HBR: Don’t Persuade Customers — Just Change Their Behavior 

“If you are a company, you might think it would be easy to sell this person a solution to their problem. However, it’s not as easy as that – there are deeply ingrained habits here that won’t just go away.” What are you doing to motivate the consumer to change their behavior?  Below is a blog from the Harvard Business Review by Art Markman:

Don’t Persuade Customers — Just Change Their Behavior 

Most businesses underestimate how hard it is to change people’s behavior.  There is an assumption built into most marketing and advertising campaigns that if a business can just get your attention, give you a crucial piece of information about their brand, tell you about new features, or associate their brand with warm and fuzzy emotions, that they will be able to convince you to buy.

On the basis of this assumption, most marketing departments focus too much on persuasion.  Each interaction with a potential customer is designed to change their beliefs and preferences.  Once the customer is convinced of the superiority of a product, they will naturally make a purchase. And once they’ve made a purchase, then that should lead to repeat purchases in the future.

This all seems quite intuitive until you stop thinking about customers as an abstract mass and start thinking about them as individuals.  In fact, start by thinking about your own behavior.  How easy is it for you to change?

Consider your own daily obsession with email and multitasking.  Chances are, you check your email several times an hour.  Every time you notice that the badge with the number of new emails has gotten larger, you click over to your browser, and suddenly you are checking your emails again.  This happens even when you would be better off focusing your efforts on an important report you are supposed to be reading or a document you should be writing.  You may recognize that multitasking is bad and that email is distracting, but that knowledge alone does not make it easy to change your behavior.

If you are a company, you might think it would be easy to sell this person a solution to their problem. However, it’s not as easy as that – there are deeply ingrained habits here that won’t just go away.

Let’s go through some of what is required to create different habits.  The point is to recognize how much work goes into changing behavior.

First, you have to optimize your goals. Many people err in behaviors like email by focusing on negative goals.  That is, they want to stop checking their email so often.  The problem with these negative goals is that you cannot develop a habit to avoid an action.  You can only learn a new habit when you actually do something.

For marketers, this means focusing on how to get consumers to interact with products rather than just thinking about them.  As an example, our local Sunday newspaper often comes in a bag with a sample product attached that encourages potential consumers to engage with products.

Second, you need a plan that includes specific days and times when you will perform a behavior.  For example, many people find that they work most effectively first thing in the morning, yet they come to work and immediately open up their email program and spend their first productive hour answering emails (many of which could have waited until later).  So, put together a plan to triage email first thing in the morning and answer the five most important emails and leave the rest until later in the day.

Now that many people have calendar apps that govern their lives, it gets easier to put things on people’s schedule to keep them engaged with a business.  For example, services from hair salons to dentists can schedule appointments and send an email that links to Outlook and Google calendars.

Third, you need to be prepared for temptation. Old behaviors lurk in the shadows waiting to return. If you have an important document to read, and you know that you will be tempted to check your email, find a conference room in the building and use that as a home base away from your computer to get your reading done.

To keep customers from falling back into the “bad habit” of stopping off at the drugstore for oops-we-ran-out-of-it products like laundry detergent or diapers, Amazon makes it easy to schedule regular shipments right to your home. You never need to stop at the drugstore again – or even to remember to check how much laundry detergent is left in the bottle.

Fourth, you need to manage your environment.  Make the desired behaviors easy and the undesired ones hard.  If you want to avoid multitasking, then remove as many of the invitations to multitask from your IT environment.  Close programs (like Skype) that have an IM window.  Only open your email program at times of the day when you are willing to check email.  Shut off push notifications on your phone when you have an important task to complete.

Marketers need to work with their designers to come up with packaging that encourages consumers to put the product into their environment. As I discuss in my book Smart Change, Procter & Gamble helped increase sales of the air refresher Febreze by redesigning a bottle that originally looked like a window cleaner bottle (and cried out to be stored in a cabinet beneath the sink) to one that was rounded and decorative (and could easily be left out on a counter in a visible spot).

Finally, you need to engage with people. Many people feel pressure to accomplish important goals alone, but there is no shame in getting help from others.  Find productive people within your organization and seek them out as mentors to help you develop new habits.

