This morning I went to buy a cup of coffee.  This coffee shop charged $1.95 for a cup of coffee - after tax it was $2.11 per cup.  I watched as the line built up and built up while the cashiers made change for each person that tried to buy a simple cup of coffee.  I even saw people walking away because the line was getting too long.  I wondered why this shop didn’t change the price just to make the act of buying a cup of coffee that much easier.  There is a LOT of margin in a $2 cup of coffee - and by simply lowing the price (even a penny) they could have made buying the coffee that much easier and I would argue, made more money in the long run.

One of my clients was suffering a very similar problem recently.  The way they were selling the product, was not aligned with how the companies could buy the software.  They were attempting to charge a “per-use” or rather a “per-user” fee, when in fact, the only money the departments had to spend was capital improvement budgets - meaning pay once a year and that’s it.  So, we are trying a new pricing scheme which is a single price per year for all-you-can-eat.  We will see whether or not it works in the coming weeks.

Sales isn’t easy - and when you make it hard to buy, you make it that much harder.  The coffee shop needed to have pennies available, needed to make change, and ultimately made the buying experience an awful one for the sake of a few pennies.  Had they changed the price of the coffee so that I paid then $2 even including tax, then I would have been in and out of that shop in a few seconds and they would have been onto the next person in line.  No-one would have needed to worry about coins.  And… I’m actually wondering whether I will even go back to this shop based on my experience.  Is that what was intended?  I think not.

For complex projects, its even more important.  I wrote about this in my 1985 post.  In 2009, we have so many ways to make the sales process easier, we need to take advantage of this to make our lives easier as salespeople.

As an entrepreneur, you need to understand how your customers buy, and how they can more easily consume what you sell.  If you make this process transparent and easy, and then give them a simple way to buy, you will see sales increase.  Remember when Radio Shack used to ask for 15 pieces of information such as phone number just to buy batteries?  Well, I went to Radio Shack this weekend, and simply swiped a card and walked back out.  They’ve figured out that easier to buy = easier to sell.

If you are having trouble getting people to buy… have you thought about whether the WAY you charge is just to difficult to buy?  Do your companies allocate budget in the way you ask for money?  Do you only accept credit cards, but the company can only provide PO’s - or the other way around? Is subscription billing a difficult way for your customers to buy - and they would prefer once a year?  Or perhaps once a year means they need a capital budget - but subscription fees are low enough that your decision makers have automatic signing authority?  You need to probe and get the answers to these questions because the easier your product is to buy - the easier it will be to sell.

Its been too long since I’ve blogged.  Lots of good things going on with QuotaCrush, plus the holidays have kept me away, but I have several topics on which I want to write about and I am goign to be more diligent with sitting down to write. 

In the mean-time, an interesting question has come up recently with two different clients about what should be the basis for commission on which I thought I would write a mini-post.  Should you pay based on the amount of profit that the sales produces - or should you pay based on the amount of revenue that the project produces.

In general, I always advocate that the goals of the compensation plan must match the goals of the company.  When these two objectives are in alignment, then the salesteam can be very productive, and everyone wins.  When these items are mis-matched, frustrations on both parts are likely to happen.

So, the question that you need to ask youself in order to answer this main question is:  What is your objective for sales this year?  Is it revenue or is it profit?  While this seems like a silly question, in fact is isn’t.  Companies, particularly the start-ups that I work with, often have a need to generate marketshare and anchor clients.  Companies may be willing to take certain clients at any cost just to have them as a client - and often certain products are loss leaders needed to get companies started before they get the more expensive products.

Once you know what you as a company want to achieve, then you can set your goal appropriately.  When you set it incorrectly, your salesteam gets frustrated and de-motivated.  For example, in one of my sales jobs, I was in the process of landing P&G as a client.  P&G, for most companies, is such an amazing anchor account, that most would do whatever they could to get a deal with them.  Ultimately, this is what my management was telling me to do.  In fact, they had me present a proposal that included a gaggle of free services.  I was able to land the account, but got nearly no commission on the deal because my compensation was based on profit - not on revenue - and once you factored in the free services that we had to offer, the profit was squeezed out of the deal.  I managed a sell few follow on deals which did generate me some commissions - one a rather large deal - so wound up OK, but the bottom line was a disgrunted salesperson for quite a while because I was doing an awful lot of work for no commission.  Had the company really thought about what they were asking me to do, they could have re-worked the compensation so that I was whole on this deal because they wanted it so badly.

