HBR: What Most Companies Miss About Customer Lifetime Value

Are you measuring your customers’ lifetime value? Are you investing in and enabling customer capabilities? Below is a blog from the Harvard Business Review by Michael Schrage.

What Most Companies Miss About Customer Lifetime Value

For managers and marketers alike, the power to calculate what customers might be worth is alluring. That’s what makes customer lifetime value (CLV) so popular in so many industries. CLV brings both quantitative rigor and long-term perspective to customer acquisition and relationships.

“Rather than thinking about how you can acquire a lot of customers and how cheaply you can do so,” one marketing guide observes, “CLV helps you think about how to optimize your acquisition spending for maximum value rather than minimum cost.” By imposing economic discipline, ruthlessly prioritizing segmentation, retention, and monetization, the metric assures future customer profitability is top of mind.

For all its impressive strengths, however, CLV suffers from a crippling flaw that blurs its declared focus. The problem is far more insidious than those articulated in venture capitalist Bill Gurley’s thoughtful CLV vivisection. In fact, it subverts how customers truly become more valuable over time.

When my book Who Do You Want Your Customer To Become? was published, five years ago, its insight was that making customers better makes better customers. While delighting customers and meeting their needs remain important, they’re not enough for a lifetime. Innovation must be seen as an investment in the human capital and capabilities of customers.

Consequently, serious customer lifetime value metrics should measure how effectively innovation investment increases customer health and wealth. Successful innovations make customers more valuable. That’s as true for Amazon, Alibaba, and Apple as for Facebook, Google, and Netflix. No one would dare argue that these innovators don’t understand, appreciate, or practice a CLV sensibility.

Pushing organizations to rethink how they add value to their customers stimulates enormously productive discussion. A fast, cheap, and easy exercise for clarifying the innovation investment approach emerged when I operationalized my book’s principles. The simple but provocative tool generates actionable insights. Having facilitated scores of workshops around it worldwide, I know it gets results.

Ask people to complete this sentence: ”Our customers become much more valuable when…”

The immediate answers tend to be predictable and obvious. For example, customers become much more valuable when “they buy more of our stuff” or “they pay more” or “they reliably come back to us” or “they’re loyal to our brand.”

There are no prizes for recognizing that these initial responses reflect the variables that go into computing traditional CLVs. While everyone agrees these things are important, participants in the exercise quickly recognize how limited, and limiting, those instant answers are.

It doesn’t take long before the answers start to incorporate an investment ethos that sees customers more as value-creating partners than as value-extraction targets. For example:

Our customers become much more valuable when…

  • they give us good ideas
  • they evangelize for us on social media
  • they reduce our costs
  • they collaborate with us
  • they try our new products
  • they introduce us to their customers
  • they share their data with us

Almost without exception, these follow-on answers are disconnected from how the firm calculates customer lifetime value. But, almost without exception, these responses push people to revisit and rethink how customer value should be measured. At one company the immediate response was to look for correlations between CLV and net promoter score. At another, the conversation led to discovering a core group of top-quintile CLV clients, who served as essential references for closing deals with firms identified as top-decile CLV clients. Those reference firms instantly won renewed attention and special treatment.

The more diverse and detailed the answers, the more innovative and insightful the customer investment. The most-productive conversations came from cross-functional, collaborative interaction — not just from marketing, R&D, or business unit leaderships.

For example, for a global industrial equipment provider, customers became more valuable when they performed more self-service diagnostics and shared that information with the firm. That led directly to the firm’s technical services teams offering cloud-connecting APIs and SDKs that let customers customize remote diagnostic gateways for their equipment. Customers embracing self-diagnostics inherently boosted their CLV. Not incidentally, information access swiftly redefined how the company qualified prospects and computed lifetime customer value.

By investing in and enabling new customer capabilities, firms create new ways for customers to increase their lifetime value. Making customers better truly does make for better customers.

But in keeping with the segmentation spirit of CLV, the question can easily be edited and modified to produce targeted insights. For example, at one workshop we used two versions of the sentence: “Our best customers become much more valuable when…” and “Our typical customers become much more valuable when…”

The innovation investment insights for one’s best customers proved qualitatively and quantitatively different from those for one’s typical customers. Forcing people to rigorously define the distinctions between typical and best frequently leads to even greater creativity around customer value.

My favorite CLV vignette emerged from a session at a global financial services giant in London. As the responses grew longer, richer, and more detailed, one of the participants called attention to an interesting fact. Some of the answers, he observed, began with “we,” as in, “Our customers become much more valuable when we do something.” The others, however, began with “they,” as in, “Our customers become much more valuable when they do something.”

