Marketing Guru Wanted

January 7th, 2010

The other day I read an interesting entry on Hungarian HR expert, Tamas Kelko’s blog.

He outlines a chronic illness that has penetrated small and medium sized organisations over the years. He refer to the situation in Hungary but the problem is more global.

He points out that in order to increase revenue, business owners must focus on marketing. Many years ago, Peter Drucker outlined the importance of marketing when he said…

“Because its purpose is to create a client, the business has two – and only two – functions… Marketing (you get paid for creating a customer) and innovation (you get paid for creating a new dimension of performance). Marketing and innovation produce results, all the rest are costs.”

So, our business owner hero knows he has to focus on marketing, but he doesn’t really know marketing. After all, he’s a subject matter expert, an IT guru.

So, he runs an ad in the local paper or even Craigslist, in which he’s looking for a marketing guru with a university degree in marketing (possibly MBA) and many years of experience.

No he doesn’t hire a copywriter to write the ad because he thinks any idiot can write a job advertisement. No big deal.

And the applications are flying in…

And since the ad is so vague, by the afternoon, he is knee-deep in applications.

By next morning he’s up to his balls with application printouts.

The applications were piling up so fast that he needs wings not to drown in them.

Then, based on whatever random criteria, he selects a guy with an MBA and four years of experience at an advertising agency and a couple of awards to his name.

“This is what I need.” – Our hero thinks.

He checks the guy’s references. The marketing guy checks out as a good guy.

What our hero neglects to ask is that if this guy has ever produced any revenue. He gets bamboozled by the guy’s awards and smooth and slick agency talk.

So, he offers him good salary, benefits, bonuses, amazing working conditions and even a company car.

Time is ticking by but by the end of the new marketing guy’s first year in the position, still nothing has happened.

What the hell is going on?

Our hero business owner thinks back to the interview process…

He remembers that the candidate was very quick to ask about the budget, but when he asked the candidate about how he had improved the bottom line at his previous employers, the candidate got rather confused…

  • I’m not sure what you mean
  • Well, I was in marketing not in sales, generating revenue wasn’t my job
  • Marketing cannot be measured with money
  • Why, was I supposed to generate revenue?

But our hero marketer used to work in an ad agency and his job was to spend the agency’s clients’ budgets to the last penny and win advertising awards.

Creativity and wards meant promotion. It wasn’t about helping clients to generate revenue.

The reality is that out of many applicants, only a few can make positive differences to their employers’ bottom lines. Most of them are lots of smoke and no fire. Big hat and no cattle.

Also, in most universities what they teach is business-to-consumer (B2C) marketing. That is, marketing commodities to the masses. There are only a very few (I know only three) universities in North America that teach business-to-business (B2B) marketing.

So, when most people with marketing MBAs (2 years of B2C Kottler therapy) land in the B2B world, they just stand there like a deer being caught in the headlights.

Here is the other problem.

Marketing, especially with the proliferation of the Internet, is changing very quickly.

But in academia, it can take years to get a new curriculum accepted for teaching. So, if you write a curriculum on Social media in 2009, it won’t be considered and accepted at least before 2012. So, in 2012 you start teaching something that is already obsolete because by 2012 social media won’t be the same as it is today (January 2010).

A few years ago Jeff Walker released his Product Launch Formula, but in academia it’s still not taught.

Social media has been around for a while but academia is still hesitating as to whether or not to recognise it at all.

A few weeks ago I was listening Jeffrey Krames’s audio book, Inside Drucker’s Brain. While Drucker was a guru and a guiding light to the entrepreneurial world (that produces the majority of GDP for most countries), he was a black sheep to academia. Only a very few textbooks refer to his name in the form of very short footnotes. But none of his 39 books is recommended reading at universities, accept at Claremont Graduate University (then known as Claremont Graduate School), where he developed the country’s first executive MBA programs for working professionals.

So What Can Business Owners Do

I suggest two actions.

1. Business owners must understand marketing pretty well. They don’t have to become marketing masters themselves, but must understand the principles, so when they hire marketing consultants for help, they can have intelligent conversations and the owner understands what the marketing consultants is talking about.

It’s hard to hire a competent marketer if you don’t speak marketing English. And this applies to any profession. How can a business owner hire an accountant if he doesn’t know what EBIDTA is?