With both clients that I talked to about this recently, my advice was to pay on the revenue that was generated rather than profit, because both clients were in desparate need of marketshare in their regions.  My theory was that if they had the salesperson focused primarily on profit, yet the goals of the company were to gain a client base and some marketshare that the goals were mismatched.  The company position might be that they would be willing to take a client at any price above a loss (and perhaps even some special situations at a loss), yet a salesperson would see that deal as an unworthy effort. 

I asked the question, “What will you think if a salesperson walks away from a deal because there isn’t enough profit for them to make any commissions?”  If the answer is any angst over the salesperson’s decision, then they should be paying on revenue - because its obvious they want sales that even produce a small amount of profit.  If the answer is that they would be happy with the salesperson’s decision, then they can commission on profit alone.  That will ensure that the salesperson only goes after deals that generate a significant amount of profit.

In speaking to so many start-up entrepreneurs, I get the same question over and over again:  what type of sales person should I be hiring?

This is a very interesting dilemma for start-up companies as they begin to build their sales plan, and as they try their best to get to profitability.  You have a serious choice.  Do you hire someone who is experienced in sales or do you hire a junior, super-energetic salesperson.

Of course… you want both!  And - often you can find that person in the experienced salesperson.  But what we are really talking about here is not energy level - its COST.   When I say experienced sales person, its just a euphemism for EXPENSIVE sales person.  A proven sales person, someone who has closed lots of very large accounts, has earned the right to have more base salary - especially at a start-up where there is so much risk - knowing this person can go to a more established company and make a lot of money.

This means that the tendency of a start-up is to find a less expensive sales person who they think can pull it off.  And many will be able to.  After all, I started my career as an entrepreneur and I was selling my software.  I had no experience in sales.  I was a programmer.  Yet, I figured it out and was able to close some very large accounts.  However, I lost a lot of accounts along the way, and also had some experienced sales people involved with the company that gave me gobs of great advice along the way.   You are going to be paying for on-the-job experience with a more junior salesperson, so how best to mitigate this and get the sales you need.

The options, as I see them, for a start-up are:

• If you have a CEO or other management type who has hard-core sales experience, then hire the junior sales person and save yourself some money.  And I mean real quota carrying sales experience - not just an ability to sell.  That manager can guide and train the salesperson, help them avoid the obstacles, power through objections, and quickly get up to speed on how to close deals.  Without this, you are likely to get lots of activity - but not lots of money.  A new salesperson typically needs their energies channeled - especially near the end of a sale because that is when it gets hard - and the path of least resistance will take their activities to new prospects where all conversations are lovey-dovey.  Managing activities and the pipeline are going to take a portion of the CEO or other management person’s time, but having management oversight will be critical - or lots of cycles will be burned without sales.

• If you don’t have a management team member that has done hard-core sales, then hire yourself a true VP of Sales.  If he/she is all you can afford, then that VP of Sales can carry a quota until he/she makes enough sales to justify another team member.  While this person will cost you more money than a junior salesperson, you will actually be spending money wisely.  This person should more than make up for their expense.  They should be able to set in place the right sales structure, and get some anchor accounts will will cement your sales strategy moving forward.

• Third option:  Hire the young salesperson, and then have an external advisor that is a sales guru (board member, outsourced sales management firm, partner firm) work with the sales person and manage their activities.  Get that person involved early on and the experienced person can shape the strategy and guide the junior sales person.  This junior salesperson, if conditioned to rely on the advice of the expert, can be guided by the senior salesperson in terms of what steps to take next, when to call again, how to handle certain objections, which accounts to prioritize, how to get past a gatekeeper, how to break a log-jam, when to negotiate on price, when to know you are getting the brush-off, etc.  He/she can also be the grey hair to call in when they call in their senior management for either a webinar or a face-to-face.  If you have someone committed to the success of your company, this can be a great option for a start-up.  If you have angel funding, you may learn that some of your angel investors can be, and would be willing to be, this person to you.  (Disclaimer:  I try to keep this blog pure sales advice - but I feel the need to disclose that outsourced salea management and advice is what QuotaCrush is about)

Its certainly a tough decision for a start-up, and the costs surrounding sales (not just salary but travel, entertainment, etc) are one of those difficult pills to swallow.  But like in anything else, its not wise to go cheap on the sales side, unless you can back-up the junior sales people with some real sales management.  I honestly believe that companies with great sales typically have solid sales management and structure behind it.

