Tomicide Solutions January 2007 - Six Major Problems with Manual Labour Grunt Work Type Lead Generation
By Tom "Bald Dog" Varjan
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It is amazing to see how many companies are stuck in the dark ages of lead generation, and fight tooth and nail to drag their arses into the 21st century. Although they jumped on the bandwagon and developed their websites, but instead of creating an online automated lead generation system, they still maintain legions of salespeople who dial for dollars and tear doors down in pursuit of "harassing" people in order to peddle their stuff.
And when most companies want to grow, they automatically start hiring more salespeople.
Just imagine you want to travel from New York to Los Angeles, and your means of transportation is a horse and cart. More accurately, a cart pulled by an old, blind, skinny, limping sausage horse that is already one foot in the grave. What you see is merely an optical illusion, not a real horse.
Let's also imagine that you're dissatisfied with your progress, and want to reach your destination faster. What do you do?
If you use even one ounce of common sense, you sell your horse, top up your money and buy an engine for your cart.
But if you think like a typical business owner or sales manager, you try to improve your progress by buying another old, blind, skinny, limping sausage horse, and start motivating, that is, whipping, them twice as hard as before.
What's your chance to reach your destiny more quickly? Nothing. Not a sausage. But now you have twice of the liability on your hands as before. You started with only one horse that could have died on you at a second's notice. Now you have two.
So, what does this example demonstrate?
Well, the idiotic conventional wisdom that you can achieve excellence by adding more mediocrity to current mediocrity.
Deming taught us a long time ago that 94% of all business problems are system problems not people problems.
So, in the above example, the problem lies not in the horses. Not at all.
The problem lies in business owners' flawed thinking that they can improve by adding more of the same. The problem lies in the system you use to select and qualify horses. So, instead of whipping the crap out of that poor horse as a motivator, you can try to improve its performance (treating the eye problem, good nutrition, treating the limp, etc.) by improving the system within which the horse operates.
So, the key to improve performance, that is, net profits, not gross sales, is to improve the environment within which salespeople operate. I firmly believe that performance is the reflection of the environment (The system per se) within which salespeople work. Excellent salespeople gradually turn into useless bums in idiotic environments. In contrast, mediocre salespeople can excel in an excellent environment.
That's why it's important that companies focus on their sales forces' quality and not on size. So first look at...
...What a Good Environment Can Do for Your Sales
Your environment acts like a magnet, and depending how you polarise that magnet, it attracts different kinds of people.
Recently a colleague of mine, career coach, Mumtaz Patel, drew my attention to an interesting study. In a 1997, organisational psychologist, Dr Amy Wrzesniewski of Yale University School of Management, did an extensive study, and categorised employees into three groups.Group #1 views work as a job. For these people the motto is, "Fair work for fair wage." They don't care about what they do. They do it to pay the mortgage and other bills. There is no pride and fulfilment in the work. It's merely another chore like taking out the rubbish or mowing the lawn. It's just another necessary evil to kill time between weekends. Loyalty is non-existent. These people leave their companies for the smallest wage increase. In society, you can compare these people to the lowest level of hookers: "We do anything for anyone for money."
Group #2 views work as a career, and the main goal is promotion and financial advancement. These people do the work because it gives them social status, prestige and title power. These are the people who love using their designations after their names. They also make significant investments in their careers and keep advancing their skills. But their work satisfaction still depends on promotions and other external conditions (motivation), while the internal conditions (inspiration) are missing. When promotion stops, they get pissed off and move on.
Group #3 views work as a higher calling. They do the work for the sake of work. These people don't have balance in their lives. They seamlessly blend life and work together. No they're not workaholics. Workaholics are driven by external motivation not by internal inspiration. These are people who also have happy, healthy and fulfilling personal lives. They would do the work for free too because they work for the love of what they do.
These people do their work to serve a higher purpose, and in doing so they make their societies and the world a better place. Using Mihaly Csikszentmihalyi's definition, these people operate in flow, that is "being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you're using your skills to the utmost."
And as we know it from good ol' Pareto, some 80% of your employees are in group #1, some 18.5% in group #2 and some 0.5% in group #3.
And...
...The Biggest Factor That Can Ruin A Business Development Environment...
