Sales Is a Relationship Business – Right???
by Rick McPartlin :: January 23rd, 2012
This post was first developed for the CEO membership of VistageConnect.com, Vistage International revolutionary new online community built for the express purpose of developing executives using virtual peer advisory sessions.
TV’s hottest show is Mad Men. “Viewers see Mad Men as a polished reflection of their own -- and their parents' -- life and times.”
I grew up in that world of the ‘50s and ‘60s where “a relationship” was born from and measured by booze, lunches, expensive Christmas gifts, trips and other benefits. My grandfather was a purchasing agent for General Motors, and Christmas at his house looked like the loading dock at Macy’s with multiple Silver Tea sets, more than one color TV (rare items then), many bottles labeled “Johnny Walker,” large boxes of fruit, mixed nuts, and those cards with tickets to the Kentucky Derby, Florida and Europe showed up each and every year.
That was how to build relationships back in the day of Mad Men -- you picked the person who could do you the most good and buy -- or I mean, build a one-to-one relationship.
The Mad Men definition of creating relationships with goodwill and gifts may still persist in a few places in the world. In all but those rarest of places, the Mad Men definition of relationships has changed.
Today, all significant purchases are touched by a number of individuals, systems, metrics, reviews and laws. With all that oversight on a deal, it is hard to conceive of a sales person creating that many Mad Men relationships to cover all those players throughout the buying process to win against those competitors who deliver real value.
For many reasons, good sales people abandoned the Mad Men relationship model 30 to 40 years ago, but the myth persists for those salesmen who may not know better and for management that watches too much TV.
For these two groups, the myth of the Mad Men relationship just keeps on going -- they think a one-to-one Mad Men relationship will carry the day. Mad Men and Jurassic Park make great entertainment, but both are about things that are extinct -- dinosaurs and the Mad Men relationship.
So move on!
Today, not only has the definition of the relationship changed, but so has who the relationship is between.
In 2012, the relationship is not about gifts (lunch, trips, golf, etc.). It is about value shared between the buyer and seller. The relationship is between your customer and your “brand promise.”
If there is a gift today, it is the gift of your brand promise, which creates the relationship. Sales or any other member of your team may develop a personal relationship with members of the buyer team. These relationships are a result of delivering your brand promise and helping solve your customer’s business problems, but today it is brand promise first and personal relationship second.
The biggest change wasn’t the definition of the relationship but the forms of the relationship. A relationship can still be person to person or it can be person to brand or brand to brand or brand to person. In this virtual, transparent world, even a trusted adviser relationship does not have to be with a person.
Many of us trust and rely on the brand promise from Apple, Facebook, Mayo Clinic, IBM, Amazon, Expedia, Coca Cola, Google, McDonalds, Southwest Airlines and many other relationships that don’t require a golf game, a drink, a gift or even another human.
Steps to take if you want to build the right 21st-century sales relationships:
- Build a brand promise that your customers, staff and partners can count on.
- Solve a problem for your customers that no one else solves -- be sure the problem you solve will compel customers to engage with you.
- Declare a niche to dominate so your customers see you as a necessary part of their business model where you provide high value as well as being easy to acquire and consume.
- Make sure you stay in integrity with your brand promise -- that relationship with your brand promise is what your customer wants in this new transparent economy.
Finally, hire people who don't watch too much TV. (It drives them maaaaad, wink, wink.)
Article written by Rick McPartlin
The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 3
by Rick McPartlin :: January 6th, 2012
In the past two blogs we covered the first three variables of revenue generation as defined by the CEO's Formula. In part 3 of this series we will look at the 4th and 5th variables and provide a summary to recap.
The CEO’s Formula:
Alignment (Revenue Strategy + Execution) x (Leverage x Structure)
Alignment (Revenue Strategy + Execution) x (Structure)
Variable 4 - Structure:
Every organization has applied structure intentionally or unintentionally. Companies create process, brands, messages, literature, training, software tools, etc. to help the execution deliver more results. The variable of structure needs to be measured for its impact on the ability for execution to deliver results.
The structure investment can come in the almost unlimited forms and always needs to be recognized and measured against the change in execution. If the resulting change in execution creates a positive ROI – great! If it is not positive decide if it can be modified to become positive and most importantly compare each structure investment to every other structure option (in every part of the organization) to determine the combination that gives the greatest overall return when plugged into the formula.
There is ONLY ONE PURPOSE for structure and that is to improve execution. NEVER invest in structure without knowing the organization's current assumptions about the benefits the new structure will provide for the improvement in the execution of “Revenue Generation.” After investing in the structure measure what really happens at the point of execution and compare that to the investment to determine if you can make changes to further improve execution to secure the best possible return on resources.
Alignment (Revenue Strategy + Execution) x (Leverage x Structure)
Variable 5 - Leverage:
We all want leverage and since the purpose of structure is to leverage an organizations ability to improve execution related to growth and profitability. Leverage is either positive or negative. The impact of the leverage shows up in the ultimate metric of more profitable revenue for the dollars invested short-term and long-term.
