Tomicide Solutions May 2007: The World Of Selling Technology Is Changing. Is Your Company Changing With It?

By Tom "Bald Dog" Varjan

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TIhe big hairy naked truth is that most technology companies are not changing as the world is changing around them. Correction. They're changing. They keep spending more and more on top notch technology. This is how they're changing. Otherwise they're simmering in the pungent stench of the status quo by doing what they've always done but doing it longer, harder and better technology. And doing more of the same, they expect different results. It's like a jockey who is using two whips to motivate his horse to run faster without realising that the horse has lost a horseshoe and is seriously limping.

It reminds me of the situation when two people meet but they don't speak each other's language. So, they start yelling at each other hoping that the louder they scream the more likely that their "conversation partners" understand what they're saying.

In most cases business development is the same...

Sales manager to sales force: "Folks, sales are stagnating, so you have to make twice as many calls, knock on twice as many doors and cover twice of the mileage on the streets as before. We also hire more salespeople to double the sales force. And if you still don't produce the demanded numbers, then we'll beat you up a lot harsher than ever before. But as always, don't expect any help and support from us."

Exactly like the jockey, who starts using two whips, puts two spurs on each boot and uses a megaphone to yell louder at his horse to motivate it to run faster. What the silly bugger ignores is the lost horseshoe, so the horse is still limping, and no amount of whipping, spurring or yelling can remedy the problem.

Yes, a blacksmith could solve the problem, but our jockey is desperate to win the derby right now. Besides, hiring a blacksmith costs money. So, it's out of question. There is no time and no money to take care of the horse. The greedy stable manager demands 100% winning ratio or the jockey gets fired.

This story may sound far-fetched, but when, many years ago, I was working at a slaughterhouse, I was called out quite a few times to the neighbouring race track to put down and take away seriously injured horses who had to die - often - due to lack of proper horse care. There wasn't enough horse sense to look after the horses. In one case the stable manager was embezzling money from the "horse maintenance" kitty. Then he got caught, and had to return the dough plus had to pay some $500,000 for two horses whose premature death was caused by him.

Today I still get enquiries from technology companies that need instant solution because there is barely two weeks worth of money in the bank. What they really need is a solid a business development strategy to generate high calibre sales leads so in time those leads convert into paying clients. But in most cases they refuse this "stupid idea" because they need instant results.

The sales environment has changed quite a bit over the last few years. Sales cycles are getting longer and longer. People take their time to purchase anything, especially high-ticket stuff.

And on the top of all this, here is the Internet. In today's sales environment prospects don't need salespeople to "provide information." That information is available on the web, and most prospects do their own due diligence even before contacting a potential company. By the time prospects meet salespeople, prospects often know more about the stuff they want to buy than the salespeople who are selling them.

A recent study by CRMGuru, in collaboration with Selling Power Magazine and Search CRM, has identified the top ten sales trends. The survey is based on 1,535 participant responses from various industries, including technology. The interesting thing is that the most commonly applied trends to increase sales are not the mast profitable methodologies. Most companies still use old fashioned antiquated approaches to increase their gross sales with no regard for net profits.

The majority of the business word still believes in the notion that sales are good. Personally I believe margins are even better.

Over the years I've observed that most technology companies are obsessed with the volume mentality. Never mind margins. And while this survey wasn't focused on technology companies alone, I've been observing this trend in the technology field.

The other part of the same equation is that many technology companies still don't fully understand the concept of selling customised intellectual capital and they try to sell "things" or time chunks of manual labour, which they call value-added services. One example is warranty work. Companies offer free service and charge only for the parts. But the value lies in the service and the parts are penny items anyway. What an amazing logic. They could offer free parts and charge for the brainpower to fit them in. Listen to the wording. Not charging for labour. Charging for the applied know-how.

Far too many technology firms emphasise either the product or manual labour aspects of their work, while grossly neglecting the customised intellectual capital they provide to their clients to improve their businesses. Instead of teaching clients how to deal with minor technical issues, they try to make their money on doing minor technical issues.

I've seen companies (with 20 plus employees) where the president was so busy replacing crashed hard drives that he didn't have time to write up a proposal for a $75,000 project. He was hopelessly busy doing $65 an hour break-fix work.

So, let's see the initiatives and the percentage of respondents who rated each initiative as important...

Trend #1: Increasing Gross Sales: 65%

One of my mentors, Alan Weiss says...

"It's not what you make but what you actually keep that counts."

And I've seen this sickening obsession with gross revenue in most of the companies I've worked with. Most technology companies have two desires: Higher gross sales and more clients. They operate like cattle ranchers and obsessed with headcount. So, now the sales manager hires a few more new salespeople and sends them out to roam the land to hunt for new business. Before he had 10 salespeople chasing prospects and alienating them. Now he's got 15. "Let's spread fear among out target market and let them know we're coming."

