The Three Causes of Failure

When a salesperson (or anybody for that matter), isn’t performing it’s useful to think about causes not symptoms. There are three root causes as to why somebody isn’t performing:

Category 1 – Knowledge Skills Deficit
The person isn’t effective because they don’t have the skills or knowledge perform to the required level. The most common solution is some kind of training intervention.

Category 2 – Wrong Mind-Set
The person may have the skills, but they don’t demonstrate the right behaviours. Behaviour is under their control; wrong behaviours eg being ‘permanently negative’ is something that they can choose to change. The normal intervention sequence here is coaching, counselling, disciplining, dismissal. Hopefully sorted out in the first coaching/counselling phase! If you’re wondering where attitude comes in, we believe managers should focus on changing behaviours not attitudes which can only be changed by the individual, and even then sometimes with great difficulty.

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Category 3 – Capability
The raw ability to perform the role. No amount of training or coaching support is going to help somebody be successful if they don’t have the basics to begin with. These people need to be given a different role that they can excel in or exited from the sales organisation.

A category mistake occurs when Category 3’s are ‘sent’ (always a clue) on a training course with the phrase, ‘this is your last chance’ ringing in their ears.

An interesting type are 2’s that become 3’s over time. Their mind-set becomes so fixed they become incapable of fulfilling the role. These people are often made allowances for far longer than they should be.

How Do You Define Value?

The concept of value is an endemic factor of business life. Every organisation is selling ‘value’; every purchaser (whether another business or consumer) is looking to buy ‘value’. So what exactly is value?

When helping clients with the development of their customer values propositions (CVPs) we a simple but powerful equation:

Benefits – Costs = Value

Viewing value in this way enables a very clear understanding of why one product represents more value to one customer than another. The benefits, which capture tangible needs and intangible wants, plus concepts like quality, are all the positives associated with the purchase.

The costs, both actual (the total amount of money), and circumstantial (things like time, convenience etc) are subtracted giving a notional values ‘score’.

This explains why a meal for two in a swanky restaurant at £150 can be perceived as good value (because of the way it meets the purchasers needs and cost expectations) and a meal in a high street bar at £25 for two can be perceived as poor value because it didn’t meet the benefit/cost expectation equation.

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An interesting dimension to the value equation that many organisations would do well to consider is what value (to the customer) does their field sales force add? As customers become more savvy purchasers, salespeople need to be much more than communicators of information and clever negotiators; otherwise the value equation can become distorted in the customers mind, seeing salespeople as unnecessarily expensive additions to their purchasing process.

Examine other parts of your offer (the benefits) for their capacity to add-value. The more they do the more the associated costs will seem in proportion to the whole giving you relatively high ‘value score’ compared to your competitors.

This formula is also helpful when applied to job candidates. The more impressive someone credentials, and the cheaper their total employment costs, the higher their value appears. The opposite is also true!

Nine Steps to a Business Growth Engine

Business Law Number One: every commercial business has to grow its top line revenues over time unless it has found the paradise of declining costs year on year.  This is the only way to maintain a profit margin.  Therefore, it should follow that every business has a very clear idea how to grow its top line, surprisingly many don’t.  Many think rising demand for their offer (rising, why?), and putting up prices every year will do the trick (in our supply-led, low-inflation economy this is very difficult to do).  Just putting a budget up every year doesn’t bring in extra sales.

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This type of organisation is easy to identify.  Sales growth in the doldrums; characterised by flat year-on-year comparisons, or miniscule growth increases, or a good year followed by a bad one.  Profits have been supported (as well as possible) by changes to the business model, reductions in the cost base or other remedial activities.  In worse cases, the business relies on its (dwindling) cash pile or other balance sheet ‘tweaks’ to prolong the torture, waiting for the market to pick up.

What Does a Business Growth Competence Look Like? 

A  summary checklist:

1. The first thing is to be clear what your customer values proposition is. What are you selling, and why is it a more compelling offer than competitors? You can then think about……
2. How you choose to compete? On price, value, quality, novelty, service etc.
Important note: The more of these variables you say yes to, and give equal weighting, the less distinctive your offer will be.
3. Make sure your resources are in balance. Can you effectively supply what you are selling? If demand increased by 20%, could the business support it? Don’t ignore working capital requirements as part of this analysis.
4. Have you locked in your current customer base? If new business is simply replacing what’s being lost, you have a very expensive way of operating. You need firstly to retain your customers (define retention parameters) and then penetrate their potential for additional sales (again define the parameters).
5. Next, how to increase demand for your offer? It maybe distinctive, but do enough people know about it? Set targets for new/new business, i.e. new business from new customers.
6. To cover points 4 and 5 build a business pipeline methodology that captures the key ‘trigger points’ that move a potential sale from one phase to the next. Focus sales management activity on optimising the processes within the business pipeline, both for speed and quality of conversion.
7. Makes sure your sales organisation knows how to take business from competitors, deepen customer relationships and identify new opportunities.
8. Focus on the people. It’s a chicken and egg question. Does a well motivated, high morale workforce drive revenue growth or is it the other way round? One thing’s for sure, if you don’t quickly get your people motivated behind the growth strategy it won’t last very long. Look at the organisations bringing services back from India, or heavily reinvesting in their service provision because their growth plans are running out of steam.
9. Makes sure the big stuff is aligned. Your organisational and brand values inform a well understood vision, supported by a clear strategy.

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