Incentivising sales people
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in October 2016 and is posted here by their kind permission
How do you keep sales people motivated when clients aren’t spending?
Salespeople are by nature risk takers. Their success or failure, and significant parts of their income if they are commission earners, are in their hands. Sales is one of the very few job categories where performance is instantly measurable, and usually linked to rewards and threats. So what happens when outside factors reduce demand? How do you keep them motivated and rewarded when customers reduce spending?
Being fair is important. If you have reduced forecasts because of the economic climate it follows that you are expecting your salespeople to make less sales. By then continuing to incentivize your sales team based on the original quotas you will be condemning at least some of them to reduced income and failure to make target, however hard they sell. You are likely to build resentment and damage motivation which is the last thing you want to do in a reduced market. Consider reducing quotas in proportion to your reduction of forecast, even if that means that some salespeople will earn more for selling less. Listen to their concerns and suggestions, provide training and coaching where it will improve performance. Continue reading
Tenders – timewaster or business generator?
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in September 2014 and is posted here by their kind permission
Should you tender or stay away? Some basic rules
Tenders are used by all levels of government and many companies to buy goods and services and issue contracts. The total value of tender business is enormous, so an immediate reaction is to get involved. There is a downside as many small businesses and start-ups have experienced. It is entirely possible to submit many, many tenders without success. The direct cost of preparing a tender is high, but the opportunity cost of conventional sales you could have made instead is higher.
Me too
I call these ‘me too’ tender submissions, where you have nothing special to offer, and the company never heard of you. Among the bidders will be existing suppliers, those having specialist skills in the area and those bidding the lowest price because they can. Your chances of success are almost zero. Instead of wasting your time, develop a specific niche expertise or technology then tell potential buyers about it. Your chances of winning subsequent tenders increases dramatically. Continue reading
Solution Selling – alive and well?
This was the topic of Ed’s address to the recent series of Sales Summits around the country.
Most companies says they sell solutions to their customers, but they find it surprisingly difficult to explain the solution provided in recent sales; they often describe products sold instead. It is still harder to get answers about the value of the solution provided – what return in money or some other measureable did the customer enjoy as an outcome of the sale? And yet this is the very definition of a solution “A mutually agreed answer to a recognised problem, which provides a measurable improvement”. You might want to reflect on this and ask yourself – do we really sell solutions?
The formal methodology of Solution Selling goes way back to the 1980’s when a visionary ex Xerox sales training director Mike Bosworth launched a company to train salespeople in his methodology. He published a book in 1993 outlining his ideas, which revolutionised the basis of selling, converting technique and technology based feature / benefit selling to and more consultative customer and solution orientated approach. Arguably this was the foundation of all modern customer centric selling. Continue reading
Word of Mouth
The importance of getting people talking about your company
This article was published as the Sanlam Business Tips for Business Owners December 2014 edition. This publication is a great resource for entrepreneurs, well worth subscribing.
People telling others about their positive experiences with your company sends a far more powerful marketing message than any advertisement. Word of mouth is credible, personal and admiring. The best advertising cannot match that. Word of mouth is also free, so it is a great marketing medium and deserves more attention that it normally gets.
You cannot simply ask people to talk about your company. Larger organisations use ‘brand ambassadors’ to promote their products. The audience knows the brand ambassador is being paid to promote the products, so the message lacks credibility, it is not true word of mouth. Few of us will tell others about a reasonably good experience with a supplier, unless we are asked for a recommendation. How then can your company use this valuable marketing tool?
Good example
The best example I know comes from many years ago when I routinely bought lunch at a deli called The Shop Around the Corner in downtown Johannesburg. Their pizza slices came from large round pizzas, roughly cut into segments, and every time I bought one the counter hand would carefully select the biggest one on the tray for me. That felt great! I soon realised that every customer got the biggest available slice. When the slices ran low a fresh pizza was cut and the slices added; the process of serving the biggest slice first continued. I talked to many people about how wonderful their service was and I am sure many others did too I am still talking about it almost thirty years later. Total cost of this exercise – one pizza slice each lunchtime. The Shop Around the Corner is still there, through all the changes in central Johannesburg, under the same ownership. With that great customer service, good food and smart marketing I am not surprised. Learn from them. Continue reading
Don’t slow down
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in November 2014 and is posted here by their kind permission
November and December offer many opportunities for alert entrepreneurs
You will all have experienced it – the dreaded November slowdown, with many anticipating the year-end holidays before South Africa shuts down sometime in December. Entrepreneurs complain that it is impossible to sell at this time of the year. Many can’t wait for the start of the holidays.
