The cost of a bad Sales Rep – it can put a small business out of business. Part 2

In my last post, I listed 5 reasons why sales rep fail in small business.  But here is the #1 reason why most sales reps fail in small businesses: small businesses cannot afford the salaries and comp plans necessary to hire the “great” reps so they are stuck with the “C” players.  It is simple math – in the good ol’ days, six figure sales reps would not work for a company that could not afford six figure comp plans that included high salaries.  So the business was/is forced to hire mediocre sales reps, then they put them into an environment with no real sales management or process and expected them to succeed.  In the good ol’ days, this sometimes worked because of the economy.  Not now -  in today’s economy this strategy can put a company out of business.  How?

• Lost sales:  Every deal is important because the number of leads is down and the competition is fiercer than ever.  Still competing with a minor league team?
• The cost of the sales rep’s salary and benefits and its impact on cashflow:  Small businesses can no longer afford the ramp up time required to get the rep producing.
• Poor customer relations:  Mediocre sales reps usually do a poor job of setting customer expectations during the sales cycle.  They over promise and under deliver because they are desperate to get the sale.  Once this it occurs, it is difficult to reset the expectation without the customer becoming angry and disenchanted.
• Wasted time and energy:  How much time, energy, and money have you wasted listening to the excuses and lies of underperforming sales reps?  “I swear!  It is closing this month!”, “I don’t know what happened!  They said they were going to buy!”, “How was I to know they could not afford it!”  Tired of the excuse yet? 

Whether it is the owner of a small business who does the selling or a team of sales reps, the success, or failure of the company will depend on the sales team.  So what is the solution?  I am about to announce a sales outsorcing program for small businesses.

The rules have changed – have you?

 

The real cost of a bad Sales Rep? It can put a small business out of business. Part 1

One of the most important aspects that will determine the success or failure of a company is the sales team.  In today’s economy, this has never been truer.  Now, you actually have to sell – not just generate a lot of quotes.  Waiting for the phone to ring and giving a price no longer makes the grade.

Unfortunately, ask the owners of most small to medium size businesses what has been one of their most frustrating and expensive problems in growing their business and they will tell you it is the hiring and retaining of good sales people.  This was a problem during the good times prior to the economic meltdown, now it is mission critical.

After years of working with small and medium size businesses, I have concluded that the following are primary reasons for the failure of these sales people:

• Lack of a hiring process.  Hiring somebody because they seemed like a good sales rep during the interview no longer cuts it.  I will let you in on a little secret – sales rep will lie during an interview.  I know, it is hard to believe.
• Poor interview technique:  A good interview is not telling the applicant about your company and then hoping he/she will come work for you.
• Failure to use Behavioral Assessments:  Interviews and reference checks are only part of the hiring process.  You need to understand how the candidate thinks and what motivates them.  Behavioral assessments give you that knowledge.  Again, believe it or not, people will lie during an interview.
• Lack of effective sales management:  Asking a sales rep everyday what they are going to close is not sales management.  Good sales management can overcome a lack of process, but good processes cannot overcome bad sales management.
• Not managing the sale rep(s) to a set of clearly defined set of expectations:
• 30/60/90 day forecasts
• Key Performance Indicators
• Managing to a Quota

In my next post, I write about what I think is the #1 reason why most sales reps fail in small business.  It is probably not what you think…

What does your driving style say about your business style?

The other day I was navigating some irritating traffic and talking on the phone to a friend of mine.  At one point, a driver did something in front of me that I did not appreciate so I honked my horn.  Upon hearing the horn, my friend noted that every time he speaks to me on the phone while I am driving, he hears me honk at somebody.  That led us to a humorous discussion about our offensive driving style.  Our conversation led me to think about how driving styles and leadership style can be a reflection of each other.  For example: 

When driving, do you look only at the car right in front of you or several cars ahead?  I am constantly looking 4-5 cars ahead to see what is happening in front of me.  If an accident occurs, I am more prepared to do something about it.  Are you focused on what is just in front of you or are you on the look-out for the unexpected trouble/opportunity ahead? 

