5 Reasons the Sales Department is Discounting

Guest post from Rebel Brown, author of Defy Gravity and an extraordinary consultant and speaker.

Read on as she peels back the layers on a dynamic that could be happening in your company, affecting profit and sales motivation.

“Is Sales discounting again?”

How many times have I heard this cry from clients?

It always makes me wonder if corporate citizens understand and appreciate how hard selling can be — especially if you have little air cover and not much ammunition.

The fact is that if sales is discounting, it means the company, and particularly Marketing, hasn’t done its job.

I’m not trying to pass blame. I’m just pointing out a “relative” truth.

Salespeople salivate for dollars. Come on, we all know that.  At least the good ones salivate — they’ll do whatever it takes to bring the revenues into your company so their wallets are happy.  Those are the reps you want working for you.

So if they are discounting — before you blame them, take a harder look.

Sure you’ll always have a select few deals you discount to open a door or seed a market.

But those are exceptions, not the rule, especially if discounting means that reps are losing money out of their own pocket. If reps are discounting consistently, then something is wrong.

It could be a number of things:

  • The Product. This is the last place some companies want to look, and probably the first place they should focus. It’s human nature to fall in love with your children, er creations. That’s what our products often become as we develop them, enhance them, nurture them. But more often than not, when Sales is discounting the product, then its capabilities, design, stability, architecture or something else is off the mark. So just admit your kid isn’t that cute, and find what it needs to make it more attractive.
  • The Story. Sales reps will act to fill a void. They have to — it’s the nature of what they do. If you don’t give Sales a story that customers understand, believe and care about, then they’ll do whatever they have to do to create that story. If that fails, they’ll cut the price.  It’s the nature of Sales. So get the story right, and work with Sales to make sure it works for them and their customers, not just for the citizens at corporate.
  • The Target Market. Just because they were your best customers in the past, don’t assume they are for this product or time. Like you, your customers are evolving and changing, following their own Phoenix flight plan. Make sure you’re still a match and if you’re not, either switch markets or products.  Discounting is often a sign that your aim is a bit off in the market.
  • The Trust Factor. If customers don’t trust that you’re the expert partner they’ve been looking for, they won’t pay you full price. They’ll want a discount for the risk they perceive they are taking. Make sure Sales has the evidence to demonstrate your expertise and prove relevant successes.
  • The Comp Plan. But what if the reps don’t lose that much money for discounting?  What if they can discount a deal to the point that you lose money — and they still get paid, maybe even slapped on the back for it? If you think it doesn’t happen, look around you.

My point is — discounting is a very telling behavior. Here and there, it’s not a big deal.  But when it starts to happen consistently, then it’s time to pay attention and fix the reason it’s going on.

And stop blaming Sales…They’re most likely doing the best they can with what they have been given.

What Does Sales Longevity Really Mean?

By Dave Kurlan

Objective Management Group has included the Sales Longevity Finding for about a year and clients still ask, “What does it really mean?”

It’s really 3 things:

  1. It calculates how long it will take each candidate to generate a 5x return on your combined investment in him/her;
  2. It predicts how likely it is that you can retain the candidate that long;
  3. It shows the areas that you can/can’t control that will help you retain the candidate.

This is really powerful information.

Two of the factors you can’t do much about are both counter intuitive.  Those are:

  1. Sales Quotient – A very strong salesperson with a sales quotient over 130 may not stick around as long because they are in high demand, getting calls from recruiters and frequently being lured to the next great opportunity.  Slightly less capable salespeople with Sales Quotients in the 115-130 range, tend to stay much longer.
  2. Figure it Out Factor – This is our finding for how quickly a candidate “gets it” and gets off to a fast start – short ramp-up time – right out of the starting gate.  Salespeople with high FIOF scores of 75-100 make a splash and then begin looking for their next challenge.  Salespeople with FIOF scores of between 50-75 don’t ramp up quite as quickly, but will stick around longer!

Three of the factors that you can control that greatly influence longevity are:

  1. How Closely You  Manage the Salesperson – When you hire a strong salesperson you would like to think they can get the job done without much help from you.  But the data shows that the more closely you manage your salespeople – the LESS you leave them alone – the longer they will stick around!
  2. How You Pay your Salespeople – Good salespeople leave when they can’t make enough money.  That happens when their income is capped by compensation that is heavily weighted toward salary with little opportunity to earn unlimited commissions. Reverse the compensation (your ineffective salespeople will leave) plan so that it is more heavily weighted toward commission and your best salespeople will stay!
  3. The number of Years in Sales – This one is simple.  Only hire salespeople who have been in sales for at least 5 years.  They will stick around much longer than those who have a shorter career and are still trying to learn and find their way.

Do you have a better understanding of Longevity now?

Confessions of a Sales Coach

By Rick Roberge

20 years and 60 pounds ago, I might have been called a runner. I was never built like a runner. Nor did I ever run fast enough to be anything other than a recreational runner, but I did run and I would often disappear for over an hour to clear my head and re-create.

