selling strategies from the top

Selling StrategieS from

tHe toPSelling Strategies from

the Top is a must read

for anyone involved in

professional selling and

sales management

Contains valuable information for today’s market whether you are a small business selling to big business or a large business involved in complex sales

ComPiled by

rob Hartnett

Selling Strategies from the Top Contents Contributor Biographies

Introdu n Rob Hartne

One – Strategies for Senior Managers Winning Sales ons Rob Hartn

Muscle Building the Sales Team Sam Reese* Strategic Customers as Corporate Assets Bob Miller*

Involving Exec s in the Selling Process Tim Call*

Two – Strategies for Sales Managers How to Forecast Accurately Bob Miller* Weekly Forecast and Deal Status Calls Damon Jones* Learn from Losing Bill Golder*

Three – Strategies for Sales Professionals

Sales Messaging for Success Rob Hartn Improve Your Prosp Techniques Miller Heiman* Phone Prosp Strategies Miller Heiman* Are you being Outlistened? Rob Hartn Are you really losing on price? Rob Hartn

for Win-Win Miller Heiman*

Info n Selling Strategies Int l

Leveraging Sales Talent Miller Heiman*

Info n on Miller

Secrets of

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*Miller Heiman Inc Copyright by Miller Heiman, Inc. All rights reserved. No part of this report may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems without written permission from the publisher. Publisher Miller Heiman, Inc. 10509 Professional Cr., Suite 100 Reno, NV 89521 877‐678‐3389 www.millerheiman.com **Selling Strategies International Copyright by Selling Strategies International . All rights reserved. No part of this report may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems without written permission from the publisher. Publisher Selling Strategies International Suite 156 66 Kingsway Glen Waverley, Victoria 3150 61 3 9560 1188 www.selliingstrategies.com.au

Contributors Rob Hartnett Rob Hartnett is the Managing Director of Selling Strategies International and a thought leader in sales, marketing and leadership in Australia. He has won numerous awards for sales and marketing leadership and is the author of several books in this area. Rob is also known as an inspirational and entertaining speaker on sales performance & business growth. Sam Reese Sam Reese has led Miller Heiman to its position as the foremost thought leader and innovator in the strategy, process and training that drives sales performance. Since he joined the company in 2000, Sam has grown Miller Heiman’s revenue by more than 150 percent, expanded product offerings and e‐learning initiatives and amassed a partner network of world‐class sales consultants. His passion for achieving results has inspired individual team members to strive for top performance, and has contributed to a culture based on ethics and integrity. Prior to joining Miller Heiman, Sam held executive leadership positions at British Telecom, Kinko’s and Corporate Express. His experience and success in sports, business, technology and leadership give him a unique perspective on what it takes to win in today’s competitive business environment. Bill Golder Bill Golder has extensive sales and sales operations experience working within complex, multi‐channel,matrix management organizations. His primary expertise is leading business‐to‐business sales of professional services, as well as multi‐unit operations management. He has proven success in leading key change initiatives related to sales compensation, organizational realignment, sales optimization, training, product development, and operational improvement. His key strengths are in driving results, developing and implementing strategy, and managing and leading sales teams. Bill has a reputation for taking on tough assignments and successfully turning around difficult situations Tim Call Tim Call brought to Miller Heiman impressive experience as a top‐performing sales manager with a strong track record of sales leadership

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resulting in double and triple digit percentage increases in revenues. Tim’s experience includes both B2B and B2C sales management in large company and startup environments. He maintains a proven record for closing large, complex deals and has a sound reputation for strong customer orientation. As executive vice president, Tim leads Miller Heiman’s efforts and works with the sales vice presidents and sales consultants to develop stronger and more productive relationships with the company’s accounts. Tim received his Bachelor of Arts in Business Administration from the University of San Diego, California Damon Jones Managing Director, Strategic Accounts Damon Jones heads Miller Heiman's global strategic accounts program. In his role, he develops and implements the strategy behind Miller Heiman's growing business within existing accounts. Since joining the company in 1999, he has been instrumental in establishing a strong international presence for Miller Heiman. His previous roles in the company included COO, president and managing director of international, and vice president of international sales. Damon has more than 25 years of industry experience covering all facets of business and sales management. His involvement with Miller Heiman began while at Guardian Royal Exchange Assurance, where he implemented the Strategic Selling® program as part of an innovative move to relationship marketing. During his tenure there, the company saw sales revenues double and sales expenditures cut in half. Damon's background includes account management, sales management, and group sales training management. Robert B. Miller Thirty years ago, Bob Miller developed and introduced Strategic Selling®. Since then, his passion for elevating the role of the sales profession has resulted in several additional methodologies, all of which are incorporated inThe Miller Heiman Sales SystemTM. He continues today in a consulting and advisory capacity, focusing primarily on product development. His mentorship drives innovations in sales performance that are consistent with the vision for the company he started three decades ago.

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About Selling Strategies Interna�onal Selling Strategies Interna�onal are Australian based Sales Performance Specialists to Business. As Miller Heiman accredited sales performance consultants Selling Strategies Interna�onal consult, design and deliver sales performance strategy and training solu�ons to clients in Australia and overseas. Selling Strategies Interna�onal Suite 156 66 Kingsway Glen Waverley, Australia 3150 Ph 61 3 9560 1188 [email protected] h�p://www.sellingstrategies.com.au About Miller Heiman Inc Miller Heiman has been a thought leader and innovator in the sales arena for almost thirty years, helping clients worldwide win high-value complex deals, protect and grow key accounts, manage talent and op�mize sales strategies and opera�ons.With a pres�gious client list that includes Fortune 500 clients, Miller Heiman helps companies in virtually every major industry to build high performance sales teams that deliver consistent sustainable results to drive revenue Miller Heiman Corporate Headquarters 10509 Professional Circle Suite 100 Reno, Nevada 89521, USA Miller Heiman Europe Nelson House No 1 Auckland Park Milton Keynes MK1 1BU, England Miller Heiman Asia Pacific Level 2 12 Waters Road Neutral Bay NSW 2089 Australia h�p://www.millerheiman.com

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Introduction

This is eBook is for those who employ, manage or earn their income as sales professionals.

The specific market for this eBook are those involved in complex business to business sales whether they involve products, services or a combination of both which is most common today. You don’t need to work for a large organisation however the content is focused on those that sell to large organisations.

When we think of a professional be it a doctor, lawyer, sportsperson the one thing they all have in common with selling is that without constant and relentless focus on continued learning and study you will not be successful. Unlike the professions of medicine, accounting and law sales does not have a professional body that insists on professional development to maintain your credentials. It is a profession that leaves this to the individual and their employer and this is why true professional selling requires the skills of determination and most importantly discipline.

This eBook features some of the most qualified professionals in sales performance from the worlds number one sales performance company Miller Heiman. Much of the content is based upon the continued and contemporary global research of Miller Heiman.

The eBook is broken into three sections. Section one is for senior executives and business owners, Section two for professional sales managers and Section three for professional sales people. However all three sections are valuable for anyone involved in the sales process in their organisation.

Good reading and may your selling always take a professional approach.

Here’s to win-win outcomes every time.

Rob Hartnett Managing Director Selling Strategies International Melbourne, Australia

Sales is a noble profession. Professional selling often takes a number of different forms depending upon the selling organisation, sales cycle and customer base. You might be familiar with such terms as business development,pursuits strategy, strategic account management, key account selling and the like. However what these all have in common is the word professional.

Rob

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Secrets of Winning Sales Organisations

What are the habits of Winning Sales Organisations and how can you acquire them

Rob Hartnett, Managing Director Selling Strategies International

Every year for the past five years, Miller Heiman a leading sales performance company has surveyed sales professionals – executives, leaders and representatives – to better understand what differentiates the most effective sales organisations.

This global study contains the input of more than 17,000 participants to date and is considered the world’s largest ongoing study of complex, business-to-business selling and sales management practices. Importantly 46% of the respondents were in sales management/leadership positions with the balance spread between senior executives 12%, sales people 32% and human resources, learning & development roles making up the balance of 10%.

Winning Sales Organisations (WSO) are defined as: • 20 % or more growth in average account billing • 20 % or more growth in revenue compared to previous year • 20 % or more growth in new account acquisition

Of the total number of organizations who submitted information for the 2008 survey only 7% made the cut of exceeding in all three areas above. While there are a number organisations that focus on sales methodologies more than others key industries that seem to do well as a group are Financial Services, Health and IT&T. Due to the size of the financial services industry in Australia I have provided some additional comments as they relate to this important industry category.

by Rob Hartnett, Managing Director, Selling Strategies International

Secrets of Winning Sales Organisations

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Customer Centric Systems WSO’s excel in the following key areas which are represented in the diagram below. Firstly they have the customer at the centre of everything they do. This is not a clichéd statement. WSO’s understand their customer, their customers customer, their customers competitors and their customers key industry issues. Secondly they also have sales systems that are scaleable and transportable meaning you can move within divisions or offices and use the same sales systems which ensures consistency and leads to improvement in critical areas such as sales forecasting. WSO’s have systems for creating opportunities, managing opportunities they deem worth pursuing and systems for managing relationships once they have won the account they desire. This is very important in today’s business world where people are more transient than ever which often results in key account knowledge walking out the door. WSO’s also have a consistent approach to protecting and growing their strategic accounts. This goes way beyond just organising the sales process. WSO’s align key stakeholders, such as sales, marketing, product management, and finance with the strategy.

With global organisations this can become a challenge to ensure global teams are not frustrated by the competing priorities of local country managers however with global executive sponsorship of the sales approach this can be overcome.

At financial services organization Allianz, they aligned their

processes this way, “Prior to 2003, our four distribution divisions had each adopted their own approach to selling. We recognised that to grow the business we needed to break down our divisional silos and develop a consistent approach to sales and fulfilment that sat across the whole organisation. The process of standardisation initially focused on four key areas: rewriting job descriptions for key sales roles; reviewing reward and recognition systems; streamlining the Account Management process and introducing interpersonal skills training for all sales people.”

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An implication for financial services organisations is to maximize vast amounts of customer information to create more effective sales cycles. This means an alignment of CRM systems with consistent sales process and methodologies so they act in a seamless way which today thankfully should be a thing of the past for those using leading CRM tools such as Salesforce.com or Microsoft Dynamics for example.

Internal Systems & Processes Thirdly they have extensive internal systems that focus on ensuring their organization and importantly the people that work within their organization in many cases the biggest assets the organization has are surrounded by a culture that ensures they can deliver the best results to their customers.

The Miller Heiman Sales System™

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A Formalised, Compelling Value Proposition According to Tim Call, Miller Heiman’s executive vice president of strategic accounts, “today buyers are more sophisticated; they’re bringing in more salespeople, comparing them, and saying, ‘The only difference is price.’ What we are seeing is commoditisation taking place more than ever especially in competitive areas such as financial services. Therefore creating a position far removed from the perception of being a commodity is a key strategy companies should use to protect themselves from profitability erosion. So it is surprising that while 62 % of WSOs report having a “formalised value proposition that is very compelling to our prospects,” only 34 % of all other organizations say they have such a value proposition. WSOs announce their value propositions, distribute them, print them, talk about them, and remind sales representatives of them at every step in the sales process. Today there is even technology available that allows key sales messages to be made available enterprise wide via rich media to ensure that from the C-level to the street the same key messages are being used and I expect financial services to be one of the first industries to utilise these solutions such the example below from Corporate Visions Inc.

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Sales Cycles are Involving More People While most respondents said they must persuade four to five people in the typical sale, more than a third report that they need to persuade six or more people for each opportunity they pursue. The number of decision makers involved with each sale shifted up by 16 % compared to last year’s study. The reason for this increase is the buying process is becoming more complex, more technical and often include procurement departments often consult back to IT or other specialist areas of the business when they make buying decisions. Secondly, in today’s economy, buying decisions are being escalated up one or two management levels.. According to Bill Golder, Miller Heiman’s executive vice president of sales, “They’re getting better at internal collaboration in decision making.” That not only means more people involved, but more knowledgeable people. Get Accurate Feedback In 2007, less than one-third of respondents agreed with the statement, “Win or lose, we get accurate feedback on all proposals from our customers.”

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In 2008, the figure decreased to 26 %. It is not easy to go back and get feedback from someone who has just rejected you. But it is definitely worth pursuing. You need to take a long term view to major accounts so you learn what the issues are and you can leverage this knowledge into new opportunities. In 2009/10 this is even more important, even when you win. You may be surprised why you won! Sales and Marketing Alignment Forty-three % of C -level (CEO/CFO/CSO/CMO) respondents agree that, “sales and marketing are in alignment in what our customers want and need.” But only 25 % of salespeople agree. This is a major gap. Call suggests that this perception gap occurs because organizations don’t always define the terms they use to describe events. “It’s easy for sales to say, ‘The lead wasn’t qualified,’ and for marketing to say, ‘A good salesperson could have closed that sale.’ This is because they may not be on the same page regarding the definition of a lead.” Or they may not have a system in place to get true data about the quality of leads. So how do WSO’s do it differently? The most successful companies have a strategy and a market focus that is customer-driven, based on customer-response surveys or even regular discussions with salespeople about customer needs. In high performing organizations, the sales and marketing teams know each other, talk, meet, and understand each other’s business.” Leverage Best Practice WSOs are 110 % more likely than other organizations to leverage the best practices of their top performers to improve everyone else’s performance. Yet, less than 50 % of WSOs do this. These findings suggest there is room for improvement across the board in this vital area. What is interesting in many industries and especially financial services is the amount of money spent on technology solutions such as CRM which often dwarf the money spent on analyzing what makes

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great sales performers despite the fact that there are today many profiling tools that can make this exercise simple and easy to execute on a regular basis for most organizations. This is especially intriguing when most C-level people acknowledge that sales people are a particular breed and there are two distinct types. The 'hunters' are intuitive, passionate and often neurotic who focus on winning the next deal and then move on, whereas the 'farmers' befriend the customer and focus on building long-term relationships. Benchmarking the best in each area would undoubtedly show a different make up of person yet as the research shows it is rarely done.

The key is to find out which of your sales team should be on which account and then to find a way to manage and reward the hunters and farmers differently and to create a structure that capitalizes on the strengths of both types and then train them accordingly.

Few companies do this effectively because of the potential political battles that may arise.

How does the world of sales vary? While only 3% of respondents were from Australia and country specific data between respondents is not available at the time of printing there are some differences between regions. In the North America training sales training is seen as a mandatory requirement especially training in a robust sales methodology for winning or retaining key accounts. In Australia based companies sales training tends to be more common around the “21 Techniques to Closing” variety where organisations are looking for a quick fix. This long term approach was also reflected in the induction processes of global companies for new sales people. For example global WSO’s were most likely to have formal sales methodology and processes training, CRM Training and a likely career path communicated to new hires before they even hit the streets. Regular benchmarking for overseas companies against their competition was a common practice compared to Australian organisations.

