Who Owns The Client? The Company Or The Salesperson Who Has Landed The Client?

September 28th, 2009

Somewhere around mid 2007, Frank, the VP of sales, in a 130-person hardware manufacturing company was about to hire some new salespeople.

Frank’s idea was to hire some salespeople on straight commission, so they can start producing but their employment doesn’t cost a penny for the company. And this is pretty much the route many IT companies take. Frank wanted to mitigate the initial risks of hiring new people, so he put the new people on full commission.

This has always the tradition at Frank’s company. Everyone was on annual salary or hourly wages, but the salespeople have always been on straight commission.

And bit by bit the problems started, and one day Frank opened his eyes…

He was evaluating one of the salespeople, Julia’s performance…

“Julia, you’ve told me about some big deals you have in your pipeline, but there is nothing. What’s happening?”

And Julia’s answer shocked Frank…

“Frank, I’ve got some big deals all right. Actually, some of those projects have already started. But instead of giving them automatically to your company, I’ve given it to another company that’s more qualified and paid me higher commission.”

Then Julia went on explaining to Frank that when she was hired she was told that the more she would produce, the more she would earn. But she also realised that she was hired on a swim or sink basis. While she swims, the company would give her some chickenfeed, but when she sinks, she shouldn’t expect help, support or mercy from the company.

So, she never felt loyal to the company. For Julia, her employer was one of the several means of achieving her ends, that is, increasing her personal wealth. So, every time she would dig up an opportunity, instead of giving the opportunity to her employer, she sought out the highest bidder for the work. It was all about optimising her production.

When Julia was hired on straight commission, she was asked to assume 100% of the risk, do 100% of the work and invest 100% of her money to pursue opportunities. And all for a small 15% commission.

She assumed the risk, made the investment and did the pursuit. But at the end of the day, she – rightfully – didn’t feel obligated to bring these opportunities to her employer.

From salesperson mode, she clicked into broker mode, and brokered out the deal to the better qualified company that paid her more than her employer would have.

According to Julia, a business has two parts: 1) Production of the goods and 2) Production of clients. So, a 50-50 split between the two is fair, and her share of 15% should be a tad more.

So she sent out 10 RFPs to her employer and nine competitors, and selected the most suitable company. And then she hired the most suitable company, as her subcontractor, to do the work under her management.

Of course, Frank was fuming with anger, and decided to lay Julia off.

On that note, Julia notified all the clients she’d ever brought to the company, explained the situation to them, and some 95% of those clients followed her to greener pastures.

And then I got an email from Frank asking for some help…

Frank asked me what I thought about Julia’s behaviour to steal those clients.

And I told him Julia didn’t steal those clients because they are her clients. Realistically, clients are free to choose, so no one “owns” them. She acquired them and leased them to the company for the period of her employment. They were Julia’s clients, the fruit of her hard work and investment. She deserves to have them as long as they want to stay with her.

There was no stealing because those clients never belonged to the company.

What I also told Frank was that a company without an internal client acquisition system is not a business but merely a glorified hobby.

A business that expects to last long can’t place its future in the hands of salespeople who come and go at an annual rate of 43%.

What do you think about the client stealing nonsense?

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Seven Mistakes IT Companies Make Regarding Their Selling Processes And Sales Staff

September 22nd, 2009

Hiring business development staff is always a challenge for IT companies. Sales managers and senior executives hope that “this one works out”, but more often than not, it doesn’t work out.

And it’s not the hired salespeople’s fault. Imagine you put the world champion swimmer Michael Phelps into a relay team with some teenagers who are the best swimmers in their schools, and send them off to the world championship.

What can you expect?

Not much really.

Those teenagers are excellent swimmers at their own levels, but they have a long way to go until they can swim in a team with Michael.

It’s not the kids’ fault. It’s the environment that is not appropriate for their levels of proficiency and experience.

And this is why so many salespeople fail in their new positions, even those who were superstars in their previous jobs.

So, in this issue of Tomicide Solutions we take a closer look at how the organisational environment shapes salespeople, so their performance is either helped or hindered by the business development environment.

So, for the rest of the article, follow the link.

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11 Warning Signs from Prospects And Clients Part 2

August 25th, 2009

Today we continue our journey in the land of warning signals coming from prospects and clients.

So, without much fuss, let’s continue…

Sign #12: Buyers Expect You To Chase Them For Payments

These buyers erroneously believe that it’s your responsibility – besides rendering your services or delivering your products – to chase them for payments, and they have the right to play hide and seek with you.