“What is the difference between the potential customer lifetime value when we do something versus when they do it?” he asked. After a few moments of silence, the conversation went to a whole other level of engagement, around how the firm wanted to engage with and invest in its customers.

The best investment you can make in measuring customer lifetime value is to make sure you’re investing in your customers’ lifetime value.

HBR: Sales Reps, Stop Asking Leading Questions

What is your approach to selling? Do you use a consultative sales approach? Below is a blog from the Harvard Business Review by Scott Edinger.

Sales Reps, Stop Asking Leading Questions

Most executives recognize a need for their sales team to act as consultants and sell “solutions.” But many CEOs would be shocked at how poorly their sales teams execute on the strategy of consultative selling. I recently had a conversation about this with the director of purchasing at one of my client companies who told me: “I can always tell when a rep has been through sales training, because instead of launching in to a pitch, they launch into a list of questions.” Too often, sales teams trying to “do” consultative selling don’t move beyond the rudimentary application of solution-sales principles: “Get the team to ask questions, and then match our capabilities to what the client has said.” So the sales force sits down and makes a list of questions designed to extract information from their prospective clients, in a kind of interrogation. I’ve sat through many sales calls like this, and trust me it isn’t pretty.

To maximize the power of consultative selling, we have to move beyond a simplistic view of solution selling. It’s not about grilling the buyer but rather engaging in a give-and-take as the seller and buyer explore the client’s priorities, examine what is in the business’s best interests, and evaluate the seller’s solutions. Asking questions is part of this engagement process, but there’s a right way to do it. Here are some important pitfalls to avoid:

Avoid checklist-style questioning. A few years ago I was working with a financial services firm that hadn’t seen much success in adopting a solution sales approach. When I watched a few meetings it was easy to see why. The sellers I traveled with did a decent job of asking questions and getting answers, but it felt more to me (and to the prospects, based on their responses and disposition) like they were going through a checklist. As a result, their sales calls felt mechanical and staid. While they gleaned some good information about clients’ needs, allowing them to dovetail the products they were selling into the conversation, there was little buy-in from the prospects they were talking to. There was no sense of shared understanding or that the client had confidence that the seller would be able to help them grow their business. I’ve observed this scenario with both beginner and experienced sellers, as well as senior partners in Big Four consulting firms: when they focus solely on asking questions, they rarely get the information they really need.

Avoid asking leading questions. Nothing falls flatter in a sales call than a question that is clearly self-interested, or makes the seller the master of the obvious. I joke about this in speeches using the example: “If I could show you something interesting, would you be interested?” The kind of questions sales professionals are taught to ask typically focus on drawing attention to client problems, pain points, and sources of dissatisfaction, so the client will then view the seller’s offerings as a solution. It can be useful to explore the buyer’s challenges, but when a seller asks a ridiculous question with an obvious answer such as, “What’s the implication of data center failure?” it can backfire. It’s counterproductive to ask patently manipulative questions because buyers immediately put up their defenses and will be skeptical of the seller’s intentions – and intelligence. Instead, ask questions that demonstrate genuine curiosity, empathy, and a desire to understand. Try to go deeper than uncovering a list of problems to be solved: ask what the buyer hopes to achieve with your product or service, and why this is a priority now.

Avoid negative conversational behaviors. When sellers are myopically focused on persuading a prospect or winning a piece of business, it creates a negative vibe in the relationship. In fact, when we look at what happens in the brain during this kind of one-sided selling interaction, we find that buyers may experience that negativity at a chemical level. In her article, “The Neurochemistry of Positive Conversations,” Judith Glaser highlights specific behaviors that contribute to negative chemical, or “cortisol-producing,” and positive chemical “oxytocin-producing” reactions in others. Among the behaviors that create significant negative impacts are being focused on convincing others and behaving like others don’t understand. Precisely the stereotypical behaviors that give sellers a bad name: being too aggressive, not listening, and going on and on about their offerings. Conversely, the behaviors that create a positive chemical impact include being concerned about others, stimulating discussions with genuine curiosity, and painting a picture of mutual success. Masters of the consultative sales approach apply these conversational techniques to their discussions with prospects and clients to create a collaborative dynamic with positive outcomes.

 

The consultative sales approach may seem simple, but it isn’t easy to execute well. Sales people cannot just go to training for a few days and gain mastery of this skill set, any more than an accountant going to a week-long course can emerge with the skills of a CFO. Consultative selling is a fundamental business strategy centered on creating value through insight and perspective that paves the way toward long-term relationships and genuine solutions for your customers. When sellers do it right, that strategy comes to life.

