Sales myths

There are  many myths and preconceptions about sales. Today we'll cover some of the more common ones.

Myth #1: “Sales is about having the gift of the gab”

Professional sales is not about coercing people into buying. People love buying if they want to buy.

Extroverts are usually confident and they tend to talk a lot. Fast talkers rarely do well in sales. The buyer will sense the pressure and confident buyer will push back losing the sale.

The diagnosis is incorrect. Confidence is the important personal quality not having the gift of the gab. Confidence is critical in sales. If you say “this is the best solution for you” but your body language and voice lack conviction, then you probably wont get the sale. Listening to the customer and letting them talk is far more likely to get you the sale. Confident introverts are well placed to be sales superstars. Introverts are naturally good listeners and will outsell a fast talker any day of the week.

By listening to the customer, you learn about them, the company, the things they are struggling with and what's important to them. If you're too busy talking, you wont learn any of this. You wont build a relationship, wont understand their problems and your chances of making the sale are greatly reduced.

Myth#2: “Sales is for those that cant do anything else”

Some of the highest paid people in the world work in sales. It is not unusual for top salesman to be paid more than the CEO. Sadly there is some truth to this myth. Some of the lowest paid jobs are in sales too. However these poor unfortunates are given no training and sent off knocking on doors.

By adopting a proactive approach to learning how to sell, you will be at the top.

Myth#3: “You have to be thick skinned to be in sales”

Why would you need to be thick skinned? Presumably because of all the rejection. Sure you will hear “No I don’t need that” a lot more in sales than other jobs.

Nature has built in a “fight” or “flight” response into our bodies. Both are bad news in sales.

Firstly don’t let rejection lead to a macho tough guy persona. Developing an aggressive attitude will lose you sales. I've certainly come across testosterone fuelled sales guys talking about “going into battle with the customer”. If you start to become aggressive or confrontational when you suffer rejection then the sale is lost. The customer is not obligated to buy.

Equally the “flight” response can be dangerous. You'll be thinking “let's get the hell out of here” and afterwards become introspective as your mojo takes a hit – losing confidence in yourself is fatal. You'll fear future encounters which will lose you further future sales.

Fact. You will suffer setbacks in sales. You need to have the strength of character to accept the rejection. The rejection should not be considered personal – the customer doesn’t need or want what you are selling. In your head say “yes” - I accept the rejection. Then in your head say “and here's what I'm going to do next”. Things change. You might move companies. They may need what you're selling in the future. The best possible outcome from rejection is that you stay in touch with this person and you learn from the rejection.

Obsessive Innovation

Mention innovation and you usually think technology.

Is innovation a good thing or a bad thing? Innovation is change - there is good change and bad change. Some companies change things because they feel that because it's new, there has to be change. Take Internet Explorer - I can't figure out how to do things that I used to do with ease in the older version - it might look less cluttered and simpler. Is this form over substance? Google Chrome similarly confuses me - I cant seem to do some things easily that I used to do back in those pioneering days of Netscape. What's going on?  Am I turning into an innovation kill-joy?

To me, it seems the world of technology has become obsessed with innovation. So let's dig a little deeper.

in·no·va·tion

1. something new or different introduced:

2. the act of innovating;  introduction of new things or methods.

The etymology says pretty much the same - innovation is merely something new. Yet  the word 'innovation' seems to convey some kind of disruptive, model changing, radical kind of concept. 

If innovative technology is merely something that's new, we can more easily accept that new doesnt automatically mean better.

Yes this obsession with innovation makes me wonder "Are we living through an 'innovation bubble' ".   The currency is innovation and everyone has become obsessed with upping the ante on more innovative (read radical) ideas?  Will, like most bubbles, this 'innovative bubble' pop and all the new ideas come crashing down?

I'm beginning to think we are living through a bubble.  I always revert to my old friend Pareto.  80% of new ideas are rubbish.  20% of new ideas will survive.  Only 20% of that 20% (just 4%) will be a success. 

