Budget 2013: What Should We Do Now?

This article was originally written for Astron Technologies’ blog, Astronology.

Worse off or better off?  Adding jobs or losing jobs?  Growth or recession?  If you read the news today, and especially the campaign ads from a contentious 2012 election, it is hard to make heads or tails of what to expect next year.  Understanding the dynamics of the markets we compete in is critical to building a budget for 2013.  What’s a company to do?

Start with the following steps to prepare your budget for 2013: understand market conditions, set your growth objectives, align your expenses to your objectives, and manage your plan.

Understand Market Conditions

economic trendsIn its latest economic forecast this month, the Fed forecasts growth in 2013 of 2.5%-3.5% – an improvement over the 1.7%-2% expected for 2012.  However, there is big uncertainty based on the election outcome, as well as huge tax increases and expense cuts scheduled to take effect in January 2013.  Congress is likely to make a deal to moderate the impacts of these tax and spending changes, but in this heated political climate, it is hard to bank on it.  2013 will likely be a slight improvement over 2012, but you should review the general trends for your industry as and the developments in congress closely.

Set Your Growth Objectives

Given the uncertain and moderate growth expected for next year, it is important to understand how you would like to position your business in 2013?  Do you want to:

make your growth plan

  • Prepare for contraction in your business?
  • Hunker down, keep the boat steady, and ride out the waves?
  • Invest for moderate growth?
  • Aggressively take market share from others while the market is destabilized?

Your objective obviously depends heavily on your cash position and ability to invest.  However, one thing I have learned in the current economic downturn is that regardless of your actions,  there will be companies that grow despite poor market conditions.  They grow by increasing market share at the expense of weaker or less aggressive companies.  Are you going to be the predator or the prey?  I would encourage everyone to invest – for moderate growth at a minimum.

Align Your Expenses to Your Objectives

track your expensesI know it is cliche, but to achieve your goals you have to have the right team in place.  In most companies, payroll is the single largest expense, but your people are also one of your most strategic assets.  Start your budget process by building staffing plans to identify the type and quantity of people needed to meet your growth objectives.

When investing in moderate or aggressive growth, start with your sales and marketing areas.  Those functions generate the leads that drive income.  Next, move to production employees – those directly responsible for delivering the product or service that you offer.  If you choose to underinvest in sales, marketing or production, you will likely fail to deliver your message to prospective customers or deliver poor quality to the clients you have.  Either outcome will hurt your business in the short and long term.

Once your core revenue generating staffing plans are in place, work the rest of your expenses (general and administrative payroll as well as all other operating expenses) to be in line with your financial objectives.  I would encourage you to be as financially conservative as you can be given the market uncertainties.  Get creative in conserving in these expense categories.  Plan for your worst-case income scenarios and reap rewards when you beat your plan.

Manage Your Plan

For a budget to be effective, it should be a living document that you visit regularly (monthly or quarterly) to assess the health of your business.  Check your assumptions on key metrics that affect your planned results.

monitor your metrics

Metrics might include number of leads, closed deals as a percentage of leads, delivered products or services, and number of resources required to achieve your results.  If any of your assumptions are significantly off-base, revisit your plan and adjust your plan as necessary.
A simple, one-page scorecard that aligns to your budgeted sales objectives, key functional performance, and expense levels is helpful to keep business leaders focused on objectives and results.  Investing time during your budgeting process to create a scorecard that aligns with your plan can be business-changing if you are not doing it today.  Take the time and think about the metrics that truly impact your business, track them religiously, and make them visible as broadly as possible within your business.

Key Take-Aways

So, economically-speaking, 2013 is likely to be similar to 2012.  However, there are enough signs that indicate the U.S. is at the beginning of a slow upward climb.  My challenge to you is to build a budget that plans for growth and prepares your business to climb at a faster rate than your competitors. Make 2013 the year you laid the foundations for success and the expectations of growth – regardless of market conditions.  Be a predator!

Sales Acumen vs. Business Acumen

 

BY S. ANTHONY IANNARINO

Sales Acumen

Acumen doesn’t mean knowledge. It means something more. It means having an insight, a perception, a sharpness. Great salespeople have sales acumen. They have the basic sales skill sets like overcoming buyer resistance, asking great questions, presenting solutions in the form of a dialogue, and obtaining commitment. But they also have something more than that; they know how all of these moving parts work together to make deals come together. It is something that is developed over time.

I liken it to the German word “fingerspitzengefuhl,” which translates to “finger tip feeling.” It is a sort of knowing what is happening everywhere all it once, without actually being there. It’s that sense that tells you “this isn’t working,” or “this is working,” or “I know when I leave they will discuss . . . ” This sales acumen is part of what helps the great salesperson to create deals that other sales people might not have been able to make. This skill is part of the art of sales that makes teaching others to sell so difficult.

There is nothing negative to possessing this skill, and the more the better. But by itself, it is no longer enough.

Business Acumen

Now more than ever, the salesperson is a business manager. It is no longer enough to possess the basic sales skills, even when coupled with sales acumen. Today, the salesperson is required to understand all general aspects of business.