 

HBR: Organizing a Sales Force by Product or Customer, and other Dilemmas

Sales can be full of double-edged swords. How do you leverage the edge you want and blunt the ones you don’t? Below is a blog from the Harvard Business Review by Andris A. Zoltners, Sally E. Lorimer, PK Sinha.

Organizing a Sales Force by Product or Customer, and other Dilemmas

HP announced in March that it was combining its printer and personal computer businesses. According to CEO Meg Whitman, “The result will be a faster, more streamlined, performance-driven HP that is customer focused.” But that remains to be seen.

The merging of the two businesses is a reversal for HP. In 2005, HP split off the printer business from the personal computer business, dissolved the Customer Solutions Group (CSG) which was a sales and marketing organization that cut across product categories, and pushed selling responsibilities down to the product business units. The goal was to give each business unit greater control of its sales process, and in former CEO Mark Hurd’s words, to “perform better — for our customers and partners.”

The choice — to build a sales organization around customers or products — has vexed every company with a diverse product portfolio. It’s not uncommon for a firm such as HP to vacillate between the two structures. And switching structures is not always a recipe for success.

Let’s rewind the clock to 2005 at HP, before the CSG was eliminated. Most likely, those responsible for the success of specific products (say printers) were often at odds with the CSG. The words in the air may have been something like “Printers bring in the profits, and our products are not getting enough attention” or “The CSG people want customer control, but we have the product expertise.” And from the CSG sales team, we can imagine the feelings, “We are trying to do the best for HP and for customers. The printing people are not being team players.”

Especially when performance lags, people in any sales structure see and feel the disadvantages and stresses that their structure creates. But they often see only the benefits of the structure that they are not operating in. The alternative looks enticing. Unreasonably so.

HP’s dilemma illustrates one of many two-edged swords of sales management. These swords are reasonable choices that sales leaders make that have a sharp beneficial edge, but the very nature of the benefit is tied to another sharp edge that has drawbacks. Unless the undesirable edge is dulled, the choice cannot work.

Consider a choice like the one HP made recently to organize its sales force by customer rather than by product.

  • The beneficial edge: Salespeople can understand the customer’s total business, can cross-sell and provide solutions (not just products), and can act as business partners rather than vendors for their customers.
  • The undesirable edge: Salespeople will have less product expertise and focus. And it will be difficult for the company to control how much effort each product gets.
  • Dulling the undesirable edge: The company could create product specialists to assist customer managers (although this would add costs and coordination needs, and would work only if salespeople and the culture were team-oriented). It could also use performance management and incentives to manage effort allocation.

    Sales is full of such double-edged swords. For example:

  • If you hire mostly experienced people, they will become productive rapidly. But they will come with their own ways to do things and may have trouble fitting into the new environment.
  • If you drive a structured sales process through the organization, things will be more transparent and organized, and coordination across people will be easier. But out of the box thinking will be diminished, and managers might use the defined structure to micro-manage their people.
  • If you give salespeople customer ownership and pay them mostly through commissions, you will attract independent, aggressive salespeople and encourage a performance-oriented culture. But this will discourage teamwork and create a brittle relationship based mostly on money.

The effective sales leader recognizes the two edges of each of these (and other) choices. He or she works to sharpen and leverage the good edge, while dulling the impact of the other edge. The overly optimistic leader who sees the benefits of only one choice will lead his or her sales force into peril!

We have offered a few examples of double-edged swords of sales management. There are many, many more. Do add to our list, and tell us how you leverage the edge you want, and blunt the one you don’t.

 

HBR: Driving Sales Success This Quarter, This Year, and Beyond

Is your sales force drifting into mediocrity? What are you using to drive success in the short, medium, and long term? Below is a blog from the Harvard Business Review by Andris A. Zoltners, Sally E. Lorimer, PK Sinha.

Driving Sales Success This Quarter, This Year, and Beyond


Most sales forces focus a good deal of their attention on the short term — on bringing in today’s sales or making this quarter’s numbers. It’s understandable: The sales team wants to be successful. Quarterly goal attainment is a visible measure of success, and often a determinant of incentive pay. Analysts and investors track company performance against quarterly goals, so company executives push the sales team to deliver on the company’s promise to the investment community. Sales leaders divide the national sales goal among sales managers, who allocate their portion of the goal to their salespeople.

