Last week was Social Media Week in the UK.  As part of this I went to a very interesting Social Media conference in London. Now and again it’s worth stopping and taking time to stand back from a trend and try to get things in context. I took a couple of days out from the sales coal face to do just this and have some interesting discussions before, during and after the conference.

My observations – for the business person – that I have after all these interactions and downloads are:

1. Social Media is still being considered more of a B2C (business to consumer) tool, with very few case studies from the B2B (business to business) world.

2. After a few years of marketing departments using social media as another ‘channel’ to send out their ‘messages’ to ‘consumers’ they are starting to realise that the real opportunity is in listening and understanding the customer in more detail.

3. The main challenge in adopting a social media strategy is internal. Large (older) organisations are starting to face up to the problem that their staff may not be motivated, happy and enthusiastic. So, when customers attempt to engage with them a) marketing are not used to talking back and b) there is often a gap between the brand that marketing have invented and the reality of the organisation.

4. Newer, smaller companies are better placed to exploit the potential of social media as they do not have the hierarchical structure and control baggage of their larger competitors

5. There is a whole generation coming through who do not use email and do not believe what companies say about themselves on their own websites. This is the customer of the future and you need to be active where they are active. You need to go to them as they are not going to come and find you.

6. People may go on-line to buy, but they do not go on-line to be sold too. So you have to be creative in engaging with them. 50% of content (minimum) should be to entertain.

7. Average spend on-line (and donations to charities) are increasing. There is a direct relationship between this and petrol & parking price increases.

8. Marketing (and there close collaborators the agency and PR company) are very scarred that they are losing control of the image / brand that they want to project. It’s almost as if they are nervous about a future board meeting where they are confronted with the true facts of what the customer thinks / feels / believes.

9. It makes increasingly little sense to talk about ROI for social media in isolation of other ways used to engage with the customer (such as the telephone or email) and perhaps ROI is Return on Involvement (or ROE = Return of Engagement)

10. As we no longer have ‘jobs for life’, creating a personal presence on the internet which helps define our views, expertise and value increases in importance and will replace the CV in recruitment and collaboration decisions.

So. just my take on a very interesting couple of days in ‘that London’.

A very good friend of mine, who has been in sales for longer than I have, shared a recent story with me. We go way back – in fact we were at primary school together – and we have stayed in touch over the last 50 years (or so).

My friend represents several overseas companies in the UK in a technical and sales capacity. One of his principals was considering introducing “lean” approaches to improve efficiency. Typical of a “lean” approach is the setting of KPI’s.

They felt “efficient” meant quoting within 48 hours of a customer request. In this technical market, this can be pushing it and my friend wanted to stress that a better measurement was quotation effectiveness/conversion rate, rather than just a quick turnaround which often resulted in poor quality proposals being created. This KPI does not include any measure of the quality of the response, or conversion rate to business, the ultimate measure of effectiveness.

This is an excerpt from his response to them:

What is the purpose of a quotation?

I suggest ”To provide information to the customer on the goods and services being offered against a specified requirement in such a way as to maximise the chance of winning the business, or if not successful then to leave the customer with the most positive impression of the company and it’s capabilities”

Points to consider.

A) In most cases time is the customer’s most precious asset. A quotation should have a clear logical layout, be easily understood and provide enough information for the customer to proceed with minimal additional effort to placing an order.

B) A quotation is part of the sales effort and should highlight the unique features and benefits of dealing with us. Where possible we should highlight a feature with specific relevance to the customer’s individual situation. e.g. offers of support with new product development or guarantees about in service reliability.

C) Our quotation will almost certainly be directly compared to that of our competitors. Does our quotation show us in the best light and portray us as professional and as a suitable business partner? An interesting exercise is to compare our typical quotation to our product catalogue and other printed company documents. Is the standard uniform across all documents?

D) Our quotation may well be evaluated by personnel who have little knowledge of our business and products and who may not have met any of our personnel. We need to ensure that the quotation leaves a positive impression with these people.

E) We need to give them confidence in placing an order with us. Changing suppliers may be considered a risky decision, so ambiguity is to be avoided at all costs and clarity on timing is particularly important:

e.g. “Within 3 working days of receipt of your purchase order we will issue a formal acknowledgment with the lead time. Where applicable, drawings for approval will be issued within 10 working days. On receipt of your approval the final order will entered into our production system.”