The “positive peer pressure” technique is frequently used in service companies and organizations like Weight Watchers and Alcoholics Anonymous, but can be used by any business that’s trying to encourage repeat visits. For instance, a fitness center might offer a few free or discounted personal training sessions to new members to help them get in the habit of working out – and making them less likely to quit.

None of these factors works by itself.  You need to create a comprehensive plan to change your behavior.  Otherwise, the constant temptations to multitask will sap your productivity despite your best intentions.

This same set of principles applies for marketers.  No matter how motivated consumers may be to try your product or service, or how unhappy they may be with their current situation, if you do not focus on a comprehensive plan for changing their behavior, then you are unlikely to have a significant influence on them.

Your business will not succeed just by trying to change attitudes and preferences.  You will succeed by helping people to develop goals, create plans, overcome temptations, manage their environment and engage with others.  You will influence your customers only when you give them as much support as you would need to change your own behavior.

HBR: What Creativity in Marketing Looks Like Today

“The changes happening in consumer behavior, technology, and media are redefining the nature of creativity in marketing. Do these changing roles require a new way of thinking about creativity in marketing?” Below is a blog from the Harvard Business Review by Mark Bonchek and Cara France:

What Creativity in Marketing Looks Like Today

What makes marketing creative? Is it more imagination or innovation? Is a creative marketer more artist or entrepreneur? Historically, the term “marketing creative” has been associated with the words and pictures that go into ad campaigns. But marketing, like other corporate functions, has become more complex and rigorous. Marketers need to master data analytics, customer experience, and product design. Do these changing roles require a new way of thinking about creativity in marketing?

To explore this question, we interviewed senior marketing executives across dozens of top brands. We asked them for examples of creativity in marketing that go beyond ad campaigns and deliver tangible value to the business. Their stories — and the five wider trends they reflect — help illustrate what it means to be a creative marketer today.

  1. Create with the customer, not just for the customer

Everyone likes to talk about being “customer-centric.” But too often this means taking better aim with targeted campaigns. Customers today are not just consumers; they are also creators, developing content and ideas — and encountering challenges — right along with you. Creativity in marketing requires working with customers right from the start to weave their experiences with your efforts to expand your company’s reach.

For example, Intuit’s marketing team spends time with self-employed people in their homes and offices to immerse themselves in the customer’s world. Through this research, they identified a pain point of tracking vehicle gas mileage. Based on these marketing insights, Intuit created a new feature within its app that combines location data, Google maps, and the user’s calendar to automatically track mileage and simplify year-end tax planning.

Brocade, a data and network solutions provider, created a “customer first” program by identifying their top 200 customers, who account for 80% of their sales. They worked with these customers to understand their sources of satisfaction and identify areas of strengths and weakness. Brocade then worked with sales teams to create and deliver customized packages outlining what Brocade heard is working or not working, and what they would do about those findings. Later, Brocade followed up with these customers to report on progress against these objectives. The results? Brocade’s Net Promoter Score went from 50 (already a best in class score) to 62 (one of the highest B2B scores on record) within 18 months.

  1. Invest in the end-to-end experience

Every marketer believes the customer experience is important. But most marketers only focus on the parts of that experience under their direct control. Creative marketers take a broader view and pay attention to the entire customer experience from end to end. This includes the product, the buying process, the ability to provide support, and customer relationships over time. That takes time and resources – and it also requires bringing creative thinking to unfamiliar problems.

Kaiser Permanente believes that as health care becomes more consumer-oriented, the digital experience becomes a key differentiator. The marketing team instituted a welcome program to help improve the experience for new plan members. Members are guided on how to register for an online member portal, which provides access to email your doctor, refill prescriptions, make appointments, and more. The welcome program required coordination with many areas of the business. As a result of this program, about 60% of new members register within the first six months. These members are 2.6 times more likely to stay with Kaiser Permanente two years later.

Like many retailers, Macy’s has traditionally spent 85% of its marketing budget on driving sales. Each outbound communication is measured individually for immediate ROI. However, recently they began to take a more holistic approach, focusing on lifetime value and their most profitable segment, the “fashionable spender.” This group looks across the business to gather behind-the-scenes information on the runway, newest clothing lines, and aspirational fashion content. The metrics also changed. Macy’s started evaluating engagement per customer across time and platform instead of per marketing message per day. The results? In the last year, customers in the top decile segment increased digital engagement by 15%, cross shopping by 11% and sales by 8%.