Actually, in most cases it’s not real buyers but purchasing departments.

This is why I believe it’s vital to get a significant down payment on your projects at commencement.

When you render a service, get 50% down payment before starting the project, and get the remaining 50% no later than half-way through the engagement. If you have a six-month project, get the second 50% 30-60 days after commencement. It’s vital that buyers have a serious skin in the deal, so they don’t jump on to other initiatives and leaving you high and dry.

When you sell products, get enough money in advance to cover your costs and get the remaining of the price well before delivery.

If your buyers want to negotiate bulk discounts on your products, tell clients that you’re open to negotiating bulk discounts with the person who signs the cheque.

There is just one condition.

The cheque-signing person must come to the negotiation table with a filled in cheque and purchase order with only the dollar amount left open. At the end of the meeting, the dollar amount is put both on the cheque and the purchase order, and you take both back to your company. The cheque must cover at least 50% of the full price.

And what to do when buyers expect you to chase them? Tell them you’re taking the matter to collections, which also means the credit bureau is notified, and there will be repercussions for buyers regarding their credits.

However, it’s usually purchasing agents that expect you to chase them. True buyers are usually honest, and they play the game of business above table. And no CEO stands by and watches while the purchasing agent tarnishes the company’s credit rating.

Sign #13: Buyers Keep Threatening You With Legal Action Unless You Dance To The Beat Of Their Drums

The good news is that this specific problem usually shows up at the beginning of the relationship. It’s also very often a bluff.

As the saying goes, the dog that barks doesn’t bite. Nevertheless, the relentless barking can be tiring on the ears, so the best bet is to get rid of these barking clients. Well, the same applies to biting clients too.

A few years ago, four months in the project, a client unexpectedly demanded me to write a brand new business plan or he would get his “lawyers involved”. I encouraged him to do that and showed our agreement, with a clear scope, to his lawyer. He backed off.

I gave him a partial refund, and fired him. First I thought of spanking him with his drumsticks, but then I decided it would have been too much work.

Yes, I lost a client, but kept my sanity, and that can be important too, considering that being in my late 40s’ I’m probably senile enough already as part of the ageing process.

Sign #14: Buyers Frequently Miss, Cancel Or Reschedule Your Meetings

This behaviour can be a double-edged sword. It either shows that buyers have no respect for your time, but are very carefully guarding their own. Or as a result of some recent development in their companies, clients have become scattered, and just can’t focus as well as they normally do. Here you can help them to get back on track.

In this case I tell clients about my observation of behaviour change, and try to talk them through the situation.

I also even suggest that we suspend the project for a few weeks if necessary. But since clients have already made the investment, they don’t want to call a time-out, so they get back on track and move on.

And most clients appreciate that I bring up their scattered states and haphazard behaviours because they impact all areas of their lives.

But if it goes on and I get stood up again, then I cancel the engagement, and move on.

No, you don’t have to return your fees because buyers have made a contract with you to receive your services, and they’ve failed to do so.

So, strictly speaking, they’ve walked away from the project not you, and you can’t justify to finance other people’s whimsical decisions.

Sign #15: Buyers Expect You To Pick Up Their Slack

Some clients may take vacations in the middle of projects, resulting in a similar email or phone message…

“I am on vacation in the next two weeks, and this is what I want you to do by the time I return.”

Some others take on other initiatives that require their full attention. A few years ago a client, the VP of marketing, took up furniture-making as a hobby just when we started working on a main initiative to re-design the company’s business development. Luckily, he postponed his furniture-making activities after the completion of our project.

The funny thing is that when you indicate to your clients that you go on vacation for two weeks, these same people get outraged and demand their money back because how dare you to leave them high and dry.

I believe your work is not about doing things FOR people but helping them to do it for themselves. At least to a certain extent.

Your contract may be to install and set up a new server with 200 workstations, but your contract definitely excludes, or should exclude, unpacking boxes and other unskilled labour.

For this work you’d better request people from your clients. They can unpack the units, distribute the workstations onto their permanent locations, and when it’s all done, you come in to do the expert work.

The way I see it is that a nutritionist can give you advice on weight loss, can help you to create a weight loss plan and can coach you to execute the plan, but clients can’t expect the nutritionist to go on a diet and then pass weight loss back to their clients.

Similarly, you’re an IT professional, and for quick and effective completion, it’s in your clients’ best interest to help you with the labour work.

Clients must implement their own plans under your care, protection and guidance. You can’t do it FOR them. Only WITH them.

