On Building A Sales Organization – 4 August 26, 2013Posted by David Dirks in Sales Compensation, Sales Management, Sales Metrics, Sales Strategy/Tactics, Sales Tactics.
Tags: David Dirks, dirks on strategy, sales, sales coaching, sales compensation, sales organizations, sales support, Sales Tactics, sales training
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Once you figure out the kinds of sales team you need and how to compensation them to higher performance, you’ll need to ensure you arm them with the resources they’ll need to succeed.
First is sales collateral – those print and digital pieces that can help the sales process along. That said, I’ve never seen or heard of any sales collateral that sells all by itself. Create sales collateral that support the sales process. The principle of “less is more” applies here. And makes sure that your sales collateral looks professional and not like it was put together on the cheap.
Then there’s sales training. This isn’t the place for determining what kinds of sales training your burgeoning team of one to more sales people. What I can tell you is that the right balance of sales training and coaching on a regular & consistent basis is worth the investment. Most small businesses provide little to none sales training except perhaps for some training at the beginning of their employment.
Sales training is like physical exercise. It should be challenging and slow build sales “muscle” – those skills that become part of their sales behaviors after a period of training and reinforcement.
Sales coaching is another support mechanism that’s necessary for a bare-bones but effective sales organization. The challenge is that most small business owners don’t often have the sales background that would enable them to provide sales coaching. What to do? If you don’t have a sales management background here are three key points to cover in each of your individual sales coaching sessions:
- How close are they to meeting their current sales goals? If not close, why and what can be done to improve performance? If they are on track, what are they doing right?
- What are prospects & customers saying about our products and services? This is a good time to take the “pulse” on what the street is doing or saying about the kinds of products and/or services your provide.
- Set goals for the next session. Success is incremental and so is the progress needed to get there.
Sales professional need regular & consistent support in the field. Make sure you are able to provide it before you commit to building a sales force.
Landing Big Sales with Tom Searcy: Podcast November 5, 2009Posted by David Dirks in Dirks On Strategy: Episodes, Sales Metrics, Sales Strategy/Tactics, Sales Tactics.
Tags: better sales results, big sales, David Dirks, dirks on strategy, large sales, sales management, sales strategies, Sales Tactics, Tom Searcy
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Listen to this podcast of a previous show on the Dirks On Strategy Radio show.
Tom Searcy, author or “RFPs Suck!” and co-author of “Whale Hunting,” is a national speaker, trusted authority on large account sales and founder of Hunt Big Sales, a fast growth sales consultancy and thought leadership organization. Searcy’s primary expertise is working directly with companies and sales teams throughout their big sales “hunts,” helping them to compete and win disproportionately large sales in highly competitive markets. His philosophy and process have resulted in over $3 billion in new sales for his company and its clients.
Before entering the national stage, Searcy headed four corporations, each of which he was able to take from annual revenues of less than $15 million to over $100 million–all before the age of 40. Since then, Searcy has helped more than 100 companies grow exponentially with his proven process for fast growth and company-wide transformation.
In his newest book RFPs Suck!, Searcy shares his rich understanding of the RFP process with companies across the board to help them conquer the RFP system once and for all to win corporate and government contracts.
Searcy’s first book with co-author Barbara Weaver Smith, “Whale Hunting: How to Land Big Deals and Transform Your Company,” was published by Wiley in 2008.
Contact him at: http://www.huntbigsales.com
Sales metrics that Work -3 January 7, 2008Posted by David Dirks in Increasing Your Profitability, Sales Metrics, Solving Business Problems.
Tags: business metrics, customer sales, profitability, Sales Metrics
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Business metrics are designed to do two things: to help you ask questions and then point you in the direction for the answers. By themselves, business metrics do nothing more than monitor your business performance in a specific area of your business. Like the computerized dashboards found in most cars today, your business metrics can help you to identify both strengths and weaknesses in your business. When your oil indicator light comes on, it just points to a potential problem; it doesn’t do anything to fix the problem.
Whether you have a retail, B2B, or service-based business of any size, business metrics are your friend.
In previous blog posts, (see under “Sales Metrics), we discussed sales metrics related to your square-footage and your employees. Now let’s look at your customer.
What is your average sale per customer? This is a basic sales metric that can tell quite a story if you keep track of it over time. Seasonal fluctuations are easy to pick out when you look at this sales metric on a monthly basis. Over time, average sales per customer can help you determine:
-Is my share of their wallet getting larger or smaller? If your average sale per customer year-over-year goes from $550 to $375, you’re already in deep. Why is your average sale per customer on a slide? What can you do to reverse the trend? If your average sale per customer is going up, then you need to understand exactly why it’s going up. Is it because of specific sales or marketing activities you are undertaking?
You’d be surprised at the number of businesses that have a few successful years and then plummet out of business. Chief reason: they were too lazy to really understand the dynamics of their own success. When those dynamics no longer had any positive affect, they had no clue what to do to stem the losses. They were ‘too busy’ to spend time looking at business metrics.
