HBR: Why CRM Projects Fail and How to Make Them More Successful

“CRM is an important tool, but it is just a tool. When the laptops are shut down for the day, it’s your sales team that is responsible for bringing value to clients and driving revenue. Implement your CRM with that in mind and you’ll be pleased with your ROI.” Below is a blog from the Harvard Business Review by Scott Edinger:

Why CRM Projects Fail and How to Make Them More Successful

In 2017, CIO magazine reported that around one-third of all customer relationship management (CRM) projects fail. That was actually an average of a dozen analyst reports. The numbers ranged from 18% to 69%. Those failures can mean a lot of things — over-budget, data integrity issues, technology limitations, and so forth. But in my work with clients, when I ask executives if the CRM system is helping their business to grow, the failure rate is closer to 90%.

The primary reason they miss the mark in helping companies increase revenue is that CRM systems are too often used for inspection — to report on progress, improve accuracy of forecasts, provide visibility, predict project delivery dates, and provide a range of other business intelligence — rather than creating improvement in the sales process. Front-line sales professionals and managers rarely find the majority of these capabilities useful in winning more business for the company.

CRMs today also serve a lot of masters, from executives in the C-suite, technology, marketing, finance, and, oh yeah, sales. They try to address more objectives than are reasonable for any software system. I recently led a working session for a team of executives looking to select a CRM provider. By the time everyone weighed in on their must-haves, we had identified 23 unique objectives. With such a diluted focus, it’s virtually impossible to succeed.

I saw this clearly at another client where there was a wide range of answers to the question, “Was the CRM implementation a success?” The EVP of marketing was pleased she could now track the assignment of every single lead. The CIO was unhappy about data integrity issues that arose from the integration of more than 20 discreet databases. The EVP of sales liked the easy-access dashboard to report on metrics and the forecast. Sales management was less positive but acknowledged that it helped them monitor activity. And the sales team — well, they mostly hated it. They had to enter a lot of information that added little value (for them), and provided no help in selling more. Because the sales team had so little incentive to keep up with the data entry requirements, the quality of the data in the system became less and less reliable over the following year. The result? Incomplete or inaccurate information from the CRM was exported into Excel spreadsheets for further manipulation by each level of management.

If you want your CRM implementation to increase revenue (which it only will if it enables your sales organization to increase sales), I recommend doing the following:

Re-think your CRM as a tool to increase revenue. Period. That is why you bought this system and spent millions, sometimes tens of millions, on its deployment. Broadcast this message loud and clear from the CEO and sales leadership. Your sales team needs to understand that they drive the execution of your strategy every time they interact with a client or prospect. Your implementation of a CRM system is not about the technology, and it is not to fulfill an administrative reporting requirement, which is how too many sales teams view them. The CRM is a tool to help them sell more, access support resources during sales cycles, and manage their territory or “book of business.” If the sales team recognizes the value of this tool, you’ll get all the metric and forecast information you desire. If not, you’ll be back to modifying guesses in Excel spreadsheets.

Integrate your marketing efforts with sales activity. Historically, these two functions collaborate on CRM implementation so poorly it’s almost a cliché. Marketing blames sales for not following up on all the leads produced. Sales points out that marketing doesn’t understand field reality and truly qualified leads. Overcoming these interdepartmental squabbles requires a collaborative effort by both teams throughout the sales process. Early in the sales cycle, marketing and sales have roles to play in identifying and qualifying opportunities to actively pursue. As sales cycles develop, they should have a shared understanding of what constitutes a qualified lead, as well your ideal customer profile — both in terms of the company and level of buyer. This helps filter out business you shouldn’t pursue. Later in the sales cycle, marketing works with sales to create materials that can be customized to client objectives and case studies, instead of the generic collateral sales teams often see as low value. Finally, working together on win/loss analysis provides an active feedback loop for joint planning and addressing future needs. This kind of integration, using your CRM as the glue, will improve marketing’s efforts to create gravity with prospects, and sales’ ability to accelerate sales cycles. It’s an advantage for the business if you can use at least some of the same metrics to evaluate the success of both departments.

