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as “the technology is too new — let’s wait until it matures,” or “we don’t want to invest in something that becomes outdated in a year.”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.

 

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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.

 

Why She Buys: The Lesson of Ryland Homes

Why She Buys: The New Strategy for Reaching the World’s Most Powerful Consumers by Bridget Brennan is a fascinating book which provides a different perspective on selling to women. Below is an excerpt from the book:

The Lesson of Ryland Homes: If the woman doesn’t want it, the man doesn’t get itWhy She Buys.jpg

Myth: Men drive all the big decisions in married households.

Reality: Women are the deal breakers.

You’d be hard-pressed to find an industry more male-dominated than home building. The average home-building company is staffed like a World War II aircraft carrier, at least in its management ranks. But times are slowly changing. While most senior executives are still white and male, these companies are waking to the fact that their real customer are women, and that they’ve been leaving money on the table by creating and selling homes from a male perspective, from underdesigning closets to using sell sheets that focus purely on technical data and architectural blueprints.

The Ryland Group is a $2 billion, publicly traded home-building company-one of the top in its industry-that has changed the way it designs houses, based on a new understanding of who rules America’s roosts. In one of the world’s biggest housing downturns, the company is leveraging its knowledge of the alpha consumer ever way it can.

If you’ve never thought of a home as a product before think again–a new home is the ultimate consumer lifestyle product. For most people, there is no bigger purchase, literally or figuratively. As is the case with all major consumer product categories, women dominate.

“Women influence 91 percent of new home purchases,” Eric Elder, the senior executive who has championed most of Ryland’s female-focused efforts, For several years now, single women have been the fastest-growing segment of the home-buying market, buying twice as many homes as single men. I worked with Ryland on a two-year research project to understand what: women want in a new home. As a result, the company implemented a variety of covert, female-friendly efforts across the company. The goal was to make these changes imperceptible to home buyers, so that women would feel drawn to Ryland’s homes but men would not feel excluded.

DESIGNING WOMEN

As discussed in Chapter 3, when a woman goes off to the workforce, she changes her personal traffic patterns, along with those of everyone in her family. As such, working mothers were the biggest catalyst for modifying Ryland’s floor plans. The company redesigned the common areas Of many of its models so that multitasking moms could keep one eye on the kids and eye on the stove. Windows were built over kitchen sink to provide a direct line of sight to the backyard. Open kitchen/family room layouts were designed with nooks for decks, so that kids could do their homework on the computer or watch TV while Mom looked on from nearby. These designs were an acknowledgment of the “time compression” that occurs within families when both parents work. Instead of parents spending an hour or two helping kids with homework and then making dinner, both activities are now likely to happen at the same time.

Time compression and the blurring of boundaries between work and home means that home isn’t quite the sanctuary it once was. With cell phones, BlackBerry devices, laptops, and the Internet, work is “part of the furniture” at home, too. In an effort to replace what’s been lost, Ryland redesigned its master bedrooms as oases for stress relief. New master suites were designed as retreats for the adults in the house-and in particular, women. “A private, relaxing, reenergizing space is especially important to single mothers, who don’t get much time on their own,” says Elder. Many of Ryland’s master bedroom suites now feature a coffee bar, mini fridge, and lounge area.

WELCOME TO THE NEIGHBORHOOD

Modifications to Ryland’s floor plans were just the beginning. The company also embarked on design changes to its neighborhoods. It learned that women don’t view themselves as buying just a house with four walls; they feel like they’re buying an entire community, a neighborhood, a school district, and a lifestyle. Women believe a new house is going to improve their life, along with the lives of everyone in their family. If it won’t, they might as well stay where they are. Subsequently, Ryland began creating more female-friendly amenities in its neighborhood designs, including cul-de-sacs, better street lighting, pocket parks, electronic garage doors as a standard feature, better lighting around home entryways, and secure gated entries in townhouse communities.

EMBRACING PERSONALIZATION

As part of the female-friendly process, Ryland completely overhauled its design centers, the places where customers pick out their options and upgrades after signing a contract for a new home. These centers had a history of being housed in the bare garages of model homes.

“In our industry, picking out home options and upgrades used to be a back-office function,” says Elder. “We’d have a hodgepodge of display cases given to us by random suppliers, with a few samples of products here and there; bad lighting … the whole experience was an afterthought.” It couldn’t be more different now. “We actually embrace the personalization process, when we used to fight it,” explains Elder. “It’s one of the biggest changes that’s occurred at the company, and it’s wholly driven by women.” A senior female executive at Ryland, Diane Morrison, was the force behind the company’s new design centers. She recognized that for many women, the appointment at the design center is the most exciting part of the home-buying process: it is here that they get to pick out all the things that will make the home distinctly their own.

Ryland also broadened the color palettes on its home exteriors, to help women feel that their new home has a unique, personal identity, and to diminish the dreaded “cookie cutter” effect. Instead of offering three exterior colors in a one-hundred-house community, Ryland now typically offers from nine to fifteen.

LESSONS FROM THE COVERT APPROACH

Ryland is a great example of a masculine industry that’s responded to women with subtle design changes that benefit both sexes.

“Every architect that’s designed homes throughout the history of this company has been a man,” says Elder. “Closets used to be leftover spaces that were essentially a door and a hole. Now they are a design element of the home, with functionality built into them. Our sales lobbies, which used to be fairly bare, now have places to sit down, with inspirational reading materials, like home design magazines, and toys for kids. And we’ve changed our merchandising displays so that they are more emotionally charged and filled with pictures of people.”

When the covert approach is done right, men don’t even notice the design elements that have been added for women. , It turns out that men like the idea of having a hot cup of coffee in their master bedroom, too. “From a consumer stand-point, men would live in the garage if they had to,” says Elder with a grin. “Women want the home, and men want the women to get what they want. The great thing for us is that the changes we’ve made have been driven by women but are appreciated by men, too.”

