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Selling StrategieS from
tHe toPSelling Strategies from
the Top is a must read
for anyone involved in
professional selling and
sales management
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
ComPiled by
rob Hartnett
Selling Strategies from the Top Contents Contributor Biographies
Introdu n Rob Hartne
One – Strategies for Senior Managers Winning Sales ons Rob Hartn
Muscle Building the Sales Team Sam Reese* Strategic Customers as Corporate Assets Bob Miller*
Involving Exec s in the Selling Process Tim Call*
Two – Strategies for Sales Managers How to Forecast Accurately Bob Miller* Weekly Forecast and Deal Status Calls Damon Jones* Learn from Losing Bill Golder*
Three – Strategies for Sales Professionals
Sales Messaging for Success Rob Hartn Improve Your Prosp Techniques Miller Heiman* Phone Prosp Strategies Miller Heiman* Are you being Outlistened? Rob Hartn Are you really losing on price? Rob Hartn
for Win-Win Miller Heiman*
Info n Selling Strategies Int l
Leveraging Sales Talent Miller Heiman*
Info n on Miller
Secrets of
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*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
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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.
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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. Selling Strategies Interna�onal Suite 156 66 Kingsway Glen Waverley, Australia 3150 Ph 61 3 9560 1188 rob@sellingstrategies.com.au h�p://www.sellingstrategies.com.au About Miller Heiman Inc Miller Heiman has been a thought leader and innovator in the sales arena for almost thirty years, helping clients worldwide win high-value complex deals, protect and grow key accounts, manage talent and op�mize sales strategies and opera�ons.With a pres�gious client list that includes Fortune 500 clients, Miller Heiman helps companies in virtually every major industry to build high performance sales teams that deliver consistent sustainable results to drive revenue Miller Heiman Corporate Headquarters 10509 Professional Circle Suite 100 Reno, Nevada 89521, USA Miller Heiman Europe Nelson House No 1 Auckland Park Milton Keynes MK1 1BU, England Miller Heiman Asia Pacific Level 2 12 Waters Road Neutral Bay NSW 2089 Australia h�p://www.millerheiman.com
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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.
When we think of a professional be it a doctor, lawyer, sportsperson the one thing they all have in common with selling is that without constant and relentless focus on continued learning and study you will not be successful. Unlike the professions of medicine, accounting and law sales does not have a professional body that insists on professional development to maintain your credentials. It is a profession that leaves this to the individual and their employer and this is why true professional selling requires the skills of determination and most importantly discipline.
This eBook features some of the most qualified professionals in sales performance from the worlds number one sales performance company Miller Heiman. Much of the content is based upon the continued and contemporary global research of Miller Heiman.
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.
Here’s to win-win outcomes every time.
Rob Hartnett Managing Director Selling Strategies International Melbourne, Australia
Sales is a noble profession. Professional selling often takes a number of different forms depending upon the selling organisation, sales cycle and customer base. You might be familiar with such terms as business development,pursuits strategy, strategic account management, key account selling and the like. However what these all have in common is the word professional.
Rob
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Secrets of Winning Sales Organisations
What are the habits of Winning Sales Organisations and how can you acquire them
Rob Hartnett, Managing Director Selling Strategies International
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%.
Winning Sales Organisations (WSO) are defined as: • 20 % or more growth in average account billing • 20 % or more growth in revenue compared to previous year • 20 % or more growth in new account acquisition
Of the total number of organizations who submitted information for the 2008 survey only 7% made the cut of exceeding in all three areas above. While there are a number organisations that focus on sales methodologies more than others key industries that seem to do well as a group are Financial Services, Health and IT&T. Due to the size of the financial services industry in Australia I have provided some additional comments as they relate to this important industry category.
by Rob Hartnett, Managing Director, Selling Strategies International
Secrets of Winning Sales Organisations
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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.
With global organisations this can become a challenge to ensure global teams are not frustrated by the competing priorities of local country managers however with global executive sponsorship of the sales approach this can be overcome.
At financial services organization Allianz, they aligned their
processes this way, “Prior to 2003, our four distribution divisions had each adopted their own approach to selling. We recognised that to grow the business we needed to break down our divisional silos and develop a consistent approach to sales and fulfilment that sat across the whole organisation. The process of standardisation initially focused on four key areas: rewriting job descriptions for key sales roles; reviewing reward and recognition systems; streamlining the Account Management process and introducing interpersonal skills training for all sales people.”
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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.
The Miller Heiman Sales System™
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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.’ What we are seeing is commoditisation taking place more than ever especially in competitive areas such as financial services. Therefore creating a position far removed from the perception of being a commodity is a key strategy companies should use to protect themselves from profitability erosion. So it is surprising that while 62 % of WSOs report having a “formalised value proposition that is very compelling to our prospects,” only 34 % of all other organizations say they have such a value proposition. WSOs announce their value propositions, distribute them, print them, talk about them, and remind sales representatives of them at every step in the sales process. Today there is even technology available that allows key sales messages to be made available enterprise wide via rich media to ensure that from the C-level to the street the same key messages are being used and I expect financial services to be one of the first industries to utilise these solutions such the example below from Corporate Visions Inc.
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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. Get Accurate Feedback In 2007, less than one-third of respondents agreed with the statement, “Win or lose, we get accurate feedback on all proposals from our customers.”
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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! Sales and Marketing Alignment Forty-three % of C -level (CEO/CFO/CSO/CMO) respondents agree that, “sales and marketing are in alignment in what our customers want and need.” But only 25 % of salespeople agree. This is a major gap. Call suggests that this perception gap occurs because organizations don’t always define the terms they use to describe events. “It’s easy for sales to say, ‘The lead wasn’t qualified,’ and for marketing to say, ‘A good salesperson could have closed that sale.’ This is because they may not be on the same page regarding the definition of a lead.” Or they may not have a system in place to get true data about the quality of leads. So how do WSO’s do it differently? The most successful companies have a strategy and a market focus that is customer-driven, based on customer-response surveys or even regular discussions with salespeople about customer needs. In high performing organizations, the sales and marketing teams know each other, talk, meet, and understand each other’s business.” Leverage Best Practice WSOs are 110 % more likely than other organizations to leverage the best practices of their top performers to improve everyone else’s performance. Yet, less than 50 % of WSOs do this. These findings suggest there is room for improvement across the board in this vital area. What is interesting in many industries and especially financial services is the amount of money spent on technology solutions such as CRM which often dwarf the money spent on analyzing what makes
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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. This is especially intriguing when most C-level people acknowledge that sales people are a particular breed and there are two distinct types. The 'hunters' are intuitive, passionate and often neurotic who focus on winning the next deal and then move on, whereas the 'farmers' befriend the customer and focus on building long-term relationships. Benchmarking the best in each area would undoubtedly show a different make up of person yet as the research shows it is rarely done.
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.
Few companies do this effectively because of the potential political battles that may arise.
How does the world of sales vary? While only 3% of respondents were from Australia and country specific data between respondents is not available at the time of printing there are some differences between regions. In the North America training sales training is seen as a mandatory requirement especially training in a robust sales methodology for winning or retaining key accounts. In Australia based companies sales training tends to be more common around the “21 Techniques to Closing” variety where organisations are looking for a quick fix. This long term approach was also reflected in the induction processes of global companies for new sales people. For example global WSO’s were most likely to have formal sales methodology and processes training, CRM Training and a likely career path communicated to new hires before they even hit the streets. Regular benchmarking for overseas companies against their competition was a common practice compared to Australian organisations.
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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. So what’s like working for a WSO? Working for a WSO has some major advantages for a sales leader. WSO have structure behind their thinking and planning and they all have a definite focus on growth which they measure consistently. They are also more likely to reward for results and have clear incentives for achieving the objectives they seek. This is especially the case in financial services. Nicola Morley from Allianz said “When developing a new sales culture you need to look at the whole picture. Of course, it's important to have a sales process that you can rely on, but to ensure it is utilised effectively it needs to be linked into an effective accountability and reward system. In addition, you need to have systems and procedures in place to ensure all your sales data is managed accordingly.” In terms of career stability WSO’s are not reliant on just a few accounts and they have sales training programs in both methodologies and techniques as part of their ongoing talent retention programs. For those seeking new opportunities it would be worthwhile benchmarking any new companies that are looking to hire you against the WSO criteria mentioned at the start of this article. 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.
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MUSCLE BUILDINGTHE SALES TEAMby 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
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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.
Unfortunately, there is no shortcut for muscle-building sales teams.
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Several years ago, Brothers Gourmet Coffees Inc.,
based in Boca Raton, Florida, saw its annual coffee
production plummet from nine million pounds to
300,000 pounds, virtually overnight. The reason? Proctor
& Gamble, which had been its largest customer, decided
to move production in-house, leaving Brothers in the
lurch. As a result, the coffee wholesaler had to shutter
its manufacturing plant in Houston, which had been in
operation since the late 1950s.
The defection of a key customer is every executive’s nightmare.
In the worst of cases, as with Brothers Gourmet Coffees,
the loss can be disastrous if the company can’t replace the
business quickly. And there are trickle effects, including a loss
of credibility and reputation in the marketplace, which could
lead to additional defections. Moreover, Wall Street takes a
dim view whenever a company loses a major customer. When
Quest Diagnostics, a multibillion-dollar provider of medical
testing services, lost a major contract with UnitedHealthcare
in 2006, the company’s stock fell 14 percent. (Meanwhile,
Laboratory Corp., which picked up UnitedHealthcare’s
business, saw an uptick in its stock price.)
Given all the dangers of losing a key customer, it’s amazing
how little attention many companies pay to keeping their major
accounts. Amazingly, some firms sometimes realize they’re
Treating Strategic Customers as Corporate Assets
The conventional wisdom: “Corporate assets include people, property, plant, equipment and intellectual property, such as patents, copyrights and trademarks.”
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.”
by Robert B. Miller, Founder, Miller Heiman
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Treating Strategic Accounts as Corporate Assets
in trouble only after a big customer has already switched
to a competitor. Part of the problem is educational. When
business schools teach students how to manage corporate
assets, the subject never includes arguably the biggest
asset of any company – its customer base. Thus many
executives have a good understanding of how to manage
people, property, plant, equipment and even intellectual
property, such as patents, copyrights and trademarks.
But they generally know painfully little about managing
important customers. That’s a huge folly because the
defection of just a handful of major customers can cripple
even a large corporation. Sometimes, as with Brothers
Gourmet Coffees, the loss of a single strategic customer
can bring a business to its knees.
Understanding Customer Churn
Customer defections inflict damage to a company in a
number of ways. Obviously, there’s the drop in revenue
from the loss of business, but there are also a number of
secondary costs. The defections could, for instance, make
potential clients think twice about doing business with you.
In addition, the cost of finding new customers to replace
the lost revenues can be considerable. The general rule of
thumb used in many markets is that the cost of acquiring
a new customer is five times that of retaining an existing
one. But in some industries, that cost can be much higher
if, for example, the market is saturated and it’s difficult to
get the existing customers of other suppliers to switch
their business to you. Acquisition costs include – but are
not limited to – marketing and advertising costs, sales
expenses (including commissions), and the costs of signing
up and servicing new accounts (in particular, the expense
of having to educate those customers who are unfamiliar
with your product).