  1. Turn everyone into an advocate

In a fragmented media and social landscape, marketers can no longer reach their goals for awareness and reputation just through paid media and PR. People are the new channel. The way to amplify impact is by inspiring creativity in others. Treat everyone as an extension of your marketing team: employees, partners, and even customers.

Plum Organics gives each employee business cards with coupons attached. While shopping, all employees are encouraged to observe consumers shopping the baby category. When appropriate, they ask a few questions about shoppers’ baby food preferences and share business cards with coupons for free products as a gesture of appreciation.

For Equinix, surveys revealed that a third of employees were not confident explaining its company story. The company introduced an internal ambassador program for its more than 6,000 employees. This program gives employees across all disciplines and levels tools to educate them on the company, its culture, products and services, and how they solve its customer’s needs. More than 20% of employees took the training online or in workshops in the first few months of the program, and employee submissions to its sales lead and job candidate referral programs were up 43% and 19% respectively.

Old Navy has traditionally dedicated their media budget to TV, particularly around back to school. However, over the past few years, they’ve focused on digital content to engage kids around positive life experiences and giving back. Through this approach, the 2016 #MySquadContest led to 32,000 kids sharing their “squads” of friends for a chance to win an epic day with their favorite influencer, creating 3 million video views, a 60% increase in social conversation about @OldNavy, and a 600% increased likelihood of recommending Old Navy to a friend (versus those that viewed TV ads only). In addition, the program led to record breaking donations for their partner, The Boys & Girls Club.

  1. Bring creativity to measurement

The measurability of digital engagement means we can now know exactly what’s working and not working. This gives marketing an opportunity to measure and manage itself in new ways. In the past, marketing measured success by sticking to budgets and winning creative awards. Today, the ability to measure data and adjust strategies in real-time enables marketing to prove its value to the business in entirely new ways.

Cisco has created a real-time, online dashboard where the entire marketing organization can look at performance. The leadership team conducts a weekly evaluation to assess, “Is what we’re doing working?” This analysis can be done across different digital initiatives, geographies, channels, or even individual pieces of content. The result is an ability to quickly adjust and re-allocate resources.

Zscaler, a cloud-based security platform for businesses, created a Value Management Office. The Office helps each client define, quantify, and track their unique business goals associated with Zscaler implementation. Zscaler and their clients hold each other accountable to specific, measurable, time-based results.

OpenTable recently launched a companion app just for restaurants to make better use of the data they’ve been collecting through their reservation system. Restauranteurs can now get a handle on their business right from their smartphone, allowing them to easily answer questions like “How did your last shift perform?” The app can tell them if they are running light on bookings, and soon they’ll be able to activate marketing campaigns to increase same day reservations. More than 50% of restaurant customers on OpenTable’s cloud-based service are already using the app, visiting an average of 9 times a day, 7 days a week.

  1. Think like a startup

In the past, marketers needed to be effective managers, setting goals well in advance and then working within budget to achieve those goals. Today, creative marketers need to operate more like entrepreneurs, continuously adjusting to sustain “product/market fit.”

The start-up Checkr represents a trend we are seeing more of in the Bay Area in particular. Marketers are adopting the business practices of entrepreneurs such as lean startup and agile development. For its background check solution, Checkr wasn’t getting the results it wanted from traditional sales and marketing tactics as it expanded into new market segments. They realized they had to think beyond marketing as promoting an existing product. Adopting an agile method of customer testing and rapid iteration, they worked with engineering to rethink the product and bring a “minimum viable product” to market for these new buyers. As a result of this integrated, agile approach, the company easily hit some early 2017 revenue targets with conversion rates that are four times what is traditionally seen in the industry.

 

The changes happening in consumer behavior, technology, and media are redefining the nature of creativity in marketing. The measure of marketing success isn’t the input, whether that’s the quality of a piece of content or a campaign, but rather the value of the output, whether that’s revenue, loyalty, or advocacy. Marketers of the past thought like artists, managers, and promoters. Today’s marketers need to push themselves to think more like innovators and entrepreneurs — creating enterprise value by engaging the whole organization, looking out for the entire customer experience, using data to make decisions, and measuring effectiveness based on business results.