-What can I do to reduce seasonal fluctuations in average sales per customer? Years ago, one local ski shop in the Hudson Valley decided that the seasonal fluctuation in their ski business could be offset by expanding their business to sell patio furniture in the off season. It turned out to be a great counterattack against their traditional business.
What is your net profit per customer? The best way I think you can look at this metric is on a customer-by-customer basis. If you have good financial controls, you should be able to determine how much profit each customer generates (monthly/quarterly/annually) based on the goods or services they have purchased from you. If you can’t, then you’d better find a good accounting firm before even considering this metric.
-Why are some customers more profitable than others? Is it because of the mix of goods or services they buy? Is your pricing varying from customer to customer? Are the repeat business discounts you’re providing too deep? Is your pricing built on solid financials or some educated guesses? What can you do to encourage customers to purchase better-margined goods or services?
Good business metrics can help you drive your business results by identifying areas of strength and weakness. The key is to understand the ‘who, what, when, where, and how’ of each metric so that you can work towards creating better performance in the areas that count, like overall profitability. The worst thing you can do is to ignore them.
Contacting Key Sales Accounts -4 January 1, 2008Posted by David Dirks in Keeping Your Customers, Managing Sales Accounts, Sales Metrics.
Tags: account management, sales contact, Sales Metrics
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“I haven’t seen or heard from my account executive in over a month”
“I’m not sure who handles my account there”
“The other company seems very interested in helping us”
And a few you never want to find yourself saying:
“I haven’t heard from them in a while”
“Oh, that account…it’s dead”
“When I have time, I’ll give them a call”
It never ceases to amaze (and disappoint) me how often businesses fail to maintain even an adequate level of contact with sales accounts vital to their business. Some wait until the phone rings. For others, it might only be an infrequent level of contact. Either way, it’s more hit or miss, than purposeful contact management.
The Big Dogz have made a science out of superior contact management. They don’t leave anything to chance and just wing it. The good news for you is that most businesses fall on their face when it comes to maintaining the right level of contact with a customer.
That should spell o-p-p-o-r-t-u-n-i-t-y to you.
How often should you follow up on any sales account you have? Many books have been written on this subject alone. In my opinion, there are two key considerations:
1. How frequently does the customer want to be contacted? Ask your customer directly. I’ve always made it a habit to ask that question and in almost all instances, the customer is very clear about how often they want me to contact them. If they want you to touch base with them once a month, then you’d better be sure and do it. Don’t ask this question if you don’t plan on following the answer.
2. What is the value of this account and how does it perform? If you’re a small business owner, you can’t be everywhere. You can’t visit all your customers with exactly the same frequency. So, you need to prioritize your customers in a way that allows you to maintain a level of contact that fits those customers needs.
There is no ‘formula’ for evaluating the performance of an account. But there are some things to think about.
First, you need to determine how you are going to measure ‘account performance’ in the first place. Account performance is defined as how a particular sales account provides inputs that meet your set business goals. Inputs are those things that contribute to the measurable success of your business. For example, some common inputs are sales volume, profitability, longevity, frequency of sales, and new business referrals. Let’s break these inputs down a little further.
Every customer that buys your products or services contributes to your sales goals. Some customers contribute more than others. What percentage of your business is from this sales account? How do they stack up against your other customers? However, sales volume alone is not a good way to prioritize customers. Which leads me to the next input.
Everybody loves large accounts. Big accounts naturally seem to demand more of your time. But are those large accounts profitable? It’s entirely possible (and often happens) that a large account provides great sales but contributes poorly to your profitability, or in the worse case, makes you lose money. I do NOT advocate dropping an account just because it’s marginally profitable. The right thing to do would be to figure out why it’s marginally profitable and fix it. I am saying that you need to understand what level of profitability (or loss) that account brings to the table.
Longevity is an interesting input. Are they a long time customer? What value do you place on a customer who stays with you rather than jump to the next competitor who offers to save them 5cents more? Or what about the new account that is buying a lot of product or services? You’re always going to have a range of customers with some new, some old. My point here is that longevity does count for something.
Frequency of sale is a measurement of how often they buy your goods or services. Once per year? Every other month? Every day? When you look at frequency of sale, you have to look at sales volume at the same time. Your customer may order only once per year but it might be the biggest order you get all year long. Keep frequency of sale in perspective with sales volume contribution.
New business referrals are another key metric. How many new customers have been referred directly from this customer? If you don’t expect your customers to refer new customers to you, you’d better think again. If your business is exceeding the expectations of your customers, you have every right to expect that they can and will help you find more customers. So, you might have a customer who doesn’t contribute as much to your sales volume but they refer a lot of business to you. They are worth their weight in gold. Even if they are unprofitable.