...is skimping on marketing and lead generation while forcing salespeople to generate their own sales leads using various methods of prospecting grunt work, including cold calling and door knocking. Remember the horse and cart example: Horses are good at pulling the cart but can't tell them: Go and get yourself a cart to pull. You have to provide the cart.
In my experience business development departments that rely on strong-arm sales tactics, stand on very weak legs. And strong-arm sales tactics come hand-in-hand with cold prospecting grunt work. Prospects no longer tolerate aggressive salespeople with a "Never take 'No' for an answer" or "Keep on keeping on" mentality.
Don't get me wrong. I have nothing against employing live salespeople. It is definitely better than employing dead ones. As a former embalmer and gravedigger, I can report to you that dead salespeople don't contribute much to their companies. I make this statement after having had the "privilege" of preparing some of them for funeral and burying them.
But when focusing on merely hiring more salespeople, companies still face..
...The Seven Undesirable By-Products of Cold Prospecting Grunt Work
There are probably more than seven, but this is a pretty good start...
By-Product #1: Chasing and Hunting Down Prospects One by One
Look, there are two options here...
Salespeople can spend time either selling their stuff to pre-qualified prospects or chasing the crowd and qualify them one by painstakingly one.
And here lies the difference between hunting and fishing...
When hunting, people chase their preys and kill them individually. The approach works if you try to feed only your family. But if your job is to hunt enough to feed a town of 100,000 people, then you're in deep shit. In order to generate your "quota", you have to hire an army of hunters and manage them, buy them weapons and ammunition, not to mention that you have to share the revenue with them.
On the other hand, fishing is drastically different. I used to be a fisherman, so gained some - about 10 years - first-hand experience while learning the fine art of fishing from great brilliant fishermen, Lewis, my high school class mate and his older brother, Joseph. I would select a good location on a certain river or pond, and would start "feeding the location." I would feed the location to entice a large amount of fish. And the combination of the environment and the bait defined what kind of fish would come.
And you know what? The fish came. After a few weeks of feeding, there was a preponderance of fish at the location. I would just sit down, cast my hook and pull out the fish. There was no chasing and no struggle. The process was pretty effortless. But it needed the foresight and the patience of only feeding but not fishing the location for a few weeks.
But it didn't work for everyone. Why? Because most people didn't have the time to feed the location. They wanted instant gratification. So, they were chasing the fish from location to location.
Similarly, this kind of magnetic marketing based on attraction doesn't work for many companies, because they are too busy chasing and hunting prospects. And every hunter knows that when you're chasing animals, they run away from you. Thus, when you chase prospects, they run away from you. It's that simple.
And what happens when you catch them. Yeah, you can convince some to buy your stuff. But they key is to provide a pleasant process, often called sales lead nurturing, during which prospects can convince themselves that by buying your services they can reduce or eliminate costly and painful problems and achieve new levels of success in their businesses.
And when you build a sales lead nurturing system, there is always someone who comes to the conclusion, "It's time I hired these guys." And the good thing is that the majority of the lead nurturing process can be automated.
By-Product #2: Low Quality Sales Leads with Mildly Interested Suspects
I've heard from so many companies, "We need more sales leads". Well, maybe not more but better leads.
According to various studies, some 97% of your prospects are not ready to buy. If you use manual labour cold prospecting, you have to plough through your prospects and find the 3% that are ready to buy. It's like looking for a needle in a haystack. All right, I'm generous. Let it be a large knitting needle in a skimpy haystack. You still have a hell of a lot of work to do to find it. And all this searching work takes you away from being engaged in sales with qualified prospects.
Some say sales is a numbers game, some say it's not. I see it half and half. As far as the automated lead generation system is concerned, it can be a numbers game. Who cares how many suspects I have at the beginning of the sales funnel? The wrong people will disqualify themselves as some point anyway. By the time of the face-to-face appointment, prospects are highly committed not merely mildly interested.
Just before setting an appointment (not proposed by me but asked for by prospects) I ask one last question. I've learnt this from one of my mentors, Gill Wagner (www.honestselling.com): "If after the appointment you're convinced that we can work together to achieve your objectives, what will you do?"
This is a simple question. The profound part I learnt from Gill was how you respond to their answers. The only acceptable answer that justifies the meeting is: "I hire you." This little nugget of sales gold I first learnt from one of Gill's articles a good few years ago has saved me an inordinate amount of time, money and headache.