They need a knowledge that competes with the industrial engineer in operations, the CFO in finance, and the Vice President of Human Resources in organization development and team dynamics. The great salesperson today will have the business acumen of a great general manager, and is just as comfortable using a spreadsheet to calculate the customer’s return on investment as he is orchestrating a team made up of members of both companies. This business acumen may not be as strong as their sales acumen, but he has to equal the business acumen of the general manager.

Conclusion

The only real dichotomy here is that a person may presently possess only one of these, sales acumen or business acumen. Both can (and must) be gained together over time. And the possession of both is the future of business-to-business sales.

Questions

  1. When selling, are you uncomfortable with any subject that is generally not in the domain of general sales?
  2. Do you rely too heavily on technical experts for even the most basic questions that your prospects ask about your product or service?
  3. Do you speak and understand the general language of business?
  4. What should you be doing to develop your business acumen?

Why Most Inside Sales Reps Fail – and What to Do About It

By Mike Brooks

If you’re in charge of hiring, training and developing inside sales reps, then what you’re about to read may shock you a little bit, but it will also resonate with you and explain why many of the reps you hire ultimately fail.

In their book, “How to Hire and Develop Your Next Top Performer” by Herb Greenberg, Harold Weinstein and Patrick Sweeney, they compared results from hundreds of thousands of assessments that were conducted over several decades with actual sales performance measurements and concluded:

#1) 55 percent of the people earning their living in sales should be doing something else, and

#2) Another 20 to 25 percent (of salespeople) have what it takes to sell, but they should be selling something else.

Before you dismiss these results as far-fetched, think about your own inside sales team.  If you’re like most companies, you probably have the 80/20 rule where 80% of your sales and revenue are made by your top 20% producers.  What that means is that the other 80% of your reps struggle to make quota (or rarely do), and I’ll bet that over the course of a year or two, half of these reps have either quit, been fired, or you wish they would move on.

I’ve worked with hundreds of companies that have inside sales teams, and I can attest to the accuracy of the stats above.  Every time I begin working with a new company, I assess the skill level, aptitude, desire and ability of each member of the team.  What I find is that up to half of the reps employed shouldn’t have been hired to begin with (or shouldn’t still be working at the company), and most important thing we can do is to replace them with better qualified candidates.

If you’re with me so far, then let me make a couple of caveats before you start thinking about replacing half your sales team…

First, in order to give each member of your existing team the full chance to succeed, you have to make sure that you have invested the proper time and energy in identifying and defining your sales process (I call it a DSP – Defined Sales Process).  Next you need to design a sales training program – complete with specific scripts – that teach the best practices of your sales process and then properly train your existing team on them.  And finally, you need to teach your managers how to coach and train your reps to adhere to those scripts and best practices.  Assuming you take the time to do this first (I usually get companies through this process in anywhere from 45 to 90 days), then you are ready to begin recruiting and hiring more qualified candidates.

So, how do you begin to look for and eventually identify the other 45 percent of people who are actually cut out for the career of sales?  Here are 3 important guidelines to follow:

Inside sales 1)    Slow hiring, fast firing.  If I were to ask you what activity college football coaches spend up to 70% of their time, what would you say?  Watching game film?  Coaching their players?  Preparing game plans?  The answer is none of those.  College coaches spend up to 70% of their time recruiting talent to play on their team.  Does that surprise you?  If you hire sales reps like most companies do, then it probably did.

Most companies hire sales reps the wrong way.  They hire reps quickly, and they hold on to underperforming reps far too long.  The first guideline you want to follow is to do just the opposite.  The best thing you can do is always be recruiting and have a constant flow of talent to evaluate and hire.  Your goal should be to hire slowly – after a structured and careful evaluation process – and then to be ready to let reps go who have not shown the improvement or performance that you’ve identified in advance is necessary (you’ll refer back to your DSP to arrive at this).

The key here is that if you have a steady flow of talent and candidates to choose from (and in this market, there are many people available), then you’ll be much less likely to make quick and ill advised hiring decisions.  Plus, you’ll be less likely to hold on to underperformers who are likely to never make it in your selling environment.

2)    Be more willing to consider and to hire candidates who either don’t have your particular sales experience, or don’t have any sales experience at all.  If we go back to the results earlier in this article – that 55 percent of people in sales should be doing something else, and another 20 to 25 percent should be selling something else – then it means that the common practice of hiring experienced sales candidates will produce an unsatisfactory result as much as 80 percent of the time!

A much more effective way of hiring successful sales reps is to start with raw and motivated candidates and then train them properly right from the beginning.  Teaching new candidates the right skills and techniques is a lot easier than first getting an experienced sales rep to unlearn all their bad habits first.  Of course, you must have a solid sales training program that teaches effective sales skills and the best practices of your particular sale (these best practices will also come after you’ve defined your sales process – DSP).

You can still interview and even hire experience sales reps, but just bare this in mind: The biggest predictor of future success in sales is what the rep has done in the past.  What a rep is used to producing and earning defines their comfort zone and in fact defines every aspect of their financial life.  In life – and in sales especially – we all tend to live up to or down to what we are used to.  If you want to know what an experienced sales rep might produce at your company, then just find out how much they earned at their previous company.  Divide this number by their commission, and you’ll have a very accurate idea of what you can expect they’ll produce.