F) Points of contact. Include the names and contact numbers for all the of our people that they can discuss the quotation with and who / how to send the order to us.

G) Make the quotation easy to read and make the customer comfortable with the content. Use exactly the terminology and / or wording the client has used in their enquiry documents and address issues in the same order as they are listed in the enquiry documents.

H) Avoid ambiguity at all times. While it may seem tempting to avoid being definitive; commercially and technically clarity at an early stage can prevent misunderstandings and problems later.

I) On high value and complicated offers consider using numbered paragraphs, separate the technical and commercial content into two sections and provide an index.

Great advice and ideas on how to make your proposal easy to understand for your customer!

What suggestions do you have to share? 

Is it possible for a small business to have a brand? Personally I have my doubts. And I am convinced that for a service industry that works business to business it’s not only impossible – but dangerous – to think in this way.

Let me explain in simple terms.

People buy people. Yes it’s a cliché, but like every cliché it’s based in truth. When you are considering a financial advisor – what’s more important, their logo design or their expertise and personality? Would you work with someone who you didn’t get on with too well if their website looked gorgeous and had consistent design elements? Of course you wouldn’t.

When most people are looking for a personal and professional service like an IFA, solicitor, accountant, architect etc. they turn to their network first and ask ‘Who do you know who…?’ Their network is far more trusted for insight than Google. We trust our connections and network far more than what we see and read on websites and in brochures.

Google is either a last resort, an impulse purchase or for delving deeper into those recommendations. I don’t think it’s the place where decisions are made. It’s where confirmation is sought.

For small businesses if you swap the word ‘Brand’ for ‘Reputation’ it all makes far more sense to me. An individual (or a small group of them) need to develop their credibility, expertise and advocates. This will go much further in developing their reputation – and over time their business – than having a pretty logo.

So all you small businesses out there: forget ‘brand’ and think ‘reputation’ in order to grow.

I have this view of the world: marketing is focused on pixels and print and sales is focused on people. It’s a bit of a simplification but the point I am trying to make is sales is about people:people interaction and marketing is mainly people:non-people interaction.

So, when it comes to integrating social media into your business what strategy do you adopt? Over the last few years we’ve seen a significant increase in social media uptake by businesses – and for the most part they are failing. To me it seems that a lot of these businesses hand over social media to the marketing department, who then start to think in terms of ‘messages’ and  ‘channels’ and see social media as just another channel to pump their messages down. But here’s the problem – most marketing departments aren’t used to the customer answering back – which is the whole point of social media. And they panic.

On the other hand sales folks are very happy to engage and converse with customers, prospect, well just about anyone in fact. So doesn’t it make more sense if the sales people are on Twitter, LinkedIn, Google+ or whatever? But marketing get concerned about how this type of interaction may ‘dilute the brand’ or ‘not be consistent with our core values’. So in the end, the customer speaks and few are listening. And those that do listen are often worried about engaging.

Ideally get your sales team involved in social media – but not to push your product – but to grow your contacts, your influence and help people on-line with your knowledge. This will create far more of a buzz and help the business define its area of expertise and value to the market place.

Social media is best when it is used across the entire company to communicate. From stores, to dispatch, from finance to HR – social media is just another communication tool that can be used across the business.

Would you consider limiting the use of the phone, or email to just one department?

Then why limit the use of social media?

Long term readers of this blog will appreciate that I am fascinated by two things: one is about the process of how people make decisions, and the other is about how and why people are motivated to do things. This blog tends to look at those topics within the context of sales – but of course they are not limited to this.

My IFA (the excellent Andrew Stinchcomb of Integrity Financial) recently drew my attention to the book “Drive: The surprising truth about what motivates us” by Daniel H. Pink. And it really is a fascinating read.

Most organisations believe that it is a requirement to motivate sales people by commission. It’s pretty normal for our industry. Well research quoted in “Drive” would suggest that this is counter productive and counter intuitive.

