When You (CEO) Should Pull the Sales Alarm

When listening to CEO's and business owners talk about some of the sales challenges they face I have found myself using the phrase "my sales alarm is ringing" to indicate that something they said wasn't sitting well with me. I guess this is my equivalent to Spiderman's "Spidey sense" - a strong feeling that something is very wrong here.

As a veteran salesperson ($10B personal sales record), sales leader and consultant I thought it might be worthwhile to share what triggers my "sales alarm". Here they are:

• Any surprise, good or bad, is a signal that your sales team did not understand something important your customer’s decision process. Examples:
  • The CEO declares to your board or internally that an upcoming large sale is, "in the bag" yet the decision goes to a rival
  • You forecast a sales decision to be made by the end of the year and the customer still has not made a decision two quarters later.
  • You declare a particular sales pursuit a corporate priority and you lose it.
  • Any time you are 'surprised' that you lost.

• If you have EVER said, "there is no competition" either because you think you are the only company under consideration or are arrogant enough to believe the customer has no other choices.
• You think your customer owes you the business.
• When top managers constantly ask “who is the (one) decision maker?”
• When sales leaders assure the boss that they will win because they “know a guy” or feel they have an exceptionally close relationship with someone in the company.
• When your sales team comes back from an important sales trip and says, "our presentation was well received".
• When you've secured a business dinner, golf outing, demonstration with a prospect and can't articulate the specific measurable goals you have for that valuable customer encounter.
• When your leadership gives higher priority/emphasis to the number of "opportunities" they have in their "funnel" rather than win-rate, or if your strategy is to “place a lot of bets” so that you can win “your fair share” of  new business.
• When you don’t know your sales win-rate.
• When your sales team spends more time talking about activities or the 'close' relationships they have with the prospective customer than what they know about how a decision will be made.… as if the shear evidence of this activity (golf outings, dinners, hunting trips, etc...) is a positive indicator of who will win or lose an upcoming sales opportunity.
• When your salesperson can't succinctly answer this simple question, "What is the number one priority the customer will use to make its selection?" one week prior to submitting a proposal.
• When asked who are you selling to and your reply is something vague or as ill defined as, "lawyers" or "small businesses" or "anyone who needs printing" or "potential home buyers/sellers" or "anyone who needs insurance" or “large corporations”.
• When your assigned salesperson can't name the top three individuals by name who carry the most influence on the outcome of an upcoming sales decision.
• When you (CEO) can explain in excruciating detail how you make a product or deliver a service but when asked to define your sales process you either get chirping crickets or hear, “Well that is Bob’s expertise, he is our number one sales guy.”
• Anytime you feel good about coming in a ‘close’ second or are consistently coming in second to rivals in your sales pursuits.
• Anytime an existing customer moves his contracted business to a rival.
• If you've ever said the customer "was stupid" or "didn't understand our offering" or "we must tell our story better" when explaining why you lost.
• If ANY of your sales presentations has an organization chart in it.
• When you think consistent sales success is based on something vague like “having the right team in place”, “being energetic/confident/enthusiastic”, ”treating your customer with respect”, or “delivering great customer service”.
• When you consistently miss quarterly sales goals.
• When no one is held accountable in any way for a significant loss.
• You don’t have a “lessons learned” process, or you have one but you don’t incorporate the lessons you identify into specific process changes, or you only use your process after a loss (as a witch hunt).

If any of these applies to your business, run, don't walk, to the nearest alarm and pull it. You have a sales emergency that needs to be addressed right away.  If you don’t know why these should trigger an alarm, connect here and we will explain why we think so and recommend what to do about it.

About the author. Mike Gomez is founder and CEO of Allegro Consulting, a business growth specialty consulting firm in Atlanta, GA. Their mission for the past 14 years is to help their clients define strategies for growth and overcome obstacles that may stand in their way.  Mike is a prolific speaker, writer, former aerospace engineer, and sales executive for McDonnell Douglas, Boeing and Lockheed. He is credited with sales wins totaling $10B.  His talk, "Winning the $2.5B Israel Fighter Jet Shootout" chronicling Boeing's wins over rival and incumbent Lockheed is a one-of-a-kind story that will motivate, teach and inspire any sales team.

The Handoff - A Business Owner's Role in Supporting A Sales Team

I've just heard this story too many times not to share it as a learning moment.

I received a call from a salesperson asking for advice as he struggled to meet his quarterly sales quota. I assumed he was calling looking for new sales techniques or particular guidance on moving a client to close. But this was not the case at all. Here is how the dialogue went:

Salesperson says, “I’m selling a product in a market where I have a competitor selling the exact same thing.”

I replied, “Same thing? You mean same features, same everything?”

“Yes”

“Are you more price competitive?”

“No, not really. We offer trade in of older equipment to bring the price down but so does our competitor”

“What about service?”

“Yeah, we do support the customer better than they do.”

”That’s good. But will your customer pay more for this better service?”

“No.”

“Interesting, so tell me what kind of direction have you received from the owner of the business you work for?”

“What do you mean?”