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Another area of difference was that of training in channel or dealer management. In North America & Europe there is more of a focus on developing channel sales managers to understand the dynamics of channel members and how developing them as profitable businesses is to the benefit of the suppler. In Australia and Asia especially, channel managers are often those from strong direct sales backgrounds who are given a channel to manage as a career progression without fully understanding the different dynamics of building healthy channel relationships built on partnerships as opposed to winning big deals. So what’s like working for a WSO? Working for a WSO has some major advantages for a sales leader. WSO have structure behind their thinking and planning and they all have a definite focus on growth which they measure consistently. They are also more likely to reward for results and have clear incentives for achieving the objectives they seek. This is especially the case in financial services. Nicola Morley from Allianz said “When developing a new sales culture you need to look at the whole picture. Of course, it's important to have a sales process that you can rely on, but to ensure it is utilised effectively it needs to be linked into an effective accountability and reward system. In addition, you need to have systems and procedures in place to ensure all your sales data is managed accordingly.” In terms of career stability WSO’s are not reliant on just a few accounts and they have sales training programs in both methodologies and techniques as part of their ongoing talent retention programs. For those seeking new opportunities it would be worthwhile benchmarking any new companies that are looking to hire you against the WSO criteria mentioned at the start of this article. Summary Many organizations do well in a number of the key components in the WSO Wheel above. What makes the difference is that WSO’s consistently do well in all components all the time. As we move into an uncertain economy globally the activities of WSO’s provide valuable direction for sales leaders to focus.

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3© 2009 Miller Heiman, Inc. All rights reserved. www.millerheiman.com | 1-877-678-0272

MUSCLE BUILDINGTHE SALES TEAMby Sam Reese, President and CEO

I was speaking at a client event a few weeks ago when hands started going up during

my presentation. The key topic sales leaders wanted to discuss that day was my opinion

on how to determine whether someone on their sales team is going to make it or if it is

time to let them go. It seems this challenging economy has made it difficult for average

performers to hide among the weeds. This is a GOOD THING. In high tide times, it’s easy

to have a great smile and a pleasant demeanor to keep a high income sales position. But

when things get tough, the pretenders fear exposure and will sometimes head for safer

careers. The hard part about muscle-building the sales team is that things aren’t always

what they seem on the surface. You can’t afford to make a bad decision. Performance

evaluation isn’t just looking at their quota attainment and making cuts. If it was that

easy, then we would have no need for sales management.

Over the years, I have seen great sales organizations look at performance as a combination

of three essential things: skills, activities and results. This performance triangle can be

a simple way to help separate the wheat from the chafe in any sales organization. Skills

are best described as the acumen and intelligence to be able to perform the duties of

the job. It is more than just product knowledge and proposal writing. It pertains to the

skills required to navigate complex sales situations: the ability to work within one’s own

corporate structure, the understanding of how to connect company capabilities with

customer requirements, and so on. Activities are the day-to-day movements that take

the business forward such as calling on customers, prospecting, performing follow up

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What Sales Leaders are Doing Now

actions, organizing next steps, etc. Old school sales managers used to have a myopic

focus on activities. They have this “it’s a numbers game’ mentality. But over the last 10-

15 years, many sales managers have completely ignored any sort of activity monitoring

because it seemed too invasive. You definitely need to know if activities are happening.

Otherwise, you will be confused when you try to make adjustments. And results are

simply the metrics that measure success - quota attainment, growth, new business,

and income.

Effective sales leaders need to look at all three of these factors when they evaluate

their teams. The key guiding principle in this process is that 2 out of 3 isn’t too bad. If

any one salesperson is capable in two of the three categories, then they should remain

on the team. If they are only capable in one of the three, then it may be time to go. For

example, a salesperson with high activity levels and critical skills is a keeper - even if

he’s not making the numbers yet.

Conversely, if a rep is making his numbers but has weak skills and low activity levels,

then there is probably a huge opportunity cost associated with keeping this person in

his current role. Maybe his territory is rich with opportunities or maybe the customer

base continues to deliver even if the salesperson is not that strong. A motivated

salesperson with strong skills and high activity levels will most likely take this territory

to new heights.

Inherent in this discussion is the role of the sales manager. A person who brings the right

skills and activity levels to the job can succeed in almost every situation. It’s up to the

sales manager to make these assessments and to stand behind them when questioned

about the success potential of one of his salespeople. The sales manager needs to be

the one who makes this determination of his team members. At the same time, he also

needs to coach to ensure his A-players succeed.

Unfortunately, there is no shortcut for muscle-building sales teams.

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www.millerheiman.com

Several years ago, Brothers Gourmet Coffees Inc.,

based in Boca Raton, Florida, saw its annual coffee

production plummet from nine million pounds to

300,000 pounds, virtually overnight. The reason? Proctor

& Gamble, which had been its largest customer, decided

to move production in-house, leaving Brothers in the

lurch. As a result, the coffee wholesaler had to shutter

its manufacturing plant in Houston, which had been in

operation since the late 1950s.

The defection of a key customer is every executive’s nightmare.

In the worst of cases, as with Brothers Gourmet Coffees,

the loss can be disastrous if the company can’t replace the

business quickly. And there are trickle effects, including a loss

of credibility and reputation in the marketplace, which could

lead to additional defections. Moreover, Wall Street takes a

dim view whenever a company loses a major customer. When

Quest Diagnostics, a multibillion-dollar provider of medical

testing services, lost a major contract with UnitedHealthcare

in 2006, the company’s stock fell 14 percent. (Meanwhile,

Laboratory Corp., which picked up UnitedHealthcare’s

business, saw an uptick in its stock price.)

Given all the dangers of losing a key customer, it’s amazing

how little attention many companies pay to keeping their major

accounts. Amazingly, some firms sometimes realize they’re

Treating Strategic Customers as Corporate Assets

The conventional wisdom: “Corporate assets include people, property, plant, equipment and intellectual property, such as patents, copyrights and trademarks.”

The reality: “In addition to traditional corporate assets like people, property, plant, and equipment, one of the biggest -- and often overlooked -- assets of a company is its strategic customer accounts.”

by Robert B. Miller, Founder, Miller Heiman

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www.millerheiman.com | 1.877.678.0274

Treating Strategic Accounts as Corporate Assets

in trouble only after a big customer has already switched

to a competitor. Part of the problem is educational. When

business schools teach students how to manage corporate

assets, the subject never includes arguably the biggest

asset of any company – its customer base. Thus many

executives have a good understanding of how to manage

people, property, plant, equipment and even intellectual

property, such as patents, copyrights and trademarks.

But they generally know painfully little about managing

important customers. That’s a huge folly because the

defection of just a handful of major customers can cripple

even a large corporation. Sometimes, as with Brothers

Gourmet Coffees, the loss of a single strategic customer

can bring a business to its knees.

Understanding Customer Churn

Customer defections inflict damage to a company in a

number of ways. Obviously, there’s the drop in revenue

from the loss of business, but there are also a number of

secondary costs. The defections could, for instance, make

potential clients think twice about doing business with you.

In addition, the cost of finding new customers to replace

the lost revenues can be considerable. The general rule of

thumb used in many markets is that the cost of acquiring

a new customer is five times that of retaining an existing

one. But in some industries, that cost can be much higher

if, for example, the market is saturated and it’s difficult to

get the existing customers of other suppliers to switch

their business to you. Acquisition costs include – but are

not limited to – marketing and advertising costs, sales

expenses (including commissions), and the costs of signing

up and servicing new accounts (in particular, the expense

of having to educate those customers who are unfamiliar

with your product).

For those and other reasons, customer turnover, or “churn,”

is a huge issue in many industries. In particular, it plagues

many consumer markets, including financial services;

insurance; cable, direct TV and Internet services; magazine

publishing; and so on. In banking, for example, one estimate

is that the average annual defection rate is 12.5 percent.1

And the situation is more than twice as bad in the wireless

industry. The annual churn rate for cell-phone subscribers

in the United States has been estimated to be somewhere

in the range from 26 percent to 34 percent.2 In other words,

wireless businesses are losing more than one out of every

four of their customers every year! To make matters worse,

people who switch services tend to be higher margin because

they use more add-on applications like picture messaging,3

and the average cost of acquiring a new customer ranges

from $250 upwards.

Not surprisingly, customer churn is wreaking havoc with the

bottom line of many companies. A recent study of the Asia-

Pacific region, for example, found that customer turnover was

costing firms there $66 billion a year.4 That figure includes

various B2C businesses such as telecom, insurance, travel,

and medical services. Unfortunately, customer churn hasn’t

been studied as extensively for B2B selling, but the dynamics

are likely just as bad, and they could be significantly worse,

particularly for complex deals that might involve a team of

salespeople working together to land a single account. In

such cases, it could easily take a company more than a year

and substantial resources to replace the loss of a single

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customer – or to woo back the lost business. When Coca-

Cola lost Burger King’s business to Pepsi-Cola in the early

1980s, it took Coke several years of planning and strategizing

to regain that major account.

Losing a key customer has always been a big headache,

but today the loss is all the more painful because of

increased pressures. As a result of greater globalization,

the competition has grown fiercer than ever before. In the

past, rival vendors might have been nipping at your heels

eight hours a day, but today that pressure is constant: the

Internet and foreign firms have now made competition

a constant threat, 24 hours a day, 365 days a year. You

simply can’t rest for a moment because you could easily

lose a customer. “It takes years to win a customer and only

seconds to lose one,” notes Catherine DeVrye, former IBM

executive and author of “Good Service Is Good Business: 7

Simple Strategies for Success.” And when you do lose any

business, it’s all the more difficult to replace it.

To exacerbate matters, customer loyalty in many industries

is on the wane. A recent study of British wireless customers,

for instance, found that the defection rate had increased

from 33.5 percent in 2005 to 38.6 percent in 2007.5 That’s

an increase of more than 15 percent in a relatively short

period of time. In the B2B arena, as your customers are

finding themselves under increasing pressures from their

customers, they are in turn demanding more from you; and

if you can’t keep up, they will find another vendor that can.

In short, no deal is safe in today’s world. Even contracts

that in the past might have been slam-dunks are now being

hotly contested.

Amazingly, though, many salespeople still don’t get it.

They will spend their time pursuing even “pie in the sky”

prospective deals instead of working hard to secure their

existing accounts. But even a slight improvement in retaining

existing customers can pay big dividends. According to

research by Frederick Reichheld of Bain & Co., the strategy

consultancy based in Boston, just a 5 percent reduction in

customer turnover can lead to an increase in net profits by as

much as 20 percent.6 In the banking industry, that same small

reduction in churn can boost net profits by up to 80 percent.7

Given such statistics, I’m continually perplexed at how little

attention many companies pay to retaining their existing

customers. And I am absolutely shocked by how lightly

some organizations treat their most important accounts –

those customers that are essential for their business.

Interestingly, firms have all sorts of processes for handling

their corporate assets – excess cash, various properties,

and so on. They might, for instance, have an entire

department devoted to managing their real-estate holdings,

and the CFO is typically held accountable for that activity.

But companies don’t always look at important customers in

the same way – that is, as corporate assets. In fact, many

organizations consider customers to be basically the sole

responsibility of the sales department, and the chief sales or

marketing officer is held accountable. But that’s just asking

for trouble, because certain customers are just as important

to a business – if not more so – than those other, traditional

assets. As such, those customers need to be managed,

nurtured and grown, just as with any other crucial asset. And

that process needs to have the attention of the CEO, COO,

CFO, or some other top-level executive.

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Not Created Equal

In today’s world, all customers aren’t equal. The well-

known adage is that 80 percent of a company’s business

might come from just 20 percent of its customers. For

some firms, the breakdown might be 70/30 or 90/10

instead of 80/20, but the point is that a minority of your

customers will usually account for a proportionately larger

fraction of your revenues. Moreover, just a handful of

customers might be absolutely essential for your success;

those firms are your “strategic” accounts.

Every business has them. I don’t care whether you’re

a “mom and pop” dry cleaner on a street corner or a

multinational corporation like Unilever, you will have a

number of customers who can, quite simply, make or break

your business. Thirty years ago, in the early days of Miller

Heiman, I was well aware that 65 percent of our business

was from one customer – Hewlett-Packard. So I made sure

I had all my bases covered at that account, and I would

personally spend two or three days out of every week at

HP’s various field offices.

But strategic customers don’t necessarily have to be your

largest sources of revenue or profit (although they often

are). A “prestige” customer could also be a strategic

account. Years ago, when I was a manager at Kepner-

Tregoe, a consultancy that specialized in executive problem

solving and strategic planning, one of our clients was Rolls-

Royce’s jet-engine business, and we worked hard to retain

that account because it provided a special cachet that

established our firm in the marketplace and helped us to

attract new business.

Whenever I’m explaining the concept of “strategic accounts”

to executives, I always ask them this question: when you’re

lying in bed in the middle of the night and you can’t sleep

because you’re worried about work, what customers are

you usually thinking about? Often, the list might be as short

as three or four accounts and, interestingly, there’s often a

uniformity of opinion about the names of those customers.

Recently, I had lunch with a friend of mine who’s the head of

the U.S. operations of a large Japanese corporation. When

I asked him the “awake in the middle of the night” question,

he immediately answered with three customer names,

and everyone on his executive team who was at the lunch

quickly nodded their heads in agreement.

Strategic accounts are so important that not just the sales

organization knows about them; everyone, including the

CEO and COO will recognize their importance. But the larger

point is this: because strategic accounts are crucial to your

company’s success, they can’t be treated like any ordinary

customer. Remember that they are your corporate assets –

your company’s crown jewels – and they must be managed

in that way.

So, for starters, the management of strategic accounts has

to have the attention of a high-level executive. Ideally, you

need a very senior person in charge. At Miller Heiman, that

individual is Tim Call, the executive vice president for strategic

accounts, who manages various teams that interface with

our different strategic customers. Call reports directly to

Sam Reese, the CEO of Miller Heiman. At a client of ours

– a large shipping and logistics company – the president

himself oversees the overall process, and each member

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of his executive circle is in charge of at least one team that

manages a strategic account. Those top executives are

called “sponsors.” They work with the salespeople and

others on their team, and they attend all meetings to keep

up-to-date on the status of that particular customer.

The important thing to note here is that any program for

managing strategic accounts must be owned, driven, and

overseen from the top. The responsibility can’t reside with

the head of the sales operations or the chief marketing

officer. It has to reside in the C-suite because you need

corporate executive sponsorship. Only someone at that

level can help perform certain crucial tasks, including the

following: 1. Evaluate the strategic importance and potential

of accounts to determine a list of strategic customers, 2. For

each strategic customer identified, formulate and implement

an account strategy that is consistent with the company’s

overall business objectives, and 3. Get resources allocated

that will help reach those objectives.

Identifying Strategic Customers

There’s no one best approach to identifying strategic

customers. Companies need to use the criteria that make

the best sense for their own overall organizational goals.

At Miller Heiman, we use five criteria for selecting strategic

accounts, namely that the customer must:

1. Be an existing account.

2. Have the ability to generate revenue in the coming year.

3. Provide a win-win environment.

4. Desire a long-term relationship.

5. Provide access to all buying influences (that is, access

to key execs at the customer firm).

