When competitors pile high and sell cheap?

Sometimes consumers will put up with a lot to secure a good price. Just look at Ryanair, which is almost as famous for its tough no-frills approach to customer service as for its cheap airfares. As a business model it’s one that works: for much of 2009 and 2010 its market capitalization exceeded that of Lufthansa, despite the German airline’s revenues being more than seven times higher.

Other sectors have seen a similar rise in “good enough” businesses, from low-cost retailers such as Aldi and Lidl to “fashion” retailers like H&M and Zara. These companies do not offer a premium service – for example, Aldi offers shoppers little choice other than its own-brand products, while the fashions on sale at H&M are not generally made of high-end fabrics – but consumers do not mind. Who needs choice when the off-brand beans are cheap and tasty, and the checkout process fast? Who needs top-quality tailoring on a new shirt that will only be worn for one season?

Given the right market conditions, low-cost competitors can rise and challenge industry leaders very quickly. Vizio is a good example: in 2004 it was a small supplier of low-cost big-screen LCD televisions in the US, with sales in that year of $20 million. Over the next few years it exploited the emergence of new channels for its products at discount retailers such as Costco and Walmart; by 2007 it was the third-biggest manufacturer of large-screen LCD televisions in the US, and by 2009 it was the market leader, with a market share of almost 22 percent – just ahead of Samsung, but well ahead of Sony.

How, then, should premium companies facing competition from low-cost rivals react? The first step is to understand the three types of core value propositions (1) Price value. This is focused on providing “good enough” solutions and offering these standard products and services at an attractive price. This is the core value proposition of low-cost competitors such as Aldi, Ryanair and ING DIRECT Bank (2) Performance value. Companies that emphasize this offer their customers a combination of superior functionality, innovative features, an exceptional user experience, excellent quality and style, and fashion leadership. Examples include Apple and Bloomberg (3) Relational value. This tends to be particularly important to customers who have complex, diverse needs and see value in being able to buy an integrated solution from one supplier. Companies will try to provide customized offerings – if that is what the customer wants. Examples include GE Medical Systems, Cisco, and IBM Global Services.

The first option is to directly challenge low-cost competitors by moving into the lower tiers of the market and offering a “good enough” product or service that is competitive on price. Advantages to this approach including meeting a real market need, gaining additional economies of scale, creating sell-up opportunities, and helping to control low-end competition. However, while this approach seems quite simple in principle, it is difficult to implement successfully. Developing the core product or service is often the easy part – the real challenges are finding effective routes to market, pricing, manufacturing, and organizational structures. Other very real risks include the possibility that you will cannibalize your own higher margin business, damage your brand, and lose focus on your core business.
Another possibility is distancing your business from low-cost competitors by increasing performance value through superior quality, performance, and style. Companies as diverse as Intel, Research in Motion and Gillette have done this successfully for a period of time. However, in many cases it is increasingly difficult to get a good return on investment this from this strategy, particularly as the product category starts to mature. It can cost a lot to make what are, from the customer’s perspective, only marginal improvements, while useful improvements are often quickly matched by competitors. To increase performance value in ways that customers will be willing to pay for requires a deep understanding of their needs. The days when companies could simply try to “out-spec” a competitor and hope that the customer found something useful are long gone; R&D investments have to be much more focused if a company is to get a good return on these investments. In addition, more and more customers, particularly in B2B settings, are looking for proof that improved performance value will lead to improved financial results.

The third option, used by companies as diverse as P&G, Tesco, and Cisco, is to increase relational value. For example, Orica Mining Services – originally ICI Explosives – built more intimate relationships with many of its customers by moving from selling explosives to providing blasting services. It recognized that what mines and quarries wanted was rock on the ground that would meet the customer’s size specifications and facilitate further processing. To meet this need, Orica would take over the customer’s blasting activities and charge them for the rock on the quarry or mine floor that met the size specifications. As Orica developed more sophisticated models for blasting, it was able to deliver more and more of the rock in the specified size range, thus reducing waste and the need for additional processing of rocks that were too large. This created value for both the customer and Orica, and substantial barriers to entry for low cost competitors. But the journey to improved relational value is often long and difficult. Companies who take it have usually begun with a performance value proposition for their customers. In many cases, their emphasis has been on providing the best-performing, highest-quality, most reliable products. This is very different to focusing more on delivering truly integrated solutions, which requires deep and intimate relationships with customers.

Only the paranoid survive
In almost every market there is, or soon will be, customers looking for “good enough” solutions that are attractively priced. The low-cost competitors that emerge to meet this demand will eventually challenge the premium brands in the market. This threat may not be immediately apparent, but companies should not be arrogant enough to ignore it simply because initial losses are small. The sooner companies make the tough choices and start grappling with the implementation issues, the better their position will be in the long run.

Why Business Plans do not help start-ups?

It’s true that a good business plan can anchor an entrepreneurial venture. Once a company has been operational for some time, it has a well-defined value proposition, and it generates positive cash flow, a plan can help attract the necessary growth financing. The problem is that business plans are typically not helpful when ventures are in their early, formative stages. An anchor is designed to keep you in one place, which is precisely what an entrepreneur should not do. The usefulness of a business plan diminishes precipitously as an entrepreneur moves away from the original idea. In most cases, the plan is only valid when it is written.

Pierre Omydar, the founder of eBay, credits the fact he didn’t have a business plan for the success of the company. He said “eBay was open to organic growth – it could achieve a certain degree of self-organization. So I guess what I’m trying to tell you is: Whatever future you’re building … don’t try to program everything.”“Five-year plans never worked for the Soviet Union – in fact, if anything, central planning contributed to its fall. Chances are central planning won’t work any better for any of us.”