Managers provide coaching to improve, not reporting to inspect. The pivotal role in driving CRM success is not individual sales people. It’s sales management. They will determine how the sales team uses and experiences the CRM. If they use it solely to check on the amount of activity, call volume, or other measures of efficiency, it’s of low value to the sales team and likely be rejected or filled with fictional data. Instead use it as a tool to jointly create strategies for major opportunities, and help the sales team to maximize opportunities by coaching them throughout the sales process. I’ve written in the past about the high value of coaching and the fact that it’s rarely done well. But CRM can be a powerful mechanism to support coaching for individual sales calls, as well as opportunity, account, and territory management.

CRM is an important tool, but it is just a tool. When the laptops are shut down for the day, it’s your sales team that is responsible for bringing value to clients and driving revenue. Implement your CRM with that in mind and you’ll be pleased with your ROI.

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HBR: The 5 Things All Great Salespeople Do

“The best sales people I have seen are like modern day MacGyvers, sans the life and death scenarios. They’re often faced with difficult situations and time pressures, having to negotiate seemingly arbitrary obstacles armed with only their wits and their phones. Elite salespeople almost always figure it out. Resourcefulness is as much a mindset as it is a skill. If you don’t start with the MacGyver mindset, then you will never fully develop the skills associated with being resourceful. As an exercise, seek out or fully embrace the next ridiculous or impossible situation you find yourself in and then put your phone down, close your computer, re-focus, and apply your energy to find multiple alternative routes to your desired destination. Find a colleague and draw it all out on a whiteboard.” Below is a blog from the Harvard Business Review by Joseph Curtis:

The 5 Things All Great Salespeople Do

The best salespeople know they’re the best. They take pride in their art form. They separate themselves from the rest of the pack regardless of circumstance. So how do they do it? What’s their secret? Are you one of them?

I’ve spent 16 years in technology sales, with most of that spent in sales leadership at Salesforce and other technology companies. I’ve had the luxury of observing great sales professionals in tech and beyond and have observed that the top performers share some of the same patterns, habits, and characteristics. I’ve distilled them down into five major categories and have begun integrating them into my work life — practicing them, honing them, teaching them. As a result, my teams have finished consistently at or near the top of the leaderboard year in and year out. Here’s what I’ve observed:

The best salespeople own everything. I used to give a speech to new salespeople, earlier in my career, titled the “It’s your fault speech.” It was very raw and full of overconfidence (chalk it up to leadership in your twenties) but the point was simple: Your success depends on you. The sales profession exists within a meritocracy. Statistically, it is not a coincidence that the same people are at the top of the leaderboard year in and year out. Some may think it’s because certain people have it easier, or are given this, or fall into that. We all have our starting points. Regardless, the most significant difference between perennial top performers and everyone else is attitude. Elite salespeople approach their goals with a total ownership mindset. Anything that happens to them, whether or not it was their doing, is controlled by them. It may not be their fault, but it is their responsibility. In the research, psychologists call this the internal locus of control. That’s a fancy way of saying that you think the power lies inside of you instead of externally. And you know what they found? Having an internal locus of control correlates with success at work, higher income, and greater health outcomes.

This area has been the hardest to coach in my career because it seems to be so deeply rooted in one’s personality. The best way to self-assess is this: Take your current situation — your accounts, your role, your earnings — and ask yourself these questions: How did I get here? Did I build the right relationships? Did I put in the extra work? Did I speak up? Did I blame others for my failures but take credit for my successes?

You must own everything.

The best salespeople are resourceful. MacGyver was a popular show when I was in fifth grade. My friends and I would try to emulate MacGyver by turning a paperclip into a knife or a key or something, but we basically just twisted it around until it broke — we weren’t exactly aspiring engineers. But if you remember watching MacGyver, the premise was that the lead character was put in an impossible situation with few to no tools or weapons or resources, with very little time, and had to get out of the situation using only his wits and whatever he could find in his pocket or laying around near him. MacGyver didn’t stop and complain about how he only had a paper clip to work with, while other people had a blowtorch. He didn’t lament how hard his position was. He simply assessed his strengths and resources and made something happen. Every week, he figured it out. And every week he saved the day.

The best sales people I have seen are like modern day MacGyvers, sans the life and death scenarios. They’re often faced with difficult situations and time pressures, having to negotiate seemingly arbitrary obstacles armed with only their wits and their phones. Elite salespeople almost always figure it out. Resourcefulness is as much a mindset as it is a skill. If you don’t start with the MacGyver mindset, then you will never fully develop the skills associated with being resourceful. As an exercise, seek out or fully embrace the next ridiculous or impossible situation you find yourself in and then put your phone down, close your computer, re-focus, and apply your energy to find multiple alternative routes to your desired destination. Find a colleague and draw it all out on a whiteboard.