In short, everyone feels the pressure to deliver quarterly results.

But sales forces that are managed only to meet short-term needs can drift into mediocrity. In extreme cases, the sales culture can become toxic, as salespeople make minor ethical compromises to reach short-term goals, and those behaviors evolve and spread. Over time, sales forces that focus excessively on the short term may not survive.

Achieving a balance between today and tomorrow requires implementing a mix of sales-force decisions and programs to drive success in the short, medium, and long term. And it requires anticipating the future consequences of decisions so that actions that boost immediate results don’t hurt performance down the road.

The best sales leaders focus their attention on multiple timeframes as they make decisions and implement programs to impact performance. For example:

They develop and retain the best sales talent this quarter by recognizing and appreciating successes; this year by training and coaching to develop competencies; in future years by hiring the best talent and creating opportunities to build rewarding careers, while dealing effectively with poor performers.

They motivate salespeople this quarter with sales incentives and feedback on goal attainment; this year with a top-notch sales compensation plan and recognition program; in future years by creating and sustaining a winning sales culture.

They encourage productive use of sales time this quarter by communicating company priorities; this year by reducing role pollution (e.g., sales time spent on duties belonging to customer service); in future years by designing the best sales force structure and providing enablers (data, systems, and tools) for supporting ongoing sales force and customer needs.

The best sales leaders understand the downside of excessive short-term focus. They recognize that actions to boost immediate results can sometimes hurt performance later, and they anticipate and plan for any future consequences of their actions. For example:

They structure the sales team around markets, not people. To keep a good employee, it can be tempting to create a job to match the needs of that individual. An example of this is redesigning a sales region for a manager who has moved to a new and less convenient location. Although it may keep the manager happy in the short term, eventually they are likely to become frustrated by trying to lead a region that doesn’t make good business sense. Worse, the gerrymandered region is likely to outlast the tenure of the manager it was designed for. Sales jobs are best designed from a customer and company perspective first — then the best personnel can be wisely matched with jobs that are consistent with long-term business needs.

They avoid rushing to fill a position. A vacant sales position, say, for a key account role, can create a temporary setback and lost sales opportunity. But a mediocre “warm body” hire to fill the position places sales in jeopardy for a much longer period. The best sales leaders anticipate the long-term consequences of their hiring decisions. It can take a year or more to recover from hiring the wrong person for a sales position. Even worse, it can take three years or more to recover from hiring or promoting the wrong person to a manager position. Sales leaders often regret hiring without sufficient forethought, and then regret taking too long to let the poor performer go.

They anticipate the future consequences of sales compensation decisions. A startup online advertising company in the early days of e-commerce paid its sales force entirely on commission. This worked well at first, attracting motivated people to the sales force and encouraging them to work hard to generate trial in a new and uncertain market. Sales took off and selling got easier. Soon salespeople were earning six-figure incomes without having to work particularly hard. As competitors entered the market and sales growth slowed, compensation costs grew too high for the sales output. Salespeople earned big commissions on easy repeat sales and rarely pursued new business. Sales leaders had not anticipated this situation when they first set up the sales compensation plan. Yet they were afraid to change the plan for fear salespeople would jump ship. The best sales leaders plan ahead when they set up a compensation structure. They make adjustments every year to keep compensation costs aligned with market realities and to avoid a situation where salespeople feel entitled to ever-escalating pay (even if the market spirals downward).

Leaders can drive immediate outcomes in a sales force by emphasizing short-term results alone. But ensuring sustained success requires a continual focus on a broad portfolio of decisions and programs, while anticipating the consequences of today’s actions on tomorrow’s results.

HBR: A Guide to Cold Emailing

Have you ever used email for cold calling? If not, this article may be useful to learn how to use email to attract new clients. Below is a blog from the Harvard Business Review by Tucker Max.

A Guide to Cold Emailing

Cold emailing is harder than most communication for two reasons. You have no relationship with your audience yet, and you lack non-verbal feedback, so you can’t modify your approach in real time. As a result, most cold emails fail.

But they can work well. People have built careers and launched start-ups with little more than cold emails. (By the way, I am not talking about sales emails, which tend to be sent in bulk. This article is about cold emailing a specific person.)

There isn’t much research on cold email, though Shane Snow did an interesting experiment for his book Smartcuts. He sent 1,000 cold emails to executives and got almost no response. So he tried again with a smaller slice of the same group and got better results by applying a few principles that line up with my extensive cold email experience and some great advice from people like Wharton psychology professor Adam Grant, and entrepreneurs Tim Ferriss and Heather Morgan.