 

 

Original Page: https://hbr.org/2017/03/what-creativity-in-marketing-looks-like-today

 

 

HOW TO SPOT A BULLSH!TTER

Feminist Fight Club: An Office Survival Manual for a Sexist Workplace by Jessica Bennett Is a very insightful book on fighting sexism. Below is an excerpt from the book:

Feminist Fight Club.jpg

HOW TO SPOT A BULLSH!TTER

Here’s what business bros are great at filling the air to sound like they know what they’re talking about, even when they know about as much as the white board they’re gesturing in front of. But since the ban on bullsh!t isn’t coming to America any time soon, a few crib notes for recognizing the practitioners of this dubious art.

BULLSH!TTER: The Synergist

Says “synergy” and “pipeline” without an actual noun. Thinks “ideating” and “decisioning” are words and refuses to acknowledge otherwise.

SPIRIT ANIMAL: The Rabbit

Much like the rabbit, the Synergist excretes a particular type of crap that is not particularly offensive when taken individually. But if you have to spend a day with this guy, these small pellets will amount to a huge, heaping pile of smelly crap.

BULLSH!TTER: The Empty Wordsmith

Fills the room with long, vague phrases that mean nothing like, “Let’s take a step back for a minute” or “Let’s focus on the low-hanging fruit,” then offers a generic platitude like, “We’re all in this for the mission, right?”

SPIRIT ANIMAL: The Pigeon

Like the pigeon, the Wordsmith’s sh!t drops in unexpectedly in the middle of a meeting, leaving your mouth agape and your blazer covered in goo .

BULLSH!TTER: The Grammarian

Loves the phrase “Let’s unpack that statement” as an excuse to break said statement into its component parts, repeating what you’ve already said but in terms a child could understand. Also prone to chiming in at the end of a meeting to say, “So in summary … “

SPIRIT ANIMAL: The Mouse

The mouse’s bullsh!t is inoffensive and even sort of cute, if you take the repetition of your words as his way of complimenting your idea. But one too many rounds of “Let’s unpack that” and you’ve likely got a full-fledged infestation on your hands.

BULLSH!TTER: The Flatterer

Compliments the overall tone of the meeting without saying anything of substance. “I don’t want to be too navel gazing but I feel like we’re making great progress.” He also enjoys agreeing with smart things other people have said, in hopes that his words will be associated with their wisdom.

SPIRIT ANIMAL: The Dog

Like a puppy, this bullsh!tter smells a good idea and feels the need to piss on top of it, in order to add his own scent to the mix.

BULLSH!TTER: The Disrupter

Uses the words “disrupt,” “disruption,” or “disruptive technology” because he thinks it makes him sound cool. Also frequently insists on “action items” and “key takeaways.”

SPIRIT ANIMAL: The Cow

The cow can’t help but put forth a horribly “disruptive” pile of heaping sh!t. The good news is he’s impossible to miss for anyone with a sense of smell.

BULLSH!TTER: The PowerPointer

Produces elaborate paper handouts or PowerPoint presentations. The more he dresses up the content-Venn diagrams, fancy fonts-the more he thinks it will “distract” from the lack of substance.

SPIRIT ANIMAL: The Sloth

The sloth takes days to coordinate its weekly poop, traveling a rough terrain of foliage, branches, and tree trunk in order to finally get the job done (at the bottom of its tree). It’s a lot of effort put into an act that leaves the sloth vulnerable to predators.

BULLSH!TTER: The Closer

Arrives to the meeting completely unprepared, waits until it’s almost over, then chimes in to question the reason for having the meeting in the first place. “Wait, guys, can I just ask what we’re trying to do here?”

SPIRIT ANIMAL: The Cat

Sneaky, undetectable, and likely to be hiding in a dark corner under a whiteboard somewhere-you won’t see this bullsh!t coming until its stench suddenly hits you.

Three Traps: Complacency, Cannibalization, Competency

The Three-Box Solution: A Strategy for Leading Innovation by Vijay Govindarajan is a great book to help leader innovate with simple and proven methods for allocating an organization’s energy, time, and resources across the three boxes:

Box 1: The present—Strengthen the core

Box 2: The past— Let go of the practices that fuel the core business but fail the new one

Box 3: The future—Invent a new business model.

Below is an excerpt on the three behavior traps. How do you manage them to the lead your organization to innovate?