Yes, the business owner must be a bit of everything. He has to have an oversight on everything, otherwise he gets screwed by unscrupulous “experts” and “gurus” whose number is growing rather fast.

2. Business owners must grow great marketers in-house. This is important because this way the marketer is developed in the company’s specific culture. Marketing knowledge is one thing but the company’s culture and values create the infrastructure within which marketing operates.

For instance, the car industry is famous for its bait and switch marketing methods and dirty, unethical sales practices. It’s not surprising if you consider that the car industry is a typical “cheat, lie, deceive and cover your arse” environment. The motto is to make money whatever (maybe short of murder) it takes.

The overall organisational strategy must be in alignment with marketing strategy. That’s why the business owner must be in charge.

Yes, it’s a good idea to discuss things with a marketing consultant to make the most of your marketing strategy, but the business owner must be in charge.

And once you and your consultant have developed a marketing strategy that is in alignment with your organisational strategy, then you can hire some implementers. Yes, it’s a good idea to keep your consultant on a retainer in case some questions come up around implementation, but you don’t need the consultant permanently on the project.

And for implementers hire good people with drive, energy, enthusiasm and passion for marketing.

Then you can organise an in-house marketing academy for your people.

Give them resources and put each of them on the path of individual professional development.

For instance…

  • Joe, by the end of 2010 you go through these materials and become a kick-arse copywriter.
  • Jen, by the end of 2010 you go through these materials and become a kick-arse SEO expert.
  • Jim, by the end of 2010 you go through these materials and become a kick-arse WordPress expert.

Remember, these people already have an innate talent and affinity to these topics, but you empower and enable them to become masters of their crafts WITHIN your company’s culture.

As they learn their crafts, they also absorb and experience the culture of your company. They become one with your vision and mission.

And these are the people who stay with you through thick and thin.

Posted in Talent Attraction, Team Development, Uncategorized | View Comments

Who Are We Hiring? Impressive Resumes Or World-Class Talents?

November 26th, 2009

Have you heard that in Mohave County, Arizona, a decree declares that people who are caught stealing soap must wash themselves until all their soaps are used up?

And of course, some people, who are smart enough to steal quality soap with natural ingredients, have a great time enjoying their booties’ soothing effects.

But those unfortunate buggers who steal normal soaps, based on various carcinogenic ingredients, are in very deep shit.

Yes, in the short-term the effects are nice and bubbly, as these materials leather really well, but the long-term damage they cause is pretty devastating.

And the reason why I mention this mind-menglingly stupefying fact is because this is happening to many IT companies when hiring business development people.

They hire people with impressive resumes who look good on paper, show up at their interviews wearing $3,000 Armani or Ralph Lauren sartorial masterpieces and present themselves so eloquently that interviewers mistakenly believe that these people really have massive achievements behind them, so end up hiring them.

After all, some of them have worked in large corporations and even have “MBA” behind their names. And then the credential-expertise crack starts widening in a gap and then to the proverbial Grand Canyon…

Follow the link to continue reading “Who Are We Hiring? Impressive Resumes Or World-Class Talents?“

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This Article Reminds Me Of The Perfect Workploace

November 24th, 2009

There is an interesting article in Inc. magazine about Jason Fried and his company, 37Signals, and the kind of culture Jason has created to attract top notch people.

The article is entitled The Way I Work: Jason Fried of 37Signals, and I think you’ll find it rather interesting.

A great company that focuses on results not activities. People can come and go as they please as long as the work gets done., and they don’t have to punch the time clock when they come and go.

People are trusted to give their best and brightest, and they’re not harassed when they take a nap at their desks.

I think this company is the role model of the perfect professional knowledge firm.

Posted in Team Development | View Comments

Do You Have A Business Development Team Of Sailors Of Mountaineers?

November 23rd, 2009

While sales managers love bragging about how their sales “teams” are doing, if we look a touch closer, we discover the total lack of teamwork in most sales “teams.” it’s really a beauty parade of individuals, and that’s the way they are expected to behave. And if necessary to increase their individual compensations, they are expected to stab their “team mates” in the back without hesitation.

I could contrast their sales team to a peak-performing sales team the same way author Victor Mallett contrasted mountain climbers against sailors in the Financial Times.

It seems that, while in the world of sailing there is real team work, in the world of mountain climbing it’s about the pursuit of individual glory even at the expense of other climbers’ lives. It seems that in mountain climbing it’s commonly accepted practice to leave others to die if the sacrifice leads the other person to personal glory.

