Note that I use the word "symptoms" because all of these phenomena are caused by something deeper. What you read here is the mere manifestation of the root cause. For instance, when you have back pain, you can take a painkiller and deal with the symptom. But at the cause level you may still have a pinched nerve in your back and no matter how many painkillers you guzzle up, the root cause is still there, slowly crippling you for the rest of your life.
So, some of the symptoms are...
"We're sick and tired of endlessly pounding pavements, dialling for dollars, knocking on doors and doggedly chasing unqualified prospects for the next piece of business."
According to McGraw Hill research the cost of a local face-to-face "cold" appointment costs around $370, and out of town appointments cost about $1,000. Take the number of your meetings per month. Multiply that number by $300, with a very generous 20% closing rate, take 80% of that number. This is how much these meetings are costing you.
"We get beaten up on our prices. Everyone seems to be looking for the lowest bidder. We can't go any lower but still being low-balled by cheapstakes."
If you offer only 10% price drop to win the contract, you have to increase your total sales volume by 88% to make the same profit. It means increased working hours and increased overheads.
"We have to scale down and compromise the value of our solutions to meet buyers' pricing points, and the resulting problems can undermine our reputation."
A few years ago a study by McKinsey found that 75% of solutions don't return a profit to sellers, and 50% of solutions don't deliver the value these sellers' clients bought and paid for. The problem in most cases was that through procurement processes controlled by cost-obsessed mid-level managers, every shred of unique value is stripped off solution.
"We work ourselves to the point of exhaustion but our results still fall short of what we expected."
On average, sales professionals spend about 70% of their times prospecting for new business. At any one time only 3% of prospects are ready to buy. Some of the 97% will buy later, but most of them are tyre-kickers, plate-lickers and prospects who can't make buying decisions without talking to their bosses, lawyers, accountants, mothers, dogs, cats or budgies.
"Hot prospects disappear for no apparent reason and reappear as our competitors' clients."
According to studies, 35-60% submitted proposals remain undecided upon and 20-35 are rejected. The typical proposal takes over 50-80 person hours to prepare. Take the number of proposals you submit in a year. Multiply that number by 50. Now calculate how much it costs you to prepare one proposal. Take 90% of this amount. That is wasted. Only 10% of this investment goes towards winning proposals.
"We spent a fortune on our website three years ago, but haven't even broken even on it, let alone turning a profit using it. Visitors just come and go. We want our website to start generating business on autopilot, so we can increase revenue without hiring more salespeople."
Over 90% of all websites are merely nice ornaments with no ability to generate leads and produce new business. Many companies spend money on building their websites but fail to invest in promoting them. Many technology companies' websites are merely fancy brochures, not sales powerhouses.
"We can't keep good salespeople for longer than 7-9 months. The attrition is killing us. They just come, seem to have a good time and leave. And they go to our fiercest competitors and start working against us."
The average annual attrition among salespeople is 43%. And when salespeople quit, you also lose the equivalent of 2-4 times of their full annual compensation. This is how much you lose both in opportunities and bringing the new salesperson up to speed.
"We've been selling our stuff using a large sales force, but if we want to increase our sales, we have to hire more salespeople, and our overheads start going up rather steeply as well."
Imagine that you're travelling from New York to Dallas, Texas… in a horse and cart. There is one problem though. Both of your horses are heavily limping. And this is where people think differently. The majority will buy two more competitively priced (a.k.a. cheap) horses in the hope of speeding up their progress. They have the cattle farmer's mentality: Any increase in headcount is good. So, now you have four horses limping down the highway, trying to get your arse to Dallas before the Millennium's out. But the minority thinks differently. They invest in a car with a good engine, turn the two horses into steak and sausages for the journey, and have a fairly smooth ride all the way to Dallas.
What this means is that if you have a great direct response marketing system in place, you can increase your sales even with a few sales folks, who, instead of chasing prospects, only take incoming enquiries from prospects your automated lead nurturing system has already qualified. These prospects fit into your Ideal Client profile and are ready and willing to work with you on your terms. Remember, sales are vanity. Margins are sanity.