An effective cold email does five things. It should:

  1. Tailor the message to the recipient. You need to do your research. But there’s a right way and a wrong way to do that.

I’ve received about 25,000 cold emails since 2004 (yes, I do keep track). Many of them make a generic mention of something on the first page of Google results for my name, then launch into a ridiculous, tone-deaf request, like “Hey, can you read my 300-page novel, give me extensive notes, and then get me an agent?” That is not personalization.

Personalization means that you’ve thought about who this person is, how they see the world, what interests them, and what they want — you’ve developed a “theory of mind” about the recipient. This shows them you have put work into understanding them.

You also make it clear why you are emailing them as opposed to anyone else. Research shows that people are far more motivated to help others when they feel uniquely qualified to do so. By outlining precisely where they fit in, you can tell a story that makes sense to them.

It’s also important to make sure your request isn’t easily fulfilled another way. I cannot tell you how many emails I get asking for advice on how to write a book, even though I literally wrote a book on that exact subject. Through personalization, you avoid that, because you’ve read up — you know the book’s out there.

  1. Validate yourself. When we meet a stranger or get an email from one, we want to know who that person is and why that person matters to us.

Remember that when you’re the stranger. You’ve already done a bunch of research on the people you’re emailing, but they don’t know anything about you. You need to show them you’re credible and they can trust you.

Knowing someone in common is the strongest form of social proof you can offer. If you have any direct connections, mention them. A mutual friend means you are no longer a stranger.

Lacking that, if you have any authority, credibility, or social status that is relevant to this person and your request, mention it quickly — a line or two should do it. The more “important” you are, the more likely you are to get a response.

If you have no real status, that’s fine. Find a commonality. Being part of the same group, especially if it’s a personal group, is a core human attraction. Look for unexpected connections, like hometowns and unusual hobbies. As Adam Grant points out, “Similarities matter most when they’re rare. We bond when we share uncommon commonalities, which allow us to feel that we fit in and stand out at the same time.”

The point is, you want to find a way to go from “stranger” to part of the recipient’s group.

  1. Alleviate your audience’s pain or give them something they want. Why should the recipient care about your email? Why should this busy person take time to respond to it? What’s in it for them?

Remember that people will go much further to avoid pain than to acquire pleasure. If you’ve done your research and found a major pain point for the recipient, and you can offer relief, highlight that. Consider this example: A VC friend of mine once complained on Twitter about how his car was constantly getting tickets because the street signs were misleading. An entrepreneur looking to pitch his start-up started his cold email with a link to a robo-calling service that took care of parking tickets. The VC used the service and was so thankful that he not only took a pitch meeting but also connected the entrepreneur to several other VCs, two of whom ended up investing.

If you can’t solve a problem, give people something they want. Offer to connect them with someone they’d like to meet — that stands out, since almost no one gives before they ask. But your gift needs to feel appropriate, from one stranger to another. An Amazon gift card would be super awkward and weird. I know, because someone sent one to me once.

  1. Keep it short, easy, and actionable. The opportunity to help someone is very enjoyable for a lot of people — it may even qualify as a “want.” By asking for help, you are giving them the chance to feel good about themselves. But make it easy for them.

You probably know this, but short emails are more likely to be read than long ones. And emails that request clear, specific action get a much higher response rate. Long-winded, rambling cold emails suck.

One of the best ways to keep things short and direct is to write the way you’d talk. If you met this person at a cocktail party, you wouldn’t just walk up and start pitching them. You’d introduce yourself, say something nice, connect with them over a shared friend or interest, and then make a request that makes sense.

I would recommend reading your email out loud before you send it. If it sounds natural, then it will read well. This is how I edit my own writing.

To make your “ask” easy and actionable, do as much work for your audience as you can. “Let me know if you want to meet up” is terrible. This forces someone to exert mental energy to make a decision for both of you, and it puts the onus on them to sort out the details. It’s short, but not easy or actionable.

Compare that with this: “I can meet on Monday or Tuesday between 8 a.m. and 11 a.m. at Compass Coffee on 8th. If that doesn’t work, tell me what does, and I’ll make it happen.” That gives them a clear, easy action to take, with specific bounded options.

But there’s more to a good “ask” than just telling people what you want. How you tell them matters a lot.

  1. Be appreciative — and a little vulnerable. I would even go so far as to say you should be slightly submissive.

I’m not saying to grovel before your audience like they’re a feudal lord. You are asking someone who does not know you for a favor. By expressing gratitude and some vulnerability, you give them the feeling that they are a good person if they choose to help. You also give them a little rush of power and status, because you’re approaching them.