And this is exactly how most business development departments work. Most companies are still looking for aggressive salespeople with a bulldog grip and unwavering ruthlessness to close, close and close. Instead of building great teams, most companies are looking for star individuals.

The main reason why teamwork is ruined is the individual compensation system. As a sales manager once told me, “I don’t care who participated in generating the new sale. I pay only the one person who actually closed the sale. You can’t expect me to pay all my people for each deal.” At the same time, when he was advertising for new sales staff (basically non-stop to deal with the 132% annual attrition rate) he was talking about a world-class sales team that works together like Swiss watch.

I can only imagine a $10 fake Chinese Rolex.

So, he was advertising a team of sailors that work together synergistically and achieve great results, but realistically all he had was a cutthroat mountaineer group who would cut each others ropes and throats with no second thought just to get to the summit first and be the salesperson of the month or the year.

Read the article and think about how you want to structure your own business development team. In my experience, “sailor” teams achieve much more than “mountaineer” “teams”.

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Think And Grow Rich – Where Napoleon Hill Went Wrong… Very Wrong

November 16th, 2009

Ask 100 people if they’ve read Napoleon Hill’s book, Think And Grow Rich, and 99 of them will nod their heads. Several of them have read it more than once.

But ask the same 100 people if they’ve read W. Clement Stone’s book, The Success System That Never Fails, and 99 of them will shake their heads, meaning they haven’t read it. Most of them have never even have heard of this book.

So, what’s the difference between the two books?

Hill’s book talks about various success principles, whereas Stone talks about applying Hill’s success principles in a systematic manner. That is, Stone put Hill’s concepts into a system.
And what was the result?

It’s also worth noting that Hill was dead flat broke throughout his life. According to his biography, after several years of hardship, even his family deserted him. He was saved from almost certain starvation when Stone hired him as a sales trainer.

But putting Hill’s success principles into a system Stone became blazingly successful.

The Same Is Happening Business Development…

Principles alone are people-dependent. But people are inconsistent in doing what’s best for them.

There have been several studies done on people whom their doctors told to change their lifestyles or they die. Over 90% of them refuse to change their lifestyles and risk their lives.

And this is why business development must be put into a system.

And here we have to stop and distinguish between…

Intellectual Capital And Intellectual Property

Intellectual capital is something that resides in people’s heads as knowledge. Let’s say you have a crack team of salespeople who produce amazing results. The performance is inconsistent for it’s human-dependent, but overall, it’s pretty good.

But this knowledge is not your company’s knowledge. If your sales people quit your company, unless you can replace them, you’re doomed.

Intellectual property is a system that integrates these people’s intellectual capital. And this system belongs to the company. Now salespeople can come and go, but the system remains.

Think of Google’s search formulas. People can come and go, but the formula remains in-house. It’s Google’s intellectual property. Without that algorithm Google would be pretty much worthless. With that algorithm Google is almost priceless.

In an IT business it’s the business development system makes a company priceless or worthless.

A company that doesn’t have an in-house client acquisition system is basically worthless. And a company that has an in-house client acquisition system is pretty priceless.

So, look at your business development? Is your company in the mercy of a few superstar salespeople who might quit you tomorrow? Because if they do, then what? It can easily be the end.

Not to mention that when salespeople quit, they often take their best clients with them.

Remember, if you don’t have a system, your people apply their own systems which they’ve developed to their own benefits and often to your company’s detriment.

Posted in Sales | View Comments

Eccolo Media’s New Report On Using White Papers In Business Development

November 2nd, 2009

Eccolo Media has just published a report on the validity of white papers in the business development cycle, entitled, Eccolo Media 2009 B2B Technology Collateral Survey Report.

Some of the main conclusions are that…

White papers are here to stay in B2B business development. 84% of decision-makers rate white papers as moderately or extremely influential in the decision-making process.

White papers are considered as the most viral form of the most viral collateral materials.

White papers  nicely differentiate respected experts from fungible vendors.

White paper consumption by decision-makers has increased from 68% in 2008 to 77% in 2009.

The larger a company the more likely its executives rely on white papers. I reckon, many owners of smaller operations are chronically busy, that is, lost beyond comprehension.

Audio and video white papers are becoming more and more popular too.