But let's look at this problem through the eyes of the cattle rancher. All right, you go for headcount and keep acquiring more cattle increasing the total weight of your livestock. But if new cattle you acquire were farmed incorrectly and have astronomically high body fat content, then you're in trouble because the quality of beef you produce is rubbish. The total weight is there but what smart ranchers need is well fed cattle that will provide top-notch beef. If your beasts are grossly overweight, their value goes down.

Years ago I funded my way through university by working at - among others - a slaughterhouse, and I killed and processed hundreds of cattle. They were traditionally farmed "volume-produced" cattle. They were high in fat and not exactly top notch in meat quality. After a while I ended up on a small ranch slaughtering organically grown cattle for the highest calibre meat and deli products. A totally different ballgame. And a totally different meat structure. Actually these beasts had untreated, non-manipulated lean meat. The meat wasn't enveloped in layers of fat, the result of endless sessions of hormone treatment and biomedical manipulations.

So, paraphrasing Alan Weiss, the idea was not how many beasts we slaughtered but how much lean sellable meat we got out of them. The large slaughterhouse had a gross weight mentality. The small ranch had a lean meat mentality.

And I believe running a successful technology company requires the lean meat mentality of a small ranch owner. Keeping waste, that is, organisational fat, to the minimum, and keep improving the methodologies of trimming it away more efficiently.

Similarly, you can make a fortune in gross sales but if your cost of rendering your services is too high, high gross sales are just as useless as a cat flap on the elephant house. Of course, at this point enters the accountant and announces that the company has to cut operating costs. Maybe 1 in a million accountants, with some kind of brain damage, says, "We have to increase profits."

So, the key is not about increasing sales but increasing margins. And that's a touch more complicated, hence many technology companies don't even try to do it.

Trend #2: Improving Sales Effectiveness: 52%

In many technology companies selling is not a consistent well-rehearsed process, but just a haphazard fly-by-the-seat-the-their-pants activity. Every salesperson does it differently. Well, when you have 43% annual attrition in the sales department, average among salespeople, then you don't even have time to implement a system and build your people's skills to use that system.

Even the client diagnosis is not a well thought-out and documented process, but a merely random collection of needs analysis questions. And we all know that needs analyses most often are manipulative questions to steer prospects towards the salesperson's stuff.

Personally I hate needs analyses because neither clients not salespeople know what clients need to improve their situations. Salespeople don't know it because they don't fully understand the situation that's led to this condition. And clients don't know it because they only know the symptoms they're experiencing but don't know what's available to improve the situation. With salespeople ask during needs analyses are questions to steer the conversation towards needing what the salesperson happens to be selling.

Now you may say, smart clients know what they want. No, they don't. Not because they are idiots, but because their current level of thinking has landed them in the very situation they are in, and they've never been in this situation, so how do they know how to solve a problem they've never faced before. How do you build a house if you've never seen a hammer and nails?

And this is not stupidity but simply not having faced this problem.

In good diagnosis processes, just in the case of a doctor and patient, clients are vital parts of the diagnosis but they're not qualified to lead the process. You, on the other hand, are working on similar problems on a daily basis, so you can solve it.

But prospects, as laypeople, don't know what they need. They experience some symptoms but don't know the underlying causes. If you have lower back pain, you may think you have a back problem, but in many cases it's a tight hamstring muscle pulling on your lower back, resulting in referred pain in the lower back. They need the expert guidance of salespeople to jointly establish the root cause of the problem.

And what are the implications for this erroneous approach?

One is that salespeople spend far too much time and effort on meeting tyre-kickers, plate-lickers and bargain-hunters. They also waste an inordinate amount of time and effort of writing proposals for bids. This could be solved fairly easily if all that initial information were put on the firm's website.

Professional service marketing expert, Robert Middleton suggests that service professionals answer eight very specific questions on their websites. He calls these eight questions the Marketing Syntax. I believe that the answers to these questions would avoid unnecessary meetings withy tyre-kickers and other freeloaders.

The eight questions are...

  1. Target - Who are your ideal clients?

  2. Problem - What is your target market's biggest problem?

  3. Outcome - What results is your target market seeking?

  4. Proof - Case studies on a few scenarios from problem to outcome and value to the client

  5. Benefits - What are your clients getting by engaging your services?

  6. Credibility - What gives you the right to do what you do? How are you qualified?

  7. Process - What do you actually offer and how does it work?

  8. Call-to-Action - What do you want them to do next? This is your most wanted action

And all this could be achieved fairly easily if salespeople were courageous enough to say...

