Articles

Lessons In Leadership: How to Build a Winning Team

Tue, 30 Mar 2010 04:48:00 GMT

We’ve all had special people influence our thinking that stamped our souls with virtues, principles, beliefs, and life lessons. Teachers, coaches, parents, ministers, bosses, and neighbors. When I was in high school some thirty-plus years ago I had one of those experiences with my sophomore high school basketball coach. His name was Eugene Zuccarini. Everyone called him “Zook”. At seventy-plus years old he’s still teaching golf. Mentors never cease their passion, do they?

Zook had the uncanny ability to take losing freshmen teams and turn them into winners, which the tenured varsity coach then promptly turned back into losing teams. He didn’t do it by taking freshman teams that won 8 games and lost 9, and then won 9 games and lost 8. He took the group of kids a year older than us, who as freshmen won 6 and lost 11, and went undefeated- 17 wins, no losses! Against the very same teams they had lost to the year before. Our class was more of a lost cause: 5 wins and 13 losses as freshmen, but Zook turned us into a 14 win- 4 loss team. Not just winning games in the last second, but thrashing opponents. We won one game 88-15, and we weren’t running up the score, either. The first string played the first quarter, the second string the second quarter, the third string played the whole second half. In case you were wondering, the halftime score was 44-10, which means the third string outscored the opponents 44-5 in the second half. We were all just playing the way he taught us- full throttle the whole game.

If you look at his leadership style, it defies what most coaches and executives do. He cut no one. He gave us three days to quit, and then whoever showed up the fourth day was on the team. But (and here’s the flip side of the no-cut knife), once you showed up the fourth day, you couldn’t quit- he hated quitters. The first three days of practice, we ran. And ran. And then ran some more. Whoever was willing to go through his first three days of hell and show up on the fourth day was on the team, knowing that it was a commitment for the season.

Did Zook look at who could dribble the best? Shoot the best? Was the tallest? Fastest? None of these were his selection criteria. He wanted to see who had the heart to play and the commitment to stay. He knew from that point on that it was his job to take that heart and commitment and make something of it.

I spoke with Zook and asked him why he didn’t cut anyone. He said, “Because I didn’t know who would blossom later. I wanted to give everyone that chance. I had Jim Smith, and they said would never turn into anything. His junior year, he became star player, and senior year he got a Division I Scholarship. I can go on and on about the list of players who blossomed after our season. You never know who will succeed or not- but you want to give every one of them a chance to succeed later. So, why cut them if they want to play? If they’ve got the heart to try, I’ll give them the tools to succeed. That was my job.”

Zook started out by using the right selection criteria. No prima donnas. No quitters. All heart and soul. Show up and try. If you want to point to the success of Southwest Airlines, Houston’s Restaurants, or In-N-Out Burgers, look at their selection process. It is thorough and it focuses on the people they are picking first, their job skills second.

First Day Speech: Laying Down the Law of Zook

“I don’t like to give speeches at practice. Speeches are like meetings: a waste of time. If I have to give a speech again, that means we lost. You don’t want to hear that speech.” Zook was not a win-at-all costs coach, even though his statement implies it. He believed- and he was right- that our problem was not that we had any less talent than the other teams, but that we were susceptible to a defeatist- a losing- attitude. His threat was more directed at the defeatist attitude than it was at losing per se.

Our practices were only ninety minutes- we started after the varsity started and were on our way home before they were done. Lesson: He doesn’t waste time- neither should we. When practice starts work hard, start to finish. Think of Federal Express type of no-nonsense urgency, Southwest Airlines turning an aircraft around in twenty minutes, or Team Penske changing four tires and adding thirty-five gallons of fuel in a twelve second pit stop.

“I’m going to challenge you to change your losing ways. To do that, you’re going to dislike me at some point during the season, and the sooner the better because you lost too damn much last year, and that attitude has to change in a hurry.”

Former Secretary of State Colin Powell put it this way:

“Being responsible sometimes means pissing people off. Good leadership involves responsibility to the welfare of the group, which means that some people will get angry at your actions and decisions. Trying to get everyone to like you is a sign of mediocrity: you’ll avoid the tough decisions, and you’ll avoid confronting the people that need to be confronted.”

Then Zook told us he’d coach anyone who made it through the first three days and showed up on day four. PROBLEM: There were only fifteen uniforms. What if there were more than fifteen players on Thursday? Zook anticipated that. He said if there were more than fifteen come the fourth day, he’d tell us who the top ten were, and rotate the rest of the uniforms each game. On the fourth day, we had 24 players! He kept his word, and we made it work, rotating the five of the bottom fifteen on a three-game rotation. None of those players quit, none of them missed practice.

The lesson here is Zook was upfront about what might happen (too many players), and what he was going to do about it (rotate the uniforms). He was up front about the problem before it became a problem, and then it wasn’t really a problem. We knew it was coming.

“You can shoot the ball anyway you like to, as long as it goes in the little round thing. As soon as you start missing, you shoot my way.” He gave you enough rope to succeed or fail. If you were a good shooter, he wasn’t going to screw you up like many coaches and managers do by making you do it their way. But if you struggled- well, you didn’t have much to argue about- you shot his way. Which, by the way, did improve many players’ shooting.

Zook hated fade-away jump shots- he believed in a player being able to go right at the defender with the shot, get fouled, and make the basket. He loved that, but he hated fade-away shots. One of my teammates, Dave Wilson, could shoot (and make) fade-away jump shots. Even though Zook hated the shot, he kept his word about shooting any way you want- as long as it went in. In fact, Zook used to send Wilson into games if he thought the opposing zone defense needed a little “loosening up”. Wilson would go in, put up three or four shots from what today is three-point range, and voila- the opponents changed from a zone to a man-to-man defense. Why didn’t Wilson start if he was such a good shot? Because he was a lousy defender, and Zook valued defense first. Lessons: Zook doesn’t let his ego get in the way of allowing players to go outside the guidelines if they are successful, and he isn’t enamored with the appearance of good (a good shooter) versus what is really important (good defense). He also knew how to apply talent in the right situation.

In this same first day speech (people would pay Zook $5,000 an hour to speak today) he told us that we might run into a player on a team that could hit a twenty-foot shot. Then have the ability to fake our defender out, take one dribble and sink the fifteen foot shot. He told us, “Well, there’s nothing you can do about that.” He was a realist. When I worked with Bobby Unser on Winners Are Driven, he thought on the exact same line. Bobby wanted to win, but understood that there might be a faster car out there and he just wasn’t going to win that day. Coming from a Three-time Indy 500 winner, perhaps his realistic approach kept his head on the level to not do something stupid and live through his sixteen Indy losses in order to get his three wins.

Zook told us to stay off the refs. He said, “You can’t get thrown out of a game, but I can because I’m not playing. Besides, if a game is going bad enough I may ask to get thrown out.” Message: He may do something provocative to re-focus our team and the refs at the same time. Another thing he said about refs was quite philosophical: “Heck, if we’re playing bad enough, they’ll make bad calls against us.” If your performance looks consistently lousy, you won’t get the benefit of the doubt.

Our high school team ran a set offense as dictated by the varsity coach. It was called the thirty-two. Freshman year, it was the first thing we learned, and anyone who made the freshmen team knew the offense. We had two freshmen teams- an “A” team and a “B” team, a total of thirty kids. I remember a friend of mine, Mike Murray, who was cut freshmen year, but sophomore year made it to the Thursday practice, thus making the team. On that Thursday, we actually picked up some basketballs and started practicing. Murray was struggling running the offense, basically because he had been cut the year before and hadn’t learned the offense. Zook asked Murray why he was having trouble, Murray meekly replied, “I don’t know the offense. I was cut last year.” Zook looked at him and said, “You were cut??!!” He didn’t have to say anything else: his tone of voice and facial expression were as though he were saying, “Not here. I’m going to turn you into a winner.” Not only did it lift Murray’s spirits, but we all noticed: He wanted us all to succeed. We started diving for balls, crashing into walls, jumping higher, sprinting harder, and pouring our soul into every moment of practice.

When I talked to Zook about this article, he said, “I got kids to believe they could do more than they really could. And they did.” Lesson: You stretch your employees’ performance by instilling a genuine belief in every one of them from bottom to top that they can succeed. The key point here is this wasn’t a tactic, because it wouldn’t work as a tactic. It worked for Zook because it was a belief.

Game time: The Psyche Master

Before each game we had to sit and listen (no talking, no questions: just listen) to Zook’s pre-game talk. When Zook talked, you listened. This was Patton firing up his troops. No two speeches alike- each speech tailored to the opponent we were playing that night. He didn’t talk to the team- he spoke to each player and their role that game, pumping them up: “They’re talking about how they’re going to blow us out of the gym!” He’d explode, eyes on fire, face turning red. “Heck, if Thimm rebounds like he’s been doing this week (Thimm’s focus for the game: rebound, rebound, rebound.), and Prang sets the press the way he can, with Bouchee stealing their long passes…” and through the whole starting line-up that way. The speeches may have been different, but the effect was always the same: when we came out of the locker room, we were like a pack of mean dogs on a very short leash. Going through the pre-game warm-ups we would pace around like panthers waiting for a meal. It wasn’t cockiness or arrogance. It was focused intensity. We didn’t play dirty or out of control, we destroyed teams by playing the game with a blistering press that put them back on their heels from the start and didn’t let up until the finish.

I was the sixth man- first guy off the bench. One weekend we had two games, and I recall playing in seven of the eight quarters. Zook played everyone- not because he was a socialist, but because he sincerely believed everyone could contribute- we all had a role. Besides, there were one of two ways to get taken out of a game by Zook: Because you were exhausted from hustling so hard, or you weren’t hustling enough. You were coming out one way or another and the choice boiled down to which looked better- coming out because you were hustling hard or coming out because you were lazy? If somebody was coming out, then somebody had to go in. So everybody got to play.

Often, by the fourth quarter the third string was in. That’s when the opponents would really complain about Zook “running up the score”, but that wasn’t what he was doing. He coached the bottom five of the lineup with the same enthusiasm he coached the first string, because his job was to develop his players, not worry about the opponent’s feelings. Not only that, but think of the positive impact on these players- that the coach cares about them as much as he does the starters? What about the confidence builder in them because they were playing well and actually contributing to winning, not just going through the motions? What a great lesson for these kids- a third string playing with confidence, and getting coached by the best in the business. Result: they shredded the opponent as well, making it look like the score was being run up.

Lesson: Involve everyone in the process, and you won’t have to worry if Billy or Suzy get sick and don’t show up. You just plug another player into the lineup and go forward. It’s amazing how organizations think that isolating people in silos is beneficial. One silo missing, and the whole thing falls apart.