Remember that although revenues are important, doing

business with a customer should always be profitable.

Otherwise, the relationship isn’t win-win. That’s why when

Bank of America CEO Kenneth D. Lewis wanted to increase

shareholder value back in early 2001, he emphasized

operating profits over revenues. So as the company’s

Global Corporate and Investment Bank unit began to

target key customers, it didn’t pursue the low-margin

relationships it had with large corporations like Wal-Mart

and IBM. Instead, it focused on more profitable deals with

other clients, specifically those companies that needed

global treasury and cash-management services (for

example, funds collection and financial forecasting) as well

as investment-banking services. The results were stunning:

Within two years, revenues for the Bank of America unit

had fallen 4 percent but operating profits had increased 12

percent and shareholder value added had nearly doubled.

Moreover, the business unit had gained “lead bank” status

at more than one third of its targeted customers, up from

just 12 percent in 1999.8

Also keep in mind that potential business from a customer

can be just as important – if not more so -- than current

business. To assess those opportunities, you can simply ask

customers for their estimates of how much of their business

is being handled by other suppliers. National Gypsum Co.

uses that approach and reports that it receives accurate

figures more than 90 percent of the time. Of course, some

customers will want to know what’s in it for them, that is, what

they’ll receive in return for their cooperation. The obvious

answer is that the data will help you respond better to their

future needs. But Lubrizol Corp., a manufacturer of high-

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performance polymers and specialty additives, provides

another incentive. Lubrizol will often encourage a customer

to provide details of its purchasing by offering complimentary

market reports for certain products – information that a

consulting firm might charge more than $40,000.9

A strategic account could also be a customer who has

given you a black eye in the marketplace, regardless of the

volume of his business. Consider Jeff Jarvis, a journalism

professor, who might at first glance seem like your typical

Dell customer. But Jarvis is a popular blogger, and after he

reportedly received a defective laptop computer from Dell

he wrote about his experiences in postings entitled “Dell

Hell.” Soon Jarvis’ ongoing saga was being covered by other

blogs as well as by the mainstream media, unleashing the

wrath of other disgruntled customers. As the tide of negative

press grew, Dell rightly recognized that the situation wasn’t

simply going to blow over by itself. In response, the company

assembled a cross-departmental team to actively scan blogs

so that it could defuse customer issues before they became

major problems, and Jarvis was invited to Dell headquarters

to meet with some of the company’s executives, including

none other than Michael Dell, company founder and CEO.

A company might easily have a dozen or more strategic

customers, but my strong recommendation is that you select

no more than a handful for the first year of your program.

It’s a matter of resource allocation. Remember that strategic

customers need to be treated like corporate assets, so you

want to start small because doing things the right way for

even a handful of strategic customers will take an enormous

amount of time and effort. At Miller Heiman, we selected

just a handful of customers for the first year of our strategic

accounts program and then we’ve continued to expand it on

a measured basis.

The next step is to assemble teams for managing the

strategic accounts. Each team should be cross-functional,

involving sales, marketing, operations and other functions

that are pertinent for that particular account. For example,

if your relationship with a customer involves multiple

structured deals that are specified in complex contracts,

your team needs to include people from your finance and

legal departments. Each of your strategic customers needs

to assemble a similar cross-functional team that will then

interface with your team. The members of the customer’s

team will depend on the specifics of your relationship. If,

for example, you provide value by offering just-in-time

delivery, then your customer should assemble a team

that includes a logistics manager and head of the supply

chain operation. Ideally, the members of your team would

have their corresponding functional counterparts on the

customer’s team.

To encourage customers to participate in your strategic

accounts program, you should emphasize your desire

to establish a long-term relationship in which you’ll be

providing direct access to key people in your organization.

In other words, the customer will gain a window into your

operations – what products are coming down the pipe,

areas in which you’ll be investing in the future, details of your

competitive strategy, and so on. In short, the huge incentive

for a customer to participate is that they will have access to

inside information that will enable them to implement your

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products and services better to maximize their return on

their investments. However, as a cautionary note, you should

hold off before formally announcing to customers that you’ve

established a strategic accounts program until you’re sure

that you’ve worked out all the kinks. That is, you might refer

to the program internally but not let the outside world know

about it until you’re sure that it’s ready for prime time.

Moving Up the Hierarchy

One of the first tasks for a strategic accounts team is to

determine the organization’s true position on the buy-sell

hierarchy. There are five levels, depending on the buyer’s

perception of what the seller does. From the lowest to the

highest level, the buyer could view the seller as

1. Delivering a commodity that meets specifications.

2. Delivering “good” products and/or services.

3. Providing “good” service and support.

4. Contributing to business issues.

5. Contributing to organizational issues.

The process of determining your position on the hierarchy

might not be as clear-cut as it may seem. Sometimes, you

might believe that you’re on level 3 but your customer thinks

you’re only at level 2. That’s crucial information because,

if you hadn’t learned of the discrepancy, the mismatch in

perceptions could have eventually led to your losing the

customer. In some cases, you could discover that you’ve

mistakenly been harboring an overly inflated view of the

value you’re delivering. Other times, the customer might

not have a full appreciation of your importance. Late in the

1980s, for instance, Arrow Electronics tried to move up the

buy-sell hierarchy by becoming more than just a distributor

of electronic components; it began offering services to help

coordinate its customers’ supply chains and to perform

engineering design work. All that should have helped make

Arrow become a more important business partner, but a

decade later it made a startling discovery: the customer

companies that were using those important services on a

regular basis didn’t even know that Arrow was providing

them!10 The crucial thing here is that you and the customer

need to have an open dialogue to determine your true position

on the buy-sell hierarchy. Not only will that conversation help

correct any misperceptions, it will also help build trust.

Next, you must develop a plan that will help you either

secure your position on the hierarchy or get you to a higher

level. This process has also got to be transparent between

you and the customer: you present your goals and get the

customer’s feedback. Moving up the buy-sell hierarchy

has its advantages because, as you’re able to go from

one level up to the next, your competition will decrease

and price sensitivity will lessen. Moreover, not only will

a customer’s loyalty increase, the customer will also be

more willing to endorse your product in the marketplace,

collaborate with you on new product development, and

even invest in your firm. Simply put, a higher position in

the hierarchy makes you more indispensable and less

vulnerable to losing the customer.

Consider the strategy of KLM Cargo, a unit of KLM Royal

Dutch Airlines that supplies cargo space on aircraft.

Customers viewed this service as essentially a commodity

(that is, level 1 of the hierarchy). So KLM worked hard with

a particular market segment – those firms that needed

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to transport perishable goods – in order to move up the

hierarchy. For those customers, KLM Cargo began to provide

point-to-point service: initial pickup by truck to a warehouse,

transportation by plane, and then storage in a warehouse

followed by final delivery to the customer. KLM Cargo also

offered three levels of service -- fresh regular, fresh cool, and

fresh supercool -- depending on how perishable a product

is. A flower trader might, for example, opt for “fresh cool”

service to transport orchids while a fish wholesaler might

choose “fresh supercool” for sushi-grade tuna. As a result,

KLM Cargo was able to reposition itself from a commodity

supplier to a provider of an end-to-end business solution,

thus moving itself significantly up the buy-sell hierarchy.11

The ideal situation is when the customer is strategic to you

and you are strategic to the customer. The perfect example

of that is i2 Technologies’ relationship with Dell Inc. Based

in Dallas, i2 sells sophisticated supply-chain management

solutions that enable Dell to efficiently assemble computers

that consumers can customize and order online. Dell’s

very business model depends on the efficacy of i2’s

products, such that the fates of the two companies are fairly

intertwined.

Avoiding Common Pitfalls

Given all the ramifications of losing a major customer, I

am continually astonished at how few precautions some

companies take to guard against that possibility. And it’s

remarkable to me that any firm should be shocked (or even

surprised) after it loses a major account. Whenever that

happens, my immediate reaction is that a number of people

just didn’t do their homework. But don’t get me wrong – I’m

not saying that no company should ever lose an important

account. Some defections can’t be helped, for instance, if a

relationship is no longer win-win and the customer isn’t willing

to work with you on correcting that. The problem, though,

is that many firms don’t take the necessary precautions to

avoid being caught off-guard. At a minimum, companies

need to watch out for the following five common traps.

1. Becoming complacent. The loss of a customer to your

biggest rival is actually more common than you might think.

Remember how Coca-Cola initially lost its business with

Burger King to Pepsi? Pepsi had shrewdly told Burger

King that, “You’ll never be number 1 with Coca-Cola

because McDonalds is a customer of Coke. But you can

be number 1 with us.” And that’s how even entrenched,

leading vendors get usurped. Sometimes, a company

might be the only game in town – it might, for instance, have

a proprietary technology – but then lose that edge as the

market matures and competitors offer competing products.

The classic example here is Digital Equipment Corp., which

dominated the market for minicomputers during the 1970s

and 80s. But DEC’s arrogance and disdain for smaller

personal computers – espoused by founder Ken Olsen’s

infamous remark, “There is no reason for any individual to

have a computer in his home” – left the company woefully

unprepared for the coming PC revolution. Eventually DEC

was acquired by PC maker Compaq, which itself was later

merged with Hewlett-Packard.

Part of the problem is that the leading company in a market

frequently gets tagged as being arrogant. “They’re getting

too big for their britches” and “they’ve become difficult to

2525



work with” are the common complaints, whether they’re

justified or not. In fact, some customers will even look for that

kind of behavior and misinterpret every tiny miscue on your

part as a sign of your supposed arrogance. So, especially

when you’re the leader in a market, you almost need to bend

over backwards to fight even the slightest perception that

you’ve become arrogant or complacent. Otherwise, you

leave yourself vulnerable to the competition.

2. Succumbing to denial. Interestingly, sales reps are

often the last people to realize that they’re in trouble with

an account. The problem is that they misread the warning

signs, or they go into denial. In their minds, they might

mistakenly assume that just because an account has been

with them for years, that customer will remain loyal. And

that’s another reason why you need a team of people in

charge of your strategic customers, because you don’t

want to end up paying for the mistakes of a sales rep or

account manager who’s in denial mode.

The team should regularly conduct account reviews that

will force account managers to confront reality. Some of

the types of basic crucial questions that need to be asked

include the following:

• Dowehaveourbasescoveredwithallthebuying

influences? For example, do we know who gives

final approval for our deals?

• What are our strengths that we can leverage in

serving this account?

• Do we know what the customer is trying to fix,

accomplish, or avoid by using our solution?

• Whataretheredflagsforthisaccount?

• Arethereanybasicissuesthatweneedtoaddress

for the customer?

Note that the questions probe the overall process being used

to manage the account as opposed to any specific items.

A common mistake that executives make in performing a

review is to start by telling the account manager, “Tell me

what’s going on here.” And then after being given the status

of an account, they’ll follow up by saying, “If I were you,

I’d do the following.” But that type of approach only leads

to account managers feeling like they’re being second-

guessed. In other words, when conducting reviews, you

want to coach people so that they can figure out on their

own what they need to do; you don’t want to do that thinking

for them.

3. Missing a warning sign. Whenever there’s an important

change at your or your customer’s company (a reorganization

or shift in strategy, for example), you need to follow up to

ensure that all your bases are still covered. One of the most

common ways to lose an account is through a change in

personnel – say, for instance, that a key executive at your

customer’s firm leaves. Remember that the people at both

your and the customer’s company will frequently change.

In some industries, for instance, the annual turnover rate is

more than 25 percent (and sometimes as high as 50 percent)

for sales personnel. And this is yet an additional reason why

having a team of people to handle your strategic accounts

makes so much sense. When an account manager leaves,

for example, the rest of the team members will still be able

to provide a reassuring sense of continuity to the customer,

helping to ensure that business will proceed as usual.

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Again, regular account reviews can be a very effective

mechanism here, helping you to catch any early warning

signs. The main focus of the reviews should be the

customer’s business results. As discussed earlier, you

should always know where the customer perceives you

to be on the buy-sell hierarchy. In addition, you need to

have a plan either for securing that position or for moving

up a level. The account reviews should then take a hard

look at your progress in that process. Say, for example,

that for a particular customer you’re currently at level 1

(delivering a commodity that meets specifications) but your

plan is to move to level 2 (delivering “good” products and/

or services). Then you need to continually monitor your

progress, specifically in terms of how improvements on your

end are helping the customer’s business. Is, for instance,

your implementation of just-in-time delivery enabling that

customer to slash its inventory costs?

4. Not obtaining “buy in.” Although every company should

set up a program to manage its strategic accounts, the

process can trigger resistance from the sales group. At

worse, a turf battle could ensue between corporate and sales.

To prevent that from happening, you need to be mindful of

the politics involved. At Miller Heiman, each of the strategic-

account teams has a designated leader who coordinates all

activities and meetings, but important decisions are made

through group discussions and consensus, taking into

consideration any concerns from sales, corporate, and other

parties. In addition, all sales reps continue to receive their

usual commissions even if one of their accounts is selected

as a strategic customer. Because of that, the sales reps

want their customers to be placed in the strategic-accounts

program, because they view it essentially as free help in their

efforts to strengthen a customer relationship.

5. Failing to get support from the top. As I mentioned

earlier, a program for managing strategic accounts must have

support from the top of your company. Ideally, the CEO, COO

or some other C-suite executive would be in charge, and that

person would get other high-level executives to participate.

The surest way to strengthen the relationship between

your and your customer’s firms is to get top executives at

both organizations involved. But the top managers at your

customer companies won’t be likely to participate if they

don’t see a similar commitment from the executives at your

own firm.

6. Relying on defense instead of offense. Sales managers

will often tell me about an important customer that they’re

losing to a competitor. Then, half-panicked, they’ll ask,

“What should we do?” I’m sorry to report that, at that stage,

they may have already lost the account and even a flurry

of heroic “firefighting” activity won’t be enough to save it.

So the lesson here is that you have to make sure that you

don’t let your customer relationships devolve to the point at

which a client is seriously entertaining sales pitches from

your competitors. In other words, the best defense is indeed

a good offense. As in football, you’ve got to keep possession

of the ball and keep advancing it. One effective way to do

that is to continually make efforts to secure your position or

move up a level on the buy-sell hierarchy. Remember that

your existing relationships with customers should confer

you with a substantial advantage (assuming, of course, that

you’ve maintained good customer relationships). The truth

2727



is that inertia is a huge factor: Customers would rather avoid

the hassles of switching vendors unless they perceive that

they’re not getting the value that they’ve paid for. So you’ve

got to do all that you can to avoid the customer reaching

that point. In my experience, the vast majority of customer

relationships break down because of what I call “benign

neglect,” which can be something as simple as not returning

a customer’s phone call quickly enough. Of course, it’s

difficult to maintain the same level of attention and service

to an account that you gave when the customer first came

on board. But companies that drop the ball in managing

an account will eventually find themselves having to play

defense, which is what you don’t want to be doing.