"We set clear parameters for our prospects and enter those parameters into our automated lead generation system, and the system will objectively filter the leads to make sure we get and meet only Ideal Client calibre prospects."

This should improve sales effectiveness because it's objective. Salespeople can easily say...

"This prospect seems to be a loser but I meet him anyway just in case I manage to squeeze some money out of him."

And when the factual aspects of qualification, also called demographics, is dependent on humans, it becomes subjective and pretty non-specific to the point of...

"Everyone with a wallet and a pulse beat is a great prospect for us."

There are many aspects of the sales process that can be automated and made 100% objective. Yes, this may look rigid, but I think here we're talking about the rigidity or precision of science here. For instance, let's look at the technical definition of a calorie, the unit for energy. 1 kilocalorie (KCal) is the amount of heat needed to raise the temperature of 1 kilogram of water by 1 degree Centigrade. It's NOT almost 1 kilogram and not APPROXIMATELY 1 degree Centigrade. It's EXACTLY 1 kilogram and EXACTLY 1 degree Centigrade.

If your target market is medium sized manufacturing companies in the $50-500 million annual revenue range, then manufacturing companies with $45 million annual revenue are outside your scope of operation. They are almost $50 million, but not exactly.

What happens here?

A lead generation system automatically disqualifies the request and that's it.

But what about salespeople? Most of them will say...

"Well... hell... It almost fits the profile. Let's go and meet. Maybe there is some commission to be earned there."

Some people may ask whether or not we need to be so precise about our prospects. I believe it's a good idea to bring a bit of precisions in our businesses.

Would you fly with a pilot who 99% completed his training and got his pilot licence?

Would you go to a doctor who 99% completed medical school?

When you're drowning, would you like to be rescued by an "almost lifeguard" who 99% completed lifeguard training school?

As the old saying goes, you're pregnant or not. There is no such thing as almost pregnant. I think this notion should also be applied to prospecting for new business as well. And since pre-defined precision is objective, it can be automated.

Trend #3: Increasing Market Share: 43%

This is a reasonable objective for companies that try to make a living on high volume. Companies with the Wal-Mart mentality, "We have low prices but make up for it in volume."

Premium technology companies can work only on a certain number of projects each year, so increasing market share is a rather retarded objective to invest serious money and attention in. A technology companies can't penetrate the market the same way as mass manufacturing organisations. It's a totally different ballgame. We have already discussed that whatever you sell, your margin lies in providing additional professional services to augment your basic offer.

I have a potential opportunity to work with a company that makes portable vital signs monitors for seniors. That's great but the margin is not in selling the units one by one, but providing additional professional services for wholesalers, retailers and doctors, so they have better success to sell and recommend the stuff.

Remember what Lou Gerstner, the former CEO of IBM said about selling products...

"You are headed for commodity hell if you don't have services."

Yes, there are the Big Four accounting firms and they do everything for everyone. They try to increase their market share, so they keep offering new services that are not even related to their core services. And of course, they increase their market share.

But how? Are they "premium" providers in their markets? Yes, maybe in accounting. But what about information technology? Can you imagine a firm that has been established as an accounting firm going around and trying to establish itself as an IT consulting firm.

It reminds me of the doctor's shingle on his office door...

Dr. Rintin Eaglebottom, Dentist and Gynaecologist

No doubt, both dentists and gynaecologists work in body orifices. But those orifices are at the opposing ends of the human body and serve drastically different purposes. One is mainly an input port and the other is mainly an output port.

My take on this topic is that the objective shouldn't be to increase market share but improve the quality of the current market share. All right. You increase market share. And now your firm works on twice as many projects as before. Are you twice as profitable than before? Most probably not. Unless you're the proverbial Wal-Mart of consulting working on large volume at low low prices.

So, again, I think, for a high-margin, low-volume technology organisation, maintaining the quality of your current market share is more important and worthwhile than spending money on increasing it.

Trend #4: Enhance Client Loyalty: 39%

Loyalty in technology companies is an interesting concept. When you're a loyal customer of your local grocery store, you go there regularly to buy your food. Depending what they offer, the same can apply to technology companies. They sell the basic whatever they sell, and then can offer extended warranties and various service contracts.

From the client's perspective it only makes sense to take out extended warranty with the same company they bought the original stuff from. If I buy a printer from Office Depot and decide I need extended warranty on it, I am likely to take out the warranty from Office Depot not from HP.

In this equation it's Office Depot's job to nurture the relationship with me and give me the incentive to become a loyal ongoing client.

