotiation?” The simple answer, of course, is selling that prod-
uct or service. But the best salespeople tend to have bigger-picture
Focus on solution-led selling goals, such as building the foundation for a long-term new rela-
26 percent more. tionship or expanding an existing one. And, as the results of Miller
Heiman’s own research indicates, the top performers achieve those
Understand their customers’ buy-
objectives by equipping themselves with knowledge (see sidebar:
ing processes 25 percent better.
“Preparation: The Ultimate Negotiation Tool.”)
high-value connections. But, Lum warns, the reverse either an agreement or alternative resolution (which,
also holds true: When done poorly, negotiation can Lum notes, may well involve walking away, at least
do more harm than good. for a while). No matter how the negotiation ends,
both parties should leave the table feeling confident
“Many sales professionals view building relationships
that they were treated honestly and fairly—and,
within the sales process as a form of collaboration,”
ideally, that they’re better off than they were before
Lum says. “But when it comes to negotiation, that’s
they sat down together. Miller Heiman’s Negotiate
when it can all fall apart. The salesperson believes, or
Success SM workshops focus on teaching salespeo-
the customer believes, that you have to be manipula-
ple how to achieve those objectives through a sim-
tive, deceitful or misleading” to close the deal. Jones
ple, non-manipulative, customer-focused process
agrees with that observation: “Many people on both
designed to make everyone involved in a negotiation
sides view negotiation as involving an adversarial
come out a winner.
approach, which is counter to building a long-term
relationship,” he says. “If the process left a bit of a If there’s a sales-specific caveat on negotiation, it’s
bad taste in somebody’s mouth the last time around, this: “Salespeople have a tendency to capitulate too
that doesn’t bode well for future discussions.” quickly,” Jones notes. “In the spirit of trying to get
the deal done, they discount too quickly or leave dol-
So what’s the key to negotiating well? It may sound lars on the table, which they didn’t need to do. They
like a cliché, but it’s nonetheless the only method take shortcuts. It’s easier to just discount something
that works: Strive for a win-win outcome. Or, as Lum than to go through further discussions to find new
puts it: “Create the best solution that will meet your value—which takes far more salesmanship.” (In fact,
interests and mine.” Miller Heiman’s study found that 69 percent of sales
leaders and 75 percent of salespeople felt increasing
Ending up at that point requires starting with the pressure from existing customers to cut their prices.)
ICON road map, first by obtaining that all-important
insight into the customer’s interests. Then establish Lum says that when salespeople cave on discussions
objective criteria. “You use criteria to help establish involving prices, it’s typically because they haven’t
a common basis for the discussion,” Jones says. explored the customer’s interests thoroughly enough.
“Until you’ve agreed on criteria, it’s really hard to get “If you haven’t discussed value, then any price is go-
a consensus to move forward.” Such benchmarks are ing to sound too high,” he notes.
particularly handy for getting over seemingly impass-
able hurdles, Lum adds. “You can resort to objectiv- “A successful salesperson can see beyond the
ity rather than force of will. You can be persuasive smokescreen of price and rigidity,” he continues. “Be
based on data outside yourself,” such as information like a detective. Ask good questions.” Based on the
provided by an independent source, he says. “That answers, suggest alternatives, he says: “Bottom line:
way, neither side feels that they’re being taken.” It’s about being a problem-solver rather than just
pushing a product.”
A clear understanding of interests and criteria will
lead both parties toward options, and, ultimately,
Create Opportunities
Manage Opportunities
Manage Relationships
73
People and Organization
We invite you to learn more about our programs and tools. If you
have a particular problem that you'd like to discuss with us
please contact Rob Hartnett, rob@sellingstrategies.com.au for a
free preliminary consultation or call on 613 9560 1188.
74
Rob Hartnett
Starting his working life at age seven in the family automotive business Rob
went on to work at Apple Computer where he secured the first single
corporate order in excess of a million dollars, Hewlett-Packard, where he won
the Asia Pacific High Achiever Award, and award winning advertising agency
Publicis Mojo.
Rob is best known today for assisting senior executives, sales professionals
and business owners around the world in focusing on their top line sales
performance through his speaking, workshops and consulting.
Rob holds a Bachelor of Business and a Post Graduate in Applied Finance &
Investment, is a member of the Institute of Management Consultants,
Australian Institute of Company Directors and is an Associate of the New York
State Speakers Association.
Rob is also a Miller Heiman accredited International Sales Consultant.
He is the author of three books, “Fast Times Ahead”, “What Marketing People
Know About Sales” and “Small Business, Big Opportunity” which has over
130,000 copies in print. Rob currently appears on Channel 7’s Kochies
Business Builders as a sales performance specialist.
Contact Information
Selling Strategies International
In Partnership with Miller Heiman Inc.
rob@sellingstrategies.com.au
admin@sellingstrategies.com.au
Ph 61 3 9560 1188
www.sellingstrategies.com.au
75
Testimonials on Rob Hartnett’s Sales Performance Keynotes &
Workshops
“You definitely exceeded your testimonials and background info.!!! Thanks for
helping us to make the Conference the great success that it was.”
Sales Director - Automotive Industry
"Thanks for your time with the sales team - you were a real hit!
I will schedule some future spots for you."
Channel Manager – IT&T Industry
“Rob delivered an excellent presentation that meshed perfectly with our brief.
Rob took the goals of our workshop and weaved his own personal
experiences and wisdom around them to provide a fantastic reinforcement to
our more formal sessions.”
General Manager - Manufacturing Industry
“Thanks for the training, the feedback afterwards was excellent, and we have
agreed to run fortnightly meetings to ensure concepts are embedded.”
Sales Director - Healthcare
"Thank you for the thorough way in which you worked with our sales team.
Various team members have mentioned that your efforts are extremely
positive and helpful."
Managing Director- IT&T Industry
“Rob it has been a real pleasure working with you as finding people who really
understand the sales process is very difficult, so to have the chance to work
with such a professional as yourself has been rewarding and enlightening.”
Global Sales Director – Communications Industry
76
www.sellingstrategies.com.au www.millerheiman.com