In the best of cases, corporate purchasing departments act

as a facilitator between seller and buyer. They might perform

important screening functions like a “better business

bureau,” helping to qualify vendors so that the buyer has to

consider just a short list of products instead of dozens (or

even hundreds) of options. Or, by understanding the benefits

of strategic partnerships, they might encourage collaboration

between the seller and buyer to help ensure a long-term

win-win relationship between the two parties. Unfortunately,

though, some corporate purchasing departments have

become big obstacles. They have increased the amount

of negotiation and procedural red tape, leading to an

atmosphere of distrust between buyer and seller. The

situation is exacerbated by increased globalization and

heightened competitive pressures. Today, it’s easier than

ever for companies to lose important customers. But many

firms still have their heads in the sand, unaware how quickly

that a major account could take its business elsewhere. In

my view, not having a program that treats your strategic

customers like corporate assets is simply asking for trouble,

and those companies that fail to see that are going to be in

for a rude awakening, probably sooner rather than later.

About Robert B. Miller

Thirty years ago, Bob Miller developed and introduced

Strategic Selling®. Since then, his passion for elevating

the role of the sales profession has resulted in several

additional methodologies, all of which are incorporated in

The Miller Heiman Sales SystemTM. He continues today in

a consulting and advisory capacity, focusing primarily on

product development. His mentorship drives innovations in

sales performance that are consistent with the vision for the

company he started three decades ago.

“The Cost of Customer Churn: What’s at Stake for Banks in the Competition for Customers?” Financial Publishing Services. 1.

Lisa Pierce, “What the Cost of Customer Churn Means to You,” Network World (November 12, 2001).2.

Charles S. Golvin, “Who’s Winning and Losing Mobile Subscribers?” Forrester Research (2005).3.

Victoria Ho, “Customer Churn is Businesses’ Greatest Fear,” ZDNet Asia (March 19, 2008).4.

“Pitney Bowes Group 1 Software Customer Churn Report” (2007).5.

Frederick F. Reichheld and Thomas Teal, “The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value” (Harvard Business School Press, 1996).6.

“The Cost of Customer Churn: What’s at Stake for Banks in the Competition for Customers?” Financial Publishing Services.7.

James C. Anderson and James A. Narus, “Selectively Pursuing More of Your Customer’s Business,” MIT Sloan Management Review (Spring 2003): 42-49.8.


Das Narayandas, “Building Loyalty in Business Markets,” Harvard Business Review (September 2005): 131-139.10.


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INVOLVING EXECUTIVESIN THE SELLING PROCESSby Tim Call, Executive Vice President

People ask me all the time: “How can we get our executives involved in the selling

process in a proactive and efficient manner?” The first thought that comes to my mind

is to answer their question with more questions: “Why do you want your executives

involved in the selling process?” Is it because you need help closing deals? Because

they are needed to negotiate pricing? Or because they want to feel they are being

supportive?

For any organization that wants to begin an executive selling program, the above

questions should be asked of senior leadership. In the current climate, decisions are

being pushed to higher levels within a company and an executive selling program can

help establish and maintain critical account relationships between C-Suites. Many of the

successful executive selling programs I have seen solicit input from all of the functional

departments so everyone knows the expectations for the program and understands the

criteria for success.

Your organization may start down the path of establishing an executive selling program

only to realize early in the process that there are perception gaps between what the

executives think they know about critical accounts and what the sales teams see as

reality. In Miller Heiman’s annual sales best practices study, we see a fair amount of

differences between C-Level respondents and sales reps. For instance, the responses

from these two groups typically indicate a wide perception gap for this simple question:

2929



We have a disciplined process that is continually utilized to review all large deals. The

C-Level is generally less likely to agree that processes are in place to review large deals

compared to sales reps.

A larger gap exists when we ask our survey participants to weigh in on another topic: Our

executive leadership is actively engaged in our selling process. The 2009 Miller Heiman

Sales Best Practices Study revealed that 66 percent of C-level executives say they are

involved, but only 41 percent of sales reps say the executives are involved. This disparity

stems from a misalignment regarding what involvement means to these two groups.

Most executives consider involvement as an awareness of the sales representatives’

activities, knowing one or two people in the client organization, and an expectation that

they will come into deals if, and when, it is necessary. In these cases, the sales force will

say that executives don’t bring any value to the client relationship. Because they don’t

know an executive’s role in the selling process, they are forced to leave them out of the

equation because in the past they have hurt more than they have helped.

Creating an executive selling program doesn’t need to take years. But to eliminate

confusion, your first step to building an executive selling program is to get everyone

on the same page. Discuss what happens with these large deals, and discuss how

an executive’s involvement might help or hinder these relationships. Here are a few

suggestions to get started now:

The Right Level. An executive should only get involved in relationships that are peer 1.

to peer. They should not be asked to come to a meeting with lower-level buying

influences where tactical or logistical solutions are being discussed. The sales rep

needs to ensure all possible bases are cover before involving an executive.

The Right Time. Executives are often expected to step in to try and save a sale that 2.

is in trouble. Get executives involved when they can provide the greatest value, not

salvage something that is likely already beyond repair. Drawing in an executive will

likely look to the customer as if you are in panic mode, and may potentially worsen

the situation.

Maintain Schedule Integrity. Make sure executives don’t skip out of a sales call 3.

because something more important has happened in the office. If they are committing

to the initiative, then they must stay committed to all scheduled meetings.

3030



Thorough Preparation. The sales team needs to take the time to review the customer 4.

relationship, current opportunities, and the meeting objectives with the executive

before a customer meeting. The better prepared an executive is, the more value he

or she can add to the relationship and the better the coaching s/he can provide.

Provide Strategic View. Without a strategic perspective, executives will not bring 5.

much to the client in the way of value. Don’t let the executive talk about a product or

service. They should be asking questions or providing high-level industry knowledge

during these meetings. Clients love it when you bring new information or introduce

new ideas related to the important issues they face.

Get Things Done Internally. It is easy for an executive to go back to the office and 6.

delegate all of the next steps to the rep. But executives need to own at least one

of the next steps. Ideally it should relate to the point from the meeting that is of

strategic value to the customer.

High Level Information Conduit. Most executives are aware of changes in the 7.

company before everyone else. Make sure that new and relevant information is

shared from one executive to another, as this type of knowledge has the potential

to undermine their authority if divulged by someone on a lower tier.

Mentor or Coach. The executive should be the person in these critical deals 8.

providing coaching and mentoring sales reps. This should not be the same type of

coaching the reps might receive from their sales manager, but coaching on high-

level issues, industry intelligence, and solutions important to the customer.

Hold Executives Accountable. The executive should be held responsible for his role 9.

in the success of the customer relationship. Without a certain level of accountability,

resentment may build and potentially jeopardize future internal interactions. It’s

crucial to remember that rep and executive are on the same team and need to pull

their respective weight.

Share Success Stories. When executives stay involved with clients, it can be 10.

perceived as a positive opportunity for your company. Take advantage of the

publicity that can be generated by promoting and sharing the success stories as a

result of executive involvement.

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Maintain Executive Status. Many reps may jump at the chance to tout their executive 11.

at a social call, but this is not the best use of their time. Unless a client specifically

requested it, bringing an executive may seem a thinly veiled attempt to solidify a

client relationship or secure additional commitment.

Avoid Exclusive Meetings. Executives should not attend sales meetings alone, 12.

unless a request has been made. The goal is to develop the standing and credibility

of the rep, and sending an executive in alone makes him or her the de facto rep,

undermining that goal.

An effective program will ultimately serve to bring clients closer to your organization.

But the most important contributing factor to a successful executive selling program is

the dedication and commitment to stick to it.

3232


Judging by the continual news of company after company

missing its quarterly numbers, you would easily be

forgiven if you thought that businesses had no clue how to

forecast their sales. Every week seems to bring yet another

headline of a firm that missed its quarterly numbers because

of some unexpected shortfall in demand for its products.

Wall Street is generally unforgiving of such lapses, typically

punishing the company with a drop in stock price.

Consider what happened to Motorola. After lagging behind

Nokia for years, the company had been gaining ground in

2005 and its share price had risen 31 percent. Everything

looked rosy the following year as Motorola continued to

increase its market share and its stock jumped another

16 percent, but then the company hit a snag in the third

quarter. It reported revenues of $10.6 billion, which was a

solid increase of 17 percent from the same time period in

2005. But the problem was that those numbers fell short of

the company’s forecasts and analysts’ estimates of $11.1

billion. CEO Ed Zander explained that the lower sales were

due, in part, to an unexpected delay in capital spending by

customers in Europe, the Middle East and Africa. In spite of

his reassurances, though, the market response was swift

and unyielding: Just a day after Motorola announced the

shortfall, its stock price fell $1.21 to close at $23.64, a drop

of nearly 5 percent.

How to Forecast Sales Accurately

The conventional wisdom: “Sales managers can’t forecast accurately because there are too many uncertainties involved.”

The reality: “Sales forecasting can indeed be turned into an accurate, reliable process.”

by Robert B. Miller, Founder, Miller Heiman

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To make matters worse, forecasting is becoming all the

more difficult because customer loyalty is on the wane and

global competition has increased such that companies

are less sure of where their future sales will be coming

from. Moreover, distribution channels have become more

complex and the lifespan of products has decreased, all

resulting in greater uncertainty. Indeed, research by Sales

Benchmark Index has found that roughly two-thirds of all

sales forecasts have a margin of error that exceeds 25

percent. Amazingly, more than 10 percent of forecasts

have a margin of error of greater than 75 percent!

In the worst of cases, a potential shortfall leads to

desperation as executives succumb to the temptation of

questionable remedies, even if they involve some shady

accounting practices. The classic story here is the tragic

saga of Sunbeam under the leadership of Al “Chainsaw”

Dunlap. To keep pace with his aggressive financial

projections, Dunlap offered huge discounts to entice

retailers to take on more merchandise than they could

sell. The products were then shipped to warehouses

where they sat, and the inventory continued to pile up.

But the problem was that Sunbeam was booking those

sales as if they had actually been made. Eventually, the

entire accounting house of cards came tumbling down

and Sunbeam investors were rightfully outraged. Dunlap

was shown the door and later agreed to pay $15 million to

settle a shareholder lawsuit.

Sadly, Sunbeam is hardly the only company that’s tried to

cook its books. Computer Associates, a global software

corporation based in Islandia, N.Y., was also a practitioner

of some illicit accounting sleight of hand, prompting

shareholders to claim in 2000 that the firm had misstated

more than $500 million in revenues. After an investigation

by the SEC found that Computer Associates had routinely

included revenues from orders that hadn’t officially

been booked, eight CA executives pled guilty to fraud,

including CEO Sanjay Kumar, who was sentenced to 12

years in prison.

What happened at Sunbeam and Computer Associates

is perhaps the most egregious examples of accounting

schemes gone wild, but the fact is that many companies

continually suffer from sales forecasts that are inaccurate

and unreliable. When the projected numbers are

unrealistically optimistic, the manufacturing division ramps

its operations up for products that end up sitting in the

warehouse collecting dust. Or, conversely, the demand

for a hot item shoots through the roof but the company

is caught off-guard, thus missing a crucial window in the

market. And it’s not just big mistakes that hurt the bottom

line. Sometimes even a small increase in the accuracy of

your forecasts can lead to substantial savings because

your distribution chain will be returning fewer products,

thus decreasing your shipping, handling and storage fees.

For large corporations, such savings could amount to

millions of dollars.

Let me put it this way: I have never heard a CEO or senior

manager complain that the forecasts from his or her sales

group were too accurate, but I have heard countless execs

grouse that they simply couldn’t rely on their company’s

sales projections. And an inability to forecast sales

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usually means that you’ve lost touch with your customers

-- a deficiency that can lead to disaster when the market

makes a turn in one direction and your firm is still headed

down a different path. The result: You end up developing

and marketing products that nobody wants.

Okay, I’ve heard it all before. According to the naysayers,

organizations that believe their sales group can make

accurate forecasts are setting themselves up for failure.

People will just fudge their numbers to game the system.

For instance, salespeople will underestimate their

projections so that they’ll look good when they make or

exceed those numbers. So why even pretend that you can

forecast sales accurately when the process will be just

another exercise in futility?

Excuse me, but that defeatist attitude is nothing but a pot

of crock! Let me be clear: It’s a cop-out for sales managers

to claim that sales forecasting is inherently impossible.

The simple truth is that companies can indeed reliably

forecast their sales, and all the leading organizations do

it because they absolutely need that crucial information.

Otherwise, a business can’t be run efficiently. How,

for example, can the manufacturing department plan

its resource allocation without knowing the volume of

shipping orders for the upcoming quarters? The trick to

accurate sales forecasting, though, is that you need the

right system in place.

Understanding the “Sales Funnel”

Before you can begin to improve your sales forecasting,

you first need to understand a fundamental concept. The

typical sales process is like a funnel (see accompanying

illustration). At the bottom are deals that you’ve almost

closed. All you need to do for those opportunities are to

remove any remaining obstacles (for example, you might

need to meet with the final decision maker to iron out the

specific financial terms of the contract). In the middle of

the funnel are other prospects that are in the works. Here,

you need to do important background work (for example,

identifying all the people at the prospective customer who

could possibly veto the deal). And above the funnel are

numerous leads that need further investigation. These

leads need to be screened to identify which ones should

be pursued. As a prospective deal moves down the funnel,

two important things happen. First, the time required

to close the deal will tend to decrease. Second, the

probability of your actually closing the deal will increase

(or, in other words, the uncertainty that you will close the

deal will decrease).

Each location of the funnel (bottom, middle or above) has

a quantitative metric for the likelihood of the deal closing

in a given amount of time. That period can be based on a

typical sales cycle. Let’s say that the typical sales cycle

for your products is eight months (that is, you usually

take eight months to close a deal from the time you get a

solid lead, such as when a prospective customer requests

information about your product or otherwise engages with

you about a solution offered by your company). So, for

instance, your potential deals at the bottom of your funnel

might generally have a 70 percent probability of closing

within half the sales cycle (or four months). Your prospects

in the middle of the funnel might have a 40 percent chance

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of closing within that time. And your prospects above the

funnel might have just a 10 percent chance of becoming

a finalized deal within the typical sales cycle (or eight

months).

Now here’s the part about forecasting. To obtain an

accurate projection of your sales, all that you to do is to

categorize every one of your potential deals into the right

location (bottom, middle or above) of the funnel, along with

your estimates of the size of the potential order. Then you

add up those opportunities for each location of the funnel

and apply the appropriate probability and time period.

The total sum of those numbers will then be your sales

forecast. Okay, you might be skeptical about how such a

simple concept could actually be effective in practice, but

I have seen numerous companies dramatically improve

the accuracy of their sales forecasts by implementing it.

