December 12th, 2011 — Uncategorized
As I’ve gotten countless requests and well wishes over the past couple of years, I feel that I owe a brief update on my doings. We formed an advanced manufacturing and materials company, Summit Materials, in mid-2009 focusing on near-net shape manufacturing to save our customers 30% and we have developed an alloy, SM-100(TM), that provides a unique combination of excellent corrosion and wear resistance at the same time. It is used in applications ranging from knives to bearings to firearm components.
So that is what’s been keeping me so busy. I’ve never worked so hard in my life, but I’ve never been more professionally happier at the same time.
I hope to get back to this blog soon, as I truly do enjoy it as an outlet and miss the community that grew around it. Perhaps I’ll broaden the scope to include lesson learned from my start-up experiences as well as what it’s like to drum up sales for a completely new product and process.
June 16th, 2009 — Summary
I have a confession. I’ve been trying to raise money to start up an innovative manufacturing company for a spell and it looks like we’re going to close on our first funding round very soon.
As such, I have to put this site on hold due to a dramatic loss of any free time.
If anyone out there has any interest in purchasing this site, I’m open to selling it, otherwise, there’s still a boatload of sales and marketing information on here, so I’m not going to officially close it down quite yet.
June 9th, 2009 — Summary
In this crazy economic environment, a lot of people are swapping jobs because the grass is always greener as the saying goes. Today’s sales post warns you not to stop working hard for your current company during your two-week notice and to go out on top of your game.
Work hard so that all your customers know you are leaving and there are no hard feelings and inform them who they should be contacting in your absence.
The reason for this seemingly weird behavior is two-fold. First, and most importantly, it is the right thing to do. If you are collecting a pay check, you owe 100% effort to your employer. Secondly, this world is pretty darn small (and getting smaller) you’ll be surprised how often you end up selling to, working for, or competing against folks you thought you’d never see again.
Bottom line is to be responsible and work hard until the door hits you in the rear end!
June 2nd, 2009 — Negotiation, New Opportunity
We’re all taught in Sales 101 to ask ourselves “Why would our prospect buy this product/service?” I’m here to tell you that this question is only the tip of the iceberg and if you leave it at this you’re only doing your competition a favor.
I can’t lay claim to the two follow up question that I’m going to put here, but I can’t quite remember the exact sales source either – I think it might have been from the SalesRoundup show. At any rate the follow up sales questions to ask yourself are:
- Why would they buy this product or service right now? and
- Why would they buy it from you?
By understanding why they need it right now you really get at their painful needs and can better control the pending sales negotiation. And you certainly need to know why they would buy from you and not your competition … so that you can educate them on this very matter.
May 26th, 2009 — Account Maintenance
I think we all know that when there is bad news brewing, like say a shipment will slip by a week, you should let your customer know ASAP. That’s a no-brainer and not worth talking about.
But in today’s economy it is worth talking about how and when to deliver REALLY bad news. For example, I’m dealing with a company that just filed for Chapter 11 bankruptcy protection and we had to come up with a plan to inform the customers so they didn’t read about it in the paper.
The people at the level I was dealing with didn’t know for sure exactly what day we were filing, we just knew it was coming – and you can’t say anything to customers before the filing, who knows, it might not actually happen, so we knew we had to at least wait until the filing actually happened.
The VP of sales for this organization (~$400M) wanted a form letter to go out to all customers, period. I argued that the top 20% customers deserve at least a phone call, and the top 5% should get a face-to-face delivery.
We ended up doing a mixture, I got my 20% phone calls and we visited the top 2% and things went pretty well. Literally every customer took our calls and thanked us for explaining what this filing meant to our company and to our ability to service them short and long-term. We set up a Web site to post updates on so that everyone knew our status and things seem to running fairly smooth right now – we’ll see.
Bottom line is that communication is the key, if your customer hears about your dirty laundry from anyone other than you – you lost.
May 19th, 2009 — Account Maintenance, Propose Solution, Summary
I love email – it’s one of the few tools that you can use at 2:00 in the morning to communicate to your customers.
I’ve noticed over the past few years, however, that the size of emails is rapidly growing. It wasn’t all too long ago that it was foolish to try to send an email over 1MB in size – now it’s common to get 10MB files launched my way.
Just because your customer is capable of receiving your bloated sales propaganda doesn’t mean that you should tax their system, or their patience. Learn how to convert images to smaller sizes and transform large documents into smaller PDF files – your prospects will thank you for it.
May 12th, 2009 — Negotiation
You’re about to close a deal with an enormous company and the buyer tells you that the $100/widget price must come down if the deal is to go through.
You’ve let your sales funnel dry up and you need this deal to make the quarter. Without hesitation, you drop to $95 (5%) and assume the deal will go through.
