Fire the Sales Force!

This is so clear and to the point, I just pasted it here so I can refer to it often. It is from Seth Godin’s Blog

Thinking about business models

A business model is the architecture of a business or project. It has four elements:
1. What compelling reason exists for people to give you money? (or votes or donations)
2. How do you acquire what you’re selling for less than it costs to sell it?
3. What structural insulation do you have from relentless commoditization and a price war?
4. How will strangers find out about the business and decide to become customers?

The internet 1.0 was a fascinating place because business models were in flux. Suddenly, it was possible to have costless transactions, which meant that doing something at a huge scale was very cheap. That means that #2 was really cheap, so #1 didn’t have to be very big at all.
Some people got way out of hand and decided that costs were so low, they didn’t have to worry about revenue at all. There are still some internet hotshot companies that are operating under this scenario, which means that it’s fair to say that they don’t actually have a business model.
The idea of connecting people, of building tribes, of the natural monopoly provided by online communities means that the internet is the best friend of people focusing on the third element, insulation from competition. Once you build a network, it’s extremely difficult for someone else to disrupt it.

As the internet has spread into all aspects of our culture, it is affecting business models offline as well. Your t-shirt shop or consulting firm or political campaign has a different business model than it did ten years ago, largely because viral marketing and the growth of cash-free marketing means that you can spread an idea farther and faster than ever before. It also makes it far cheaper for a competitor to enter the market (#3) putting existing players under significant pressure from newcomers.

This business model revolution is just getting started. It’s’ not too late to invent a better one.

I met recently with a potential client who offered technology services to law firms. They had a fancy brand name, “IT Solutions for Law Firms” and a web site with content geared to providing IT services to law firms.

As anyone who has ever spoken to a law firm about technology knows, any issues related to computers at a law firm has about as much priority as choosing a janitorial service. Important, but not important enough to require any serious consideration from the law firms’ managing partners and certainly not seen as a differentiating asset in the legal universe.

However, one of the most important challenges any law firm faces with respect to technology is when two or more law firms decide to collaborate on a major litigation compex case. A war room is typicallly set up and boxes of legal documents are brought in from several sources and telephone land fax lines need to be set up. What’s challenging is that each of these capabilities must be highly secure and protect the confidentiality of each document, phone conversation, fax transmission, etc.

Implementing the technology to adequately support this “complex litigation” activity usually under deadline pressure and facing severe consequences for any screw-up, is typically well beyond the capabilities of the in-house “janitorial” IT staff.

Perfect opportunity for an outside consulting firm.

By changing the marketing of this service to “complex litigation support” from “IT services for law firms”, the relevance and importance to critical functions of a law firm are accentuated, understood, and appreciate by the senior law firm management.

As a result, high fees can be charged and high stature earned by the IT services consultant.

All from a simple name change!

One of things I learned while installing and running Unix based systems like email and web servers is that when it comes to debugging an non-obvious problem, sometimes it’s just easier to start from scratch rather than ferret out a hidden bug with multiple dependencies. It takes less time and is far less frustrating.

As I contemplated another year in New York with the financial and media markets crashing around me, well worn tracks up and down the avenues, and tired faces all around, I decided to change everything and move to Southern California. My sister and her husband have lived in a beautiful home in Topanga Canyon for many years and have repeatedly invited me to occupy their rustic guest house complete with breath taking views and a blazingly fast internet connection.

So, amid the worst economic turmoil since the Great Depression, I decided to leave the NYC dust bowl and head west!

After several weeks of moving my heavy stuff into NJ storage and the shipping the essential stuff to California, I am finally here. Perched high above a beautiful canyon in the Santa Monica mountains, I am fully wired, healthy, and ready for my next assignment!

Bliss.

The market drops 250 points in one day. Your best prospect just got laid off. It just hurts sometimes.

Time to dust off, breathe deeply, and start over!

I sometimes think sales is alot like being a waiter in a restaurant.

From Wikipedia: The duties of waiting staff include preparing tables for a meal, taking customers’ orders, serving drinks and food, and cleaning up before, after and during servings in a restaurant. Depending on the restaurant, other less common duties may be required, such as singing birthday songs to customers who are celebrating a birthday

Summary:
- customer is always right
- waiter is responsible for the food even he/she didn’t cook it
- hours can be long and grueling
- always on your feet
- showing up is important
- only as good as your last tip, you can be fired at any minute

Attitude is important. People spending $100 on dinner don’t care if you’ve had a bad day - get your game face on every day no matter what. If the customer doesn’t feel well served, you’re toast.

Good news:
- everyone has to eat - there are lots of sales jobs
- it’s not that hard to do!

Toyota reported sales down 34% for Q408. Does that mean that all of their marketing, salespeople, channel partners, and dealers forgot how to sell?