Research undertaken by Deci (I won’t go into the details, you’ll have to read the book) comes to the following conclusion: “One who is interested in developing and enhancing intrinsic motivation in children, employees, students, etc, should not concentrate on external-control systems such as monetary rewards”

Now that’s quite a statement. Just think about it – commission, for the long term, doesn’t work. Rewarding the kids with money in return for doing those house-hold chores – doesn’t work. He goes on… “When money is used as an external reward for some activity, the subjects lose intrinsic interest for that activity” Rewards can deliver a short-term boost – just like a jolt of caffeine – but the effect wears off – and worse, can reduce long term motivation for a project.

Now here’s an interesting point. That research is over 40 years old and clearly hasn’t changed the way we behave – for the most part – in how sales people are managed in the work place.

The research also implies that if the commission is taken away, people will be demotivated to a level below that at which they started. So, by paying commission in the first place we need to keep paying it – as taking it away will be detrimental. But the effect of paying the commission in the first place only has a short term effect, at best. Over time – and it’s quite a short time – the effect of having a commission scheme wears off.

So, what does motivate people? I suggest you read this book (and also ‘Punished by Rewards mentioned in another posting) for the answers…

This is a topic that is covered in my sales workshops and often leads to quite a heated debate. I’ve read quite a bit on the subject of how our brains make decisions. So far, I have not come across a really accurate description of the process at all, especially when it relates to purchases. You’d think an understanding of this process would be essential to ourselves as individuals, let alone of high value to sales folks! What I have learned is that in a ‘considered purchase’ (where there is an element of risk involved - i.e. one that is not an impulse purchase) the process requires both sides of the brain to be satisfied, if at all possible. The perceived risk may be associated with doing something, or not doing something or even assessing the risk between different suppliers…

Both sides of the brain are needed to make a considered purchase – an informed decision. The left hand side of the brain is associated with the facts, logic and process. This side of the brain will look at specifications, price, fit for purpose and so on. The right hand side of the brain is associated with emotions, feelings and creativity. So this side of the brain will look at how they feel about the solution, salesperson and impact on people (including oneself).

So here is an interesting question: “What side of the brain starts the process off to purchase something?” Is it the logical left hand side of the brain or the emotional right hand side? Turns out it’s the right hand side that gets us started because we are ‘uncomfortable’ or ‘dissatisfied’ with something. See – those emotions are what get the sales process started. In fact you could consider the role of marketing is to make people unhappy and dissatisfied with some aspect of their work / personal life! If people are happy with what they have and how they feel, there is a significantly reduced requirement to purchase things to make life better.

So if the right hand side gets the sale started – where does the decision get made? Well, also in the right hand side for the most part. But in between the thought process move to the logical left hand to ensure that the factual requirements are understood and met by the proposed solution or product. Eventually the thought process  moves back (in fact it may be that it moves from one side to the other a number of times) to the right hand side that will ultimately place the order.

Why is this important for sales folks? Well, you need to be able to assess what part of the brain is being used at any particular time by a prospect so that you can match your behaviour and conversation accordingly. There is no point discussing your superior specifications if the prospect is thinking about how the wrong purchase may affect their promotion. Likewise there is no point focusing on the status to be gained in purchasing a new to market product if the prospect is asking questions about compatibility with existing equipment. Of course both sides of the brain need to be satisfied before a decision can be made. Otherwise they will just say ‘leave it with me…’ or ‘let me think about it…’ Or, as I’m sure we’ve all experienced an emotional decision is taken. This can also lead to the decision being justified by logic (good reasons) whilst the motivator was emotional (real reasons).

This is why it can be so dangerous to have a ‘standard’ presentation about a product.  The salesperson needs the flexibility to ascertain which side of the brain the prospect is working in and match their sales presentation accordingly.

But never under estimate the power of emotions – in both starting and closing a sale! 

I thought I’d share with you one of the exercises covered in my sales workshops. It attempts to uncover how well someone knows their business (or sales territory) with respect to some key numbers. I argue that unless you track and know these numbers, decisions you make regarding how you spend your time (assess your priorities) are suspect.

For the moment I want you to consider the work you put in to create new business. That is business from people who have never ordered from you in the past. Forget repeat business from loyal customers for the moment.

So get a blank sheet of paper and answer the following questions. You should be able to do this off the top of your head, or worst case refer to your CRM system or sales tracking spreadsheet. (If you don’t have either of these alarm bells should already be ringing)

• What is the average value of a customer order?
• When it comes to the customer making a decision about your quote / proposal,  what percentage say “yes” to your offer?
• How many quotes / proposals do you put out in a year?
• What percentage of your meetings / customer interactions result in you producing a quote / proposal?
• How many meetings / customer interactions do you have in a typical week?

