Tim Sandford's blog

Telephone based lead generation does not work!

This will not come as much of a surprise to most companies that have ever used or thought of using telemarketing as a source of decent qualified sales leads.

There are a number of reasons for the ever diminishing returns that telemarketing based lead generation  delivers to most business to business orientated companies, but the really big ones are pretty obvious to most of us;

• The Corporate Telephone Preference Service that enables companies to remove themselves permanently from telephone cold calling lists and targeting is making the telemarketers potential market smaller and smaller by the month – varying estimates suggest between 15 and 20 percent of UK businesses are now CTPS registered.

• Fewer business decision makers will take cold calls – if you don’t, why would you expect your target market to?

• In many cases the people doing the cold calling do not have the experience or knowledge required to be credible with their target audience. Put bluntly asking the average 18 to 25 years old to have a conversation about accountancy systems with the CFO of a multi-million pound business is unlikely to have the desired impact.

• The propositions developed by telemarketers for use on the phone are frequently naive and lack any compelling argument that would lead to a business decision maker wanting to do anything other than hang up the phone.

• Most telemarketers have aggressive targets and are as a result very pushy which makes it easier to not take the call in the first place than subsequently try and politely get rid of them.

As a final point, in many cases we also found that databases were being poorly utilised with little or no planning being put into the ongoing development of the data or the way that it is used to develop relationships with potential customers that could lead to something in the future. This is a highly wasteful practice.

We’ve spoken to, worked with and been exposed to a large number of companies (over 100) in the last three years. The majority of them have at some point tried telephone based lead generation campaigns and none of them believe that traditional telemarketing works as a method of generating leads.

As always there are exceptions which I put into a matrix last year to help companies decide whether or not telemarketing is right for them. There is however a big fat caveat. In isolation or backed up only with a bit of something simple like e-mail, telemarketing does not work for all the reasons listed above.

Telemarketing matrix

As you can see from the matrix, there are areas at the lower end of the market, where the value of the transactions is such that telemarketing, e-commerce and so forth are the only really cost effective approaches. While up at the high end with infrequent, high cost purchases telemarketing is so ineffective on its own that it is frankly a complete waste of time and money.

Having now slammed telephone based lead generation and telemarketing in business to business marketing, when used in isolation, I will assert that it is an essential part of the marketing mix. However I am going to leave that for next week.

The Parties have missed the market

At Market Transformations, we are very focused on helping our customers have a really clear understanding of their markets as the foundation for everything that they do in product development, marketing and sales. If they don’t have that, the market is highly unlikely to have any interest and even less likely to take action. There cannot be a more timely British example than the three main political parties.

If you follow me on Twitter you might have noticed my statement the other day that only 1.3 percent of the population of the UK are members of political parties. This is an incredibly small number in comparison to other countries like the USA, where membership and active affiliation covers over half the population. So what is the point of my article and what has political party membership got to do with marketing?

In a nutshell, the electorate are the market and no matter how you look at it, the electorate at this point have never been more disconnected from the main political parties. We all suspect that there are huge cuts to come and some unpleasant taxation rises. What is more, most of us apparently want to know how big the cuts are likely to be and where. Yet even when pressed by members of the electorate and the professional pundits, none of the parties seem willing or even able to answer the difficult questions. This is just one of many examples of the current disconnect that appears to cover every aspect of modern life and society - we want the truth, they don't seem to want to provide it.

The parties claim to represent us, they claim to be in touch, they claim to have our best interests at heart and they claim that if we vote for them we will be contributing to a better Britain. Yet among the voting public there is a greater level of cynicism about politics than ever before. There is a stronger feeling of outrage at the current state of political behaviour than ever before.

If the political parties were businesses trying to sell products and services to the market, they would all be failing both to sell and survive as businesses. The problem appears very simply to be that they have failed entirely to understand their market and what the market wants and needs from them as organisations and their products (manifestos).

