It sure makes a weekend when we get an unsolicited email like this one from a client we wrapped up a couple months back. We like to work ourselves out of a job and leave behind a team that can thrive after we leave.
March is turning out to be a killer month for us and the team is really humming. Am feeling good about the structure that we architected and Sales Director is doing a great job driving AE’s and AM’s.
Altus Partner, Dave Chase, wrote a Guest Post for the leading Tech/Business site in Seattle — TechFlash. Dave has been actively involved in helping local Internet media businesses become profitable (a rarity). In this his piece Local media need dual business models, not dueling models, he draws parallels with the traditional dual business model of newspaper businesses that is rapidly becoming a solo business model with the dramatic decline in classified advertising. In today’s environment, distribution is defined less by physical distribution than it is things like quasi distribution as defined by Google PageRank.
He opens the piece as follows:
What made newspapers viable for so long was the fact that they had two products/businesses that were largely unrelated but bundled together. There was the news business — monetized by display ads — and the classifieds business — monetized by classified ads. The classified business was enabled by the distribution and audience of the news franchise.
He also highlights that most local salesforces aren’t the asset they were once thought of…
Having gotten closer to “the last mile” of the Internet, I’ve come to observe that in most situations the local sales organizations of the incumbent media are more encumbrance than asset.
He wraps up his piece as follows:
The sooner local media recognize dual business models — rather than dueling business models — the sooner we’ll see hiring rather than firing being the storyline of local media.
Related articles:
Dave Chase wrote a follow-up piece to his “Five Fatal Flaws that are Killing Local Internet Plays” post on NewsInnovation.com. It’s his prescription for fixing the flaws outlined in the earlier post. It’s titled Ten Point Plan to (Re)building a Successful Local Media Salesforce. He draws from principles that are a part of Altus’ Sales Process Optimization practice.
Now more than ever revenue traction is a life or death proposition for new businesses during the current economic climate. With our original Outsourced Business Development Practice we were able to help our clients succeed in the aftermath of the tech bust earlier this decade. Since launching our Sales Process Optimization Practice in the last couple of years, we’re thrilled to say we’re batting 1000 with guiding our clients to rapid revenue growth in over a dozen engagements. These successes have been directly or indirectly written about in several leading publications and blogs including iMediaConnection (the leading trade publication for the Interactive Marketing Industry), VC Journal, Newsosaur (high profile blog for the Internet news industry written by an investor/advisor and industry veteran), Private Equity Week, and NewsInnovation.com (site created by David Cohn and Jeff Jarvis, the leading pundit in New Media and author of the new book What Would Google Do?). [Please note that VC Journal and Private Equity Week is only available to subscribers and via reprints]
The great news is that all is not doom and gloom during a recession as Dave Chase wrote about for iMediaConnection – How brands thrived during the Great Depression. In fact, our clients are thriving. One even had a recent exit that builit on the strength Sales Process Optimization that created a world class telesales machine which was a core reason for the acquisition. The best thing about the successes highlighted below is that these companies can succeed without an exit as a result of the sales traction they have achieved. These companies represent a wide array of business from Internet media to a SaaS software solution to company providing energy savings solutions for building owners to a lead generation company for educational institutions. A common thread is that all have highly fragmented customer bases where traditional, expensive shoe-leather sales models don’t pencil out so we helped them implement a more successful model.
In the midst of the negativity in the press, it’s great to hear success stories. The following is a sampling across 4 companies:
We were able to guide these successes by applying a 13 phase process that takes the companies through a rigorous set of processes and workshops that elevate the company’s effectiveness. If you’d like an overview of the 13 phase process, click on any of the partners on our About Us page for our contact information.
13 Phase Sales Process Optimization overview
Altus partner, Dave Chase, had an article he wrote entitled 7 recession survival tips published on iMediaconnection.com (the leading publisher for Interactive Marketing). The article highlights elements of Altus Alliance’s Sales Process Optimization practice.
It starts as follows:
Recessions are a murky time, particularly for newer brands trying to shape their messages during economic lulls. Follow these surefire steps to emerge even stronger than before.
For sellers in the digital media marketplace, what can be learned from the dotcom bust that can be applied today? Whether you’re a publisher or managing a network, lessons from the last downturn have already been applied with success in today’s environment.
Those of us “old-timers” who were in the business in the aftermath of the dotcom bust remember it was a trying time, especially for emerging businesses whether they were new lines of business for traditional companies or a startup. With startups, it was a matter of life and death to get sales acquisition costs as low as possible. For established companies, it was the difference between mere survival and using the downturn to gain competitive advantage. Fortunately, interactive media is much more proven as a business model today than it was earlier this decade. It’s a far more competitive space, however, and the market has responded with an array of companies filling every conceivable niche.
It later highlights the fact that most companies executive ranks are ill-equipped to put in place lower cost sales organizations.