During the game, if you made a fundamental mistake or lost focus, Zook wouldn’t yell. He didn’t have to. He’d stare a pair of holes through you. He could also tell when you were having a bad day at the office. One game, we were killing the opponent early, and I was in early. But I just couldn’t get “in sync”- things were not going right at all. He yanked me pretty quick, sat me down next to him, and said, “Relax. You’re too wound up. Let Wilson play for a while tonight.” He could distinguish between a loss of focus and a bad day because he was an engaged leader. He engaged with his players enough so he could sense where they were at. Bobby Unser talked about this in Winners Are Driven when he said, “Leaders have to get involved with their people. They have to get out from behind their desks, go out on the factory floor, and get a real sense of what is going on.”

Strategy: The Big Picture Genius.

Zook never drew. He said his job was to make the other coach call time-out and draw. That didn’t mean he wasn’t a planner. He was the consummate planner. He always had a strategy that he went over with us before the game. An effective speaker, he was able to get the message across verbally. Leadership today requires the ability to deliver the message- to communicate with passion and clarity. I remember one game how he got inside the opposing coach’s head in the first minute of the game. Our team was known for pressing the whole game, then falling back to a man-to-man defense. That game, Zook had us start out in a zone defense. Sure enough, the opposing coach called a time-out within a minute and started drawing feverishly on his board. Zook looked over at the opposition huddle, then told us, “OK. He’s now drawing up an offense that goes against our zone defense. Go back to our man-to-man defense. They’ll have to adjust back to the offense they planned at the start of the game. After two minutes, go back to the zone again because they’ll forget everything the coach just drew on the board. They’ll call another time-out.” Sure enough, things went exactly as he said.

He was pro-active in everything he did. Planning his game strategy was always attack, attack, attack, and do it with a little twist here and there to throw off the predictability of where it’s coming from. Make them worry about you. Looking back on his first speech that, too, was proactive. He anticipated we might run into a tough opponent and was matter-of-fact about it. The rules of practice, expectations, and consequences for not meeting those expectations were laid out. So it was no surprise to us when we actually did lose a game after winning our first five: We got the speech, the wake-up reminder to refocus, and then he ran us into the ground to slam home the point.

Halftime: Time to Re-focus.

This was his mid-course reminder for us to stay on track. No matter what the score was, we weren’t going to take anything for granted. He never let us play “not to lose”. One game, we were ahead 38-12 at the half, and he told the second string (who was going to start the second half), “You’ve got them in a hole, don’t even think of letting them out. As far as you guys are concerned, the score is zero to zero.” He never believed in “playing not to lose”. He never sat on a lead, or took one for granted. There were no slam-dunks in his book. How many people play the game to not lose, and then lose anyway? Or brag about the “slam-dunk” deal, only to see it slip through their grasp?

Finish: The Reward

As much as Zook gave you the glare when you lost focus, he also let you know when things went right. Because of our style of play to pressure the opponent and then run them into the ground, we would get spurts in a game where we would score ten or twelve points in a hurry. We’d get a basket. Then steal the ball, and get another. Then another. The crowd (we played in front of big crowds because our game preceded the varsity game) would start to get louder with each score. It was like a feeding frenzy. We’d make a basket and the crowd would cheer. Then a steal and another basket and they’d roar. Now the adrenaline is flowing and we’re like sharks that smell blood in the water. We would make a steal, and the whole team would fan out breaking and running, the ball passing from one player to the other, never touching the ground. The play would finish with a pass and score and the crowd would explode. But above all this noise, the loudest thing we would here on a play like that was Zook bellowing out, “Looked like a million bucks!!” Now the adrenaline spigot was open wide, and we felt like a million bucks! When you’ve got the team pumping on all cylinders and the stuff is just rolling, it makes all the blood, sweat, and tears worthwhile.

Zook Lessons as Applied to the Leadership World Today

Times are tough now in the world we live in. But are the circumstances beating us, or are we letting them beat us? Are we playing so bad that the calls are going against us? Are we playing not to lose? Are we afraid to challenge people to run harder or do better because they might get upset? Are we engaged and coaching the whole team? Are we winning? Do we make our people feel like a million bucks when they do well? What do you think Zook would do?

The Law of Zook

Who’s committed to make change and get things done? If you’re in, I’ll lead you all the way. I don’t quit on you; you don’t quit on me.
The change to becoming a winner will be painful, but the status quo of losing is more painful.
Take action to solve the problem, don’t talk about it.
Credentials are meaningless if there isn’t any desire to perform.
Tell it like it is, not how people wish it to be.
Give your people a chance to fail on their own. They just might succeed.
If they fail, fix it by training them.
Be a players’ coach- earn their respect by being involved.
Communicate the plan, and the belief they can stretch to achieve a higher level.
Coach and train the whole team.
Never play not to lose. Attack continuously.
It’s OK to dish out praise. After all, if you don’t have a million bucks to give them, you can still make them feel like a million bucks.

Massachusetts Moment: Business Lessons for Corporations That Ignore the Guy In the Pick-up Truck

Sat, 27 Mar 2010 05:51:00 GMT

First, a caveat: This is not a political column, this is a business column. The meaning of Scott Brown’s election in Massachusetts is a great metaphor for corporations. Given a “Massachusetts Shock Message” to a corporation (like snowballing employee turnover or customer defections), how many corporate executive teams and organizational leaders go into spin cycle- or worse yet- denial mode? Let’s face it: leadership isn’t just about giving a directional message (“I haven’t explained the message well. They don’t get it”.) That’s top-down management-by-directive, and the problem is the executive is in denial about which way the real message is being sent: it’s not coming from headquarters; it’s coming from the pickup truck- the street.

If there is a problem with the rank and file, it isn’t because the message hasn’t been crafted well so they get it. It’s because there are some serious leadership issues and the leaders better find out what’s really going on at the factory floor level, at the customer level- at the street level. And if they don’t already know how to drive a pickup truck, then they’d better bring in folks that can do that- and listen to their good advice.

What are the metaphorical business messages of the Scott Brown election in Massachusetts?

Stop Talking: Start Listening

Maybe leaders don’t have an inability to articulate their message- maybe they aren’t listening to what’s happening on the ground floor. I went into a retail store- a specialty sports store- a few years ago looking for a sports hat. I forget the details of the hat, but remember the gist of the exchange- the store didn’t have it and the store clerk was upset. He was upset because at least ten customers had come in looking for that type of hat, and they didn’t have it. The clerk’s frustration wasn’t that he didn’t have the hat: the clerk’s frustration was that he had been telling his corporate bosses for several months that they were inventorying the wrong stuff and not bringing in the right stuff. That store is now closed. No wonder. The clerk drove a pick-up truck, but the folks in Washington knew better.

Get Engaged: Stand out at Fenway Park on January 1 in the cold.

SCAN Healthplan is one of the fastest growing Medicare Advantage plans in the country. They aren’t accomplishing this because they are doing over-the-top mergers and acquisitions. They are doing this because all of their senior executives- the CEO, COO, CFO, and every executive Vice-President- actively participate in “Straight-Talk Forums” where they have to engage and listen to their members. Additionally, all executives are required to go on “ride-alongs”- sales calls with a salesperson in a prospect’s home. They drive pickup trucks and aren’t afraid to stand out in the cold.

Don’t Fake It: Anyone can buy a pickup truck, but not everyone can drive a pickup truck.

One of the biggest waste of business transformational effort and expense is to try to imitate some industry standard- be like Jack Welch or Southwest Airlines or Federal Express, etc. The pickup truck wasn’t a gimmick. It was Scott Brown, it was his message, it was what he stood for, and most importantly, it connected with who he was delivering his message to. There are certain things that just don’t fit- and can’t be faked- either as a leader or by the organization. If you suddenly want to re-invent your company by buying a bunch of pick-up trucks, it isn’t going to work if you don’t have people that “fit” the image of the truck. They’d better chuck the suit. They can’t be afraid to get it dirty or to haul stuff in it. And they sure as heck better be able to parallel park it. You can’t be who you aren’t.

A Simple, Resonating Message: Constant Communications and articulating well is meaningless if the message is ignored.

A boy was fishing with his dad. The boy made a great cast to the perfect spot where a fish would surely be lurking. “That’s a perfect cast!” exclaimed the boy. The dad replied, “You know it and I know it, but does the fish know it?”

While some executives will lament, “They don’t get it- so we must articulate our message better (or shove it down their throats harder).” Scott Brown’s message was pretty simple- “I will be the 41^st vote”; “I drive a pickup truck”. I will take action (and the message resonates) and I am one of you (I get it). Yet not one resonating message can be quoted from his opposition- which not only included his opponent, but arguably two of the best Presidential orators of our time.

A few years ago, interviewing the head of training and development of Southwest Airlines, he made a quote about what working at Southwest boils down to: “Seats full, wheels up.” That is a Scott Brown message.

Forecasting a Sure Win Will Lead to Failure: Leaders shouldn’t assume they’ll win tomorrow because they won yesterday.

A thirty-three year straight-commission salesman had some sage advice for his daughter (real estate) and son (B to B) when they went into sales: “Every day is a learning experience. When the day comes that you think you know it all, shoot yourself.”

Sales is- and should always be- a humbling profession. So should leadership. As brash as some salespeople- and leaders- are on the surface, the really successful ones are the ones who never assume that their hard-fought victories or methods of the past will guarantee success tomorrow. Here are some notes from a pre-program interview conducted for a sales training seminar with David O’Connor, New York sales rep for Lubrication Engineers. David had been selling Lubrication Engineers’ products as a straight-commission sales rep for 46 years at that point:

“David, what would you like to take away from this program?”

David O’Connor: “I love going to training programs because there is always a jewel to be taken from them. My biggest need is to open new accounts- usually I have 50-60 new accounts, but I only have 30-40 this year. I’m looking for a few new tips in that area.”

Far too many people in business and sales take the Martha Coakley approach: They assume the victory because they won a few times in the past. Or, some assume victory because they are the brand of choice- they are in Ted Kennedy’s party. They coast. This leads to the next point.

Playing Not To Lose: Panic as the margins slip away.

How many times have we watched a sports team build a great lead in the first half by playing great defense and skillful offense- and most importantly, playing the game with their hearts? Then the second half starts and they start to think- they try to slow down their offense, play a prevent defense, and pray for the clock to move faster. It doesn’t. The opponent stung by the humiliation of the first half comes out playing with fire in the second half. They sense the leading team’s lack of passion and go for broke. The inertia of the lead being whittled away can’t be stopped, until the team that led at the half is finally overtaken- and loses.

Witness the Irish Hurling Final of 2003 in Dublin between the favored Kilkenny and Cork. Hurling is a cross between soccer and field hockey, except they use something that resembles a baseball bat. In the final, Kilkenny had a huge halftime lead. This was the first time I ever watched this sport- and yet, in the second half, I could tell Kilkenny stopped attacking (played not to lose) and the whole momentum swung to Cork’s favor, who eventually won.