For those and other reasons, customer turnover, or “churn,”
is a huge issue in many industries. In particular, it plagues
many consumer markets, including financial services;
insurance; cable, direct TV and Internet services; magazine
publishing; and so on. In banking, for example, one estimate
is that the average annual defection rate is 12.5 percent.1
And the situation is more than twice as bad in the wireless
industry. The annual churn rate for cell-phone subscribers
in the United States has been estimated to be somewhere
in the range from 26 percent to 34 percent.2 In other words,
wireless businesses are losing more than one out of every
four of their customers every year! To make matters worse,
people who switch services tend to be higher margin because
they use more add-on applications like picture messaging,3
and the average cost of acquiring a new customer ranges
from $250 upwards.
Not surprisingly, customer churn is wreaking havoc with the
bottom line of many companies. A recent study of the Asia-
Pacific region, for example, found that customer turnover was
costing firms there $66 billion a year.4 That figure includes
various B2C businesses such as telecom, insurance, travel,
and medical services. Unfortunately, customer churn hasn’t
been studied as extensively for B2B selling, but the dynamics
are likely just as bad, and they could be significantly worse,
particularly for complex deals that might involve a team of
salespeople working together to land a single account. In
such cases, it could easily take a company more than a year
and substantial resources to replace the loss of a single
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Treating Strategic Accounts as Corporate Assets
customer – or to woo back the lost business. When Coca-
Cola lost Burger King’s business to Pepsi-Cola in the early
1980s, it took Coke several years of planning and strategizing
to regain that major account.
Losing a key customer has always been a big headache,
but today the loss is all the more painful because of
increased pressures. As a result of greater globalization,
the competition has grown fiercer than ever before. In the
past, rival vendors might have been nipping at your heels
eight hours a day, but today that pressure is constant: the
Internet and foreign firms have now made competition
a constant threat, 24 hours a day, 365 days a year. You
simply can’t rest for a moment because you could easily
lose a customer. “It takes years to win a customer and only
seconds to lose one,” notes Catherine DeVrye, former IBM
executive and author of “Good Service Is Good Business: 7
Simple Strategies for Success.” And when you do lose any
business, it’s all the more difficult to replace it.
To exacerbate matters, customer loyalty in many industries
is on the wane. A recent study of British wireless customers,
for instance, found that the defection rate had increased
from 33.5 percent in 2005 to 38.6 percent in 2007.5 That’s
an increase of more than 15 percent in a relatively short
period of time. In the B2B arena, as your customers are
finding themselves under increasing pressures from their
customers, they are in turn demanding more from you; and
if you can’t keep up, they will find another vendor that can.
In short, no deal is safe in today’s world. Even contracts
that in the past might have been slam-dunks are now being
hotly contested.
Amazingly, though, many salespeople still don’t get it.
They will spend their time pursuing even “pie in the sky”
prospective deals instead of working hard to secure their
existing accounts. But even a slight improvement in retaining
existing customers can pay big dividends. According to
research by Frederick Reichheld of Bain & Co., the strategy
consultancy based in Boston, just a 5 percent reduction in
customer turnover can lead to an increase in net profits by as
much as 20 percent.6 In the banking industry, that same small
reduction in churn can boost net profits by up to 80 percent.7
Given such statistics, I’m continually perplexed at how little
attention many companies pay to retaining their existing
customers. And I am absolutely shocked by how lightly
some organizations treat their most important accounts –
those customers that are essential for their business.
Interestingly, firms have all sorts of processes for handling
their corporate assets – excess cash, various properties,
and so on. They might, for instance, have an entire
department devoted to managing their real-estate holdings,
and the CFO is typically held accountable for that activity.
But companies don’t always look at important customers in
the same way – that is, as corporate assets. In fact, many
organizations consider customers to be basically the sole
responsibility of the sales department, and the chief sales or
marketing officer is held accountable. But that’s just asking
for trouble, because certain customers are just as important
to a business – if not more so – than those other, traditional
assets. As such, those customers need to be managed,
nurtured and grown, just as with any other crucial asset. And
that process needs to have the attention of the CEO, COO,
CFO, or some other top-level executive.
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Treating Strategic Accounts as Corporate Assets
Not Created Equal
In today’s world, all customers aren’t equal. The well-
known adage is that 80 percent of a company’s business
might come from just 20 percent of its customers. For
some firms, the breakdown might be 70/30 or 90/10
instead of 80/20, but the point is that a minority of your
customers will usually account for a proportionately larger
fraction of your revenues. Moreover, just a handful of
customers might be absolutely essential for your success;
those firms are your “strategic” accounts.
Every business has them. I don’t care whether you’re
a “mom and pop” dry cleaner on a street corner or a
multinational corporation like Unilever, you will have a
number of customers who can, quite simply, make or break
your business. Thirty years ago, in the early days of Miller
Heiman, I was well aware that 65 percent of our business
was from one customer – Hewlett-Packard. So I made sure
I had all my bases covered at that account, and I would
personally spend two or three days out of every week at
HP’s various field offices.
But strategic customers don’t necessarily have to be your
largest sources of revenue or profit (although they often
are). A “prestige” customer could also be a strategic
account. Years ago, when I was a manager at Kepner-
Tregoe, a consultancy that specialized in executive problem
solving and strategic planning, one of our clients was Rolls-
Royce’s jet-engine business, and we worked hard to retain
that account because it provided a special cachet that
established our firm in the marketplace and helped us to
attract new business.
Whenever I’m explaining the concept of “strategic accounts”
to executives, I always ask them this question: when you’re
lying in bed in the middle of the night and you can’t sleep
because you’re worried about work, what customers are
you usually thinking about? Often, the list might be as short
as three or four accounts and, interestingly, there’s often a
uniformity of opinion about the names of those customers.
Recently, I had lunch with a friend of mine who’s the head of
the U.S. operations of a large Japanese corporation. When
I asked him the “awake in the middle of the night” question,
he immediately answered with three customer names,
and everyone on his executive team who was at the lunch
quickly nodded their heads in agreement.
Strategic accounts are so important that not just the sales
organization knows about them; everyone, including the
CEO and COO will recognize their importance. But the larger
point is this: because strategic accounts are crucial to your
company’s success, they can’t be treated like any ordinary
customer. Remember that they are your corporate assets –
your company’s crown jewels – and they must be managed
in that way.
So, for starters, the management of strategic accounts has
to have the attention of a high-level executive. Ideally, you
need a very senior person in charge. At Miller Heiman, that
individual is Tim Call, the executive vice president for strategic
accounts, who manages various teams that interface with
our different strategic customers. Call reports directly to
Sam Reese, the CEO of Miller Heiman. At a client of ours
– a large shipping and logistics company – the president
himself oversees the overall process, and each member
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Treating Strategic Accounts as Corporate Assets
of his executive circle is in charge of at least one team that
manages a strategic account. Those top executives are
called “sponsors.” They work with the salespeople and
others on their team, and they attend all meetings to keep
up-to-date on the status of that particular customer.
The important thing to note here is that any program for
managing strategic accounts must be owned, driven, and
overseen from the top. The responsibility can’t reside with
the head of the sales operations or the chief marketing
officer. It has to reside in the C-suite because you need
corporate executive sponsorship. Only someone at that
level can help perform certain crucial tasks, including the
following: 1. Evaluate the strategic importance and potential
of accounts to determine a list of strategic customers, 2. For
each strategic customer identified, formulate and implement
an account strategy that is consistent with the company’s
overall business objectives, and 3. Get resources allocated
that will help reach those objectives.
Identifying Strategic Customers
There’s no one best approach to identifying strategic
customers. Companies need to use the criteria that make
the best sense for their own overall organizational goals.
At Miller Heiman, we use five criteria for selecting strategic
accounts, namely that the customer must:
1. Be an existing account.
2. Have the ability to generate revenue in the coming year.
3. Provide a win-win environment.
4. Desire a long-term relationship.
5. Provide access to all buying influences (that is, access
to key execs at the customer firm).
Remember that although revenues are important, doing
business with a customer should always be profitable.
Otherwise, the relationship isn’t win-win. That’s why when
Bank of America CEO Kenneth D. Lewis wanted to increase
shareholder value back in early 2001, he emphasized
operating profits over revenues. So as the company’s
Global Corporate and Investment Bank unit began to
target key customers, it didn’t pursue the low-margin
relationships it had with large corporations like Wal-Mart
and IBM. Instead, it focused on more profitable deals with
other clients, specifically those companies that needed
global treasury and cash-management services (for
example, funds collection and financial forecasting) as well
as investment-banking services. The results were stunning:
Within two years, revenues for the Bank of America unit
had fallen 4 percent but operating profits had increased 12
percent and shareholder value added had nearly doubled.
Moreover, the business unit had gained “lead bank” status
at more than one third of its targeted customers, up from
just 12 percent in 1999.8
Also keep in mind that potential business from a customer
can be just as important – if not more so -- than current
business. To assess those opportunities, you can simply ask
customers for their estimates of how much of their business
is being handled by other suppliers. National Gypsum Co.
uses that approach and reports that it receives accurate
figures more than 90 percent of the time. Of course, some
customers will want to know what’s in it for them, that is, what
they’ll receive in return for their cooperation. The obvious
answer is that the data will help you respond better to their
future needs. But Lubrizol Corp., a manufacturer of high-
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performance polymers and specialty additives, provides
another incentive. Lubrizol will often encourage a customer
to provide details of its purchasing by offering complimentary
market reports for certain products – information that a
consulting firm might charge more than $40,000.9
A strategic account could also be a customer who has
given you a black eye in the marketplace, regardless of the
volume of his business. Consider Jeff Jarvis, a journalism
professor, who might at first glance seem like your typical
Dell customer. But Jarvis is a popular blogger, and after he
reportedly received a defective laptop computer from Dell
he wrote about his experiences in postings entitled “Dell
Hell.” Soon Jarvis’ ongoing saga was being covered by other
blogs as well as by the mainstream media, unleashing the
wrath of other disgruntled customers. As the tide of negative
press grew, Dell rightly recognized that the situation wasn’t
simply going to blow over by itself. In response, the company
assembled a cross-departmental team to actively scan blogs
so that it could defuse customer issues before they became
major problems, and Jarvis was invited to Dell headquarters
to meet with some of the company’s executives, including
none other than Michael Dell, company founder and CEO.
A company might easily have a dozen or more strategic
customers, but my strong recommendation is that you select
no more than a handful for the first year of your program.
It’s a matter of resource allocation. Remember that strategic
customers need to be treated like corporate assets, so you
want to start small because doing things the right way for
even a handful of strategic customers will take an enormous
amount of time and effort. At Miller Heiman, we selected
just a handful of customers for the first year of our strategic
accounts program and then we’ve continued to expand it on
a measured basis.
The next step is to assemble teams for managing the
strategic accounts. Each team should be cross-functional,
involving sales, marketing, operations and other functions
that are pertinent for that particular account. For example,
if your relationship with a customer involves multiple
structured deals that are specified in complex contracts,
your team needs to include people from your finance and
legal departments. Each of your strategic customers needs
to assemble a similar cross-functional team that will then
interface with your team. The members of the customer’s
team will depend on the specifics of your relationship. If,
for example, you provide value by offering just-in-time
delivery, then your customer should assemble a team
that includes a logistics manager and head of the supply
chain operation. Ideally, the members of your team would
have their corresponding functional counterparts on the
customer’s team.
To encourage customers to participate in your strategic
accounts program, you should emphasize your desire
to establish a long-term relationship in which you’ll be
providing direct access to key people in your organization.