Surveys from the Inc. 500 suggest fewer than 25% of successful entrepreneurs create business plans at start-up. Those that do write them will generally stick to informal “back of the napkin” types of documents. Our own experience with high-tech founders over 15 years confirms this. But everyone from bankers and accountants to business professors and consultants say business plans are necessary. The fact is, you only need a business plan for one reason: to get financing. This brings up another important misconception. Financing is not typically a part of the early stage of a company’s creation. Banks fund assets, not ideas, and venture capitalists fund momentum and sales.

Unless you have a proven entrepreneurial track record, or you have created some kind of unique scientific breakthrough that has huge commercial potential, it will be difficult to secure financing outside a network of friends, family, and your own sweat equity.

There are numerous examples of ventures that start with minimal financing. Dell and Subway were both launched with less than $1,000. In fact, 98% of new ventures start with no venture capital or angel financing at all. Further, surveys from the Inc. 500 rank credit cards ahead of VC funding as a source of start-up capital.

All the millions that dot.com firms such as pets.com received in the early 2000s didn’t put them on the pathway to success. In fact, it probably hurt them. With money comes the temptation to spend it – on offices, people, advertising, and infrastructure – all of which takes an entrepreneur’s eyes off what is really important. Things like making sales, building networks, and improving product or services.

Business plans can be very useful in helping an entrepreneur think through the full implications of an idea. And they definitely come in handy when the time comes to pursue funding. But their negative potential as ‘anchors’ in a particular place and time mostly outstrips their benefit – particularly in the early stages.

Are great entrepreneurs born or built?

The process theoretically goes something like this: An entrepreneur has a brilliant idea, writes a business plan, gets start-up funding, puts together a team, creates a product or service, and sells out to a Fortune 500 firm. It sounds logical, but reality paints a different picture.

Let’s start with the brilliant idea. There are many stories floating around about entrepreneurs whose empires were sparked by blinding insights that occurred during some mundane activity, like waiting for a bus or taking a shower. We call this the myth of the epiphany, and the truth usually differs from the myth.

Most great ideas start out extremely rough and half-baked, and they are only chiselled into greatness over time. Howard Schultz’s flash of insight was to bring Italian coffee bistros to the United States, but in his original concept, customers stood or perched on stools (there were no chairs), listened to opera music, and were served by baristas wearing bow-ties – certainly not what a customer would expect to experience in today’s Starbucks.

Jeff Bezos had a good idea -- selling books online -- but his real insight was turning his store into a global marketplace for other people to sell their goods, even when they competed with Amazon.com’s products.

Ideas are important but they are not pivotal. We have conducted many brainstorming sessions in our classes, and the results have been intriguing. Teams of students and executives consistently come up with more than 100 start-up ideas in five or 10 minutes. Some of the ideas are absurd, but at least a dozen really good ones are generated each time we run the exercise. Ideas, as they say, are cheap.

Most great entrepreneurial ventures begin with a problem, which could be an unmet need, a bottleneck in a process, or an inconvenience. The idea is simply a solution for how to solve the problem. MIT Professor Eric von Hippel found that more new profitable lines of business came from customer complaints than from research and development departments.

A study by IMD Professor Stuart Read and colleagues suggested that it is more important to look at how successful entrepreneurs behave (what they do) than to look at their characteristics (who they are). According to this research, conducted at IMD, successful entrepreneurs consistently follow four basic principles:

1. They start with what they have: who they are, what they know, and who they know. They typically don’t worry about raising millions in seed capital or trying to figure out something new. They start close to home with something they already know and understand.
   
2. They set an affordable loss. This means that they are more concerned with how much they can afford to lose than they are with how much they can make. Most entrepreneurs only quit their day jobs after a venture has been in operation for longer than a year, sometimes much longer. In fact, surveys of the INC 500, the 500 fastest-growing private companies in the United States each year, suggest that 18 months is the typical length of time entrepreneurs take before they establish their first offices. We have personally seen this in our own interactions with hundreds of founding CEOs over the past 15 years.
   
3. They are great at taking advantage of unexpected situations. Most management textbooks regard surprises as anomalies that should be avoided or minimized. Successful entrepreneurs, by contrast, are able to adjust their strategies on the fly.
   
4. They are skilled at forming partnerships. Despite what you may think, successful entrepreneurs do not stay at home tinkering with their inventions all day long – they cannot generate sales this way. Instead, they spend a great deal of time developing and nurturing a steady stream of formal and informal partnerships.

The entrepreneurs in Professor Read’s study are  adaptive thinkers who are willing to adjust and modify their strategies based on constant feedback from a shifting set of partners. The entrepreneurs understand that failure is a part of building and developing ideas, and they are willing to switch gears when better opportunities arise.
This differs radically from the guidelines set out in most entrepreneurship textbooks. Good entrepreneurs are talented at recognizing problems, but their first ideas are usually not very good. Lucky for them, most are also tenacious – they don’t give up easily. Ideas get tested, prototyped, revised, stretched, shared, prototyped again, and then retested until they evolve into a workable form. This process is the central concept behind a new field of entrepreneurial research called effectuation, the core principles of which are about adapting your business model to opportunities as they evolve.

Market driving vs market driven

What Can Steve Jobs Still Teach Us?