In business, the same thing occurs: A business creates a great product, gains huge market share, and generates record revenues and profits. Then they sit back on their invention, reap profits, and hope nobody notices. Competitors start to attack the price margins. Innovation stagnates because the focus is on cost-control (prevent defense). The management strategy is to play not to lose as the margins and market share continue to wilt away. Finally the business loses.

Final Lesson: Learning to drive the pickup truck.

A few years ago, we had a coaching intervention with a regional sales executive in the weekly newspaper print business. The sales executive’s office happened to be at corporate headquarters and his responsibility was for twelve weekly publications- the furthest being a two-hour drive from his office at headquarters.

The challenge was his region was under-performing. The bigger challenge was (at that time) the corporate mentality (his bosses) was, “Make them come to you, don’t go out to them”. It was the Washington DC mentality. Engagement with his twelve publication managers was mostly at the monthly meetings held at his corporate office. If one of the corporate execs slipped into the meeting, it turned into a beating. The only managers he would visit regularly were his two “problem” (really low performing) managers. He only got out to the field (left Washington) when there was trouble. So, a visit by the regional boss to a newspaper office could only mean one thing: that office was in trouble. A visit to a state by Washington can only mean one thing.

The coaching session with the regional exec lasted six weeks. It involved a live visit the first week to review the objectives and guidelines followed by a five-week blended program of online work and teleconference calls. We set a very singular goal for the sales executive: Get out to all twelve publications on a weekly basis- get in the field four days a week. Start racking up the truck miles.

But it wasn’t as simple as that. There were two issues: One was he had to look at all the reports and meetings at corporate and make the conscientious decision that they were not as important as going to the field. In other words, he had to choose NOT to be a part of the report and meeting corporate culture. He had to disengage himself from the Washington DC apparatus. The excuse he used at corporate was he was going out to deliver more beatings instead of doing it monthly. The visits were allowed by corporate as long as beatings were in order.

The other issue was that he just couldn’t get in the pickup truck and drive out to one of the twelve local newspaper offices and announce, “Here I am!” They’d brush him off, not trust what he was up to, think this was a new management gimmick, or just throw him out (Don’t tread on me!). His visits normally meant trouble, and he had a credibility gap that he had to bridge in a hurry. Without getting into details, we were also at that time running the third in a series of blended (live and online) programs for the twelve managers. We were already driving the pickup truck around and knew what it would take for him to “fit in”- and we could facilitate the introduction to the locals as to why this change would work. We had their ear.

His weekly goal was to add one-half to one full day in the field per week- adding two to three newspaper offices per week to his weekly “truck” visit list. The biggest challenge was to get two of his most independent (and top-performing) managers to allow him to visit. Again, without getting into details, as an “advance team” (for lack of a better term) we had the managers’ ear and were able to get them to think differently about the role of the sales executive and the opportunity this presented to them.

The results can be summed up in the following unsolicited phone calls from the sales executive to us during the intervention:

Week 3: He called to exclaim, “The two most difficult managers for me to work with called me today and invited me to their offices!” We did not suggest they do this- we merely helped them see him and their relationship with him differently. The “locals” gave him permission to bring his truck to town- and it was entirely their call.

Week 4: “I was out four days this week and made it to all twelve publications for the first time.” He’s going to get 200,000 miles on that truck- and that will have meaning.

Week 5: “We had our monthly meeting at corporate today, and for the first time I was in charge of the whole meeting- and didn’t have to refer to one report. I knew what was going on.” Well now, there’s a revelation. Listen, learn, and lead.

What was the effect? Performance of his twelve publications exceeded goal over the following twelve months by over 20% and year-over-year growth of 25%. Let’s see: The President carried Massachusetts by a 26% margin in 2008- Scott Brown won by 5%- a 31% swing. Anybody detect a pattern?

Leaders don’t need to own or even know how to drive a pickup truck. They need to respect it, pay attention to it, and understand its meaning. It looks like it’ll help improve productivity 20 to 30%. And the competition will wind up as road kill.

Recognizing Talent: From Busboy to Six Figure Salesman

Sat, 30 Jan 2010 04:29:00 GMT

Where do you find good salespeople? First, you have to define “a good salesperson”. With no college curriculum or extensive certification process for someone to be called a salesperson, a “good” salesperson is a highly subjective definition. Here’s the acid test for executives as to whether or not they know a person is a “good” salesperson or not: Can the executive make an accurate evaluation without looking at the sales numbers or track record- and will the sales numbers verify the executive’s decision to hire? Would an executive of a prominent electrical wholesaler hire a food server at a restaurant with the intent of making him an outside salesperson? John Walter of Walter’s Wholesale Electric did that very thing about twelve years ago.

As is the case with many business executives- particularly those close to the sales function- John Walter had his regular restaurants. One was Hof’s Hut in Torrance, CA. And as is also the case with many regular customers, John had a favorite server- Tony Estrada.

After some time, John realized Tony was more than a food server: Tony was a salesman. While many executives who had frequented Tony’s serving area had suggested Tony get into sales, no one had actually offered him a job. After all, Tony was only twenty-one and had no college degree. Who would offer him a job in sales? John Walter did. With the confidence built up from other customers’ comments about going into sales, Tony accepted the opportunity at Walter’s Wholesale Electric.

Tony started out in the warehouse- filling orders. He had to get the feel of the products he would be selling, like starting out in the kitchen of a restaurant. Then he moved to counter sales, working with walk-in contractors. Tony would ask questions about what types of projects they were working on so he could connect the products ordered to the type of project. Most importantly, he was learning about the contractor’s business and earning their trust. At Hof’s Hut, his attitude was to always put himself in the customer’s shoes: “How would I want to be treated if I were them?”

This sounds like common sense, but if that’s the case, why do so many salespeople and sales training programs focus on presenting features-and-benefits when they should be focused on learning what the customer needs and building trusting relationships? It’s a rather universal concept with successful salespeople, but so few executives realize this value and so few salespeople “get it”.

Because of his focus on the customer, most of Tony’s business is via referral- even in this down economy. Paying attention to customers, feeling their pain, being accountable, and most importantly- enjoying the interaction- these are the universal things that Tony Estrada took from the restaurant to the contractor world.

And the “bottom-line” result? Tony has been selling for Walter’s Wholesale for a little over ten years. Dick Benbow, Vice President of Sales at Walters, says Tony has produced- in terms of both gross sales and gross profits- in the top ten out of ninety-three seasoned veterans for the past five years running, earning a six-figure income. Apparently, John Walter knows what a good salesperson is when he sees one in action- and case of Tony Estrada, the numbers have proven his decision. Where do you look for salespeople?

Thoughts from 1965- Lessons for 2010

Wed, 09 Dec 2009 05:56:00 GMT

The following is a memo sent in January, 1965, from J.A. Sexauer to his 75 field salespeople. Interesting how some of his thoughts and philosophies are somewhat timeless:

Progress will continue as our most important project during 1965. It will not, however, result from chance shots.
There is a price to be paid- and the following precepts will determine the cost viz…. Integrity! Intelligence! Industry! Intensity! Success will not be on arrival. It will be the fun we enjoy while overcoming the obstacles on the way.
“Service” will have a far greater meaning and continuing emphasis. Service creates confidence… it lessens the labor of the individual doubt while speedily dispatching business. It brings buyer and seller together to a satisfying state of mutual benefits and does so more quickly than any other system.
Once Service, in its true sense, has been established, we have the basis for a reasonable profit…. despite the multitude assuming its merits in every day competition.

Any fool may claim to sell cheaper… but it takes service in one’s soul to sell so that the customer will come back and buy more of the same thing… that gets the buyer and seller to do more business at a profit to both… for service determines the cost and value of a thing.
There is one other precept of the many, equally vital… to wit… “Self satisfaction without progress is stagnation.”
This business world of ours has its multitudes stuck in the mud of self-satisfaction. Once the dry-rot of self-satisfaction takes hold, the winter of discontent becomes twelve months long, unless we keep the fires of purpose and enthusiasm at white heat.
This “service above self” in helping others, while helping ourselves, will command a respect and confidence far more valuable than any amount of money… and as we plan our progress for 1965… so will we shape our tomorrow.

Small Manufacturing Growth for 2010: Economic Survey

Tue, 06 Oct 2009 02:31:00 GMT

On Sep 24-25, 2009, Peter Zafiro and I ran a workshop on behalf of Manufacturers Agents National Association (MANA) in Chicago. The workshop is called Building A Successful (Independent) Representative Network. Typically companies attending the program are companies that are growing and need more sales; are entering a new market; or are not growing and have had to lay off their direct sales force in lieu of hiring an independent, straight commission sales force.

We have run this program twice a year on behalf of MANA since 2003. The usual attendance for this event is about 15 to 20 manufacturers. This year the average attendance has been close to 40 for each of the two events- double the normal attendance. When you consider that this program is now going through its first recessionary period, perhaps that in itself is an indicator. Realizing this, we added one question to our anonymous attendee demographic survey conducted at the beginning of the program. In addition to the demographic questions asked below, we asked about projected revenues for 2010.

There is some fairly interesting- and telling- information about the state of the economy of these attending manufacturers from this survey. A total of 39 attendees representing 34 manufacturers attended. The countries where these manufacturers have their corporate headquarters and principle manufacturing facilities are: (30) United States; (2) Canada; (1) Mexico: (1) China Note that not all of the people complete the survey, and that not all of the surveys are completely filled in- this is not required information or course material. Consequently, there is not a one-to-one relationship of the data throughout the survey results. Here are the results of the survey for your review:

1. Company size:
The vast majority of the companies were small manufacturers.
a. Under $5 million: 9
b. $5-25 million: 14
c. $25-100 million: 2
d. Over $100 million: 3

2. Position:
This program, “Successful Sales Rep Network Development” is a high profile priority for these businesses.
a. Entrepreneur: 1
b. CEO/ Pres: 5
c. Exec Sales Mgr: 12
d. Regional Mgr: 2

3. Reason for attending:
While several are looking to get more performance (straight commission) for their sales dollar, many are looking for quick sales growth due to immediate opportunities via an experienced rep network. Still other companies are looking to enter new markets to mitigate their narrow market economic dependence.
a. Transitioning from direct to independent rep sales force: 9
b. Growing needs require hiring sales: 14
c. New market entry: 7

4. Typical order size:
While most of the typical orders from customers are relatively small, twelve were over $10k each, and five of those companies say their typical order size was over $50k, indicating typically a major purchase by OEMs or an investment in a manufacturing process line.
a. Under $1K: 4
b. $1K to $10K: 14
c. $10K to $50K: 7
d. Over $50K: 5

5. Typical Customer type:
The vast majority of customers for the attendees are OEM’s. An assumption could be made that these attendee manufacturers- all relatively small- are feeding products some larger OEM fish, who in turn are looking up forecast-wise.
a. Original Equipment Manufacturer: 19
b. Distributor: 9 Value-added reseller: 2
c. End user: 5
d. Contractor: 3
e. Retail: 0

6. PROJECTED SALES 2010
This statistic wraps up all the other statistics- as well as the assumption that anyone attending this program is, for the most part going to grow. Those that are not growing are probably eliminating the overhead of a direct sales force or scrambling to get into some new markets because their current market is in an economic abyss.
a. UP OVER 10%: 10
b. UP 5 TO 10%: 6
c. -4% TO +4%: 3
d. DOWN 5% TO 10%: 2
e. DOWN OVER 10%: 2

Economically, this is a small group of small manufacturers. However, the fact of the matter is- and has been for every recession recovery since 1981- small business is where the economy will recover from. Small business has created the largest number of new jobs in every recession recovery and expansion since 1981.