"Several of our hottest prospects become our competitors' most profitable and most loyal clients."
In that case they've never been hot prospects. They had interest in the solution but due to lack of relationship they moved to the competition that can do the same work cheaper. Every business development process should include a lead nurturing process, so these hot prospects are incubating in your system and become your clients.
"Our sales, marketing and clients service people seem to work more against each other than in support of each other. While they demand their pay increases, they kill our sales."
According to recent survey by the Yankee Group, 93% of the companies' sales, marketing and client service folks work against each other.
"We spend the king's ransom on advertising but it doesn't work. We hardly ever get a call from the Yellow Pages or our magazine ads."
Look at your Yellow Pages ad next to your competitors. They're the same. Why? Because most businesses imitate their competitors. In their desperate efforts of standing out, they end up looking exactly the same.
"Our gross sales are growing but after paying all the expenses and wages, we have almost nothing left."
When a typical service business wants to increase its sales, they just bring in more salespeople. And then sales will increase a bit, but the cost of selling goes up drastically. Then next group of salespeople quit and the cycle repeats.
"We're on a constant feast and famine roller coaster. Sometimes we're so flooded with work that we have to hire new staff, and when the work is over we have to lay them off. Then we get killed on severance payments and re-hiring costs not to mention the bad reputation we create."
According to BtoB: The Magazine for Marketing Strategists, an 11% reduction in lost sales leads, combined with an 1% improvement in lead-to-client conversion rate, increased annual gross profit by 136%. Are you pounding that calculator? Do you like what you see?
"We seem to generate lots of sales leads, but they somehow just vanish in thin air, and our sales folks have nothing to work with."
According to the Yankee Group's research, companies lose 45-80% of their sales "in the shuffle". They just mysteriously disappear. 10% of leads are lost due to ill-defined processes, 10% are lost due to inadequate technology, that is, email, fax, web, etc., 20% are lost due to lack of processes and system for handling "not ready" prospects, 20% are lost due to poor or lack of follow-up, 10% are lost due to lack of tracking marketing efforts, 5% are lost due to the wrong territory, 15% are lost due to antagonism between sales and marketing departments, 8% are lost due to poor lead distribution, 20% are lost due to poor qualification.
"Far too many of our sales appointments and presentations end in 'Let me think about it'. And then when we follow up, prospects are surprised by being contacted, and some even start pretending they've never heard of us. Of course, we have no hope to ever close the deal."
When there is hesitation, it is most likely created by your salespeople and the process they use. The old-fashioned "presenting -> handling objections -> closing" spiel is dead and gone. Solutions nowadays are far too complex for this manipulative "arm-twisting" approach.
"We know how good the media can be (hey, it's almost free) but don't even know where to start using it."
Most technology companies don't ever use the media because they are reluctant to make an initial investment to start turning the "media flywheel". They fail to put out valuable information the media could pick up, so they fail to build "Media Momentum."
"We have lots of idle clients in our database. How can we re-activate them?"
At any one time some 25-35% of an idle database can be reactivated. But not all of them. You must accept that some will never buy. Look, using farmer's language, you can't "reactivate" an ox into a bull. The "snip" was permanent. But even if you reactivate only 10%, that can make a significant difference.
"We spend an awful lot of time on writing proposals and doing presentations, and then most of those buyers just fall off the face of the earth and never to be found again."
With a system, prospects can self-qualify before requesting personal meetings with your sales folks. You have to create a system that allows you to automatically qualify prospects, so you don't have to go all the way just to discover that the prospect is not interested but only want to pick your brain.
"We're bleeding to death in bidding battles. It seems most of those RFP-issuers are just collecting free information for in-house implementation."
What many technology companies fail to realise that they can't win anything significant through RFPs. One component is missing: Relationship with the buyer. No relationship, no trust. No trust and they are regarded as fungible vendors, lukewarm commodity. You get the gig if and only if your bid is sufficiently low in price. You unique value will be stripped out of your solution.
"Everyone and his kitchen sink are talking about creating and selling information products. It sounds interesting and intriguing. But how does that work? Where shall we start?"