This is the single biggest mistake that companies make as well. They build their products, their businesses and their business models on unproven assumptions, intuition and often little or no real market research. The result is usually a business and products that fail to have any traction in the market and attract few if any customers. I(n 2008 insolvency practitioners listed lack of market research and knowledge as the single biggest reason for company failure.)

The only effective way to know if you are going to succeed in the market is to engage directly with it and build up an accurate, real picture of the market through a thorough and detailed process of research and verification. Every time we do a market verification for a customer, the result is a better market position, more sales leads and more sales.

So going back to the political parties. Ipsos Mori statistics indicate that this election will have a turnout of just around 50 percent, representing a drop of ten percent of more since the last election. This suggests that the parties are not connecting with half the electorate at any level which from a pure marketing perspective indicates pretty much that the parties products (manifestos and policies) are not what we want.

I remember when Tony Blair came into power in 1997 and whether or not you supported him , there was a tangible feeling or excitement and renewal in the air when he walked into number 10. New Labour proved that a party can connect and can get the electorate to vote for a change. So what has happened this time round?

Prove it

I was watching the big debate this evening between the three prime ministerial candidates and it struck me that this was like watching three desperate sales men pitching for the deal of their lives. We heard promises, we heard pleas, we heard reasoning, we heard accusations, but the one thing we never heard was proof.

The central pillar that modern sales and marketing is built around is proof. Without it your proposition is just noise in the marketplace. Proof is the undeniable truth that enables you to show that your product does what you say it does.

In business to business sales and marketing, proof is ideally couched in terms of making more money or saving more money for a company. There are a number of tools that vendors can use to prove it, but the one that stands out head and shoulders above the rest is case studies. Developed correctly and used when they have the greatest impact our experience shows that case studies will tip the balance in a sale.

The basic formula is simple and provides a quick and easy way for potential buyers to see what your products and services could do for them by reading about what they have done for your other customers. The structure we recommend and have used with great success for customers is incredibly simple and is ideally not more than one A4 page long;

Problem – describe the problem your customer had in business terms

Solution – describe how your product solved the problem

Payback – describe the benefits the customer enjoyed (Remember make money/save money)

In simple terms what this does is, credibly prove that you have customers that use your products and their businesses have benefitted financially by using your product.

There are naturally nuances, exceptions, and variations on the core theme that are appropriate for different circumstances, but at the core, the Problem, Solution, Payback model is the best one we have used. If you want to read more about this essential sales and marketing tool, visit http://www.markettransformations.com/what_we_do/case_studies_guide.

I said earlier that a case study should ideally fit on one side of A4. There is a reason for this. It is very easy to wax lyrical, but your audience only want to know the essential facts that will inform them. It goes back to Cut the crap and get to the point. Your job in our experience is to get the key points across as simply and clearly as possible and that will mean brevity or you’ll lose your audience’s interest.

As a final note and reverting back to last week’s article about outcomes, remember to include the outcome because that is what your customers buy, your product or service is just the enabler.

Businesses don't buy your products and services, even if they do

Outcomes. This is one of the hardest things for a lot of sales and marketing people to get let alone the rest of the universe, but the truth is your market doesn’t buy your product or service, it buys the outcome your product or service provides them. For example when you have a headache and you go and buy painkillers, you aren’t buying painkillers, you are buying the outcome, namely no more headache.

This all sounds extremely simple and for something like a headache pill it is simple, but for more complex products especially in business to business sales and marketing this is actually very complex.

Let’s just examine a fairly typical example of the problem, for example CRM software. CRM software is usually very complex and packed with features and benefits that help organisations manage their customer relationships. Most CRM vendors still talk about features as if they are important with big brassy statements like;

• Comprehensive, industry-specific sales force automation capabilities.

• Unify your sales, marketing and customer care functions

This all sounds very exciting and these are propositions currently being used by a couple of global CRM vendors. What they do not do however is provide any explanation of the outcome that these systems provide, even though that is what businesses buy. All they do is make a bland statements that score high in buzz word bingo.