Ah, but what does the buyer see? He sees that you just took a seemingly arbitrary 5% off your price – quite an arbitrary amount don’t you think? If you had 5% to give up, you probably have 7%. So the buyer waits two or three days and says that the deal is yours if you just back your price back an extra 2%. Deal done.
Now imagine you cut your price from $100 to $98.35 instead of the round $95, what is this message saying to the buyer? Well, it says that you don’t have much room to move at all, and there isn’t much margin to give up. The buyer comes back demanding an even $98 and you’re still $3 ahead of where you were in the first scenario and everyone’s sales ego remains intact.
Bottom line: don’t telegraph that you have excessive sales margin by moving your price in predictable amounts.
May 5th, 2009 — Examples, New Opportunity
I get asked a lot where I get my sales leads from. While there are plenty of standard answers – mine is typically “Where other salespeople aren’t looking.” Here are two quick examples.
For example, what industry to you sell into? Let’s say that it is in novel materials for semi-conductors. Why not monitor the semi-conductor patents that get issued and contact each and every author to pick their brain and see if they know who you should be talking to.
Staying on the same general sales lead path – get your hands on all the technical articles you can and call up all the authors. Typically these more technically-oriented people will talk to you and provide you with great insight and sales leads as well.
The point is to look where others aren’t looking.
April 28th, 2009 — Fact Finding, New Opportunity
We often preach how important it is to “ask open ended questions”. I recently realized, however, that many don’t really know what is meant by this sage sales advice – so we’re going to set the record straight right now.
Open ended questions simply refer to questions that can’t be answered with a single word such as yes or no.
An example open ended question would be “How does your purchasing process work here?”
An example closed question would be “Do we have everyone at this meeting that we should have?”
Why do we preach this so hard? Well, it ties in with another important sales lesson to listen ten times more than you talk. You may say ten words in a closed question that your prospect answers in a single word – you now have a deep deficit in your talking to listening ratio.
After asking your open ended question, just sit there and listen, no matter how hard it is. Let them fully answer the question and then either just sit there in awkward silence until they talk more or simply probe deeper “I think I get what you’re saying, can you give me an example?” “Where does the process typically bog down?” and so forth.
A final bit of advice, don’t sit there and think about your next question while your prospect is answering you. Listen and live in the moment and just make sure that you fully understand everything you need to in order to put your self in your customer’s shoes – just make sure you take off yours first!
April 21st, 2009 — Propose Solution, Summary
We set out to prove that our oft claimed strategy of integrating the buyer into your sales process at the very beginning of the sales cycle provides deep rewards down the line. By integrating buyers in your process early, we argue, you are gaining almost insurmountable advantages over your competition. Here are just two of the main advantages.
- Buyer buy-in. In other words the buyer will be on the ride with you as you and the respective technical teams build up a technology solution. She’ll have a say at each fork in the road and understand the economic repercussions of each decision. So by definition, your price tag will be acceptable, the buyer knows what it is before you submit it. As long as your technology is at least comparable to your competition – you’ll win the job every time.
- Your customer’s engineering team will often be on your side, because they are mainly interested in the best technical solution, period. As such, as you and they begin to form that solution, they will act as your agent – convincing the buyer that your combined solution is the best path forward. When your competition’s proposal shows up and no one has even seen it before, you will look like the safe bet.
We surveyed a swath of buyers from major domestic corporations in the fields of telecommunications, advanced materials, manufacturing, aerospace and aviation, mining, and advanced electronics; we stayed away from buyers in the retail world. While a statistician would have no problems poking holes in our method, you can’t argue with the practical results – and that’s all we really care about.
For this post, we’re detailing the question that asked for the top five mistakes that engineers and salesmen make when trying to sell into their respective organizations. The questions were asked in an open format, so that they participants could answer in any manner that they felt best. Here are some of the quotes that we received.
Don’t talk down to buyers.
Don’t ignore the buyer when you get them in the meeting.
Engineering estimates are not the same as quotations.
Don’t try to backdoor the buyer by going through the engineer.
So here they are – the top five buyer’s pet peeves.
5. Trying to weasel in the back door of the company through an engineer.
4. Not offering alternate solutions.
3. Not knowing about either company’s terms and conditions.
2. Underestimating the buyer’s technical knowledge.
1. Not bringing the buyer in the process from the very beginning.
In support of the number one reason, one of the survey questions was:
At what stage in the buying process do you like to be brought in at?
a) During the initial sales call
b) After your engineers have approved the solution
c) While a quote is being developed
d) After delivery of quotation
100% of the respondents answered (a) they want to be brought into the sales process in the very beginning.
In reality most buyers are brought in the process at step (d) after delivery of the quotation. If they (buyers) want in at the beginning of the sales cycle and we (sellers) want that too, why is it so rarely done? I guess we’d need another research study to determine that!