Consulting projects are somewhat different. They happen in cycles. It means clients don't need consultants permanently. But you still can maintain the relationship with these clients in the form of a newsletter or some kind of periodic mailing.

Nevertheless, just as we stay in touch with prospective clients before their projects with us, we also stay in touch with past clients to nurture the existing relationship. And maybe they give us another project down the road. But maybe they never have another project for us. But if you have an automated "stay in touch" system, it makes no difference if you have 20, 200, 2,000 or even 20,000 contacts to keep in touch with.

Trend #5: Increasing Margins: 22%

I'm a bit shocked by this but then think of Mark Twain's truism...

"Whenever you find yourself in the majority, pause and reflect."

Many technology companies are in the majority of ignoring this trend altogether or treating it as a backburner issue. Yet, it could have the highest impact on their profits.

This is really the wasp's nipples. I believe every technology company should concentrate on this area, yet sadly, most of them are mired up to their eyebrows in other lower yield activities. Just think about it...

Based on McKinsey & Co. study on manufacturing companies these results were obtained.

Yet, what do most technology companies do? Due to the overarching accounting mentality, they try to be profitable by cutting their costs. What are the examples?

Many technology companies still sell through commissioned sales forces. They fail hiring receptionists to handle incoming calls, but set up complicated and rather annoying telephone voice mail systems. What they don't realise is how much business they lose by subconsciously asking enquiring prospects to bugger off and leave the company alone.

Don't get me wrong. I have nothing against voice mail. But I have a problem with endless mazes of options on voice mail. The other day I called my bank to activate the PIN number on my credit card. It took me almost five minutes to navigate through the option maze.

Then we have the commissioned sales force. Putting it bluntly, no one trusts commission-based salespeople. Everyone knows that they are after their next commissions and they try to sell anything to maximise it. Years ago, before digital dictating machines became popular, I went to a music instrument store to buy a digital recorder. I told the guy I wanted to record my speeches. Yet he kept talking about the built-in drum machine and how it could spice up my music. He used every trick in the book in attempt to sell me the machine. He was the typical "Don't take no for an answer" type commissioned sales guy.

What technology companies fail to realise is how much they lose through these hard-nosed sales attempts. Of course, wasting money bit by bit is less outstanding in the books than investing in the implementation of a semi-automated lead generations system.

The Internet is another example. Firms spend the king's ransom on websites, and then refuse to invest in the other aspects of online business development. But the website is just a tiny fraction of web-based business development. But after spending the money on an unnecessarily fancy website, there is no money left for getting traffic to it. It's like buying a Ferrari with fancy paintwork but without an engine. The car is still great to impress the neighbours although it's totally dysfunctional. Plain retarded.

Increasing profits, well margins in other words, is the most profitable activity, but ranks only at 5th place on companies lists of sales objectives. Why is that?

I believe one reason for this ignorance is the billable hour mindset. Most technology companies that are smart enough to sell professional services do so on a Per Diem basis. Far too many of them erroneously believe that they're selling time. So what they try to improve is not margin but sales volume. And now we're back to the "we need more clients" paradigm. And their idea is that the more volume they sell, the more manual labour they can perform, thus the more they can charge.

Of course this fallacy comes from Karl Marx's labour theory as he explained in "Value, Price and Profit" in 1865.

We arrive, therefore, at this conclusion. A commodity has a value, because it is a crystallisation of social labour. The greatness of its value, or its relative value, depends upon the greater or less amount of that social substance contained in it; that is to say, on the relative mass of labour necessary for its production. The relative values of commodities are, therefore, determined by the respective quantities or amounts of labour, worked up, realised, fixed in them. The correlative quantities of commodities which can be produced in the same time of labour are equal. Or the value of one commodity is to the value of another commodity as the quantity of labour fixed in the one is to the quantity of labour fixed in the other.

What good old Karl failed to realise was that technology is about solving someone's business problems. You're dispensing customised intellectual property and the application of your accumulated skills and experience solve your clients' problems. And applying intellectual property can't be measured objectively, but must be judged and discerned. But this approach requires that the people who do the judgement and discernment are reasonably proficient at the topic.

Using sports analogy, manual labour is like soccer. Who scores more wins. But technology is like figure skating. There are lots of subjective variables beyond the measurable ones. Yes, the triple Axel outweighs the double Axel, but there are many minute considerations too.

And here is the kicker. Marx idea, communism, has failed all over the world. Yet, his idea about value and the invested social labour are still wide-spread among many technology firms. But I've never met a buyer who says...

"Let's hire a technology company for a few hours of tinkering on our server. And if we have some money left, we ask them to tinker on the security system too for a day or two."