If I type the word innovation on google, I get 413 Million page hits - that's a lot of innovation ! If I looked at one page every second, it would take me 13 years to look at them all...apart from the fact it's a moving target.

The problem I see, is the obsession with innovation hasn't got a purpose other than to be innovative (read new). 

Is innovation just features in disguise?  

Compare these sentences: 

"We've got some new features on our product" 

                             vs 

"We've got some innovative new features on our product".

Innovation makes it sounds more exciting, more sexy.

If I look at some of the new big ideas (possibly hype), I often struggle to get it.  I dont mean that I dont understand the new technology - I usually do understand what it does - I just fail to see the point of why anyone would bother to do it and importantly for me - pay me money for this new stuff. 

Some ideas I get instantly - I can articulate the benefits even if the innovator can't.  The benefit might be cost, simplicity, usability......Customers buy into these benefits - they dont necessarily buy into innovation.

The iPhone user interface is a great innovation - it's fascinating to see my wife pick up cameras or other people's non smart phones and try and do zoom gestures. In fact she gets confused why it doesn't zoom! Here is a clear innovation that is a success - the benefit is ease-of-use. 

Clearly some innovation ends up being still birth - it fails to gather traction since the innovator cannot articulate (sell) the benefit. Yet some innovations seem to gain traction and support without the benefits being clearly understood. Why is that? Is it strong personalities hyping up the tech or do some memes live even though they should die? 

Innovation is fascinating - the challenge I make to all innovators is - make my job easier. 

Think about what benefits your innovation delivers - it saves me a lots of time eliminating the duff ideas !

Talking Binary

I'm usually banging on about not talking features and instead how it is important to talk about benefits and value in the selling process. Well today I'm going to contradict that and talk about the need to talk binary and obscure technical details in the selling process.

Imagine you've done the perfect pitch to the board to solve their complex technology problem. You've got their attention :- you understand their need, what they want to achieve and they think you are credible, understand them and can solve their problems. They are pretty much ready to buy.

Now comes the due diligence. If you are selling something complex that integrates with your prospects business the value your solution proposes may well be insignificant compared to the risk it could present to the business. Time for the wizard inquisition.

You will be passed over to the back room boffins that speak binary. Your will need your own wizards that speak binary. This is a critical stage in the sales process since the boffins can influence the decision either way. If your wizards cant speak the same language and they don't have good responses to the spells the boffins are throwing at them then you can quickly loose credibility as a supplier or partner – you may lose the sale.

If this process goes well there can be a new level of respect. The peer level of respect between the boffins and wizards can be very valuable.

Don't leave this stage to chance. Wizards and boffins can be highly principled and honest. Too honest. You need to make sure your wizards understand the sales process too. I was once a wizard and looking back I can think of one particular sale where the sales lead made a massive mistake. He didn't educate me on the goals of the business, in other words what was important and I wasn't really trained to handle objections. In this situation, the boffin raised a valid point that the solution looked inefficient. I started digging a hole which was putting the sale in jeopardy.

Looking back I should have said something like “Yes I can see why you think this looks inefficient. Can you tell me more about [why this is a problem for you] [what you are comparing this to]”, rather than me trying to justify where we were. Technical inefficiency doesn't really matter unless there is a consequence. If the solution costs more than the competition as a result then it's bad news – if it burns more of their resources then it's bad news. If it's less efficient but still still a step change in say density, which the customer understands saves them money because floorspace is expensive, then it really isn't an issue.

So what's the message? Make sure you're prepared for the technical inquisition. Make sure you're wizards are well briefed and understand the situation and what is important to the prospect and that the wizards see an objection as an opportunity to gather more information rather than switch to a defensive argument about your technical approach.

Technology Failure

25% of new businesses fail within the first year.

66% fail within the first five years

After 10 years only the fittest 29% will remain.