Paul Chinn/San Francisco Chroniclen

let'sconsider the greatest decision he ever made. It didn't happen in a garage in Cupertino, California, sweating with Steve Wozniak as they dreamed up a computer for the common man. Or in a conference room, as managers told him that no one would ever pay $400 for a portable music player. Or in another conference room, as new managers told him no one would ever pay $400 for a cell phone. Rather it was in an almost forgotten annex on the Apple campus.

Jobs had recently come back to the company after a 12-year hiatus working for two of his own startups: NeXT, which made ultra-high-end computers, and Pixar. He was taking a tour of Apple, becoming reacquainted with what the company had become since he'd left. It must have been a sobering, even ugly, sight--Apple was dying at the hands of Microsoft, IBM, Dell, and other competitors that were doing what Apple did, only cheaper and with faster processors.

In a dusty basement across the road from Apple's main building, Jobs found a solitary designer who was ready to quit, languishing amid a stack of prototypes. Among them was a monolithic monitor with a teardrop swoop, which integrated all of a computer's guts into a single package. And in that room, Jobs saw what middle managers did not. He saw the future. Almost immediately, he told the designer, Jonathan Ive, that from here on out they'd be working side by side on a new line of computers.

Jobs was ahead of his time: he saw usability as way more important than speed and tech specs.

Jobs may not be the greatest technologist or engineer of his generation. But he is perhaps the greatest user of technology to ever live, and it was to Apple's great fortune that he also happened to be the company's founder.

Those computers that Ive and Jobs worked on became, of course, the iMac--a piece of hardware designed with an unprecedented user focus, all the way to the handle on top, which made it easy to pull out of the box. ("That's the great thing about handles," Ive told Fast Company in 1999. "You know what they're used for.") That single moment in the basement with Ive says a great deal about what made Jobs the most influential innovator of our time. It shows an ability to see a company from the outside, rather than inside as a line manager. He didn't see the proto iMac as a liability or a curiosity. He saw something that was simply better than what had preceded it, and he was willing to bet on that instinct. That required an ability to think first and foremost as someone who lives with technology rather than produces it.

People often say that Jobs is a great explainer of technology--a charismatic, plainspoken salesman who is able to bend those around him into a "reality distortion field." But his plainspokenness had force because he always talked about how wondrous it would be to use something, to actually live with it and hold it in your hands. If you listen to Jobs's presentations over the years, he comes across not as the creator of a product so much as its very first fan--the first person to digest its possibilities.

It's when Jobs has fancied himself the chief creator, rather than first fan, that Apple has stumbled. His much ballyhooed Apple Cube, which was in fact a successor to the NeXT cube he'd developed, was an $1,800 dud. Even before his hiatus from Apple, in 1985, his meddling and micromanagement had gotten out of control. But the years away reportedly helped him begin ceding more responsibilities to others. He became less enamored of tech for tech's sake. He blossomed into a user-experience savant. A reporter who asked Jobs about the market research that went into the iPad was famously told, "None. It's not the consumers' job to know what they want." It's not that Jobs doesn't think like a consumer--he just thinks like one standing in the near future, not in the recent past. He is a focus group of one, the ideal Apple customer, two years out. As he told Inc. magazine in 1989, "You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new."

Jobs has been criticized for exhibiting a ruthless and arbitrary perfectionism, scrapping a product because it didn't feel right, because some minor feature like a power button or a home screen seemed unresolved. (He notoriously tore through three prototypes of the iPhone in 2007 before finally giving the okay; he berated Ive over the details of the USB port in the first iMac.) But that interpretation is unsophisticated. A myopic focus on details can destroy as much value as it creates. (Think about how often you've sat through a meeting with a boss who harped on details, killing an idea before you had a chance to explain what it could be.) Jobs certainly did not destroy value. True, he killed far more ideas than he let live--there are more than 300 patents under his name covering everything from packaging to user interfaces. But those that survive outweigh all the rest. His focus was, continually, on what it would be like to come at a product raw, with no coaching or presentation but simply as a new, untested thing.

The most obvious example of this hides in plain sight and is a fundamental part of every Apple product. From the 1970s to the 1990s, if you opened up a new gadget, the first thing you faced was figuring out how the damn thing worked. You'd have to wade through piles of instruction manuals written in an engineer's alien English. But a funny thing happened with the iMac: Every year, Apple's instruction manuals grew thinner and thinner, until finally, today, there are no instruction manuals at all. The assumption is that you'll be able to tear open the box and immediately start playing with your new toy. Just watch a 3-year-old with an iPad. You're seeing a toddler intuit the workings of one of the most advanced pieces of engineering on the planet. At almost no time in history has that been possible. It certainly wasn't when the first home computers were introduced, or the first TV remote controls, or the first radios. And it was something Jobs was driving for his entire career. Again, from 1989, Inc. asked him, "Do you sometimes marvel at the effect you've had on people's lives?" Jobs said: "There are some moments. I was in an elementary school just this morning, and they still had a bunch of Apple IIs, and I was kind of looking over their shoulders. Then I get letters from people about the Mac, saying, 'I never thought I could use a computer before I tried this one.'"

A decisive factor that aided Steve Jobs was fortuitous timing. He came of age just in time to become a founding father of the personal-computer movement. And he was still young enough when he returned to Apple, in 1997, that his own instinctive sense of what a computer might become could be brought to life. In the 1980s and 1990s, computers were sold on their speed and technical capabilities. But by 2000, these features had largely become commoditized--it no longer mattered how fast a computer was when basic issues of usability and integration became paramount. What did speed matter if you didn't know what all the menus meant, or if you were hit with pop-up errors every time you clicked your mouse?