Bottom Line: Get the buyer’s involved right from the start and you’ll be buying them a beer after the deal closes!
April 14th, 2009 — Develop Solution, Examples
This example is a real-life one lifted from my own experience. We had an idea that recycling expensive metal used in the investment casting of aerospace parts would be a useful service to offer. Metal prices were at record high levels, and these guys used hideously expensive metals like rhenium and silver, to name two. Used parts were just stockpiling up everywhere because no one knew what to do with them. This type of project would have the potential to fill up the bottom of my sales funnel – the best part.
I called on the major aerospace players and asked them if this was a problem. YES. That was music to my ears. I decided to pick just one company to focus on initially to prove out the concept and the technology. We sketched out our solutions and got basic cost data put together for each process. The various solutions ended up being vastly different in cost structure.
One solution was very cheap and could be rapidly implemented – but the purity of the resulting metal was less than prime and it would have to be diluted with pure virgin metal to be used again. The alternate solution was very capital intensive and would take a year to implement, but the produced metal could be used as is – in fact it was purer than the incoming material.
I called on my contact at the company; his title was Technical Consultant, which at this company was the very top of the pecking order for the technical ladder, so he was the right person to be talking to. I asked him if it would be possible to put together a team from his side that could help evaluate our solution from both a technical and business point of view. He replied that he was the correct technical contact and he would put me in touch with the responsible buyer.
We had an initial teleconference where our team laid out the two solutions and talked about the pros and cons of both methods. At this point both paths made economic sense for them, but Option A was clearly less expensive if they could use the less pure metal. I suggested a trial run of Option A, since we already had that equipment on site.
A $50,000 purchase order was cut less than a week later.
Do you think the PO would have been so easy to get without the correct buyer in the loop? Note that I anticipated that this would be a possibility and had previously worked out the costs to arrive at the price.
As the work commenced, it was apparent that we needed to involve another of their vendors into the loop. They would be responsible for the initial melting of our recycled material into a usable alloy. Well, this group is now starting to get difficult to manage. Conference calls now had an average of seven outside people on the line in addition to our four or five. But this is the price to be paid for this type of collaboration. It got so involved that I ended up purchasing a Web hosting service to better facilitate the discussions via video – I even bought each of the major players a video camera and microphone to use. Talk about good will!
To cut down on the length of the story, the initial solution didn’t provide good enough quality for them to use, so we needed to further investigate the second option. Things get sticky here because your getting major quotes for capital equipment over $1 million and you really don’t want to tell your prospect what things cost or they will beat you down to unsurvivable margins. I was upfront and only told them what price we would need to charge to make it an attractive business to us.
They fought very hard to get more cost data, and sometimes you have no choice but to surrender. But in this instance, I had the upper hand. They had so much time invested with me that their switching costs to going with a competitor would be too expensive and time consuming. I ended up giving some detail about depreciation terms and usage estimates, but equipment pricing was never disclosed. See the article “Negotiating With the Bean Counters” for details about how to handle these situations.
The sale was actually pretty easy at this point. I went into a multimillion dollar and multi-year business opportunity with a one-page, zero-surprise quotation and won the business over others who submitted “proposals as thick as phone books”. If you’re curious about timing, from my initial contact to the $50,000 order was one month. It took another ten months to secure the multi year deal – no one ever said that complex sales happen quickly!
It should be noted here that since we initially thought of the idea, there was no competition up front. After getting into a bit and working with the team, I suggested to my customer that they begin to work up a competing quote.
Why would I invite competition?
Well, for starters, I knew that for orders of this magnitude, at least two competitive bids are almost always needed. If we waited until the end to realize this, it could delay the order process by months. Secondly, maybe the competition had a better plan that we did. I doubted it, but one never knows. And if they did have a better idea, perhaps we could share in it. Either way, I had the customer’s best interest at heart and it showed.
There are many more interesting intricate details that happened along the way with this project, but the soul of the relevant matters to this article have been laid out.
April 7th, 2009 — Uncategorized
I eluded to some big news some time ago and it’s finally coming to fruition. As like many of you I’m sure, I try to have several irons in the fire at any one time. One of these irons appears to be glowing so hot that it is consuming my time – not to mention I have a 3 year old and a 3-week old at home.
As such, I’m at a point where I need to make some difficult decisions. One of which is to let this site go – the site where I cut my teeth in the online world and made so many great friends.
I’m not going to go into details of the stats here (other than to mention that my download list is about 1,000 people) and I have no price in mind. But if the content is of interest to you or you think it would appeal to your customer base, drop me a note and I can give you the skinny on the site.
I’ll keep posting until it sells or I decide to change my mind.