Having worked with CRM vendors over the last few years and been involved in implementing CRM, I can tell you first hand that the kind of outcomes that most businesses want from CRM systems include;

• An average X percentage improvement in the volume and value of sales as a direct result of implementing a company wide sales management process through the CRM system.

• An average X percentage higher volumes of sales leads being generated and converted to sales because the CRM system provides an end to end sales and marketing platform.

• An average X percent profit per customer increase after the CRM system helped companies to offer better service to their service

Those are outcomes. Those are the things that companies buy, not woolly claims about the functionality of their products.

There are usually only two reasons that a company will buy when you boil it all the way back down and they are both financial – to make money or to save money, both of which add to the profit of a business. So the outcomes that company buyers want are closely linked to the profit motive.

This means that in the main, the outcomes your product provides have to be directly linked to the profit motive in order to stand any real chance of being bought. A word of warning though, your claim has to be backed up with real proof or you will lose your credibility, but we’ll come to proof next week.

Why would you take a sword to a gunfight?

I was going to cover value and outcomes this week, but a couple of discussions I had with people in the last week made me think there was a more appropriate article to be written. So I’ll cover outcomes next week.

In the last twenty five years pretty much everything has changed and evolved in business, except sales and marketing, which has changed almost not at all. Sure the Internet has come along and there are people doing some interesting  and exciting stuff in there, but the basic practices of sales and marketing professionals haven’t changed. Some might say that this should be the case. However lots of others, including me think that not adapting to the changes in the market would be the equivalent of taking a sword to a gunfight.

Markets are radically different from 1985 and buying behaviour is so far away from the eighties that it isn’t comparable. The table below kind of tells it all pretty neatly I hope.

Quite a lot of change

As the table shows, the number of marketing channels has doubled, the number of buying channels adopted in the market has almost doubled, competition is in many cases global and professional procurement processes are in use in even quite small businesses now. All of this means that if your sales and marketing people are still doing what they have always done, they are in reality taking swords to gunfights?

In the UK we do not view sales and marketing as true professions or business disciplines, for lots of reasons, but the important point to note is that in 25 years, there has been little or no real development in the general understanding of;

• What the market wants from your sales and marketing  - The market is the major stakeholder

• What your market is actually buying from you – it almost certainly isn’t what you’re selling
• How to bind sales and marketing into your market effectively
• How to manage yours sales and marketing effectively
• What kind of sales and marketing processes work best for you and your market

 

The big truth here is that sales and marketing is just a group of business processes designed to achieve a specific business objective, the same way as manufacturing is a set of processes.

 

In truth this isn’t really that difficult, but it does require a really good understanding of your market and most importantly it requires the right people in your sales and marketing team. Traditionally this is where it all falls down – people.

 

Research indicates that less than 15 percent of sales and marketing professionals have either the personality traits or the skills required to do their job effectively. So how can they help you take your business forward? This is one of the main reasons why sales and marketing in the UK has failed to move forward in the last 25 years. Our experience and that of others backs this up completely.

 

The other reason is process. Most sales people go to a training course on the products they are going  to sell, some highly inappropriate high pressure selling techniques, get told how much money they can make if they hit target and then they got dumped into the market with little or no support. Unsurprisingly they usually fail. They then repeat the process at their next sales job and so on. The training and support for marketing people is even more scant. This is the second and probably biggest reason that UK sales and marketing practices are still stuck in the 1980s - inappropriate and out of date sales and marketing models and processes.

 

A lot of what we do for companies is implement, modern sales processes and practices and we know that it has a significant impact. I am happy to share some of our experiences here so just drop me a line if there is something specific you would like to know. This is a huge topic and I have just done the headlines.

 

So I have over used my allocation of words for the week, but I hope this has made a few of you think about sales and marketing a little differently. So put down your sword, pick up a gun and even the odds.