On the top of all this Marxian bollocks, Marx never visited real workplaces, and had seriously limited connection both in finance and industry. He spent most of his life in deep debt, arguing with his creditors, and constantly threatening them with non-payment. He never had a job and expected his family to support him as he was working on his earth-shattering idea of communism. A truly swell dude I must say.

Besides I used to live in communism, and I can tell you it's hell. Read George Orwell's 1984, and you'll have a better idea.

Trend #6: Shrinking The Sales Cycle: 19%

I believe more and more that the sales cycle is what is largely because clients decide when they are ready to buy, not us when we're ready to sell. Yet, many technology companies operate on the "Go and get 'em, boys" basis. Yes, we can do a few things to shorten the buying cycle, but we're also pretty limited on our side. You can't sell anything to people who don't perceive their problems.

If you have good lead nurturing system in place, then you know you've done everything you could to reduce the sales cycle. Otherwise, I believe that, instead of working on shrinking individual sales cycles, it's more valuable to work on lead generation, so you have preponderance of qualified sales leads that will become clients when they are ready to move. Professional services marketing and sales expert, Mike Schultz of RainToday writes in his white paper, "Making Lead Generation Work for Professional Services"...

"I've read two of your white papers, saw you speak, and regularly read your newsletter. I love your website and your ABC Methodology. I've been looking forward to speaking with you for years now.

That is, prospects will contact you if and only if they are ready and willing to change. They buy when they are ready to buy not when we are ready to sell. All we can do is to stay in touch with our prospects but not with stupid pitches but with valuable stuff. At this point we can do no more to shorten the sales cycle than we can to speed up the rotation of the globe.

Using Michael Gerber's words...

"People change in their own time and at their own pace.

And there is not a sausage we can do about it but respecting their wishes and staying in touch with them. But this stay in touch process can be 99% automated.

The irony is that technology companies seem to be the slowest to recognise and adopt automation for their business development departments. And guess who are the worst? Companies that are selling CRM. The typical shoemaker child's syndrome. They sell something most of their own salespeople refuse to use.

Trend #7: Increasing The Effectiveness of Sales Channels: 17%

Now imagine the typical business development continuum from first contact to signed contract...

Business Development Continuum

And from the diagram you can see that you can get clients in two ways...

Traditional sales-heavy model
Marketing-heavy model
Outbound: You chase people and try to sell your stuff to them Inbound: Interested people contact you when they are ready to buy
Rejection: 90% of the people you call want you to get lost or if it's all possible, be dead... right now Acceptance: Only interested people respond. There is no rejection, no overcoming objections and no closing the sale. Qualified prospects close themselves
Sales model: Trying to convince people they need what you sell Diagnosing model: Establishing if there is a reason to change the status quo and the fit to use your services to do so
This is the traditional approach the mediocre majority follows. "We want instant sales now!", "We refuse to plant but demand instant harvest!" - They cry. To pull this off, you need and army of salespeople, that is extra overhead and a drain to manage. Besides, you have to pay them on every sale. And if you pay peanuts, you'll get only monkeys. Until and unless you talk about base pay plus 15-20% commission, you can't expect good people. And as long as you pay salespeople differently from how you pay other employees, you will never get team players. Through a process that is heavy on marketing and light on sales, practised by the top-performing minority. Look at McKesson Corporation, the leading provider of healthcare supply bits and bobs. In the 2002-2003 fiscal year, with only 500 employees, McKesson produced $7 billion in gross revenue. That's an outstanding $14 million per employee. Do you really think they achieved this by running the world's biggest group of peddlers? I dare to say, they mainly used their brains to figure out how to have prospects come to them. In this process you can have only a tiny sales force that can deal with the prospects your marketing process has brings to the point of conversion. There no chasing, hunting, pounding pavements and dialling for dollars. Qualified prospects seek you out as an industry expert.

This sounds nice but since so many technology companies operate in chronic desperation for the next buck, there is never enough money to design a marketing system.

In fitness the hard part is to train and eat in such a way that you gain only lean muscle but not fat. But most people, when they start training with the intention of beefing up a tad, they start gaining both muscle and fat.

Technology companies are the same. When they decide to improve sales channel effectiveness, they tend to go for increasing volume. It seems their only success indicator is sales volume. And here is the problem.

Just like in fitness, it's not hard to gain weight if we allow room both for fat and muscle. Gaining lean muscle tissue is hard. Similarly, in business development, gaining more sales is easy. The hard part is gaining higher margins.

And the only way to create higher margins is if we define more meaningful key performance indicators (KPI). So, let's look at some of these KPI babies...

Job turnaround: This is the difference between the contracted deadline to complete a project and the real time frame. Obviously the aim is to complete each gig before the contracted deadline.