Trust and Integrity- Winners Are Driven book excerpt

Mon, 31 Aug 2009 22:56:00 GMT

The following is an excerpt from Chapter 7, Winners Are Driven
(Bobby Unser, Paul Pease, Wiley, copyright by Mi-5, 2003). It seems that some stories are timeless, but we can't seem to get the lessons to stick:

"People fundamentally know that trust is a good thing. Why do so many good, trustworthy people sway off course? How can you avoid their mistakes? With all of the problems going on with some major corporate executives destroying trust in the executive ranks, how do you avoid their traps? I’ll talk about the temptations that can take you off the path and crash an honest reputation. Then I’ll tell you how to avoid these potential crashes that kill careers…….
…….In this day and age of constant bombardment of material wants and wealth and instant gratification, some people need to understand why it’s so important to pave a path to success with trust, instead of greed and impatience. That’s why you need to know how trust benefits you. By knowing the benefits of trust, you won’t likely sway off the path when instant gratification or greed tempts you…

……In business, something is either going wrong, or it’s changing. It’s no different than racing. There’s always some sort of pothole, bump, or debris on the road to success. Sometimes, there’s a major crash, creating a momentary crisis. These are all unexpected events that challenge race-car drivers. In your career, there are also external events constantly occurring that affect your performance…..
…..The big worry people have today is that as soon as something goes wrong, their division will be sold, their department budget cut, or they’ll get laid off. Some people even have this worry if things are going right- that’s how bad it gets. If we learn to trust each other to work through the challenges and hold together, then we create stability in the long-term.
The problem with change is people don’t trust that the outcome will be better. When change occurs for the wrong reasons- like greed and impatience- then it becomes a bad thing and the result is bad. That’s why people feel uncomfortable with change- anything new is presumed to be a devil they don’t know. Changing for the right reasons- like improving the way things are done- is a better way to do it. Then it’s not a devil of any sort. In fact, it’s an angel, a savior.
When you change for the right reasons and things go wrong- and they will- people trust eventually the outcome will get better. As long as you drive the right reasons, then people won’t be as stressed out about adapting- they’ll feel more secure about going forward. If you are moving in a pro-active, positive direction, many people will trust the change and feel secure moving forward….

….Trust saves time from constant follow-up.
No matter what problems I had with any racing team, owner, or anybody in business, there was one thing people knew when they dealt with Bobby Unser: I was going to show up on time and give 100%. If things didn’t turn out in a race the way we hoped it would, well it sure wasn’t from a lack of total effort.
On the other side of that, when a leader is trusted, and the leader says “Go!” their people “Go!” The leader doesn’t have to waste time constantly being second-guessed by people constantly asking “Why?” Likewise, when the leader trusts you, they don’t waste time asking, “What are you doing?” “How are you going to do it?” “Why are you doing it that way?” and so on. ….
…..It takes time to earn trust, but once that happens, it takes less time to manage trust. You don’t have to keep checking on people to see if they’re doing their job. Likewise, when you are trustworthy, they don’t have to keep on checking up on you. If time is money, and trust saves time, then trust saves money. It also makes money.
When I look back on my path to success there are a lot of people whom I can point to and say, “That person helped me.” They were all different in their personalities, and if you put some of them in the same room, they’d probably start a good fight. But the one common thing about all of them was trust. I could trust them, and they could trust me.
We can see that when people believe in each other that they can relax about what they’re doing, focus on what they need to get done and not waste time nagging others to get their tasks done….
….. Trust builds morale.
Another huge benefit of trust is building confidence in others by giving them the opportunity to succeed. Additionally, it builds self-confidence. People become self-assured when you give them more control over their job….
…..Giving people more authority to make their own decisions, like Roger Penske did, can help you when working with teams. By trusting them to be accountable for their actions, you become a much more effective leader for them. You also build their self-confidence, which makes them a better employee….
…Trust is something that is earned through a combination of words and actions. Since you need believable actions to develop trust, it takes a long time to build a relationship on trust…..

Always give full effort.
Some people may interpret full effort as commitment, but it goes beyond that. You are really building trust. In my last race for Dan Gurney in Phoenix in 1978, I knew I was quitting his team and going to work for Roger Penske as soon as the race was over. But I gave 100% during that race for Dan Gurney’s All American Racers’ Team, because that was the team I was on, and I was going to do my best. In fact, I raced against Team Penske’s Tom Sneva that day and beat him. I wasn’t going to pull any favors for Penske, even though I was going there as soon as the race was over. And I sure as hell wasn’t going to do anything less than 100% for Dan Gurney and the All American Racers, because they all worked hard to get there.
One thing that is truly, truly American is giving 100%. That’s what everybody likes, and that’s why so many people pull for the underdog. People love to see effort, and they really love to see effort win. The other absolutely great thing about someone that has a reputation to go full out the whole time is you trust that person to give it a full shot, and for many employers, that is a big deal.

Actions that back up words.
I’ve always believed that the only way I could be successful was to do things- to take action. When you commit to something- do it. If you can’t make it happen, don’t commit to it. Let’s look at two viewpoints of this issue- taking action to earn trust.
First, let’s look at you and your own career. If you want to be really successful, start out by making sure that whatever you commit do and then you do it. Even if you have to stretch a little to make your commitment- get it done. Look at the long-standing relationship I had with Don Shepherd because he made it to the race, through hell and high water. Or the trust the car parts suppliers had in me for my 1959 Pikes Peak Hill Climb- I always paid my bills on time to them. I did what I said I was going to do. The return in long-term relationships built through actions that make your words true is immense.
Now let’s look at this – building believability through actions- from another viewpoint of this topic: You as the business leader. Some leaders just like to say a bunch of words that try to appease everyone, but then can’t make things happen. Other leaders just give the dirty work to other people- they just give orders. Either way, that’s lazy leadership, and in the end, unbelievable leadership.
The only way you can lead successfully is to motivate your people through your actions, not your words. Get involved with what your people do on a day-to-day basis. This is how you build believable trust with your people. It is taking leadership action that not only shows you care, but brings reality to your leadership. When you are involved with your people, you know how to give them tasks that they will do, and do them right. They believe you because you have taken action to be with them, and, you know not to give them assignments they can’t possibly finish.
You also have to willing to take tough actions and make hard decisions as a leader. I had a guy working for me in my shop for eighteen years, and I had to fire him for drinking during work hours. I caught him by accident. I was out running some noon time errands, and happened to see his truck parked in the parking lot of a bar. I went in, and there he was with a beer in his hand. I asked him what on earth he was doing, and he just said that it was no big deal, to have a couple of beers at lunch. Well, I sure as hell didn’t let any pit crew members on my race team work on my car after having a few beers. I wasn’t about to let one of my mechanics work on a customer’s car after a few beers. That was an easy, clear-cut decision for me, and everybody knew it. So, I fired him. I had to. I had to take believable action to earn the trust of the rest of the employees and my customers.

Losing trust: crashing and burning.
Look at all the people in the corporate world today that make it to the top, and then have to lie and cheat to stay at the top. Some of them even lie to get to the top. Why do they do this? There are three causes I know of.
Causes of losing trust:
1. Impatience.
2. Don’t know how to deal with falling.
3. Material desires exceed the passion for the game.

Impatience.
I didn’t make it to the Indianapolis 500 until I was 29 years old. I had already been racing fifteen years by that time, and had been in many hundreds of races. Despite that long apprenticeship in racing, I never really felt I took any short-cuts to get there. In fact, even the first year, 1963, I wasn’t sure I was ready for Indianapolis.
What drives impatience? Why have we become a world driven by instant gratification? What’s wrong with doing things right, instead of getting instant results? People want to see how quickly anything can be done, including rising to the top of a profession. The big sacrifice they make in being impatient is things may not get done right- they’ll skip steps. The bigger sacrifice is they may lie to cut corners. Getting the result becomes so important, that they lie and cheat their way up the ladder.
We’ve seen many people’s careers ruined because they lied on their resume. Why do they do this? Well they swayed off course- they felt the result was more important than the means they took to get there. They justify the means, even if it means cheating and lying. Everybody has to pay their dues to get to the top- nobody gets in for free. A big part of the dues is to be honest about the path and steps you take to get there, which means you have to be patient until you get there. Some people who read this will think, “Bobby, you’re one of the most impatient people I know. How can you talk about patience?” I’m not patient when it comes to taking action. I just know I can’t take short cuts or fake the results. You can be impatient to do things, but not at the expense of doing things right and truthfully.
Some people don’t take short-cuts to the top, and get there without lying or cheating. But then they make a mistake by lying and cheating to stay on top.

Don’t know how to fall from the top.
After I won the USAC National Racing Championship in 1968 and won the Indy 500, my brother Al asked me, “Well, you are the only one on top. The top is the very peak, and there’s only room for one person up there. You are the champion. What are you going to do?”
I replied, “Well, I’m going to try my best to stay there!”
He said, “Yeah, but you probably can’t stay on top.”
I told him, “It’s okay. I see what you’re getting at, but maybe I won’t fall too far. That way I don’t have to kick so many asses to get back up there again. Don’t you worry about that.”
A lot of people get on top, and then they have to hold on for dear life. They cheat to stay there because they’re worried about falling. I knew I was going to fall. Everybody falls. That’s the way life is. I accepted it. What I didn’t do was deny the fact I would fall, and I didn’t let myself get dejected when I fell. I knew I would get back up to the top again, and I did so in 1974, winning the Championship again.
Even in individual races, I often realized I wasn’t going to win. Sometimes I had a car that just wasn’t fast enough to win. We couldn’t set it up any better and I couldn’t get any more out of it. First place just was not going to happen. That didn’t mean we didn’t run the race as hard as we could- effort was never a question with me or the crew. It’s just we weren’t going to get any more than our best effort could give us, and on a given day with a given car that wasn’t going to be first. I accepted that as a fact, but some people just can’t do that. In fact, many corporations lie about performance when it looks like they can’t win, get first place, grow, or whatever measure they’re using to show “success”. Then they start bouncing checks and the financial reports become fuzzy.