This gets results. Even just saying “Thank you so much! I am really grateful” to a request doubles response rates. And tell people it’s fine if they are too busy. Giving them a way out actually makes them more likely to help you.

All this may sound obvious, but again, very few people do it. I’d say about half the people who have cold emailed me expressed no appreciation beyond a perfunctory “thanks.” And the other half either sounded brusque or entitled. Really — strangers asking for huge favors say things like “Lemme know how quickly I can expect you to get this done.” Clearly, they don’t feel like waiting around. But that tone has repercussions: I don’t feel like helping them.

Finally, don’t use a template. If you Google “cold email template” you will find a LOT of them. I looked through dozens, and though some were very good for mass email and sales, I could not find a good template for a personalized cold email.

Which makes sense. By definition, if something is personalized, it doesn’t come from a template. That’s why this article lays out principles but has no scripts.

I did find some good examples of cold emails (this one, for instance, and this one), with breakdowns of how and why they worked. You’ll notice they each used almost every principle here.

 

HBR: Developing Employees’ Strengths Boosts Sales, Profit, and Engagement

As a manager or owner, are you focusing on your employee strengths? What are you doing to strengthen your employees’ performance? Below is a blog from the Harvard Business Review by Jim Asplund and Brandon Rigoni, Ph.D.

Developing Employees’ Strengths Boosts Sales, Profit, and Engagement

Should companies primarily focus on playing to the strengths of their employees or help them improve on their weaknesses? This question is particularly important today, given low workplace engagement and higher expectations from workers about what a great job entails.

Gallup has studied thousands of work teams and millions of leaders, managers, and employees for more than five decades. We’ve found that there’s significant potential in developing what is innately right with people versus trying to fix what’s wrong with them.

We know, for example, that the more hours a day adults believe they use their strengths, the more likely they are to report having ample energy, feeling well-rested, being happy, smiling or laughing a lot, learning something interesting, and being treated with respect. In addition, people who use their strengths every day are more than three times more likely to report having an excellent quality of life and six times more likely to be engaged at work.

Focusing on employees’ strengths does more than engage workers and enrich their lives, however: It also makes good business sense. Gallup recently completed a large study of companies that have implemented strengths-based management practices. The companies we studied develop what comes most naturally to people — e.g., having employees complete the CliftonStrengths assessment, incorporating strengths-based developmental coaching, positioning employees to do more of what they do best every day, and the like.

The study examined the effects those interventions had on workgroup performance. It included 49,495 business units with 1.2 million employees across 22 organizations in seven industries and 45 countries. Gallup focused on six outcomes: sales, profit, customer engagement, turnover, employee engagement, and safety.

On average, workgroups that received a strengths intervention improved on all of these measures by a significant amount compared with control groups that received less-intensive interventions or none at all. Ninety percent of the workgroups that implemented a strengths intervention of any magnitude saw performance increases at or above the ranges shown below. Even at the low end, these are impressive gains.

  • 10%-19% increase in sales
  • 14%-29% increase in profit
  • 3%-7% increase in customer engagement
  • 9%-15% increase in engaged employees
  • 6- to 16-point decrease in turnover (in low-turnover organizations)
  • 26- to 72-point decrease in turnover (in high-turnover organizations)
  • 22%-59% decrease in safety incidents

So how can your organization approach these impressive numbers? This research, combined with our work with hundreds of organizations, also identified seven best practices for optimizing strengths initiatives. Companies that practiced more of them saw results at the top of the ranges shown above.

Start with leadership. Sometimes a few isolated departments will implement strengths interventions independently, creating a limited impact. But when leaders make these interventions a fundamental strategic priority, that’s when change really happens. Take profitability, for example: We found that the potential for increased profits multiplies when top-level leaders push strengths throughout the entire company.

After a four-way merger, senior leaders at a North American company implemented a “Lead With Your Strengths” program to help employees at all levels understand how to use their strengths to navigate the change, and to foster a unified culture with a shared operating strategy and mutual goals. In the first year alone, the company’s employee engagement levels improved by 26 percentile points in Gallup’s overall organization-level database.

Get managers on board. The best way for employers to maximize workers’ strengths is through their managers. Almost seven in 10 employees who strongly agree that their manager focuses on their strengths or positive characteristics are engaged. When employees strongly disagree with this statement, the percentage of engaged employees plummets to 1%. Manager alignment on a strengths initiative is crucial because managers are ultimately responsible for developing workers based on strengths. This best practice has a profound impact on performance.