Before 1997, Jobs was ahead of his time: The computers he made were overpriced for the market, because he thought that usability was more important than capability. But as computers reached maturity and became a staple in every home, his obsessions became more relevant to the market. Indeed, many of Apple's recent signature products, such as the iPad or the iPhone, were ideas first conceived in the 1990s or even the 1980s--they had to bide their time.

Jobs is ahead of his time in other ways too: He has taught his entire organization to play in the span of product generations rather than product introductions. Apple designers say that now, each design they create has to be presented alongside a mock-up of how that design might evolve in the second or third generation. That should ensure Apple's continued success for a long time, aided, of course, by the tremendous momentum that Jobs's leadership has provided the company.

It's not clear that anyone else at Apple will possess Jobs's same talent for looking at Apple's products from the outside view of a user. Tim Cook, his anointed successor, proved his worth by revamping Apple's production processes and supply chain. That talent is vital to running the business and has increased Apple's profits by untold billions. But being able to break apart the nuances of sourcing is the exact opposite of being a usability genius: Cook's career has largely been spent focusing on precisely those things the consumer never sees.

Does Cook have an in-house product critic who could stand in Jobs's place? Will Cook have as close a working relationship with Ive as Jobs did? Will Ive even stay? And did Jobs create an entire organization that reflects his balance of concerns--for the back end, yes, but for usability first and foremost? The biggest risk is that Apple takes for granted that its superior design will forever demand a price premium. That might lull it into thinking that Apple itself is great, rather than its products. But Apple, all along, has only been as good as its last "insanely great" thing.

"What would Steve do?" has long been a mantra at Apple (albeit often unspoken). No doubt his example and presence will persist in the organization. The world's most valuable company has one man's vision at its core, in roots that go back 30 years. The unanswered question for Apple is: Who's dreaming its future now?

History of social networks

Social media as we know it — Facebook, Twitter, Linkedin, etc. — is only 15 years old, and yet it feels as if they are permanent fixtures in our lives that have been with us forever. A look at the history of social media, however, shows how fleeting much of it is, and how few genuinely innovative developments there have been since the mid-1990s. The Globe.com, for instance, was the first big, modern form of social media, and it incorporated virtually all the concepts and communications you can currently see in Facebook. It imploded after only three years.

1994: TheGlobe.com invents social media

Cornell students Paternot and Krizelman founded this company after discovering a primitive chat room online at the university. The idea was similar to virtually every social media platform – for each user it had a chat room and messaging. TheGlobe.com went public on November 13, 1998, posting the largest first-day gain of any IPO in history to that date, 606% over the initial share price. It failed to generate significant advertising revenue and died in 2008. Lifetime: 14 years

1996: ICQ popularizes instant messaging

Although AOL Instant Messenger boosted the popularity of instant messages, its success was predated by ICQ, a free IM software from the Israeli company Mirabilis, founded in 1996. AIM followed in May 1997, and AOL later acquired ICQ. You can still download ICQ today. Lifetime: 15 years and counting.

1994: GeoCities invents user-created content

GeoCities provided customizable “home pages” for anyone who wanted them, and was probably one of the first major purveyors of user-created content. Individuals and businesses flocked to upload contact information and photos via its easy-to-use interface. Although GeoCities’ custom designs were famously amateurish and loud, it bore a striking resemblance to MySpace. GeoCities was ultimately acquired by Yahoo! and then closed in 2009. Its main competitor was Angelfire, founded in 1996, which still exists.

Lifetime: 13 years

1997: SixDegrees.com invents the social network

SixDegrees.com invented the social network via a series of contact lists through which one communicated with friends. Users were given bulletin boards, e-mail and online messaging if they agreed to hand over a list e-mail addresses for 10 friends. It closed in 2001. Lifetime: 4 years

1999: LiveJournal beats Blogger to market

Online diary keeping began in earnest with the debut of LiveJournal, the first of many sites to popularize blogging.It preceded Pyra Labs’ blogger software. by Google, which remains one of the dominant blog-hosting platforms. LiveJournal failed to keep up with Blogger and in 2009 most of its U.S. staff were laid off and remaining operations were moved to Russia. Lifetime: 12 years and counting

2002: Friendster “invents” friends

Friendster achieved what SixDegrees.com failed to do, which was to become popular through users’ overt collecting of “friends.” Although it attracted millions of users it was quickly eclipsed by the advent of Facebook in 2004. The site officially closed and deleted its users’ accounts in May 2011, vowing to reopen as an Asia-focused gaming web site. Lifetime: 9 years

2003: MySpace reinvents the homepage

Yet another attempt to give users custom homepages, messaging and photo-sharing, MySpace peaked in July 2005 when it was sold to News Corp. for $580 million. MySpace’s cluttered pages, which often blared the user’s favorite music, became a favorite of teens and the bands they followed. It began to lose users when the simpler, easier-to-use Facebook came along. In June 2011, MySpace was sold to a consortium which included Justin Timberlake for restructuring. Lifetime: 8 years and counting

2004: Facebook sucks the air out the room

Founded in a Harvard dormroom by Mark Zuckerberg, Facebook now has more than 750 million users. More importantly, it has seen off the competition and continues to grow. Facebook is deceptively simple to use, but has allowed so many different companies to promote ad-on apps that it can be customized in almost infinite ways. The company is expected to go public in 2012.