Consider the operations of a large aerospace company that

was having trouble years ago because its sales projections

were all over the map – the average accuracy was just 35

percent. Then the company implemented a program that

taught the fundamentals of funnel management. To begin

with, managers clearly delineated and codified specific

criteria that helped define prospective customers. For

example, a lead had to meet specific objective criteria

before it could be moved to the middle of the funnel. And the

company conducted formal reviews each week to ensure

that all the salespeople were using the new system. Within

just one quarter, the accuracy of the company’s sales

forecasts had improved to 60 percent, and it eventually

exceeded 75 percent. That change saved the firm millions

of dollars annually because the manufacturing group was

then able to allocate its resources more efficiently to plan

better for future orders.

Of course, that aerospace company didn’t just implement

the system and magically have the accuracy of its sales

forecasts improve. Although simple in concept, the sales

funnel takes a concerted effort and sustained commitment

from everyone in the sales organization. And, as with

other kinds of similar initiatives, the devil is definitely in

the details of implementation.

Managing the Sales Funnel

The first important detail is that you have to classify

your customer opportunities accurately. If you’ve been

mistakenly placing companies in the middle of the funnel

when they actually belong above, then of course they will

take much longer to close and a smaller percentage of them

will become finalized deals than you’ve expected. This

then means that your sales forecast will be substantially

off because of the shortfall.

Categorizing customer opportunities correctly is

easier said than done. The problem is that many sales

professionals will fool themselves into thinking that a deal

is closer to being closed than it really is. They’ll be overly

optimistic, now realizing the amount of work that needs

to be done. So you need to get them to be realistic, and

the way to do that is by having some good metrics, both

qualitative and quantitative. Everyone has to agree to the

criteria, and each person has to abide by them. You should

consider having a standard form that salespeople would

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fill out for each solid lead, especially for potentially large

deals, and that form would include questions that help

determine the location of that opportunity with respect to

the sales funnel.

You might use an acronym like “DUNCE” to help people

remember the criteria. “D” is that the customer has dollars

allocated to pay for the project; “U” is that there’s urgency

on the customer’s part; “N” is that you understand the

customer’s true needs; “C” is that you have coaching; and

“E” is that you know the identity of the economic buyer,

or final decision maker. Before a lead can be placed into

the funnel, you might stipulate that the salesperson has

to satisfy the D, U, and E requirements. And before a

prospect can be moved from the middle to the bottom

of the funnel, the salesperson must meet the N and C

requirements. At a minimum, companies need a list of

general questions like DUNCE, but they also should have

criteria that make sense not only for their specific industry

but also for their own business. For instance, one criterion

for moving a potential customer to the middle of the funnel

might be that a salesperson has to perform a live product

demonstration at the customer’s site. You might need a

few iterations to define all the necessary funnel criteria.

You should involve key managers in that process, not only

because they typically know what criteria are important

but also because their participation will enable you to gain

their buy-in when implementing the system.

The criteria should be designed to help managers refrain

from the common practice of second-guessing the sales

estimates from their staff. We’ve all done this type of

thing before: “Because Roger always estimates low and

sandbags his numbers, I’ll adjust his forecasts upward by

20 percent. And because Marcia is always wildly optimistic,

I’ll cut her projected sales by half.” That’s the kind of game

that sales managers often find themselves having to play,

but the funnel criteria, when selected properly, will help

prevent that kind of number fudging.

But you also need someone in charge of the funnel system

to ensure that all the salespeople are using it and that

everyone is abiding by the same criteria. The important

thing here is that that person has to have enough clout to

hold people accountable for their individual funnels. You

can’t turn this important function over to some low-level

staff person, because then the salespeople and account

managers will try to game the system or they won’t take it

seriously. You need someone who can hold people’s feet

to the fire. That individual might be the head of the sales

operation or one of his or her key lieutenants.

The funnel “meister” should be empowered to hold people

accountable. If, for example, customer prospects have to

have a 50 percent probability of closing before they can

be placed in the middle of the funnel, then a salesperson

who is closing just 25 percent of those deals needs to

be taken to task. Could that salesperson, for instance,

be prematurely placing those leads into the middle of

the funnel before they’ve been properly qualified? That’s

why the criteria need to be specific enough to make such

assessments, and you need at least about three or four

for each funnel location. Interestingly, experienced sales

managers usually know what those criteria should be

3737



because they have a sense for the typical obstacles that

tend to hold up deals for their company’s products.

At the Treasury Management Sales and Commercial

Business Development for Wells Fargo, managers came

up with an “opportunity checklist” to help them conduct

reviews of large potential deals. The checklist contains

a series of 20 questions such as, “Do you know who all

the key decision makers are?” The list helps the company

to prioritize its prospects and get a better handle of

future sales. For example, when reviewing one particular

lead, Wells Fargo uncovered two important things: the

prospective customer already had a good relationship with

its current supplier and it didn’t perceive Wells Fargo as

having any edge over the incumbent vendor. So Well Fargo

decided not to expend resources to put together a custom

bid and decided instead to submit a bid that was close to

the company’s standard pricing. Moreover, Wells Fargo

also omitted that potential deal from its sales forecast.

Large businesses like Wells Fargo should consider having

a different funnel for each major product line, especially

if the products have very different selling cycles. And you

might also need to have a separate funnel for each major

geographic region, such as North America, Europe, and

Asia/Pacific. Moreover, you should adjust your criteria to

the changing market. In normal times, for example, your

sales cycle might be six months. But in a recession, that

time period could easily balloon to over a year. That’s why

in volatile markets you’re better off using a sales cycle that

is adjusted using a moving average over several cycles

or, better yet, a weighted moving average that places

more emphasis on recent periods of time. In addition,

remember that your sales cycle is just an average. In

general, larger deals will tend to take longer to close

because they will usually involve a greater number

of people in the approval process. Also, sales to new

customers will typically take much longer than sales to

existing accounts, especially when those deals involve

products that are new to the market.

In order for the funnel system to work, salespeople have

to manage their individual funnels on a regular basis. The

frequency will depend on the complexity of the typical

deal as well as the sales cycle. For products with long

sales cycles, monthly funnel reviews might suffice. But

for other products, daily reviews might be necessary.

When implementing a funnel system, companies should

consider having at least weekly meetings for people to give

updates of their funnel activity. The participants basically

go around the table, one by one, to give their numbers. In

this way, peer influence helps to keep people honest to

their commitments. After the funnel system has become

an ingrained part of the sales process, companies might

then have the meetings on a less frequent basis, perhaps

just monthly instead of weekly. Again, this depends on the

sales cycle of the product (shorter cycles require more

frequent meetings).

After each meeting, you might publish the funnel data on

an in-house basis to help keep everyone honest. The funnel

reports should be internal and confidential, and you could

aggregate the data per region (or district or branch) and

per product. The real power of the funnel comes over time

3838



when people can track the progress of various potential

deals, and they can identify what’s stalled and then develop

a plan of action for moving those prospects along.

One way to ensure that salespeople take the funnel system

seriously is to tie the accuracy of their forecast numbers to

their sales commissions. Or, at the very least, you can make

forecast accuracy a part of their performance reviews. In

addition, you need to impress upon salespeople how good

forecast numbers are ultimately in everyone’s (including

their own) best interests. When Sean Reese, a demand

planner for Ocean Spray Cranberries, was trying to get

better information from his company’s sales staff, he made

the following case. He argued that accurate forecasts will

help improve the efficiency of the company’s supply chain

and reduce the possibility that stores would run out of

product, thus eventually leading to a higher sales volume

– and thus larger commissions. That argument helped

everyone get on board with Reese’s program.

If your company relies heavily on information from

distributors, you might consider encouraging them to

provide more accurate data by sharing any resulting savings

with them. Consider Arasco, a Saudi-based supplier of

animal feed products. In 2006, after Arasco realized that

better forecasting could result in considerable savings in

storage costs, the company agreed to cut prices by up to

4 percent for those distributors that agreed to help provide

better information about future demand. The program was

a success as the forecast error fell from 15 percent to 9

percent, enabling the company to increase its on-time

delivery rate from 85 percent to 93 percent.

Some Common Traps

World-class sales organizations all place a value on

process, and accurate forecasting should always be part

of that process. To improve your forecasting, the use

of the sales-funnel concept can help tremendously, but

implementing it takes concerted effort and an awareness

of the potential pitfalls. In particular, companies should be

on the lookout for the following common mistakes:

1. Allowing prospects to “whirlpool.” Every sales

organization has customer prospects in the middle of the

funnel that go round and round but make little progress

toward moving to the bottom and getting closed. You

might have an uncovered base, such as a key executive

at the customer company is unconvinced of the need

for change. A study by Miller Heiman found that, at

any given moment, nearly 35 percent of prospects are

wasting a salesperson’s time. Often the problem is that

those prospects have been miscategorized and should be

moved from the middle to above the funnel.

2. Confusing selling with buying. Remember that the

selling process has seven basic steps: 1) target prospects,

2) qualify leads, 3) cover the bases, 4) make proposal, 5)

close deal, 6) fulfill order, and 7) up-sell and cross-sell.

The buying process also has seven basic steps but they

are markedly different: 1) monitor status quo, 2) recognize

the need to change, 3) define problem, 4) evaluate options,

5) select best solution, 6) implement solution, and 7)

assess value of solution. The problem is that there’s often

a mismatch in where the seller is versus where the buyer

is. The classic mistake occurs when the seller is on step 5

3939



(ready to close the deal) while the buyer isn’t even on step

2 (that is, the customer isn’t fully convinced that he has a

problem). This, unfortunately, happens far too frequently.

You can prevent such occurrences by relating some of

the steps of the buying process to the criteria you use

to determine a prospect’s location in the sales funnel.

With the acronym “DUNCE,” for example, the letters “D”

(the customer has dollars allocated to pay for the project

and “U” (there’s urgency on the customer’s part) relate

specifically to step 2 of the buying process (recognizing

the need to change).

3. Treating all products the same. Companies should

consider ranking their product lines (for example, in order

of potential revenues or profits) so that they can spend

more time tracking and forecasting those products that

will have a bigger impact on the bottom line. For instance,

BASF, the German chemical manufacturer, categorizes

its products into A, B or C, depending on their potential

impact. By spending more time on forecasting the A

products and less time on the C, one business unit at the

company was able to improve its overall forecast accuracy

by an average of 20 percent.

4. Not making special allowances. Sales forecasts

based on the funnel concept will be accurate if you have

numerous prospects that are all about the same order

size. In such cases, the law of averages will prevail: some

prospects will drop out while others will reach fruition such

that everything will even out. But the problem is when

some of your sales opportunities are much larger than

others. Consider, for example, the extreme case in which

one of your potential deals is an order or more larger in

magnitude. Let’s say that you have a deal in the works that

could bring in $10 million, but your average sale is much

less than that. If you close that big deal, your sales will be

$40 million for the quarter, but if it falls through then you’re

looking at $30 million, substantially less. The best thing

to do here is to separate that $10 million prospect from

your forecast, perhaps by placing an asterisk next to your

quarterly projection. In fact, deals that important require

their own individual funnels so that they can be tracked

separately from the rest of your prospects.

5. Failing to properly prioritize activities. In general,

salespeople tend to work the funnel from the bottom up,

concentrating on the surest opportunities first and leaving

the less certain stuff for last. That approach might seem

to make sense, but the truth is that it leads to unnecessary

volatility. Here’s what typically happens: The sales

organization is busy closing important deals and works

hard to move prospects from the middle to the bottom of

the funnel. All of that activity takes considerable effort,

and people just can’t find the time to generate new leads

until they realize that the funnel is drying up. Panic then

ensues, as everyone scrambles to find new business. But

the problem is that those new leads could take months (if

not years) to work their way down the funnel, and that time

lag could result in a sales shortfall and missed forecast.

To prevent that, you should always prioritize the three

areas of the funnel in the following way: bottom, top and

then middle (instead of bottom, middle and then top). The

reason for that is because salespeople dislike the hard

(and seemingly thankless) task of prospecting, so the only

4040



way to ensure that it gets done is to prioritize it ahead

of the work that needs to be done in the middle of the

funnel. Of course, that’s not to say that you can afford

to neglect customer prospects in the funnel’s middle.

Somehow, though, people will find the time to work on

the middle of the funnel (after paying the proper attention

to the funnel’s top), whereas they always seem to be too

busy to concentrate on finding and qualifying leads above

the funnel unless they’re absolutely forced to do so.

6. Not having a funnel “meister.” You need someone

in charge of the funnel system and that person has to

have a lot of clout. He or she can’t be a low-level staff

person, because then the process becomes just a clerical

function. You need someone who knows the process

and is familiar with the different customer accounts so

that he can keep people honest by asking questions like,

“How can this customer be in the middle of the funnel

when you don’t really know who the final decision maker

is?” In other words, the funnel meister can’t just blindly

accept information from salespeople; he or she needs to

constantly question the funnel info because salespeople

are absolutely notorious for being overly optimistic about

their prospects.

7. Making the funnel process burdensome. On the

other hand, you don’t want to make the funnel process

an onerous or thankless chore. The funnel has got to be a

tool that enables the sales force to work more efficiently

and effectively. Otherwise, people will do everything

they can to avoid using it. So the trick is to integrate the

funnel process with what the sales force already does.

Many companies, for instance, use a “blue sheet” or other

internal process to track the status of customer prospects.

Much of the information required by a funnel review can

be obtained from such a system. For example, blue sheets

typically require salespeople to fill in the names of the key

decision makers at a customer account -- information that

is crucial for any funnel review. Moreover, such important

data can be transferred directly to a customer relationship

management (CRM) system that a company might already

be using. Miller Heiman, for example, has a tool called

Sales Access Manager that enables salespeople to avoid

having to re-key any data; they just enter it once into a blue-

sheet application and the information can be transferred

automatically to a CRM system from Oracle, Salesforce.

com, SAP or another vendor. Those CRM applications, in

turn, typically have their own capability to perform sales

forecasting, and that information can then be used in your

funnel reviews.

8. Over-relying on CRM. That said, you should also

be careful about relying too much on data from a CRM

system. According to research by Miller Heiman, 72

percent of sales organizations report that their CRM

application does not provide accurate forecasting. As with

any type of application, the software is only as good as

the input data. In other words, “garbage in, garbage out.”

Specifically, when a CRM application is too cumbersome

or difficult to use, salespeople will often input inaccurate

information, for instance, quickly checking off boxes on

a form without really thinking about what they’re doing

because they just want “to get the task over with.” Such

faulty data will then lead to wildly inaccurate forecasts.

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To prevent that, sales managers have to be involved in

the design of the CRM tool and should never completely

relinquish that job to the IT department. If they do, they

risk ending up with a system that salespeople don’t

really take seriously because the perceived benefits do

not outweigh the effort required to use it. A good rule of

thumb is that, if you can’t teach salespeople the basics

of how to use a CRM system within five or ten minutes

so that they can at least hit the ground running (later,

they can learn additional functionality), then the system

is probably too complex. Any sales application needs to

be intuitive enough so that people can essentially learn

how to use it simply by using it. And ideally the software

should interface with other tools that your salespeople

regularly use, such as Microsoft’s Outlook, as well as

portable devices like the iPhone and Blackberry. In short,

both usability and accessibility are crucial.