Generate awareness and enthusiasm company-wide. When strengths concepts are consistently communicated, employees use their strengths more. A mid-sized financial services company prominently displayed each employee’s top five strengths in their office or cubicle — helping all employees keep one another’s natural talents top of mind. Leaders should also communicate their business strategy in terms of their organization’s competitive strong points – their company’s strengths. Additionally, they need to deliver praise throughout the organization in ways that convey how individuals and teams within have relied on their strengths to be successful. These messages encourage everyone to buy in.

Be mindful of strengths when creating project teams. Not only do leaders need to create ways for all employees to increase their self-awareness, but they should also employ tactics to ensure teams are assembled with each individual’s innate talents in mind. Responsibilities need to be assigned based on what comes most naturally for each team member. For example, strategically partnering two people — whereby both contribute in their area of greatest strength — can make the difference between whether or not teams accomplish overall goals, or even simple objectives.

Focus performance reviews on the recognition and development of employees’ strengths. Even leaders and managers who are motivated to capitalize on their employees’ strengths will find this difficult to do if the company’s performance management philosophy focuses on fixing employees’ weaknesses. A strengths-based approach to performance management is straightforward, appealing and decisive. Managers should conduct performance reviews that encourage and make use of employees’ talents and offer recognition and development aligned with their strengths. Managers should also provide clear performance expectations and help workers set demanding achievable goals. One result of strengths-based performance management is that employees feel their manager knows and respects them, which in turn boosts their performance.

Build a network of strengths experts and advocates. A company’s internal strengths advocates and champions are personnel who play a crucial role in supporting all employees in using what they’re good at to the best of their advantage. These champions help drive the strengths movement at every stage, from initial launch efforts to sustaining momentum down the road. Ultimately, their consistent encouragement can propel the company to world-class performance. One investment management company in the U.K. grew quickly with a network of internal experts who helped employees understand how they could use their strengths more effectively. The result? Despite a competitive and changing market conditions, these individuals were able to adapt to constantly changing environments and develop their skills at the same time.

Tie the organization’s strengths-based culture to its larger brand. A brand that reflects an organization’s strengths-based culture goes a long way for the company. A strengths-based brand attracts the right kind of job seekers – those who are driven to apply and develop their strengths and would be a good fit with the organization’s culture. A strengths-centric brand is also compelling to customers, which can differentiate a company from the competition.

Struggling to live up to its brand promise of exceptional customer service, a large retail company trained its employees to offer shoppers personalized knowledge and advice about purchases, installations, and repairs. When employees were also encouraged to understand and use their strengths, they did an even better job of connecting with customers and providing individualized service. Stores that implemented the new customer strategy and the strengths-based focus grew 66% faster than stores that didn’t use strengths in the initiative.

Now, let’s be honest: employees can’t completely avoid their weaknesses. That just isn’t possible in the real world. But instead of having people waste too much time trying to improve in areas where they’re unlikely to succeed, managers can form strategic partnerships and thoughtful processes that help them work around their weaknesses. Our data suggest that focusing energy on improving in areas that come most naturally to people reaps high returns, as employees and organizations that incorporate strengths as a strategy tend to realize significantly positive business results.

 

HBR: The Best Salespeople Do What the Best Brands Do

Does your sales force create extraordinary experiences that embody your company’s brand?  Are you cultivating emotional connections with customers and providing real value for them? Below is a blog from the Harvard Business Review by Denise Lee Yohn.

The Best Salespeople Do What the Best Brands Do

It’s not news that the role of salespeople and selling is changing. In the past, salespeople were often the first step in a purchase process, and could significantly influence customer decision-making by controlling information about pricing, availability, competitive advantage, etc.

But in this era of nearly ubiquitous information, customers usually engage with salespeople after they’ve already researched their purchase and in some cases made their purchase decision. Digital commerce and disintermediation have caused many customers to question the importance of having a sales relationship at all. Moreover, companies are learning that true sales success isn’t indicated by the number or size of deals closed; it’s measured by getting and keeping the right customers.

Great salespeople succeed in this new business environment by doing what great brands do. I laid out seven critical brand-building principles that great brands follow when I wrote my first book. I’ve now found that these principles are as instrumental to restoring sales to its role as a valuable, sustainable, integral business function as they are to building great brands.