Embrace your inner MacGyver.

The best salespeople are experts. Sales is less about selling and more about leading, which requires high levels of confidence, which in turn requires knowledge and experience. This concept can be expressed mathematically as Knowledge + Experience = Confidence to Lead. You can control the first part of the equation; the second comes with time. Gaining industry knowledge and a strong point of view about the products they’re selling should be the top priority for any aspiring salesperson.

Study. Learn. Form an opinion. Expertise leads to confidence, which leads to trust, which leads to sales.

The best salespeople help others. Regardless of where you are in your career, there is someone else you can help. There is something you know about a product, a process, or an industry that someone new or less tenured does not. The best salespeople I have observed regularly pass their knowledge on to less tenured or less experienced sales people with no expectation of anything in return. Coincidentally or maybe ironically, the act itself becomes a catalyst for building confidence within one’s self. And others take notice as well. Shawn Achor, author of Big Potential, found that people who are social support providers at work (“work altruists”) are a whopping 40% more likely to receive a promotion.

The best salespeople move quickly. The best salespeople don’t move recklessly, but they do have a sense of urgency. I’ve often been amazed throughout my career when I’ve encountered salespeople who were slow in getting back to their clients or customers — who delayed in delivering contracts or materials needed to make a decision. Most elite salespeople get things done, to quote Norton in The Shawshank Redemption, “not tomorrow, not after breakfast, now!”

Look at the top salespeople in your own company and see if they possess most if not all of these characteristics. My bet is that they do. And I also bet that they’d be willing to share their strategies with you.

CT: What to do When Your Customers Ignore Your Phone Calls and Emails

“As consumers, calls and emails from companies can be annoying. But what happens if your the business on the other end of those unanswered or unopened calls and emails? The answer is lost opportunity and poor customer experience. And of course, these things lead up to something even scarier: lost revenue.” Below is a blog from Customer Think:

What to do When Your Customers Ignore Your Phone Calls and Emails

We’ve all been there before; letting calls go to voicemail when we know it’s probably just a business trying to sell something, or sending those “EXCLUSIVE” email offers straight to trash to avoid them taking over our inboxes.

As consumers, calls and emails from companies can be annoying. But what happens if your the business on the other end of those unanswered or unopened calls and emails? The answer is lost opportunity and poor customer experience. And of course, these things lead up to something even scarier: lost revenue.

Businesses today need to find better ways to communicate with their customers — whether that’s to remind them about an upcoming appointment, or to give them a special offer. Equally important to the content is the way you are delivering it.

So how exactly do customers want to communicate with businesses? If your first guess was email, just take a look at your inbox. With only 22% of consumers having confidence in emails from brands, it’s no wonder that there’s been an 11% decline in CTRs, and a 17% decline in click-to-open, with 57% of consumers abandoning email addresses altogether.

And while voice is still the most popular channel for service, Deloitte expects it to drop from 64% of call center contacts in 2017 to 47% in 2019. Whether it’s the annoyance of getting stuck in an IVR or having to repeat yourself over and over again, consumers are shifting their preference towards other forms of communication.

But just because customers don’t want you filling up their inbox or voicemail, doesn’t mean that they don’t want to hear from you. Instead, more and more customers would rather communicate with a business via the channel that has transformed the way we all communicate: text.

A study by Twilio found that 66% of consumers would prefer to interact with brands through messaging services, with 47% saying that they preferred text. What’s more, 85% of consumers want to be able to message brands in the same way they were contacted, meaning that they want to engage, as long as it’s through a channel that they are comfortable with. And with 22 billion texts sent every day worldwide, people are clearly comfortable with text.

Here are some ways text will open up the dialogue and strengthen the relationships between you and your customers:

There’s a sense of urgency and need to respond. Customers are much more likely to respond after hearing that beep or feeling that vibration in their pocket as opposed to saving an email for later. In fact, 82% of text messages are read within 5 minutes and 89% of all Americans keep their Smartphones close by them. Plus, as soon as they see the notification, they’ll already be in a position to send their response. And even if you don’t get a response, you can almost be guaranteed that your potential customers saw your message or offer, which is a lot more assuring than the emails that just get deleted later.