In other words, the customer will gain a window into your
operations – what products are coming down the pipe,
areas in which you’ll be investing in the future, details of your
competitive strategy, and so on. In short, the huge incentive
for a customer to participate is that they will have access to
inside information that will enable them to implement your
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products and services better to maximize their return on
their investments. However, as a cautionary note, you should
hold off before formally announcing to customers that you’ve
established a strategic accounts program until you’re sure
that you’ve worked out all the kinks. That is, you might refer
to the program internally but not let the outside world know
about it until you’re sure that it’s ready for prime time.
Moving Up the Hierarchy
One of the first tasks for a strategic accounts team is to
determine the organization’s true position on the buy-sell
hierarchy. There are five levels, depending on the buyer’s
perception of what the seller does. From the lowest to the
highest level, the buyer could view the seller as
1. Delivering a commodity that meets specifications.
2. Delivering “good” products and/or services.
3. Providing “good” service and support.
4. Contributing to business issues.
5. Contributing to organizational issues.
The process of determining your position on the hierarchy
might not be as clear-cut as it may seem. Sometimes, you
might believe that you’re on level 3 but your customer thinks
you’re only at level 2. That’s crucial information because,
if you hadn’t learned of the discrepancy, the mismatch in
perceptions could have eventually led to your losing the
customer. In some cases, you could discover that you’ve
mistakenly been harboring an overly inflated view of the
value you’re delivering. Other times, the customer might
not have a full appreciation of your importance. Late in the
1980s, for instance, Arrow Electronics tried to move up the
buy-sell hierarchy by becoming more than just a distributor
of electronic components; it began offering services to help
coordinate its customers’ supply chains and to perform
engineering design work. All that should have helped make
Arrow become a more important business partner, but a
decade later it made a startling discovery: the customer
companies that were using those important services on a
regular basis didn’t even know that Arrow was providing
them!10 The crucial thing here is that you and the customer
need to have an open dialogue to determine your true position
on the buy-sell hierarchy. Not only will that conversation help
correct any misperceptions, it will also help build trust.
Next, you must develop a plan that will help you either
secure your position on the hierarchy or get you to a higher
level. This process has also got to be transparent between
you and the customer: you present your goals and get the
customer’s feedback. Moving up the buy-sell hierarchy
has its advantages because, as you’re able to go from
one level up to the next, your competition will decrease
and price sensitivity will lessen. Moreover, not only will
a customer’s loyalty increase, the customer will also be
more willing to endorse your product in the marketplace,
collaborate with you on new product development, and
even invest in your firm. Simply put, a higher position in
the hierarchy makes you more indispensable and less
vulnerable to losing the customer.
Consider the strategy of KLM Cargo, a unit of KLM Royal
Dutch Airlines that supplies cargo space on aircraft.
Customers viewed this service as essentially a commodity
(that is, level 1 of the hierarchy). So KLM worked hard with
a particular market segment – those firms that needed
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to transport perishable goods – in order to move up the
hierarchy. For those customers, KLM Cargo began to provide
point-to-point service: initial pickup by truck to a warehouse,
transportation by plane, and then storage in a warehouse
followed by final delivery to the customer. KLM Cargo also
offered three levels of service -- fresh regular, fresh cool, and
fresh supercool -- depending on how perishable a product
is. A flower trader might, for example, opt for “fresh cool”
service to transport orchids while a fish wholesaler might
choose “fresh supercool” for sushi-grade tuna. As a result,
KLM Cargo was able to reposition itself from a commodity
supplier to a provider of an end-to-end business solution,
thus moving itself significantly up the buy-sell hierarchy.11
The ideal situation is when the customer is strategic to you
and you are strategic to the customer. The perfect example
of that is i2 Technologies’ relationship with Dell Inc. Based
in Dallas, i2 sells sophisticated supply-chain management
solutions that enable Dell to efficiently assemble computers
that consumers can customize and order online. Dell’s
very business model depends on the efficacy of i2’s
products, such that the fates of the two companies are fairly
intertwined.
Avoiding Common Pitfalls
Given all the ramifications of losing a major customer, I
am continually astonished at how few precautions some
companies take to guard against that possibility. And it’s
remarkable to me that any firm should be shocked (or even
surprised) after it loses a major account. Whenever that
happens, my immediate reaction is that a number of people
just didn’t do their homework. But don’t get me wrong – I’m
not saying that no company should ever lose an important
account. Some defections can’t be helped, for instance, if a
relationship is no longer win-win and the customer isn’t willing
to work with you on correcting that. The problem, though,
is that many firms don’t take the necessary precautions to
avoid being caught off-guard. At a minimum, companies
need to watch out for the following five common traps.
1. Becoming complacent. The loss of a customer to your
biggest rival is actually more common than you might think.
Remember how Coca-Cola initially lost its business with
Burger King to Pepsi? Pepsi had shrewdly told Burger
King that, “You’ll never be number 1 with Coca-Cola
because McDonalds is a customer of Coke. But you can
be number 1 with us.” And that’s how even entrenched,
leading vendors get usurped. Sometimes, a company
might be the only game in town – it might, for instance, have
a proprietary technology – but then lose that edge as the
market matures and competitors offer competing products.
The classic example here is Digital Equipment Corp., which
dominated the market for minicomputers during the 1970s
and 80s. But DEC’s arrogance and disdain for smaller
personal computers – espoused by founder Ken Olsen’s
infamous remark, “There is no reason for any individual to
have a computer in his home” – left the company woefully
unprepared for the coming PC revolution. Eventually DEC
was acquired by PC maker Compaq, which itself was later
merged with Hewlett-Packard.
Part of the problem is that the leading company in a market
frequently gets tagged as being arrogant. “They’re getting
too big for their britches” and “they’ve become difficult to
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work with” are the common complaints, whether they’re
justified or not. In fact, some customers will even look for that
kind of behavior and misinterpret every tiny miscue on your
part as a sign of your supposed arrogance. So, especially
when you’re the leader in a market, you almost need to bend
over backwards to fight even the slightest perception that
you’ve become arrogant or complacent. Otherwise, you
leave yourself vulnerable to the competition.
2. Succumbing to denial. Interestingly, sales reps are
often the last people to realize that they’re in trouble with
an account. The problem is that they misread the warning
signs, or they go into denial. In their minds, they might
mistakenly assume that just because an account has been
with them for years, that customer will remain loyal. And
that’s another reason why you need a team of people in
charge of your strategic customers, because you don’t
want to end up paying for the mistakes of a sales rep or
account manager who’s in denial mode.
The team should regularly conduct account reviews that
will force account managers to confront reality. Some of
the types of basic crucial questions that need to be asked
include the following:
• Dowehaveourbasescoveredwithallthebuying
influences? For example, do we know who gives
final approval for our deals?
• What are our strengths that we can leverage in
serving this account?
• Do we know what the customer is trying to fix,
accomplish, or avoid by using our solution?
• Whataretheredflagsforthisaccount?
• Arethereanybasicissuesthatweneedtoaddress
for the customer?
Note that the questions probe the overall process being used
to manage the account as opposed to any specific items.
A common mistake that executives make in performing a
review is to start by telling the account manager, “Tell me
what’s going on here.” And then after being given the status
of an account, they’ll follow up by saying, “If I were you,
I’d do the following.” But that type of approach only leads
to account managers feeling like they’re being second-
guessed. In other words, when conducting reviews, you
want to coach people so that they can figure out on their
own what they need to do; you don’t want to do that thinking
for them.
3. Missing a warning sign. Whenever there’s an important
change at your or your customer’s company (a reorganization
or shift in strategy, for example), you need to follow up to
ensure that all your bases are still covered. One of the most
common ways to lose an account is through a change in
personnel – say, for instance, that a key executive at your
customer’s firm leaves. Remember that the people at both
your and the customer’s company will frequently change.
In some industries, for instance, the annual turnover rate is
more than 25 percent (and sometimes as high as 50 percent)
for sales personnel. And this is yet an additional reason why
having a team of people to handle your strategic accounts
makes so much sense. When an account manager leaves,
for example, the rest of the team members will still be able
to provide a reassuring sense of continuity to the customer,
helping to ensure that business will proceed as usual.
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Again, regular account reviews can be a very effective
mechanism here, helping you to catch any early warning
signs. The main focus of the reviews should be the
customer’s business results. As discussed earlier, you
should always know where the customer perceives you
to be on the buy-sell hierarchy. In addition, you need to
have a plan either for securing that position or for moving
up a level. The account reviews should then take a hard
look at your progress in that process. Say, for example,
that for a particular customer you’re currently at level 1
(delivering a commodity that meets specifications) but your
plan is to move to level 2 (delivering “good” products and/
or services). Then you need to continually monitor your
progress, specifically in terms of how improvements on your
end are helping the customer’s business. Is, for instance,
your implementation of just-in-time delivery enabling that
customer to slash its inventory costs?
4. Not obtaining “buy in.” Although every company should
set up a program to manage its strategic accounts, the
process can trigger resistance from the sales group. At
worse, a turf battle could ensue between corporate and sales.
To prevent that from happening, you need to be mindful of
the politics involved. At Miller Heiman, each of the strategic-
account teams has a designated leader who coordinates all
activities and meetings, but important decisions are made
through group discussions and consensus, taking into
consideration any concerns from sales, corporate, and other
parties. In addition, all sales reps continue to receive their
usual commissions even if one of their accounts is selected
as a strategic customer. Because of that, the sales reps
want their customers to be placed in the strategic-accounts
program, because they view it essentially as free help in their
efforts to strengthen a customer relationship.
5. Failing to get support from the top. As I mentioned
earlier, a program for managing strategic accounts must have
support from the top of your company. Ideally, the CEO, COO
or some other C-suite executive would be in charge, and that
person would get other high-level executives to participate.
The surest way to strengthen the relationship between
your and your customer’s firms is to get top executives at
both organizations involved. But the top managers at your
customer companies won’t be likely to participate if they
don’t see a similar commitment from the executives at your
own firm.
6. Relying on defense instead of offense. Sales managers
will often tell me about an important customer that they’re
losing to a competitor. Then, half-panicked, they’ll ask,
“What should we do?” I’m sorry to report that, at that stage,
they may have already lost the account and even a flurry
of heroic “firefighting” activity won’t be enough to save it.
So the lesson here is that you have to make sure that you
don’t let your customer relationships devolve to the point at
which a client is seriously entertaining sales pitches from
your competitors. In other words, the best defense is indeed
a good offense. As in football, you’ve got to keep possession
of the ball and keep advancing it. One effective way to do
that is to continually make efforts to secure your position or
move up a level on the buy-sell hierarchy. Remember that
your existing relationships with customers should confer
you with a substantial advantage (assuming, of course, that
you’ve maintained good customer relationships). The truth
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is that inertia is a huge factor: Customers would rather avoid
the hassles of switching vendors unless they perceive that
they’re not getting the value that they’ve paid for. So you’ve
got to do all that you can to avoid the customer reaching
that point. In my experience, the vast majority of customer
relationships break down because of what I call “benign
neglect,” which can be something as simple as not returning
a customer’s phone call quickly enough. Of course, it’s
difficult to maintain the same level of attention and service
to an account that you gave when the customer first came
on board. But companies that drop the ball in managing
an account will eventually find themselves having to play
defense, which is what you don’t want to be doing.