Three TrapsThree Box Solution.jpg

While there were many within IBM who clearly understood the implications of both nonlinear shifts, their insights had difficulty penetrating the entrenched logic of the past. The dominant logic of the past exerts its hold on business cultures and practices in three distinctive but tightly interlocking ways. I think of their dynamic effects as traps that snare the unprepared. All three have common origins in mind-sets that focus excessively on past values, behavior, and beliefs.

The Complacency Trap

Current success conditions a business to suppose that securing the future requires nothing more than repeating what it did to succeed in the past. This is the complacency trap. Complacency shrouds the future in a fog of misplaced confidence, hiding from view a clear understanding of the extent to which the world is changing around you.

IBM’s extraordinary success driving revenues in its Box 1 mainframe business masked difficulties to come. Rather than face up to looming threats to the mainframe business, IBM applied temporary patches. One such patch ‘was to change the revenue model from leasing mainframes to selling them outright. S This produced a pleasing surge in near-term revenues that postponed IBM’s day of reckoning.

The loyalty of successful organizations to the past is often so potent that they become quite ingenious at ignoring the onset of fatigue in the Box 1 business. Instead of building the future day by day, IBM prolonged it’s past with what amounted to an accounting change. The resulting years-long period of bolstered revenues made it easy for the company to think that everything was just fine-four words that fairly summarize complacency.

Another way to understand how IBM fell into the complacency trap is that the company’s continuing Box 1 profitability delayed development of a sense of urgency that might have motivated a more prescient Box 2 judgment: that it was important to invest aggressively in the new enterprise model of client/server computing.

This is the dark side of success. No matter the industry or company, each great innovation spawns a steady accumulation of Box I-based structures, processes, and attitudes of the kind that blinded IBM to its predicament. IBM mainframes were not simply smart machines; they were smart machines that over the years had created at customer work sites whole new layers of enterprise management that had never existed before.

Mainframe computers were island fortresses, secured and operated by a newly empowered IT function and inaccessible, except through IT proxies, to the rest of the enterprise. If a technology can embody a governing philosophy, the mainframe’s philosophy was exactly opposite that of the open, accessible internet that was yet to appear. Even before the internet emerged as a business tool, there were pitched battles within almost every company about making valuable mainframe data accessible to and usable by employees with networked PCs. This increasingly loud demand clashed with the mind-set of IBM’s IT customers, who saw their mission as protecting the security and integrity of corporate data: allowing liberal access would lead to data corruption and to proliferating unreliable versions of the “truth.”

In fact, customers can play an important role in deepening a complacency trap. IBM had collaborated with its customers in creating what became an entrenched system of governance for computerized organizations. That system’s structures and attitudes were a self-reinforcing feedback loop amplified by IBM’s large-enterprise customers.

Ultimately, a more modern version of the mainframe emerged and made peace with the rest of the IT infrastructure. Today’s version powers big data analytics and other applications in many large enterprises. But in the IBM of the 1990s, mainframes cast a long shadow over the emergent model of more open, democratized network computing.

The Cannibalization Trap

The cannibalization trap persuades leaders that new business models based on nonlinear ideas will jeopardize the firm’s present prosperity. So, like antibodies attacking an invading virus, they protect the Box 1 business by resisting ideas that don’t conform to models of the past.

At its heart, the fear of cannibalization reflects a wish to keep the world from changing. It is perhaps easy to understand that wish, but it’s much harder to excuse it. The glib answer to those who suffer from this fear is to remind them that change is inevitable and the world will change either with them or without them. When a business allows worries about cannibalization to interfere with its strategy, it has overinvested in its past and is doomed to undermine its future.

Cannibalization is typically understood-and feared-as a near-term threat. As foresighted as IBM was in developing its personal computer in the early 1980s, forces marshaled within the company to protect the legacy business. Those who feared the PC believed it had the potential to threaten the mainframe computing model, perhaps by feeding the growing appetite to liberate enterprise data or by diverting attention and investment away from the company’s dominant business.

People who fear new technology are usually more right than wrong about its potential to supersede legacy products. The truth is, every Box 1 business has reason to fear, sometimes even hate, whatever shiny new thing is being launched. When Steve Jobs gave a big push to the Macintosh launch toward the end of his first stint at Apple, the group in charge of the incumbent Apple II felt threatened and undercut. It was as if cofounder Jobs had sponsored an insurrection.”