You’ll give the people what they want. Research show that people actually prefer receiving text messages over other forms of communication. One study found that 55% of consumers prefer SMS for appointment reminders (vs 35% of consumers who prefer email), 51% of consumers prefer SMS for prescription refills (vs 36% of consumers who prefer email), and 53% of consumers prefer SMS for service outage notifications (vs 34% of consumers who prefer email). By catering to what your customers want and respond to, you’ll be able to provide better service and get better response rates.

You’ll be viewed favorably. Personalization is king in customer service now a days, and to be honest people expect it. Whenever you make anything more personal, like texting them directly to their phone, people generally will appreciate it and view you favorably for it. 77% of consumers who can text are likely to positively view a company that offers text capability, and another 58% of consumers indicated they would view a business more positively if they offered SMS capabilities.

CSAT Scores Will Rise. Fast and reliable communication is the key to providing good service, but also to making the customer feel satisfied in their experience. 91% of users who opted in to receive texts from a brand see those messages as useful and 48% of consumers said they opted in to a brand’s text messages to be in the loop. People want to know what’s going on. Lack of communication is the reason why many customers feel frustrated with brands if and when something goes wrong. With text’s ability to provide information people need, exactly when they need it, you can avoid frustrated and angry customers and instead leave them feeling satisfied.

So say goodbye to the voicemail greeting and email trash can, and hello to genuine two-way conversations with your customers via text. By reducing communication barriers and catering to preferences, you’ll show customers that you’re listening to what they want and need, and increase engagement and revenue in the process.

HBR: Sales Data Only Matters If It Helps You Take Action

“These are valid concerns, but here is the crux of it all. It’s not the data and technology that matter. What really matters is how technology, data, and analytics can help salespeople, sales managers, and leaders improve fundamental sales force decisions and processes.” Below is a blog from the Harvard Business Review by Andris A. Zoltners, PK Sinha, Sally E. Lorimer:

Sales Data Only Matters If It Helps You Take Action

In sales, as everywhere else in business, there is a buzz about big data and analytics. Vendors hype tools and mobile applications to help sales forces make sense of it all, while touting case studies that generated impressive improvements in sales force effectiveness.

Companies are anxious to capitalize on the opportunity. While some jump in, many are reluctant to move forward. Some will remember or hear stories of failed projects – big investments to give salespeople tablet computers, to develop data warehouses, and implement CRM systems that ended up racking up huge costs, while generating little value for customers and salespeople. We also hear concerns such as “the technology is too new — let’s wait until it matures,” or “we don’t want to invest in something that becomes outdated in a year.”

These are valid concerns, but here is the crux of it all. It’s not the data and technology that matter. What really matters is how technology, data, and analytics can help salespeople, sales managers, and leaders improve fundamental sales force decisions and processes.

Consider a few examples.

Helping salespeople. Consider account targeting. Traditionally, salespeople decide which customers/prospects to spend time with by examining a list of accounts in their territory and figuring out which ones to focus on to achieve a territory sales goal. But far too frequently, salespeople end up spending too much time with easy and familiar accounts, demanding customers with urgent needs, and friendly prospects. Ease and urgency trump importance.

Approaches that use data and analytics, structured around frameworks that capture the dynamics of customer/prospect needs and potential, help salespeople target the right accounts and spend time more effectively. Such an approach involves:

  • Identifying profile characteristics (e.g. type of business, number of employees) that predict account potential and developing an estimate of potential for each customer/prospect.
  • Using techniques such as collaborative filtering to identify customers/prospects with similar needs and potential (the “data doubles”) and suggest the best value proposition and sales approach for each account.
  • Closing the loop by providing an assessment of how effective account targeting was so as to inform better future decisions.

Helping sales managers. Analytics can help sales managers have higher impact as coaches and make more-informed decisions about issues such as sales territory design, goal setting, and performance management. Traditionally, managers rank salespeople on criteria such as territory sales or sales growth, and tie rewards or corrective consequences to these rankings. But if territories don’t have equal potential, the rankings don’t reflect true performance. Salespeople with rich territories have an unfair advantage while those with poor territories are demotivated.

Data and analytics enable performance metrics that account for territory potential, so that sales managers can reward the best salespeople, not the best territories. Such an approach involves:

  • Developing measures of customer/prospect potential, using company and third-party data sources (e.g. business demographics) and sales force input.
  • Identifying the true best performers using techniques that separate the impact of territory potential from the impact of a salesperson’s ability/effort on performance.
  • Rewarding the true best performers, learning what they do that’s different from average performers, and sharing the learning across the sales team.