Material desires exceed passion for the game.
Remember, it’s OK to fall now and then. You just have to get back up. But that’s a big problem with many people. They need too much material nonsense to keep themselves “happy”. Once you’ve made enough to live a good life, what else do you need? Why do you need more? You’ve got to keep the fires for the game burning. When your material wants drive you harder than your desire to play the game, you’re going to start losing.
The year I retired from racing, 1981, I was making $180,000 under contract plus over a million dollars in winnings that year, driving for Team Penske. As soon as I quit, I had offers for $1,000,000 just for driving, plus my winnings! Over five times what I was earning for Team Penske! But I didn’t go back for the money. I knew better. I didn’t quit because of the money, so why should I go back for the money?
Drivers today have long-term, high dollar contracts. That’s wrong and it’s bad. It’s wrong because they should have to prove themselves before they get rewarded. Yes, auto-racing is a risky sport. Drivers use the excuse that they secure these long-term large contracts “just in case” something bad happens, but they know this is a risky business. That’s the risk they take for the big money they earn…..
…..I know a lot of “successful” businesspeople that made a lot more money than I ever did and they are flat broke today. They let their material desires take over. Then when they had to feed their material appetite again, it was a win-at-all costs proposition, which often involved cheating and lying. And somewhere along the way they forgot about the fun of the game they were playing- they’re desire to do the right thing the right way- and got lost on the path of material self-destruction….

……Trust is built and earned over a period of time. It is created through a series of circumstances and principles upheld in those circumstances that make trust believable.
Trust is a personal aspect of success that you never want lose. Don’t yield to the temptations of material gains, instant gratification, or skipping steps in the process of becoming successful. Creating a legacy of trust builds a reputation of integrity.

AREA: Attributes of Successful Salespeople

Sat, 30 Jan 2010 19:29:00 GMT

NOTE: Following is a letter written from a 33-year straight commission salesman to his daughter as she embarked on her sales career- note the last sentence.

November 25, 1988

Dear Les:

Now that you are firmly entrenched in the sales profession I am submitting the following for you to chew on and digest. I was fortunate enough to work for a man (John A. Sexauer) who was tough but sincere. I worked for him- straight commission- from 1947 to 1979. He had a formula for hiring people- the formula was reduced to an acronym: AREA.

“A” is for Adaptability; using your talent to rectify errors that occur to the customer through no fault of your own- wrong merchandise shipped, poor quality, or a billing error. The ability to cope with the situation personally, without help from your superiors, is adaptability. It is a prime selling fundamental.

“R” is for Responsibility; to yourself, to your company; and to your clientele. “To yourself” is probably the most difficult since it requires self-discipline: Get out of bed, get on the road, and make sales calls without the boss telling you to do so. “To your company” simply means giving them a productive effort for your wages. “To your clientele” responsibility is usually reflected by the results of “to yourself” discipline because it proves that you are reliable. Hence a customer rapport is established that challenges the competition. You can serve a client without being subservient. There is a great distinction between the two: stand ten feet tall but remember you are there to serve and not to surrender.

“E” is for Enthusiasm, for which there is no substitute! Without this element life is an abyss. No salesperson can afford to ignore it. It is the spark that ignites attention faster than any other medium of salesmanship. You cannot expect to sell something unless you are sold on it yourself. Hence the reason for genuine sincerity in your presentation. When you have convinced the client that you are providing him value- then price becomes secondary.

Like a good cook, add ingredients to boost the flavor, such as consideration and integrity. Consideration is necessary when you are about to close the deal and the client suddenly has an emergency that delays the order. You have to be considerate of the circumstances. Integrity can only come with time; time for the client to judge your character for honesty. Integrity is a priceless ingredient for any transaction. Your word is your bond, Les, and never forget it.

“A” is for Ambition which is not only for the money but certainly does not discount it. Ambition seems to be inherent- either you have it or you don’t. It cannot be taught. If it must be taught then it is no longer ambition but simply obedience to the teacher. Salespeople who lack ambition are merely “order takers” because they have no spark.

Hope this helps you out, Les; nothing moves in the entire world until a sale is made. And when the day comes that you think you know it all, shoot yourself.

Love you

Dad

Training ROI

Thu, 18 Feb 2010 17:34:00 GMT

Employee and team development- whether through training or interventions- is a critical element to the adaptation and ultimate success of a business in the ever-changing landscape of the global economy. Measuring the direct effect on human performance based solely on training is virtually impossible. There are a multitude of variables that are always changing inside and outside the business that effect measured outcomes- with or without training. The effect of any training program can be- and should be- measured over time. Even then, the impact training has on productivity can only be measured in general terms relative to some norm.

Some executives may feel that only way they can be sure they are going to get what they pay for is to ask the training provider to guarantee an ROI. This is a bizarre twist of everything we (and any executive) experienced from kindergarten through college. Accountability to learn the course material rests entirely on the student to study course material, pass the tests, pass the class, and earn a degree, no matter how good or bad the professor is or how relevant or irrelevant the course is for the student. Additionally, there is some substantial financial skin in the game on the part of the student.

In the business world, that accountability shifts to the trainer and the training program- and there is no financial skin in the game for any trainee- student. It doesn’t take a lot of intuition to figure out that the college student is significantly more focused and vested in learning than their business trainee counterpart because the college student is accountable for learning and paying for the experience.

Once the accountability for the ROI of training is placed where it needs to be- with the trainees- then businesses will see significantly better ROI’s for their training investment.

The best way to ensure a proper ROI for training is to clearly define the objectives- the problem to fix or the goal to achieve- that will provide a measurable return over time. Then, perform due diligence on the training firm hired to make a confident decision. Training shouldn’t be a cost line item or a department that has to justify its existence- it should be part of the business culture. Making it a part of the culture will always net an ROI.

Executives Who "Get It" Managing Sales

Wed, 15 Jul 2009 18:48:00 GMT

When it comes to understanding the role of sales and how to maximize sales performance, not too many business executives “get it”. Hint: Managing sales is not about dictating control. If your salespeople are totally controllable by you, then what are they like when negotiating on your behalf? Worse yet, if you have total control over them, then do they have to wait for you to tell them to do something before they do it? Two major characteristics of great salespeople are the strength to negotiate value in the face of a buyer’s price pressure and the self-discipline to get things done without adult supervision. Neither of these characteristics are those of someone who is “controllable”. In fact, another inherent characteristic of great salespeople is they are fiercely independent.

But this doesn’t mean they are insubordinate, cocky, or arrogant. It’s just that their independence is built with the passion to solve problems for customers at a profit to the company without sacrificing their deeply driven principals centered on integrity. These salespeople walk away from bad deals for either customer or the company. At the same time they are willing to stand up to management that is not delivering the goods, the promises, or is actually getting in the way of the salesperson’s ability to sell by restricting (controlling) their behavior. Independence also doesn’t mean great salespeople aren’t team players- quite the contrary. They function well with teams. They just happen to be the ones that lead the charge to get things done- like generating new business.

Here is an unedited email from (with permission) from Dick Benbow, Vice-President of Walter’s Wholesale Electric- an executive who clearly “gets it”:

Paul, you mentioned managers "governing" from afar. They have their people filling out sales call sheets, contact reports, expense reports, projections, marketing reports, etc. Nothing but stumbling blocks to success. They do these things because they don't trust the system. They don't trust the people they hire. We are fortunate when our competition goes to market that way. I contend, hire the right person, get accounting people to make out all the reports you want.

Have your salespeople on a commission program that rewards high achievers, SUBSTANTIALLY. You can't be afraid of overpaying them. A sales manager is lost as soon as he feels no one salesperson should make as much or more than he does. I pride myself in claiming I have a number of salespeople that have higher incomes than we V.P.'s of our company. The more they make the more we make.

For the life of me, I don't see how one manages people by not being with the people you are responsible for. How can one manage people when you aren't in the field seeing first hand what they are up against. How many of these managers woke up one morning and found out that one of their high achievers just left the company. Probably wouldn't have happened had he/she had been out there in the trenches with that individual, at least it would not have come a surprise to that manager.

Check out Walter’s Wholesale Electric growth and success story over the last forty years. They are cleaning their competition’s clock, and doing it profitably. An executive of another extremely successful company (even in this tough economy) Russ Lesser, President of Body Glove International, is an accountant by profession who understands the value of the sales function. At a recent lunch he commented, “I don’t need any accountants if I don’t have any salespeople because without any sales we won’t have any money to count! It’s crazy for an accountant to get upset with a salesperson because the salesperson is making more than the accountant.”

Russ continued, “Two stories come to mind about how NOT to treat salespeople. One has to do with a salesman I knew back in the 60’s who sold for Hang Ten. He made $75,000/ year, which back then was not bad. He called me up one day and said he was quitting Hang Ten because they were cutting his territory and cutting his commission. They were punishing his success. So he went to work for an upstart company called OP- Ocean Pacific. Three years later he was making a million dollars per year selling for OP and Hang Ten was bankrupt.”

“Another story was about someone I knew making $180,000/ year on straight commission. Then the company said they were going to do away with the commission and go to a $200,000/ year salary, so he quit. You would think that getting a guaranteed $20,000/ year raise wasn’t so bad, except this guy wanted the incentive- or perhaps fear- to get out of bed every day and sell. Also, even though he made less than the salary, the thought that he was limited in income was a turn-off, even if the salary was high.”

How about another story of another exec who “gets it”? The Los Angeles Business Journal as “CFO of the Year for 2008”, Dennis Eder, CFO of SCAN Heathplan, the fastest growing Medicare Advantage plan in the country. We had Dennis do a presentation to the SCAN sales team about the fundamentals of SCAN’s financial structure, how they bid the Medicare process, and how the monies are distributed. Dennis’ opening remarks to the sales team were- with arms wide open for emphasis- “THANK YOU for feeding my family!” That was not scripted. Sales went up 20% that month. That was the result of his genuinely sincere statement.

What about execs that don’t “get it”? We’ve met a few of those. One president of a $120 million division of a $700 million company had 12 sales managers covering territories spread across the United States. Every month, he would make these managers fly in to a meeting near the company headquarters. We asked him why he did this. He said, “My philosophy is to make them come to me. And the one time we did not have the monthly meeting, they did not make their numbers, so we concluded that the monthly meeting is a necessity.”

We asked him, “Do you have a yearly strategy for these meetings? In other words, does one meeting strategically lead into another with some major milestone objective toward the end of the fiscal year?”