“Well, given the market realities you’ve outlined, how does your owner expect you to win new business? Is he doing things to separate you from this competitor? For example, specializing in a certain niche (becoming experts and thus the preferred vendor) or using marketing and strong advertising techniques to build brand preference (aka, Colgate vs Crest toothpaste)?”

“No, the only guidance I was given was, “Treat it like it’s your business.”

Even the best salesperson will under-perform or fail under these conditions.
  
It is not the salesperson's job to identify target customers and invent ways to differentiate.

The role of the owner, President and/or CEO of a business is to equip your sales team with the tools to be successful. At a minimum this includes the following:

• A list of “target customers” 
• those inline with the customer mix outlined in your short and long-range growth plan
• who match the profile of those who will value your product, expertise and/or differentiators
• The compelling story to support why clients should buy your product over competitors
• Who are the competitors the sales team can expect to face and what differentiates us from each
• A supportive marketing (lead generating, branding, demo tools, social media, samples, brochures, etc...) strategy
• The right sales tools and support (travel budget, conference attendance, CRM, bid and proposal, quoting, etc...) - tools that actually help the sales team do their job versus those that help the owner monitor the sales force.

Given that only 28% of a salesperson’s time is spent in front of the customer and about 50% of that time is actually selling (the rest is prospecting (35%), relationship building (10%), and training (5%)), it is imperative, you the owner, equip him/her with the tools to ensure it is the right prospect and that he maximizes the productivity of that time.

In my 12 years of consulting "under-performing sales" has been by far the number one pain point with the blame typically placed squarely on the salesperson or VP of Sales. It is not long into the engagement when humility kicks in as the owner discovers it is their lack of a long-range plan, a clear understanding of what makes them different, a detailed knowledge of their competitors, and an ineffective or non-existent marketing strategy that are the real culprits.

Want to give your sales team the best chance for success? Let's talk about your metro Atlanta business over a cup of coffee.  Contact me here.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping businesses plan and execute aggressive growth strategies. He grew his very first client’s business from $8M to $35M in just two years. Mike is a growth strategy and sales process evangelist, prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters. www.allegroconsultant.com

The Formula for a Successful Start-up

Towards the end of an engaging coffee meeting with Harold Brown, a well known and self defined serial entrepreneur and investor in the rising tech community of metro Atlanta, he made this observation, “As I am getting to know you Mike I’ve come to the conclusion you are not a ‘creator’ you are instead a ‘doer’ and I bet if we paired you with a good creator we’d get one heck of a start-up.”   

I wasn’t insulted by that observation at all.  In fact he captured me perfectly.  I am a doer and always have been.  My consulting company is all about helping business owners become more disciplined doers.  There is no doubt the aircraft engineering degree (process orientation) and military upbringing (Dad was career USAF) contributed to these traits.  The whole conversation got me thinking about what the necessary ingredients are for a successful start-up – outside the risk taking, free spirit characteristics you hear about most often. Here’s what I concluded:

(C + D) + Fr = SSu

or

(Creator + Doer) + Financial resources = Successful Start-up

Leave it to a former engineer to turn an observation into an equation. Let’s take a moment to dissect this formula.

Financial resources:  The inclusion of this in the equation should not be a surprise to anyone. It takes money or equivalent to start a company.  We all know that - whether that means going without pay for years or writing checks for website, business cards, office space, travel, capital equipment, etc…. I read somewhere that one of the top three reasons for a start-up failure is being under-capitalized.  In other words they simply run out of money before sales revenues are sufficient to support the business.  Now I will argue that a vast majority run out of money because they spent unwisely namely because they lacked a Doer who would ensure a plan was in place to control precious cash.

Creator:  This is the passionate idea person who can see a problem or need as well as the business solutions to address it.  Though there are common traits between a creator and an inventor the difference is dramatic.  A creator in this case conceptualizes a business solution before a technology solution. Sadly an inventor‘s approach is exactly opposite, which explains why so many inventors are flat broke.  Jeff Stibell wrote this in a Harvard Business Review article titled, Are you an Inventor or an Entrepreneur?

“But don’t confuse being an entrepreneur with being an inventor. Great ideas are a dime a dozen. Action is what differentiates an entrepreneur from an inventor. If you want to focus on ideas, become an inventor — not an entrepreneur.”

Guys like Henry Buckley typify the definition of a creator. He conceived and started 10 businesses, the latest a jogger-based door-to-door pamphlet delivery service called JogPost.

Doer:  This is a person (a) with the discipline and skills to develop and execute a credible business plan, (b) who possess fundamental selling and marketing skills, and (c) who is versed enough in financial balance sheets to make critical and timely decisions, (d) who knows how to find, hire and motivate a talented workforce, and (e) who knows when and how to engage outside experts (legal, accounting, etc…). 

Now don’t get me wrong, I am not suggesting that this is an entirely different person from the creator.  Though quite rare, a creator may in fact possess some or all of these traits.  The important message is a business cannot make it without a well thought out plan, good marketing, strong sales and a disciplined approach to how capital is being utilized.  Take away any one of these and you’ve significantly impacted your chances of success.