Helping sales leaders. Analytics can help sales leaders improve decisions about issues such as sales strategy, sales force size and structure, and the recruiting of sales talent. Consider how analytics can help sales leaders design a sales incentive compensation plan. Traditionally, incentive plans are designed by surveying salespeople about their satisfaction with the current plan, benchmarking against industry and company historical norms, and checking past incentive costs versus budget. This retrospective approach can blindside sales forces with undesired consequences in terms of sales force effort allocation and financial risk.

A better plan results when companies use data and analytics, structured around frameworks that link plan design to projected costs, sales force activity levels, and fairness under varied market conditions. Such forward-looking approaches improve the odds that despite an uncertain future, an incentive plan will motivate the sales force to focus effort on the right products and customers, and be fiscally responsible. Such an approach involves:

  • Using analytics to test the consequences of proposed plan designs, compare alternatives, and reveal unwanted side effects and financial risks.
  • Monitoring payout distributions and metrics showing a plan’s strategic alignment, motivational power, and costs.
  • Proactively making adjustments to keep the plan on track.

It’s not about the technology or the data. Investments in sales data, technology, and analytics can only live up to their promise when sales forces focus first on understanding the dynamics of the fundamental decisions and processes that salespeople, sales managers, and leaders are responsible for.

 

HBR: How AI Is Changing Sales

“The challenge for any company is always finding new ways to grow their revenue, reduce costs, and expand market share, while at the same time minimizing risks. It’s become apparent to leading edge companies that leveraging their existing internal database, and mining it for new opportunities using AI, will allow them do to so prudently. If data is indeed the new oil, then companies who can capture the data, analyze it, and generate actionable insights will have salespeople who’ll be able to close more deals, more often.” Below is a blog from the Harvard Business Review by Victor Antonio:

How AI Is Changing Sales

Companies are using AI (Artificial Intelligence) in all kinds of innovative ways to advance their businesses. If you’ve ever searched Netflix to watch a movie, AI (a recommendation algorithm) was no doubt used in your decision about what to watch. If you’ve shopped on Amazon, your decision about what to buy was also influenced by AI (via an association algorithm). If you’ve ever ordered an Uber, AI (a location algorithm) was used to have a car in your vicinity quickly. If you ever had a thought about a product or a vacation, and it seemed to suddenly pop up on your search page or in your email inbox, I can assure you it was based on AI (a classification algorithm) monitoring your online activity.

These same types of AI algorithms can be used to power any company’s decision-making process, helping you make better business predictions. Based on research for my book Sales Ex Machina: How Artificial Intelligence is Changing the World of Selling, here are five specific areas where AI algorithms can be leveraged to help your business grow by helping your sales team sell more:

Price Optimization: Knowing what discount, if any, to give a client is always a tricky situation. You want to win the deal, but at the same time you don’t want to leave money on the table. Today, an AI algorithm could tell you what the ideal discount rate should be for a proposal to ensure that you’re most likely to win the deal by looking at specific features of each past deal that was won or lost. Features could include: size of the deal in terms of dollar amount, product specification compliance, number of competitors, company size, territory/region, client’s industry, client’s annual revenues, public or private company, level of decision-makers (influencers) involved, timing (e.g., Q2 vs Q4), new or existing client, etc.

Forecasting: Sales managers face the daunting challenge of trying to predict where their team’s total sales numbers will fall each quarter. Using an AI algorithm, managers are now able to predict with a high degree of accuracy next quarter’s revenue, which in turn would help a company, from an operations standpoint, to better manage inventory and resources.

Upselling and Cross-Selling: The fastest and most economical way to grow your top-line revenue is to sell more to your existing client base. But the million dollar question is, who is more likely to buy more? You can spend a lot of money on marketing to those who won’t buy, or you can use an AI algorithm to help identify which of your existing clients are more likely to buy a better version of what they currently own (up-sell) and/or which are most likely to want a new product offering altogether (cross-sell). The net effect is an increase in revenue and a drop in marketing costs.

Lead Scoring: A salesperson with a rich pipeline of qualified potential clients has to make decisions on a daily, or even hourly, basis as to where to focus their time when it comes to closing deals to hit their monthly or quarterly quota. Often, this decision-making process is based on gut instinct and incomplete information. With AI, the algorithm can compile historical information about a client, along with social media postings and the salesperson’s customer interaction history (e.g., emails sent, voicemails left, text messages sent, etc.) and rank the opportunities or leads in the pipeline according to their chances of closing successfully.