How much are you contributing to this business slowdown? Are you demotivated by decisions being deferred to next year? Have you gone into pre-holiday slowdown mode, and repeated that this is an impossible time of year for marketing or sales? If you have then you are part of the problem, and this is a self-inflicted limitation on doing business.
Can you really afford to have one quarter of the year, from the beginning on November to the end of January as a time of minimal sales? Is it really true that nobody buys at this time of the year? The truth is there is an enormous volume of business available at this time, but it will not come to you if you ignore the opportunity.
Opportunities
There is an old saying that “everything comes to him (or her) who hustles while they wait”. Many successful entrepreneurs have had great successes during the slowdown by catching competitors napping in preparation for the holiday, or being the only bidder for profitable business. Tenders are published now to limit the number of bidders – really awake entrepreneurs take advantage. To get a slice of the millions spent in the next couple of months you must be alert, work hard and look for opportunities. You should also plan and execute an assertive sales campaign. Continue reading
Selling to big business
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in October 2014 and is posted here by their kind permission
Sales to huge organisations can be wonderful, but there are risks
Making a breakthrough into a giant corporate or a part of government is like finding the pot of gold for many entrepreneurs. If you have secured a contract rather than a single sale the excitement is even greater; the long-term profit generated allows the business to fund growth and regulates the cash flow. Beware though, this kind of business comes with some risks, and entrepreneurs should be aware that such contracts have destroyed businesses, and cost entrepreneurs everything they owned.
Making the sale
Large organisations, from government departments to mines are required to buy from small businesses, especially black empowered ones. We expect them to seek out entrepreneurial companies as suppliers, but it does not work that way. Little businesses have to fight hard to become suppliers. Large organisations are driven by budgets and the key performance objectives (KPIs) of the business unit which needs the product or service, so they will buy the products that fit the specification they prepared to suit those needs. This may not be the best product offered to them. Giants are risk averse and bureaucratic.
To win their trust you need to be aware of their style and needs and prepare your company and products to meet those. Pitch your sale in a way that will help the end users to do their job better. If there is ever a case of selling to the customer needs then this is it – you want to stand out from competitors and show why your company should become the supplier. Once you make the sale you must execute flawlessly all the time, and be instantly available to them at all hours. Continue reading
Tenders – timewaster or business generator?
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in September 2014 and is posted here by their kind permission
Should you tender or stay away? Some basic rules
Tenders are used by all levels of government and many companies to buy goods and services and issue contracts. The total value of tender business is enormous, so an immediate reaction is to get involved. There is a downside as many small businesses and start-ups have experienced. It is entirely possible to submit many, many tenders without success. The direct cost of preparing a tender is high, but the opportunity cost of conventional sales you could have made instead is higher.
Me too
I call these ‘me too’ tender submissions, where you have nothing special to offer, and the company never heard of you. Among the bidders will be existing suppliers, those having specialist skills in the area and those bidding the lowest price because they can. Your chances of success are almost zero. Instead of wasting your time, develop a specific niche expertise or technology then tell potential buyers about it. Your chances of winning subsequent tenders increases dramatically.
Before you even get to tender stage you may have to register as a potential supplier. Government departments, municipalities and corporates frequently publish invitations for suppliers to list their companies in particular categories. If you have a highly competitive attribute or niche and are listed you may become one of a handful, or the only company invited to bid when the company needs your speciality. Continue reading
Competitive strategy
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in August 2014 and is posted here by their kind permission
Is this only for the big corporates?
Large IT companies spend millions on market research to see how they stack up against their competitors and use this information to figure out how to be different and better than them. Automotive manufacturers and importers watch every move competitors make, being first-to-market with a new fashion trend can mean the difference between a clothing brand outselling its competitors or disappearing. Even cities position themselves against other cities to attract tourists and businesses. Why should competitive strategy, a vital part of marketing strategy only be relevant to very large organisations? Why not your business?