Of course, sales forecasts will always have some degree

of uncertainty. After all, predicting the future is, at best, an

inexact science. And there can certainly be valid reasons

for a sales shortfall. A big customer could go belly up

or be acquired by a company that uses another vendor.

Or new governmental regulations could dramatically

increase the length of your sales cycle. Indeed, you can’t

foresee and prepare for every possible contingency

because nobody’s crystal ball is ever that clear. But

that’s not what I’m talking about. I am asserting that the

sales function is a definable, repeatable process that can

be tracked and managed using a simple concept called

the sales funnel. And if a process can be tracked and

managed, then you can certainly monitor it regularly to

extrapolate the future from the present. The basics are

really quite straightforward, but unfortunately many sales

managers are either too lazy or they lack the discipline

to implement such a system. Alas, for them, sales

forecasting will always be an unreliable process like tea-

leaf or palm reading, and that is certainly no way to run

a business.

About Robert B. Miller

Thirty years ago, Bob Miller developed and introduced

Strategic Selling®. Since then, his passion for elevating

the role of the sales profession has resulted in several

additional methodologies, all of which are incorporated in

The Miller Heiman Sales SystemTM. He continues today in

a consulting and advisory capacity, focusing primarily on

product development. His mentorship drives innovations

in sales performance that are consistent with the vision

for the company he started three decades ago.

1. “Manage or Damage: Is Your Funnel Ratio Up to Par?” (Miller Heiman Sales Secrets, 2008). 2. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management Review, July 7, 2008). 3. “Fast Forward: How Sales Leaders Can Ensure Forecast Accuracy,” The Sales Performance Journal (Miller Heiman, March 2006): p. 9. 4. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management Review, July 7, 2008). 5. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management Review, July 7, 2008). 6. “Funnel Management Best Practices” (Miller Heiman, 2006). 7. Chaman L. Jain and Mark Covas, “Thinking About Tomorrow: Seven Tips for Making Forecasting More Effective,” Business Insight (The Wall Street Journal and the MIT Sloan Management Review, July 7, 2008). 8. Robert B. Miller, “Taming the Volatile Sales Cycle,” MIT Sloan Management Review (Winter 2006): pages 10-13.

9. “Fast Forward: How Sales Leaders Can Ensure Forecast Accuracy,” The Sales Performance Journal (Miller Heiman, March 2006): p. 8.

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WEEKLY FORECAST AND DEAL STATUS CALLSby Damon Jones, President and Managing Director of International

Getting accurate forecasts has been a quest for many organizations for some time, but

in the current economic climate, this subject has increased in importance and in many

instances, in difficulty. All sales managers will probably relate to the following dialog:

Manager: “Joe, how are we doing on that big deal with XYZ?”

(Slight Pause)

Salesperson: “Great boss. I think we’ll have it signed in the next week or two.”

Quite often this conversation carries on for the next few weeks until the manager abruptly

learns the account has been lost to a competitor when the expectation was that the rep

was close to securing it. Suddenly the poor sales manager is faced with taking this out

of the forecast and having to explain to his boss what went wrong. The good news is

that there are some things you can do to avoid this situation in the future. I’d like to start

by talking about some of the problems that contribute to this and provide some ideas

on what can be done about it.

Some of the problems that cause poor forecast accuracy and what you can do.

No standard definition for the opportunity or deal. Everyone in the team needs to ��

work from the same definition. At a minimum, you need to include the deal size, your

solution, the customer and the expected close date. The closer the opportunity

4343



moves to closure, the more important it becomes to confirm the accuracy of

information. Managers should check the accuracy of deal sizes, ask questions

about expected close dates and make sure they feel comfortable with where the

opportunities are moving and how they are being dealt with.

Lack of common understanding of the sales and buying process. This is one of the ��

biggest issues I see in organizations: the definition of both the selling and buying

processes. Most organizations only focus on the former. But this is only looking

at half the picture. You need to understand what the customer’s buying process

looks like and more specifically, what actions the customer has to take to move the

opportunity through the funnel or pipeline. There will be multiple, definable steps

an opportunity will go through from the starting point up to winning the sale. This is

often the root of the biggest disconnect. The sales rep believes the opportunity is

farther down the funnel than it is in reality. Unless you also have a screen that looks

at where the customer is in the process you run the risk of forecasting business

that is far from certain.

Poorly qualified deals. When I talk to customers about forecast accuracy the ��

typical challenge is that forecasts are too optimistic or aggressive. In essence,

the forecasts over promise and under deliver. One thing you can do to prevent this

is to ensure you only forecast adequately qualified deals. This means you need

to develop and apply consistent criteria. Many companies develop some form of

criteria for defining what an ideal customer looks like. Any deviation too far away

from that ideal customer presents a red flag and should be investigated.

Lack of understanding of the opportunity. As a manager, it’s unlikely for you to ��

be close to every deal belonging to each of your reps. To scale your opportunity

management, you need some type of system for determining which deals you will

get close to. Deal size and proximity to closing are good starting points. Once

you have decided which deals you want to zero in on you can ask some simple

questions. You can keep these consistent for every deal. Your reps will soon catch

on and will be better prepared with answers once you have done this a few times.

Here are some questions you can ask:

What is the customer trying to fix, accomplish or avoid?��

How will our solution address that and how does it sound different from ��

other options the customer has?

4444



What is the customer’s decision-making process? Have we met all the ��

decision makers?

What are the biggest red flags that would stop us from winning this deal?��

I’m sure you can see a common pattern from my previous thoughts. Getting some

common standards and language is really important if you want to get more consistency

and accuracy in reports.

If you’re thinking this sounds like a lot of work and doubt if it is truly worth it, let me

answer that. It doesn’t have to be complicated. You should try and keep it as simple

as possible to encourage these check-ins to continue because the value goes well

beyond more accurate forecasts. Once you work with good information, you can start

to make much better decisions. You will start to see more quickly where your reps

need help and which deals you should get personally involved with.

For many organizations, resources have become more scarce, so it is vital to ensure

you have a solid basis for determining where you should direct those precious

resources. One of the worst things an organization can do is spend considerable time

and resource on the wrong opportunities. Losing slowly is something that should be

avoided at all costs. The difference between losing and winning a deal can be the

correct allocation and timing of resources on a deal.

Finally, make sure this information comes to you in one format and is the same from

everyone. You don’t have time to learn what different reps and managers mean by,

“It’s close to closing.” You need them to tell you where it is in the selling and buying

processes and what needs to happen for the deal to close. A standardized process

and common language will buy you more time, time that you can use to help get

business closed!

4545


LEARN FROM LOSING: WHAT SALESAND MARKETING LEADERS CAN LEARN FROM LOSING A DEALBy Bill Golder, Executive Vice President of Business Development

Everyone who has ever been in sales can remember the outstanding feeling of winning

their biggest deal. In business, there aren’t many things like landing a big client that

can create that kind of excitement and triumph within an organization. Big deals can

often make a company’s month, quarter or year and put their competitors on notice. It’s

fun to be a part of the team that makes those winning moments in business happen.

Those involved have no trouble reflecting on how it all went down with amazing clarity:

the incredible strategy, the flawless execution, the collaborative team, the competitor’s

mistakes. We remember it all, and it gets better every time we tell the story.

When it comes to the ones that got away, most individuals (and organizations) seem to

have amnesia. In fact, it’s amazing how quickly we all move on without another word on

lost deals. It’s as if they never existed. Most shocking is these deals typically take longer

and use more resources than the ones we win, so they should be pretty memorable.

I’m in a fortunate position to be able to see how some very good organizations capture

findings and learn from both won and lost deals. It’s safe to say that far fewer have

applied a real discipline toward understanding the latter. Those that do tend to be

higher performing organizations and are learning things that are helping them sustain

performance.

4646



These organizations aren’t just talking about lost deals; they are incorporating a loss

review into the sales process. The outcomes help sales and marketing take away key

nuggets that shape overall client acquisition and relationship management strategies.

So What Does a Loss Review Process Look Like and What are Companies Learning From It?

Let’s start with the meaning of a lost deal. We all tend to think about losing a deal in a

very linear way – the deal moves all the way through the funnel and the customer makes

a decision. In fact, most lost deals don’t work out that way at all. I’m surprised by the

number of deals that fall out of the funnel long before they reach the proposal stage

and how often they are “lost” to other factors such as competing priorities or internal

resources versus a true competitor. Companies who understand this want to learn just as

much about those that fell out of the funnel early as they do about those that follow the

stereotypical pattern. It’s important to get everyone on the same page as to what “lost”

means. It may also help to create other definitions such as “no interest” or “on hold” to

begin understanding and categorizing what happens when you don’t win.

Assuming everyone is on the same page with defined funnel stages and the definition

of a lost deal, you can put a repeatable review process into motion. The best examples

of clients we see executing a loss review process typically incorporate the following

elements:

Criteria for deal sizes��

A standard format for capturing the attributes for each deal and a scoring system to ��

evaluate the strength of each attribute in comparison to scenarios when you win

Involvement of both sales and marketing in the process for identifying key factors ��

that can impact how you attract new opportunities as much as how you manage

existing opportunities

A culture of discovery vs. blame – candor will be critical in having meaningful findings ��

that help to improve overall conversion and effectiveness

A mechanism to cascade key findings to sales and marketing that can benefit the ��

organization.

4747



My observation has been that organizations with a loss review process that includes the

above elements seem to be much more effective in the following areas:

A well understood value proposition. Sales and marketing teams are better aligned 1.

as they learn, through a deal review process, what is resonating and when it is

resonating with potential clients regarding their solutions. Sales feels better supported

by marketing when this is dialed in and marketing can see its lead creation efforts

making an impact – a rarity in most organizations.

A more strategic prospecting plan that focuses the organization on ideal profiles of 2.

potential clients. This is especially impactful on potential investments being made in

both time and money for the pursuit of new business.

Results. A clear impact can be made on both conversion and velocity through a 3.

diligent deal review process.

Operational efficiency and customer satisfaction. It’s amazing what happens when 4.

you engage with prospects that are a better fit for your organization’s offerings. The

organization leverages unique strengths instead of trying to make round pegs fit into

square holes. Loss reviews help you understand whether or not you are chasing bad

business and potentially draining resources needlessly.

Organizational alignment. It becomes much easier to make decisions on segmentation 5.

strategies when you know your ideal customer and prospect. Loss reviews become

a critical component of understanding the types of resources and talent needed to

win business, and how to avoid investing resources in prospective business that may

never close.

Certainly, loss reviews alone aren’t the answer. They need to be part of a much larger

strategy centered on the diligent pursuit of understanding the customer. However, it is

a component that I’ve seen deliver terrific value when incorporated into the rigor of your

sales and marketing organization. Don’t avoid it, embrace it!

4848

ARTICLE

Leveraging Sales TalentA Successful Model for Identifying, Developing, and Retaining Top Sales Performers

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5454

Sales Messaging for Success Why Having a Client Centric Value Proposition is Invaluable

Defining Your Ideal Customer

Before you can construct a value proposition you must know to whom you are

constructing it for. Too many organisations try to be all things to all people and

most end up simply confusing all prospective customers. To truly add value to a

customer prospect we must be able to demonstrate that we not only understand

our customer but also the customers customer and the environment in which

they operate. The value proposition must represent the tangible outcomes your

customer can expect. It is not a benefits list of what you are selling.

So who are your ideal customers? Can you define them simply and elegantly

about what makes them ideal. This definition should include a set of

demographic and psychographic criteria. For example I saw a business define

their clients as “owners or managing directors of non retail businesses located in

metro Sydney with a turnover of 10-30 million dollars”. This definition is a good

start however it only includes the demographic components. Psychographic

information such as honesty, openness, technically competent and realistic are

all examples of criteria that if missing could turn an ideal customer prospect into

a less than ideal opportunity.

Defining Your Sales Message

Once we know who our ideal customer criteria is we can then start to construct a value

proposition that means something to the prospect. A simple test you can apply to your

own business is to ask if your sales people can answer these three questions succinctly

from a customer’s point of view?

Who Are You? Most sales people are able to answer this one quickly and easily.

by Rob Hartnett, Managing Director, Selling Strategies International

5555

What Do You Do? This next question begs some more questions and if you have a board or several

partners looking at this question get ready for a number of responses and a few

surprises.

Why Does It Matter? This is question is harsh but the most important question.

The answer to this question is the one your customers care most about. That is

why do you matter to your customers, what do you do that makes you so special

and unique to them.

If you are answering this question with regard to a specific product or service, a

test to your answer is the three D’s of marketing.

1. Can you differentiate yourself from the competitors?

2. Can you defend yourself in the market place?

3. Can you distinguish yourself in a crowded market place

Source: The Brand Gap & Selling Strategies International

Are you Seen as Above or Below the Line? Put more simply does your prospect or client see you as someone who adds to

their revenue or profits or as someone that represents a cost to their business.

Getting on the right side of the profit and loss statement can make an enormous

amount of difference to how you are viewed by the buying organisation.

If you look at the diagram below you can see there are just seven ways to drive

profit in any business and these are made up of either increasing revenue or

decreasing costs.

Above The Line - 5 Ways to Increase Revenue

1. Increase number of leads

2. Increase the conversion into sales

5656

3. Increase average sales value

4. Increase number of times p.a. that clients buy

5. Increase the profit margin per sale

Below The Line - 2 Ways to Decrease Cost

6. Decrease variable cost per sale

7. Decrease fixed overhead

Clearly it pays to be seen as someone who drives above the line performance

and not below the line performance. The recent Global Financial Crisis was

evidence of this. Those suppliers who were seen as a cost had their business cut

while those who were seen as contributors to above the line or top line

performance were retained.

The table below also demonstrates how much difference a small increase of 10%

across the five areas can deliver a significant result to profitability. Understanding

how your products and services can assist a prospects profitability in a table

such as the one below is very compelling.

Above The Line In Action

Current 10% incr. #1 Leads / Enquiries x 100 110 #2 % Conversion to Sale = 10% 11% Number of Customers x 10 12.1 #3 Average Sale Value = $1,000 $1,100 Sales Turnover x $10,000 $13,310 #4 Repeat Sales per Year = 4 4.4 Annual Turnover $40,000 $58,564 #5 Profit Margin 50% 55%

Annual Gross Profit $20,000 $32,210 Increase in Net Profit 62% Source: Better Business Institute

5757

Examples of Value Propositions

Here are some examples of value proposistions that have proven to be

successful in getting engagement with a new prospect. Note how they use the

language and metrics that their prospects use and care about.

We help mid sized companies reduce their employee costs without impacting the

benefits they receive. This has been critical to the success of our mid sized

clients as they survive the challenges of an economic downturn and retain key

staff. One of clients reduced over half a million from employee costs and saw an

increase in average employee tenure during the same period.

After implementing our sales and marketing alignment strategy one of our clients

was able to discover and close a major opportunity in under 90 days. This

represented a shortening of the sales cycle by 60% and an ROI of 200% with a

bonus of having an increase in employee satisfaction during the same period in

their go to market team.