Sign #16: Buyers Expect You To Go The “Extra Mile”, But They Are Not Willing To Offer The “Extra Dollar” For It

Some clients cite rubbish like “the customer is always right”, “you should bend over backwards to serve your clients”, “The customer is number one”, etc.

In my experience, this happens to clients who want to squeeze more out of their IT professionals than they paid for.

A few years ago I heard a business guru say that we should become slaves to our clients. Hm.

It’s like going to a car dealership and demanding that they offer you a free driving course just because you’ve bought one of their cars, thus you’ve already paid for it.

I’m not even sold on the traditional under-promise and over-deliver concept. I prefer to keep the promise and the delivery in synch with the payment.

If you under-promise and get paid for a Chevrolet, but over-deliver, and your client gets a Mercedes, next time he will expect you to deliver a Ferrari at a Chevrolet price. No way, baby.

Sign #17: Buyers Are Extremely Tight-Lipped About Finances

We can’t negotiate engagements without talking about money. The money buyers expect to make by seizing an opportunity or save by solving a problem and the money they have to invest to achieve their objectives.

Often when you ask about the budget buyers have allocated to your projects, they brush off your question and say…

“Just submit your proposal and we’ll find the necessary money.”

Don’t believe that, honey. It hardly ever happens. In my experience, those buyers who are tight-lipped about budgets are having money-problems. Have you noticed when you ask people how much they make, those who make good money and enjoy their work, don’t mind talking about money? And those who struggle from hand to mouth month after month, dodge the issue and give you some feeble excuse to talk about, like the weather or the football results?

It’s also a good idea to get a sense of the budget even before you meet. You can tell prospects…

“Other clients in search of similar results have invested $xyz. Is your company able to handle an investment of that magnitude?”

By the time you meet a buyer, it must be an honest discussion between peers. If the buyer is still playing his pitiful “control” game, and tries to treat you his minion, a supplicant, a subordinate, then you’d better leave and never look back.

Sign #18: Buyers Try To Rush You Into Submitting Proposals Without Giving You Enough Information To Be Able To Write One

Has it ever happened to you? A buyer shows up out of nowhere as says to you that he needs this project very urgently and that you have to move very fast. So, he tries to cut the pre-proposal discussion short and rushes you into submitting a proposal as a mere formality.

Then after you’ve submitted the proposal, the buyer vanishes. You try email, telephone, snail mail and even smoke signals, but the buyer is gone. Most of these rushed buyers are gone forever.

Why?

They just don’t have the guts to tell you that they needed your proposal as a way of generating ideas for the internal folks to implement whatever the buyer wanted to hire you for.

How can you recognise them in advance?

Well, just like governments, they demand very detailed proposals with every little step clearly explained.

Then, after collecting enough “new ideas”, the internal people start dissecting the proposals. But this approach usually fails.

It fails because the internal people know the “How to…?” but don’t know the “What” and “Why?”

As Sun Tzu put it in the Art Of War…

“All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.”

So, what to do when buyers try to rush you?

Just explain to them that, unlike them, you’ve done this many times before, and there is a reason why you do it the way you do it. And if they don’t have two brain cells to rub together to comprehend that you’re an expert in this area, and maybe you know what you’re doing, then it’s time to move on to greener pastures where buyers come with more brain.

Sign #19: Buyers Expect You To Be Available Even While You Are On Vacation

Yes, sometimes engagements are so long that you take a vacation in the middle of it, and some clients may get outraged by it.

In my experience, people often get angry when people do to them what they always do. People who regularly interrupt other people’s conversation fly off the handle when someone interrupts them.
People who regularly take phone calls and check their emails during in-person meetings get very angry when others do the same thing.
And who gets angry about your vacation plans? Buyers who’ve just come back from vacation and are about to go again.
Why do they get angry?
Because they resent the whole vacation concept and they know they fall behind on the project. But they don’t want to say no to their spouses in case the event breaks out a family feud.

The anger against you is often their hidden resentment for the people who “force” them to take a vacation.

Good clients know that you have to recharge your batteries, and for them it’s more important that you show up in good condition than merely showing up and putting in the hours.

Sign #20: Buyers Are Picking Your Brain For Free Information, And Then Demand You To Either Lower Your Prices Or They Go To A Cheaper Provider

This is a typical problem when you get your engagements through bidding wars. I participated in one many years ago, and pledged never to do it again.

I don’t mind sharing my knowledge, but sharing it knowing that everything I say will be used against me, it not my cup of tea.

I think every engagement can be started on a small scale that is easy to agree to.