Being competitive is a core requirement for all businesses irrespective of size. Not-for-profit organisations like charities, schools and religious organisations compete for funds, members and media attention. Very small business and start-ups must wrench business away from competitors or alternatives just to survive. Without a compelling message about what advantages they offer over others many of these organisations will fail as consumers take the easy route of buying the most popular, the most accessible or the most familiar.
Competitive
More than 30 years ago Michael Porter defined competitive strategy as “The plan for how a firm will compete, formulated after evaluating how its strengths and weaknesses compare to those of its competitors”. This plan should be focused on getting a sustainable advantage over competitors so it is much more than simply reducing price or having a special offer. Continue reading
Marketing on a tiny budget
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in November 2013 and is posted here by their kind permission
You have to tell potential customers what you offer – even with no money
It is almost a caricature. A new business is launched. The entrepreneur has used all the available funds to perfect products. There is no marketing and consequently no customers and all the technologically wonderful products remain unsold. The world does not beat a path to the door of the person who has the better mousetrap; it continues to buy whatever it has done in the past.
The message is clear – you have to tell people who could buy from you that you exist and why they should consider you. You can do this with little or no money for marketing promotions, but there are some rules.
The first one is to realise that with limited funds you needs to reach the people likely to buy from you as efficiently as possible; you cannot afford to market to people who will never be your customers. It is amazing that this simple piece of logic is so often ignored. Identify who your most likely customers are, and then to figure out the best way to get a marketing message to them with as little wastage as possible.
The right media
Another rule is that you have to use the right media. It does not make sense to advertise wedding dresses by flyers in business post boxes. Instead you must be on the internet – unless you can afford to be at bridal exhibitions or to advertise in specialist magazines. Find out which information sources are used by your target market and then use the most cost effective ones. A useful cost saver is to form an alliance with a non-competitive supplier to the target market. The allies agree to share exhibition or other marketing costs, but they also introduce each other to their customers.
Barter is an ancient and honourable way of saving cost – you print my brochure and I will plan your conference for example. Community service by you and your staff can attract the attention and goodwill of community minded businesses and individuals and it is free. Continue reading
Start-up sales
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in September 2013 and is posted here by their kind permission
Early sales are vital for start-ups, early bad sales are dangerous
When you open the doors of a new business your immediate thoughts are likely to be about income producing sales. If it is a retail business you will be watching anxiously for the first people to enter the store, restaurant, hairdresser or filling station. If you sell business to business (B2B) you must build new prospects to develop early sales. Expenses mount up, and insufficient sales income means your business could run out of cash and be forced to close before it really got started. Making early sales is that important.
Low hanging fruit
Everyone has heard about ‘low hanging fruit’ and you, the new entrepreneur, should look for those sales which you can most readily close. ‘Low hanging fruit’ is usually understood to mean potential customers which are easy to start selling to, but there is a problem in trying to sell to anybody who will listen. If the prospect is obvious to you it is also obvious to competitors, and they are more established, have customer references and will be more assured than you. They will also be eager to shut out a new competitor.
To really be ‘low hanging fruit’ the prospects should be those which your new business can easily close. This means retail customers who buy rather than browse, and a high ‘strike rate’ – the ratio between sales cycles begun and closed – in B2B organisations. Continue reading
The subject expert entrepreneur
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in April 2013 and is posted here by their kind permission.
You have the expertise but where are the customers?
Challenge
This entrepreneur had 26 years experience in the security industry when he started his own security company. For several years he has been unable to secure guarding contracts, and asks for help
Response
Every start up entrepreneur believes that a sustainable and profitable enterprise can be built and this belief is reinforced by expertise in the product or service that the company will deliver. An expert in the chosen field has big advantages; he or she does not need to climb the product learning curve that affects so many start-up entrepreneurs. However as our questioner has discovered to his cost, expertise in the chosen field alone does not guarantee success.
A successful business must provide customers with services which they perceive to be more desirable and valuable than the services available from competitors. This perception is not just about the product or service; it covers the supplying company, people, styles, and brand association – the whole package on offer. The challenge for start up entrepreneurs is to create a business that provides the package which will attract customers away from alternatives – and then communicate the package to them. Continue reading
What do they want to hear?
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in March 2013 and is posted here by their kind permission.
The subject must be important to potential buyers
Challenge
This entrepreneur was the victim of a horrific motor vehicle accident that left him brain damaged. He has beaten the odds and gained several tertiary qualifications. He asks how he can turn his inspiring story, as well as information about brain injuries into a career as a speaker.