Or that they stopped working for two or three days a week?

Or their sales process is broken?

No, I don’t think so. I think that market conditions are a macro force that controls what’s possible.

The solution is to lower costs and increasing production. How?

Replace sales bodies with process. Get a steady in-bound lead process going and have fewer, more highly qualified people spending most of their time closing not qualifying opporunities.

I needed to get a proposal to a customer last night…

Left the office in haste at 9PM and left the proposal on my laptop safely ensconced in my drawer…at the office…

Woke up at 6AM so I could get to the office by 8AM and send the proposal to the client before they got in thereby giving the illusion that I had sent it last night…

Got on the 7:30AM train…so far so good…

Train broken down in the Hudson River tunnel 60-90 minute delays…

Got to office at 9:40AM, take out laptop, log on to mail…

Server down, no access, call tech support guy, no answer, leave message…

Send proposl by Gmail at 9:50AM…

Moral of this story — work from home office!

It was a slow day today due to Martin Luther King’s birthday plus the inauguration tomorrow. So I took a spin through Linked-In.

In the space of an hour, I turned up over twenty new connections, five people who want to be included in our next event, and several friends. Awesome power. Highly recommended!

I wrote the following email to a client of mine who contracted my firm to do some cosmetic work on their website. We did a great job, they rae very happy, but the site itself is still “brochure-ware”. I removed the individual names and company name out of courtesy.

M,
Hope the new year is off to a good start for you!

I had recently exchanged emails with SalesManager about biz dev and lead generation. I mentioned that most companies today are using SEO/SEM for generating sales leads from the company website.

What drives this is cost. All companies in good times and bad need to look at their cost of sales. In other words, what does it take to put revenue on the bottom line? Traditionally, sales leads come from advertising, promotions, cold calls, networking, referrals, etc. The cost associated with these activities is primarily the cost of professionals’ time to execute these activities. If you take the company’s annual revenue and divide by these costs, the result is the “cost of sales”. Cost per lead and cost per sale are also derived from the same process.

Now if you compare these traditional business development costs to what it costs to generate leads from a website through SEO/SEM, it is usually an order of magnitude less. I’m not sure what the numbers are at CompanyName, but I’m sure they are within industry norms.

With an order of magnitude difference in cost to acquire sales leads and then close business, it is usually a no-brainer to justify SEO/SEM costs.

When I reviewed this with SalesManager, he suggested that I send you an email and copy him. This is it!

I’d be delighted to work up the numbers with you for CompanyName and take the website to the next level - producing revenue!

Best,
Thomas Morling

Makes sense doesn’t it? Websites need to pay their fair share!

It seems right to begin the new year with some fresh, clean definitions of terms that are so often misunderstood and abused in business development.

The my last post, I defined “sales lead. In this post, I’ll tackle “Qualified”.

There are several uses of the word “Qualified”. Here’s one from Dictionary.com:

qual-i-fied? ?[kwol-uh-fahyd] Show IPA Pronunciation –adjective
1. having the qualities, accomplishments, etc., that fit a person for some function, office, or the like.
2. having the qualities, accomplishments, etc., required by law or custom for getting, having, or exercising a right, holding an office, or the like.
3. modified, limited, or restricted in some way: a qualified endorsement.

I’ll go with “having the qualities, accomplishments, etc., that fit a person for some function”. In this case, the function we need performed is to buy our product or service.

Simply, a “qualified” sales lead represents a person who is able to buy. It’s not any more complicated than that.

Sometimes people attach “qualified” to “lead” automatically. Just because someone expresses interest in a product or service doesn;t mean they are able to buy. I might be interested in a test ride in a Lear Jet but, trust me, I can’t afford one! If I called the local Lear Jet dealer and asked for some information, I might be considered a “lead” but certainly am not a “qualified” lead.

In larger and more complex sales (to larger companies), there is a concept called “influencer”. A shipping clerk may be able to persuade a vice preseident to buy something because they are related or are friends but that doesn’t make the shipping clerk a “qualified” lead.

In order for a lead to be qualified, the sales person or team needs to do soem work. Leads don’t qualify themselves. Someone needs to verify that the “lead” has authority to spend money from a budget and enough of it to cover the cost of what you’re selling.

Just because a lead is a senior executive doesn’t mean they’re “qualified”. For example, a senior vice president of marketing doesn’t have the ability to buy a server for the the datacenter no matter how senior he is. Maybe they can, but this needs to be verified and probably checked twice!

Of course, people lie. Sometimes people will say they are qualified to buy when they aren’t. There may be a bit of self delusion going on when they have more clout than they really do. Better ask a few folks first before updating your sales forecast with a new “qualified” lead!