In the past two days, I’ve gotten a call from two of the banks that I do business with.  The first one, Chase, holds my home equity line, and I got a call from a woman who wanted to talk to me about my line.  The second bank is TD Bank and they hold my personal checking account and also my QuotaCrush business account.

What was interesting is that both banks were calling me with essentially the same exact pitch.  Both women that called me wanted to call to establish a “relationship” with me.  They wanted to let me know that they would be my “personal banker” and that I could call them with any questions and concerns and they would help me out.

I suppose that the banking industry is hurting for good customers now, and this is the effort that they are putting out there to try and establish the relationships that they should have been cultivating LONG before now.  I entertained both of the calls because I found it interesting and I wanted to find out what they were offering.  The fact is neither woman could articulate to me what they added benefit to me would be with them now as my “personal banker.”  They could set-up accounts for me, track down payments, etc.  When I said that everything they were talking to me about, I was already doing, online, without any interaction, and not having any problems, they still could not tell me why I should care that I now had a personal banker.  Clearly definining a value proposition should have been something that was in their pitch to me - but wasn’t. 

The reality is, they are trying to establish a relationship with me because the entire banking experience has become very disconnected.  I can get money from a machine, and I do all of my banking on-line.  In fact, I can’t remember the last time I went to a bank and went through the second set of doors - I typically stop at the ATM and don’t go further.  As a result, I don’t really care who my bank is or where they are located.  I only care that they are solvent and that they make things simple and easy for me.  I would switch banks / mortgages / etc. tomorrow if I found a better deal.

So, the banks are reaching out to establish a relationship which will make me more connected to the bank, and less likely to leave.  They can step in and fix problems, and make me a happier customer.  Today, I call a general 800 number and placed in a queue.  Perhaps tomorrow I could call one of these women and have personal attention.  (As an aside, one of the women spoke in broken English which was not very convincing that I would have an easier time).  Both called me from branches close to my house, and explained that I could come in any time and talk to them about any issues I would have.  Other than this, I could not figure out what the benefit would be to me - and really I am not looking for this in my bank.

As a credit to both banks, and why I’ve been with both of them so long, is because I have not had many issues calling the 800 number and getting my problems solved.    But… honestly, I would leave both in a minute if they started to charge me fees, or make my banking experience more difficult.  I moved to TD Bank 5 years ago because Wachovia decided to add a $3/mo fee to on-line banking.  It took me about an hour to move all of my business over to TD Bank (Commerce Bank at the time), switch over Quicken, and start banking somewhere new. 

That was a long pre-amble to the point that I wanted to make  - when you make a sale and get a new customer, you should be thinking about the relationship that you want to have from the beginning - not once you are into it.  By making sure that you establish the right relationship from the beginning, you are more likely to have a customer for life.  You will get the feedback that you want BEFORE you hear that they have cancelled your service - not as they are walking out the door.

In the 21st century, social networking platforms offer us lots of ways to establish great on-going relationships with our customers, and we need to use these tools to their fullest to make sure that we are engaging our customer base and making sure that they feel part of the solution and not just a number. 

Its possible that its not too late for the banks to establish a relationship with me and prove to me that they can offer me value that another bank cannot - but as you can see - I got the same pitch from two different banks within a week - so I’m not sure that this pitch is going to sway me one way or another at this point.  It makes me think that all banks will offer the same product.  Had the initial interaction with a bank been one that made my life so much easier and convinced me that they would be there for me - then I would have been better sold and committed to one company.

Are you establishing the right interaction with your customers?  Do they believe that you care about them?

If they don’t then you didn’t do your job as a salesperson.  If they do, then you will have a customer that will stick with you.