Jim Flannery, Founder of the Four Athens technology incubator, reinforces this formula when he shared with me the reason the word “Four” is in his incubator name.  His experience says that you need the following four things to make a successful start-up:

• A business person
• A marketing/sales person 
• A technical person that can implement an MVP (software/hardware start-ups exclusively) 
• A service provider (legal/accounting) 

“I am very fearful of solo founders,” Jim says.  “My advice, rather than say "do you possess these traits", is "can you find two other people that possess one of these traits each AND believe in your (creator) vision"  

My strong message to those creators is to be brutally honest when assessing your skill-sets and if you lack any of those under the category of doer don’t make the mistake of thinking you can get by without it. I’ve seen enough to confidently say you can’t and won’t.

Want some growth advice for your metro Atlanta start-up from a proven "doer"?  Let's chat over a cup of coffee.  Contact me here.

Mike Gomez is the founder of Allegro Consulting, a business growth specialty firm.  He has served as a program manager and business development executive in both Fortune 100 companies as well as small businesses. Through the use of sound yet simplified business processes he has helped Georgia companies achieve remarkable sales growth. Mike is a growth strategy and complex sales expert, prolific writer, speaker, guest lecturer at GaTech and UGA, and a mentor at FourAthen technology incubator and Atlanta Tech Village.  http://allegroconsultant.com

“I’ve fallen and I can’t get up!” - Staffing needs and the early stage start-up.

So you have this great idea for a business.  You are prepared to make the sacrifices to self finance until sales can support the company.  You’ve analyzed your personal strengths and weaknesses and recognize you lack some of the critical skills required to get the business off the ground.  You need help.  But you can’t afford the full time salaries to hire the talent your business demands. 

What do you do?

This is one of the recurring scenarios I have seen with start-ups.  It’s an ugly sight really; watching a founder run full speed into this brick wall of reality.  And my advice is always the same.  If you do not have a solution to overcome this particular weakness then STOP. Don’t continue to build, or develop or spend time or money on this business idea because you will fail.

The staffing shortfall I see most often is the role of sales – sales strategy and implementation. Most founders first believe that selling is the easy part, that it’s something they can do themselves.  Or, there are those who attempt the, “if I build it, they will come” philosophy of sales. And finally, the last group, believing that social media and email blast will be a sufficient sales force.  They eventually learn that selling is crucial to the business and requires a level of expertise and experience. 

So, assuming you need more talent than is available through a free intern, what are the options for securing such talent? Let’s run down the choices.

1. Commission only.  This approach will have the least impact on cash flow because you only pay when sales are generated.  Yes, you might have to pay upfront for car allowances, cell phones and computer charges but that’s about it.  However, you’ve heard the saying, “you get what you pay for”?  This applies here.  Those who will take a commission only job are no doubt self starters but they will also ditch you in a heartbeat for a better offer. Their bottom line is the driving concern not your company nor your customers. If your product or service is a fairly easy sell and the rewards flow quickly this may be a good option for your start-up business. On the other hand, if it is a longer more challenging sales cycle and pay-out of commissions will take longer, I have found that more time will be spent by your new salesperson revising his or her resume and looking for a better gig than actually selling.
2. Base pay plus commission.  This is by far the surest method for hiring the exact talent you need – qualifications, industry experience, past performance.  The downside of course is impact on cashflow. You will be writing checks before any sales are generated.  Striking the right balance between the amount of base pay necessary to secure talent while keeping the motivating force of the commission will be one of your tougher challenges. 
3. Deferred pay plus commission.  This is an interesting variation of the base pay plus commission approach.  Here you and the candidate agree upon a market base pay and commission structure.  Then, predicated on current and future cash flow projections, you decide how much of the base pay you can afford to pay now and how much you will ask the prospect to defer to a specific date or milestone. The prospect is basically letting you use his pay as operating capital until there is sufficient cash flow.  Here are the four areas available for negotiation (flexibility) with this approach:
1. the length of the deferral,
2. the interest rate applied to amounts deferred,
3. the amount of compensation deferred, and
4. the pay mix or combination of cash and noncash forms of compensation that are ultimately paid.

This can be a particularly compelling tactic if there is a milestone on the horizon that will trigger an influx of new capital (meeting a performance standard, venture capital infusion, achieve positive cash flow status). As you might expect significant trust in the business idea, the business model and most importantly the management team to execute and monetize the idea is critical. As founder it is your job to instill that trust and make absolutely certain you pay the deferred amounts with interest as promised.  

Having the right talent on hand to support your start-up is crucial to success.  Attracting that talent can be a challenge with limited cash flow.  It starts with identifying the roles and responsibilities you expect that person to fulfill.  Follow that with writing down the qualifications and experience you feel are necessary for that person to be successful. Lastly is outlining a cash flow appropriate compensation plan that you will use to attract that individual.  

Mike Gomez is the founder of Allegro Consulting, a business growth specialist.  He has served as a program manager and business development executive in both Fortune 500 companies as well as small business. Through the use of sound yet simplified business processes he has helped Georgia companies achieve remarkable growth. Mike is a guest lecturer at GaTech and UGA and a mentor at FourAthen technology incubator. He can be reached by phone at 678-908-8433 or by e-mail at m.gomez@allegroconsultant.com. Visit http://allegroconsultant.com