How much contact time should you spend on a customer? The answer is not easy as you can see. However, by asking the customer what frequency of contact they want and understanding their performance contribution to your business, you’ll be in a better position to prioritize them.
More on Sales Metrics July 17, 2007Posted by David Dirks in Sales Metrics.
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I’m pondering sales metrics again. Whenever we talk about sales metrics in this blog, let’s get one thing straight now: sales metrics are designed to get you to ask more questions about what they tell you and why.
Sales metrics by themselves cannot provide “the answer” to a downward or unfavorable trend. Likewise, positive sales metric trends make you feel good but what we need to understand is this: what is creating this positive sales metric trend?
Sales metrics are designed to help you peel back to ‘layers of the onion’, so you can be sure you understand the key drivers for a positive or negative trend. The Big Dogz are excellent at getting to the root causes of sales metric trends. They isolate key sales and profitability drivers AND make sure to keep the good ones and eliminate the bad ones FAST.
Here’s another one worth taking a hard look at: X by employee. The ‘X’ factors I would look at are: sales and expenses. Let’s look at ‘sales by employee’ first (if you have no employees other than yourself and/or family, then count each person that is at least 50% active in the business…you are the employees, right?).
This is simple enough to calculate. Take total sales by month, quarter, and/or year and divide by the average number of employees you have.
$500,000 2006 Sales divided by 6 employees = $83,333 per employee.
Doesn’t mean much unless you compare it to previous timeframes. So let’s break it down with another example.
1st quarter 2006 sales per employee: $30,000.
1st quarter 2005 sales per employee: $45,000.
Questions to ask about example #2:
• What are the reasons that my sales per employee are down in the year-over-year comparison?
• Did I hire more people in the 1st quarter of 2006? Why?
• Did I expand hiring too fast?
• What key drivers do I control that will help to keep sales per employee growing?
It’s the same thing with expenses per employee. Add ALL of your business expenses for one quarter and divide that amount by the average number of employees you had in that quarter. Now compare it to month-over-month (same period).
• Are expenses up, down, or flat?
• If they are increasing, is there a commensurate increase in revenues (or better)?
• What expense items increased or decreased more than 10% in the same period comparison?
• If they are decreasing, how does that compare to your sales per employee during the same period or month-over-month?
• If revenues are increasing and expenses are decreasing…why is that?
And so on…you get the point. Those questions beget more questions until you come to the point of getting grounded on what the key drivers are that are positively or negatively affecting your business.
Understanding the ‘what, when, why, and how’ of whatever my sales metrics are telling/showing me is critical. Remember, sales metrics serve one purpose: to keep you focused on asking more questions until you get to the core of 1) identifying what is working or not working and WHY, and 2) encouraging what works and quickly eliminating what isn’t.
Sales Metrics that Work June 1, 2007Posted by David Dirks in Sales Metrics.
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While the Big Dogz sometimes miss the mark on getting to know their customers better, there is one area they generally excel in. Sales metrics, whether in retail or services-based businesses, are critical indicators for any small business. You need ways to help you shape the course of your sales, marketing, product/service selection, packaging, etc. Developing and incorporating sales metrics can go a long way to helping you grow a profitable business.
Here’s on simple metric (especially for retail): sales per square foot vs. cost per square foot. This simple metric is a broad indicator of the general health of your business. It’s simple to calculate. Take your total sales for say, a month, and total it up, then divide by the number of square feet dedicated to sales. Don’t include space such as warehouse, office, etc. Include only space where sales take place. Then calculate your total expenses (everything) for that same month and divide by the number of square feet of selling space (again, don’t include non-sales space).
Your calculation might look like this:
$10,000 (total sales for month) divided by 1200 square feet = $8.33 sales per square foot.
Now let’s look at expenses.
$6750 (total expenses for month) divided by 1200 square feet = $5.62 per square foot of selling space.
So what does having $8.33 sales per square foot versus $5.62 in expenses per square foot tell you? Again, as a very broad sales metric, it’s the size of the gap between the two that starts the process rolling. This metric is designed to get you to ask yourself more questions about your business than provide any immediate answers:
Is the gap between sales per square foot and expenses per square foot enough to help me to reach my financial goals (i.e. what I need to make a living and the whole effort worth while)?
What can I do to increase the gap between sales and expenses?
How does my product selection and layout impact my ability to increase sales per square foot?
Does this indicator fluctuate much month-over-month? Why?
What are my best sales per square foot months? Why?
What would happen if I increased sales space and decreased office support space? Would the increase in sales space justify the effort?
What expenses can I reduce to increase the gap between sales per square foot and expenses per square foot?
How does my marketing spend (or the lack of) impact my sales per square foot?
Sales metrics, like the one we use here, are designed to force you to question everything, including your pet brainstorms that you’re emotionally attached to. This way, you’re always challenging yourself in a way that truly looks to improve business performance and profitability. Leave the ego at home.
In the next blog, we’ll take a look at another key sales metric: Sales/revenues per employee (including you).