Do you drive in the HOV lane – SLOWER than the flow of traffic?  This drives me nuts.  It is like the person driving says “I have 2+ people in my car so I HAVE to get into the HOV lane”.  Are you being a sheep and just “following” the rules because that is what the sign says? 

When driving in interstate traffic, do you stay in the same lane, regardless of whether the lanes next to you are going faster?  I cannot stay in the same lane.  I am always looking to gain position.  Sometimes it works sometimes it does not.  Are you stuck in the same lane, even if it is not the best lane to advance your company? 

Are you looking up ahead in traffic to see where the gaps in traffic are forming?  I am always trying to anticipate what is going to happen next by observing the traffic patterns around me.  If an opportunity presents itself, I am ready to act.  Are you looking for the next opportunity? 

Do you find yourself competing with traffic to get where you are going a few minutes quicker?  When I am stuck in traffic, I find myself picking a semi-truck way up ahead of me and seeing if I can get ahead of it.  Once I accomplish that goal, I pick another truck.  What is your next goal? 

When coming up to a traffic light, do you look at the cross-walk signal to see how much time you have before the light changes?  Why do this?  It lets me know how much time is left on the green/yellow light because in my world, yellow means speed up.  Unfortunately, red light cameras are starting to cramp my style.  Are you using all the information available to you make split second decisions? 

When driving, are you oblivious to what is happening around you?  It is amazing to me how some people can be so completely out of touch with their surroundings.  Are you oblivious to the business climate around you and just keep doing the same thing over and over again hoping for a different result? 

These are just a few examples.  Do you have any you can share?

 

Corrupt Government Morons

NBC LA has a story about how it is taking the state of California months to process new drivers licences.  The following is a comment to the story posted by a reader named FANTUM.  He nailed it!  You really need to read this!

Corrupt Government Morons:

The U.S. Postal Service was established in 1775. You corrupt morons have had 234 years to get it right and it is broke.

Social Security was established in 1935. You corrupt morons have had 74 years to get it right and it is broke.

Fannie Mae was established in 1938. You corrupt morons have had 71 years to get it right and it is broke.

The War on Poverty started in 1964. You corrupt morons have had 45 years to get it right; $1 trillion of our money is confiscated each year and transferred to “the poor” and they only want more.

Medicare and Medicaid were established in 1965. You corrupt morons have had 44 years to get it right and they are broke.

Freddie Mac was established in 1970. You corrupt morons have had 39 years to get it right and it is broke.

The Department of Energy was created in 1977 to lessen our dependence on foreign oil. It has ballooned to 16,000 employees with a budget of $24 billion a year and we import more oil than ever before. You corrupt morons had 32 years to get it right and it is an abysmal failure.

You corrupt morons have FAILED in every “government service” you have shoved down our throats while overspending our tax dollars.

AND NOW YOU WANT AMERICANS TO BELIEVE YOU CAN BE TRUSTED WITH A GOVERNMENT-RUN HEALTH CARE SYSTEM?

Would you send back the food?

We were out to eat in Athens with the family and the restaurant was having issues.  Understand that I am one of these people who will tell the hostess to seat us at another table if I don’t like the table she gives us.  I will also send the food back if I am not satisfied with the item. 

On this night, 5 of us ordered the Shrimp and Scallop Bisque at $9.00 a pop.  I take one taste of the bisque and said “This is not very good…”  It was bland and tasted fishy.  Salt and pepper did not help so I sent it back and asked the waiter to take it off of the tab.  Everybody else suffered through trying to eat it before giving up.  When the waiter comes back, I ask him to take back all of the bisque.  The waiter apologizes profusely and takes all 5 bisque off of the bill.  Our conversation at the table at this point is should you return food if you are not satisfied or just be quiet.