In reality, however, cannibalization should be understood as a long- term benefit. The new Apple Macintosh embodied features that soon enough would make its predecessors obsolete. If Apple hadn’t moved quickly, a competitor-maybe even IBM-would have filled the vacuum. Given its history, IBM’s embrace of microcomputing was unexpected. But it quickly set the standard for PCs and legitimized them as tools for both home and business users. While IBM’s marketing of the PC initially tilted toward home users, the real revenue bonanza came from businesses. Suddenly, at least part of IBM had reason to root for client/ server computing. No matter what anyone in the mainframe business thought about it, the client/server model had the shine of inevitability.

So, while companies must take the fear of cannibalization seriously as a problem to manage, it can’t become a reason not to act with foresight when new nonlinear strategies or business models present an opportunity.

The Competency Trap

The competency trap arises when positive results the current core business encourage the organization to invest mainly in Box 1 competencies and provide little incentive for investing in new and future-oriented competencies. In established companies built around a spectacular success, such as IBM’s industry-defining mainframe computers, it is natural to want to create a workforce whose skills dominantly reflect the legacy success. But a competency trap is a double- edged sword. IBM’s investments in Box 1 competencies helped its mainframe business. But Box 1 logic asks, why invest in skills not vital to the company’s current profitability? That is why Box 2 is necessary.

IBM eventually recognized that the dominant computing model it had exploited to achieve such great success was changing. Yet, despite having made significant investments in a robust R&D function, it was having chronic difficulty incubating new ventures. It struggled to find what IBM insiders called “The Next Big Thing.” The organization appeared to have succumbed to a “four monkeys” value system.

Believing that there were indeed systemic problems, then-CEO Louis Gerstner commissioned an internal inquiry to identify root causes. The inquiry, led by Bruce Harreld, IBM’s head of corporate strategy, confirmed Gerstner’s fears. Looking at a number of recent examples of flawed new-business incubation, Harreld’s team concluded that the company’s dominant Box 1 systems, structures, processes, and culture had:

  • Created a powerful bias for near-term results.
  • Encouraged a focus on existing customers and offerings to the extent that new technologies and nonlinear trends were either underestimated or escaped detection entirely.
  • Burdened new businesses with unreasonably high performance goals-especially damaging to ventures that targeted newer, riskier, but often more promising markets.
  • Motivated an unimaginative approach to market analysis that impaired the company’s ability to understand the sorts of “embryonic markets” most likely to spawn nonlinear Box 3 ideas.
  • Interfered with development of the skills necessary to adaptively transition a new business through its emergent and growth stages until it finally became an established enterprise.
  • Caused assorted failures of execution, many owing to the inflexibility of Box l=driven organizational structures, which leaders of new ventures “were expected to rise above … Voicing concerns over [such challenges], even when they were major barriers to new business initiatives, was seen as a sign of weakness.”

What the report didn’t say is important to note. IBM’s problem was not caused by a lack of research competency. On the contrary, its workforce possessed at least some expertise in a wide array of disciplines and technologies. Among its research projects were some that were quite promising and others that were highly speculative, unproven, and obscure. But for all the reasons listed, even ideas that managed to get traction were being ineptly developed and executed. What IBM needed was a well-designed process for enabling, supporting, and rewarding its maverick monkeys and likewise for managing new ventures onward through their developmental stages.

Such a process typically should incorporate a range of structural, cultural, and leadership remedies. At IBM-first under Gerstner and later Sam Palmisano-these distinctive remedies came together under the emerging business opportunities (EBO) framework, which created new structures, changes to the buttoned-down IBM culture, and more versatile and adaptive leadership behavior.

5 Steps for Tackling Tough Conversations

Blanchard LeaderChat

Business Woman Pointing To Coworker. He Refuses TaskIn a new article for Talent Management magazine, consultants Rachel Eryn Kalish and Pat Zigarmi, coauthors of The Ken Blanchard Companies Challenging Conversations training program, share how leaders can address intense and emotionally charged discussions with open, vibrant, and direct communication.

