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Monday, 17 January 2011

Failing during the down turn.

I wrote of my dear friend who is succeeding in the down turn, http://bit.ly/gDW2lD and he continues to thrive 15% Y on Y growth, from a changing product mix and a growing market. His Cash disciplines and customer focus continue to pay-off.
However, we play golf with another Businessman. He, and his two daughters, runs a Machine shop, Precision Engineering and Custom Chromium Plating. 18 months ago he thought the downturn would only last a year. He had the cash, so he simply bunkered down.
He kept his employees, employed.
He gave extended credit to his customers.
And, he waited!
drowning2

Now he is running out of Cash, and Cash counts.

It is not too late, he still has a core business, but his material suppliers want cash up front, and not all of his customers pay, many pay late.

 

He asked me to help sell.

But, the sale to cash cycle is 7 months and he no longer has 7 months of Cash.

Bank loans? Mortgage? I had to tell him, that the way he currently operates, in his real market, he will lose his home as well as his business.




Madness, is doing the same thing and expecting different results.

How do you recover?

Cash Control is number one, both cash spend and cash collection.

He has to size the workforce to the business, and he has to stop being his Customer’s Bank. NOW.


A quick product/Market scan showed his best Customers, in Cash terms are in France, moderate Margins but good payers.
I’ve sent HIM on a sales call.
All Customers 10,000 € in arrears are now on credit stop pending payment. No shipments until the account is cleared, and future “deals” are 30% on order, 30% on manufacturing start and 40% on completion. This represents his business cycle of Material purchase, Worker hourly rate, and Margin.

I have been handling Difficult Customers, and keeping “the family” away from them.
I am, with some success, offering 10% Cash Back for less than 30 day payments,
and I do mean CASH.

swimmingThe ‘will not pay’ are not getting any shipments,
the 'cannot pay' I am looking at on a case-by-case basis.

This is not “hard headed”,
they should have been doing this anyway,
but now they have to do it.

It’s a good business, they are good people,
I hope we can save their business.
Then I can tell them about Flat worlds,
Facebook, Twitter, Blogs and Selling in 2011.
Right now it’s more basic than that.

Setting Stretch Sales Targets for 2016



One of the measures we use at BMAC is a firm’s “Maturity”,

their ‘Sales’ maturity is WHEN and HOW they use:


‘Stretch Targets’

  


Firms that use “stretch targets” outperform
their expectations and outperform their competitors. 

They are High Performing Companies.

 

Our measurement is M1 through M4,
based on Ken Blanchard’s “Leading at a Higher level”.

 

What is a “Stretch” Target?

Simply put it: It is what you NOW believe Sales can achieve,
based on the ACTUAL Sales Velocity or Run Rate.


A Stretch target recognises that ‘Forecasts’ are just predictions.
That things like Markets, Products and Competitors change;
as do the Economy, Laws, Technology and Fashions.

Therefore, “Forecasting” and “Targeting” a year ahead is often inaccurate.

Within my Clients over the last twenty years,

I have seen from 50% to 200% variation from forecast.


profits graph

Then, is it their forecasts that are wrong?


By their very nature, forecasts are unstable.
You predict in December the result
for December of the following year
...no mean Task.

It is far easier to predict NEXT MONTH,
based on the last 3 months,
still prediction, NOT certainty.





 

How then do I use the M1-M4 scale, and what do I do with it?

 

What is the involvement of the sales people in setting Sales Targets?

 

  • M1: the least mature Firm’s 12 months forecast,
    set the Sales Target then divided it amongst the Sales people
    and they NEVER modify it.
    They congratulate themselves for achieving any monthly, quarterly or annual milestone,
    and blame any salesperson who does not.
    There are three failings inherent in this system.
    • It de-motivates sales people
    • It is sub-optimal in that it accepts the Target as success, rather than overachievement
    • It has no strategy for failure, it simply repeats month after month
  • M2: set a 12-month Goal, based on a 12 month Forecast,
    divides it amongst Sales Managers,
    who accept the Target after Consultation and ask for the resources to achieve the Target. 