The entrees arrive and the mashed potatoes and creamed spinach sides are cold.  About that time, the manager walks up and asks if everything is okay.  A chourus of “Fine” comes from our table.  My response was “Honestly?  The potatoes and spinach are cold.”  He apologized profusely and brought us some hot food.  Again, a conversation ensued around the table about should you speak up when things are not up to satisfaction. 

My opinion is that if a restaurant is offering their entrees’ for $20 or more, I am not setting the bar too high by asking that food be palatable and hot.  Is this asking too much???

As a business owner, you had better hope that your customers speak up when something is wrong.  This at least gives you a chance to fix the problem.  Unfortunately, most people do not say anything and just never come back. 

What would you do?  Speak up or say nothing and never go back?

Life on the Hamster Wheel

As we head into the last stretch before Christmas and into the New Year, I decided to go back and look at my newsletter from Jan 5, 2009 to see what was on my mind going into 2009.  Here is the first paragraph… 

Welcome to 2009!  What will the year bring?  Nobody really knows.  The talking head pundits are even having a hard time concealing they are clueless.  The best guess is that the recession will last into 2010.  Focus on the word “guess”. 

The second paragraph was about restaurants going out of business.  Wow, here we are 2 years later and I could use the same newsletter.  Sad commentary.  With the exception of the stock market, we are in much worse shape.  The market on Jan 2, 2009 was at 9,034.69.  As I write this, it is at 11,497.   On January 6, 2006, the market was a 10,959.31.  Up 562 in 5 years.  Hmmm…  Kind of feels like a hamster wheel.  Going in circles and going nowhere fast.

 The market is up but so is just about every other negative economic indicator.  Unemployment, foreclosures, bankruptcies,etc.  We are now in the 3^rd year of this recession.  Now the Obama administration says we have to pass the bill with the extended unemployment benefits and extended tax cuts or we will slip into a double dip recession.  Don’t we have to get out of the recession before we can dip back-into to one?  As I have been saying for some time now, welcome to the new normal.

So what does this mean to a business owner?  You have to be much smarter and better than your competitor.  I was at the Gwinnett Chamber MACE meeting last week and the presenter made a great point:  Selling has moved from “demand fulfillment” to “demand creation”.  This is no longer an “order taking” sales environment.  You must know how to sell – no exceptions.  So what to do?  Get educated and do things differently!  Start with looking at how you sell.

I meet a lot of business owners who are scared and frozen in place, as if waiting for things to get back to the “way it used to be”.   So ask yourself:  are you frozen in place or are you adapting to the new circumstances?

Free 50 minute telephone consultation with purchase of Change or Go Broke!

• Already own a business and looking for answers on how to deal with the new economy?
• Thinking about starting a business?
• Have a boss that needs some help?

Purchase a copy of Change or Go Broke by December 31st and receive a 50 minute telephone consultation with business consultant and National Speaker Kevin Hanville. 

These are the words used to describe Change or Go Broke by fellow business owners and executives: 

“funny…”  “witty…”  “Actually useful…”

“definitely not politically correct…”

“Not boring like other business books…”

“Straight and to the point…”  “Hard hitting…”

“No nonsense…”  “Real…”

I wrote Change or Go Broke to cut through the hype and fads and provide a reality check to running about small business.  I share the lessons I have learned the hard way in my twenty-five plus years as an executive, entrepreneur, and business consultant.  I blast some of the commonly accepted platitudes and priniciples pertaining to entrepreneurship, sales, employees, finance, and leadership.  Besides taking on some of the ‘sacred cows’ of small business, you also get real world strategies and ideas for your business.  Ideas that can actually work.

This is not your typical business book.  This is the right book for business during these challenging times.

I am so confident you will enjoy my book that it comes with a 100% money back guarantee when purchased from our website.  There is one caveat; there is no money back guarantee if you want to return the book because it hurt your feelings.  Fair warning…

The rules have changed, are you still running your business the same way?  If you can’t invest $12.95 and 50 minutes on your business, you are probably already toast…

Click here to purchase Change or Go Broke and receive your 50 minute consultation. 