Sales & Marketing Alignment Once the value proposition is developed and agreed upon it is vital that other

functions such as marketing are brought in to ensure it is communicated

consistently across the organisation. Too often the sales message delivered in

person by sales is not reflected in key customer communication tools such as

websites, brochures, advertising and direct marketing campaigns. This is the joint

responsibility of both sales and marketing.

Not surprisingly in the recent Miller Heiman research on what makes a Winning

Sales Organisation sales and marketing alignment was a key attribute of the

most successful sales organisations.

5858

SPECIAL EDITION

Best of Sales Performance Tips: Improve Your Prospecting Techniques

5959

© 2006 Miller Heiman, Inc. All Rights Reserved | 10509 Professional Circle, Suite 100, Reno, NV 89521 | 775-827-411 | www.millerheiman.com

Improve Your Prospecting Techniques

Introduction

This issue features three articles that focus on the critical steps required to be successful at prospecting in today’s selling environment; some helpful advice to win more business by pursuing only those opportunities that reflect the qualities of your ideal customers; and tips to help you identify and access the senior-level decision maker in your sale.

Get Out Of Your Shoes And Into Your Prospect’s. How many times have you started to leave a voicemail for a prospect or began a sales presentation with the words, “let me tell you a little bit about our company”? Chances are, you’re probably doing it all the time.

How To Identify Ideal Customers. Most salespeople have a high level of sales activity as a result of prospecting. But we also see many of them chasing down opportunities that have a low probability of closing. This activity is damaging. Time is wasted when it could have been spent finding prospects resembling the profile of your top customers.

Identify the Economic Buying Influence. The first step in executive-level selling is to find out who holds the purse strings in your sale. The ultimate decision maker is the person who gives final approval to buy or veto your sale.

Get Out Of Your Shoes And Into Your Prospect’s

Step 1: Get Out of Your Shoes and into Your Prospect’s

Selling isn’t about you. It’s about your prospects. If you’re not getting out of your shoes and into your prospect’s, you’re missing the boat.

How many times have you started to leave a voicemail for a prospect or began a sales presentation with the words, “let me tell you a little bit about our company”? Chances are, you’re probably doing it all the time.

Your prospects aren’t interested in you and your product. What they do care about is their problems and the things they want to fix, accomplish, or avoid.

Stop. Think. Reflect.

Stop product pitching. People don’t want to hear about how great your product or service is.

Think about what’s likely going through the mind of your prospect. What issues and challenges are they facing?

Reflect. Specifically, how can I help this person?

Effective prospecting requires a relentless pursuit toward understanding your prospect’s Concept - a fundamental principle of Miller Heiman’s Conceptual Selling® workshop.

Concept is something that develops in your prospect’s mind. In many cases, you can contribute to defining your prospect’s Concept by helping them understand what they need to fix, accomplish, or avoid. If you don’t identify your prospect’s Concept, you’re losing business.

By getting out of your shoes and into your prospect’s, you’ll begin to move from product-led selling to a true customer-centric approach, in which you become a trusted advisor and business consultant, and not a product-pusher.

Remember, key decision makers are tired of salespeople taking an ineffective approach to prospecting. They want salespeople to truly understand their problems in order to deliver a meaningful solution.

How To Identify Ideal Customers What if you could duplicate your best customers?

Most salespeople have a high level of sales activity as a result of prospecting. But we also see many of them chasing down opportunities that have a low probability of closing. This activity is damaging. Time is wasted when it could have been spent finding prospects resembling the profile of your top customers.

How to Identify Ideal Customers

1. Make a List of Your Best and Worst Customers

Think about your customers for a minute. Which customers do you wish you had a thousand more of just like them? Who are the customers you wouldn’t lose sleep over if they went to your competitor tomorrow? On a piece of paper list your best customers on the left, and your worst customers on the right.

2. List the Characteristics of Your Best and Worst Customers

Miller Heiman | Best of Sales Performance Tips: Improve Your Prospecting Techniques

6060


What makes these companies your best or worst customers? Consider the demographic features of these customers, like number of people, deal size, etc., but also think about the psychographic characteristics such as values and culture. Write these underneath your list of best and worst customers.

3. Select Your Top Five

When finished making your list of characteristics, you’ll need to prioritize. Which five traits of your best customers would you consider the most important in replicating? Are there any features of a best customer that you see the reciprocal of on the right side?

For example, if you listed your best customers as typically having growing product life cycles, perhaps you may have listed that your worst customers have mature product life cycles. If so, this could be an indication that the quality of a growing product life cycle should be among the top five criteria that you choose to become your ideal customer profile.

Using this formula to pursue new prospects will keep you focused on those companies more likely to do business with you. Better yet, you will stop wasting time pursuing prospects that have a low probability of closing.

Identify The Economic Buying Influence With 3 out of 4 opportunities now requiring executive-level approval, you probably know that executive-level selling is mandatory to succeed in today’s selling environment. But what you may not know is that you simply can’t rely on using your own executives to sell for you.

Instead, you need to master executive-level selling yourself so you can consistently win the decisions of high-level executives without depending on internal resources.

Identify the Economic Buying Influence

The first step in executive-level selling is to find out who holds the purse strings in your sale. The ultimate decision maker is the person who gives final approval to buy or veto your sale. In Miller Heiman’s Strategic Selling® program, this person is called the Economic Buying Influence. There is only one Economic Buying Influence per sale, although there can be a board or committee in some instances.

The Economic Buying Influence is concerned about the bottom line and return on investment. At this level, price pressures are significantly reduced, and a sharp focus is

placed on how your solution addresses what the Economic Buying Influence wants to fix, accomplish, or avoid.

Access the Economic Buying Influence

Once you’ve identified the final decision maker in your sale, you’ve got to create a compelling reason for him or her to meet with you. In Miller Heiman’s Conceptual Selling® program, this is called the Valid Business Reason.

A strong Valid Business Reason:

· Clearly defines why the executive should meet with you. · States the purpose of setting an appointment. · Links directly to what the Economic Buying Influence

wants to fix, accomplish, or avoid.

In order to get in the door of your executive-level decision maker, your Valid Business Reason must impact what the executive wants to solve in the organization. Instead of focusing on the features and benefits of your product or service, focus on understanding the issues of the executive.

You need to explain why your sales call is such a high priority and state “what’s in it for me?” from the perspective of the executive. And finally, the Valid Business Reason should be short and concise enough to be left on a voicemail or with an assistant.

About Miller HeimanMiller Heiman has been a thought leader and innovator in the sales arena for almost thirty years, helping clients worldwide win high-value complex deals, grow key accounts and build winning sales organizations.

The company is headquartered in Reno, Nevada and has offices around the world. More information can be obtained by visiting the company’s website at: www.millerheiman.com.

Miller Heiman | Best of Sales Performance Tips: Improve Your Prospecting Techniques

This selection is supported by Miller Heiman’s workshops, Strategic Selling

®, Conceptual Selling

® and Executive Impact

SM.

If you have questions relating to this topic, and would like to hear from an expert, you may call us at 877-678-0391. You may also visit www.millerheiman.com and subscribe to receive Sales Performance Tips each month via email.

6161

SPECIAL EDITION

Best of Sales Performance Tips: Phone Prospecting Strategies To Get Your Foot In The Door

6262


Phone Prospecting Strategies To Get Your Foot In The Door

Introduction

In this issue, we focus on a necessary exercise required of “hunters” and business development professionals that they dread doing – calling a prospect. With telemarketing on the rise and an increasing number of people screening their incoming calls, phoning a prospect and hoping to get an appointment with him or her require new techniques.

Increase Your Call Back Rate By Leaving Better Voicemail Messages. When leaving voicemails for prospects or clients, you can dramatically increase your callback rate by adjusting your message to your client’s perspective instead of yours.

Warm Up To Cold Calling. Are you anxious about picking up the phone? You’re not alone but you can do something to overcome your fear of cold calling.

Increase Your Callback Rate by Leaving Better Voicemail Messages “Please leave a message...”

As sales professionals, we leave a lot of voicemails in our pursuit to drive revenue and build client relationships. When leaving voicemails for prospects or clients, you can dramatically increase your call back rate by adjusting your message to your client’s perspective instead of yours.

One of the most common mistakes salespeople make when leaving messages for prospects is talking too much about themselves and their company. Using a Valid Business Reason (VBR) is an effective way to craft a compelling reason for your client or prospect to call you back. The person you are calling is as busy as you are, so messages longer than 20 seconds will start to decrease your chance of a call back right off the bat. Being concise is key. Selecting what information to include in that brief message is what a VBR will help you accomplish.

Criteria for a good VBR:

1. Impacts what your recipient wants to accomplish 2. Sets the call as a high priority

3. States “what’s in it for me” to the recipient 4. Is clear, concise, and complete

An additional suggestion is to start the message with your name, company name, and phone number. The tendency of the recipient is to start writing down your information before they even know what you want. If you back that up with a solid VBR, and repeat your name and number at the end, you are much more likely to get a call back.

Warm Up to Cold Calling Cold calling and call reluctance are very real issues for many sales organizations. Here are three tips for overcoming your fear of cold calling.

1. Target properlyBefore picking up the phone, it is vital to understand what your ideal customer profile looks like. Many salespeople make the mistake of starting too high or too low within an organization. Also, many salespeople approach companies that just aren’t a “fit” for the products or services they’re trying to sell. Know whom you’re going after and why they are a fit. Has your company had success in a particular industry? Who are truly the key decision makers as it relates to your product or service? Do you understand how purchases are made within the target company? Research. Research. Research.

2. Have a valid business reasonOnce you’ve identified whom you are going to call, you better have a clear understanding of what is in it for them. Why should they take time out of their busy schedule to speak with you? What is the real business need you can address? What value do you offer? Know what you are going to say and clearly articulate why this person should spend their time with you.

3. Schedule a timeIf you catch your prospects at their desk, don’t assume they have all the time in the world to talk to you right that second. Instead, request to set up a 30-minute conversation at a later date to ensure that when you do finally have a conversation, all attention is focused on you.

Final words: If you’re still anxious about picking up the phone, just think about the process of cold calling one step at a time. At the end of the day, it’s a numbers game. If you target properly, have a valid business reason for making the call, and respect the time of your prospects - you’re much more likely to experience success.

Miller Heiman | Best of Sales Performance Tips: Phone Prospecting Strategies To Get Your Foot In The Door

6363

Are You Being Out Listened?

Rob Hartnett

www.sellingstrategies.com.au

Working in a today’s complex selling environment means that competition is high and your sale relies more and more on the approval of multiple decision makers. In the online world , it is also likely that customers already have a description of your product from your website or your competitors and may even have people cheering for them internally.

This situation presents a perfect opportunity to benefit from a well-built relationship. Customers need assurance that you understand their needs and that you are more interested in helping them find a solution than pushing your product.

Unfortunately, most salespeople do not spend enough time letting their customer talk to develop a solid relationship. In fact global sales performance company Miller Heiman tell us that on many sales calls, the salesperson talks 80 percent of the time, leaving almost no time to listen. In addition they found that 80 percent of what we say has no relevance to our customer's needs or interest. Miller Heiman call this 80 Percent Syndrome.

The 80 Percent Syndrome can be very damaging to your business relationships, causing your credibility to flounder and your opportunities to decrease significantly. Suppose you have one hour to spend with your customer. Your time is likely broken down as follows:

• Thirty-one minutes spent telling the customer about your product or service

• Eight minutes spent on idle chat• Nine minutes spent asking questions • Twelve minutes spent listening to the customer talk

Instead of spending the majority of the valuable time your client is investing with you talking, start your conversation by asking him questions. Give your customers time to answer and continue to ask questions until you are certain that you understand their challenges. Good questioning helps you determine the breadth of the opportunity and can even open the doors to new opportunities.

A great conversation can motivate and sustain your customer's interest, stimulate ideas and become the building blocks that form a strong relationship.

Are You Being Out Listened? by Rob Hartnett, Managing Director, Selling Strategies International

6464

��

Just recently I had a meeting with a CFO (Chief Financial Officer) clearly a decision maker and key buyer. This was an important meeting for my company. He did the majority of the talking especially about his business and I chipped in with as many astute questions as I could to further my understanding of his issues. At the end of the meeting which went for over an hour I really felt I hadn’t offered him many solutions at all. As we shook hands he said “well you seem to understand our business and you have some great ideas so lets get together again in a week with some of my key people”.

The reality is that we listen at 600 words per minute and talk at around 150 words per minute. We should keep these ratio’s in mind when making a sales call.

Next time you make a sales call either on the phone or in person, remind yourself to stop talking and start listening.

6565

Are You Really Losing on Price?

Rob Hartnett

There are many reasons why a client will choose not to buy from you: perceived product performance, poor past track record, credibility issues, an inability to create the right solution, timing or any combination of these.

If price was the main reason for losing a sale, it would be a lot easier to win by simply dropping it. The reality is, there are solutions clients will pay a premium for. Ultimately, clients decide to buy from you because they believe you brought to the table something that has value to them and cannot be obtained elsewhere.

Learn Why You LostThe only way you will know the real reason is to ask. Understanding why you lost represents a great opportunity to improve your future performance, especially considering that so many salespeople do not conduct this follow through activity.

In Miller Heiman’s annual research of Sales Best Practices, barely a quarter of respondents agreed with the statement, "Win or lose, we get accurate feedback on all proposals from our clients." Analyzing the key factors of a winning account has value, but knowing why you lost an account can help you avoid the same mistakes, increasing your success rate.

This research was also supported by the 2008 CSO (Chief Sales Officer) Insights Research that showed that those organisations who conducted frequent win/loss reviews ultimately had better sales results than those organisations who did not.

From Excuse to ActionBut is price really the issue? Here are three common rejection responses you've probably already heard and what they really mean.

"Our budget was cut at the last minute."You may not have reached the right level of decision maker to insulate your sale from this outcome. A higher level decision maker may have been able to reserve a budget if your proposed solution is critical enough to their business issues.

"We didn't need all the features included in your solution; it was too expensive for what we need."Better evaluating the needs of the client can help you focus on the elements of your solution that they consider most valuable. Identifying features that have no value to them may allow you to eliminate items that inflate the perceived wasted cost. This is a response commonly given by people who can say no to you but cannot say yes because they don’t have the authority to buy in most cases.

Are You Really Losing on Price? by Rob Hartnett, Managing Director, Selling Strategies International

6666

��

"Your solution doesn't give us everything we need to accomplish our objectives."In this case, you may have actually had the lowest price, but because you did not offer a solution that fits what the client is trying to accomplish, you were not selected as the best option.

“Your solution looks ok but we don’t have budget this year” In this instance the client is trying to be nice but really saying we don’t have enough trust established to move forward.

Improve Your ResultsThe knowledge you can gain from understanding the sometimes veiled reason why the client did not choose your solution provides can actually bolster your credibility, showing genuine interest in why your solution was not selected and how you can better understand the client’s needs.