Lifetime: 7 years and counting

2006: Twitter reinvents the blog

At base, Twitter is just another blogging platform. Its genius lies in the realization that a lot of people want to keep some sort of blog but are either bad at writing or don’t want to write at length. The 140-character limit on each tweet also imposes a charming discipline on its users. The very first tweet (above) was published March 6, 2006. The service has more than 200 million users. Lifetime: 5 years and counting

2007: The iPhone takes social media mobile

Sure, there were smartphones that allowed people to update their various social media apps prior to the iPhone, but the Apple device made it easier and more fun. It is not a coincidence that social media has exploded following the rise of iPhone and Android smartphones. Prior to this year, “social” media often felt anti-social to use: to experience it, you had to be sitting at a desk or a laptop, and therefore often alone. Now people can share, message and update each other no matter where they are. Lifetime: 4 years and counting

SALES MANAGEMENT

Sales Basics: Top 5 Tips for New Sellers

I was recently asked, "If you were mentoring a new salesperson, what would be your top five sales tips, and how did you learn those?"
Good question! It really got me thinking. There are so many things I'd like to tell a new seller. But what are the most important? What things could I recommend that would have the highest impact on success?
1. Focus on Making a Difference
Nobody cares about your product, service, or solution. That's the hardest thing for sellers to realize. All prospects care about is the difference you can make for their organization.
For example, today I sell sales training. If I called a vice president of sales and mention that, he'd tell me they're not interested. However, once I changed my focus to the tangible outcomes his organization would get from using my sales training, the door opens wide. After all, they would be extremely interested in shortening their sales cycle, reducing the ramp up time for new hire sales reps, and driving revenue growth.
2. Slow Down to Speed up Your Sales
This was one of the hardest things for me to learn. When I first started selling, I was so eager to be successful. I tried to wow my prospects with my great product knowledge. I closed often and early. But the more I tried to rush things, the more resistant to moving forward my prospects became. They'd throw out obstacles and objections that I couldn't overcome. When I learned to slow down, parcel information out over multiple meetings, and simply advance the sales process one step at a time, suddenly my sales increased.
When you're scared about not getting the business, your prospects can intuitively sense your fear. One of the major symptoms is rushing the sales process.
3. Pay the Price of Admission. Do Pre-call Research!
To get into big companies, you can't make a 100 cold calls saying the same thing to everyone. Several years ago corporate decision makers stopped answering their phones and rolled all calls to voicemail. They delete most messages within seconds because they sound like salespeople making their pitch.
I discovered that the only way to capture the attention of these corporate decision makers was to create a very personalized message based on in-depth research in their firm. Once I started doing this, I started setting up meetings.

4. Create an Account Entry Campaign
It takes seven to ten contacts to crack into a corporate account these days. Most sellers give up after three to five attempts. If you want to set up a meeting with a corporate decision maker, plan multiple touches from the onset. It takes a while to break through their busy-ness and register on their Richter scale, but it can be done.
You can use multiple formats in your campaign, too: voicemail, email, direct mail, invitations to teleseminars, and more.
5. Analyze Your Sales Approach from Your Customer's Shoes
It's not important what you say. The only thing that matters is what your customers hear. For example, when I was trying to reach a decision maker a while back, I decided to leave the message on my own voicemail first to see how I sounded. When I listened to my message, I was appalled. I sounded pathetic! So I worked on scripting my message and kept calling myself over and over until I finally created something I would respond to if I were the prospect.

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your sales goals can be your worst enemy

1. Goals can be a major impediment to your success? Take cold-calling, for instance.  Most sales pros see cold calling as a goal-oriented activity — fill the pipeline with “X” number of prospects, in the hopes of creating as many customers as possible.  But it makes you see each conversion that results in a prospect as a “win” and each cold call that ends in some other way as a “loss” - even if the person you called had absolutely no use whatsoever for your product!  And that’s setting yourself up for failure, because the nature of cold calling is that only a small percentage of the people you contact will be potential customers.  The majority will be people who simply aren’t interested or are not a fit for a variety of reasons.
3. The root cause of this deeply flawed “win/loss” thinking is focusing on the goal rather than the process.  If you’re focused on the result, you are visualizing the future (i.e. “will I make my goal???”) rather than experiencing the present moment. As a result, there’s no way that you can really listen to the prospect, because your attention is on a possible event in a future-yet-to-be.  Because your focus is elsewhere (on your goal, that is) you’ll find it difficult to be creative and flexible in responding to what the potential prospect actually says.
5. Here’s how you fix this.  Define cold-calling as a process rather than goal-oriented activity.  Stop focusing on the result and start focusing on the potential prospect and the process of communicating with that prospect to determine if in fact, there’s truly a fit.  Changing your way of thinking is that you’ll immediately become more effective because it removes the “sting” of contacting a lead that turns out, for whatever reason, not to be a real prospect. Rather than a “loss,” the event simply becomes something that you happened to discover during the process of cold-calling. More importantly, treating cold-calling as a process keeps you focused on finding ways to help potential prospects and customers - and on not wasting the time of those who don’t need the help.
7. Your true goal shouldn’t be to make your sales goal, but to emulate an olympic athlete.  Top athletes visualize “winning” (the goal) before competing, but when they’re actually performing they focus on what’s happening right then and there. Focusing on process rather than your goals increases the chances that fulfill your goals. In other words, know your goals, then forget them, and put your mind into the process.  If you do this right, your goals will take care of themselves, because your process will make them happen without you wasting time obsessing on them.