Then ask yourself if that’s enough.  If it isn’t, then take a chance on someone new to the profession of sales and instill in them a new comfort zone based on success at your company.

3)    Regardless of whether you hire an experience sales rep or someone new to the profession, what you absolutely must do is make sure your managers are measuring the right indicators of sales success and progress.  You would be surprised by how many companies measure and rely on metrics that don’t drive sales.  I’m talking about things like number of calls, time on the phone, etc.  Now don’t get me wrong – these are important metrics and they definitely play a role in the success or failure of your inside sales team.  But they don’t drive sales.  Let me explain the difference.

While it’s obviously important that your reps are making the most amount of calls and contacts with decision makers as possible, this alone will not drive sales.  You see, if your reps are not qualifying prospects properly, or if they are not handling objections or brush offs well enough to win sales, then if they simply make more calls, this won’t result in a lot more sales.  In fact, it will just waste more of their time, more of your resources and result in more frustration in your sales department.

The only thing that drives more sales is effective conversations that move the sale forward with qualified prospects.  Each contact with a qualified prospect must have benchmarks that are achieved and agreements must be made at every point of the sales cycle for that prospect to ultimately result in a sale.  Coaching and measuring the successful navigation of these benchmarks is what drives sales.  This is the crucial difference begin measuring quantity (make more calls) versus qualify (measuring what happens during those calls).

Once you understand and can apply that difference in your sales environment, and once you can teach this to your reps, then and only then will you begin building a more successful sales team and company.  Until then, you are likely to keep repeating the kind of performance you’ve had over the last few years – regardless of how many new reps you hire.

To recap these successful hiring guidelines, start with the philosophy of slow hiring and fast firing.  Always be on the lookout for new candidates, and turn each employee into a mini recruiting machine.  Offer hiring bonuses, referral bonuses, and other incentives to get your whole company looking for qualified and talented candidates that you can add to your sales team.

Next, expand your search of talent.  Don’t just run ads in the sales section of the paper or online source, but expand to college recruiting boards, acting blogs (actors often make great inside sales reps!) and other websites.  Be open to bring on someone fresh to the profession of sales and teach them the right skills from the beginning.

And finally, make sure you measure (and reward) the actions that drive sales.  Remember, it’s how your sales reps handle the brush offs and smokescreens and stalls that determine how successful (and empowered) they are more than how much time they spend on the phone.  It’s always “who” is in the pipeline that is more important than “how many.”

Follow these guidelines and you’ll be on your way to building a highly successful inside sales team.

Are You Giving Away Your Power and Selling Your Soul?

By Gerhard Gschwandtner

 

 

As the founder of Selling Power magazine, I’ve watched the profession of sales change dramatically in the past 30 years. And I think it is very, very tough for sales leaders out there today. Possibly the toughest it’s ever been.Fact one: The average tenure of a sales VP is somewhere between 24 and 32 months. There is a huge amount of pressure on newly-hired VPs to come in to a company and magically fix everything. The problem is that 24 months is nowhere near enough time to implement strategic change. Not only is this a terrible scenario for the VP, it’s also a surefire way to hamstring a company and its strategic initiatives.

Fact two: The B2B customer has officially gone digital. And many companies are failing to adapt to that fact. Today, 57% of B2B buying steps are completed before buyers connect with a salesperson. That’s a staggering shift. Yet B2B companies are not leading the charge to embrace the digital customer. They are not setting up online sales channels. They are not exploring social selling solutions. They are not adopting marketing automation programs. They are not outfitting their sales teams with tablets and mobile phones. They are not implementing sales enablement solutions.

That’s why you see so many sales cultures that are stuck in a rut, and so many sales teams that are failing to meet revenue goals.

This year alone, I have hosted three Sales 2.0 events for B2B sales leaders — in Philadelphia, London, and Boston. These conferences draw speakers and attendees from industry giants like Hewlett-Packard and Microsoft, to rapid-growth startups, to everything in between. The message I hear from these companies is the same: the good old days of selling are over. Everyone at some level is feeling the pain of being left out of the technology loop, and they’re unsure about what their next step should be to remain competitive in this new landscape.

I have always believed that selling is an art. Today, however, no sales leader can afford to ignore science. Sales 2.0 and technology solutions are making the art of selling measurable in actual numbers. And that is going to have a huge effect on the way we lead sales teams in the years to come. My opinion is that sales leaders who make strategic decisions to leverage a combination of data and social insight will empower their teams and be able to deliver predictably successful results for their companies.

In October, I’ll be discussing the future of selling in more detail at the Sales & Marketing 2.0 Conference in San Francisco — along with leaders from companies like PI Worldwide, Oracle, McKinsey, and CSO Insights. The agenda is packed with examples of how sales leaders can start taking those steps to push their teams to higher levels of success in a variety of areas. I invite you to email me with any questions atgerhardg@gmail.com or message me on Twitter @gerhard20.