“No, we can’t do that because we don’t know what we need to fix from one meeting to the next.” That didn’t sound too productive. In fact, it is totally reactive- just like the management style.

This was really more of a monthly beating, than a meeting. The first time we presented at one of their monthly meetings, we opened with an interactive question that generated conversation every time for other clients. Except for this one. The silence was absolutely deafening if not alarming. It is difficult to “fix” a problem when the guy paying you is the problem. We suffered through this for two years. The only reason we were kept in the game was his boss- the company president- insisted on our involvement with the division. Sometimes the most influential sales calls come when you are seated next to the big boss for five hours on a cross country flight.

Finally, the division president was fired. Guess what happened? Sales shot up 20% across the board! So, the manage-by-dictating control was hurting sales to the tune of 20%. We have seen the same result in at least five other cases in the last ten years; a manage-by-directive sales tyrant is terminated resulting in an immediate across-the-board net sales productivity improvement of about 20%.

What’s the pattern? Performance-based pay (commission) that rewards- not punishes- success. Business systems that don’t stifle, but support sales activity. An organizational culture that embraces sales not as a necessary evil, but as a competitive edge. A management team that understands that good salespeople are independent and management’s job is to leverage that independence strategically. Fundamentally, in business the executives that win believe that a good defense is a great offense- and offense in business can only come from sales. Unfortunately, these execs and CFO’s are the exception when it comes to their view on sales. But, I’m sure they don’t mind being the exception, because that is why they keep winning.

Forecasts or Honest Information

Tue, 23 Jun 2009 19:30:00 GMT

The predictability of future business through the eyes of the field sales force is critical to effective decision-making on the part of any executive. What is the trend? What is changing? What’s over the horizon? Knowing this can help make the necessary strategic decisions that keep a company in step with the changing marketplace and ahead of the competition. The problem is most organizations utilize an outdated business school approach to getting this information: sales forecasts.

Why is forecasting- in its traditional business sense- the wrong thing to do? Let’s look at how well people who are paid big money to forecast business do. Let’s look at economists. Every December, Business Week solicits the expert predictions of 54 of the top economists in the country. In 2000, their predictions for 2001 were:

 3.1% GDP growth (average of the 54)
 4.3% jobless rate
 Of the 54, the lowest prediction for FY 2000 GDP growth was 1.7%

Here’s what actually happened in 2001 (Note that 9/11 had no appreciable bearing on the 2001 forecast because the forecast is for FY Oct 1 2000- Sep 30 2001):
• GDP grew at less than 1%- a three-fold margin of error as the predicted average of the 54 experts.
• Unemployment hit 5.7%, 33% higher than the gurus predicted.
• To add insult to injury, the closest expert (the lowest of the 54) was off by a whopping 70% (and he was noted as being the best of the best in the article).
Conclusion
• Economists can only predict upswings in the economy, and then only by luck. They may hit the number, but not for the reasons they predicted.
• They can’t predict downturns, which is really the only time they need to get it right.
• Question: If the best minds that are paid to predict the economy can’t get it right, why do we ask our salespeople to predict outcomes?

Why does management need forecasts?
• Resource allocation planning- personnel, financial, materials, capital equipment, production scheduling, etc.
• Forecasting shows if sales activity is in line with the business strategy.
• It gives management and stockholders a feeling (albeit a false one) of assured growth.

Getting forecasts from field sales is more challenging than ever. It’s difficult enough to get quality, timely communications from the field. Forecasts are worse. Why do salespeople hate forecasts?
• They hate doing any reports.
• They get punished (beat up) for doing them.
• Their experience in field sales tells them the future is not predictable- they will hear “no” more than they will hear “yes”. Consequently, they don’t know which ones will hit.
• A naïve management (to the sales process) has hounded them to bring in the orders- make the numbers. This is the birth of sales orders a la Enron smoke and mirrors.

The problem isn’t that forecasting isn’t prudent business practice, nor is it that forecasting is a waste of valuable sales time. The problem is management doesn’t know how to get salespeople to give them what they really need: good honest information- especially the bad news.

Forecast or Threat?
In the early 1980’s, Gould went on a business buying spree. One company they bought in 1981, Gettys, started to suffer greatly during the 1982 recession. Gould then decided to push Gettys’ sales to “make (up) numbers”. They asked the Gettys’ sales engineers to “forecast” 1983 territory numbers, as long as each territory grew by $1 million. That’s not a forecast- it’s a threat. Which is a typical use of sales forecasting. Then Gould started to maneuver more numbers- holding the sales books open past the end of a month, shipping products early to make the monthly numbers, shipping partials but invoicing for the complete order, and so on. Gould eventually disappeared. Enron isn’t the first, nor will they be the last- company to “cook the books”. It usually starts with unrealistic forecasts and the fact that management and Wall Street will not accept reality- which is occasionally in the form of bad news.
The economy expands, then it pulls back. It always has, it always will despite our meager efforts to forecast infinite growth. The sooner management accepts lowered forecasts as a warning of business contraction rather than a confrontation with field sales, the sooner management will start getting some real information. Furthermore, armed with real information, management will be able to make better decisions to mitigate the effect of the downturn.

Specific Sales Are Unpredictable
Any manager who beats up a salesperson for “not getting the order at XYZ company or not making forecast” has never spent a second of their business lives in the field on a sales call- or was that over-achieving egomaniac salesperson promoted to management that should not be in charge of people. On one hand- the manager that just simply doesn’t get sales- they only go to the field for the pre-arranged “feel good” calls. Not much going on there in terms of understanding the reality of sales. On the other hand, the ego-maniac can’t help but to take over every call and bully their salespeople. Again, totally devoid of reality and definitely never getting any real information from salespeople.
Now an exec will say, “But I want to see the trend.” Fine. Get copies of field correspondence and read them: the quotes, proposals, etc. If execs are close enough to field sales, then they will also know the predictability of these events. This brings up another issue about forecasting: probability of closure. How consistent is that over the span of the sales force? The optimists disappoint management because they don’t bring in everything they hope to bring in, and the pessimists are accused of sand-bagging. Furthermore, there is no such thing as getting 70% of an order. Either you get the order, or you don’t.

The Solution: Copies of correspondence; candid communication; Mutual Action Planning.
In addition to copies of correspondence to customers, the other important aspect of getting information from the field is for any manager to be in continuous verbal contact with their field salespeople. Taking notes of pertinent comments made during conversations is the best and most accurate way information flows because it is unconditional and voluntary.
The third element of good information flow is for each sales territory to have a Mutual Action Plan with the home office. This Mutual Action Plan aligns a successful local selling strategy with the overall corporate strategy. It also serves as a focal point for decision-making and territory growth management. Mutual Action Planning is detailed in another article.

Without question it is critical that the executive suite of any business get accurate information from field sales as to what the trends in the marketplace are. The problem is that there are far too many executives that go about this the wrong way by dictating the format, the frequency, and sometimes the goals- which leads to a lot of reporting, but no information flow or false information flow. Forecasting as a means to extract meaningful information from field sales is an approach that has never led to the desired result- nor will it ever. Continuous information flow via candid and unconditional communications built around a Mutual Action Plan will give the executive what they need: a clearer picture of trends and changes in the marketplace.

Harley Davidson Public Relations Ken Schmidt presentation June 1 2009

Wed, 03 Jun 2009 17:59:00 GMT

Ken Schmidt- Public Relations Director of Harley Davidson Motorcycles during their turbulent turn-around in the 80’s- made the keynote presentation to the Manufacturers Agents National Association on June 1, 2009. Here are notes from that presentation:

“Once upon a time, Harley-Davidson had 90% market share in heavy weight bikes. This made Harley lazy and complacent. Then came the competition: better bikes, lower prices. Harley gave them the market.

In 1985, we were in trouble- both from a market-share and financial aspect. We then made another mistake: we got into price wars with the competition and went bankrupt. What we needed to do was give people a reason to buy.

We thought this meant not just price, but quality and something that looked like what the Japanese were bringing into the U.S. In 1986 we copied the Japanese and made great, precision, high-quality, well-manufactured, and low-price bikes. We then went to market the same old way- we went after a cover of at least one or two of the three major motorcycle magazines.
We exceeded our goals: we got ourselves on the covers of all three major motorcycle magazines. To get a bike on the cover of all three major motorcycle magazines had never been done before and has never been done since. We were so elated with this accomplishment that we then spent money we didn’t have on the back page of each magazine for advertising- and still nobody bought!
Harley-Davidson blamed the dealers: “We gave you the best product at a great price!” But the dealers said, “Our customers don’t believe you!” Harley Davidson realized they needed to do something different.
What was different? Well, in the car industry, everyone took a test-drive before they bought a car. But in the motorcycle industry, nobody took a test drive- there was too much liability concern. But Harley decided to do something different. Harley took all of their money out of advertising and put it into two big trucks they hauled around the country to let people test-drive motorcycles.
Harley took this opportunity to ask their customers and prospects, “What do we need to change on this motorcycle to get you to buy it?” The feedback was humbling.
Harley had no formal way of taking and consolidating all the information they received, but after a while, some patterns emerged. One big one was this: Customers wanted a bike that fit them. The saddle, handlebars, the length, and the shape of the bike.
Harley realized that one of their strengths was they knew how to bend and shape metal. So they started making bikes for the different types of riders. Sales went up. That’s when Harley-Davidson made mistake #2: They thought, “They (the customers) are getting it!” (because they were buying). Not true! We had to tell them over and over and over again- we had to keep engaged with them. Human beings support what they helped create.
The next step for Harley was to get both the customers and the Harley-Davidson employees on board with the experience. Engaging customers meant more than just asking for their input: it meant to be a part of the Harley-Davidson community- which included the employees, the dealers, and the customers. We created the HOGs- Harley Owners Groups. Instead of the typical store experience, people were getting a different kind of store experience with Harley. Think of it this way: Someone walks into a store and the store employee says what all store employees say: “Can I help you?” What happens? The customer looks down, looks away, and says, “No, I’m just looking.” But, suppose that customer walks into the store and someone says, “Cool shoes dude! Where did you get them?!” Guess what? Totally different experience. The customer opens up and starts talking- and is way more likely to buy. Why? Because the salesperson showed an interest not in trying to sell something, but in paying attention to the customer individually.