The earlier the better

Following on from last week’s blog, I want to talk about when sales takes over and turns a lead into a sale. But first let’s finish off Marketing’s role in the whole process.

For a while Marketing has been working on the target, building up your relevance, reputation and relationship. The target is now beginning to think that perhaps it’s time to consider buying that wonderful product you have been showing them will benefit their business for a while now. Marketing finally get to arrange a meeting for one of your sales people to visit and discuss how your product will help the target’s business.

Under the sales norm, what would happen is that the sales person would go to the meeting and tell the target how wonderful your product is and how much it will help their business. That is after all what most sales people do and it is also why they don’t make target.

In the modern sales world, the sales person will realise that while there might be a deal, the truth is that he or she knows little or nothing about the target’s business, what the driver is that created the opportunity in the first place, what is involved in the decision making process, etc, etc. So the sensible sales person attends the meeting and spends most of it listening and questioning so that he or she has a much better understanding of what the target’s requirement is.

To give you an example, we ran a seminar with the Royal Bank of Scotland last week all about why companies large and small fail to makes sales to big corporate organisations. The bank in question talked about this from their perspective, but having worked with other corporates, RBS is no different in most respects. The attendees spent the hour or so of the presentations writing down copious notes covering all the challenges, regulations and other difficulties that corporations put in the way of doing business with them. During the questions the focus was on how negative the presentations were and that everything was skewed against SMEs, which it wasn't. It all simply went to prove that none or very few of the attendees had listened to the real messages, because the bank told them exactly what to do in order to do business with the bank regardless of whether you are the biggest company in the world, or the smallest. The RBS team were brilliant and we can’t thank them enough.

So why is that a good example? Simple it is the listening part of selling that wins deals, not the telling part. Potential customers have nothing to gain by hiding things from potential vendors, other than the price they are prepared to pay. They will tell your sales people everything they need to know to specify the right product, how to pitch it and all the other things required to clinch the deal. All your sales people have to do is listen.

Back to the main point of the blog. Your sales person is in at the very beginning of the buying cycle and it is unlikely there will be a deal for a little while. However there is the opportunity to create a position such that you are the preferred supplier throughout the buying process, making it very difficult for competitors to take the deal away from you. To develop a position as ‘preferred supplier’, your sales people need to listen and listen and question and listen and understand. Then they need to bring their understanding and knowledge back and work out what to propose.

In the world of standard products this is pretty easy because yours either fits or it doesn’t. If on the other hand you provide solutions then it is more complex, but amazingly if your sales folk are listening they will know exactly what it is that the target wants to buy. This will also include the outcome that your product has to deliver to the target’s business – but I’ll cover that next week.

Assuming you have had a listening sales person in an opportunity and you have achieved ‘preferred supplier’ status, by the time your competitors get involved because they likely will, the chances of you losing the deal are very slim. So how do you recognise whether or not you are getting in early or too late in deals;

• Are your sales peoples’ pipelines always getting filled up with last minute deals with ‘days’ to go before the decision is made and winning very few of them?

• Deals arrive in the pipeline and move slowly but you win more than your fair share?

Just like last week, the truth will lie somewhere in between the two, but if you are suffering from too much of the first then your marketing isn’t working and your sales people aren’t getting the chance to win or are maybe just doing too much telling and not enough listening. If you have a lot of the second, sit back, relax and think about that next holiday.

Joking aside, this is a short article covering the most challenging aspect of business growth this decade when sales is likely to be the only viable method of growth for many companies. I have barely scratched the surface and there is a huge amount to talk about, so if you have a particular question, just ask we'll be happy to try and answer it for you.

Selling versus Buying

This is the biggest problem in sales and marketing by far. There has been a historic view in many circles that ‘buyers’ can be forced or coerced into a 'sales' cycle by a clever sales person armed with a range of persuasive sales tools and collateral. After close to 25 years in sales and marketing as an individual I can now confirm that this approach works so rarely that it has to be considered abnormal rather than normal. So big truth number one of professional sales is – You can only sell to someone who is in the market to buy.