This morning I had a sales meeting, and before I went I sent out a tweet that said “business casual sales meetings means I get to wear my really cool Christmas ties almost never… I think I’m going to wear them anyway…”

So… I go to my meeting, and the very first thing the man says to me is, “Interesting tie choice. I’m curious as to why you would wear that.  I think perhaps you didn’t think about whether wearing a Christmas tie would bother me.”  I was caught quite off-guard and for a moment thought perhaps he was following me on twitter and was making a joke about my morning comment - but alas he wasn’t.  He was truly upset at my tie choice.

He had a traditionally Jewish sounding last name, but I honestly did not think that anyone, regardless of what they celebrate or don’t celebrate in December would be offended or upset at a Christmas Mickey Mouse tie (actual picture above).  I expressed to this gentleman that I honestly thought it would show my fun side and my holiday spirit, but did not think for a second that it would offend or upset anyone.  We moved on from the tie discussion, although he brought it up at least four more times during our meeting making, “just like your tie choice” comments.

When I wrote this blog post about salespeople protecting their on-line identity, I talked about how you shouldn’t make all of your public rantings and opinions part of the public domain because all of that is fair game in the sales cycle.  Well, in a way, I did that today.  I screamed to the potential client that I celebrated Christmas and was proud of it.

I think that this example points out someone at the extreme, and not the normal mainstream reaction to a Christmas tie.  (although I’d love to hear from all my Jewish friends on your take on this).  Nonetheless, it was a reminder that you need to do your homework, and you need to make sure that you understand your audience.  I took my eye off the ball, and got smacked for it.  This is certainly not as bad as getting caught groping a cardboard cut-out of your boss’ choice for Secretary of State, but it was still bad.

When we express our personal views, they become part of the sales process - for better or for worse.  As small as a comment, tweet, blog post, facebook status update, online photo, email, or other action may seem, it can affect a sale.  My tie choice, affected this sale.  As small as that might seem, it became a factor.

I can guarantee you that my Christmas ties will stay in the closet for sales calls from now on!

The end of any quarter is deal-making time, but December is the best of them all.  I was talking to a salesperson the other day whose opinion was, “nothing happens in December”  Ah, how UNTRUE!  In fact, when other people slow down, its the chance to make a big deal.  But… there is a problem with December that puts sales people against sales managers and while both are aware of it, it certainly creates problems for all sides.

The problem is this: most sales plans re-set at the beginning of the year.  January is a fresh start.  Close a deal in December, and the impact of that sale typically gets wiped out in only a few weeks.  If you are already above quota, you get the sale at your accellerator, but if you push the deal until January, you have a running start towards next year’s accelerator.  If you are behind quota, you aren’t going to get it at the best commission rate anyway, so might as well wait until next year so you won’t miss quota two years in a row - and you will show good progress for next year.

The bottom line is… for a sales person, December is a not a good month to close anything.  Holding the sale until January is a much better option.  Unfortunately, with sales managers and companies trying to get the best financial picture for the year, this proves to be an interesting dilemma. 

The initial reaction of some companies is to put negative incentives in place for the salespeople, to encourage December sales.  Sales that are on the 1 yard line sometimes will get negative treatment in January, to punish salespeople that don’t get that sale in December that the company feel they should have (which may or may not be due to the above problem). 

I find, in building compensation plans, motivation always works better than punishment.  Regardless of what has happened in the past, if you want a salesperson to sell, put the carrot in front of them.  The better solution for companies that want significant numbers in December, is to reward extra.  Some ideas:

• Bring all salespeople to the top commission rate regardless of level
• Sales contest for December outside of quota
• Pay commissions on December sales - and provide 1/2 quota credit for next year (not a double commission - but for every dollar sold in December give $0.50 quota relief for next year so its easier to reach quota in the next year)

I always think that you can get amazing things from salespeople if you put the right incentive in front of them. 

Now, the other side of the coin is this:  If you are a salesperson who is behind, and you are looking for a chance to shine - and perhaps earn some silver bullets for the next year… get out there and close that December deal - there are dollars to grab.  It will show a real effort, and earn major points for putting the company above your own personal gain.

Anyone else have any interesting ways to solve the December sales problem?

Sales professionals live and die by their network.  Becoming a very successful salesperson typically means that you can use your network to its fullest to get and GIVE introductions, referrals, and more.  There are dozens of posts on ways to build and maintain your network (and I’ll likely have several posts here on this), but what do you do when you want to ask someone in your network for assistance in making contact?

