Common-Sense For Sales

Tulips, Beanie Babies, Baseball Cards and Oil Futures

  Many of my friends that own businesses are working every day to increase the value of their venture.  They are investing their time, money and intellectual resources into building something that provides a service to the public and value to their future.  I was talking to one of my business acquaintances this week and he told me about his buddy that was making a killing by investing in the oil market.  He was frustrated because here his buddy sat at a computer all day making trades and helping drive the price of oil up and because the price was so high gas is now $4.00 a gallon.  The high price of the gasoline is hurting the small business owners.  He said it was enough to drive entrepreneur spirit out those who were building something of value for their community and family.

  I started thinking about what is going on in our country with the real estate bubble burst and the oil prices rising so quickly.  I began to connect the present to the past.

  Legend has it that the tulip craze that hit Holland in the seventeenth century is arguably the most famous financial bubble in all of history. The most popular stories about what happened tell us that prices for tulips began to rapidly increase in 1636 as news spread that rich people were willing to pay large amounts of money for tulips. Soon almost everyone that had a little bit of money saved up joined in the speculative fervor, many people using their life savings in order to buy bulbs, believing they could resell them at windfall profits. At the height of the mania, a single bulb cost as much as an expensive house. Eventually reality set in and in 1637 panic selling commenced as people realized they were never going to make a return on their investments, and the price of bulbs crashed, losing over 90% of their value. Many people were financially ruined. 

As a history major in college have to tell you that the Tulip story is a wonderful and helpful legend but not all of it is true. The tulip speculative bubble really did occur, but some of the wilder stories told about it are exaggerations.  Still, Tulips make a fitting symbol for anything like oil or real estate or stocks and bonds or gold or diamonds whose small intrinsic value is vastly inflated by speculation.   

  Speculation is when you buy anything you don't intend to use yourself, but only to resell when the price goes up.

  History tells us that with the Tulips, most buyers simply refused to pay for the bulbs after the crash. In today’s computer world our financial markets people don't have that kind of luxury. With a single click of a mouse, all your money instantly and forever disappears.

I wonder how many people lost/lose big money on Beanie Babies, Pokémon Cards, and baseball cards over the years?

  How much of the oil futures' market has become a bubble? As hedge funds and such start bidding the price up as a way to mitigate the falling dollar, how many other institutional investors are following suit? Is foreign demand in developing countries really accounting for all of the price increase? As its selling price rapidly approaches $150 barrel, how many believe that its true value is still closer to $60. If the bubble does burst, what does it do to the financial industry? This ought to be a big concern for various retirement plans around the world. It has become a damned if we do, damned if we don't scenario. The current high prices of gasoline are affecting the economy, but a collapse of the oil market could carry serious consequences of its own.

  I am not an economist but I don't think the price of oil is set by a cartel. I’ll admit I don't fully understand the oil market and all the players, but I don't think it is OPEC setting the price right now.  It seems to me that OPEC controls the supply of much of the world's oil, thus heavily influencing the price. When OPEC cuts output, prices tend to go up, when they increase output, prices tend to go down. 

  But for some reason, right now no matter what OPEC is doing, the price just continues to climb.  It the price we hear of a barrel of oil the real value or just the speculative value?

The closest thing I can like oil too is the way diamonds are valued.  What do you think the "true" value of a 1 carat flawless diamond is? Maybe 50 bucks? Try negotiating that price in NY's diamond district.

  But, it's not just oil; it's pretty much all commodities. Look at the history of popular investment rushes like the 1990’s dot com stocks or the current US real estate market. 

So, the question is not whether it's a bubble or not, it's where will all that money go when this one bursts?

  I am old enough to remember that the words gold standard was not allowed to be used in the United States.  When I was a child it was illegal for an American citizen to hold gold and they were all forced to sell it to the government at a fixed rate that was below market value and that was not that long ago.  I remember in the 1960’s that gold in the United States was priced at about $35 per an ounce.

Back in the gold rush, gold miners that didn’t starve to death used banks to store their gold and the gold was weighed and a hand written receipt was given out.  As is often the case, soon people discovered that these hand written receipts for gold could be forged and hence the need for a official receipt that became known as the American dollar.

Later this gold was lent out but soon that gave way to checks and before too long the value of the paper money was far in excess of the value of the gold held by the banks and when the miners discovered this discrepancy they were offered something new at the time called interest payments to keep them all happy.