The quality of writing sets the perception of the white paper. Based on the writing, the white paper issuing company can be perceived either as a proverbial Miss. Universe beauty queen or a $20 hooker.

And this perception sets the tone of the ensuing communication between buyers and sellers. 51% of respondents believed that that high-quality writing is either very important or extremely influential.

So, grab your copy of Eccolo Media 2009 B2B Technology Collateral Survey Report, and read the details.

Posted in Lead Generation, Lead Nurturing | View Comments

We Pay You An Hourly Wage But Evaluate You On Performance

November 2nd, 2009

I’ve seen this problem in so many IT companies, and sadly they don’t even realise how they confuse their people.Look at most career ads looking for IT people in various positions.

Almost all of those ads say…

“We offer competitive hourly wages.”

Right!

But do we want to attract competitive people who are not really great but merely competitive, so they have to compete with the crowd?

Do we want to build a company that is forced to compete with all the other companies in the industry or do we want to build a company that stands out in the industry like a trombonist in a heavy metal band?

This is the question here.

And then when these poor bastards are hired for competitive hourly wages, they get told how their performance will be evaluated.

Now hang on a moment.

You get hired and get paid for dispensing time chunks based on a schedule defined by the employer and then the employer wants to evaluate you based upon totally different criteria.

You get evaluated based on performance, which has never been part of your contract.

Remember, the contract specifies that you show up at a specific location and spend 40 hours a week there between Monday and Friday. There is nothing specified about what you put into those hours. You get paid for physically being on that location. And you must be paid even if you spend your 40 hours sleeping.

And here comes the unethical side of hourly payment

You get reprimanded if you don’t spend enough time on that location.

You get reprimanded, or even fired, if you sleep on that location.

You get reprimanded, or even fired, if you smoke pot or get drunk as a skunk on that location.

You get reprimanded, or even fired, if you don’t do real work.

But look at the contract.

It stipulates that you get paid X dollars per hour. It doesn’t say what you have to do because most IT companies are bogged down with number of hours. The work is really physical presence. That’s all.

It amazes me when a whole industry collectively denies its nature as knowledge workers and tries to operate as manual labourers.

And maybe this is the exact reason why the market treats information technology as manual labour, and defines fees and prices by the amount manual of labour sellers perform not by the value buyers derive from better IT systems.

Anyway…

So, here comes the first annual evaluation of the employee.

Boss: On a scale of 1 (disaster) to 10 (perfect), how do you rate yourself in your first year?

Employee: 10. I fulfilled my payment condition 100%.

Boss: But what about your overall performance?

Employee: What performance? I get paid for spending 40 hours a week in this building. I’ve fulfilled that. My performance is about showing up for 40 hours a week. That’s all. That’s what I get paid for.

Boss: But what about work?

Employee: What work? My work is physically being in this building 40 hours a week. That’s all.

Boss: But you can get fired for that?

Employee: And I’ll sue the shit out of your company for unfair dismissal.

Boss: But we expect you to work?

Employee: No, you expect me to do what I you pay me for: Dispensing 40 hours of my life and being physically present in your building from Monday to Friday. And I’ve fulfilled that without a hitch. I’ve never even been late. So, where is the problem?

And it goes on and on…

The reality is that your people do what they get paid for. If you pay them for their physical presence, then don’t expect them to do anything else.

But…

Business development is knowledge work, not manual labour that can be correlated to the passage of time.

Authors Margaret J. Wheatley and Myron Kellner-Rogers express it rather nicely in their book “A Simpler Way”…

“Playful and creative enterprises are messy and redundant. Human thinking is accomplished by processes that are messy and redundant. When computer scientists first tried to mimic the lavish parallelism found in human thinking and all of nature, they had to link together more than 64,000 computers working on the same problem at the same time. Parallel systems are dedicated to finding what works, not by careful stepwise analysis in the hands of a few experts, but by large numbers of a population messing about in the task of solution-creation. They come up with better solutions, but they are based on a different kind of logic: trying thousands of things simultaneously to find what works.”

This is also the essence of knowledge work, and it can’t be compared to working on an assembly line.

So, how do you pay your business development people?

I believe salaries should be split into three parts…

1. Base salary: The base salary demonstrates whether or not we have a serious employer. Winners don’t piss around with minimum wage and straight commission. That’s what losers do. So, I’m a bit surprised by ads where companies call themselves world-class but want to pay minimum wage or expect people to work on full commission.