When you appeal to women in a covert fashion, the men find themselves on the receiving end of things they never knew they wanted but are happy to get-and maybe even pay more for the next time. The lesson is this: when you make women happy, you make everyone happy. Women are the leading economic indicators of what people want. Key learnings from Ryland include:

  1. Never underestimate the influence of women in a couples” purchase. Women are the veto vote for buying decisions large and small, from deciding what home to buy to where to eat. The individual who conducts the financial transaction (which can often be the husband) is not always the primary decision maker. If you sell to a lot of couples, figure out the “hot buttons” for both your male and female customers. They may be very different.
  2. Study how the divorce rate and the increased spending power of single women may be impacting your industry. The phenomenon can open new opportunities in product design, as it did with Ryland and its master bedroom retreats, and also in the services that support your product offerings.
  3. A well-crafted, subtle approach attracts women and pleases men, too.
  4. It’s socially unacceptable for men to buy products that are overtly feminine. By being subtle in your appeal to women-through a covert approach-you have the ability to attract both sexes without alienating either one. Married women never want to see their husbands alienated or emasculated. (Not if they’re happily married, anyway.)

HBR: Are Sales Incentives Becoming Obsolete?

What sales incentives are you using in your lumberyard? Are your outside salespeople making an impact on their customers? Below is a blog from the Harvard Business Review by Andris A. Zoltners, Sally E. Lorimer, PK Sinha:

Are Sales Incentives Becoming Obsolete?

To motivate, manage, and reward B2B salespeople, many companies use sales incentive plans that link large commissions or bonuses to individual results metrics, such as territory quota achievement. As digital channels continue to reduce and redefine salespeople’s role in customer buying, these traditional sales incentive plans are becoming less effective at driving sales outcomes.

The right sales incentive plan creates a double win. Salespeople win because they are rewarded for their hard work and good performance. The company wins through a better-motivated sales team that produces short-term results and is more likely to achieve company goals.

For a sales incentive plan to produce this double win, there are two necessary conditions:

  • Salespeople must have a large impact on sales results by focusing on activities that add value and directly influence customer buying decisions.
  • The company must have the ability to measure individual results by separating out each salesperson’s contribution and determining how much an individual’s actions affect the outcome.

Today’s multichannel world increasingly challenges both of these conditions.

Before the proliferation of digital information and buying channels, buyers usually relied on field salespeople’s help and expertise when purchasing. Salespeople “owned” relationships with customers, and had considerable impact on purchase decisions. This made it easy to measure individual sales results. In many cases, incentives linked to sales performance were an effective way to motivate and reward individual salespeople.

Today digital channels make buyers more informed, connected, and socially influenced. Buyers no longer view salespeople as their primary connection to companies they want to do business with. For simple product purchases such as office supplies, many buyers are self-sufficient. They get information online and purchase through websites supported by inside sales and service. Field salespeople no longer have impact on buying decisions. The first necessary condition is no longer true.

For complex solution purchases such as customized manufacturing equipment, buyers usually rely on a combination of digital channels and salespeople. The internet allows buyers to easily gather preliminary information about solution alternatives. But when solutions are complex and expensive, digital channels are usually not enough. Buyers want to collaborate with salespeople to reduce uncertainty. Often, they want input from multiple salespeople and technical specialists from the solution provider, in addition to help from digital channels. Salespeople have impact on purchase decisions. But because that impact is shared with multiple sales roles and digital channels, the company’s ability to measure impact and attribute it to a specific salesperson is limited. The second necessary condition is no longer true.

More and more selling situations today are failing to meet one or both necessary conditions for traditional sales incentives to work. Multiple influences on buying reduce individual salespeople’s impact and the ability to measure it. This blurs the connection between individual effort, results, and incentive pay in the minds of salespeople. Incentives become fuzzy and are no longer effective at rewarding and motivating individuals.

New Sales Management and Culture

Companies can no longer rely on large, individual, short-term sales incentives as a primary means of managing salespeople. Instead, they must change their sales compensation plans while emphasizing other ways to direct salespeople and shape sales culture.

Sales leaders must change compensation plans to look more like management bonus plans, designed to encourage people to work together to make the company and its customers more competitive and prosperous in the long run. Changes include:

  • Changing the metrics for determining incentive pay. Instead of short-term individual results (for example, quarterly territory sales), the metrics that determine pay should reflect annual company and team performance, along with individual effort contributing to team results (for example, going above and beyond to meet with key decision makers or to engage product specialists to help customers).
  • Shifting the pay mix more toward salary. Companies should also provide a smaller (but still reasonable) incentive opportunity for salespeople.

In addition to changing sales compensation, sales leaders and managers must take a more active role in managing salespeople. This involves changes such as:

  • Deploying new sales team structures. They must work alongside other channels (internet, inside sales) to meet customer needs.
  • Hiring salespeople with new capabilities. In addition to having solution sales skills, they should be comfortable using digital communication (email, video calls, social media) with customers, appreciate the value of analytics for enhancing the sales process, and be able to orchestrate customer buying across multiple channels.
  • Using performance management, coaching, training, and sales data and tools. Guide salespeople instead of relying on incentives as a primary means of controlling sales activity.
  • Establishing a new sales culture. It should be focused on teamwork and customer success.

Incentives are embedded in the culture of many sales forces, and changing that culture may be difficult. Yet change is necessary for companies to affect sales force behavior and drive results in today’s multichannel sales environment.

Original Page: https://hbr.org/2017/08/are-sales-incentives-becoming-obsolete

 

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

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

Don’t Persuade Customers — Just Change Their Behavior 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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