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5 WAYS TO BREAK SALES RECORDS
Want to break the sales record for your organization… or even for your entire industry?  If so, here’s the EXACT recipe:

• Step #1: Prepare to change. If you’re thinking of breaking sales records, it’s probably because you’re already pretty good at what you do.  However, it is impossible to break sales records simply by doing tomorrow what you’re doing today.  You’re going to need to do something different if you’re going to “amp it up” to the next level and beyond.
• Step #2: Research “best practices.” Breaking sale records means excelling at every sales skill.  Go through your organization and find people who are the best at each skill.  Learn how they think and how they execute that skill.  Then incorporate that “best practice” into your own tool kit by writing down what you’ve learned, studying it, and practicing it… every day.
• Step #3: Measure your behavior. No matter how committed you are, you WILL relapse into your old behaviors, unless your new skills are reinforced.  Figure out a way to measure each of your new skills and behaviors, so that you know exactly how you’re doing.  If your enthusiasm starts flagging, come up with a reward process that will reinforce the right behavior.
• Step #4: Keep evolving. As you measure, examine what’s working, and what’s not.  Continually find areas where you can improve your skills.  Look for additional role models; keep reading up on sales technique.  Experiment.  Find ways to use “down time” to improve your selling skills.  Treat yourself like a top athelete — and then be your own coach.
• Step #5: Don’t stop. Top athletes come in two varieties: the one-hit-wonders who have a great season and then rest on their laurels, and the all-time champion teams that break record after record after record. The champions know that if they set the bar higher, and continue with basic training, reinforcement, measurement and correction, they’ll be continue to achieve at their highest level.

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Not Everyone Needs to Be a Thought Leader

"They told me I had to become a thought leader or I'd never achieve great success as a professional." This is what a leader at a professional services firm told me recently that a marketing consultant told him.

He didn't say this to me matter-of-factly either. He said it with a mix of fear, skepticism, sadness, and hope.

• Fear. Because he can't write and doesn't have much "new" to say, and neither do the rest of the folks on his leadership team.
• Skepticism. Because he didn't think it was true that thought leadership was now a requirement, but he was starting to hear it so much he thought maybe the tide had turned and it now was.
• Sadness. Because he liked his job selling, delivering, and managing and didn't want to become, as he put it, a "professor type."
• Hope. Because he was hoping I'd say what he wanted me to say: that it was not true.

He was…right! It's not true. Ludwig Feuerbach* noted, "A being without suffering is a being without being." Given the drumbeat of advice to professionals to become thought leaders, you might be convinced that a firm without thought leadership is a firm not worth a damn.

Some industry watchers and consultants these days are downright dogmatic in their belief that, to achieve all you can achieve as a professional, you have to become a thought leader. And to differentiate your firm, you have to become a thought leader. Same for generating leads, raising prices, and competing for the best clients.

False. Not true. El wrongo.

Now don't get me wrong. I'm a huge fan of thought leadership, partly because as a member of the faculty at Babson College I am a "professor type," but mostly because of what good thought leadership can do for a firm.

Thought leadership helps with:

• Lead generation
• Fee maximization
• Branding
• Winning deals
• Drawing the best candidates to work at your firm
• Repeat business
• Confidence of the thought leader

And the list doesn't stop there. No question, thought leadership is helpful, but is it necessary?

Let's say you need heart surgery. All you know about your two potential surgeons is that one pioneered and is most widely published regarding the surgery you need, and the other is in the prime of his career and has performed the surgery 1,500 times but has never published.

Let's say you need much greater efficiency in your supply chain. One consultant wrote the book on it, and while the other hasn't written a lick about it, she and her firm have a long track record of success getting done what you need to get done.

Let's say you just got word that another company stole your patent. Which lawyer do you hire: the one who writes most often about winning the type of case you want to win or the one who has won the most?

It's likely most buyers would prefer the latter in each. Perhaps you might have said to at least one of them, "Well, I don't know!" In either scenario, you prove the point: thought leadership isn't necessary. As some of you might have hoped, you may not have to devote time, energy, and money into becoming the leading thinker in your space!

But you probably do have to spend time, energy, and money on something else if you want to outfox the thought leaders and benefits that thought leadership brings to them. Here are a few thoughts that can get you started on how you might do it for your firm.

1. Most buyers aren't persuaded by thought leadership per se, they're persuaded by authority. The concept of thought leadership implies originality in thinking. Not only does good thought leadership not have to be original, you really don't have to add anything at all to your field to establish yourself as an authority. What you have to establish is expertise in the subject and proof of your ability to perform successfully in the subject area. You can do this through publishing case studies. You can speak at conferences and events with your clients at your side about the work you've done and the value it delivered. You can become a leader in a professional association and be seen as a fixture in the industry. All these things create authority, and you don't necessarily have to have one original thought in your head to do them!

2. Buyers buy helpfulness. Perhaps you're an innovation consultant, or compensation consultant, or a lawyer. In your marketing process you can demonstrate your helpfulness through a host of methods such as case studies, client testimonial videos, clear and logical service descriptions and packages, email newsletters that highlight (but don't introduce) new thinking in the industry, professional development seminars, and so on. In your selling process you can demonstrate your helpfulness by listening, uncovering needs, crafting a strong solution, and delivering value even before they start working with you. You can do all of this without a book, white paper, or article to your credit.

3. People buy consistency and quality. I don't know about you, but many times I've simply wished a service provider did what they said they were going to do, and did it to a high standard. We don't always need new thinking, but we need to trust that people can deliver when they say they can so we don't have to worry about it or do it all over when it comes out poorly.