I believe in that investment creates commitment and commitment leads to improvement. And whoever is the main beneficiary of the improvement must have a skin in the deal.

2. Revenue bonus: This bonus is based on a pre-established percentage of company-wide revenue.

3. Professional development: This is a multiplier on the bonus. For every fiscal quarter or year, every business development associate has specific professional development objectives. At the end of the fiscal quarter or year, the associate’s achievement on her professional development goals is assessed, and evaluated on a percentage basis. And this percentage of her full bonus gets paid to her.

And this requires some explanation.

Yes, people can maximise their bonuses by increasing company-wide revenue, but they if neglect planting the intellectual seeds for the future, they fall behind on expertise. This in turn leads to declining intellectual capital and intellectual property (i. e. documented intellectual capital) in the company, which can lead to lost market positioning in the future.

So what about hourly wages?

Idiotic.

I’ve read about a survey that was done in 2005, where hourly workers were told they could go home as soon as they do their normal amount (8 hours’ worth) of work in high quality. On average, people completed 8 hours’ of work in 3 hours and 19 minutes. This shows that under hourly wages, these people were working at a mere 41% of their full capacity.

So what do you prefer your people to do? To show up and fill face time in your building or to do real work?

But the hourly wage is a comfortable alternative in companies where even management is confused about what needs to be done.

Verasage fellow, Ed Kless is fond of saying…

“If you suck at what you do, charge hourly fees.”

Paraphrasing Ed…

“If you suck at managing your people to achieve results, then hire hourly employees and micromanage their time.”

For a moment, Spanish philosopher, essayist, poet, and novelist, George Santayana comes to mind…

“Fanatics are who lose sight of their goals and redouble their efforts.”

And this is exactly what hourly wages achieve. Working harder and longer than ever before and achieving… precisely dick.

But creating results in business development is not about working harder and longer, but working shorter and drastically differently.

What do you think?

Posted in Talent Attraction | View Comments

Eight Lethal Mistakes That Screw Up IT Business Websites

October 27th, 2009

Do you know that David “Screaming Lord” Sutch, as leader of the Monster Raving Loony Party, was Britain’s longest serving party leader from 1983 to June 1999, when he hanged himself?

This fact may seem to be about as trivial to our topic as the lovemaking habits of pregnant skunks relative to the phase of the moon, but it can be important for you if you consider that so many IT companies are actually hanging themselves on instalment plans by missing certain vital elements from their websites, and repelling otherwise qualified visitors by the truckloads.

What’s the single most important thing that IT companies could improve on their websites? It’s not broadband. It’s not more graphics. It’s not a new webmaster. It’s not even brand new servers.

It’s better writing.

And this is exactly what we discuss in Eight Lethal Mistakes That Screw Up IT Business Websites. So be brave, click the link and start reading the next nipple-tinglingly exciting issue of Tomicide Solutions.

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Posted in Lead Generation, Sales | View Comments

When IT Business Development Goes Broke

October 26th, 2009

Oscar-winning actor, Nicolas Cage who’s made a pretty penny over his career now claims he’s dead, flat broke as a result of his business manager’s incompetence. He’s actually suing Samuel Levin for $20 million for leading him to financial disaster.

Cage claims that Levin handled his money irresponsibly, took unnecessary risks and failed to pay taxes on several properties, so now Cage owes the IRS some $6 million in back taxes.
Interestingly, this is the exact dynamic I’ve seen in so many smaller IT companies.

Executives don’t wants to get involved in business development because they regard it as substandard activity to their highly developed technical minds, so they hire armies of salespeople on straight commission and clearly communicate to them the key message…

“Your job is to bring us signed contracts and purchase order. Do whatever needs to be done but don’t disturb us with the details. We’re extremely busy, and we’re not interested in it anyway. You get clients and hand them over to us for further work.”

I bet my bottom dollars that this mentality has led Nicolas Cage down the doom loop too.

“Look, business manager. I’m an actor. I don’t care about the dirty details like money or business. I’m an actor. I’m an artist. You take care of the business but leave me out of it.”

In this dynamic two strong factors work in favour of salespeople…

First, salespeople can do whatever they want to do in order to get clients, and since they work in isolation, no one can really supervise what they do and no one in the company knows what’s happening around business development.