Most motorcycle customers visit their dealer once or twice a year for maintenance. HOGs visit their dealers at least once a month- sometimes once a week. And it’s not for maintenance- it’s a community gathering, a meeting, a social event. They aren’t customers anymore- they’re friends. They do charitable events, barb-e-ques, and interestingly- they buy a lot of Harley-Davidson brand name stuff at the store. They spend more money.
For the employees, to get them onboard with the Harley experience, Harley-Davidson’s executive team realized that their people had to be committed to the Harley experience. That was done through engaging employees rather than directing them. The leaders realized employees would respond the same way their customers did: show interest in them. Rather than directing employees’ every activity, Harley’s leaders asked, “Where do you want to go (with your career)?” Just like asking the customers what will make them buy, we asked the employees what they thought we should do to build better bikes and a better workplace for them. Human beings support what they helped create.
What’s our mission statement? It used to be some long, boring piece of business-school garbage: “We are driven to be the best and have a great workplace, blah, blah, blah”. You know what it is today? Three words: We fulfill dreams.
What is the result of all this? In a world where every product and brand leader is the same, we got people to like us. We don’t think like a commodity. We don’t get dragged down into the price decision. We have gotten people to like us so much that they are willing to tell others about us.
What does that mean in terms of dollars and cents? Check these numbers out: Honda sells 14.7 million motorcycles worldwide per year. Harley-Davidson sells 275,000 worldwide. In 2008, Honda duplicated the top-selling Harley Davidson motorcycle. There are no major discernable differences between the two motorcycles. Honda sells that bike for $8,000, Harley sells it for three times as much- $24,000! Harley outsells the Honda in the U.S. market by a twenty to one margin! And we even outsell that same Honda in Tokyo- where they have a much greater price advantage due to shipping and import duties.
Statistics on reliability and dependability are useless. Demand creation is not statistic driven. A Harley Davidson ad says nothing about quality, reliability, or dependability. It says four words: Dreams; Passion; Freedom; Individuality The relationship our employees and our customers have is not with the product, it’s with the brand.

Where Are the Salespeople?

Thu, 21 May 2009 23:47:00 GMT

Where Are the Salespeople?

The following quote from the Harvard Business Review may have a familiar ring to it:

“More than 35 years ago, the insurance industry embarked on an intensive program to solve the problem of costly, wasteful turnover among it’s agents. ….

After expenditure of millions of dollars and 35 years of research, the turnover in the insurance industry remains (as it was)….What accounts for this expensive inefficiency? Basically this: Companies have simply not known what makes one person sell and another not.”

This quote is from an article titled “What Makes a Good Salesman”, by David Mayer and Herbert M. Greenberg, and was published in the Harvard Business Review in July-August 1964- over forty - five years ago! What’s even more astounding is the beginning of the quote, talking about the insurance industry failing to “fix” sales 35 years before the article was published- 80 years ago. Apparently, the issue has not been resolved.
The sales profession continues to mystify management. What is the benchmark of a “good” salesperson? Where do they come from? How do you integrate the sales function more tightly with the corporate strategy? How should salespeople be incented, and what is fair? How do you get sales to tell you what is going on in the field? How is performance measured and compensated?
But, in today’s world, there is another factor that is cause for concern: the supply of salespeople is declining. There is no sales “feeder system”- nobody is graduating from college with a degree in sales -save a few colleges, but a couple in 2,000 institutions is not going to help fill the pipeline. Adding to the problem at the college curriculum level is students now have more choices of majors, such as accounting, technology, and numerous expanded offerings in business, science, and liberal arts.
In the late 1970’s and early 1980’s, IBM and Xerox (among others) recruited, hired, and trained thousands of college graduates for sales. Their training programs were intensive - and “graduating” from one of these tough programs was an accomplishment well respected in the business world. Those programs no longer exist, eliminating another sales career development pipeline
Since the year 2000, membership of independent sales representative associations has been declining at an annual rate of five to twenty-five percent, with some sales associations disappearing entirely. Sales, as an occupation, is attracting fewer people as a career choice. The Bureau of Labor and Statistics estimates that the percentage of people entering sales will decline from 10.6% of the overall workforce in 2002 to 10.4% in 2012- a net decline of about 2%.
Given the choice of professions for a college graduate to enter, sales is not at the top of the list. Another contributing factor to declining sales professionals is the perceived lack of value of the sales function, which is driving sales compensation downward. Thus career salespeople that have seen their compensation packages get continuously squeezed are discouraging others from pursuing the profession, further eroding the pool of prospective salespeople. The bottom line is there is less and less glamour (payoff) in sales, and it is diminishing the demand to enter the profession- and hence the available supply of salespeople. Given these facts, the real challenge for today’s business executive is that nothing occurs until a sale is made, and that requires a salesperson.
Looking at the quote from the Harvard Business Review- “Companies have simply not known what makes one person sell and another not”- and coupled with the fact that there are fewer people going into the sales profession- a perfect storm of sorts is brewing for the sales profession. There are fewer people going into the profession, fewer resources for developing sales professionals, and still a general lack of understanding who should be in sales and who should not be. And make no mistake about it- improving the quality and quantity of salespeople is an absolute critical need for businesses to grow profitably. The businesses that will succeed for the near and long-term future are the ones that understand this and are willing to dedicate personnel and financial resources to the recruitment and development of professional salespeople that are managed by executives who understand the sales function.

Street Smarts Over Industry Knowledge

Tue, 08 Jun 2010 23:50:00 GMT

Why do we have salespeople that can’t hack it? How do people who don't belong in sales wind up running a multi-million dollar territory for a company? We have discovered the most prevalent hiring mistake was the poor performers were hired for their industry knowledge. Conversely, we have found that the majority of the top tier salespeople in most organizations have experience in at least one other industry or another company department. They are real salespeople- whether selling a product or a new way to be more productive in their department. What they sell is just a detail. Sales ability trumps industry knowledge more often than not in sales performance. Much more often than not.

Why do businesses hire people with industry knowledge? The theory is that industry knowledge- which includes knowing the industry language, players, and trends- can be transformed into instant sales without any appreciable training because they already “know” the business.

In order to get away from industry experience hiring bias, you have to approach the hiring process different than your industry as a culture does. You have to look for real sales talent. You have to look for people who know how to sell before they walk in your door. With no standards or formal development programs for salespeople, you have to think differently about finding real sales talent. A stellar book written about effective hiring practice was not written specifically for that purpose. Nonetheless, Michael Lewis’ Moneyball (2003 by WW Norton) is a gem when it comes to thinking about who to hire. Moneyball shows how Major League Baseball’s Oakland Athletics do a better job drafting quality players than most other teams in baseball- and they do it with one of the lowest payroll budgets in baseball. They make the playoffs more often than teams with much, much larger payrolls. And the point here is NOT to reduce pay to get good salespeople. It’s how to define, evaluate, select, and develop real talent versus perceived potential talent. The basis of the Athletics’ success is the non-traditional player selection philosophy of their General Manager, Billy Beane. Following are some excerpts from the book with narrative comments:

First, Billy tears down the conventional industry-skills thinking of the traditional-thinking baseball scouts.

…On the white board closest to Billy, the Big Board, there is space for 60 players. One by one he takes the names of the players the old scouts have fallen in love with (the ones with the “tools”) and picks apart their flaws. The first time he does this an old scout protests. “The guy’s an athlete, Billy,” the old scout says. “There’s a lot of upside there.”

“He can’t hit,” says Billy.

“He’s not that bad a hitter,” says the old scout.

“Yeah, what happens when he doesn’t know a fastball is coming?” asks Billy.

“He’s a tools guy,” says the old scout, defensively. The old scouts aren’t built to argue; they’re built to agree. They’re a part of the tightly woven class of former baseball players (industry people).

In every industry we hear the same things from all the old scouts who have been in the business for a long time. It doesn’t matter what industry- banking, healthcare, electrical distribution, systems integration, industrial automation, print advertising, or food service- the “old scouts” of each industry think the same. Take, for example, industrial automation. Working with sales managers in industrial automation, we’ll ask, “What are your hiring criteria for salespeople?”

They respond, “First, they must be technically competent- they must be engineers.” (The guy’s an athlete, Billy.)

Then we ask, “What’s your biggest challenge with your sales team?”

“They don’t know how to close.” (They can’t hit.)

Then we ask, “Are you going to train your salespeople this year?”

They respond, “Yes. We’re going to give them product training (make them a better athlete). “

Us: “Are you going to do any sales skills training?”

Response: “No, we don’t have time or the budget for that.”

So, at the end of the year, the salespeople will be even more knowledgeable about the products they already know (better athletically), but still haven’t learned how to dig up, engage, and close a deal (hit). It’s so ironic, because they aren’t paid to engineer, they’re paid to hit (get orders).

…..”My only question,” says Billy, “is, if he’s that good a hitter, why doesn’t he hit better?”

“The swing my need some work. You have to reinvent him. But he can hit.”

“Pro baseball’s not real good at reinventing guys,” says Billy…..

By the time a corporation hires a salesperson, that person has gone through the most influential era of their life already and their habits are formed- good and bad. They either have a passion for sales already or they don’t. If they have a passion for sales, they get up and get out every day without adult supervision, they dig up new opportunities, find ways around obstacles, work on self-improvement, and pull themselves back up off the deck after getting flattened. These people are hitters- they don’t get mad when they strike out- they wonder how it happened and fix it the next time.

As far as hiring the Industry Specialists (the guys with “the tools”) is concerned, consider this: maybe they’ve been in the industry so long because they actually couldn’t sell in any other industry. In other words, they aren’t salespeople. Real salespeople have sales instincts, street smarts, and are the consummate road warriors. What industry they come from has nothing to do with their sales ability.

The Ten Laws of Successful Sales Management

Wed, 10 Mar 2010 22:38:00 GMT

The sales executive plays a unique and critical role in any organization. The uniqueness stems from three areas. One is directing salespeople, who are independent by nature. Second, sales executives typically don’t have a title with a “C” in front of it- thus keeping them at arm’s length from the executive committee. Finally, there is no pre-requisite educational degree or certification process for someone to earn the sales executive title.

This poses a challenge to the executive whose department is the only department that is chartered to grow via profitable revenues. The sales department is the only department whose performance directly affects how much more- or less- money is available to all other departments on a annual basis. It is up to sales to deliver the goods that make or break a business going forward.

Bench-marking some of the best practices of the 2,500 plus sales executives we have worked with in the past ten years (not to mention the ones we worked for an accumulated forty years prior to that), some patterns develop when observing the executives that stand out as excellent in terms of their performance. This stellar performance is not only shown in out-performing their industry counter-parts, but with their low turnover rates. They all have clear vision, a deeply principled management style, and inherent strategic thinking. These best practices have been summarized in the Ten Laws listed below.

The First Law: Hire Right

While many sales execs inherit their charges, hiring right is without question the core with which to build a successful sales organization. Great sales managers know what to look for in a salesperson and know how to vet that during the hiring process. While there is a more detailed article regarding this topic (Hire Right), the right behaviors in a salesperson are: integrity, ambition, accountability, adaptability, and self-discipline.