In the best of cases, corporate purchasing departments act
as a facilitator between seller and buyer. They might perform
important screening functions like a “better business
bureau,” helping to qualify vendors so that the buyer has to
consider just a short list of products instead of dozens (or
even hundreds) of options. Or, by understanding the benefits
of strategic partnerships, they might encourage collaboration
between the seller and buyer to help ensure a long-term
win-win relationship between the two parties. Unfortunately,
though, some corporate purchasing departments have
become big obstacles. They have increased the amount
of negotiation and procedural red tape, leading to an
atmosphere of distrust between buyer and seller. The
situation is exacerbated by increased globalization and
heightened competitive pressures. Today, it’s easier than
ever for companies to lose important customers. But many
firms still have their heads in the sand, unaware how quickly
that a major account could take its business elsewhere. In
my view, not having a program that treats your strategic
customers like corporate assets is simply asking for trouble,
and those companies that fail to see that are going to be in
for a rude awakening, probably sooner rather than later.
About 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 in
The 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.
“The Cost of Customer Churn: What’s at Stake for Banks in the Competition for Customers?” Financial Publishing Services. 1.
Lisa Pierce, “What the Cost of Customer Churn Means to You,” Network World (November 12, 2001).2.
Charles S. Golvin, “Who’s Winning and Losing Mobile Subscribers?” Forrester Research (2005).3.
Victoria Ho, “Customer Churn is Businesses’ Greatest Fear,” ZDNet Asia (March 19, 2008).4.
“Pitney Bowes Group 1 Software Customer Churn Report” (2007).5.
Frederick F. Reichheld and Thomas Teal, “The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value” (Harvard Business School Press, 1996).6.
“The Cost of Customer Churn: What’s at Stake for Banks in the Competition for Customers?” Financial Publishing Services.7.
James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.8.
James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.9.
Das Narayandas, “Building Loyalty in Business Markets,” Harvard Business Review (September 2005): 131-139.10.
James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.11.
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INVOLVING EXECUTIVESIN THE SELLING PROCESSby 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:
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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:
The Right Level. An executive should only get involved in relationships that are peer 1.
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.
The Right Time. Executives are often expected to step in to try and save a sale that 2.
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.
Maintain Schedule Integrity. Make sure executives don’t skip out of a sales call 3.
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.
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What Sales Leaders are Doing Now
Thorough Preparation. The sales team needs to take the time to review the customer 4.
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.
Provide Strategic View. Without a strategic perspective, executives will not bring 5.
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.
Get Things Done Internally. It is easy for an executive to go back to the office and 6.
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.
High Level Information Conduit. Most executives are aware of changes in the 7.
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.
Mentor or Coach. The executive should be the person in these critical deals 8.
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.
Hold Executives Accountable. The executive should be held responsible for his role 9.
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.
Share Success Stories. When executives stay involved with clients, it can be 10.
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.
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What Sales Leaders are Doing Now
Maintain Executive Status. Many reps may jump at the chance to tout their executive 11.
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.
Avoid Exclusive Meetings. Executives should not attend sales meetings alone, 12.
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.
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Judging by the continual news of company after company
missing its quarterly numbers, you would easily be
forgiven if you thought that businesses had no clue how to
forecast their sales. Every week seems to bring yet another
headline of a firm that missed its quarterly numbers because
of some unexpected shortfall in demand for its products.
Wall Street is generally unforgiving of such lapses, typically
punishing the company with a drop in stock price.
Consider what happened to Motorola. After lagging behind
Nokia for years, the company had been gaining ground in
2005 and its share price had risen 31 percent. Everything
looked rosy the following year as Motorola continued to
increase its market share and its stock jumped another
16 percent, but then the company hit a snag in the third
quarter. It reported revenues of $10.6 billion, which was a
solid increase of 17 percent from the same time period in
2005. But the problem was that those numbers fell short of
the company’s forecasts and analysts’ estimates of $11.1
billion. CEO Ed Zander explained that the lower sales were
due, in part, to an unexpected delay in capital spending by
customers in Europe, the Middle East and Africa. In spite of
his reassurances, though, the market response was swift
and unyielding: Just a day after Motorola announced the
shortfall, its stock price fell $1.21 to close at $23.64, a drop
of nearly 5 percent.
How to Forecast Sales Accurately
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.”
by Robert B. Miller, Founder, Miller Heiman
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To make matters worse, forecasting is becoming all the
more difficult because customer loyalty is on the wane and
global competition has increased such that companies
are less sure of where their future sales will be coming
from. Moreover, distribution channels have become more
complex and the lifespan of products has decreased, all
resulting in greater uncertainty. Indeed, research by Sales
Benchmark Index has found that roughly two-thirds of all
sales forecasts have a margin of error that exceeds 25
percent. Amazingly, more than 10 percent of forecasts
have a margin of error of greater than 75 percent!
In the worst of cases, a potential shortfall leads to
desperation as executives succumb to the temptation of
questionable remedies, even if they involve some shady
accounting practices. The classic story here is the tragic
saga of Sunbeam under the leadership of Al “Chainsaw”
Dunlap. To keep pace with his aggressive financial
projections, Dunlap offered huge discounts to entice
retailers to take on more merchandise than they could
sell. The products were then shipped to warehouses
where they sat, and the inventory continued to pile up.
But the problem was that Sunbeam was booking those
sales as if they had actually been made. Eventually, the
entire accounting house of cards came tumbling down
and Sunbeam investors were rightfully outraged. Dunlap
was shown the door and later agreed to pay $15 million to
settle a shareholder lawsuit.
Sadly, Sunbeam is hardly the only company that’s tried to
cook its books. Computer Associates, a global software
corporation based in Islandia, N.Y., was also a practitioner
of some illicit accounting sleight of hand, prompting
shareholders to claim in 2000 that the firm had misstated
more than $500 million in revenues. After an investigation
by the SEC found that Computer Associates had routinely
included revenues from orders that hadn’t officially
been booked, eight CA executives pled guilty to fraud,
including CEO Sanjay Kumar, who was sentenced to 12
years in prison.
What happened at Sunbeam and Computer Associates
is perhaps the most egregious examples of accounting
schemes gone wild, but the fact is that many companies
continually suffer from sales forecasts that are inaccurate
and unreliable. When the projected numbers are
unrealistically optimistic, the manufacturing division ramps
its operations up for products that end up sitting in the
warehouse collecting dust. Or, conversely, the demand
for a hot item shoots through the roof but the company
is caught off-guard, thus missing a crucial window in the
market. And it’s not just big mistakes that hurt the bottom
line. Sometimes even a small increase in the accuracy of
your forecasts can lead to substantial savings because
your distribution chain will be returning fewer products,
thus decreasing your shipping, handling and storage fees.
For large corporations, such savings could amount to
millions of dollars.
Let me put it this way: I have never heard a CEO or senior
manager complain that the forecasts from his or her sales
group were too accurate, but I have heard countless execs
grouse that they simply couldn’t rely on their company’s
sales projections. And an inability to forecast sales
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usually means that you’ve lost touch with your customers
-- a deficiency that can lead to disaster when the market
makes a turn in one direction and your firm is still headed
down a different path. The result: You end up developing
and marketing products that nobody wants.
Okay, I’ve heard it all before. According to the naysayers,
organizations that believe their sales group can make
accurate forecasts are setting themselves up for failure.
People will just fudge their numbers to game the system.
For instance, salespeople will underestimate their
projections so that they’ll look good when they make or
exceed those numbers. So why even pretend that you can
forecast sales accurately when the process will be just
another exercise in futility?
Excuse me, but that defeatist attitude is nothing but a pot
of crock! Let me be clear: It’s a cop-out for sales managers
to claim that sales forecasting is inherently impossible.
The simple truth is that companies can indeed reliably
forecast their sales, and all the leading organizations do
it because they absolutely need that crucial information.
Otherwise, a business can’t be run efficiently. How,
for example, can the manufacturing department plan
its resource allocation without knowing the volume of
shipping orders for the upcoming quarters? The trick to
accurate sales forecasting, though, is that you need the
right system in place.
Understanding the “Sales Funnel”
Before you can begin to improve your sales forecasting,
you first need to understand a fundamental concept. The
typical sales process is like a funnel (see accompanying
illustration). At the bottom are deals that you’ve almost
closed. All you need to do for those opportunities are to
remove any remaining obstacles (for example, you might
need to meet with the final decision maker to iron out the
specific financial terms of the contract). In the middle of
the funnel are other prospects that are in the works. Here,
you need to do important background work (for example,
identifying all the people at the prospective customer who
could possibly veto the deal). And above the funnel are
numerous leads that need further investigation. These
leads need to be screened to identify which ones should
be pursued. As a prospective deal moves down the funnel,
two important things happen. First, the time required
to close the deal will tend to decrease. Second, the
probability of your actually closing the deal will increase
(or, in other words, the uncertainty that you will close the
deal will decrease).
Each location of the funnel (bottom, middle or above) has
a quantitative metric for the likelihood of the deal closing
in a given amount of time. That period can be based on a
typical sales cycle. Let’s say that the typical sales cycle
for your products is eight months (that is, you usually
take eight months to close a deal from the time you get a
solid lead, such as when a prospective customer requests
information about your product or otherwise engages with
you about a solution offered by your company). So, for
instance, your potential deals at the bottom of your funnel
might generally have a 70 percent probability of closing
within half the sales cycle (or four months). Your prospects
in the middle of the funnel might have a 40 percent chance
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of closing within that time. And your prospects above the
funnel might have just a 10 percent chance of becoming
a finalized deal within the typical sales cycle (or eight
months).
Now here’s the part about forecasting. To obtain an
accurate projection of your sales, all that you to do is to
categorize every one of your potential deals into the right
location (bottom, middle or above) of the funnel, along with
your estimates of the size of the potential order. Then you
add up those opportunities for each location of the funnel
and apply the appropriate probability and time period.
The total sum of those numbers will then be your sales
forecast. Okay, you might be skeptical about how such a
simple concept could actually be effective in practice, but
I have seen numerous companies dramatically improve
the accuracy of their sales forecasts by implementing it.
Consider the operations of a large aerospace company that
was having trouble years ago because its sales projections
were all over the map – the average accuracy was just 35
percent. Then the company implemented a program that
taught the fundamentals of funnel management. To begin
with, managers clearly delineated and codified specific
criteria that helped define prospective customers. For
example, a lead had to meet specific objective criteria
before it could be moved to the middle of the funnel. And the
company conducted formal reviews each week to ensure
that all the salespeople were using the new system. Within
just one quarter, the accuracy of the company’s sales
forecasts had improved to 60 percent, and it eventually
exceeded 75 percent. That change saved the firm millions
of dollars annually because the manufacturing group was
then able to allocate its resources more efficiently to plan
better for future orders.
Of course, that aerospace company didn’t just implement
the system and magically have the accuracy of its sales
forecasts improve. Although simple in concept, the sales
funnel takes a concerted effort and sustained commitment
from everyone in the sales organization. And, as with
other kinds of similar initiatives, the devil is definitely in
the details of implementation.
Managing the Sales Funnel
The first important detail is that you have to classify
your customer opportunities accurately. If you’ve been
mistakenly placing companies in the middle of the funnel
when they actually belong above, then of course they will
take much longer to close and a smaller percentage of them
will become finalized deals than you’ve expected. This
then means that your sales forecast will be substantially
off because of the shortfall.