Second, salespeople have no rules for their work. Since the company doesn’t care about the details, salespeople focus on 1) what’s good for them and then 2) what’s good for the company. One thing they don’t focus on: What’s good for clients. So in the process of maximising their personal earnings, shoddy often practices raise their ugly heads.

By shoddy practices I don’t mean nasty practices but that can happen too. One areas of shoddy practices is short-term vision.

The company may be interested in landing long-term repeat and referral clients, but due to their compensation model, commissioned salespeople only care about the “right here” and the “right now”. And we can’t even blame them, since they have to eat too.

And we haven’t even mentioned the huge attrition of salespeople in the IT industry. Again, due to their archaic compensation model, they keep looking for greener pastures.

And when that happens and they decide to move to the competition, they take all their clients with them.

And executives get pretty pissed off for this “stealing” act.

But let’s see the other option of not “stealing” clients

Fred salesman leaves the company where he worked on a “Do it and spare us from the details” basis. The company has no built-in business development.

So, what happens to the prospective clients and past clients after Fred’s departure? These are the people the company should stay in touch for future business. And they get neglected.

Here is why…

These prospective and past clients have relationships with Fred not with the company.

Fred has his own stay-in-touch system but the company has none.

So, it’s only fair to say that the company’s haphazard stay-in-touch programme will soon go down the toilet and these prospective and past clients will be unceremoniously abandoned.

And what are the executives doing in the meantime?

They are probably naval-gazing in the boardroom about executive compensations, website colour schemes or the latest management fads that have just come out of one of the Ivey League business schools.

And what happens when the company runs out of money due to lack of clients?

Simple…

Bring on the next round of venture capital.

And when no more money is to be had, the company quietly goes tits-up.

The way I see it, unless business development is a centralised organisational function, it’s not a business but a glorified hobby.

Yes, salespeople may be needed, although I doubt it, these salespeople have to work on executing the company’s business development strategy not merely doing their haphazard work to get clients here and there.

Message to IT companies: If you want to hire great salespeople, show them that your company actually has a business development strategy.

Message to IT salespeople: Ask you would-be employer about the company’s business development strategy. And when the recruiter says that you just go out and hunt for clients on your own, you’d better run because the end can be near.

What do you think? Is this a reasonable perspective on business development?

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Posted in Lead Generation, Lead Nurturing, Sales | View Comments

Working As A Business Development Broker On A Contingency Basis

October 19th, 2009

A while ago a woman called Karen Sala made allegations that actor Keanu Reeves was the father of at least one of her four kids. Sala was claiming monthly child support of $150,000 and monthly spousal support of $3 million.

I would say that’s a tad too steep.

Well, it turned out, Reeves is not the father of any of her kids, and it seems she was after some quick buck.

It’s just sad that people can come out of the woodwork and try to ride on the coat tails of successful people who’ve become successful as a result of years and years of dedicated hard work and sacrifice in other areas of their lives.

I’ve seen similar situations in business development in a number of IT companies.

Company stagnates as a result of incompetent management, and then wants to hire experienced commission-only salespeople with extensive connections to advance the company to the next level of success on a no cost and no risk basis.Well, no cost and no risk for the company because it dumps all risk and costs on the salespeople.

Basically, the company tries to ride the coat tails of these successful salespeople without making any commitment to and investment in the sought-after improvement.

Imagine this situation…

Joe salesperson is hired on straight commission because coward executives don’t have the guts and balls to shoulder their responsibility and want to dump it all on the salesperson.
Nevertheless, the Joe produces rather well.

Knowing his commission percentage and being a pretty sharp guy, Joe knows what he’s supposed to be paid for certain deals.

And at the beginning, on his smaller “warm-up” deals Joe’s getting his money as expected.

Then the value of the deals starts going up. His manager and the company’s executives are ecstatic. They are rubbing their palms in anticipation of obscenely high year-end bonuses.

Then Joe starts noticing that his calculations on his commissions don’t add up.

He puts pencil to the paper, makes some calculations and then talks to his manager.

The manager tells Joe that there is no way the company would pay him his normal 15% commission on such high sales because Joe could earn more money than the top executives, and that would be bad for the company’s image.

Joe tries to defend his position by saying that he also brings in more revenue than the executives.

No avail.