What the miners soon became unhappy about was another new invention called inflation where a ten dollar bill was suddenly worth only nine grams of gold and not the ten they had originally deposited with the bank.

Fast forward to today and we have shorts, longs , stop losses , petrodollars, futures , derivatives , CDO’s, and something I just came across on the news called the sub prime crisis that gave you all a 0.25% cut in interest rates but also lead to the GBP buying you 1.5% less from abroad.

Now hands up all of us that have a pension fund or an IRA Mutual Fund and can honestly say they know what money really is invested in.  Why do so many of us want to take the short cut but find out too late that we were taken.

Why not invest in your community, in that independent business owner right down the street that serves you and your family and make life better for us all?  You can see the growth and the value each time you stop in or drive by. 

The one thing about history I have learned, people never seem to learn from their past mistakes.  Are you prepared for the almost certain burst in the current bubble?

Maybe P. T. Barnum was right.  But don’t even take that bet; because Mr. Barnum in reality never said those famous words, “ A sucker is born every minute”.  Even that is a myth.

Should you Abandon Ship or Change the Way the Crew Paddles?

I saw an interesting fact recently that an average of more than 500,000 businesses failed in the United States duiring each of the 10 recessions that have occurred since 1945.  You would think that with all the time to learn and understand what to do and prepare for, and how to respond to, the challenges of an economic downturn business owners and managers would have a primer of how ot handle this by now. 

 

Many of us having lived though several economic slowdowns and the uncertainty they create are not surprised by how many companies are quick to respond by scaling down their operations. Staffing reduction can have both negative and positive consequences for an organization and the economy in general. That is why it is important that business owners and managers consider all the issues when working though these unsettled times.

 

So, the question is:  When the ship is taking on water, should you lighten the load or have the crew paddle and bail faster?  What should you do to survive until the storm abates?

 

By now many managers of companies have gone through a difficult exercise of rationalizing whether to layoff staff or just not replace employees when positions become open due to attrition and are working on a strategy of running their organizations with significantly reduced headcount.

 

The reasons given for employee reduction for most companies are surprisingly similar.  When one is confronted with declining revenues and rising costs something must be done for the business to survive.  Increasing sales in difficult economic times can be a challenge.

 

For many business owners and managers the first reaction is to reduce their sales force and customer support positions based on the decreased demand for products or services. That also is often a risky undertaking, as less people calling on prospects and customers often equates with diminished customer intensity, loss of reputation for customer care, and decreased ability to outpace the competition.

 

The fact that many organizations are caught by surprise so quickly by slowing demand for their product or service shows us just how ineffective our long range planning can be. The budgets that seemed so achievable when plans were made last fall were mostly based on last year's numbers, and are almost never adjusted downwards based on the long-term economic forecast.  While it may seem realistic to predict lower sales in the next year it almost seems un-American to forecast a reduced amount of sales in the next year for many business owners and managers.  Many who are responsible for performance are quick to blame their sales force or marketing department and start the staff reductions in those departments.

 

On the other hand, you can't blame every sales decline on your sales force or your marketing message. They may be performing quite well to deliver the sales levels you are achieving.  One school of thought says not to lay off salespeople during times of uncertainty. Rather, look for ways to bolster the team you have.

 

"In tough times, I think you're better off having more than fewer as long as you can get performance," says John Monoky, an adjunct professor at the University of Michigan Business School and a sales consultant.  He believes that companies should free up their salespeople to focus on new accounts. "What's happened with all the downsizing is, you have the salespeople involved in the servicing and maintaining and retaining [of accounts], but they're not working on getting new business. You've got to put in the infrastructure to support their going out and selling."

 

During recessions, consumers and marketers alike must make the best of a bad situation. Not every brand will cut spending, but many of those that do will find themselves at a disadvantage when the recession ends.  Sales and Marketing managers need to make the most of every dollar spent in support of their brands if they hope to maintain strong consumer relationships. Those that succeed should then be well positioned to take advantage of weaker competition when the good times return.

 

Once you reduce headcount and then the economic conditions change companies must dedicate a significant amount of time and effort to rebuild a qualified sales force.

 

Sometimes you just have to stop the bleeding and layoffs are necessary. If that is the case, then there are steps you can take to minimize the damage. Many experts recommend investing in training for your remaining employees to demonstrate your commitment to them; surveys have found a substantial correlation between an increase in job training after layoffs and subsequent increases in profit and productivity.