If you have a buyer, representing a $100 million a year company, and he has a problem to start a small $25,000 project to diagnose the situation, then there is a serious problem. This company probably wastes 100s of thousands of dollars, so if your $25,000 fee is a problem, then someone is not playing nice.

My proposals are 3 pages long “big picture” documents, and they also serve as selection tools. If buyers want more, then we’ve hit a brick wall. If a tree-page document is not descriptive enough to start a small $25,000 project, then, I’d better retreat, and move on to the next buyer.

The other side of this coin is that buyers take your proposals and tell you that another company is offering the same services at a lower price.
Very often, there is no other company, but they try to trick you into dropping your fees. If you were out of their price range, they wouldn’t even be talking to you.

No one goes to the Ferrari dealership, hoping he can demand Ferrari to drop its prices just because across the street the dealership is selling some General Motors junk at 5-10% of Ferrari’s prices.

Sign #21: Buyers Are Always Hyper-Busy And In Constant Rush

Have you come across clients who are always in a terrible rush and are constantly interrupted when you try to connect with them?

You know the ones that answer emails and phone calls while you’re trying to explain something to them?

My view is that it’s not the lack of time but the lack of overall organisation that puts them into this permanently rushed mode. You can’t do business with losers. Ditch them.

Sign #22: Buyers Communicate In One-Word Sentences

Imagine that you send well-written letters or emails to prospects or clients, and all their responses contain is one-word sentences, like fine, sure, ok, hm, well, all right and similar.

To me it’s an indication that the issue that we’re discussing is not worth proper communication.

I like giving people the benefit of a doubt, but I’ve also learnt a few lessons in life, and this one-word communication is one of the hard-learnt lessons.

On Summary

I believe being in business has the great advantage over employment is that we can select who we want to do business with, and we don’t have to accept proverbial latrine duty with jerks just to make the big boss rich.

And if we think prospects are not appropriate for us, either because their projects look boring or the people involved are not nice, we just have to courteously reject them as clients.

Yes, business is partly about making money, but I think we also have to enjoy the process, otherwise work becomes drudgery.

So, look at your clients and prospects and see whether you really want to carry on interacting with them or you’d better refer them to the competition.

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22 Overlooked Warning Signs from Problematic Prospects And Clients

July 9th, 2009

In their efforts to produce higher sales, many business development folks of IT companies overlook typical warning signs from prospects and clients, and fanatically focus on making money.

While making money is a pretty good idea in any business, it is important to consider how effortlessly you make that money and how much you enjoy the process. All right, the word effortless may piss some people off, saying that you are supposed to work hard to earn your money. But are you really? As the saying goes, you can tell a craftsman from a labourer by the sweat on his brow.

The craftsman is a master achieving something, the labourer, on the other hand, is just working hard, sweating like a pig and swearing like a trooper.

And here is where very often the problem lies. Some prospects and clients expect their IT service providers to work very very hard to actually earn your fees. They may not insist on the sweating and swearing parts, expect hard work nevertheless.  But that is retarded.

If you are any good at your profession, then you can deliver great value with very little effort. So, your prospects and clients should consider the end result not the effort you put into creating them.

Some of these points are more applicable to product sales, and some others are more applicable to selling services.

So, Here Are Some Warning Signs…

1. They want to keep you under their thumbs. They try to be in full control of what you do and how you do it.

2. They keep moving the project’s goalposts. They try top get more value from you without paying for it. It’s like going to the car dealership and saying, “Hay, I’ve bought your car, so now you have to give me free training to get my driving licence.”

3. They put you down for every little mistake. In every project, there are plenty of mistakes made both by clients and service providers. That’s how projects work. There is no point in blaming the other party, and there is no point in tolerating such behaviour.

4. They are prone to scope creep – try to push you into doing things outside the project’s scope.

5. They advise you how to conduct your business.

6. They regard you as their subordinates – Some clients expect you to dedicate your whole life to them and demand your full attention 24/7. They fail to realise that you have several clients but only 24 hours a day. Besides, who the cricket wants to work 24 hours a day.