Complete/Incomplete work ratio: A snapshot of the company's ratio of complete projects and work in progress

First pass ratio: How much of the work gets completed on "first touch"?

Labour cost: What is the ratio of the cost of labour working on a project and total project revenue?

revenue per person: The company's total revenue divided by the total number of employees.

Client yield: What is the typical revenue per client? Hint: fire clients with low client yield and high labour costs.

Client retention: This indicator applies only if your offer ongoing contracts, like preventive maintenance.

Wallet share: It shows how many companies one client uses to buy similar services from.

p>These are meaningful indicators because they relate more to causes (leading indicators) and less to effects (lagging indicators).

When I'm coaching business development teams, I also establish personal KPIs, like...

These are three sure-fire indicators. There can be some more but these three are a pretty good start. Remember, the goose must be in top-notch condition in order to lay the golden egg. Run-down, exhausted and stressed out geese can't lay eggs. And if they attempt to, they may end up merely shitting on your doorstep.

Personally unfulfilled people can actually harm your company. Just spend 5 minutes in conversation with 99% of unionised employees, and you get the world's best lecture on apathy.

Trend #8: Enhancing The Quality Of Communication: 13%

Here we're back to lead nurturing and follow up. For many technology companies follow-up simply means repeatedly contacting prospects with a "Wanna buy" pitch.

And while I agree with putting a "Call for action" into "stay in touch" messages, I believe the message should be of value. Something prospects can instantly use to advance their businesses. If you include a call for action message like...

"Feel free to contact me if you want to discuss methods to achieve your highest level of success through the implementation of these ideas. They could help you to achieve balanced growth and long-term prosperity."

It's not pitchy, but offers help for firms that say "I like it but don't know where to start."

In his latest report, "The Rebirth Of Internet Marketing", Internet traffic expert, John Reese writes...

If you are sending out emails to your list that are mainly just promotions for other products then you are NOT making someone's life better.
If you're too focused on making YOUR life better with the money you will make from your business, the odds are good that you aren't making people's lives better with what you do. And the ironic part is, this will keep you from making a lot of money.
Your business must be built around truly making people's lives better or you are, ultimately, doomed to fail online. Write that down. NOW.

And the same concept applies in off-line marketing too. So, is your communication making someone's life better or is it merely wasting someone's time? Is there value in your ongoing communication with your target market?

You have probably heard it already that content is king, it's becoming more and more of a king every day. Your content is the proverbial 800 lb. Gorilla.

Then John Continues...

"What everyone really wants is rock-solid content for whatever topic they are interested in. And guess what, whoever can give it to them is going to generate the highest return from that single visitor - whether through advertising monetization or by selling them products and services."

And when you're communicating with your prospects, forget about hype words like "cutting edge", "leading edge", "robust" or "best of breed."

You market is searching for valuable information and is hoping to get it from you. Well, provide it in a pressure-free manner.

Trend #9: Reducing Sales Costs: 10%

With this baby we're addressing one segment of improving internal performance. In a way we're back to the sales funnel and how prospects are managed from first contact to signed contract. And when I say prospects can be managed through an automated process, many of my clients rebel that prospects expect personalised services.

Well, let's tell this the doctor who is diligently healing his patients but doesn't waste time chasing ill people outside his clinic. I believe personal face-to-face "premium" attention should be given only to paying clients. I believe in providing value upfront, but I believe that your greatest value, availability to you in-person should be restricted to clients only.

I know technology companies where it's customary for salespeople to personally visit prospects, including the most hopeless tyre-kickers, on a rotating basis with a box of doughnuts and a barrel of Coke to "advance the sale." I once met the partners of a Vancouver-based engineering consulting firm. These partners regularly got on the road to visit their prospects all across North America. They would go to the prospect's city and then call, "Hey we happen to be in the neighbourhood." Most prospects responded, "Sorry, we're too busy to see you, and we don't need anything anyway." The month-long trip would cost around $250,000, usually resulting in nothing. Imagine, these people were travelling from neighbourhood to neighbourhood in the hope of meeting a prospect and squeeze a sale out of them.

Management insisted that this was the only way the industry was doing business. And they refused to change, until... one day the money ran out. And by the time the firm reduced the cost of sales to $0, it was pretty much ready to go out of business.

Trend #10: Encouraging And Supporting Team Selling: 9%

When technology companies are promoting expertise in multiple areas of technology (e.g. web-based back end development and network design), team selling becomes vital. If I want to review my company's technological "up-to-date-ness" in the light of overall strategy, I want to talk to both a strategy expert and an IT expert. And I'd prefer to talk to them together, so I can also assess that they work well as team not merely as two individuals sharing bosses and toilets.