 

Substantial lay-offs are unlikely to be the right solution for the prosperity of the company.  A recent study of almost 300 companies that weathered the last recession shows that over a three-year period companies that dismissed more than 3 per cent of their employees did no better than those that made smaller cuts or no cuts at all. Companies that cut more than 15 per cent of their workforce performed much below the average and, significantly, the companies that announced repeated rounds of job losses did worst of all. 

 

One other strategy to consider is that many employees might prefer the option of continued employment at a temporarily lower salary than to endure layoffs.  Salary reductions may also have a less negative impact on morale, provided it is done equitably across the whole organization and everyone is making the same proportionate sacrifice including managers and business owners.

 

Business owners and managers should spend time working on plans to ensure their company is meeting customers’ existing needs. Put a plan in place to encourage your marketing department and sales force to gather feedback and keep track of changing customer needs. What new services and products might be appealing to customers and potential customers?  This may also be a great time to weed out those problem customers that are costing your organization as much or more than they return.  Customers that are constantly dissatisfied and who pay late in even in the goof economic times are unlikely to be profitable when times get tough.

 

Although they are not exactly welcome at the time, downturns and even recessions can in fact be very healthy for those that survive it. They force organizations to occasionally confront and pare the fat and inefficiencies that no one pays attention to in when the economy is humming along.

 

But when you come down to it, success still comes from within.  Opportunities are all around us even in unstable economic times.   More millionaires were created in the Great Depression than at any other time in history. 

 

I recently receive an email from Neal Anderson telling me “The economy is booming if you are calling on the right folks. The economy has never been stronger for those that find a way instead of always finding an excuse. Those that call on the wrong prospects, don't save 10 percent, give away 10 percent, and amass debt will always be affected by a price increase. Some people feel gas is expensive...while they pay 35 dollars per gallon for coffee.”

 

 

Are you this decade’s Chickenman of Business?

Back when I was a kid there was a daily radio serial that everyone listened to that satirized the then-popular TV series, "Batman." It was called Chickenman!

Chickenman was, "the most fantastic crime fighter the world has ever known." It was (and in some places remains) a radio phenomenon.

Even today, if you yell “Chickenman!” one of the millions of loyal fans will instantly and involuntary respond, "He's everywhere! He's everywhere!"

In many respects small business owners and most salespeople are like “Chickenman”. (Come on and say it; He’s everywhere, He’s everywhere!) They stay busy and work really hard and are everywhere all the time.

Of course, they’re not literally everywhere, they are prospecting all over town and making sales to whomever will buy from them. They get to the end of their day, the end of their week or the end of their quarter and they just don’t have enough sales. Yet they’re worn out and tired.

The problem is that the closing ratio of most salespeople is about 20%; and that’s if they’re good. That means that 80% of their time is being spent with the wrong prospects. That’s a lot of wasted time and energy without any results to show for it.

How would things change if you could close 80% of your prospects instead of 20%? How much more time would you have to do the things you want to do – like develop stronger relationships with your best clients, provide better service, and actually have a life outside of work.

There are many ways to dramatically increase your closing ratios and none of them have anything to do with using closing techniques. Here are six things you can start doing immediately that will get your closing ratios climbing higher.

• Prioritize Your Day – Determine the most important tasks you need to complete on a daily basis to hit your sales goals. There should only be three or four key tasks such as contacting prospects and meeting with prospects. To find out what your top tasks are, simply ask yourself the question: “What are the direct activities that will have the biggest impact on my sales success?” Make sure that you prioritize your time each day to include appropriate time on your most important tasks. Block your time for these tasks and protect it just as you would protect an appointment with a prospect.
  
  
• Identify Your Bull’s Eye Market – Narrow your prospecting activities to your best prospects. Avoid the temptation to go after the low-hanging fruit. Instead, determine which group of prospects gets the most value from your product or service. Select a distinct market segment and start building your visibility and credibility with those people.
  
  
• Develop A Prospecting System – Most salespeople have a “hit or miss” prospecting system. To avoid this haphazard approach, you will have to get more disciplined with your prospecting activities. First, you must determine which methods you are going to use to connect with prospects and the activities you will need to engage in. For example, you may cold call with the plan of converting a certain percentage to face-to-face appointments. Second, review your numbers based on your most recent experience to determine how many appointments you need to close a sale along with the other proper follow-up activities. Third, schedule the activities in your calendar taking into account all the other things you are responsible for. In other words, make it real. If you have to make three appointments a day, but you know that Fridays are reserved for administrative work and staff meetings, then you need to adjust your daily tasks accordingly for the rest of the week.
  