Based on your answers to the above you should be able to calculate your annual new business turnover (drop me a line if you need help with this). Another interesting calculation is how many first meetings do you need in a year to get this level of turnover (ditto).

You can also repeat the exercise for existing customers (and include the frequency they buy from you) to get your turnover for repeat business. Add the new business turnover to the repeat business turnover and that will give you the total annual turnover for your business. Simple? No! Rarely do people actually get close to their sales target / quota / business turnover. Only those who ‘know their numbers’ get close to a figure that is credible.

Why is this important? Well, I argue that unless you know these numbers it’s hard to make an informed decision about where things might be going wrong when business takes a bit of a downturn. Or if that new initiative (e.g new promotional activity, new sales presentation, new pricing structure etc.) is having the desired effect on the key numbers.

Yet, there are companies and sales people out there who do not know their numbers, but still feel comfortable making predictions, or giving out new targets like “Your target is up 8% this year” or “We need to change our split of new / repeat business to more like 50/50″ or “We will deliver double digit growth…”

And those questions (and many others) relate to the big strategic stuff for large companies. But let’s make it more focused on the individual for the moment. Knowing your own personal numbers – do you ever look at them and think which ones you could do something about improving? Or, more interestingly which are the important numbers to focus on?

For those of you who struggled to write down the answers to the questions at the top of the blog – what are you waiting for?

Start tracking and knowing your numbers now.

On his blog “Stories that Sell” Jim O’Conner asked the question ‘How to sell when you have no USP?” I commented on Jim’s posting at the time, but thought the ideas below might help you think about how to develop differentiation (your USP) within your business. So here are seven ways to build and develop some differentiation:

1. Product Differentiation
How is what you are offering (product or service) different from or better than your competitors’? If you don’t have (or can’t invent) some valued and unique components, you are in danger of being perceived as just another commodity.

2. Price Differentiation
In my opinion, this is the worst approach in trying to build a viable long-term business. But, if your business is more ‘one-shot’ than ‘repeat’ and you get the volume required, it can work.

3. Relationship Differentiation
If there is a solid relationship between you and your clients based on trust, you have an inside track of tremendous value. This environment will make you the envy of your competitors, and your client may not even give your competitor a chance if the relationship is strong enough.

4. Process Differentiation
Many companies don’t attach enough significance to the processes that dictate the image of their business model. Get your best minds together and brainstorm better, more customer-friendly ways to do business. Remember every complaint or concern raised by a customer is an opportunity to review how things might be done better.

5. Technological Differentiation
This age of technology affords many opportunities to advance our ways of communicating. These new modes of communication encompass a wide variety of options, such as podcasts to update customers or to a blog (like this one) that provides a “voice” for your business and a way to “listen” to your customers. Cardinal rule: Make it easy for the customer to communicate with you – wherever they are.

6. Experiential Differentiation
Many people believe that we are in an “experience economy.” Can we provide customers with knock-your-socks-off service and experiences that are so memorable that they start telling their friends and colleagues? Customer service miracles are anything you can do to make a customer say “Wow!” Ask yourself, “How can I make doing business with me an irresistible experience?”

7. Advocate Differentiation
This level of differentiation builds on all of the above. It is the most powerful form of differentiation. This is where you develop customers into advocates for what you do. They tell their friends about you, they broadcast their experiences of dealing with you on social networks they even defend you if someone is critical. They are unpaid sales people who promote you and your products to their networks because the love what you do and how you do it.

So Jim, what do you think?

A couple of days ago British Gas learned what it costs to have poor customer service.

http://www.bbc.co.uk/news/business-14303264

The story is a catalogue of disasters (or opportunities) for British Gas who have been fined £2.5 million as a result of them not listening to, and acting upon, customer complaints. Just think about that for a moment…. £2.5 million pounds taken out of profits because of not engaging properly with their customers.