Categorizing customer opportunities correctly is
easier said than done. The problem is that many sales
professionals will fool themselves into thinking that a deal
is closer to being closed than it really is. They’ll be overly
optimistic, now realizing the amount of work that needs
to be done. So you need to get them to be realistic, and
the way to do that is by having some good metrics, both
qualitative and quantitative. Everyone has to agree to the
criteria, and each person has to abide by them. You should
consider having a standard form that salespeople would
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fill out for each solid lead, especially for potentially large
deals, and that form would include questions that help
determine the location of that opportunity with respect to
the sales funnel.
You might use an acronym like “DUNCE” to help people
remember the criteria. “D” is that the customer has dollars
allocated to pay for the project; “U” is that there’s urgency
on the customer’s part; “N” is that you understand the
customer’s true needs; “C” is that you have coaching; and
“E” is that you know the identity of the economic buyer,
or final decision maker. Before a lead can be placed into
the funnel, you might stipulate that the salesperson has
to satisfy the D, U, and E requirements. And before a
prospect can be moved from the middle to the bottom
of the funnel, the salesperson must meet the N and C
requirements. At a minimum, companies need a list of
general questions like DUNCE, but they also should have
criteria that make sense not only for their specific industry
but also for their own business. For instance, one criterion
for moving a potential customer to the middle of the funnel
might be that a salesperson has to perform a live product
demonstration at the customer’s site. You might need a
few iterations to define all the necessary funnel criteria.
You should involve key managers in that process, not only
because they typically know what criteria are important
but also because their participation will enable you to gain
their buy-in when implementing the system.
The criteria should be designed to help managers refrain
from the common practice of second-guessing the sales
estimates from their staff. We’ve all done this type of
thing before: “Because Roger always estimates low and
sandbags his numbers, I’ll adjust his forecasts upward by
20 percent. And because Marcia is always wildly optimistic,
I’ll cut her projected sales by half.” That’s the kind of game
that sales managers often find themselves having to play,
but the funnel criteria, when selected properly, will help
prevent that kind of number fudging.
But you also need someone in charge of the funnel system
to ensure that all the salespeople are using it and that
everyone is abiding by the same criteria. The important
thing here is that that person has to have enough clout to
hold people accountable for their individual funnels. You
can’t turn this important function over to some low-level
staff person, because then the salespeople and account
managers will try to game the system or they won’t take it
seriously. You need someone who can hold people’s feet
to the fire. That individual might be the head of the sales
operation or one of his or her key lieutenants.
The funnel “meister” should be empowered to hold people
accountable. If, for example, customer prospects have to
have a 50 percent probability of closing before they can
be placed in the middle of the funnel, then a salesperson
who is closing just 25 percent of those deals needs to
be taken to task. Could that salesperson, for instance,
be prematurely placing those leads into the middle of
the funnel before they’ve been properly qualified? That’s
why the criteria need to be specific enough to make such
assessments, and you need at least about three or four
for each funnel location. Interestingly, experienced sales
managers usually know what those criteria should be
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because they have a sense for the typical obstacles that
tend to hold up deals for their company’s products.
At the Treasury Management Sales and Commercial
Business Development for Wells Fargo, managers came
up with an “opportunity checklist” to help them conduct
reviews of large potential deals. The checklist contains
a series of 20 questions such as, “Do you know who all
the key decision makers are?” The list helps the company
to prioritize its prospects and get a better handle of
future sales. For example, when reviewing one particular
lead, Wells Fargo uncovered two important things: the
prospective customer already had a good relationship with
its current supplier and it didn’t perceive Wells Fargo as
having any edge over the incumbent vendor. So Well Fargo
decided not to expend resources to put together a custom
bid and decided instead to submit a bid that was close to
the company’s standard pricing. Moreover, Wells Fargo
also omitted that potential deal from its sales forecast.
Large businesses like Wells Fargo should consider having
a different funnel for each major product line, especially
if the products have very different selling cycles. And you
might also need to have a separate funnel for each major
geographic region, such as North America, Europe, and
Asia/Pacific. Moreover, you should adjust your criteria to
the changing market. In normal times, for example, your
sales cycle might be six months. But in a recession, that
time period could easily balloon to over a year. That’s why
in volatile markets you’re better off using a sales cycle that
is adjusted using a moving average over several cycles
or, better yet, a weighted moving average that places
more emphasis on recent periods of time. In addition,
remember that your sales cycle is just an average. In
general, larger deals will tend to take longer to close
because they will usually involve a greater number
of people in the approval process. Also, sales to new
customers will typically take much longer than sales to
existing accounts, especially when those deals involve
products that are new to the market.
In order for the funnel system to work, salespeople have
to manage their individual funnels on a regular basis. The
frequency will depend on the complexity of the typical
deal as well as the sales cycle. For products with long
sales cycles, monthly funnel reviews might suffice. But
for other products, daily reviews might be necessary.
When implementing a funnel system, companies should
consider having at least weekly meetings for people to give
updates of their funnel activity. The participants basically
go around the table, one by one, to give their numbers. In
this way, peer influence helps to keep people honest to
their commitments. After the funnel system has become
an ingrained part of the sales process, companies might
then have the meetings on a less frequent basis, perhaps
just monthly instead of weekly. Again, this depends on the
sales cycle of the product (shorter cycles require more
frequent meetings).
After each meeting, you might publish the funnel data on
an in-house basis to help keep everyone honest. The funnel
reports should be internal and confidential, and you could
aggregate the data per region (or district or branch) and
per product. The real power of the funnel comes over time
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when people can track the progress of various potential
deals, and they can identify what’s stalled and then develop
a plan of action for moving those prospects along.
One way to ensure that salespeople take the funnel system
seriously is to tie the accuracy of their forecast numbers to
their sales commissions. Or, at the very least, you can make
forecast accuracy a part of their performance reviews. In
addition, you need to impress upon salespeople how good
forecast numbers are ultimately in everyone’s (including
their own) best interests. When Sean Reese, a demand
planner for Ocean Spray Cranberries, was trying to get
better information from his company’s sales staff, he made
the following case. He argued that accurate forecasts will
help improve the efficiency of the company’s supply chain
and reduce the possibility that stores would run out of
product, thus eventually leading to a higher sales volume
– and thus larger commissions. That argument helped
everyone get on board with Reese’s program.
If your company relies heavily on information from
distributors, you might consider encouraging them to
provide more accurate data by sharing any resulting savings
with them. Consider Arasco, a Saudi-based supplier of
animal feed products. In 2006, after Arasco realized that
better forecasting could result in considerable savings in
storage costs, the company agreed to cut prices by up to
4 percent for those distributors that agreed to help provide
better information about future demand. The program was
a success as the forecast error fell from 15 percent to 9
percent, enabling the company to increase its on-time
delivery rate from 85 percent to 93 percent.
Some Common Traps
World-class sales organizations all place a value on
process, and accurate forecasting should always be part
of that process. To improve your forecasting, the use
of the sales-funnel concept can help tremendously, but
implementing it takes concerted effort and an awareness
of the potential pitfalls. In particular, companies should be
on the lookout for the following common mistakes:
1. Allowing prospects to “whirlpool.” Every sales
organization has customer prospects in the middle of the
funnel that go round and round but make little progress
toward moving to the bottom and getting closed. You
might have an uncovered base, such as a key executive
at the customer company is unconvinced of the need
for change. A study by Miller Heiman found that, at
any given moment, nearly 35 percent of prospects are
wasting a salesperson’s time. Often the problem is that
those prospects have been miscategorized and should be
moved from the middle to above the funnel.
2. Confusing selling with buying. Remember that the
selling process has seven basic steps: 1) target prospects,
2) qualify leads, 3) cover the bases, 4) make proposal, 5)
close deal, 6) fulfill order, and 7) up-sell and cross-sell.
The buying process also has seven basic steps but they
are markedly different: 1) monitor status quo, 2) recognize
the need to change, 3) define problem, 4) evaluate options,
5) select best solution, 6) implement solution, and 7)
assess value of solution. The problem is that there’s often
a mismatch in where the seller is versus where the buyer
is. The classic mistake occurs when the seller is on step 5
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(ready to close the deal) while the buyer isn’t even on step
2 (that is, the customer isn’t fully convinced that he has a
problem). This, unfortunately, happens far too frequently.
You can prevent such occurrences by relating some of
the steps of the buying process to the criteria you use
to determine a prospect’s location in the sales funnel.
With the acronym “DUNCE,” for example, the letters “D”
(the customer has dollars allocated to pay for the project
and “U” (there’s urgency on the customer’s part) relate
specifically to step 2 of the buying process (recognizing
the need to change).
3. Treating all products the same. Companies should
consider ranking their product lines (for example, in order
of potential revenues or profits) so that they can spend
more time tracking and forecasting those products that
will have a bigger impact on the bottom line. For instance,
BASF, the German chemical manufacturer, categorizes
its products into A, B or C, depending on their potential
impact. By spending more time on forecasting the A
products and less time on the C, one business unit at the
company was able to improve its overall forecast accuracy
by an average of 20 percent.
4. Not making special allowances. Sales forecasts
based on the funnel concept will be accurate if you have
numerous prospects that are all about the same order
size. In such cases, the law of averages will prevail: some
prospects will drop out while others will reach fruition such
that everything will even out. But the problem is when
some of your sales opportunities are much larger than
others. Consider, for example, the extreme case in which
one of your potential deals is an order or more larger in
magnitude. Let’s say that you have a deal in the works that
could bring in $10 million, but your average sale is much
less than that. If you close that big deal, your sales will be
$40 million for the quarter, but if it falls through then you’re
looking at $30 million, substantially less. The best thing
to do here is to separate that $10 million prospect from
your forecast, perhaps by placing an asterisk next to your
quarterly projection. In fact, deals that important require
their own individual funnels so that they can be tracked
separately from the rest of your prospects.
5. Failing to properly prioritize activities. In general,
salespeople tend to work the funnel from the bottom up,
concentrating on the surest opportunities first and leaving
the less certain stuff for last. That approach might seem
to make sense, but the truth is that it leads to unnecessary
volatility. Here’s what typically happens: The sales
organization is busy closing important deals and works
hard to move prospects from the middle to the bottom of
the funnel. All of that activity takes considerable effort,
and people just can’t find the time to generate new leads
until they realize that the funnel is drying up. Panic then
ensues, as everyone scrambles to find new business. But
the problem is that those new leads could take months (if
not years) to work their way down the funnel, and that time
lag could result in a sales shortfall and missed forecast.
To prevent that, you should always prioritize the three
areas of the funnel in the following way: bottom, top and
then middle (instead of bottom, middle and then top). The
reason for that is because salespeople dislike the hard
(and seemingly thankless) task of prospecting, so the only
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way to ensure that it gets done is to prioritize it ahead
of the work that needs to be done in the middle of the
funnel. Of course, that’s not to say that you can afford
to neglect customer prospects in the funnel’s middle.
Somehow, though, people will find the time to work on
the middle of the funnel (after paying the proper attention
to the funnel’s top), whereas they always seem to be too
busy to concentrate on finding and qualifying leads above
the funnel unless they’re absolutely forced to do so.
6. Not having a funnel “meister.” You need someone
in charge of the funnel system and that person has to
have a lot of clout. He or she can’t be a low-level staff
person, because then the process becomes just a clerical
function. You need someone who knows the process
and is familiar with the different customer accounts so
that he can keep people honest by asking questions like,
“How can this customer be in the middle of the funnel
when you don’t really know who the final decision maker
is?” In other words, the funnel meister can’t just blindly
accept information from salespeople; he or she needs to
constantly question the funnel info because salespeople
are absolutely notorious for being overly optimistic about
their prospects.