4. People buy who they like best. In Mastering Rainmaking Conversations, we tell a story about how a CFO friend of ours chose one of the Big 5 (at the time) accounting firms to take a company public. The long and short of it is that while he publicly justified it with an analytical argument, he told me privately that he hired the firm whose staff he liked best.

Another key argument in the you-must-be-thought-leadery-or-else camp is that you can't differentiate without thought leadership. I agree that thought leadership is a good means to differentiation, but it's not the only means.

For example, imagine you're all of the good things (consistent, likeable, helpful, etc.) noted above. Develop a reputation for these and you set yourself apart right there. You can also develop a compelling service package that will seduce people with your value and stand out from the crowd. As we wrote in Professional Services Marketing, Bain uses the Profit Hunt service well in this regard. We use the Revenue Growth Benchmark Assessment. There's no reason you can't offer your own.

Yes, thought leadership can help you stand out, but you don't need thought leadership to stand out. You can convey, without being a thought leader, what sets you apart from others as well as how hard it would be to substitute your firm with another provider. I'm not saying it's easy to convey these things, but then again, anything that's worthwhile to pursue isn't likely to be easy.

The truth of the matter is that not everyone can or should be a thought leader, and that does not make them second-class professionals. As helpful as thought leadership might be in the right situations, you can achieve fabulous success without it. 

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34 MISTAKES SALES MANAGERS MAKE




Change the compensation plan after hiring a rep to drastically to reduce the compensation that’s actually paid.



Change the demographic of prospects every two weeks, discarding any progress made towards closing an actual sale.



Create product lines that aren’t reasonably debugged or field worthy, thereby murdering the sales rep’s reputation.



Demand sales increases and then fail to compete on bids after the rep got your product specified.



Fail to provide competitive analysis, leaving the rep to figure out how to fight off attacks from the other guys.



Have a sales rep build up business in an area then declare them ‘house accounts’ that don’t pay a commission.



Hire more sales reps for a region than revenue from that region can support, so they’ll all compete for the same business.



Ignore a potential consistent customer-base in favor of higher-ticket, more difficult to close prospects.



Insist that all contact info belongs to the company and demand all copies when the sales rep leaves the company.



Keep dumping more and more responsibilities on the same size sales force, with no additional support.



Know that a product is on back-order indefinitely but still encouraging sales reps to sell it.



Let a new rep bootstrap their income by cherry picking accounts belonging to another rep.



Limit the sales reps’ access within your own firm to minor players so that they don’t “get in the hair” of top management.



Make sure that the most popular products are unavailable to the reps, especially if demonstrating is key to closing a sale.



Make the compensation plan incomprehensible and then make the rep fight for every dime.



Offer a better price to customers on the web site than the sales team can offer directly to the customers.



Openly praise reps who set an unachievable high target while degrading the ones who set practical ones.



Overload your sales staff with administrative reporting and trackers that take up time that could be spent selling.



Permit discounts in order to close business but then demand customers pay full price.

Promise the reps good commissions but hold off paying them until the end of the quarter or the end of the fiscal year.



Promise to support a new product and then produce zero case histories, sales tools or good training.



Raise the quota every month at least 10% so that nobody ever achieves a commission check.



Refuse to give reps laptops or smartphones so they can compete with the other sales teams in their markets.



Refuse to go on field sales calls to a “difficult” customer in order to show the rep how to handle that customer.



Save all the best leads for the top rep and send the questionable ones to the other reps, just in case they might get lucky.



Say something like: “you can’t tell ME anything I don’t already know. I’ve been doing this for 24 years.”



Schedule joint calls and cancel because you found something more important to do.



Set a sales target to sales rap but fail to devise or communicate a sales strategy to achieve that target.



Set ambitious targets intended to impress top management when you know that the reps cannot really achieve them.



Shout, throw fits of temper, and act like a big baby rather than listening and coaching reps on how to perform better.



Spend big money on a sales and marketing campaign that has no tie-in to the products that the reps must actually sell.



Update the website without telling the sales team, so customers can tell them what’s new in your product set.



Use words like “you’ve been overpaid” when making changes to the compensation plan.



Wait until a rep is about to bring in a large account and then cap commissions.



LEAD QUALIFICATION QUESTIONS



• How serious they are about solving the problem.

• Whether they’ve got viable alternatives to buying.

• Whether they see the problem as a spending priority.

• Whether your competitor is already in the account.

• Who (what group) might gain power if they don’t buy.

• Who (what group) might lose power if they don’t buy.

• The REAL time-frame for solving the problem.

• Whether or not they’ve thought the problem through.

• Whether or not they’ve thought the solution through.

• Whether the deal might be a dead-end with no purchase.


TOP 1O REASONS WHY NEW SALES REPS FAIL

Last week’s huge post “Is a Sales Career Right for You?” went through the characteristics that top sales professionals share. However, the lack of those characteristics aren’t the only reason that sales pros fail. Here are the top ten reasons that people (mostly new-hires) fail to build a successful career in Sales. Some of them are similar to the ones described in the original post, but some are new:

• REASON #1: They base their self-worth on what other people think. If you define your sense of worth based on how you assume your boss, co-workers, and customers see you, you’ll be deeply hurt by anything that smacks of criticism. Selling, and working inside a sales organization, begins to look like a series of horrible and (finally) intolerable rejections.

• REASON #2: They assume that past failure defines the future. Some people find failure so unpleasant that they try to avoid it at all costs. As a result, they avoid any situations where failure is a risk. Because any meaningful sales effort entails risk, such people seldom, if ever, accomplish anything significant in a sales organization.