Managing for Performance: Every month, sales managers have to assess the revenue pipelines of each of their salespeople with an eye towards nurturing deals that might stall, or worse, fall through. Using AI, sales managers can now use dashboards to visually see which salespeople are likely to hit their quotas along with which outstanding deals stand a good chance of being closed. This will allow a manager to focus their attention on key salespeople and associated deals that will help the company hit their quota.

In each of the five examples above, the quantity of gathered data used will increase the algorithm’s ability to give a more accurate prediction, which in turn will drive behavior. This is key. The value of any prediction lies in how it can be used to guide a salesperson’s or manager’s behavior to improve the company’s bottom line.

If you choose to harness the power of AI on your own sales team, where do you begin?

First, identify the different types of data sets that exist within a company that can be combined to give a more complete picture of the customer base. For example, the sales department obviously has historical purchase data, and the marketing department has website analytics and data from promotional campaigns (e.g., response rates from clients). Combining these data sets can allow an AI algorithm to make better predictions about who is more likely to respond to an offer.

These data sets then need to be combined with a Customer Relationship Management (CRM) platform (e.g., Saleforce.com, Microsoft 365, Zoho, and many others) which will serve as a repository for all customer transactions and interactions. These CRM platforms have tools that will allow you to analyze the data sets for patterns, and generate the types of predictions mentioned in the five examples above. (More and more CRM companies are adding “intelligence” as part of their platform options. For example, Salesforce.com now has an “App Exchange” where you can purchase AI plug-ins like InsideSales.com’s Neuralytics to record, store, and analyze phone calls.)

The challenge for any company is always finding new ways to grow their revenue, reduce costs, and expand market share, while at the same time minimizing risks. It’s become apparent to leading edge companies that leveraging their existing internal database, and mining it for new opportunities using AI, will allow them do to so prudently. If data is indeed the new oil, then companies who can capture the data, analyze it, and generate actionable insights will have salespeople who’ll be able to close more deals, more often.

HBR: How to Reduce the Costs of Salesperson Turnover

What is your strategy when a salesperson leaves? How do you handle the vacant period? Below is a blog from the Harvard Business Review by Andris A. Zoltners, Sally E. Lorimer, PK Sinha:

How to Reduce the Costs of Salesperson Turnover

 Even the best sales forces can’t keep every good salesperson. Loss of salespeople to competitors occurs frequently in high-growth industries in which the demand for experienced salespeople exceeds the supply, such as in fast-evolving technology markets. Poaching of salespeople also occurs when sales are driven largely by relationships. For example, wealth management companies frequently recruit advisors who have built a strong book of business at competitive firms.

Companies facing high sales force turnover situations can try to reduce undesirable loss of salespeople, but they should also use another strategy, by taking steps to reduce the negative consequences on customers and the company when salespeople do leave, as some inevitably will.

These strategies focus on minimizing sales loss during three critical phases surrounding a salesperson’s departure – the withdrawal period, the vacancy period, and the hiring/orientation period.

Managing the Withdrawal Period

In the period from when salespeople contemplate leaving until they actually depart, salespeople often stop putting full effort into the job. Too frequently, departing salespeople are distracted by their job search. Or worse, if a departing salesperson plans to work for a competitor, the salesperson might feel pressure to convince customers to defect. Minimizing withdrawal period sales loss requires a proactive approach.

It starts with detecting the possibility that a salesperson might leave as early as possible. First-line sales managers are critical to this effort. By keeping in touch with their people, managers can identify and address emerging issues before they escalate to the point where salespeople decide to leave.

One company with a large internal sales force used an early-warning system to track call agent behavior and predict the likelihood of resignations. Signals of impending departure included fluctuating productivity, an increase in the number of vacation days taken one at a time, a drop in call quality, and increased off-phone time. By tracking these signals, the system could direct incoming phone calls from important customers to agents who were not at risk of leaving. In addition, managers could meet with employees at risk of leaving to talk through their situation and try to prevent their departure. Managers could use solutions such as job rotation, job enhancement, relocation, and greater control of their work schedule.

Even when intervention can’t preempt an unwanted departure, early detection gives companies more time to prepare for a smooth transition of relationships with customers before a salesperson leaves.

