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
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in November 2016 and is posted here by their kind permission
Where should business owners fit in to the sale process?
Buyers like dealing directly with the boss, and some large organisations insist on the business owner as their primary contact. When your business was a start-up you may have done all or most of the selling, and still have the sales relationship with customers. The problem is that the owner’s involvement in sales is seldom a defined role and this can create uncertainties and inefficiencies, so it is worthwhile examining just what your role should be.
If you have a very small business or if you have a single large customer you will probably have to be the account manager or salesperson. You may find it difficult to delegate sales responsibilities involving customers you have personally dealt with for years. Then there is the awkward transition period between the owners doing all the selling and having a fully-fledged sales force. The usual first step is to hire one or two salespeople and expecting them to generate new business with as much drive and knowledge as you apply. That is unlikely to happen. Rather approach delegation of sales responsibility and development of a sales force as projects, with appropriate funding, training, systems, measurements and processes in place.
If you must continue in sales attend a course or otherwise educate yourself about sales skills and tactics. That might seem strange when you have been selling successfully for years, but unless you understand solution based selling you will not know what additional business you could be getting. Then get an understudy to shadow you and take over at least the routine work. Free up time to manage the business otherwise you will not grow. Continue reading
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in August 2016 and is posted here by their kind permission
Buyers are scarce and highly selective. How do you get a share of their business?
The business climate has been bad for several years. The mining sector is in decline, manufacturing has been shrinking and consumer spending has reduced. In tight economic times buying patterns change; projects are postponed, companies are reluctant to replace machinery, individuals stop buying nice-to-have things and financial managers slash budgets. Cutbacks like these can affect suppliers seriously, even fatally. Buyers become much more selective when they do buy. They negotiate harder and look for better deals, so competition increases for the little business remaining.
While this is going on you need to keep your sales at a profitable level. It is too risky to plan to break even; the tough times are likely to continue and your costs will increase so you risk making losses. Loss making companies do not survive bad times very well.
How do you maintain or even increase sales? A good starting point is your attitude. In my experience entrepreneurs who focus on how bad things are will often see their fears come true. Those who ignore doom-and-gloom conversations and show determination often succeed in making sales despite the economy. It is also crucial to put the downturn into perspective. The majority of buying continues. All of the savings and deferred expenditure makes up a small portion of all purchases. Even depressed economic sectors, like mining, spend billions of Rand on goods and services. Your challenge is to be a supplier who gets a slice of the buying that still takes place. Continue reading
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in August 2015 and is posted here by their kind permission
Turn your whole company into an enthusiastic unit that aids and promotes your sales
It is in the interests of any employee to do anything they can to ensure the business makes sales, or at least not put sales at risk. Aside from loyalty to their employer, a healthy and growing business means everyone is better off and has improved prospects for promotion. Strangely there are employees, and some managers too, who damage the company through carelessness, incompetence or deliberate obstruction. They are hurting themselves as much as their employer.
Contrast that situation with companies where everyone is customer centric, and frequently attract praise from customers they have been in contact with. There are typically no unresolved complaints on consumer forums, and every employee seems to know why customers should buy.
To build a company like them, some introspection may be a good idea. Do you really deliver goods and services that meet customer expectations, or have customers had to lower their expectations to your standards? Think of the grudge purchases you make, or the times you have been distressed but did not change supplier after a bad experience. You cannot expect your employees to be champions if your company supplies shoddy products, uses untrained technicians and seldom delivers on its promises. Fix the real problems and you will be pleasantly surprised by the change in your staff. Continue reading
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in July 2015 and is posted here by their kind permission
Sensible outcomes from disputes
“The customer is always right” was originally coined in 1909 as a way of differentiating Selfridges Department Store from competitors. It was revolutionary at the time, when misrepresentation by retailers was common and “caveat emptor’ (let the buyer beware) was the usual response to customer complaints.
Customer disputes happen in any business. Unresolved disputes may result in loss of customers or groups of customers, refusal to pay, widespread and often biased bad publicity, loss of repute, legal action, and even damage to property and public protest. Minor disputes can quickly escalate into anger, recriminations, threats and violence. Staff complaints about abusive and unreasonable customers is another source of dispute.
Where does it start?
Customer perceptions of broken promises or products not living up to expectations are at the heart of many disputes. Rude, uncaring or incompetent service from employees is another frequent cause. You may initiate a dispute relating to slow or non-payment, unreasonable or bullying customers or continual changes to requirements but unwillingness to pay for changes.
Arguments will escalate quickly if either party feels they are not being listened to by the other. A simple request can grow to a blazing row when either party ignores the other or scorns their view. Many serious disputes could have been resolved easily if they were attended to sensibly, courteously and early. Continue reading
This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in April 2015 and is posted here by their kind permission
Opportunities and risks of getting the biggest deal ever
What do you do if you get the opportunity of a huge sale, one bigger than anything you have done so far, maybe bigger than your entire business? This is a potential game changer, the opportunity to grow spectacularly. At the same time it is scary. Will you be able to continue to supply regular customers? How will you finance this deal, what will happen if you do not get paid? Can you deliver? The opportunity opens up dreams; all the wished for things you will be able to afford for the business and your family, security for you and your workers…
Best and worst
The best things that can happen are really good. If you make reasonable margins on the huge turnover increase the extra cash can be used to increase competitiveness with additional resources, creative marketing, better buying terms and the best information systems. Once you have executed a large deal successfully, you attract other large deals. Big organisations like to deal with suppliers who other big organisations use, so your business may be at the start of an incredible growth curve.