This fine has happened because British Gas operate in a regulated market and Ofgen can levy fines for this type of behaviour. But what happens in those markets that are not regulated – like the environment for most businesses? Chances are one or two things (maybe both) can happen. First off – as we are British – we tend to complain to everyone except the folks who might be able to address the problem. If we’ve had a bad meal in a restaurant, we are more likely to tell our family and friends afterwards than the staff at the time. Apparently this is because we don’t like to “make a fuss” as my Mother used to put it. The other thing that will happen is we are unlikely to go back to that restaurant. So the restaurant never gets to hear of the problem or get a chance to put things right.

With British Gas, they did get to hear of the problems and – when they thought the matter had been dealt with – closed the file. It didn’t matter if the customer was still unhappy and thought that more could be done, as far as British Gas were concerned is was game over. So lots to put right with British Gas at the moment to ensure they do not get additional fines. But, at least it’s been brought to their attention (and ours) and they have the opportunity to do something about it.

So, how open are you with the problems that are raised by your customers and how are they handled? Even if you do not operate in a regulated market – you can still be “fined” by the customer as a result of lost business and decreased reputation.

And what are you doing to make sure that feedback, improvements and comments are welcomed and acted upon?

Or, are are you hoping that your customers are like my Mum and will rarely “make a fuss”?

I have yet to see a description of any commission scheme or incentive plan that is fair to everyone. In fact, I’d like to suggest this as a given, an absolute truth: Call it “Lever’s Law” if you like: All commission schemes are unfair.

First let me explain why I believe this to be the case. And then I’d like to suggest that if we all stopped paying commissions to salespeople the world would be a better place.

So, why is having a commission scheme not fair?

It’s not fair to the customer – when I am buying something I don’t want to work with a person who is motivated by their gain by getting a deal done. I won’t to work with people who put my gain first. I don’t want incentives to become a new customer – only to be penalised when I am existing customer.

It’s not fair to the other staff – why offer commission to sales but not marketing? Or production or administration? These staff are as much a fixed cost as the sales people are. If someone in purchasing works late to get the job done – how is this different from a salesperson working late to get a proposal out? The difference is the salesperson will get commission if the order comes in and purchasing will not.

It’s not fair to the salesperson – sales people will get demotivated if they lose a sale they have worked hard on. This is especially true if  a colleague gets some commission from a sale involving little work. A commission scheme can reward the salesperson in an easy sales region with little competition and can demotivate the salesperson who has a lot of competitor activity in their region. How is this rewarding the same effort fairly?

It’s not fair to the company – you want team players and staff who are motivated to ensure the company grows and prospers. So why hire folks who are loners and are motivated by their commission plan and might not pick up the ‘phone if an in-coming call is not from their territory? What happens when the commissions can generate more money from existing customers (who may pay a higher price) so that the emphasis on new business (which may require some price flexibility) is reduced? This doesn’t sound like a company looking to grow and go places.

In order to minimise the last problem a variety of commission scheme types exist. They could simply be based on turnover, or margin, or market share, or new vs. repeat business etc. etc. Each variation attempts to reduce the unfairness and motivate the salesperson to do what the business needs. In some organisations the scheme is changed each year in order to “make it more fair”. But isn’t this the sales manager or sales directors’ job? Isn’t it down to them to create an environment that develops, motivates and inspires the sales team? So, does that mean commission schemes are a support for poor management? Yes, I think they often are.

The problem of motivating people with rewards, to do something that you want them to do, can start at a very early age. Which parent hasn’t said “be good and I’ll buy you some sweets” or “pass your exams and we’ll get you a car”. Surely there must be a better, different way to motivate people. The problem as I see it is we are brainwashing people (from a very early age) into expecting a reward every time we ask them to do something different or something they may not like. This was brought home to me when a salesman who reported to me asked how much extra commission he was going to be paid for helping to train up a new member of the sales team.

If we continue to offer rewards to staff for doing what we think is difficult or something they wont like doing we will continue to perpetuate the myth that people are only motivated by money. And I don’t think this is true. Imagine removing all incentive plans, commission schemes and rewards from all levels of the company. I don’t think we would have had the credit crunch and the current recession if the financial markets had not been motivated the way there were. Imagine people in sales who sell their products in a professional way and are motivated purely because they are truly helping their clients solve their problems…

If the above rambling has got you thinking, can I encourage you to have a look at the excellent “Punished by Rewards” by Alfie Kohn. It really might make you think differently about incentive schemes and commissions.