In an article titled, Conflict? Talk It Out, they explain that while most leaders recognize the importance of open and direct communication, many are reluctant to enter into these challenging conversations. That’s a mistake, according to the authors.  Withholding information or avoiding difficult discussions tends to make things worse. Dealing with conflict always calls for more communication, not less.

To help leaders more easily succeed with challenging conversations they face, the authors suggest a five-step process that can help both parties speak up without pushing the other person away.

5 Steps for Tackling Tough Conversations

  1. State concerns directly. Communicate in a way that doesn’t alienate the…

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HBR: The Best Ways to Hire Salespeople

How are you hiring salespeople? Do you use talent assessments to insure your they are successful? The Northeastern Retail Lumber Association (NRLA) has a great tool to assess your salespeople. Click on this link to get more information. NRLA/LMS Below is a blog from the Harvard Business Review by Frank V. Cespedes and Daniel Weinfurter.

The Best Ways to Hire Salespeople

Many firms talk about talent management, but few deal systematically with a basic fact: average annual turnover in sales is 25 to 30%. This means that the equivalent of the entire sales organization must be hired and trained every four years or so, and that’s expensive.

Consider these stats. Direct replacement costs for a telesales employee can range from $75,000 to $90,000, while other sales positions can cost a company as much as $300,000. Moreover, these figures don’t reflect the lost sales while a replacement is found and trained. In sectors like medical devices, big capital equipment, and many professional services, including these opportunity costs can push turnover cost to $1 million or more per event.

The challenge is compounded by the fact that there is no easily identified resource pool for sales positions. According to Howard Stevens in Achieve Sales Excellence, more than 50% of U.S. college graduates, regardless of their majors, are likely to work in sales. But of the over 4,000 colleges in this country, less than 100 have sales programs or even sales courses. And, even if companies are lucky enough to find qualified grads, the increased data and analytical tasks facing many sales forces mean that productivity ramp-up times have increased. Each hire is now a bigger sunk cost for a longer time.

Bottom line: companies typically spend more on hiring in sales than they do anywhere else in the firm. So how do you improve the returns on this investment? Here are four places to start:

Hire for the task. In business, you hear so many opinions about what makes for a good salesperson. But most are a bland summary of the Boy Scout Handbook, with traits like extroversion, assertiveness, empathy, modesty, and an “achievement orientation.” These platitudes are often reflected in firms’ competency lists and are so broad that, at best, they simply remind us that people tend to do business with people they like (but not always and not as often as many sales trainers assume). At worst, these abstractions are irrelevant to the execution of business strategy, and they make hiring, in sales and other functions, a classic example of the cloning bias: managers use these slogans to hire in their own image.

Selling jobs vary greatly depending on the product or service sold, the customers a salesperson is responsible for, the relative importance of technical knowledge, and the people contacted during sales calls. A review of hundreds of studies about sales productivity finds that “[t]he results of this research have simply failed to identify behavioral predispositions or aptitudes that account for a large amount of variance in performance for salespeople. In addition, the results of this research are quite inconsistent and, in some cases, even contradictory.” Common stereotypes about a “good” salesperson (e.g., pleasing personality, hard-wired for sociability, and so on) obscure the realities you face.

Selling effectiveness is not a generalized trait. It’s a function of the sales tasks, which vary according to the market, your strategy, the stage of the business (i.e., startup or later stage), the customers targeted by your strategy, and buying processes at those customers. This is true even for firms in the same industry. Think about the difference between sales tasks at Nordstrom, where personalized service and advice are integral to strategy execution, and Costco, where low price and product availability make sales tasks less complex and variable.

The first step in smart hiring and productivity is understanding the relevant sales tasks in your market and strategy and then reflecting those tasks in hiring criteria and a disciplined hiring process.

Focus on behaviors. Research based upon thousands of exit interviews shows that a primary cause of poor performance and turnover is poor job fit. People, especially salespeople with a variable pay component, become frustrated when they’re hired for tasks that are a poor fit with their skills and preferences. Conversely, as the saying goes, “You hire your problems.” Zappos CEO Tony Hseih estimates that bad hires have cost his firm $100 million. Famously, Zappos will pay people to leave voluntarily after a few months on the job.