Unfortunately, very few senior executives have experience in these telesales-heavy models. To their surprise, businesses often learn that telesales models will drive deals well into six figures. To re-engineer a sales process, a business needs to go through a complete overhaul to crash-proof their business.
Read the article for tips on how to gain revenue traction with lower cost sales models. The single biggest takeaway from the aftermath of the dotcom bust was that the only companies that survived and/or got funded were those that kept costs low while building significant revenue streams. Altus’ founding was in the shadow of the bust so these are familiar times for us.
Altus partner, Dave Chase, had an article he wrote entitled Five Fatal Flaws that are killing local Internet plays published on the NewsInnovation.com site that was put together as a result of the New Business Models for News Summit that David Cohn & Jeff Jarvis put together. The post touches on elements of Altus’ Sales Process Optimization practice that borrows heavily from Bill Lawler’s experience running the Gold Standard of low cost customer acquisition models — Dell.
In the post, he goes into detail on each of the 5 fatal flaws listed below:
1. Farming Hunters.
2. Expensive sales people and processes for low dollar advertisers
3. Inability to quantify the value of your audience and articulate a return-on-investment to a prospect.
4. Cluttered sites with postage stamp sized ads
5. Rate card as after thought vs. a strategic selling tool
One of the common missteps in sales organizations is putting people in roles they aren’t well suited for and thus fail to meet their numbers. The most common mistake of all is not understanding that some people are “Hunters” while others are “Farmers”. Both personality types are needed to build a long-term healthy business, however placing Hunters in Farming roles and visa versa is a costly mistake. Here’s a few indicators of what type of individual you are dealing with
The following are signs that someone is a Hunter vs. a Farmer
When we help optimize a sales organization, we help existing organizations put the right people in the right positions. With emerging or growing organizations, we use a set of interview questions to ferret out where someone is best positioned to succeed. It’s just as hard to hunt with farming skills as it is to farm with hunting skills.
CEO’s often ask me about “poor performers”. Downturns in the economy are often a catalyst to weed them out as companies watch every penny going out the door. I’ve found there are patterns that can identify these people so they can be weeded out of the organization. I share these below.
Sales People fail for (one or more than one) of the following reasons:
1. Fit
I am a firm believer that you can train a good salesperson to sell anything. So when I say “fit”, I am not referring to “domain expertise” or “dental experience” but rather are they a “profile fit” for the position?
Let me explain. There are normally 3 and sometimes 4 distinct profiles that map against the customer lifetime continuum.
a. Hunter
b. Farmer
c. Nurturer
I often times find sales people miscast in roles that do not fit their profile. A hunter wants to sell something, and sell it fast, and doesn’t want to have to farm or nurture them after the sale. They make horrible Account managers. On the other hand, a farmer wants to develop an existing account. They are better with an existing book of business where they upsell and cross-sell. The nurturer wants accounts to love them. And typically the accounts do; the nurturer will work tirelessly to keep their accounts happy and satisfied. But don’t ask a nurturer to sell anything.
In most cases, sales people tend to find their way into only one bucket, or have a strong preference for one bucket. If the primary role of your sales team is hunting, then we should be hiring hunters. We have interview questions and background checks that can test for hunters. People that have traditionally managed a book of business or a list of accounts in a given territory most often do not fit the profile.
2. Motivation
I want people that “want the A.” Mary is someone who always “wants the A.” She wants the executive team and her peers to say “nice job.” She wants to be recognized as a top performer and that drives her every month to success. And when she has a bad month, she tells herself, “I’m not going there again.” “I am going to go kick some butt this month, and make up for last month”
Passion, drive, motivation, success-oriented, goal-oriented are all terms that describe this characteristic. People who are driven to success, usually make good sales people.
Warning: Sales people with this characteristic are sometimes a pain in the butt. They are so driven that occasionally they will step on toes. They are not always elegant and tactful in getting things accomplished. As long as their passion is channeled in the company’s best interests and they are not creating any issues externally (with prospects and customers), I found that the internal challenges of highly motivated people were well worth the extra “internal mgmt. required.
3. Compensation
More and more companies are moving to a 40/60 or 45/55 base/variable plan with less than half of the OTE (on target earnings) salary and more than half on the variable comp.
I recommend that your base salary is conservative enough that people can’t get too comfortable living on their base salary alone. If your comp package is above-market, this should allow you to attract excellent sales personnel.
4. Training
Formal training along with on-the-job training is a must. For most companies, there is a lot to cover for new sales people. Be sure to align training that is appropriate part of the customer lifecycle they deal with.
Ongoing training is always useful. Even simple things like:
a. Telling the company story
b. Overcoming objections
c. Getting past the gatekeeper
d. Giving a great demo that gets to close
e. Phone scripts, email templates
f. When to use referrals
Making time for peer-to-peer best practice collaboration is important. Sharing successes, strategies, tactics, wins, and losses are all important. Brownbag lunches can be great forums for this sharing.