Management has already decided to halve Joe’s commission on large deals to avoid rebellion from the executives and other – mainly non-performing – salespeople.
So, this is the new rule of Joe’s socialistic organisation: Capitalise income generation and dump the responsibility on one person, and socialise income distribution among non-producers. Or as Ayn Rand put it in Atlas Shrugged…

“Take it from the producers and give it to the needy.”

Joe is a producer whose hard work is expected to subsidise the incompetent managers and executives.

So, what can Joe do at this point?

  1. He can certainly put up with the new rules of the socialist dictatorship and work twice as hard as before to earn the same income.
  2. He can don his hat, leave for the competition and take his clients with him. It’s a common and rightful practice among commissioned salespeople. But the competition may have similar retarded rules as his current employer
  3. He can quit his company and become an independent business development broker for the IT industry.

Operating In Broker Mode

Now Joe is an independent business developer. Now he can land his own clients to generate business for. And this approach requires a slightly different approach.

So, Joe needs a Memorandum of Understanding, a subcontractor agreement with a few stipulations…

1.    I (Broker – Joe) generate sales leads and close sales. I negotiate and price projects. Then when everything is lined up, I Issue a request for proposal to you and nine of your competitors. Then I hire the most qualified company, may or may not be you, as my subcontractor, to perform the work as per my instructions.

2.    You (Subcontractor) work as and identify yourself as my subcontractor

3.    You will do no promotion for your business at any time, and stay clear from…

a.    …handing out your business cards or any of your promotional materials

b.    …verbally promoting your own business

4.    You perform the work according my instructions, and do not agree to any altered, modified, or new conditions with the client. Any change request from the client must come to me

for decision.

5.    Your payment is a competitive pre-agreed flat fee. The client pays me and I pay you. You agree that the work is completed in high quality and will be inspected.

6.    All work created and all the relevant materials are my property.

7.    You cannot call this company as your client.

8.    All communications both with the client and me are confidential and subject to the non-disclosure agreement you have signed.

9.    You conduct your operation with professionalism and integrity and meet the work requirements above. Failure to do so in the client’s or my opinion results in the instant termination of the contract and the cancellation of payment.

10.    The client’s name stays out of database, and you have no right to market additional services to this client. All negotiation takes place between the client and me.

I know this approach seem a bit harsh, but I put up 100% of the money, work and expertise, and take 100% risk to land the client, so I have the right to dictate certain terms. Using the words of Andrew Pears, the founder of Pears Soap, London, UK, once said…

“Any fool can make soap, but it takes a genius to sell it.”

What percentage do you charge as a broker?

A business has only two aspects: 1) Acquiring clients in search of solutions and 2) providing the solutions.

And since you take 100% risk, you might as well aim at 50% commission. Even if not 50%, keep it t least 30% of the gross revenue you generate.

I know, some people find the 50% too high, but this is the other side of the coin.

You’re working on achieving something that the company’s well-paid top dogs have failed to achieve.

Some fine points between you and your client

  • Declining percentages: Some clients may insist that in your first year of your help you get 100%, next year 80% and after 60% of your commission. Reject it. The result of your help is the smallest in year #1 and then keeps increasing. And since you’ve created the results, no one has the right to steal your percentage. Protect it like a junkyard dog.
  • Measuring results: The method of measuring results must be pre-agreed. Every month you receive your payment with the accountant’s copy of the sales report for the previous month. This must be the same sales report that is used to report revenue to the tax authorities. And you have the right to spot-check it at any time.
  • Receiving payments: Demand payment on previous month’s revenue up to the 5th of the next month. Don’t let payments drag on. And stipulate the fine for late payments. Keep the fines rather hefty.
  • Ownership of wealth creation: Since this is not a normal consulting gig that includes skill sharing with clients to pass on the performance capability, you have the right to keep the performance capability to yourself. If the client cuts you off, the performance instantly stops. Keep all login information to yourself.
  • Solving disputes: Forget about the legal stuff. I’ve been sued twice. Once I won and once I lost. The client admitted that it was his fault that the project failed but still took me to court to recover his investment. All right. My fault. I accepted an arsehole as a client. If you can’t solve a problem, instead of the law, use something much more powerful: The media.

So, this is it. For business development, having an employee position is necessarily the only way to go. Many business developers have some entrepreneurial spirit in them, so they can venture out and become business development brokers.

What do you think?

Posted in Lead Generation, Sales | View Comments

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