  
• Remove The Sales Pressure – One of the primary reasons why closing ratios are so low for most salespeople is because they exert subtle or overt sales pressure with their prospects. When pressure is exerted, the prospect often will disengage by throwing out false objections or stalls or simply avoiding future contacts. Have you ever had prospects that won’t return your phone calls after you’ve talked or met with them? If so, you are probably guilty of acting like a “typical” salesperson.

  To remove pressure, examine your communication process. Are you asking questions or telling? While you should be asking questions, you need to make sure that the questions you ask aren’t putting undue pressure on your prospect. Review the questions you typically ask from your prospects’ perspective to determine if you need to do any rephrasing.
  
  

• Attract The Right Business – Carefully evaluate your prospects to make sure that you are securing the right business. The only thing worse than not making enough sales is making bad sales. Bad sales are with clients that are not a good fit for you, your company or your product. These clients will become a thorn in your side and take up way too much time and energy that should be spent elsewhere.
  
  
• Get More Referrals – You have instant credibility with referrals, because someone is recommending you. Consequently, spending more time with referrals naturally leads to higher closing ratios. You can set yourself up for more referrals by doing business with the “right clients.” That’s because the right clients become raving fans when you take care of them better than anyone else does. You can easily do this if you aren’t wasting precious time with bad clients. The right clients will refer more people like themselves to you.

Follow these simple steps and not only will you increase your sales, you will have more time available in your week and feel more rewarded than you ever have. Not to mention, you can strip off your Chickenman suit forever!

Sales Professionals as our National Differentiator?

Our country is no longer the manufacturing power it once was. Low-cost manufacturers from all over the world are now able to offer high-quality products at lower prices than many of our American companies. Some industry experts believe America’s expertise in selling is what will allow us to continue to compete in an increasingly difficult global marketplace.

Is the Sales Profession Capable of Reinventing Itself?
In the late 1950s and 1960s, the United States dominated the world economy. Today, our share of the pie has shrunk to less than 25 percent. The global marketplace has undergone enormous changes. If the sales profession is to be our ticket to future economic success, then we must see and conduct ourselves in the profession differently.

Though Americans have generally not regarded sales as a desirable career, statistics indicate that more than 50 percent of all students who graduate become salespeople directly out of college — with no meaningful training to prepare them. The result is a higher turnover rate in sales than almost any other profession.

If the sales profession is to be America’s expertise and differentiator in the global market, experts now tell us that college-level preparation is a must for a career in sales. I contend that a college degree does not completely prepare you for a successful sales career. To truly understand sales and be a highly productive and effective salesperson, you must enroll in a sales training curriculum that prepares you for the profession and how you should think, plan and conduct yourself.

Part of the challenge Americans face is their historic discomfort with salesmen. Relying on charm, high-pressure tactics or simple faith in their products’ virtues, salesmen have rarely inspired respect or trust in American culture.

Business leaders today agree that successful salespeople must become trusted advisers to their customers rather than pitchman or closers.

Let’s say you’re a salesperson and you’ve had a few good meetings with a prospect. You’ve successfully overcome their objections. Before you close the deal, you must ask yourself a very important question.

Before you move forward, you need to put yourself in the prospect’s shoes. Does it make sense for the prospect to do business with you?

When answering that question, you must be objective — something that’s not easy when your ego is on the line. You must also be totally honest — something that’s not so easy when commission is on the line. Will the prospect be better off choosing you over your competitors or just not taking action at all?

While it’s easy to get excited about closing a sale, closing the wrong prospect will damage your credibility. The wrong prospect may receive some value from your product or service, but that’s not enough. The wrong prospect becomes a bad client. A bad client, in turn, has more issues that will take the time of you or your colleagues to address.

There is an opportunity cost associated with dealing with problem clients. Every minute spent trying to satisfy them is time not spent building stronger relationships with your best prospects and clients.

What it really boils down to is choosing to do business with those prospects who have the potential to be raving fans. Treat your prospects honestly and ethically and they’ll become raving fans if your product or service meets and exceeds their expectations. By focusing on these types of clients and weeding out the poor fit ones, you’ll be in a position to exponentially grow your business through positive word-of-mouth and referrals. This won’t happen if you are willing to sacrifice the wrong prospect’s satisfaction for your immediate gratification.