Early on in a professional sales career, the mistake that salespeople often make is to badger the people in their network - or ask unreasonable things of the people in their network.  Think of the typical pyramid scheme (sorry… “multi-level marketing program”) salesperson.  They typically continually hawk their products to their friends, family, neighbors, etc. until those people cringe when they hear their call or see them face-to-face.  They are actually taught by the people at the top of the pyramid (trapezoid, parallellogram, or whatever shape the particular scheme calls it) to rely on their closest relationships for sales.  This is completely the wrong way for professional sales people to behave.  You should rely on your network to help get you closer to your sales - but never to get the sale for you.   You always need to remember that it is YOU that needs to get the sale.  Your network is but one tool in your bag.

If you rely on sales to live, the last thing you want is for people to avoid your calls, avoid you at networking events, and delete your emails.  You want them to embrace you.  In order to do this, you need to get into their shoes.  What would make YOU do something for them if they were calling you?

Here are my three basic rules for making contact and requests of your network:

1. Ask for something EASY:  Ask them if they would forward your email onto the decicion maker, ask them for the decision makers assistant’s name, ask for some (publicly available) information on corporate goals that might help you build a better pitch
2. DON’T ask them to get you a meeting.  (rookie mistake):  Never ask this person to get you a meeting with a decision maker.  This is putting the task of getting in the door on them.  Asking them to forward your email with a short introduction is easy and puts the ultimate closing pressure on you.  When you ask them to get you a meeting, it puts the closing of getting the meeting on them.You are asking them to do your job - not to help you out.  If you put yourself in their shoes, imagine if someone in your network asked you to get them a meeting with your CEO as opposed to just forwarding an email onto them and then letting them take care of getting the meeting.  The email is a great “in” and you haven’t potentially affected your relationship with the person in the network.
3. ALWAYS offer something in return: A referral into your network, posting on your blog, information that will help them with a project they are working on, etc.  If this person is unwilling, or un-able to help you out this time, providing them some assistance in their job

If the person you contact is inclined to go further in their assistance, they will.  Perhaps they will get you that meeting.  But because you asked for something that is easy for them to do - they will not feel put out.  You never can know the internal politics that may be going on.  Its possible they are saving that silver bullet for another time, maybe they recently had a bad performance review, maybe they don’t think your product is right for their company (but still like you and want you as part of their network)..

I recently spoke at the NY Xpo for Business at the Jacob Javitz center on the topic of “Knockout Sales Presentations” and one of my tips that drew the most controversy was when I said, “During a sales presentation, you never, ever, ever, ever give a demo.”

Before I fully explain my position, I want to give credit where credit is due.  Much of the basis of my presentation comes from the Pitch Coach himself, David S. Rose, who provides advice to entrepreneurs looking for angel investors.  If you want to view his presentation, its on his blog here.  What my presentation did was rather than look at presenting to raise money, it was how to take theses ideas and apply them to making a killer sales presentation.

I plan to post on all of the points that I brought up in the presentation, but I’m going to start with the most controversial point: NO DEMOS!

When I mentioned this in my presentation, I immediately had about 10 hands go up to challenge my claim.

“But… my company sells video conferencing, and I have to show them how my quality is better than my competition.”

“But… unless I show them my great interface, they won’t understand how I’m better than competitor X.”

I challenge all of this.  If you can’t articulate the value that you provide over your competition, or that value you bring in general without a demo, then you aren’t going to get the sale anyway.  If you make video conferencing software, then tell me that your algorithm was developed by listening to the mating calls of owls or whatever makes your technology great.  If I can grasp and believe WHY you built your product the way it did and am sold on your thinking, then the demo is icing.  If I don’t believe it, then the demo is wasted time.

Demos are a chance to screw up.  What if the product doesn’t work during the demo?  You lose all credibility with the prospect and you killed the sale.  Convince the customer of the value that you bring to them, and you don’t need a demo.  If you convinced them of the product benefit, then the demo either confirms the sale that is already won, or it kills it.

Why are salespeople so shocked by this statement?  Because giving the demo is easy.  It takes up a lot of time in the presentation.  You feel busy, as if you did a lot to move the sale forward.  But you didn’t.  Spend that same time focusing on how to convince the customer of your value and save the demo for after you’ve sold them on the value of your product.  I have even gone as far as to say that software salespeople should not even be given a way to log into their software.  When you focus on the features of your product, you take focus away from the value that you bring to them.