Technology based businesses are more likely to fail than average in the first 5 years.

Failure is not limited to new ventures – well established names like Woolworths have disappeared from our high street in recent years. Take the technology space - what happened to Winchester hard drives, Sinclair and Kodak?

These startling statistics reveal that the odds of survival are stacked against new ventures – it truly is survival of the fittest. What are the most common reason businesses fail? What can be done to increase the odds of survival? Why are technology businesses more likely to fail? We cover failings not just in start-ups (a terms which has become almost synonymous with technology ventures) but failings in more established ventures.

Let's start with the top 5 most common reasons for failure:

1/ Cashflow

Money is blood to a company. If there isn't enough cash to pay the bills then the company is on its way to insolvency. There are three main areas impacting cash-flow.

• Insufficient funding
• Failure to control costs
• Over expansion

Let's start with funding. In the current climate where raising cash is tough, it is fashionable for start-ups to “boot strap” themselves (self finance) to get off the ground. Although admirable, it is probably storing up problems for later on – there still needs to be plan. When will the self financing run out? Where will we secure additional funding and how long will it take to get it? When will the cash from the first sale come in? What is the burn rate? How many sales do we need to cover costs each month? With interest rates so low, there are no shortage of investors out there – is boot-strapping really just an excuse for failing to come up with a viable business plan and convincing investors?

As a company grows, so do the expenses of running a company. Many companies fail to understand forward financial commitments (accruals) and budget for them. This could be VAT, payroll taxes or contractual agreements to pay for some item in annual instalments. At the other extreme is companies that receive a large tranche of funding or get the big sale and then go on a spending spree on items which eventually turn into a liability, for example plush rented offices. The majority of businesses have seasonal fluctuations in demand – is there sufficient cash in the kitty to get the company through the lean periods?

Over expansion is similar to a failure to control costs. Investing in a large new factory for example creates a cash lag. It may take 1 year for the factory to come on line with cash burn in the meantime yet it may take another 6 months from coming on-line to get cash from the new capacity. What happens if the demand doesn’t materialise or the market changes? The new factory has become a liability. In this situation, doing what-if scenario planning before the risk materialises could save the company's life. Similarly a company may want to increase sales so invests in new sales personnel. Depending on the market, it could take between 3 and 12 months before they bring in sales – can you afford to employ them before they pay their own way?

2/ Lack of Focus

After investing all that effort creating your offering, you start getting customers. Great news! You're so pleased people want it. You start getting customers asking for customisations, customers in far away places. “We love your product...can you just add this feature”. It's all going great....or is it.

It is critically important to prioritise and focus. Not all customers are equal. The reality is 80% of your profit (not necessarily revenue) will come from 20% of your customers. Delivering customisations in the product, service or support may be costing you more than it is worth. You need to understand the real costs and ensure you're making profit from all the extras.

Your business is extremely unlikely to have a surplus of resource. Are you spreading yourself too thinly? Resource is finite – it needs to focus on the things that really matter and add financial value to the company. Never adopt strategic pricing – pricing to win business with a view to the customer being profitable in the long term when they buy additions.

Focus is nutshell is your marketing strategy. You need to be clear about who you are targeting, why they will buy which means knowing what problem you solve for them. Be prepared to say 'no' to some customers. It can take real courage to say 'no' – if you're not prepared to say no, then you must question and review your business plan and strategy – which parts don’t you believe in?

Focus is a particular problem for technology companies. Technology companies are usually created by technologists. The majority of technologists are not strong at marketing or sales, which we will come to shortly.

3/ Perfection

Quality is important. Is the quality of your product good enough for the needs of your market? If you have the perfect product and it's not costing you more than the market needs, then great news! If it is costing you more but your customers don’t value your perfection then disaster – your costs are too high.

At the other extreme we have products and services that simply aren’t up-to scratch. They either don’t work, are too unreliable or don’t do what the target customers need them to do. Guy Kawasaki famously said “It's OK to be shitty if you're first”. This is right – get something out there – the early adopters will tolerate it but be fast and responsive to fix the issues they highlight.