I want to make sure that everyone involved in my project is pulling the proverbial cart in the same direction.

And this is one more nail in the coffin of the commissioned sales force. Selling technology requires trust, but you can't build trust on a sales force with 43% annual attrition. Here is one important consideration. Commissioned salespeople are antagonistic to teamwork. They don't want to involve anyone else in the pre-project phase because they fear that they have to share their commissions with anyone who was involved to land the deal.

So, they act as brokers between prospects and topic experts...

"Just tell me about it, and I'll relay your question to our expert and then bring you the answer."

We all know that the more ears and mouths our message goes through, the more distorted it becomes. People pass on messages with their own slants on them. That's why eyewitnesses to car accidents almost always disagree...

"What?! A small red car hitting the pedestrian! Bullshit! It was the pedestrian who hit the big blue truck."

And they've both seen the same event. Hm.

I believe team selling should be much higher on this list.

But there is one more problem: The match between buyer and seller.

Your salespeople get appointments with buyers. But the buyers are top executives, while the salespeople are often the most recently hired lowest-level employees straight out of the unemployment lines. There is no match between buyers and seller.

Mismatch between buyers and sellers

Why the unemployment lines? Because most technology 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 out from companies with which they would have the best match to work.

Now close your eyes and visualise the typical executive on the top of the organisational pecking order overseeing multimillion dollar operations. Then visualise the typical salesperson with his slick closing techniques, chest-beating canned presentations and phoney charm. Have you seen the movie Glengarry Glen Ross? Or The Death of a Salesman? Watch them. And make sure your salespeople are not like them.

And if you want your salespeople to reach beyond the evil clutches of the purchasing and procurement departments and get invited into boardrooms, then help them to forget everything they've ever learnt in sales training.

Most executives at the top of the company have nothing to discuss with rank-and-file people from other companies. Hint: Privates can't just knock on the doors of four-star generals. There is a chain of command to follow.

In the world of selling technology, this is the procurement or purchasing department, and the dreaded bidding war.

So make certain your whole sales team is in on selling your stuff not just some individuals.

Trend #11: Reducing the Cost Of Sales Admin: 6%

We know from the McKinsey study that 1% cost-cutting can add only 2% to net profits. What cost cutting also achieves is cutting down on opportunities.

For instance, the company's management may say, we can't justify to have a live receptionist to take incoming phone calls. We can replace her with a basic voice mail system. For technology companies this is tempting. But there is a world of difference between using better technology and using technology better. And replacing a real person with a machine at the first touch point is a bit unwise.

Mike Schultz of RainToday writes in his white paper, "Making Lead Generation Work for Professional Services" that 88% of technology service companies' clients are willing to switch service provides.

But there is a huge difference between eliminating unnecessary admin expenses and compromising potential ROI. For instance, if I run a $2,500 a month ad in a magazine that consistently delivers $10,000 in sales every month with $2,500 net profit (the other $7,500 include the cost of the ad and the cost of doing business), then, unless I'm a raving idiot, I keep running this ad, and rob a bank if necessary to allocate more money for more $2,500 ads. This is 100% ROI.

Now some people may say but it's risky. Why? Once you've tested it and established that the ROI is pretty consistent, then it's done. Yes, you re-test periodically for consistency, but keep investing.

By cutting costs on your "stay in touch" messages, you give your prospects an outstanding opportunity to drop you like a hot potato and go to your competition buy the services they originally wanted to buy from you. And, as the above number shows, prospects are pretty trigger-happy to switch service providers.

So, the key is not to reduce sales admin per se, but to optimise it to the level of the highest yield. Maybe you don't need a full-time employee on the payroll to handle newsletters. You can have an outsider who receives inputs from all your people and once a month shakes those bits and bobs into a newsletter and sends it out to your list.

If you have a list of only 1,000 buyers who've indicated interest in your services and raised their hands asking you to stay in touch with them, but not yet ready to buy, what is the value of staying in touch with that list of warm leads?

What is the potential lifetime value of those buyers? Think about that and justify the investment of creating a monthly newsletter that way.

If you find a good writer who can compile your thoughts into a newsletter and send it out once a month, would that service be worth $1,000 a month for you? And what if your list is growing by 100 subscribers per month?

Try to reduce your sales admin costs by better qualifying sales leads and not to waste time to meet every tyre-kicker in person.

My Modified List

Using the evergreen truism of Ron Baker of the Verasage Institute...

"Growth for the sake of growth is the ideology of the cancer cell not a successful business."

Here is how I would modify this list for my own firm.

I think these factors are the causes...