7. Making the funnel process burdensome. On the
other hand, you don’t want to make the funnel process
an onerous or thankless chore. The funnel has got to be a
tool that enables the sales force to work more efficiently
and effectively. Otherwise, people will do everything
they can to avoid using it. So the trick is to integrate the
funnel process with what the sales force already does.
Many companies, for instance, use a “blue sheet” or other
internal process to track the status of customer prospects.
Much of the information required by a funnel review can
be obtained from such a system. For example, blue sheets
typically require salespeople to fill in the names of the key
decision makers at a customer account -- information that
is crucial for any funnel review. Moreover, such important
data can be transferred directly to a customer relationship
management (CRM) system that a company might already
be using. Miller Heiman, for example, has a tool called
Sales Access Manager that enables salespeople to avoid
having to re-key any data; they just enter it once into a blue-
sheet application and the information can be transferred
automatically to a CRM system from Oracle, Salesforce.
com, SAP or another vendor. Those CRM applications, in
turn, typically have their own capability to perform sales
forecasting, and that information can then be used in your
funnel reviews.
8. Over-relying on CRM. That said, you should also
be careful about relying too much on data from a CRM
system. According to research by Miller Heiman, 72
percent of sales organizations report that their CRM
application does not provide accurate forecasting. As with
any type of application, the software is only as good as
the input data. In other words, “garbage in, garbage out.”
Specifically, when a CRM application is too cumbersome
or difficult to use, salespeople will often input inaccurate
information, for instance, quickly checking off boxes on
a form without really thinking about what they’re doing
because they just want “to get the task over with.” Such
faulty data will then lead to wildly inaccurate forecasts.
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To prevent that, sales managers have to be involved in
the design of the CRM tool and should never completely
relinquish that job to the IT department. If they do, they
risk ending up with a system that salespeople don’t
really take seriously because the perceived benefits do
not outweigh the effort required to use it. A good rule of
thumb is that, if you can’t teach salespeople the basics
of how to use a CRM system within five or ten minutes
so that they can at least hit the ground running (later,
they can learn additional functionality), then the system
is probably too complex. Any sales application needs to
be intuitive enough so that people can essentially learn
how to use it simply by using it. And ideally the software
should interface with other tools that your salespeople
regularly use, such as Microsoft’s Outlook, as well as
portable devices like the iPhone and Blackberry. In short,
both usability and accessibility are crucial.
Of course, sales forecasts will always have some degree
of uncertainty. After all, predicting the future is, at best, an
inexact science. And there can certainly be valid reasons
for a sales shortfall. A big customer could go belly up
or be acquired by a company that uses another vendor.
Or new governmental regulations could dramatically
increase the length of your sales cycle. Indeed, you can’t
foresee and prepare for every possible contingency
because nobody’s crystal ball is ever that clear. But
that’s not what I’m talking about. I am asserting that the
sales function is a definable, repeatable process that can
be tracked and managed using a simple concept called
the sales funnel. And if a process can be tracked and
managed, then you can certainly monitor it regularly to
extrapolate the future from the present. The basics are
really quite straightforward, but unfortunately many sales
managers are either too lazy or they lack the discipline
to implement such a system. Alas, for them, sales
forecasting will always be an unreliable process like tea-
leaf or palm reading, and that is certainly no way to run
a business.
About 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 in
The 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.
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.
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WEEKLY FORECAST AND DEAL STATUS CALLSby 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
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What Sales Leaders are Doing Now
moves to closure, the more important it becomes to confirm the accuracy of
information. Managers should check the accuracy of deal sizes, ask questions
about expected close dates and make sure they feel comfortable with where the
opportunities are moving and how they are being dealt with.
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.
Lack of understanding of the opportunity. As a manager, it’s unlikely for you to ��
be close to every deal belonging to each of your reps. To scale your opportunity
management, you need some type of system for determining which deals you will
get close to. Deal size and proximity to closing are good starting points. Once
you have decided which deals you want to zero in on you can ask some simple
questions. You can keep these consistent for every deal. Your reps will soon catch
on and will be better prepared with answers once you have done this a few times.
Here are some questions you can ask:
What is the customer trying to fix, accomplish or avoid?��
How will our solution address that and how does it sound different from ��
other options the customer has?
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What Sales Leaders are Doing Now
What is the customer’s decision-making process? Have we met all the ��
decision makers?
What are the biggest red flags that would stop us from winning this deal?��
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!
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LEARN FROM LOSING: WHAT SALESAND MARKETING LEADERS CAN LEARN FROM LOSING A DEALBy 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.
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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.
So What Does a Loss Review Process Look Like and What are Companies Learning From It?
Let’s start with the meaning of a lost deal. We all tend to think about losing a deal in a
very linear way – the deal moves all the way through the funnel and the customer makes
a decision. In fact, most lost deals don’t work out that way at all. I’m surprised by the
number of deals that fall out of the funnel long before they reach the proposal stage
and how often they are “lost” to other factors such as competing priorities or internal
resources versus a true competitor. Companies who understand this want to learn just as
much about those that fell out of the funnel early as they do about those that follow the
stereotypical pattern. It’s important to get everyone on the same page as to what “lost”
means. It may also help to create other definitions such as “no interest” or “on hold” to
begin understanding and categorizing what happens when you don’t win.
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:
Criteria for deal sizes��
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.
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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:
A well understood value proposition. Sales and marketing teams are better aligned 1.
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.
A more strategic prospecting plan that focuses the organization on ideal profiles of 2.
potential clients. This is especially impactful on potential investments being made in
both time and money for the pursuit of new business.
Results. A clear impact can be made on both conversion and velocity through a 3.
diligent deal review process.
Operational efficiency and customer satisfaction. It’s amazing what happens when 4.
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.
Organizational alignment. It becomes much easier to make decisions on segmentation 5.
strategies when you know your ideal customer and prospect. Loss reviews become
a critical component of understanding the types of resources and talent needed to
win business, and how to avoid investing resources in prospective business that may
never close.
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!
4848
ARTICLE
Leveraging Sales TalentA Successful Model for Identifying, Developing, and Retaining Top Sales Performers
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5454
Sales Messaging for Success Why Having a Client Centric Value Proposition is Invaluable
Defining Your Ideal Customer
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.
Defining Your Sales Message
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?
Who Are You? Most sales people are able to answer this one quickly and easily.
by Rob Hartnett, Managing Director, Selling Strategies International
5555
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.
Why Does It Matter? This is question is harsh but the most important question.
The answer to this question is the one your customers care most about. That is
why do you matter to your customers, what do you do that makes you so special
and unique to them.
If you are answering this question with regard to a specific product or service, a
test to your answer is the three D’s of marketing.
1. Can you differentiate yourself from the competitors?
2. Can you defend yourself in the market place?
3. Can you distinguish yourself in a crowded market place
Source: The Brand Gap & Selling Strategies International
Are you Seen as Above or Below the Line? Put more simply does your prospect or client see you as someone who adds to
their revenue or profits or as someone that represents a cost to their business.
Getting on the right side of the profit and loss statement can make an enormous
amount of difference to how you are viewed by the buying organisation.
If you look at the diagram below you can see there are just seven ways to drive
profit in any business and these are made up of either increasing revenue or
decreasing costs.
Above The Line - 5 Ways to Increase Revenue
1. Increase number of leads
2. Increase the conversion into sales
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3. Increase average sales value
4. Increase number of times p.a. that clients buy
5. Increase the profit margin per sale
Below The Line - 2 Ways to Decrease Cost
6. Decrease variable cost per sale
7. Decrease fixed overhead
Clearly it pays to be seen as someone who drives above the line performance
and not below the line performance. The recent Global Financial Crisis was
evidence of this. Those suppliers who were seen as a cost had their business cut
while those who were seen as contributors to above the line or top line
performance were retained.
The table below also demonstrates how much difference a small increase of 10%
across the five areas can deliver a significant result to profitability. Understanding
how your products and services can assist a prospects profitability in a table
such as the one below is very compelling.
Above The Line In Action
Current 10% incr. #1 Leads / Enquiries x 100 110 #2 % Conversion to Sale = 10% 11% Number of Customers x 10 12.1 #3 Average Sale Value = $1,000 $1,100 Sales Turnover x $10,000 $13,310 #4 Repeat Sales per Year = 4 4.4 Annual Turnover $40,000 $58,564 #5 Profit Margin 50% 55%
Annual Gross Profit $20,000 $32,210 Increase in Net Profit 62% Source: Better Business Institute
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Examples of Value Propositions
Here are some examples of value proposistions that have proven to be
successful in getting engagement with a new prospect. Note how they use the
language and metrics that their prospects use and care about.
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.
Sales & Marketing Alignment Once the value proposition is developed and agreed upon it is vital that other
functions such as marketing are brought in to ensure it is communicated
consistently across the organisation. Too often the sales message delivered in
person by sales is not reflected in key customer communication tools such as
websites, brochures, advertising and direct marketing campaigns. This is the joint
responsibility of both sales and marketing.
Not surprisingly in the recent Miller Heiman research on what makes a Winning
Sales Organisation sales and marketing alignment was a key attribute of the
most successful sales organisations.
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SPECIAL EDITION
Best of Sales Performance Tips: Improve Your Prospecting Techniques
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© 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | www.millerheiman.com
Improve Your Prospecting Techniques
Introduction
This issue features three articles that focus on the critical steps required to be successful at prospecting in today’s selling environment; some helpful advice to win more business by pursuing only those opportunities that reflect the qualities of your ideal customers; and tips to help you identify and access the senior-level decision maker in your sale.
Get Out Of Your Shoes And Into Your Prospect’s. How many times have you started to leave a voicemail for a prospect or began a sales presentation with the words, “let me tell you a little bit about our company”? Chances are, you’re probably doing it all the time.
How To Identify Ideal Customers. Most salespeople have a high level of sales activity as a result of prospecting. But we also see many of them chasing down opportunities that have a low probability of closing. This activity is damaging. Time is wasted when it could have been spent finding prospects resembling the profile of your top customers.
Identify the Economic Buying Influence. The first step in executive-level selling is to find out who holds the purse strings in your sale. The ultimate decision maker is the person who gives final approval to buy or veto your sale.
Get Out Of Your Shoes And Into Your Prospect’s
Step 1: Get Out of Your Shoes and into Your Prospect’s
Selling isn’t about you. It’s about your prospects. If you’re not getting out of your shoes and into your prospect’s, you’re missing the boat.
How many times have you started to leave a voicemail for a prospect or began a sales presentation with the words, “let me tell you a little bit about our company”? Chances are, you’re probably doing it all the time.
Your prospects aren’t interested in you and your product. What they do care about is their problems and the things they want to fix, accomplish, or avoid.
Stop. Think. Reflect.
Stop product pitching. People don’t want to hear about how great your product or service is.
Think about what’s likely going through the mind of your prospect. What issues and challenges are they facing?
Reflect. Specifically, how can I help this person?
Effective prospecting requires a relentless pursuit toward understanding your prospect’s Concept - a fundamental principle of Miller Heiman’s Conceptual Selling® workshop.
Concept is something that develops in your prospect’s mind. In many cases, you can contribute to defining your prospect’s Concept by helping them understand what they need to fix, accomplish, or avoid. If you don’t identify your prospect’s Concept, you’re losing business.