  • Great brands start inside. Great salespeople sell inside first. Just as great brands start brand-building by cultivating a strong brand-led culture inside their organizations, great salespeople know the first step to sales success is actually one taken inside their own companies. They contribute tremendous value to their organizations through their market insights and direct communication channel with customers. So they help their companies with product development, marketing strategy, and customer service by serving as the Voice of the Customer internally.
  • Great brands avoid selling products. Great salespeople cultivate emotional connections with customers. In the book What Clients Love, Harry Beckwith explains that relatively few businesses actually sell products, services, or even expertise; most sell satisfaction. “Progressive does not sell car insurance. It sells comfort: the comfort of knowing that if you have an accident, they will be at the scene, ready to write a check.” In the same way, great salespeople don’t try to sell items or programs. Instead, they appeal to and connect with their clients through emotion, brand story-telling, and thought-leadership. In doing so they take the attention off price and features and appeal to the feelings customers value and the identities they want to experience and express.
  • Great brands ignore trends. Great salespeople don’t imitate, they innovate. Great brands don’t follow what everyone else is doing, nor do they wait to take their lead from customers. In the same way, great salespeople offer their customers unique perspectives and often seek to push their thinking. They present a differentiated sales experience by challenging customers’ status quo and teaching them something new and valuable. They are the “Challengers” that Matthew Dixon and Brent Adamson identified in their research into what distinguishes high sales performers.
  • Great brands don’t chase customers. Great salespeople attract the best customers for their company. Just as great brands know they’re not for everybody and so they seek to attract loyal and profitable customers through shared values and common interests, great salespeople are selective when engaging prospects. Research by VoloMetrix, a sales productivity firm, shows that top sellers build deeper relationships with fewer customers rather than casting a wider net of shallower engagement. Salespeople cultivate profitable, sustainable customer relationships if they’re savvy enough to focus on accounts that inherently represent a good fit with their company instead of trying to close as many deals as possible.
  • Great brands sweat the small stuff. Great salespeople create extraordinary experiences that embody their brand. Great salespeople know that they can strengthen their brand if they interpret and reinforce it and its differentiating value throughout the sales experience. So they examine all the different touchpoints between the customer and the brand in the sales process and seek out opportunities to infuse the most influential ones with the brand’s key values and attributes. They’re also aware of the power of social selling today and they carefully manage their social network activity to make informed, authentic, personal connections.
  • Great brands never have to “give back.” Great salespeople create real value for their customers. Great brands don’t engage in questionable business practices and then try to make up for them with charitable activities and social responsibility programs — they create a positive social impact in the way they design and run their businesses. Likewise, great salespeople don’t engage with customers simply to make a sale — they look for ways to make their clients more successful. Leadership consultant Scott Edinger observed, “Sales-training programs rightly focus on finding clients’ ‘pain points.’ But great salespeople also know there’s value in pointing out successes waiting to be exploited.” They know improving a customer’s condition may not always involve a sale and they do it nonetheless.
  • Great brands commit and stay committed. Great salespeople impart the unique value of their brand. Many salespeople feel pressure to gain new business or retain accounts at any cost, but the most effective ones do not give price concessions just to win deals. They are convinced of the value their company offers and they skillfully help their customers understand it as well. They employ the techniques put forth by the writers of the book Value Merchants, drawing on their knowledge of what clients value to convey their offer in a way that resonates with them.

Great salespeople implement all of these principles in a cohesive, coordinated approach that mirrors the brand-as-business management approach used by great brands to develop powerful and valuable brands. Just as great brands cultivate mutually beneficial relationships with their customers, great salespeople cultivate a deep connection between their company and their client’s business. To borrow a term, the best salespeople are brand evangelists.

Guy Kawasaki first adopted the term “evangelism” into the business world by applying it to an innovative approach to sales, marketing, and management. Evangelism, as he defined it, means “convincing people to believe in your product or ideas as much as you do” because evangelists believe that what they offer is truly helpful and valuable to others.

Over the years, many technology companies have developed the role of a technology evangelist or “chief evangelist.” These people are charged with building up support for a given technology, and then establishing it as a standard in the given industry. Like these technology evangelists, brand evangelists — that is, great salespeople — build up support within a market for a brand so that it becomes the brand leader in its category.

Importantly, brand evangelism is not another one of the customer-centric or customer-driven sales approaches that have become popular in recent years. Customer-centric sales and most other sales improvement approaches are pursued for the sole purpose of increasing sales. Brand evangelism is about engaging customers in a way that produces stronger and more valuable brands and sustaining long-term business success for their companies and their clients.

 

This is what great salespeople do.