After you have placed your order, just forward the email order confirmation to bhanville@quadrantgroup.biz to schedule your consultation.

Recession, Depression, and Going John Galt

I scan newspapers and the internet daily trying to learn as much as I can about the economy and where it is headed.  I see reports covering the whole gambit of where our economy is in its recovery (or lack thereof).  In Saturday’s Wall Street (10/09/10) on page B16 was a very interesting comment in a small side bar labeled OVERHEARD.  

In the section, David Rosenberg, Gluskin Scheff’s chief economist, says we are in a depression.  I found the last paragraph very thought provoking.

And for those who question the absence of 1930 style bread lines, Mr. Rosen counters that today, thanks to food stamps and other government assistance program, “the soup and bread lines are in the mail”. 

Before you say this guy is nuts, considers these stories and headlines: 

Food Stamp Recipients at Record 41.8 Million Americans in July, U.S. Says

Here is a quote from the article:  An average of 43.3 million people, more than an eighth of the population, will get food stamps each month in the year that began Oct. 1, according to White House estimates.

http://www.bloomberg.com/news/2010-10-05/food-stamp-recipients-at-record-41-8-million-americans-in-july-u-s-says.html

 One in Six Americans Receives Government Assistance

http://blog.heritage.org/2010/09/07/one-in-six-americans-receives-government-assistance/

 Or how about unemployment benefits being extended to almost 2 years to 99 weeks? 

 These numbers don’t show any indication of going down and my taxes look like they are going to keep going up.  I don’t take any government assistance, I pay for my own food and medical expenses, I pay my mortgage on time, and I don’t have credit card debt.  No bail outs going on here because I am one of the schmucks paying the tab.  At what point do we go John Galt and just say “#^@& it”? 

To quote Harry Truman: “It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.”

Another “rule” that changed…

I was having a discussion with a friend of mine about how his brother’s business failed after 26 years.  The bank called their credit line and he was toast.  He had a “successful” business but he used debt to finance the growth.  At one point, the brother had bragged about having 10+ credit cards maxed out with over a $100k of debt.   

It was at that point I remembered reading numerous stories back around 2005 in magazines like Entrepreneur and INC. extolling the virtues of maxing out your credit cards to start, and run, your business.  “Real” entrepreneurs did it, why not you!  Get out there and be a success!  Lack of money is no excuse, use a credit card you loser!   

I did a Google search and found a blog posting “What it means to be an Entrepreneur.”  The first in the list is:  You’ve maxed out more than $50K in credit cards to fund your business. 

We were all told we should spend “other people’s money” and “leverage” was the key to success.  What happened?  The rules changed and millions were left with unsustainable amounts of debt in a new economy.  Suddenly those credit cards have 25% interest and your revenues have fallen through the floor.  Looks like conventional wisdom was wrong again.   

Seems every decade has a catch phrase or two.  Like in the 80’s with “Where’s the beef?”  The 90’s with “Show me the money!”.  00’s will probably be “WTF?”

Pizza wars – another one bites the dust…

In less than a week, we found out that two of our favorite restaurants have closed. Both single site, mom and pop businesses. Yet if you drive by the Red Lobster and Olive Garden at the Mall of Georgia on a weekend night and there is a line waiting outside for the privilege to eat that crappy food (another example of how marketing works on the masses).

One of the restaurants that closed was our favorite pizza place. It is no wonder that it closed down because of the pizza wars. You can get 3 topping large pizza at Pizza Hut for $10.00 and 2 medium 2 topping pizzas for $5.99 each. The mom and pops cannot compete with this pricing.

This is a good example of how deflation and recessions can work hand in hand. As fewer people eat out, the restaurant chains lower prices to attract fewer customers. Smaller restaurants cannot compete as they cannot afford to pay overhead at these prices. A viscous cycle ensues and all we are left with is the damn chain restaurants. Reminds me of the 1993 movie Demolition Man. The movie takes place in the future and the only restaurants are Taco Bell. Who would have thought that Sylvester Stallone was a prophet? Yo Adrian!