Perfection is an area where many technology companies suffer. Left alone, engineers will take forever to deliver the product – they will redesign parts they have already developed because they can see a better way of doing it. They will fill the product with great ideas and functionality that was never asked for.

The consequences can be severe – product is never delivered. The product might end up being too expensive to build or the product may be brimming full of differentiated features that no-one knows is there.

The last point is an important one. Marketeers are forever going on about USP – Unique Selling Point. There may be some hidden gems in the product that the technologist have put in there but the marketeers don’t know exist and therefore the sales people don’t know they can sell the value of these hidden features. Alternatively the commercially aware technologists may have put some features in there which they think are great and real differentiators. The problem is the end customer really doesn’t care – the features have no value to them – end result wasted effort and additional cost. We'll come back to functionality and marketing later.

4/  Inability to change

As companies grow, they become more entrenched in their market and way of doing things. A dangerous side-effect of focus in specialism. Evolution tells us that species adapt to improve their ability to survive, yet extinctions are common events. Companies are no different.

Environments change. Kodak couldn’t let go of it's origins despite every omen saying the world was going digital. It is not a good idea to be in a declining market unless your strategy is clearly to exploit that with a clear plan to move onto something else. Marketing is not just promotion too l to sell what you have. It is understanding the environment in which you operate and positioning yourself for success.

Similarly being reliant on a small number of customers can lead you to extinction. Look at the statistics at the beginning of this article. If you have 5 customers, there's a pretty good chance one of your customers will go out of business. This could at best leave you with bad debts and at worst push you over the edge as your cash-flow is impacted.

5/ Ineffective sales and marketing

The final entry in our top 5 is ineffective sales and marketing. The opposite to over expansion is not selling enough or selling at a loss. Price your product below cost and watch your cash flow out the door.

Make a load of product in volume to reduce costs but fail to sell it – watch your business die – look what happened to Rover cars – fields of unsold cars yet the factory kept making more.

Technology companies are particularly susceptible to ineffective sales and marketing. Technologists are very good at technology but poor at articulating the benefit and ultimately the value of their technology.

Fact. People do not buy technology – they buy what it does for them. My children didn’t buy an iPod – they bought downloading free apps and playing Angry Birds. They bought the ability to listen to THEIR music in the car on boring long journeys. They bought “fitting in” with their friends who all had iPods.

Technology companies talk about features. Excellent marketing translates features into benefits. Excellent salesmanship translates benefits into value for a specific customer. Selling features and benefits which have no significance for a customer raises objections – they will be paying for something they dont want or value.

The linkage between marketing and sales is key, yet most companies rarely have joined up marketing and sales. Marketing may even be viewed as a luxury. Marketing is not advertising. Marketing is not promotion. It is not PR. It can include these things but it is ultimately about getting effective sales.

Sales is a tough job. You need to be thick skinned to handle frequent rejection. In a typical selling scenario just 3% of your target customers are ready to buy. Targeting is important – wasting effort selling to people that have no need for what you have is stupid. In a business to business context, there is no excuse nowadays for targeting the wrong companies and the wrong people. Some salesmen will strike lucky and sell to the 3%. But it does mean 97% of of viable prospects will say no. They will say no because they simply haven’t removed the filters. When I decided I needed a 4x4 car, I suddenly started noticing how many different types of 4x4 cars there were. Prior to that my brain simply filtered these alternatives out.

Joined up marketing and sales opens the eyes of your prospects enabling selling.

Getting it right

Marketing and sales plays an important role in technology company survival. Most companies are getting it wrong. Don’t be a dodo.

If you are a technology company within a 50 mile radius of Harlow in Essex, Market Footprint will help you get it right.

Sales effectiveness

Following on from my last post on experimental sales, it seemed appropriate to talk about sales effectiveness and metrication of sales.