Response
This entrepreneur is very passionate and knowledgeable about his subject and has researched the high prevalence and management of brain injuries. He believes everyone should be aware of this information. He also has an inspiring story to tell, of overcoming huge obstacles on his way to his qualifications. His problem is getting paid speaking assignments.
Many entrepreneurs have products and services in which they believe passionately, and think potential customers should share their enthusiasm, but consumers at every level have the choice of more products and services than they could ever buy. They select those which are important, which may not be the services the entrepreneur believes in so passionately. So they do not come asking for the entrepreneur’s services and that can leave the him bewildered and frustrated. Continue reading
Starting alone
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in September 2012 and is posted here by their kind permission.
Leaving the security of the corporate world to start your own business requires more thought than expected
Challenge
A prospective entrepreneur asks how he can make the transition of leaving full time employment in the corporate world to make a career as an independent IT consultant. He does not have enough funds to cover expenses in the early months.
Response
The entrepreneur must have a very clear idea in his or her mind why they want to take this step. Some of the right reasons are a desire to make much more money, to build something lasting, to taste business ownership or to enjoy creativity which is stifled in the corporate world. Wrong reasons include an inability to get on with the boss, grievances about underpayment or a desire to work less. If these or similar thoughts are the reasons for going alone it may be better to change attitude, or change jobs.
Staying alive
A crucial part of the transition from the corporate world into self employment is having or generating the funds to pay for essentials in the early months. This means either having an income stream or having access to money from savings or borrowings. In either case it is wise for the entrepreneur to have a lean, low cost lifestyle, and cut out any extra expenses. Pay off debt, close accounts and trade in the high cost vehicle, but do not cut to the point where there will be pressure from the family to return to the corporate world.
The best strategy is to make these changes well before the start up is launched, and save the excess so that a reserve is available when there is no corporate salary. At the same time initial customers can be developed and serviced out of business hours. Do not take a loan to support living costs. Continue reading
Marketing in the digital world
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in May 2012 and is posted here by their kind permission.
Getting a response from initial e-mails is a challenge
Challenge
This entrepreneur started a company to market advertising for digital publications and mobiles. Like most start-ups he has a challenge in making initial sales, and he has identified a weakness in his initial e-mails to generate interest. For instance his e-mails promoting a new product for organisations sending electronic statements has produced no response. He asks what he should include in the e-mail.
Response
This entrepreneur actually faces two challenges: He needs to attract attention from potential customers who do not know his business or his products. To do this he has tried using e-mail as an inexpensive way to communicate his offer, but has been unsuccessful. His second challenge is that he is promoting advertising in the digital world, so his digital communications have to be arresting and effective, he cannot use traditional media to market his products.
E-mail is incredibly efficient at sending messages but this has brought about the major problems of e-mail overload and spam. As a result defences against unwanted mail have been built. Many of this entrepreneur’s e-mails will never be read, victims of spam filters or the delete button. If they are read, it will be a quick scan, so messages which don’t immediately attract attention will be ignored. Continue reading
Penetrating the market
This article was written by Ed Hatton for the column the Start up Coach and published by the South African edition of Entrepreneur magazine in April 2012 and is posted here by their kind permission.
Start ups in small towns need excellent marketing strategies
Challenge
This entrepreneur plans to start an event business that will offer wedding and party planning and a catering service offering African gourmet meals with a twist. He requests advice on marketing and penetrating the limited market in his small town. As an unknown young black entrepreneur he has concerns about succeeding in marketing to a predominantly white and older community.
Response
The first step is market and competition evaluation, to determine if there is enough market, and whether his business could win against established competitors. If either of these are negative then the entrepreneur needs to answer totally different questions.
Assuming this has been done and the market is available, then there is a mix of good and scary news. The good is that he is thinking of how to be different. The idea of gourmet African meals is exactly the sort of unique selling proposition that great businesses are made of. The scary part is that any market is really hard to penetrate. What is usually in the target’s mind on first approach is something like:
- I don’t know you, I don’t know your business and I don’t know why I should talk to you;
- I have never heard of your products, and I am not sure why they should interest me;
- I have existing suppliers and I am generally happy with them;
- Now what was it you wanted to sell me? Continue reading
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