Many managers fail to get this critical law right, and it’s no coincidence this is the first law. Without getting this one right, everything else fails. The problem many sales execs have with the hiring process is they think about filling the position instead of getting the right fit. The former approach treats hiring like a task, while the latter uses hiring as a part of their strategy. Hiring right requires active patience on the part of the executive- actively pursuing the right fit, but being patient until they find the right fit.

For sales executives who inherit their team- hopefully they have some salespeople who have the right behaviors and can then add new people to inject desired behavioral elements and create the right cultural shift within the department.

The Second Law: Train Well

Training seems to be an after- thought, a cost-center, or non-existent in many organizations. However, it should be part of every sales culture. The challenge with most training initiatives is they are often implemented with the belief that a one-time training event in a Power Point format will work. Not true- but the failure to recognize you can’t “fix” sales with a one-time event is a failure on the part of management to understand what it really takes to change behavior, which is a sustained training effort with observation and feedback over time.

Furthermore, typical training programs are more often on product or market knowledge, not critical sales skills and behavior.

When training is part of the culture of sales organizations, the best sales organizations make sure they devote at least half of their training to sales skills best practices sharing and sales skills development.
Without any type of training, sales skill development evolves- or regresses- by rote, creating an unwieldy management challenge.

The Third Law: Stay Strategically Three Steps Ahead of the Sales Force

Salespeople by nature are in the reactive world of prospects and customers. Market shifts, customer objections, and competition can trap salespeople in the tyranny of the momentary crisis. The best sales management teams can triage the current crisis and re-focus the sales team on the forward objectives.

Effective sales managers can do this because they know the next set of objectives and don’t lose sight of them. This does not mean they ignore the current situation at hand. It means they don’t let the current crisis paralyze their forward movement. They know how to advance their team under fire. Once the current crisis is resolved, triaged, or mitigated, they re-focus the sales team (or individual) forward to the next strategic objective.

The Fourth Law: Communicate Effectively

Strategy communicated by osmosis isn’t good leadership- but it is an unfortunate operational style for many businesses. Without exception, the better sales executives know how to tie together their writing, comments, and actions to both individuals and the sales team into a cohesive, consistent strategic message.

The best sales executives take that one step further: they have an acute awareness of new information by comprehending what they read, understanding what they hear (listening), and seeing what is really going on in the field (observing). They take this new information, tie it back to their strategy, make any necessary adjustments, and then feed it back to their people.

The last piece- feedback- is what clearly separates excellent sales executives from the rest. The excellent sales executives don’t manage passive- aggressively. They don’t hide behind email and voicemail. they don't ask for input and do nothing about it. They respond with a commitment going forward, providing clear guidance to their people. And when salespeople offer information from the field, the great sales executives act on it and respond, resulting in continuous information flow from the field. They don’t have to ask for information- it just keeps coming in because they do something with it- they reward the right behavior.

The Fifth Law: Get Engaged- Mutual Action Planning

Mutual Action Planning as a means to grow a market is a great sales executive tool. As the name implies, there is mutual skin in the game from the field salesperson and the home office to make commitments on behalf of territory growth and then to be held accountable in achieving those commitments. This is a departure from management-by-directive through coerced plans (forecasts or “budgets”) that become whipping posts for the next quarter or year.

We’ve noticed that great sales executives tailor Mutual Action Planning to the specific market and salesperson serving that market, and that Mutual Action Planning is not an annual event, or management-by-directive. It is a pre-thought strategy to achieved agreed-upon goals that require commitments by both the salesperson and management to take actions to achieve the objectives. It is a teamwork proposition to achieve a common goal: growth.

The Sixth Law: The Numbers DO Lie- Read Between the Lines

“Numbers don’t lie.” “It’s a numbers game”. Both of these comments are false regarding effective sales management. Taking them one at a time: “Numbers don’t lie.” Numbers lie and they lie quite often when someone wants to use numbers to hold sway in an argument, fudge the data to be better or worse than it actually is, or pump up the books to look better for the boss. Finally- numbers only indicate a momentary accumulation of data, they don’t indicate a trend and seldom paint the real picture of what is going on.

Great sales executives compare numbers to what they subjectively observe is going on in the field. This gives them a “read” on whether or not the numbers are in line with what they observe. If there is a difference, then the executive can investigate whether the numbers are hiding the behavior or the behavior is hiding the numbers. When an effective sales executive sees the numbers come in, there are no surprises. If there are surprises, then they really have a cause to investigate further to see what is really going on. But these surprises are anomalies for the excellent sales exec.

The other quote- “It’s a numbers game”- is equally false. This is based on the false premise that there is value in gluttony. Getting revenue numbers at the expense of profits is not good. Getting deals at the expense of customer relationships is not good. Throwing stuff at the wall in the hope something sticks just makes the wall dirty. Sustainable, profitable growth has nothing to do with engaging in arbitrary business.

The Seventh Law: Discover Each Salesperson’s Talent and Strategically Turn It Loose

What is each person’s talent? Great sales executives have very acute vision when it comes to understanding the talent their people possess. They look for the hidden talent and make sure this talent is exploited to the maximum effectiveness strategically both for the company and the individual.

What does the salesperson do well? Dig up leads? Develop local brand name recognition through effective marketing and networking? Do they rise to the occasion when objections are thrown their way, or competitive challenges, or when the opportunity is seemingly lost? Are they tenacious, persistent, or actively patient with follow-up and follow-through? Do they move laterally in an organization once they are inside the door?

Engaged sales executives are constantly looking for the talent each person has to maximize sales productivity. Then, they work with each salesperson to utilize that talent strategically to the mutual advantage of the salesperson and the corporate strategy.

The Eighth Law: Firm but Fair: Enforce Accountability Reward Excellence.

What applies to the bottom applies to the top. Top sales executives have the nerve to fire the top performer when the top performer crosses the line of insubordination, ethics, or integrity. No sales manager can be effective if they turn the other way when a top performer crosses the line whereas anyone else would be reprimanded or terminated.

Rewarding excellence means understanding what excellence is- and it isn’t just the numbers. It’s effort in the face of insurmountable odds. It’s doing the little things that matter much for the customer and the business reputation. Knowing this, seeing this, and rewarding these things are what excellent sales executives do.

The Ninth Law: Cherish Complaints

This is an interesting subject, because most managers are not too keen on the constant complaints they get from the usual suspects in field sales. The better managers know that there are complainers in every sales force and accept that as a fact of managing sales. The best sales managers not only don’t let the complaining bother them, they are able to ignore the tone (emotion) of the complaint to understand the core message of what is really being said.

Take the salesperson who leaves eight panic voicemails with eight different people to help solve a customer service problem. Many sales managers will look at the issue and think, “What is this idiot salesperson doing wasting eight people’s time?!”

The excellent sales executive will think, “I have to find out if the problem is that we don’t have a trusted, established go-to person for the field salesperson, if the field salesperson isn’t aware of how to handle this with the go-to person, or a combination of the two. Then, we have to get it fixed either by process or training.” The effective executive looks at the problem, not the person.

As one excellent sales manager commented to us, “When your chronic complainer stops complaining, they’ve quit. You not only have lost a salesperson, you have lost a field information resource.”

The Tenth Law: Get Out of the Way

Some sales executives think they have to always be posturing for power to “control” their sales force. Whether it be taking over a sales call, taking over every meeting, or taking over the dinner conversation.

The narrow minded, manage-by-directive control freak executive will want to constantly take charge and impose their small view of the way the sales world should be. Excellent sales executives look at each engagement with their team as a learning experience for the executive, not the salesperson.

What is the payoff of an effective sales executive/ manager? What do they contribute to the “bottom line”? The best measure we have for this is when a bad manager is removed. We have observed five companies who had managers that were tyrants, managed by directive, or were passive aggressive- all bad traits for sales management. When the bad manager was finally removed, overall sales jumped 20-30 % in each case. The conclusion is that if a bad manager affects the numbers negatively this way, then a good manager should be able to produce numbers equally positive. The numbers people will conclude that while a good sales exec has a net performance advantage of 20-30% over a middle-performing exec, they enjoy a performance advantage of 40-60% over a bad sales exec.

Regardless of how we play with the numbers, fundamentally, a sales executive is doing a great job when the sales team does the right things when nobody is watching.

What are salespeople worth?

Thu, 16 Apr 2009 05:34:00 GMT

Checking the articles that are downloaded monthly from this website, the consistent winner is the article titled “Sales Compensation Systems That Work”. It’s safe to say that sales compensation is a hot topic. The problem is most people downloading this article will be disappointed because most executives and business owners are constantly seeking that “silver bullet” compensation package that drives successful results. There is no silver bullet in “Sales Compensation Systems That Work”. Rather, there is a frank discussion on creating a compensation system that works for the sales personalities you hire, the market base you are chasing, and the systems in place that measure and compensate sales performance.

But there’s a larger challenge to the compensation issue. It’s the fact that executives have become more and more distant from the sales function. The downside to this is the executive has no idea of how to value their salespeople. Asking for only “bottom line results”, and paying for bottom line results, executives take much for granted when it comes to selling. For example:

How hard it is today to get in the door of any place- with the tech barriers of voicemail and email. Ask yourself this question: How easy do you make it for salespeople to call on your business?
After finally getting in the door, it takes many, many “no’s” before anyone says “yes”.
How much time- and panache- it takes to smooth the customer over factory mistakes- essentially reselling what was already sold.
Keeping competition out of existing accounts. It’s a myth that there is no work required to keep an existing account. The fact that your salesperson wrested the account away from a competitor to begin with proves the customer is willing to change. What’s to prevent them from changing again?
Fixing damaged customer relationships due to late deliveries. Essentially, holding the deal together at least until checks start coming in.
Losing orders because of unrealistic pricing policies. People at the home office seem to know how to sell value better than a salesperson, but when they come out to the field on a joint call with the salesperson, they themselves cave in to pricing pressures from the customer.
Losing orders because of a general lack of factory responsiveness or operating urgency.
Selling products that don’t reflect customer closeness. Outdated features, or not incorporating features that the competition offers.
Assisting in collecting monies due.
Providing marketing information, including market trends, competitive analysis, and over-the-horizon trends. Pursuing new market opportunities.
Training customers.
Training channel partners.
Participating in trade shows and local seminars.
Filling out non-profitable paperwork such as expenses for the IRS.

Not one of these functions adds as a direct measure to the bottom line. Not one. But, is there value in these functions? Absolutely. The challenge is how to measure and compensate accordingly. Should we bother measuring? Think about this: You go out with some friends to a fine restaurant. Your spouse complains that the meal was not up to par, or whatever. The waiter immediately tears up the check- the meal is on the house. In a business, the bean counters can immediately calculate the amount of money “lost” due to that gesture. But how do you measure the return of the goodwill earned? You can’t. You just know it’s the right thing to do. Some things that are the right thing to do can’t -and shouldn’t- be measured.