• REASON #3. They believe in destiny, luck and fate. Some people believe that their status in life and potential as a human being is determined by luck, fate or divine intervention operating upon the circumstances of their lives…

These beliefs, however, constantly keep you focused on what you can’t change (e.g. fate) and not on what you can (e.g. your skill set.)

• REASON #4: They lack the right attitude. The right attitude for a sales pro consists three qualities: 1) Empathy, so that you can understand customer needs. 2) Confidence, so that your can bring customers to the point of buying, and 3) Resilience, so that you can use rejection and temporary setbacks as spurs that constantly move you forward.

• REASON #5: They don’t perceive the subtleties. When mediocre sales pros make sales calls, they are so busy “trying to sell” that they miss the nuances of the customer relationship. Top sales pros know that the most important element of a successful sales call is the value that the sales professional can bring to the customer, rather than whatever might eventually be sold.

• REASON #6: They’d rather be doing something else. Failing sales pros often wish they had the nerve get out of sales and do something completely different. If a sales pro’s ideal occupation is to play baseball, be a musician, write a novel, or do anything else that not in Sales — they’ll eventually sabotage their sales career.

• REASON #7: They don’t learn from their mistakes. Sales pros tend to avoid looking at their failures and would prefer to examine their successes - and then attempt to replicate them. However, until and unless you understand how, why and where your sales process is failing, it’s impossible to correct systemic problems in your sales approach.

• REASON #8: They can’t follow simple instructions. Sales skills must be learned. Some people are naturally resistant to learning new ideas and new techniques, especially if they’ve already achieved a certain level of success. Many a sales pro has “topped off” at the lowest level because of a failure to understand that news skills are needed at each stage of a sales career.

• REASON #9: They lack true honesty and candor. Sales is all about relationships and relationships are all about trust. People who lie and fudge the truth may become good at fraud or other criminal acts, but they’re at an extreme disadvantage when it comes to being successful at an honest sales job. Most customers can “sense” when a sales rep isn’t being real… and avoid buying.

• REASON #10: They can, but won’t, do the work. This is true not just of selling, but of every other activity in the world. Sales pros who don’t makes their numbers either can’t or won’t do what it takes to make sale. When you can’t do the job, it’s usually because you don’t know what to do. When you won’t to the job, it’s because you simply lack the drive.

9 Strategies for Selling Smarter

Having more prospects in the pipeline does not necessarily mean more sales because you cant hunt so many clients at once. You need to do the following as well : to sell to the RIGHT customers and in REDUCED sales cycle

·         #1. Increase the percentage of time you spend selling

o    Get someone to do paperwork and data entry

o    Yse smart phone apps

o    Optimize travel time

o    Use web conferencing

·         #2. Think about your solution as a verb

o    If you sell glue, don’t say you sell glue (a noun). Instead use verb preceded by an adjective.. say you are selling “efficient gluing under high operating speeds”. This leads you to think of solving problems of customers.

·         #3. Consider yourself the customer’s ally. Do not see a customer in terms of  “convincing”, “overcoming”, “winning”. Visualize how your company can help the customer achieve specific business goals and be free to offer advice even if it is not specific to your offering.  The customer will notice, develop more trust and confidence.

·         #4. Disqualify more prospects. Every prospect does not need your product. If it turns out that the customer really doesn’t need what you got, leave and consider the sales call a major victory, because you’ve helped that customer avoid an unnecessary expense.  As a bonus, you’ll build a reputation for having your customers’ best interests at heart.

·         #5. Ask more questions during conversations. Rather than talking to the customer about what your product can do, use questions to lead the customer to the natural conclusion that the customer needs your solution. Ask intelligent questions that the prospect is capable of answering, so that the two of you can discover whether the customer really needs you to solve a problem or achieve a goal. Use questions to help the customer visualize how things would be better if the customer had the solution in hand.

·         #6: Increase the average quality of your leads. If your leads come from marketing, communicate clearly, based upon your own experience in the field, who’s interested and who’s buying. Provide specific details, including job title, industry, typical organizational structure, etc. Bring some sample customers in to meet the marketing group so they understand the target better. Don’t have a marketing group? Do the same thing, but apply the knowledge to your own lead generation efforts. A small amount of effort in this area can yield disproportionately large results, because a positive change ripples through the entire sales process.

·         #7: Increase your conversion rate. Make sure that you’re talking to the REAL decision-makers, and not just the influencers and sideliners. When you meet a decision-maker, stay in regular communication throughout the sales cycle. Don’t let long periods of time go buy where you don’t know what’s going on, or what’s changing inside the account. And don’t the competition. Find out who the other guys are calling on, and how they’re approaching the account. Then figure out how to outflank them.  Build a short sales plan that documents the process and the players, so that you don’t spin your wheels trying to remember who needs to do what and when.

·         #8: Increase your average dollar value. While it may take more effort to cut a $1 million deal, it’s less than ten times as much effort as cutting ten $100,000 deals. The more money that you can make on any one sales opportunity, the more money you’ll make overall. To keep the numbers high, always remain aware of new opportunities in an account. Use discounts sparingly or not at all, except when they’re bundled into a larger deal. Find more ways to help the customer, today and in the future.  The more you can be of service, the more the customer will buy from you.

·         #9: Decrease the effort required to close. Find out the customer’s “compelling event” which will actually trigger the buying process and time your selling effort to match. For example, a prospect might have budget in the current quarter, making the “compelling event” the end of the quarter. Similarly, a prospect might be waiting for an order from its own customer before making a new purchase. Schedule your activities backwards from the event and you’ll spend the least amount of time developing the opportunity.