The fact is that most people don't start doing business with you by engaging your most expensive services. They want to start small. That's why you need information products. Many people believe they can do it themselves without your help. Well, give them the tips and let them do it. This can be a new revenue stream for you.
"We live in constant fear of losing our best salespeople. If some of them decide to leave us for a better job, we may not even be able to survive the loss."
Salespeople leave because of the bad treatment they receive. It's largely caused by commission payments. Commissions alienate people from the rest of the company that get paid a salary. The commission structure encourages salespeople to watch out for themselves not for the company. They almost push their personal agendas first.
"Some of our clients pay us late or very often cancel projects in the middle of the implementation phase. We end up financing projects upfront that never get paid for."
This happens because you don't have an Ideal Client profile, and accept anyone. You have to draw the line in the sand and stick to it. Troubled clients can be recognised early on.
"Our salespeople are up to their eyeballs with appointments but we still keep falling short of our sales projections."
Most companies play the sales as a game of volume not as a game of margin. They are like the rocking chair: Lots of activities but little progress. Yes, salespeople are hyper-busy running from appointment to appointment, and in this shuffling madness and mind-bending cacophony, in which everyone focuses on more sales volume, they give away margins to close deals. But sadly, if you offer even 10% discount, you have to generate an extra 88% of sales volume to maintain the same margin.
"Our salespeople know our services inside out. They know how to present, how to handle objections, how to close, but still, the closing rate is still a far cry from good."
No surprise here. Handling objections and closing the sale are old school materials coming from sales gurus who were top-producing salespeople in the 60s, 70s and 80s mainly in commodity sales. Since then they have become sales trainers and lost their touch with the reality. And in the world of complex high-ticket sales, their stuff doesn't apply anyway. People have grown sophisticated beyond closing and objection handling. They can't be suckerpunched with old-fashioned peddler and huckster techniques any longer.
"We hire good people but we seem to lose them within 12-18 months. By the time they really learn the stuff - on our dime - they go to the competition and work against us."
I believe that HR departments are the main reason for high attrition. HR folks are great at matching resumes against rigid job descriptions but a more important match is missing. People are not hired based on talent and strengths but only on raw academic achievement. And now we know this is a huge mistake. People perform in life according to their strengths and talents not their school grades and certificates. Do yourself a favour. Don't let HR interfere with the hiring process.
"We bend over backwards for prospects in the hope of gaining their businesses. But in this bending effort the 'corporate spine' has lost its integrity. Now we bend for pennies while missing dollars."
Many technology companies operate like whores: "We do anything for anyone for money." And their clients treat them accordingly... as whores. No trust, no respect. Just command, control, suspicion and scepticism. The problem is not with the clients.
"We suffer from a gradually dwindling wallet-share syndrome. We're getting less and less business from clients."
More and more clients use the divide and conquer strategy with their technology services providers. They slice up the work into little pieces, and grant small chunks to an army of providers. Clients erroneously believe that this approach of putting all their eggs into lots of little baskets mitigates their technology risks, but actually the opposite is true. Clients actually create little techno-silos which hardly ever work with each other as a seamless whole. This approach also drastically increases warranty work, which, in turn, makes technology providers' margins even thinner.
"To earn their commissions, our salespeople promise benefits we've never even heard of let alone being able to deliver. Then clients get upset and there goes negative word-of-mouth promotion all across the land."
By paying commissions your sales folks don't work for your company. No. They work for themselves. They milk you until you run dry and then they hop over to the competition. This payment structure alienates them and they feel no loyalty to a company that keeps and regards them as replaceable commodities.
Of course, this is far from being an exhaustive list, but at least it gives you a better idea of the kind of business development problems technology companies hire me to help to solve.
I know shit can happen. There are economic circumstances and unforeseeable events which can impact any business. But I also dare to say that what holds technology companies back from becoming the best they can be in their industries lies within the company not outside. And as you change your attitude to business development, and start implementing better client acquisition and retention strategies, so will the profitability of your business will change. And the good part is that you don't have to work any harder than you're working now.
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