The reality of life in sales and marketing is this. When a potential customer starts to enter a buying cycle, they can be actively sold to. If a potential customer is not in a buying cycle the only thing the sales person will do it they actively try and sell is annoy the buyer and turn them off.

This is an exceptionally hard lesson for a lot of companies to learn and one that too many have yet to learn. The trick that genuinely successful sales and marketing orientated companies know is that to be successful their products and services have to be in the mind of their potential customers at all times so that when a company does enter a buying cycle they will be included as a potential supplier.  

This is pretty key and just about perfectly describes how sales and marketing should work together. The job of marketing is to build up three things with your target market;

• Reputation – By demonstrating and proving that you are experts in your field and that your customers gain real benefit from your products and services.

• Relevance – Showing that your products and services are relevant and can help their businesses

• Relationship – building up a relationship with your market, preferably each target organisation through all the relevant channels available

Unsurprisingly we call this the 3Rs of marketing©. This is a key element of the Market Conversation™ that I wrote about in a previous blog. However the point is that when a potential customer is not in a buying cycle, the job of marketing is to keep you in touch with and build up the 3Rs with the target so that when the target begins to enter their buying cycle, they get in touch to find out more about your products and services.

At that point, Sales takes over and does its thing to win the business. (I’ll cover that part of it in my next blog)

If you think I am talking out a hole in my hat, here are two things to look at which will tell you whether or not your sales people are trying to sell to customers that aren’t ready to buy;

• Your sales people have opportunities in their pipeline that stay there for many months without going anywhere and then close either won or lost after a flurry of last minute activity.

• Your sales pipeline never has an opportunity that is older than 3 months and every target is actively progressing towards a close.

In reality there is usually a mixture, but if your sales pipeline looks more like the first bullet, then your sales people are doing more marketing than selling. In which case they are not doing enough of what you need them to, which is working on customers in a buying cycle and moving them towards buying from you.

If you are lucky enough to have the latter type of pipeline, then you quite probably have a formal lead generation programme in place that feeds your sales people with a flow of sensible leads to work on.

I hope this article is useful, but the real key is to understand that selling is only ever really effective when a potential customer is entering their buying cycle. Up to that point marketing is the most effective and productive approach to building your market’s awareness of your product with a tight focus on the 3Rs and ensuring they are being developed all the time with individual target companies and organisations.

Cut the crap and get to the point

We’ve been working through a couple of propositions recently with customers and there is one thing that we just can’t reinforce enough and it’s this; Cut the crap and get to the point.

We call it the sixty second pitch, some call the elevator pitch but the point is the same, in a minute or less you have to be able to clearly and succinctly describe:

• What your company does
• Who it does it for
• The problem your products solve
• How
• The outcome your products deliver preferably in monetary terms

The problem is that far too few companies understand this. I met one CEO a few years back who took 45 minutes to tell me what his company does. I worked with a marketing manager in the past who thought that a really tight sales letter ran to three pages. There are more but I hope the point comes across that by time the pitch has finished, the recipient has died of boredom.

In a world where the average human being is bombarded daily with over 500 sales messages (some people think it’s as high as 3000 messages), how do you stand out? How does your message get through and strike a chord?

We did some research last year into buyer attitudes towards marketing. Over 70 percent of the respondents, all of whom were senior decision makers or directors, stated quite clearly that they expect vendors to keep their sales and marketing messages tight and to the point. In particular they want to know:

• What your company does
• What it will do for them
• The problem they have that you solve
• How
• And how much this will either make them money or save them money

But they want to know this quickly. So if you have a PowerPoint presentation with 10 slides of company history and background, or your mail shots are more than a page long (even that is too long) then chuck them in the bin, cut the crap and get to the point.

The duality of product development

You know those moments when you think, Wow that is still the most important thing in my world? I had one last night. I was working with some business owners on the idea of ‘product’ and how to get the right one in the market so that people buy it, which is pretty much the point of a product in the first place really.