The key is to focus on the behaviors implied by the sales tasks. In many firms, this means upgrading assessment skills. Managers are excessively confident about their ability to evaluate candidates via interviews. In reality, studies indicate a low correlation (generally, less than 25%) between interview predictions and job success, and some indicate that interview processes actually hurt in hiring decisions: the firm would have done better with blind selection procedures! The best results, by far, occur when those making hiring decisions can observe the potential hires’ job behaviors and use a recruitment process based on a combination of factors, as illustrated in the following graphic:

There are many ways to do this, including simulations, interviewing techniques, or (as at Zappos) providing an incentive for self-selection after recent hires experience the required behaviors. Especially in expensive sales-hiring situations, many organizations could emulate the practice used by investment banks and consulting firms when hiring MBAs: the summer job is, in effect, an extended observation by multiple people at the firm of the candidate’s abilities before a full-time offer is extended.

Then, immerse reps in the tasks they will encounter in working with customers. At HubSpot, which provides web-based inbound marketing services to businesses, Mark Roberge has sales hires spend a month in classroom-style training but also doing what their customers do: create a website from scratch and keep that site populated with relevant content. Roberge notes, “they experience the actual pains and successes of our primary customers: professional marketers who need to generate leads online. As a result, our salespeople are able to connect on a far deeper level with our prospects and leads.”

Be clear about what you mean by relevant “experience.” Previous experience is the most common criterion used by sales managers in talent assessment. In one survey, over 50% of respondents cited “selling experience within the industry” as their key selection criterion, and another 33% cited “selling experience in [an] other industry.” Driving this view is a perceived trade-off between hiring for experience and spending money on training. But because selling effectiveness depends upon a company’s sales tasks, “experience” is an inherently multidimensional attribute. It may refer to experience with any (or any combination of) the following:

  • A customer group: e.g., a banker or other financial services recruit hired by a software firm to call on financial firms; or, in health care, firms sell different products, but many sell to hospitals.
  • A technology: an engineer or field-service tech hired to sell a category of equipment.
  • Another part of the organization: a service rep moved to sales because internal cross-functional support is a key sales task and that rep “knows the people and the organization.”
  • A geography or culture: a member of a given nationality or ethnic group who knows, and has credibility within, the norms of the relevant customer’s culture.
  • Selling: an insurance agent or retail associate with experience in another sales context.

The relevance of each type varies with your sales tasks. So consider what type is, and is not (see below), relevant, and require the people doing sales hiring to clarify what they mean by experience.

On-going talent assessments. Markets have no responsibility to be kind to your firm’s strategy and sales approach. It is leadership’s responsibility to adapt to markets and develop the competencies required today, not yesterday.

As organizations confront new buying processes, required competencies are changing. The figure below, based on an extensive database of company sales profiles, indicates the changing nature of sales competencies at many firms. Competencies that, only a decade ago, were considered essential are now lower in priority.

Does this mean that developing leads, qualifying prospects, and adapting to different buyer motivations are no longer important? No. Rather, as one should expect in a competitive activity where success is ultimately measured by relative advantage, the focus of productivity improvement in sales is shifting. Yesterday’s sales strengths have become today’s minimum skill requirements.

This underscores the need for on-going talent assessments to stay in-touch with changing tasks and required behaviors. The good news is that the tools for doing such assessments, based on behavioral research findings, are more available and have more granularity and practicality for sales leaders. Conducting a skills inventory and determining the best fit for your sales tasks need not be the standard mix of folklore, various embedded biases by front-line managers, and the content-free platitudes about “selling” that populate many blogs. And it is increasingly necessary because companies must ultimately be worthy of real talent.

It’s often said that many firms maintain their equipment better than they do their people. If so, you ultimately get what you don’t maintain, especially in sales.

Are you a “Come On” leader, or a “Go On” leader?

Why Lead Now

I recently went out for some drinks with friends of mine who both work in the medical profession. Each of us being in leadership roles of some form, the discussion turned to styles of leadership. They both agreed that, in their line of work, you couldn’t work with junior team members – new doctors, and nurses; and tomorrow’s leaders of the health system – simply by telling them what to do. You had to be there to show your team how things should be done, and then let them take the reins whilst you step back.

This reminded me of a speech I’d heard about four years ago. I don’t remember all of the details, but I remember the key opening line. In life, you’ll come across two types of leaders. There are “Come On” leaders – leading from the front, setting the example, and pioneering the way for their…

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