The worst things that could happen are very bad indeed. Many suppliers have gone insolvent because large customers persisted with unreasonable demands or did not pay. You may not be able to deliver to specification or on time and have penalty or cancellation clauses invoked. If you have personal guarantees to any supplier your lifestyle can be at risk too. Continue reading
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
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.
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
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
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in July 2014 and is posted here by their kind permission
Are you paying enough attention to this profit generator?
The difference between turnover and cost of sales is the starting point of profitability. Entrepreneurs drive their sales aggressively and manage operational costs tightly, but seldom pay as much attention to the crucial issue of margin. This is missing an opportunity to increase profit substantially with a little additional work.
Margin (or gross profit) is the difference between turnover and cost of sales, and it often comes from a simple percentage mark-up on all cost prices. This is a lazy way of setting the amount of gross profit your business will secure, and ultimately the net profit. You can do a lot better than that.
There are at least four opportunities to increase the total gross profit: More sales, higher prices, lower cost of sales and changing the product mix to increase the percentage of high margin products or services sold. Naturally this last one only works if you do not have a one-margin-fits-all lazy margin strategy. A tip to sell more is to increase the average number of items sold per order. Even a tiny percentage increase can make a significant difference to total margin. Look at the example of burger franchises which invite you to add a slice of cheese to the burger. If just 10% of all customers buy that very high margin slice of cheese they make significant extra profit with minimal effort, and it is so simple. What can you do to increase the items per order? Extended warranties, service contracts and training all offer opportunities. Continue reading
This article was written by Ed Hatton, the Start Up Coach for Entrepreneur Magazine (South African edition), as the My Mentor column published in June 2014 and is posted here by their kind permission
Managing a small sales force is challenging
In start-up small businesses the entrepreneur will usually make all the sales. As the business grows a sales team is often recruited. The entrepreneur may retain important customers and may keep responsibility for some product lines.
Some arrangements like this work very well, but if your sales force is underperforming and you still have to bring in the bulk of the income you need to take action. A typical result of this situation is a deteriorating relationship between demotivated salespeople and the frustrated entrepreneur. Do not automatically blame the toxic situation exclusively on the salespeople – your own actions and omissions may be causing the problem.
The right people
Finding the right salespeople is a challenge; you need strong enthusiastic people who see sales as a desirable career, not just a place to earn some money until they get a ‘real job’. Your company probably does not yet have well-known brands or comprehensive sales support, so recruit those who can work in this environment. Ask the right questions. They must enjoy learning on their own, be self-reliant and work hard with little supervision. They must also fit the culture of your company.
You may unconsciously assume that new salespeople share your product knowledge, work ethic, and feelings of being responsible for the business succeeding. You will need to build these characteristics with training, motivation, communication, mentoring and rewards. The investment of even large amounts of money and time in these aspects pays dividends. Continue reading
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
When to sell and when to walk away
You’ve got to know when to hold ’em, Know when to fold ’em, Know when to walk away, And know when to run The Gambler, Kenny Rogers
Kenny Rogers was not referring to selling when he sang those famous words many years ago, but he could well have been. Whether you are an individual salesman, an entrepreneur building your business or an organisation intent on improving profits you should consider the words of the old gambler.
There are certainly sales that you should stick to, even though they do not close easily. There are others where you should realise that you have no realistic chance of success and yet others where the effort to close them is not worth the return you will get. There are definitely sales opportunities you should run from as fast as you can. As the old gambler advised in the song, the difficulty is in knowing which sales opportunity is which. Continue reading
This article was written by Ed Hatton, the Start Up Coach for the South African edition of Entrepreneur magazine, as the My Mentor column published in July 2013 and is posted here by their kind permission
What makes your business the supplier of choice for your customers?
I occasionally ask groups of entrepreneurs why they think their customers buy from them. After an awkward silence some in the group will give answers about product uniqueness, price advantage or better location, or easily copied ones like good quality and better service. At least some entrepreneurs in the group will really not know.
Entrepreneurs who do not know why customers buy take a huge risk of customers drifting away for unknown reasons. The question is even more important for start ups. Anyone who plans to open a business and does not identify clear reasons why customers would buy risks opening a business which will make no sales.
Why customers buy
There is a huge body of research about buyer motivations which is good to study. In my view the most important business differentiators are uniqueness or competitiveness
Uniqueness may mean innovative products or services, but can also be the uniqueness of the business principal. Products like trousers, perfumes, sporting equipment and coffee bars have thrived from being driven by a famous sports or entertainment star. For the average entrepreneur who is not famous or an inventor there are still options to be unique. Businesses which use a unique pricing model will rent when others sell, offer last minute sales at incredible discounts, or develop other pricing innovations. They will not simply sell at lower prices. Continue reading
This article was written by Ed Hatton, the Start Up Coach for the South African edition of Entrepreneur magazine, as the My Mentor column published in June 2013 and is posted here by their kind permission
Entrepreneur optimism in sales forecasting
Entrepreneurs are natural optimists; they have great belief in themselves and their products, they see even ordinary products as being irresistible to potential customers. There is nothing wrong with self-belief; without that we would see few new businesses being launched.
Optimism in sales forecasting is much more serious. There could be disastrous consequences if the venture fails to make unreasonable sales targets.
Before the entrepreneur even thinks about forecasting the sales volume he or she must define the target markets; groups of people or businesses most likely to become customers. These groups must see a good reason to buy from the new venture rather than their existing suppliers, and be able to learn about the goods and be motivated to buy. The entrepreneur must identify the processes to achieve these requirements. Please do not skip these steps. The belief that ‘everyone will want this product and my website will bring enquiries’ has produced many poorer and embittered ex-entrepreneurs. Continue reading