If there is a powerful brand that draws customers or if aligned execution creates repeat business and referrals then the leverage is positive. Conversely if the whole organization goes to product training to learn how to pitch the product in detailed PowerPoint’s, how to deliver specification heavy demos and to create web videos that talk about company history the buyers will be convinced that the company’s goals aren’t about solving the buyers problems, but are about creating a transaction for the buyer, then the leverage is negative.
Strategy, Execution, Alignment and Structure individually and as a group control both the nature (positive or negative) and the amount of leverage, which changes the results from execution.
Summary:
Alignment (Revenue Strategy + Execution) x (Leverage x Structure)
Most organizations only focus on two things (execution and structure) and they both require budget. Execution and structure are the two things a leader can buy with the expectation that things will get better, which may or may not be true.
In truth large amounts of money are misspent on these two parts of the formula. CRM, training, advertising, trade shows, and websites are far too often large investments with little or no alignment and large negative leverage. That means not only don’t they help get more profitable revenue but they actually increase the Cost of Chaos, while holding down topline growth.
As the Cost of Chaos increases any additional growth requires spending more and more money (on execution and structure) to get smaller and smaller returns (both topline and profit).
This is why an organization can be operationally excellent, win all kinds of awards for excellent structure (training programs, websites and super bowl ads) while their problems get bigger and bigger.
Everything a team does, every dollar spend is either aligned to the revenue strategy (assuming there is one with the 5 answers) or it isn’t. Each action and every resource invested creates either positive or negative leverage and has a corresponding impact on growth and profits.
The choice is to apply this formula in an intentional way which requires the organization to apply the discipline of revenue science focusing on all five variables or let the world decide how to apply the formula to the organization.
Any organization that wants help applying this formula to win The Revenue Game should join those of us thinking like a CRO to implement the formula as part of the science of “Revenue Generation.”
Article written by Rick McPartlin
The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 2
by Rick McPartlin :: December 26th, 2011
Last week we discussed the first variable of revenue generation - revenue strategy. In today's blog we will now look at the second and third variables in the CEO's Formula.
The CEO’s Formula:
Alignment (Revenue Strategy + Execution) x (Leverage x Structure)
Revenue Strategy + Execution
Variable 2 - Execution:
Execution is what separates survival and success from frustration and failure. Great execution is a variable that leaders have control over. Leaders have control over how their teams engage, how many hours are worked, the level of training, who is hired and the words that are spoken.
As important as the ability to execute is remember that what is being executed should be spelled out in the revenue strategy so the combination of the first two variables looks like this:
(Revenue Strategy + Execution)
It is the combination that creates profitable results in the market. The better these two are done the greater the result. If one is strong the other gets stronger and if one is weak the other is weakened. That is why they are placed in the formula together and multiplied by the degree of alignment.
Alignment (Revenue Strategy + Execution)
Variable 3 - Alignment:
The alignment variable is always between 0 and 1 with 1 being perfect alignment. So if the revenue strategy is great and the execution is great and they are aligned with each other the result is the largest return possible for the revenue resources investment. Whatever the value the strategy offers plus the results from perfectly aligned execution defines a maximum return on investment. Anything less than perfect alignment decreases the overall return on invested resources accordingly.
When strategy and execution are not fully aligned then the alignment variable is less than 1 and when you multiple the alignment variable times the total possible from strategy and execution the actual return (topline and profit) is decreased by the same percent that alignment is less than 1.
Lack of alignment is one of the major causes for the Cost of Chaos, so focus on aligning revenue strategy and execution.
Please share your thoughts and experiences with us here!
Article written by Rick McPartlin
The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 1
by Rick McPartlin :: December 12th, 2011
Using the Power of Algebra to Influence “Revenue Generation”
The science of “Revenue Generation” has uncovered a formula for CEOs and CROs (Chief Revenue Officers) to use to successfully manage the growth of profitable revenue.
This formula has 5 variables that determine the revenue outcome. The 5 variables aren’t optional the only question is how are they managed - intentionally or unintentionally? If you influence the variables then you have control over the revenue outcomes, which is how to exercise control over the growth and profitability of the business.
The CEO’s Formula:
Alignment (Revenue Strategy + Execution) x (Leverage x Structure)
Variable 1 - Revenue Strategy
Everyone understands that winning The Revenue Game is about success in the market. Revenue leaders need clarity about what needs to be accomplished and the value accomplishing that brings to the market. Telling that story to the leadership team and customers is critical. The Revenue Strategy variable and the clarity it creates is a key way to assist in the execution of the dream as opposed to no clarity where each situation is treated as one of a kind.
The quality of the strategy determines the maximum value of the offer, what can be charged and ultimately the profitably of the offer and the business. If the strategy has no value on its face the seller can’t ask a lot of money for it from the buyer and the seller will receive even less.
Intentionally developing value and clarity make the engagement safer for the customer and more profitable for both the buyer and the seller. To have a strategy that safely delivers high value requires answering these 5 questions:
- What is the brand promise (the experience the customer, partners and staff can count on every time)?
- What’s the customer “problem” that that is solved that no one else solves?
- What niches are dominated or will be dominated in the near term?
- How is the ideal customer defined?
- What are the key offer(s) to dominate the niche?
When these 5 questions are successfully answered there is a framework to link the next variable in the formula which we will discuss next week in the second part of this 3 part series.
Article written by Rick McPartlin
Please share your thoughts and experiences with us here!