Back to the present – If I had a bucket list, one of the first things that I would put on it would be that I want to run again and over the past 20 years, I’ve had several starts, but life gets in the way. Sometimes, when I’m coaching, I use examples from other parts of our life and last Thursday, I compared the grind of getting and exercise regimen going to the grind of getting a prospecting regimen going. Little did I know that Wes Powell was a fitness fanatic and that if you got him going on that, he had a real dark side. As we talked, I could see him using my stuff on me so that he could try to hold me accountable to work out regularly. I told him that I got a lot of email. I blog. I spend several hours coaching every day and that I have commitments to my clients. I was very good at dodging. Remember, I’ve learned to dodge from years of coaching you! I’m a great dodger!

So, then he asks, “So, who do you like better, your clients or your grandchildren? And I’m thinking that he’s a real (well never mind) and that this is probably what my clients think of me when I’m holding their feet to the fire. I had a coaching call with Stephanie McLaughlin at 9:15 today. She had call reluctance. We talked about who she needed to call and that she already had a call scheduled for 10 AM, but we agreed that I would call her back at 11:30 and see how she did on the three calls that she agreed to make. Two voicemail messages, one connect with a conversation with a non-prospect and at 11:20, one of the voice messages called back, they found an issue and scheduled a meeting for tomorrow. Stephanie was proud of herself and rightfully so. I finished my call with Stephanie and at 11:49 decided that I was hungry, but that I would go for a walk to be aerobic first. I had an email exchange with Carole Mahoney. Responded to a sales coaching question from Preston Bowman. Acknowledged a schedule change with Barbara Escher and a few other distractions from taking that first step.

So, then it was 12:49. Where did that freakin’ hour go? Now, I was starving.

Now, don’t ask me how, but somehow I left the house and 40 minutes later came back sweaty, breathing and I ate lunch.

I feel like Stephanie.

Do you feel like me?

The Six Real Reasons Why VPs of Sales are Fired

By Steve W. Martin

It can be well-argued that the vice president of sales is the most important position within a company since their words and actions impact the organization’s most critical issue—generating revenue. However, the average job tenures of vice presidents of sales is now at an all time low of eighteen months to twenty-four months.

Obviously, one of the main reasons VPs of sales are fired is because they miss the revenue target. However, with the economy in the tank this traditional measuring stick doesn’t tell the entire story. In fact, many VP of sales are “let go” at the wrong time and for all the wrong reasons today. Quite often the CEO mistakenly believes the grass will instantly become greener with the addition of a new sales leader. Unfortunately, this tumultuous changing of the executive guard can do far more harm than good in both the short and long term. With this in mind, here are the six real reasons why a vice president of sales should be fired.

Inability to Recruit “A” level Talent. Outside of revenue generation, the most important task for every vice president of sales is to attract, hire, and retain top-level talent. In other words, the VP of sales must present the compelling closing arguments to “A” quality salespeople as to why they should join the company. More importantly, the VP of sales should be able to recruit high quality “A” level managers. Because, “A” level managers hire “A” level salespeople and “B” level managers hire “B” and “C” level salespeople. The cascading effect of diminishing talent kills the competitiveness of the sales organization. This is particularly true for smaller companies that must compete against a gorilla (Oracle, IBM, Cisco, etc.) in their industry.

Wrong Sales Culture. The sales organization’s culture dramatically impacts the ability to achieve revenue. Three of the worst sales cultures are based upon secrecy, dominance, or submission. A secretive sales culture is one where there is a conscious effort to withhold information from the rest of the company. As a result, there is a black hole of customer information and engineering and marketing are always guessing about what they should do next. A dominant sales culture takes bullying to the extreme. They condescendingly steam roll the other departments of the company to get what they want and cut corners wherever possible. At the other end of the spectrum is a culture based upon submission and inferiority. Think about it for a moment, if the sales organization doesn’t have enough backbone to fight internal battles inside their own company how can they be expected to vanquish the competition in the field?

Inaccurate Forecasting. Does the VP of sales have the pulse of the sales organization? Does he look through rose colored glasses over-optimistically at the forecast or with so much pessimism that it is impossible to decipher what business is real? Is he well-versed on the major deals and close enough to the salespeople to discern unachievable pipe dreams from real pipeline? Are there continual surprises and is bad news continually delivered at the last possible moment? Remember what Machiavelli said, bad news should be given all at once and as soon as possible.

Executive Team Combativeness. Since the sales function relies so heavily on the other departments (engineering, marketing, customer support, etc.) to achieve success, it is completely natural that friction develops between members of the executive team. And, the VP of sales who tenaciously fights for his department’s causes should be respected. However, a change is warranted when this turns into a personal vendetta against other executive team members.

Is the VP of Sales a Strategist? Can he or she create a competitive sales strategy based upon marketplace realities (and implement a process to execute it)? Does he aggregate meaningful product feedback and articulately represent the customer’s experience? Does he help advise marketing as to which programs to pursue and how best to spend their precious dollars? Most of all, can he dovetail his sales philosophy to the company’s ever-changing strategic direction?