Anyway the point was that I took the group right back to rule number one of the market: The market is always right, even when it’s wrong!

For the garden shed inventor this simple and absolute truth is their nemesis. These are the people who rarely understand that to develop a successful product, particularly in a small business you need to have two characters involved:

·       The enthusiastic, driving optimist who keeps you going and believing that the market wants, even needs your product.

·       The reasoned, logical cynic who questions your every assertion and assumption forcing you to find out the facts

As you can imagine this duality can be quite difficult, but it is vital if your product is to have any chance of being a success in the market. In truth the cynic is actually more important than the optimist because if you can persuade the cynic, then the chances are you really are onto something.

 

Some of you out there might think I am being far too cynical about all of this and maybe I need a shot of positive thinking, but you know, here’s the truth: Every time I see a product that has been developed in the context of the market, fully backed up with all the relevant market research and positioned the way the market wants it positioned, then I know I am looking at a success. If those two stages we call market verification and market alignment haven’t been completed properly then the chance of success, is just that, a chance and nothing more.

 

I am really happy to say that the folks I was working with last night got it all and I am pretty sure are enjoying a good, old wrangle with their inner optimists and cynics.

 

If you want to know what our experience proves you ought to do, follow the link I have pasted below and have a look at the website, it’ll tell you what you need to know.

 

www.markettransformations.com

How big is too big for a sales team?

I was working on a client problem today to do with lead generation, which led to an interesting discussion with my client. The problem is simple, there is a sales team in place, it does okay, but truthfully the levels of productivity on an individual basis are way, way too low - between the 6 people in the team there is probably the productivity of two sales people working properly. My client's initial thought was to suggest that we need to put in place a lead generation programme to get the sales team 'working harder and selling more' (client's words not mine). On the face of it this sounds reasonable and is the kind of thing that a huge number of company directors and sales managers would opt for with perhaps some sales training thrown in for good measure.

However after some fairly basic analysis and a little number crunching, which I'll come on to later, it's pretty clear that my client has some serious rethinking to do. The basic problem my client now has to face is that his market isn't big enough to support six sales people because there just aren't enough potential customers in the market each year to support that number. Its’ more like one and half sales people working productively.

The other problem my client has is that if he reduces the sales team down to one or two people how does he make sure that they are going to be productive enough to do the new targets they will be getting if the suggested plan is implemented. Most sales professionals are best employed working on opportunities rather than generating them, especially if they have a bigger target to achieve.

The simple answer is to put a programme in place to generate leads, but the programme must be cohesive and it must be developed properly – a bunch of folk on phones just won't work, especially in quite a small market where building reputation is key. In our experience something like the Market Conversation™ is more appropriate and this is what will be put in place to ensure that the sales team has enough opportunities to follow up on.

So what’s the point of this blog entry? Well put simply it is that there is a lot more to think about than just hiring a bunch of sales people. The things we focus on include –

·         Just how many potential customers are there in the target market? If you are really honest about the criteria there will be a lot fewer potential customers than you think.

·         How many of those potential customers go to market each year on average – or how many potential opportunities are there every year?

·         How much time is needed by a sales person to follow up a lead properly through to close which put more simply is how many sales leads can a sales person follow up in a year?

From that you can work out how many sales people the market can stand and how many opportunities there are in any given year. For the client I was working on today the calculation works as shown in the diagram below.

Sales team calculator

(There is an important point to note that the calculation is based on a model where the vendor uses marketing processes to build reputation and relationships with the market and introduces sales people only at the point when an opportunity is generated.)

In general this is quite a complex matter, but the point of this article is that with some consideration and thought it is entirely possible for a company to work out how big its sales team should be. This also means the company can work out what it can realistically expect to make in revenues from the market annually (I am happy to talk to anyone about that if they want to go over it)

So here's a question. How big should your sales team really be?