7. They treat the project as a “backburner issue” in their lives. It is not regarded as top priority.

8. They treat you as a commodity and have little respect for your unique expertise.

9. They put too much emphasis on references and testimonials – They don’t care what they can achieve with you but blindly focus on what you have achieved with others. They fail to realise or simply deny the fact that in each equation you are the constant and the client is the variable. Using basic mathematics, the outcome of the equation is the function of the variable. A relationship with a professional is not only intellectual but also highly emotional. Just like a marriage. Let me ask you this: Did you marry or start dating your spouse because references and testimonials from previous boyfriends and girlfriends said “She is amazing in bed” or “He is brilliant at fixing cars, TVs and lawnmowers”. 80% of a relationship with a professional is visceral, thus cannot be put into a testimonial. And the other 20% (the intellectual stuff) is just a small contributor. However, this only applies to truly collaborative relationships. For a moment parenting comes to mind. You don’t have to be a child psychologist to raise great kids. As long as you offer the visceral stuff, like love, care, challenge, guidance, protection, high expectation, openness, etc. (just like in a consulting gig), you are on the right track.

10. They repeatedly violate your time by calling you at socially unacceptable times. My clients have unlimited access to me, but when a client repeatedly calls me at 11PM and gets outraged because I don’t pick up the phone (because I’m asleep), that is a bit of a problem. I believe in giving clients unlimited access to you, provided your fees are high enough to justify this level of access, but I don’t believe in being on call. When it suits me, and happen to be awake, I answer that 11PM call, but also tell clients not to expect me to sit by the phone at 11PM. There must be some ground rules here.

11. They keep reminding you that they could get greater value for lower fees – They keep telling you they are with you just as a favour and expect you to lower your fees if you want to keep them.

12. They consider you as a bank and expect you to offer favourable payment terms.

13. They expect you to chase them for payments.

14. They keep threatening you with legal action unless you dance to the beat of their drums. I’ve been though this baby, and cost me $11,000. The project went south because the client didn’t do his side of the agreement, which he also admitted in court, but eventually, five years after completion, he sued me, I was found guilty of breach of contract, and had to return my fee.

15. They frequently miss, cancel or reschedule your meetings.

16. They expect you to pick up their slack – Some clients take vacations in the middle of projects, resulting in a similar email or phone message: “I am on vacation in the next two weeks, and this is what I want you to do by the time I return.” The funny thing is that when you indicate that you go on vacation for two weeks, these same people get outraged and demand their money back. I believe that consulting is not about doing things for people but helping them to do it for themselves. All in all, they have to do the work under your care, protection and guidance. A nutritionist can give you advice on weight loss, can help you to create a weight loss plan and can coach you to execute the plan, but clients can’t expect the nutritionist to go on a diet and then pass the back weight loss to clients. Clients must implement their plans with the care, protection and guidance of their advisors.

17. They expect you to go the “extra mile”, but they are not willing to offer the “extra dollar” for it. They cite rubbish like “the customer is always right”, “you should bend over backwards to serve your clients”, “The customer is number one”, etc.

18. They expect you to be available even while you’re on vacation.

19. They picking your brain for free information, and then threaten you with going to a cheaper provider unless you lower your fees and prices.

20. They are always hyper-buys and in constant rush. Well, it is not the lack of time but a lack of direction. You can’t do business with losers. Ditch them.

21. They are too agreeable. Don’t believe this. They become some of the nastiest clients, even taking you to court to get their money back. Initially they agree to everything you say, but then they deny it all.

22. They are emotionally involved with you. That is, they are your friends and relatives. Unless you are extra careful, this can be very messy. Friends and relatives are the worst at recognising your value. They just expect you to do everything for free.

So, now sit down and create a “Difficult Client” profile, just as you have created and “Ideal Client” profile.

You must be 100% clear about whom you want to absolutely and positively reject without even thinking about it.

Go for better clients and make sure you don’t clog up the shop with seekers of the lowest bidder.

If you can automate the whole discovery / disqualification process, several great things happen. You consistently get clients with the your pre-defined attributes. Hey, the form they have to fill in is objective to everyone. You also drastically reduce the time you spend with people before they make a commitment to hiring you.

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Sales Lead Generation in the Traditional Versus the Lucrative Way

June 29th, 2009

All farmers know, even me as a small-scale former farmer, that in order to harvest we have to plant. And while planting doesn’t guarantee plentiful harvest, not planting does guarantee full scale famine and hard-core starving, unless someone (like a government with a distorted, communist mindset) bails us out.

Lead generation is the same. It doesn’t guarantee abundance of clients right away, but if you don’t do it, then you can land in very deep yoghurt with no hope in hell to ever be able to climb out. The sad fact is that many IT companies choose this route because they mistakenly believe they can save a small fortune if they skip marketing and skimp on the associated investments. And they are so everlastingly stupid that they regard marketing as an expense to be eliminated, as opposed to an investment to be optimised for ROI.

Read the full article of Sales Lead Generation in the Traditional Versus the Lucrative Way on EzineArticles.com.

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