I sold a $2M contract before the customer ever saw the software.  I convinced the largest marketer in the world to trust me for SMS voting on a live TV program without ever seeing the software.  What did I talk about in my sales presentations?  Why my company was great.  Why we were different from the competition.  How we were providing great service for their competition, and other companies in industry.  How our algorithms would protect them, etc.  THESE are the things that matter - not what my interface looked like.  The interface can change, but the reason we were a great company - is much harder to change.

I just read a great post by Jeff Stewart of the UrgentGroup on Sales as R&D in a startup.  The article talks about how in a start-up, your sales team is your R&D.

The wrap up to his post echos a lot of what I say to my teams:

Many engineers I talk to have the misguided “if we build it, they will come,” approach to sales.  To this I say: Bull.  In 1999, I had the chance pleasure of meeting most of the Google sales team in a hotel bar.  Let me tell you, they weren’t talking about algorithms.  While the PHDs at Google deserve a lot of credit for building a great product, we can’t forget that the innovations of the sales team developed for the company.  They are very responsible for getting Google to where it is today.

“Discovering” how to sell your product is as important as coding your software. No one likes to hear “no i won’t buy from your company” any more than they like to that their code won’t compile, but both are important vital parts of the development process.

In start-ups in particular, the sales team needs to be continually finding out what the market needs and bring that information back to the company.  And, the company needs to be able to take that information in and, diseminate which of it is real, and put that information back into building a great product.

When I founded my first firm, I had the advantage of being both the salesperson and the product designer.  While I spent most of my time funding customers, I held the CTO title.  (Gave the title up at one point to my head engineer, but ultimately took it back).  I ran a very sales driven company, and as a result, I had quite a few suitors for the company AND its products.

Of course, you need to be careful that you keep you eye on your ultimate prize in building your product, but your customers will tell you quite a bit about what the real need is in the market. If you focus on value sales, then you will be actually building something that people need, that they want, and most importantly - WHAT THEY WILL PAY FOR!

Since I started writing this blog, I’ve looked for sales lessons in everyday life. I blogged a few months ago on sales lessons in a chick flick.  This week, I was treated to a very nice sales lesson from my seven year old daughter.

The other nite, my wife called me and asked me how long it would be before I got home from work because that nite, Erin, my seven-year-old daughter had to go to the PTA board meeting in town and my wife wanted to know if I could watch the other two kids, while she took Erin there.  I wasn’t going to make it home in time, but determined that if we met each other at the school, we would arrive just as the meeting would start.  We could meet there, Erin could do what she needed to do, and then we could all grab a quick dinner.

When I arrived, I saw the father of one of Erin’s best friends, and I started chatting him, and he said, “I see Erin was one of the finalists too.  Isn’t that great?”  It turns out that in order to teach the kids about the election, the school had put together a mock election where each student put together a platform for what should be the official healthy snack food for the entire school.  Each student wrote an essay, and then it went through an entire election process.   The top students in the school were asked to present at their platform at the board meeting.  My daughter and her best friend were one of the top students.

When I asked my daughter about the selection process, and how she got selected and about what am amazing feat this was for her, she actually looked surprised that I was so proud of her.  It never occurred to her that this was a big deal.  It just was what it was.

I am telling this story not to gush about my daughter (ok…maybe a little), but to illustrate something amazing about kids that we often forget about - and something critical to good sales people:  humility and the just do it attitude.  My daughter didn’t think about failure.  She didn’t think about self-glory.  She only did what she was supposed to do, and she did it to the best of her ability.  Because she didn’t really worry about failure, she wound up performing well above all of her peers.

She went out and just DID IT.  When we as salespeople create imaginary obstacles in front of ourselves, we can lose before we win.  We have to just go out there and try our best, and not worry about rejection, and not worry about losing deals, we need to just go for it.

Exhibiting humility, as well, is something that is key to a good salesperson.  No-one wants to deal with a cocky or pushy salesperson.  Your amazing feats will speak for themselves, and the customers themselves will be your badges of honor.  Think about how MORE proud I was of my daughter because she didn’t (and hasn’t since) gloated about her honor.  Our customers do the same, and reward us with additional business.