By getting out of your shoes and into your prospect’s, you’ll begin to move from product-led selling to a true customer-centric approach, in which you become a trusted advisor and business consultant, and not a product-pusher.
Remember, key decision makers are tired of salespeople taking an ineffective approach to prospecting. They want salespeople to truly understand their problems in order to deliver a meaningful solution.
How To Identify Ideal Customers What if you could duplicate your best customers?
Most salespeople have a high level of sales activity as a result of prospecting. But we also see many of them chasing down opportunities that have a low probability of closing. This activity is damaging. Time is wasted when it could have been spent finding prospects resembling the profile of your top customers.
How to Identify Ideal Customers
1. Make a List of Your Best and Worst Customers
Think about your customers for a minute. Which customers do you wish you had a thousand more of just like them? Who are the customers you wouldn’t lose sleep over if they went to your competitor tomorrow? On a piece of paper list your best customers on the left, and your worst customers on the right.
2. List the Characteristics of Your Best and Worst Customers
Miller Heiman | Best of Sales Performance Tips: Improve Your Prospecting Techniques
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© 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | www.millerheiman.com
What makes these companies your best or worst customers? Consider the demographic features of these customers, like number of people, deal size, etc., but also think about the psychographic characteristics such as values and culture. Write these underneath your list of best and worst customers.
3. Select Your Top Five
When finished making your list of characteristics, you’ll need to prioritize. Which five traits of your best customers would you consider the most important in replicating? Are there any features of a best customer that you see the reciprocal of on the right side?
For example, if you listed your best customers as typically having growing product life cycles, perhaps you may have listed that your worst customers have mature product life cycles. If so, this could be an indication that the quality of a growing product life cycle should be among the top five criteria that you choose to become your ideal customer profile.
Using this formula to pursue new prospects will keep you focused on those companies more likely to do business with you. Better yet, you will stop wasting time pursuing prospects that have a low probability of closing.
Identify The Economic Buying Influence With 3 out of 4 opportunities now requiring executive-level approval, you probably know that executive-level selling is mandatory to succeed in today’s selling environment. But what you may not know is that you simply can’t rely on using your own executives to sell for you.
Instead, you need to master executive-level selling yourself so you can consistently win the decisions of high-level executives without depending on internal resources.
Identify the Economic Buying Influence
The first step in executive-level selling is to find out who holds the purse strings in your sale. The ultimate decision maker is the person who gives final approval to buy or veto your sale. In Miller Heiman’s Strategic Selling® program, this person is called the Economic Buying Influence. There is only one Economic Buying Influence per sale, although there can be a board or committee in some instances.
The Economic Buying Influence is concerned about the bottom line and return on investment. At this level, price pressures are significantly reduced, and a sharp focus is
placed on how your solution addresses what the Economic Buying Influence wants to fix, accomplish, or avoid.
Access the Economic Buying Influence
Once you’ve identified the final decision maker in your sale, you’ve got to create a compelling reason for him or her to meet with you. In Miller Heiman’s Conceptual Selling® program, this is called the Valid Business Reason.
A strong Valid Business Reason:
· Clearly defines why the executive should meet with you. · States the purpose of setting an appointment. · Links directly to what the Economic Buying Influence
wants to fix, accomplish, or avoid.
In order to get in the door of your executive-level decision maker, your Valid Business Reason must impact what the executive wants to solve in the organization. Instead of focusing on the features and benefits of your product or service, focus on understanding the issues of the executive.
You need to explain why your sales call is such a high priority 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 assistant.
About Miller HeimanMiller Heiman has been a thought leader and innovator in the sales arena for almost thirty years, helping clients worldwide win high-value complex deals, grow key accounts and build winning sales organizations.
The company is headquartered in Reno, Nevada and has offices around the world. More information can be obtained by visiting the company’s website at: www.millerheiman.com.
Miller Heiman | Best of Sales Performance Tips: Improve Your Prospecting Techniques
This selection is supported by Miller Heiman’s workshops, Strategic Selling
®, Conceptual Selling
® and Executive Impact
SM.
If you have questions relating to this topic, and would like to hear from an expert, you may call us at 877-678-0391. You may also visit www.millerheiman.com and subscribe to receive Sales Performance Tips each month via email.
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SPECIAL EDITION
Best of Sales Performance Tips: Phone Prospecting Strategies To Get Your Foot In The Door
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© 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | www.millerheiman.com
Phone Prospecting Strategies To Get Your Foot In The Door
Introduction
In this issue, we focus on a necessary exercise required of “hunters” and business development professionals that they dread doing – calling a prospect. With telemarketing on the rise and an increasing number of people screening their incoming calls, phoning a prospect and hoping to get an appointment with him or her require new techniques.
Increase Your Call Back Rate By Leaving Better Voicemail Messages. When leaving voicemails for prospects or clients, you can dramatically increase your callback rate by adjusting your message to your client’s perspective instead of yours.
Warm Up To Cold Calling. Are you anxious about picking up the phone? You’re not alone but you can do something to overcome your fear of cold calling.
Increase Your Callback Rate by Leaving Better Voicemail Messages “Please leave a message...”
As sales professionals, we leave a lot of voicemails in our pursuit to drive revenue and build client relationships. When leaving voicemails for prospects or clients, you can dramatically increase your call back rate by adjusting your message to your client’s perspective instead of yours.
One of the most common mistakes salespeople make when leaving messages for prospects is talking too much about themselves and their company. Using a Valid Business Reason (VBR) is an effective way to craft a compelling reason for your client or prospect to call you back. The person you are calling is as busy as you are, so messages longer than 20 seconds will start to decrease your chance of a call back right off the bat. Being concise is key. Selecting what information to include in that brief message is what a VBR will help you accomplish.
Criteria for a good VBR:
1. Impacts what your recipient wants to accomplish 2. Sets the call as a high priority
3. States “what’s in it for me” to the recipient 4. Is clear, concise, and complete
An additional suggestion is to start the message with your name, company name, and phone number. The tendency of the recipient is to start writing down your information before they even know what you want. If you back that up with a solid VBR, and repeat your name and number at the end, you are much more likely to get a call back.
Warm Up to Cold Calling Cold calling and call reluctance are very real issues for many sales organizations. Here are three tips for overcoming your fear of cold calling.
1. Target properlyBefore picking up the phone, it is vital to understand what your ideal customer profile looks like. Many salespeople make the mistake of starting too high or too low within an organization. Also, many salespeople approach companies that just aren’t a “fit” for the products or services they’re trying to sell. Know whom you’re going after and why they are a fit. Has your company had success in a particular industry? Who are truly the key decision makers as it relates to your product or service? Do you understand how purchases are made within the target company? Research. Research. Research.
2. Have a valid business reasonOnce you’ve identified whom you are going to call, you better have a clear understanding of what is in it for them. Why should they take time out of their busy schedule to speak with you? What is the real business need you can address? What value do you offer? Know what you are going to say and clearly articulate why this person should spend their time with you.
3. Schedule a timeIf you catch your prospects at their desk, don’t assume they have all the time in the world to talk to you right that second. Instead, request to set up a 30-minute conversation at a later date to ensure that when you do finally have a conversation, all attention is focused on you.
Final words: If you’re still anxious about picking up the phone, just think about the process of cold calling one step at a time. At the end of the day, it’s a numbers game. If you target properly, have a valid business reason for making the call, and respect the time of your prospects - you’re much more likely to experience success.
Miller Heiman | Best of Sales Performance Tips: Phone Prospecting Strategies To Get Your Foot In The Door
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Are You Being Out Listened?
Rob Hartnett
www.sellingstrategies.com.au
Working in a today’s complex selling environment means that competition is high and your sale relies more and more on the approval of multiple decision makers. In the online world , it is also likely that customers already have a description of your product from your website or your competitors and may even have people cheering for them internally.
This situation presents a perfect opportunity to benefit from a well-built relationship. Customers need assurance that you understand their needs and that you are more interested in helping them find a solution than pushing your product.
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.
The 80 Percent Syndrome can be very damaging to your business relationships, causing your credibility to flounder and your opportunities to decrease significantly. Suppose you have one hour to spend with your customer. Your time is likely broken down as follows:
• Thirty-one minutes spent telling the customer about your product or service
• Eight minutes spent on idle chat• Nine minutes spent asking questions • Twelve minutes spent listening to the customer talk
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.
Are You Being Out Listened? by Rob Hartnett, Managing Director, Selling Strategies International
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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.
6565
Are You Really Losing on Price?
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.
Learn Why You LostThe only way you will know the real reason is to ask. Understanding why you lost represents a great opportunity to improve your future performance, especially considering that so many salespeople do not conduct this follow through activity.
In Miller Heiman’s annual research of Sales Best Practices, barely a quarter of respondents agreed with the statement, "Win or lose, we get accurate feedback on all proposals from our clients." Analyzing the key factors of a winning account has value, but knowing why you lost an account can help you avoid the same mistakes, increasing your success rate.
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.
From Excuse to ActionBut is price really the issue? Here are three common rejection responses you've probably already heard and what they really mean.
"Our budget was cut at the last minute."You may not have reached the right level of decision maker to insulate your sale from this outcome. A higher level decision maker may have been able to reserve a budget if your proposed solution is critical enough to their business issues.
"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.
Are You Really Losing on Price? by Rob Hartnett, Managing Director, Selling Strategies International
6666
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"Your solution doesn't give us everything we need to accomplish our objectives."In this case, you may have actually had the lowest price, but because you did not offer a solution that fits what the client is trying to accomplish, you were not selected as the best option.
“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.
Improve Your ResultsThe knowledge you can gain from understanding the sometimes veiled reason why the client did not choose your solution provides can actually bolster your credibility, showing genuine interest in why your solution was not selected and how you can better understand the client’s needs.
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 ©
6767
© 2006 Miller Heiman, Inc. All Rights Reserved www.millerheiman.com |
Equal Pain or Equal Gain? Negotiate for Win-Win
Every sale involves negotiating—starting with
your fi rst contact with the client. Miller Heiman’s
Negotiate SuccessSM workshop shows the best
way to begin, essential areas of focus, what to
do fi rst and last, how to avoid pitfalls and ways to
handle typical “tactics.” Call: 877-678-3386 to
fi nd your next step to successful negotiation.
6868
Preparation:
The Ultimate Negotiation Tool
The best salespeople clearly under-
stand the importance of knowing as
much as possible about what their
customers need, what they worry
about and how they do business, ac-
cording to Miller Heiman research.
More than 2,200 sales profession-
als participated in the 2006 Miller
Heiman Sales Performance Study,
which is part of the world’s largest
continuous research project on sales
performance. Among other fi ndings,
this year’s study identifi ed the char-
acteristics of key players in Winning
Sales Organizations (WSOs).
The study indicated that, when
compared with less-successful
salespeople, top performers:
Clearly grasp the specifi c chal-
lenges their customers face in their
industries 20 percent more often.
Focus on solution-led selling
26 percent more.
Understand their customers’ buy-
ing processes 25 percent better.
Win the approval of senior
decision-makers 32 percent
more
Source: The 2006 Miller Heiman
Sales Performance Study
Equal Pain or Equal Gain?Negotiate for Win-Win
© 2006 Miller Heiman, Inc. All Rights Reserved www.millerheiman.com |
Equal Pain or Equal Gain? Negotiate for Win-Win
By Anne Stuart
If there’s one thing everybody knows about sales, it’s that serious
negotiation starts when you and your customer or prospect sit down
together to close a deal. Right?