A great way to test the price issue is to provide pricing options – a good range is three. This allows the client to engage in a dialogue about the features and benefits of your offer with you and through this you will get a “feel” for the budget the client has.

In terms of budget excuses this is another buying signal. Asking about financial year up front and whether funding is approved and from a capital or expense area will also eliminate this excuse later on as you can provide finance options or payments spread over two fiscal years for example in your proposal.

Believing you are losing because of price negatively impacts your chances to affect your future performance. Become more proactive at developing your skills by identifying and acknowledging the real reasons behind past lost sales and take action to improve your results in the future by eliminating them or at least reducing them up front.

Rob Hartnett

Business Performance ©

6767

© 2006 Miller Heiman, Inc. All Rights Reserved www.millerheiman.com |

Equal Pain or Equal Gain? Negotiate for Win-Win

Every sale involves negotiating—starting with

your fi rst contact with the client. Miller Heiman’s

Negotiate SuccessSM workshop shows the best

way to begin, essential areas of focus, what to

do fi rst and last, how to avoid pitfalls and ways to

handle typical “tactics.” Call: 877-678-3386 to

fi nd your next step to successful negotiation.

6868

Preparation:

The Ultimate Negotiation Tool

The best salespeople clearly under-

stand the importance of knowing as

much as possible about what their

customers need, what they worry

about and how they do business, ac-

cording to Miller Heiman research.

More than 2,200 sales profession-

als participated in the 2006 Miller

Heiman Sales Performance Study,

which is part of the world’s largest

continuous research project on sales

performance. Among other fi ndings,

this year’s study identifi ed the char-

acteristics of key players in Winning

Sales Organizations (WSOs).

The study indicated that, when

compared with less-successful

salespeople, top performers:

Clearly grasp the specifi c chal-

lenges their customers face in their

industries 20 percent more often.

Focus on solution-led selling

26 percent more.

Understand their customers’ buy-

ing processes 25 percent better.

Win the approval of senior

decision-makers 32 percent

more

Source: The 2006 Miller Heiman

Sales Performance Study

Equal Pain or Equal Gain?Negotiate for Win-Win


Equal Pain or Equal Gain? Negotiate for Win-Win

By Anne Stuart

If there’s one thing everybody knows about sales, it’s that serious

negotiation starts when you and your customer or prospect sit down

together to close a deal. Right?

Think again. In any successful negotiation, the real work begins long

before either party comes to the table.

“When people hear the word ‘negotiation,’ they think ‘Oh, that hap-

pens at the end of the sales process,’” says Grande Lum, author of

The Negotiation Fieldbook: Simple Strategies to Help You Negotiate

Everything. In fact, he and other experts say, the best salespeople

start thinking about negotiation much earlier--sometimes even be-

fore they’ve made the fi rst contact.

Specifically, top performers prepare for those at-the-table talks by

learning as much as possible about the other party’s needs and

concerns. “You have to look for their underlying interests,” says

Lum, a nationally known authority on negotiation who has partnered

with Miller Heiman to integrate negotiation into their sales system.

“You need to understand what their personal motivators are, what

they’re really after.”

It’s equally important for salespeople to understand their own inter-

ests, Lum says: “As a salesperson, what is it you want to get out of

the negotiation?” The simple answer, of course, is selling that prod-

uct or service. But the best salespeople tend to have bigger-picture

goals, such as building the foundation for a long-term new rela-

tionship or expanding an existing one. And, as the results of Miller

Heiman’s own research indicates, the top performers achieve those

objectives by equipping themselves with knowledge (see sidebar:

“Preparation: The Ultimate Negotiation Tool.” )

“Too often, salespeople don’t dig enough to fi nd the customer’s

real interests,” notes Damon Jones, who, as Miller Heiman’s Chief

Operating Offi cer, is responsible for the fi rm’s global sales opera-

tions and international growth. “They need to fi nd out whether the

client’s focus is around price, or around the terms and conditions, or

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More Information on Negotiation

Negotiate SuccessSM program

Miller Heiman’s Negotiate SuccessSM

workshops provide a simple, easy-to-fol-

low blueprint for using negotiations to im-

prove the sales process. The workshops

offer a proven process for making sure

everyone involved in a sales negotiation

walks away satisfi ed. Among other things,

participants learn proven methods for

overcoming objections without resorting

to price reductions—while still building

long-term relationships that ultimately

bring their companies more business.

The Negotiation Fieldbook:

Simple Strategies to Help You

Negotiate Everything

by Grande Lum

The fi eldbook is included with the Negoti-

ate Success® workshop and is written

by one of the world’s foremost experts

on the topic. This straightforward how-to

guide offers proven practices and tools

for successful negotiation. It includes

reusable worksheets and checklists,

real-life examples, a glossary and other

resources. Click here to learn more

about the workshop.



around something else. They need to understand what’s driving

the customer—for instance, is it that they’ve just bought a similar

product or service somewhere else?”

Developing that deep understanding of both parties’ interests is

just the fi rst of four elements that Lum calls critical to preparing

for any type of negotiation. Those building blocks make up what

he calls the ICON Negotiation Model, a framework developed

from the best practices of successful executives, salespeople,

diplomats and others skilled in negotiation. Each letter in the

acronym “ICON” summarizes one of those four key elements:

Interests: The subjective needs, goals, concerns, fears and

desires of each party.

Criteria: Objective benchmarks, precedents and standards for

judging and fi ltering potential options.

Options: Possible solutions that satisfy all parties’ interests,

making them agreeable to all concerned.

No-Agreement Alternatives: The actions each party can take

if they leave the table without formally agreeing to any option.

In these cases, negotiators often strive for what’s known as a

BATNA—“the best alternative to a negotiated agreement.”

Lum, who describes those interlocking elements in more detail

in his Fieldbook (see sidebar: “More Information on Negotia-

tion” ) says that, together, they provide a proven road map for

planning any type of negotiation. By consciously and thorough-

ly addressing each element beforehand, and by understanding

how each can be used as a source for creating more value,

savvy salespeople will come to the table better prepared—and

more likely to succeed.

And, again, “success” means more than just making the sale.

Business, after all, is about long-term relationships—as we know

all too well, it’s typically more profi table to work with existing

customers than to fi nd new ones. Done correctly, negotiation

can be a powerful tool for maintaining and expanding those

7070

high-value connections. But, Lum warns, the reverse

also holds true: When done poorly, negotiation can

do more harm than good.

“Many sales professionals view building relationships

within the sales process as a form of collaboration,”

Lum says. “But when it comes to negotiation, that’s

when it can all fall apart. The salesperson believes, or

the customer believes, that you have to be manipula-

tive, deceitful or misleading” to close the deal. Jones

agrees with that observation: “Many people on both

sides view negotiation as involving an adversarial

approach, which is counter to building a long-term

relationship,” he says. “If the process left a bit of a

bad taste in somebody’s mouth the last time around,

that doesn’t bode well for future discussions.”

So what’s the key to negotiating well? It may sound

like a cliché, but it’s nonetheless the only method

that works: Strive for a win-win outcome. Or, as Lum

puts it: “Create the best solution that will meet your

interests and mine.”

Ending up at that point requires starting with the

ICON road map, fi rst by obtaining that all-important

insight into the customer’s interests. Then establish

objective criteria. “You use criteria to help establish

a common basis for the discussion,” Jones says.

“Until you’ve agreed on criteria, it’s really hard to get

a consensus to move forward.” Such benchmarks are

particularly handy for getting over seemingly impass-

able hurdles, Lum adds. “You can resort to objectiv-

ity rather than force of will. You can be persuasive

based on data outside yourself,” such as information

provided by an independent source, he says. “That

way, neither side feels that they’re being taken.”

A clear understanding of interests and criteria will

lead both parties toward options, and, ultimately,

either an agreement or alternative resolution (which,

Lum notes, may well involve walking away, at least

for a while). No matter how the negotiation ends,

both parties should leave the table feeling confident

that they were treated honestly and fairly— and,

ideally, that they’re better off than they were before

they sat down together. Miller Heiman’s Negotiate

SuccessSM workshops focus on teaching salespeo-

ple how to achieve those objectives through a sim-

ple, non-manipulative, customer-focused process

designed to make everyone involved in a negotiation

come out a winner.

If there’s a sales-specifi c caveat on negotiation, it’s

this: “Salespeople have a tendency to capitulate too

quickly,” Jones notes. “In the spirit of trying to get

the deal done, they discount too quickly or leave dol-

lars on the table, which they didn’t need to do. They

take shortcuts. It’s easier to just discount something

than to go through further discussions to fi nd new

value—which takes far more salesmanship.” (In fact,

Miller Heiman’s study found that 69 percent of sales

leaders and 75 percent of salespeople felt increasing

pressure from existing customers to cut their prices.)

Lum says that when salespeople cave on discussions

involving prices, it’s typically because they haven’t

explored the customer’s interests thoroughly enough.

“If you haven’t discussed value, then any price is go-

ing to sound too high,” he notes.

“A successful salesperson can see beyond the

smokescreen of price and rigidity,” he continues. “Be

like a detective. Ask good questions.” Based on the

answers, suggest alternatives, he says: “Bottom line:

It’s about being a problem-solver rather than just

pushing a product.”



7171

About the Author

Anne Stuart is a Boston-based freelance writer who

specializes in writing about business issues.

Grande Lum is the author of The Negotiation Field-

book and co-founder and managing director of Ac-

cordence, a Burlingame, Calif.-based fi rm.

Damon Jones is Chief Operating Offi cer for Miller

Heiman. He has more than 25 years of industry

experience covering all facets of business and sales

management.

About Miller Heiman

Miller Heiman has been a thought leader and innova-

tor in the sales arena for almost thirty years, helping

clients worldwide win high value complex deals, grow

key accounts and build winning sales organizations.

With a prestigious client list, including Fortune 500

companies, Miller Heiman helps clients in virtually

every major industry to build high performance sales

teams that deliver consistent sustainable results

to drive revenue.

The company is headquartered in Reno, Nevada and

has offi ces around the world. More information can

be obtained by visiting the company’s website at:

www.millerheiman.com.



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Miller Heiman Sales Solutions Accurate Diagnostics and Powerful Solutionsto Drive Sales Performance

The Miller Heiman Sales System is our framework to diagnose issues for our clients and to organize our solution portfolio. Our Sales System drives sales performance through disciplined processes to effectively create and manage opportunities and manage relationships. This involves analysing deals and accounts, preparing strategies, and identifying specific actions, accountabilities and timelines needed to execute the strategy.

Our programs and tools can be delivered via facilitated or online delivery or a combination of both.

Create Opportunities

Conceptual SellingCustomer Interaction Strategy for Winning Complex Sales

Executive ImpactStrategy for Securing Executive Approval Securing Strategic AppointmentsEffective Contact Strategy

for Generating Quality, High Value Appointments

Manage Opportunities

Strategic Selling®Comprehensive Strategy for Complex Sales

Strategic Selling® GovernmentComprehensive Strategy for Winning Government Business

Negotiate Success Win-Win Sales Negotiations that Strengthen Customer Relationships

Manage Relationships

Large Account Management Process (LAMP®) StrategicPlanning for Protecting and Growing Key Accounts

Channel Partner ManagementOptimizing Results from Indirect Distribution

7373

People and Organization

Sales Excellence AssessmentFact-driven Sales Management and Coaching Solutions

Predictive Sales Performance Hiring Solutions to Build Outstanding Sales Teams

Support and Enablement

Sales Access ManagerMiller Heiman Sales Process Enablement Through CRM Integration

Web Reinforcement eLearning modules to reinforce Miller Heiman's sales processes and support adoption throughout the selling organization

Management Execution Tools

Funnel ScoreCard®Opportunity Evaluation and Loss Review Process

Sales Benchmarking Benchmark your sales organisation against peers, industries, and top-performing sales organizations.

Strategic Selling® CoachingAdvancing Adoption of the Strategic Selling® Process for sales managers

Conceptual Selling® Coaching Advancing Adoption of the Conceptual Selling® Process for sales managers

Strategic Selling® Funnel ManagementImplementingCustomised Funnel Management

We invite you to learn more about our programs and tools. If you have a particular problem that you'd like to discuss with us please contact Rob Hartnett, [email protected] for a free preliminary consultation or call on 613 9560 1188.

7474

Rob Hartnett

Rob Hartnett is the managing director of Selling Strategies International (SSi) a leading sales performance consultancy.

Starting his working life at age seven in the family automotive business Rob went on to work at Apple Computer where he secured the first single corporate order in excess of a million dollars, Hewlett-Packard, where he won the Asia Pacific High Achiever Award, and award winning advertising agency Publicis Mojo.

Rob is best known today for assisting senior executives, sales professionals and business owners around the world in focusing on their top line sales performance through his speaking, workshops and consulting.

Rob holds a Bachelor of Business and a Post Graduate in Applied Finance & Investment, is a member of the Institute of Management Consultants, Australian Institute of Company Directors and is an Associate of the New York State Speakers Association. Rob is also a Miller Heiman accredited International Sales Consultant.

He is the author of three books, “Fast Times Ahead”, “What Marketing People Know About Sales” and “Small Business, Big Opportunity” which has over 130,000 copies in print. Rob currently appears on Channel 7’s KochiesBusiness Builders as a sales performance specialist.

Contact Information Selling Strategies International In Partnership with Miller Heiman [email protected]@sellingstrategies.com.auPh 61 3 9560 1188 www.sellingstrategies.com.au

7575

Testimonials on Rob Hartnett’s Sales Performance Keynotes & Workshops

“You definitely exceeded your testimonials and background info.!!! Thanks for helping us to make the Conference the great success that it was.” Sales Director - Automotive Industry

"Thanks for your time with the sales team - you were a real hit! I will schedule some future spots for you."Channel Manager – IT&T Industry

“Rob delivered an excellent presentation that meshed perfectly with our brief.Rob took the goals of our workshop and weaved his own personal experiences and wisdom around them to provide a fantastic reinforcement to our more formal sessions.” General Manager - Manufacturing Industry

“Thanks for the training, the feedback afterwards was excellent, and we have agreed to run fortnightly meetings to ensure concepts are embedded.” Sales Director - Healthcare

“Thanks so much for your contribution to our sales conference. Everyone today has made reference to points from your presentation.” National Sales Director – Fashion Industry

"Thank you for the thorough way in which you worked with our sales team. Various team members have mentioned that your efforts are extremely positive and helpful." Managing Director- IT&T Industry

“Rob it has been a real pleasure working with you as finding people who really understand the sales process is very difficult, so to have the chance to work with such a professional as yourself has been rewarding and enlightening.” Global Sales Director – Communications Industry

“I invite Rob Hartnett to speak to my business audience every year. Rob's message is motivating, inspiring and very informative. The feedback from my guests is always brilliant and he is approachable and a pleasure to work with. Managing Director – Events Industry

"Rob, you far exceeded my expectations of a speaker in our Masters Program. The discipline of great preparation and content delivery was explict, and it balanced perfectly with sincere enthusiasm and creating some very funny moments. It was a joy watching the master at his craft."Head Lecturer University Masters Program

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