#1: Increasing Margins: The McKinsey study says that 1% fee increase can result in 12% increase in net profit. I would be a raving idiot to put this baby anywhere lower on this list.

#2: Enhancing The Quality Of Communication: This is the very process that creates the perception for my services.

Outside perception vs. inside reality

The better you manage to align your company's inside reality with its outside perception, the larger the "Success Zone" becomes. And that success zone means your clients derive higher value from your services and you get better clients who are ready and willing to accept your premium prices for premium services.

It's that simple and that hard.

#3: Enhance Client Loyalty: This is really the quality of service we provide and the quality of the relationships through which we provide it.

#4: Encouraging And Supporting Team Selling: I believe a good business development team should operate as a military commando: One team not many individuals.

#5: Increasing Market Share: This comes from good communication.

#6: Improving Sales Effectiveness: Optimising risk, investment and return on investment. I used to believe this was about maximising and minimising. But now I prefer optimising. I've realised that maximisation and minimisation work against each other. When you drive your car, you can maximise your speed but you also maximise fuel consumption. But when you optimise your trip, you can have both pretty good speed and pretty good fuel consumption. When you record music, you optimise between noise and distortion.

...and these are merely the effects...

#7: Increasing Gross Sales: This is an effect and will increase as the causes change. One of these causes is the price which you can command for your stuff.

#8: Shrinking The Sales Cycle: This is about the quality of your follow-up. You may try to shrink the sales cycle, but your buyers buy when they're ready to buy not when we're ready to sell.

#9: Increasing The Effectiveness of Sales Channels: Keep cleaning your sales channels and make sure buyers can move smoothly from first contact to signed contract.

#10: Reducing Sales Costs: Everything with moderation. And keep testing the results. You have to decide whether you want to be a high-volume low-margin or a low-volume high-margin business. Again, optimisation is the key.

#11: Reducing the Cost Of Sales Admin: To acquire quality clients we need to build quality in all aspects of the company. Don't waste money on stupid things but the other side of the same coin is that you can't cost-cut your way into excellence either.

Summary

In fitness it's not bodyweight that counts but body composition. That is the ratio of your lean muscle mass relative to your total body fat. It's a relative number not an absolute number. Yes the majority of people track their fitness progress through their body weights. But let's not follow the morons down the wrong trail.

Using quality guru, Philip Crosby's words…

"Building a better scale doesn't change your weight."

Another example… How do most companies track their websites' success? Well, number of hits. I attended a seminar a few years ago with the web guru, the late Corey Rudl, and he said…

"HIT is a short for How Idiots Track"

Some 4-5 years later, many search engine optimisation companies still market their services through the number of hits they can obtain to their clients' websites. At the same time, SEO companies lose clients left, right and centre because they can't offer ROI for their clients and don't even know how to demonstrate ROI using their clients' hypothetic data.

So, we are back to what we discussed earlier. Key Progress Indicators.

In fitness. When you starve the fat (go on extreme diet without exercise), you also starve the muscles. When you starve the muscles, you lose muscle along with the fat because the body needs energy regardless of where it comes from. In the worst case your body starts cannibalising your muscles and your body clicks into "starvation mode." At this point the body will hang on to every gram of fat, knowing that some bloody hard times are afoot and nourishment is pretty scarce.

If you further cut your calorie intake, your fat loss finally comes to a standstill, and stays there until you can't take the starvation anymore and give up. And then you start gaining fat the way you've never gained fat before, and before your could say Jemima Puddleduck, you're forced to replace your whole wardrobe with clothes twice the size as before.

And millions of morons all over the world go through this vicious circle over and over again getting exactly nowhere and getting fatter and fatter after every attempt.

The same happens when you cut your expenses to save money. For instance, when you cut your marketing budget and try to solve the problem by hiring some more salespeople on full commission. You may save some pennies, but your lost opportunity cost is much higher than the pennies you've saved.

Maintaining a large sales force for instant results is like going on crash diet. Yes, you can see some instant results, but they are small deals really at the expense of building opportunities for large deals. You can lose weight on crash diets, but the lost weight is not fat but cannibalised muscle tissue. But as people lose weight, they lose sight of what they're losing. Again, they use the wrong indicators, total bodyweight.

This reminds me of the hospital where the average patient body temperature is just fine: Half of the patients have high dangerously fever and the other half are dead. But the average is brilliant.

Experts say that marketing and selling is about two things: 1) Human Behaviour and 2) Numbers. In my experience, they're pretty much right. Let's not complicate life. Keep an eye on the right numbers, and keep improving the behaviours, and you can't go wrong.

You can't cost-cut your way into excellence. Yes, be frugal and keep an eye on the purse strings, but not at the expense of lucrative opportunities.


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.