Managing the Vacancy Period

From the time the salesperson departs until a replacement is found, two strategies help minimize sales loss.

The first is to shorten the vacancy period through aggressive and proactive sales force recruiting. One medical equipment company minimized vacancy time by keeping a bench of screened and trained candidates who were ready to jump into sales positions quickly when needed. Bench programs work best in large sales forces in which the sales job requires significant training time. If training needs are modest or the cost of maintaining a bench is too high, constant recruiting can create a “virtual” bench. By maintaining a list of viable job candidates before an opening occurs (including employee referrals, candidates who rejected past offers, employees in other functions), companies accelerate hiring and reduce vacancy time.

The other key to minimizing the costs of the vacancy period is to avoid lapses in customer coverage. This is especially important for major customers that depend upon and trust a departing salesperson who has in-depth knowledge of their business or who has participated throughout a long sales cycle (which means sales are often left half-completed). Even the most loyal customers may see the salesperson’s departure as a reason to consider competitive offerings. Providing temporary coverage of major customers by a sales manager or by another salesperson until a permanent replacement is found can avoid sales loss.

Managing the Hiring/Orientation Period

Once a replacement is selected, it takes time for that individual to become fully productive.

The costs of this period can be reduced by making it a priority to get salespeople up to speed quickly. Sales managers play a critical role in onboarding and training new salespeople to help them understand the culture, learn the products and customers, and become fully engaged. Hiring experienced salespeople also helps accelerate the learning curve.

An Ounce of Prevention

Defensive approaches can protect companies in high sales force turnover environments. Two strategies help minimize sales loss across all three phases surrounding a salesperson’s departure.

First, build multiple connections between customers and the company. The risk of customer loss is especially great when departing salespeople hope to bring customers along to a new job with a competitor. Take action well before a departure is imminent. Get a sales manager or sales specialist involved with customers in deals with long sales cycles. Provide customers with resources they value outside the sales force, such as a customized ordering website or easy access to customer service or technical support personnel. Such resources can encourage customer loyalty that outlives a connection with an individual salesperson.

Second, use CRM systems to capture critical information. Such systems can document customer needs, track the sales pipeline, and help ensure essential information is not lost in transition.

Turnover of salespeople too often results in missed sales opportunities and loss of business. Even the best sales forces experience some disappointing departures. By taking defensive steps now, and working diligently during the three phases that accompany an individual’s departure, those costs can be minimized.

Original Page: https://hbr.org/2017/11/how-to-reduce-the-costs-of-salesperson-turnover

 

HBR: Selling Products Is Good. Selling Projects Can Be Even Better

As building suppliers, we tend to focus on bigger projects such as new homes and commercial buildings. Is your company or yourself focusing on small projects? Are you helping your customers complete their projects? Below is a blog from the Harvard Business Review by Antonio Nieto-Rodriguez.

Selling Products Is Good. Selling Projects Can Be Even Better

In the beginning companies sold products. And then they sold services. In recent years, the fashionable suggestion has been that companies sell experiences and solutions, solving the needs and aspirations of customers.

Companies, indeed, do all of these things. But increasingly, what companies sell are projects. To understand the difference, think of an athletic shoe company, such as Nike or Adidas. A focus on products means a focus on selling running shoes. A focus on experiences might mean they sell you a membership to a local running club. A focus on solutions might mean they figure out how to help you reach your goal weight. While these clearly offer more value than simply selling you a pair of shoes, they also have limitations. Selling products limits the revenues you can make from clients: Unless you are innovating and continually updating your product offering, customer attrition tends to be high, and incentivizing repurchases can be hard. Selling experiences provides intangible benefits that are hard to quantify and measure, often focusing on meeting the needs of one single customer, preventing any mass production. Selling solutions became popular in the early 2000s when customers didn’t know how to solve their problems. But today, in the internet age, people can do their own research and define the solutions for themselves.

A focus on selling projects would mean helping someone do something more specific, such as running the Boston Marathon. Nike could provide you with its traditional sports gear, but in addition it could include a training program, a dietary plan, a coach, and a monitoring system to help you achieve your dream. The project would have a clear goal (finish the marathon) and a clear start and end date.

And that is just one type of project. More so than products, the possibilities with projects are endless.