However, saying this requires a hell of a lot of self-confidence because when you say that, many internally insecure people will lash out at you and demand that you come down from your high horse and show some respect. But in my experience when self-confident (Note: Not arrogant) people interact with internally insecure people, their self-confidence is often perceived as aggressiveness, arrogance and borderline bullying.
I've come across this several times when I use another gold phrase from Gill. When prospects raise some objections, I just say in an emotion-free, matter-of-fact manner, "I guess we've found a reason for not doing business together. Would you agree?" And guess what? People hate being rejected. But by the time I come to using this phrase, I'm no longer interested in them anyway.
Napoleon Hill teaches us in his book, Think and Grow Rich that we have to become decisive in nature. Indecisive prospects become indecisive clients and they become the project's greatest enemy. I love challenges but I hate struggle. I love exciting heated debates on issues, but I hate antagonistic behaviour from clients. As Sun Tzu teaches us in The Art of War, we have to carefully select our battlefields. If I have no chance to succeed with the project due to the client's negative behaviour, I'd better not even start.
By-Product #3: You're Losing Out on Paid Work
Average businesspeople spend some 70% of their time prospecting for new business and 30% on administration, sales meetings and actual selling. This is not bad if we consider that the typical corporate CEO spends mere 28% minutes a day to perform revenue-generating activities.
In comparison to their bosses, even some of the worst salespeople are peak performers. But executive incompetence is a difference ball of wax, so let's leave it out for now.
But if salespeople are paid to sell, why are they used to generate leads and chase suspects. I tell you why. Because marketing failed to generate sales leads, but unlike the sales folks, the marketing folks are not accountable for their work. They are paid for creating fancy slogans, retarded battle cries for campaigns and silly images to raise brand awareness."
Again, imagine a cart being pulled by two horses. And the two horses pull the cart with their full might in opposite directions. Sooner or later they break up the cart and the driver lands on his arse on the middle of the road.
Most companies are pretty similar. Sales is pulling in one direction by trying to generate revenues and responses. Marketing is pulling in another direction by trying to generate awareness. They are natural antagonists competing with each other for larger departmental budgets and better working conditions. That's retarded.
The way I see it is that in a company it's everyone's responsibility to improve the company's profitability. This in turn offers a better working environment for all people involved, which leads to better services for clients. And that leads to higher profitability. And now we're on an upward spiral.
But in an environment where salespeople get beaten up for missing their quotas while people in marketing go on without a shred of accountability, then sooner or later the best salespeople quit.
By-Product #4: High Attrition in the Business Development Department
We've already touched on that salespeople love selling but hate mindlessly chase suspects. Look at most companies where salespeople are expected to do their own prospecting and what you find is that they start and 43% of them leave within one year go to the competition and do their level best to put their former employers out of business by enticing as many of their clients as they can.
Of course now you may say you're protected by non-disclosure and other fiendish agreements. Well, when companies mistreat their salespeople to that level that they decide to leave, they won't care much about agreements.
And employers believe that the quitting salespeople can't do a sausage to hurt them. They can. Big, big, big time.
It's an HR rule of thumb is that when people leave their companies, it can cost 2-4 times of their annual compensation to replace them. For managers this can go up to 8-12 times. And for executives this cost can be as high as 24 times.
And of course, when salespeople are forced out of their companies, they don't go quietly. They tell all their clients about what happened. No, not to entice them, although clients often follow them to their new companies, but telling them that the company mistreated them and they quit, so clients will get a new rep. And clients usually ask what happened. And by the time the quitting rep explains to clients what happened, clients know that they are doing business with a company that can be best described as a Dilbertian hellhole where the reigning company strategy is "Conformity we worship, status quo we uphold" and HR policy is "Bring them in -> burn them out -> kick them out."
And there are several studies that show that there is a pretty consistent correlation between talent and client attrition. Pissed off employees create pissed off clients who in turn stop doing business with the company. Why does it happen? Simple. Because disgruntled salespeople act out their frustration on their clients. This is just human nature. We act out our emotions on whoever happens to be around us.
That's why many weakling employees go home after 8 hours of verbal abuse from the boss, and beat the shit out of their spouses and their kids because they're desperate to demonstrate their power which their bosses have taken away from them.
And since they do it subconsciously, they don't even realise what they're doing. It's just natural human reaction. When people are mistreated, they often try to pass the buck on to someone lower in the pecking order, so they can't retaliate.