5. Ramp
Be patient, but not too patient. Ramping to full quota should take place somewhere between month 3 and month 9. I would suggest that the average of those (month 6) is a pretty good guidepost. Certainly if someone has not fully ramped by month 9 (unless the sales cycle is 12-18 months), they should be placed on a PIP (Performance Improvement Plan.) Typically if they are unable to hit quotas by month 6, they are probably not likely to hit quota by month 9.
Make sure, though, that the goals are fair and the sales individual is fully trained.
6. Sales process failure
Let’s look at a company where the sales process centers around the demo and the close with the following steps:
a. Qualifying the opportunity
b. Identifying the decision maker
c. Getting to the decision maker early
d. Demo (and discovery) to decision maker and key influencers
e. Overcoming objections (might have to do a second demo, price discussion)
f. Getting the order
If the deal is not properly qualified or access to the decision maker is blocked or the decision maker is not available for the demo, et al., the sales process breaks-down and the likelihood for success diminishes.
7. Misalignment of goals and expectations
Sometimes the goals are unachievable. Stretch goals are fine, but should usually be set on top of an achievable goal. And achievement of stretch goals should be rewarded over-and-above the normal compensation for quota achievement.
Set goals that match the company goals (or the company re-stated goals) within a 10% factor. So if the company goal for a given month is $500K, align your quota model to distribute between $450K and $550K to your sales people. Under normal business conditions my personal bias is to roll out quotas that total the company goal. There can be factors (product delay, infrastructure issues, etc.) that justify rolling out something less than the company goal, but I still like to use the +-10% as a guide.
Sales People are “coin operated”; they want to make money. They also want to over-achieve their quotas/targets. Usually quotas that are unattainable lead to sales people that are not making money and are running at 50-70% of target each month. The good sales people will eventually look elsewhere if the goals are not aligned and the poor performers will hang out for awhile until something better comes along.
8. Time management
And as important as “time management”, is “time prioritization” (spending time on the right activities)
I have had sales people who were wonderful managers of time, very efficient, got a lot of things done, but were not “effective” at selling and working their pipeline.
So this means 2 things:
a. Are they using their time wisely?
b. And are they spending time on the right activities?
It also means, do they manage their time in order to maximize their productivity:
a. Making calls when it is a good time to catch decision-makers (early, late, maybe even lunch)
b. Doing their research and emails during times when it is impossible to get a hold of decision-makers
c. Prioritizing their month or quarter; working their pipeline to close business each week/month
9. Mismanagement of pipeline
This is typical with farmers and nurturers who are thrust into a hunting role with no formal training or experience in working a pipeline.
Pipeline management is not intuitive. You have to know how to most effectively work your pipe:
a. How many deals do I need at each stage to make my number this month/quarter
b. How many calls do I have to make to get XX number of demos
c. Which deals should I focus my efforts on this week/today
d. “Win early and lose early”
e. Am I talking to the decision maker, and I am talking to them early in the sales cycle?
Often times, inexperienced sales people spend way too much time on deals that are never going to happen. Learn to disqualify deals early and move on. Spend your time on deals that fit the “Hot Opportunity Profile”, that is prospects who fit our ideal customer profile.
You want to avoid being in the business of educating the marketplace. Leave that to consultants and analysts and marketing departments. We want to find people who can make a buying decision, and make it now. The marketing team should put on seminars/webinars to find and educate these people. Leave it to them if you are in Sales.
10. Work ethic
This is an issue that typically surfaces after 2-3 months. People can fake it for a while or they can be energized by a new opportunity. But people who would prefer to be golfing or lounging or playing video games show their true colors at some point.
I am not a huge fan of the “work smart, not hard” philosophy. Typically, that is just an excuse. I want people who want to “work hard and work smart”…that combination can yield success.
And the early warning signs are usually obvious:
a. activity levels (calls/demos) dropping
b. Pipeline is stagnant
c. Missing meetings/work frequently
d. Customer/prospect complaints
Use this as guidepost. Quickly identifying the issues/problems, will help us quickly determine a remedy/cure. If you want some help, talk to us about a Sales Process Optimization project. Having the right metrics and processes in place readily identifies the issues outlined above.
Chase was interviewed by David Cohn of Spot.Us about his experience at the New Business Models for News Summit that was put on by CUNY, David Cohn and Jeff Jarvis. He shared his experiences about building a successful hyperlocal local media business particularly in this challenging economic time. The interview can be watched here.
The company that Dave is working with is NextNewsNet that builds off of the success of SunValleyOnline and NewWest.Net. He has been applying both the methodologies of Altus’ Sales Learning Curve and Sales Process Optimization practices with the help of Bill Lawler. Bill’s background with Dell has been particularly helpful in developing a low cost customer acquisition model. NewWest.Net has already seen the quantity of HOT Opportunities increase 4-5x in the early stages of the project. If past experience holds, this will result in a significant increase in revenue.
The video is of Dave Chase doing a “lightning round” at the summit explaining what has been learned with SunValleyOnline and NewWest.Net that is being applied to the NextNewsNet business model is located here.