From Products to Projects at Philips

Consider the evolution of Philips. Founded in Eindhoven, in the south of The Netherlands, in 1891 by Gerard Philips and his father Frederik, it began by producing carbon-filament lamps. Its success was achieved by a culture of innovation and the speedy introduction of new products. Over more than a century of profitable existence, the range of products offered by the company has mushroomed. Today, Philips produces everything from automated external defibrillators to energy-efficient lighting for entire cities. It even applies its smart sensor technology to teeth brushing.

This profusion of products means that Philips is cash-rich, yet sales have stagnated in the last decade, and concerns about the company have been reflected in its stock price. Faced with this changing reality, Philips took a long, hard look at itself. It identified the absence of focus and lack of strategy implementation capabilities as crucial elements that needed addressing. Five years ago, with intensifying competition, the Philips board split the organization into three different companies: Consumer Health, Lighting, and Healthcare.

It then went on to launch “Accelerate,” a program aimed at accelerating growth by transforming each new independent company into a focused organization. At the heart of the changes brought about by the Accelerate program are projects.

Over the years, Philips had become an intricate, blurred matrix. Accountabilities and responsibilities were shared between products, segments, countries, regions, functions, and headquarters. It set out to simplify this convoluted and archaic organization structure.

To do so, Philips put projects center stage. Projects were identified as the best management structure to break up silos and encourage teams to work transversally (end-to-end) in the organization.

As part of this, Philips Health Tech was divided into just three divisions. Essential to making this happen was a substantial increase in the work executed through projects. The shift was from selling customers a few products every year to creating an engaged relationship over decades.

One of the biggest challenges facing Philips Health Tech is that the life expectancy of its products is becoming shorter and shorter. Soon after launch, products are copied by the competition, which means they must be priced more cheaply. Soon, they become a commodity. This removes any opportunity for steady, high margins over the long term. Philips has experienced this even with its high-end health care products. Shifting its emphasis to selling projects rather than products was a strategic response to this problem.

For example, Philips sells high-tech medical devices. In the past it sold them simply as products (and it still does). But now Philips seeks out the projects in which its products will be used. If a new health care center is being considered, Philips will seek to become a partner from the very beginning of the project, including the running and the maintenance of the new center.

Among the results of this project focus at Philips is a partnership with Westchester Medical Center Health Network aimed at improving health care for millions of patients across New York’s Hudson Valley. Through this long-term partnership Philips provides WMC Health with a comprehensive range of clinical and business consulting projects, as well as advanced medical technologies such as imaging systems, patient monitoring, telehealth, and clinical informatics solutions.

In similar long-term partnerships with Philips, hospitals have been able to significantly improve radiology volumes and cut MRI waiting times in half. These organizations are seeing a 35% reduction in technology spending while improving clinical quality.

The Project Revolution

Philips is not alone in using an increased focus on selling projects as a means of disruptive transformation. At Microsoft, the company’s entire focus has shifted to Cloud services, most of which are offered as projects. It now has around 10,000 operating projects. Airbnb, valued this year at $30 billion, recently announced that it will start selling “experiences” — small tourism projects — as a way to create new revenue streams and address the increased regulatory scrutiny in some of its bigger markets. The biopharmaceutical industry is also seeking to work with governments and other purchasers on focused treatment programs, rather than simply offering individual drugs.

Clearly, the shift to becoming a project-driven organization and selling projects rather than products or services presents sizeable challenges to corporations and their business models. Working in projects throughout my career, I have identified these as the important ones:

  • Revenue streams. Revenues will be generated progressively over long periods of time, instead of right after the sale of a product. This will affect the way revenues are recognized, as well as accounting policies and the overall company valuation.
  • Pricing model. New pricing models will need to be developed. It is easier to price a product, for which most of the fixed and variable costs are known, than a project, which is influenced by many external factors.
  • Quality control. Delivering quality products will not be enough to meet customer expectations. Implementation and post-implementation services will also have to be of the highest possible quality to ensure that clients continue to buy projects.
  • Branding and marketing. Traditional marketing has focused on short-term immediate benefits. Marketing teams will need to promote the long-term benefits of the projects sold by the organization.
  • Sales force. The buyer of the project will no longer be the procurement department of an organization. Sales will be pitched to leaders of the business, so the sales force and sales skills will have to be upgraded with strategy and project management competencies.

Stop for a moment and consider what your organization is selling. Is it a project? Increasingly, the answer is clear and affirmative. If not, beware, your products might soon become part of a project sold by someone else.