How effective is email as a vehicle for cold calling?
Time is money - is it cheaper to use email for cold calling than ringing?
How many calls do you need to make to get a sale?

As with all metrics, it is easy to come up with lots of new measurements.
The classic question remains - are you measuring the right things or things which are easy to measure?

Building a pipeline remains a critically important task. Even if you are selling complex solutions where there are a handful of potential customers on the planet, you always need to be thinking about the next sale.

A typical sales person should be spending around 25% of their time prospecting. Assuming a 40 hr week, this translates to 480 hours per year - a large amount of time. So ensuring this time is being used effectively.

If you are selling in a business to business context, with LinkedIn it is a relatively easy task nowadays to identify who you need to target in the organisation you want to sell to.  It is usually a pretty easy task to get their email address whilst getting their mobile number to cold call them is non trivial.

So in terms of effectiveness, does it make more sense to email 20 people in the same time it might take to get hold of one person via the telephone.

Latest statistics suggest that about 18% of unsolicited emails are opened.  If your message is on-target and well crafted you might have a 1 in 4 response rate from those that bother to open it. That means from 20 emails you might 1 response. So it is comparable in reach to cold calling. If your cold calling is on target you might get 80% response so actually in terms of effort expended on emailing is comparable to the effort required to speak to someone. 

However is the goal to get a response? The goal is to progress a potential sale - email is impersonal whilst speaking carries impact. It is difficult to quantify and measure the rapport which can be built up over a phone call versus an email.

One thing is clear - in order to improve sales effectiveness, it makes sense to measure the the process in order to understand where effort is best spent.  The key resource that a salesman has is time. Time needs to be spent wisely. It is all to easy to get wrapped up in the activity of selling and it is important to take time to reflect and consider whether you are doing the right things,

Do the right things rather than do things right.

Experimental Sales

You may not be aware of it but most of the big websites such as Amazon regularly run experiments on you.

You (and some others) may see a web page which is different to the majority. What's happening is that you are part of an experiment where they test your behaviour compared to the majority.  It's kind of like evolution. If the experiment is successful (I guess their normal measure is you buy more) then the experiment is adopted across the site.  One of Amazon's most successful experiments was "Customers who bought this also bought this".

I really like the concept of running low risk experiments - it drives innovation.  Running these experiments on a web site with millions of visitors is pretty straight forward since it's possible to determine what is normal behaviour for a group and the control group is large enough to be statistically relevant and show how the change deviates from normal behaviour. 

In  sales, decision makers are getting tougher to reach and sales practices which worked 10 years ago may not be effective today. Without evolution, sales will surely die.  I love the quotation "Doing the same thing and expecting a different result is the definition of insanity". If the sales approach isnt delivering results, why continue to do it the same way? Enter experimentation.

Market Footprint sells complex high value technology to business customers. It is not a high volume sales model, so how can we apply the experimentation mindset in this context?

If you have ever worked with six sigma, one of the sampling methods is to take a small sample of 100 things. Given 100 is not a statistically significant sample size, I am always fascinated to find that even in a small sample it is possible to gain insights in behaviour.

When selling high tech, a sample of 100,000 is extremely unlikely whereas a sample of 100 is perfectly feasible.

One area where I experiment is email.  Finding mobile numbers for people you want to speak with is tricky whereas email addresses are pretty easy to find. Sending introductory emails is therefore a routine task.

And here the lab experiment begins. I regularly tweak the wording to see if I get a better response rate. I might send the same email to 10 targets and a different email to another 10 targets and see what response rate is for each group. One email might be very clear about why I want to contact them whereas the other email might be very vague and talk solely about benefits. 

I find even with small samples there is a difference is response rates. Just like Thomas Edison, I like to continue experimenting - as a result  "I know hundreds of selling techniques that dont work".

I would be very interested to hear what other sales experiments people run - feel free to comment.