Does He Add Value in C-Level Executive Customer Meetings? One of the most critical and often overlooked aspects of the VP of Sales job is the ability to participate in C-Level customer meetings and convince company leaders to buy. Does your VP of sales sit in the safe confines of the ivory tower at headquarters or is he able to make a direct impact on the most important deals in the field?

I remember hearing a vice president of sales publicly pronounce that all his problems would be solved if only he could, “Make the monkeys climb higher in the trees.” His tongue-in-cheek criticism was the topic of conversation within his sales force for months. To his salespeople, it was just another example of a management style that they found to be repugnant. Anyone who creates an environment like that should be fired.

Conversely, I have the pleasure to work with many very talented sales VP’s. They are great recruiters, masterful forecasters, and serve as mentors to sales managers and salespeople alike. They are charismatic leaders who measure their success using three criteria; meeting revenue goals, creating an environment where the entire team can succeed, and helping the entire company realize its potential. While they are not perfect, they are well-liked and a unifying force for the entire organization.

Fix these 3 social media faux pas that can hurt prospect communications

By Geoff Alexander

I’m putting together one of my inside sales management classes, and in addition to the management and coaching techniques I teach, I discuss the impact of social media as it relates to inside reps. There were three items in particular that, over the past year, have caused a break in communications between my clients’ reps and their prospects. They fall into the categories of LinkedIn, texting, and calendaring. Take a look, any of these seem familiar?

1) Don’t fill your LinkedIn with “junk” contacts. Junk contacts are people you don’t know, or can’t remember, and they hurt the efficacy of this important tool. For example, one rep I coached had a 2nd-level contact with a prospect. But he couldn’t remember who the individual was, and there was no record of that person in the CRM. So it was useless. So here are two tips:

a) Observe good LinkedIn etiquette: don’t LinkIn to people you don’t know, or haven’t talked to. For prospects with whom you’ve had a conversation, a good tip is to suggest to them you send them a LinkIn invitation so they’ll have a quick, easy way to find you.

b) Put your prospect’s name in your CRM, so you’ll have a context for the name.

2) Don’t assume your “texted” message has reached its goal. Many people don’t use texting, or use landlines as their prime telephone technology. Send email instead.

3) Don’t rely on Outlook calendar updates outside of your own company. Not every prospect is working in an Outlook shop, and various browsers and email clients can’t “read” Outlook calendar updates. Instead, send an email, with your appointment information in prose.

Those are just three of the most common social media issues that reps are wrestling with today. Let me know if there are others you’ve encountered, and add avoiding these missteps to your Best Practices Playbook.

Be Proud Of Being A Professional Salesperson

By Gavin Ingham

On my travels as a sales motivational speaker, I meet a lot of people who “fell into” sales. Infact, when I ask people at sales conferences to ask the people sitting near to them, “How did you get into sales?” the vast majority reply, “Well, I kind of fell into it.”

So many people don’t choose sales as a career. They don’t sit in first school talking about how they want to be a salesperson. They don’t argue that they want to be Lord Alan Sugar instead of Rooney when they’re kicking a ball about in the playground and they don’t want to be a cold caller rather than an astronaut or a doctor.

And on top of all of this, many people are rude about salespeople saying that they are uneducated, illiterate, self-centred, selfish, pushy, arrogant, egotistical individuals. And they are rude about the job too saying that it is for people who couldn’t get a better job. Indeed, I once read an article in a national newspaper where the writer said that we should “feel sorry” for salespeople because they had fallen so low in life…

Is it surprising then that many salespeople do not want to be called a “salesperson”? They do not want the title of salesperson, preferring instead to change it to “consultant” or “account manager” or even “account director”.

And how many salespeople do you know who want to be sales managers? Virtually all of them.

Why? Because they perceive that this is promotion. Because they perceive that this elevates them above these criticisms. And because they perceive that it means more money, more prestige, more kudos, more respect…

And they might be right. Or are they?

Great salespeople can make great sales managers. And great sales managers can make great salespeople. But great salespeople do not necessarily make great sales managers. And great sales managers do not necessarily make great salespeople.

And these are important facts to swallow because if you don’t swallow them and you don’t apply them to yourself then it will cost you big! Big in money. Big in prospects! Big in personal satisfaction. And BIG in career opportunities.

Great salespeople need to be proud of what they do. Great salespeople need to recognize that their greatest asset is their ability to sell and to create new business. Great salespeople need to know that top quality salespeople are like world-class athletes and a selling career provides all of the rewards that anyone could ever dream of…

If you read the Sunday Times Appointments section this week you would have seen a huddle of None-Exec roles, Directors of public sector companies, MDs and FDs… but, the most interesting, best sounding and highest (stated) paid opportunity was…?

A sales opportunity…

London, New York, Singapore. £100k, OTE £250k (uncapped). Sounds interesting already right?

Success in life is about playing to your strengths and if you have worked hard to be a top salesperson then you ought to be proud of your achievements and continue to become a well-paid, well respected, sought after, world-class, sales superstar.