So the mistreated father goes home from work, beats up the younger sibling, but instead of walloping the older sibling who could hit back, he kicks the dog half-dead.
By-Product #5: Wasting Time, Money and Energy
While on the surface it may seem that cold prospecting creates clients pretty quickly, when you look under the veneer you can recognise how wasteful it is.
In cold prospecting people try to go for the appointment right away. And that's possible. Yeah, you can get the appointment. But who do salespeople get the appointment with? In most cases they'll meet flunkeys not decision-makers. Then they spend an awful lot of time to prepare presentations and various dog and pony shows. In most cases economic buyers don't even grace these meetings. Why? Because there is no match.
What match?
This is an interesting concept. The match between a top-ranking person (economic buyer) on the prospect's site and a bottom-ranking grunt (salesperson). I call them bottom-ranking grunts because this is how most companies treat their salespeople. As you see on the...
...there is no match between the economic buyer on the top of the company who may be with the company for over a decade and the salesperson at the bottom who has just been hired out of the unemployment line.
Why the unemployment line? Because most companies are looking for cheap salespeople not good ones. Actually this happens because good salespeople don't act the same way as cheap salespeople, so most HR (Human Repression) departments screen them out. Over the years HR departments have become pretty good at keeping talented people away from companies with which they would have the best match to work.
And most people at the top of the company have nothing to discuss with rank-and-file people from other companies. Hint: Four-star generals don't spend their time meeting privates. There is a chain of command to follow.
So, while I agree that sometimes you can meet some economic buyers, the chances are pretty low. After all, with time, even the blind hen can find some corn, but she remains a pretty skinny hen who is almost always hungry.
By-Product #6: Attracting the Wrong Type of People
Since manual labour lead generation aims at instant results, these companies attract "commercially short-sighted" people.
There's been an ad on Craigslist's Vancouver site. A mysterious company has been looking for salespeople, and essentially the ad says that this is a job for people made of pure greed. Can you guess what sort of company would advertise for these kind of people?
Prospecting grunt work based companies usually pay commissions only. This payment plan is not only unethical but also eliminates the best salespeople. Who in his right mind would work for a company where you have to take 100% of the risk, pay your own cost of prospecting and then get 10-15% of the rewards?
Prospecting grunt work also creates internal competition between salespeople. Why does it happen? People by nature are either competitive or collaborative. The commission only people love competition but they are lone wolves. So, collaboration is out of the question.
I believe salespeople can be put into one of three categories...
In the first category you find salespeople who are superstars on the surface. They are the dreams of mediocre companies because they can produce instant results, but are the nightmare of excellent companies because they are unreliable in the long-term and have zero loyalty. If another company offers an extra 1% on the commission structure, they're gone, often taking their clients with them. Integrity is often replaced by expediency. These salespeople are virtually impossible to control because they're not on your team but on their own.
Their loyalty goes as far as the next commission cheque. They look out for their own success even at the company's expense. Why? Because in return their companies don't care about whether they live or die. They are regarded as fungible costs to be kept to the minimum. You can recognise them because their first question at the interview is, "What's the commission?"
In the second category you find salespeople with an entrepreneurial spirit. Yes, your commission motivates them but deep down they have no intention to stay with you. They come in to learn the trade on your dime and them leave and start their own businesses and start competing with you.
In the third category you find people who happen so sell because this is what they love. They see themselves as parts of a team and their individual accountability happens to be landing new clients. They work on improving the company's condition because they know that in return the company looks out for their welfare and professional fulfilment. These are natural collaborators who work to make the team successful. They have a higher calling than earning the next commission cheque. For them the big benefit is working as a part of a team.
In a cold prospecting, 100% commission environment there is no teamwork. You eat what you kill. And since the company makes no investment in creating results, hence pure commission, there is no support for the salespeople. It's a sort of "sink or swim" environment.
Conclusion
I'm fully convinced that in order to create a loyal, dedicated, enthusiastic business development department, you have to implement two important things...
1 Providing your sales force with preponderance of pre-qualified leads.
2 Add your salespeople to of your company by compensating them the same way as other employees.
And what do you achieve if you do this?
Well, you create an excited and enthusiastic sales force that can attract great clients with sexy projects and seamlessly blend he sales force into the whole company.
Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.