Think again. In any successful negotiation, the real work begins long
before either party comes to the table.
“When people hear the word ‘negotiation,’ they think ‘Oh, that hap-
pens at the end of the sales process,’” says Grande Lum, author of
The Negotiation Fieldbook: Simple Strategies to Help You Negotiate
Everything. In fact, he and other experts say, the best salespeople
start thinking about negotiation much earlier--sometimes even be-
fore they’ve made the fi rst contact.
Specifically, top performers prepare for those at-the-table talks by
learning as much as possible about the other party’s needs and
concerns. “You have to look for their underlying interests,” says
Lum, a nationally known authority on negotiation who has partnered
with Miller Heiman to integrate negotiation into their sales system.
“You need to understand what their personal motivators are, what
they’re really after.”
It’s equally important for salespeople to understand their own inter-
ests, Lum says: “As a salesperson, what is it you want to get out of
the negotiation?” The simple answer, of course, is selling that prod-
uct or service. But the best salespeople tend to have bigger-picture
goals, such as building the foundation for a long-term new rela-
tionship or expanding an existing one. And, as the results of Miller
Heiman’s own research indicates, the top performers achieve those
objectives by equipping themselves with knowledge (see sidebar:
“Preparation: The Ultimate Negotiation Tool.” )
“Too often, salespeople don’t dig enough to fi nd the customer’s
real interests,” notes Damon Jones, who, as Miller Heiman’s Chief
Operating Offi cer, is responsible for the fi rm’s global sales opera-
tions and international growth. “They need to fi nd out whether the
client’s focus is around price, or around the terms and conditions, or
6969
More Information on Negotiation
Negotiate SuccessSM program
Miller Heiman’s Negotiate SuccessSM
workshops provide a simple, easy-to-fol-
low blueprint for using negotiations to im-
prove the sales process. The workshops
offer a proven process for making sure
everyone involved in a sales negotiation
walks away satisfi ed. Among other things,
participants learn proven methods for
overcoming objections without resorting
to price reductions—while still building
long-term relationships that ultimately
bring their companies more business.
The Negotiation Fieldbook:
Simple Strategies to Help You
Negotiate Everything
by Grande Lum
The fi eldbook is included with the Negoti-
ate Success® workshop and is written
by one of the world’s foremost experts
on the topic. This straightforward how-to
guide offers proven practices and tools
for successful negotiation. It includes
reusable worksheets and checklists,
real-life examples, a glossary and other
resources. Click here to learn more
about the workshop.
Equal Pain or Equal Gain?Negotiate for Win-Win
© 2006 Miller Heiman, Inc. All Rights Reserved www.millerheiman.com |
around something else. They need to understand what’s driving
the customer—for instance, is it that they’ve just bought a similar
product or service somewhere else?”
Developing that deep understanding of both parties’ interests is
just the fi rst of four elements that Lum calls critical to preparing
for any type of negotiation. Those building blocks make up what
he calls the ICON Negotiation Model, a framework developed
from the best practices of successful executives, salespeople,
diplomats and others skilled in negotiation. Each letter in the
acronym “ICON” summarizes one of those four key elements:
Interests: The subjective needs, goals, concerns, fears and
desires of each party.
Criteria: Objective benchmarks, precedents and standards for
judging and fi ltering potential options.
Options: Possible solutions that satisfy all parties’ interests,
making them agreeable to all concerned.
No-Agreement Alternatives: The actions each party can take
if they leave the table without formally agreeing to any option.
In these cases, negotiators often strive for what’s known as a
BATNA—“the best alternative to a negotiated agreement.”
Lum, who describes those interlocking elements in more detail
in his Fieldbook (see sidebar: “More Information on Negotia-
tion” ) says that, together, they provide a proven road map for
planning any type of negotiation. By consciously and thorough-
ly addressing each element beforehand, and by understanding
how each can be used as a source for creating more value,
savvy salespeople will come to the table better prepared—and
more likely to succeed.
And, again, “success” means more than just making the sale.
Business, after all, is about long-term relationships—as we know
all too well, it’s typically more profi table to work with existing
customers than to fi nd new ones. Done correctly, negotiation
can be a powerful tool for maintaining and expanding those
7070
high-value connections. But, Lum warns, the reverse
also holds true: When done poorly, negotiation can
do more harm than good.
“Many sales professionals view building relationships
within the sales process as a form of collaboration,”
Lum says. “But when it comes to negotiation, that’s
when it can all fall apart. The salesperson believes, or
the customer believes, that you have to be manipula-
tive, deceitful or misleading” to close the deal. Jones
agrees with that observation: “Many people on both
sides view negotiation as involving an adversarial
approach, which is counter to building a long-term
relationship,” he says. “If the process left a bit of a
bad taste in somebody’s mouth the last time around,
that doesn’t bode well for future discussions.”
So what’s the key to negotiating well? It may sound
like a cliché, but it’s nonetheless the only method
that works: Strive for a win-win outcome. Or, as Lum
puts it: “Create the best solution that will meet your
interests and mine.”
Ending up at that point requires starting with the
ICON road map, fi rst by obtaining that all-important
insight into the customer’s interests. Then establish
objective criteria. “You use criteria to help establish
a common basis for the discussion,” Jones says.
“Until you’ve agreed on criteria, it’s really hard to get
a consensus to move forward.” Such benchmarks are
particularly handy for getting over seemingly impass-
able hurdles, Lum adds. “You can resort to objectiv-
ity rather than force of will. You can be persuasive
based on data outside yourself,” such as information
provided by an independent source, he says. “That
way, neither side feels that they’re being taken.”
A clear understanding of interests and criteria will
lead both parties toward options, and, ultimately,
either an agreement or alternative resolution (which,
Lum notes, may well involve walking away, at least
for a while). No matter how the negotiation ends,
both parties should leave the table feeling confident
that they were treated honestly and fairly— and,
ideally, that they’re better off than they were before
they sat down together. Miller Heiman’s Negotiate
SuccessSM workshops focus on teaching salespeo-
ple how to achieve those objectives through a sim-
ple, non-manipulative, customer-focused process
designed to make everyone involved in a negotiation
come out a winner.
If there’s a sales-specifi c caveat on negotiation, it’s
this: “Salespeople have a tendency to capitulate too
quickly,” Jones notes. “In the spirit of trying to get
the deal done, they discount too quickly or leave dol-
lars on the table, which they didn’t need to do. They
take shortcuts. It’s easier to just discount something
than to go through further discussions to fi nd new
value—which takes far more salesmanship.” (In fact,
Miller Heiman’s study found that 69 percent of sales
leaders and 75 percent of salespeople felt increasing
pressure from existing customers to cut their prices.)
Lum says that when salespeople cave on discussions
involving prices, it’s typically because they haven’t
explored the customer’s interests thoroughly enough.
“If you haven’t discussed value, then any price is go-
ing to sound too high,” he notes.
“A successful salesperson can see beyond the
smokescreen of price and rigidity,” he continues. “Be
like a detective. Ask good questions.” Based on the
answers, suggest alternatives, he says: “Bottom line:
It’s about being a problem-solver rather than just
pushing a product.”
© 2006 Miller Heiman, Inc. All Rights Reserved www.millerheiman.com |
Equal Pain or Equal Gain?Negotiate for Win-Win
7171
About the Author
Anne Stuart is a Boston-based freelance writer who
specializes in writing about business issues.
Grande Lum is the author of The Negotiation Field-
book and co-founder and managing director of Ac-
cordence, a Burlingame, Calif.-based fi rm.
Damon Jones is Chief Operating Offi cer for Miller
Heiman. He has more than 25 years of industry
experience covering all facets of business and sales
management.
About Miller Heiman
Miller Heiman has been a thought leader and innova-
tor in the sales arena for almost thirty years, helping
clients worldwide win high value complex deals, grow
key accounts and build winning sales organizations.
With a prestigious client list, including Fortune 500
companies, Miller Heiman helps clients in virtually
every major industry to build high performance sales
teams that deliver consistent sustainable results
to drive revenue.
The company is headquartered in Reno, Nevada and
has offi ces around the world. More information can
be obtained by visiting the company’s website at:
www.millerheiman.com.
© 2006 Miller Heiman, Inc. All Rights Reserved www.millerheiman.com |
Equal Pain or Equal Gain?Negotiate for Win-Win
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Miller Heiman Sales Solutions Accurate Diagnostics and Powerful Solutionsto Drive Sales Performance
The Miller Heiman Sales System is our framework to diagnose issues for our clients and to organize our solution portfolio. Our Sales System drives sales performance through disciplined processes to effectively create and manage opportunities and manage relationships. This involves analysing deals and accounts, preparing strategies, and identifying specific actions, accountabilities and timelines needed to execute the strategy.
Our programs and tools can be delivered via facilitated or online delivery or a combination of both.
Create Opportunities
Conceptual SellingCustomer Interaction Strategy for Winning Complex Sales
Executive ImpactStrategy for Securing Executive Approval Securing Strategic AppointmentsEffective Contact Strategy
for Generating Quality, High Value Appointments
Manage Opportunities
Strategic Selling®Comprehensive Strategy for Complex Sales
Strategic Selling® GovernmentComprehensive Strategy for Winning Government Business
Negotiate Success Win-Win Sales Negotiations that Strengthen Customer Relationships
Manage Relationships
Large Account Management Process (LAMP®) StrategicPlanning for Protecting and Growing Key Accounts
Channel Partner ManagementOptimizing Results from Indirect Distribution
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People and Organization
Sales Excellence AssessmentFact-driven Sales Management and Coaching Solutions
Predictive Sales Performance Hiring Solutions to Build Outstanding Sales Teams
Support and Enablement
Sales Access ManagerMiller Heiman Sales Process Enablement Through CRM Integration
Web Reinforcement eLearning modules to reinforce Miller Heiman's sales processes and support adoption throughout the selling organization
Management Execution Tools
Funnel ScoreCard®Opportunity Evaluation and Loss Review Process
Sales Benchmarking Benchmark your sales organisation against peers, industries, and top-performing sales organizations.
Strategic Selling® CoachingAdvancing Adoption of the Strategic Selling® Process for sales managers
Conceptual Selling® Coaching Advancing Adoption of the Conceptual Selling® Process for sales managers
Strategic Selling® Funnel ManagementImplementingCustomised Funnel Management
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.
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Rob Hartnett
Rob Hartnett is the managing director of Selling Strategies International (SSi) a leading sales performance consultancy.
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 KochiesBusiness Builders as a sales performance specialist.
Contact Information Selling Strategies International In Partnership with Miller Heiman Inc.rob@sellingstrategies.com.auadmin@sellingstrategies.com.auPh 61 3 9560 1188 www.sellingstrategies.com.au
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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
“Thanks so much for your contribution to our sales conference. Everyone today has made reference to points from your presentation.” National Sales Director – Fashion Industry
"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
“I invite Rob Hartnett to speak to my business audience every year. Rob's message is motivating, inspiring and very informative. The feedback from my guests is always brilliant and he is approachable and a pleasure to work with. Managing Director – Events Industry
"Rob, you far exceeded my expectations of a speaker in our Masters Program. The discipline of great preparation and content delivery was explict, and it balanced perfectly with sincere enthusiasm and creating some very funny moments. It was a joy watching the master at his craft."Head Lecturer University Masters Program
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www.sellingstrategies.com.au www.millerheiman.com
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