    The Sales Managers seek to aggregate their salespeople’s results to achieve their Target.
    This can produce either a Coaching Culture’ or the ‘Blame Game’. There are still three in inherent failings at this level of maturity.
    • It continues to be sub-optimal in that the target is success,
      and any combination of sales result that meets Target will do.
    • Sales are composed of ‘motivated winners’ and ‘de-motivated losers’.
    • The Strategy for failure is to focus resource on winners and ignore losers
  • M3, the Goal is set based on the Forecast and ‘deep dialogue’ with Sales Managers,
    which is then agreed by consensus amongst their salespeople.
    The VP of Sales owns the overall Sales Target; it will not be simply divided out,
    but will be apportioned according to the Consensus of the entire sales force. 
    It is based on an optimal result.


    The VP of Sales is tasked with using the resources in an optimal manner,
    reviewing Strategy on a Monthly basis:
    optimising People, Accounts and Opportunities into a ‘most likely to succeed’ scenario.
    • The major drawback at this level is finding a VP of Sales with the skill set of:

      Leadership, Creative Thinking and Sales Management,
      who is both capable AND motivated to do it.


  • M4 the goal is to “Sell As Much As Is Profitable.” 
    Forecasting and Targeting are for planning purposes only,
    in execution each person within Sales
    from VP to a Sales Rep is fully engaged on “Sales Optimisation”. 
    The true M4, in fact, everybody is involved in Sales Optimisation. 
    [Usually, you only find M4 in Professional Services:
    Legal, Accounting, and Management Consultancy.]

You would do well to look at them.

In Ken Blanchard’s Book on Leadership,
his basis is give the people (or the firm) the Leadership they NEED”.


However, in Sales, we tend to get the Leadership they HAVE, especially from the CEO.
Hence, most Sales Firm’s have the Maturity Level of their CEO’s Leadership Style.
The Forecast, Targeting and Goals, which is the CEO’s ‘preferred’ style.

This may disconnect Sales from the Market reality;
instead Targets are based on the Risk Aversion,
Control Requirement and the “People Outlook” of the CEO.

    • Set Sales Targets 15% higher than aggregated Managers targets
      and then aggregated Managers Targets at 115% of the Firms targets”
      (Planning for Failure)
    •  “Put up all their targets by 15% every year.”  ( High staff Turnover)
    • “Set the targets low in order to meet them.” (No shareholders)
    • “Set the Targets just out of reach, so we minimise bonus payments.”  (when the CEO listens to the CFO)

      or
    • “Let’s go for it!”

How were your sales targets set this year 2015?

Targets graph

Based on the Market reality under an Umbrella Sales Strategy
with every Salesperson’s buy-in and commitment?


Or, were they dealt off the top
of the “Target Pack” after a shuffle.

 

Will you be happy to achieve ‘Target’ in 2016 or will you :
“Sell as Much as You Profitably Can”



BMAC Consultants offer a free Diagnostic Pack

“What is your Sales Maturity and
  What is your Sales Leadership style?”

Contact brian.maciver@googlemail.com


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Monday, 3 January 2011

Hunters and Farmers 2013

One of the most popular misconceptions in selling is:
that there are two kinds of Salespeople,
Hunters and Farmers, there are not.

 

If you believe that there are, and if you put this misconception into practice,
then you are losing much of your Revenue Opportunity and all of your Profits.


image

“Hunters”


e.g.  “New Business Development Executive”
“Hunters both prospecting and
qualifying sales opportunities.”








image

Farmers


e.g.  “Account Manager”
“Farmers servicing existing customers, identifying and closing NEW sales opportunities”







This has been used for about 35 years (maybe more).


Anyone that researches Hunters and Farmers Model finds that:

http://www.mckinseyquarterly.com/Using_your_sales_force_to_jump-start_growth_2781


By definition Sales “Hunters” take Business from Sales “Farmers”,


I would like you to think
of the whole idea differently.

It is NOT salespeople who are ‘Hunters’ or ‘Farmers’ with 'Buyers' as “food”.

In fact the TRUE MODEL is that:
BUYERS who are either “Hunters” or “Farmers”
and it is Salespeople who are their ‘meals’!

 

Do not confuse my use of the word ‘BUYER’ as a “Professional  Buyer” in the Purchasing Department,
I use the word ‘Buyer’ here in the context of ANYONE who a seller may sell to. 
ANYONE. Technical, Financial or User. 

Anyone in the Buying/Decision Making Model whatever their role,
could be either a Hunter or Farmer.


I have researched “Effective” Buyers, in Retail, High Tech, Financial Services and Government.
Using the model of “success” as the best outcome including Product Application, Cost of Acquisition and Ownership, and successful on-going relationship (for the buyer). 

These three criteria determine Buyer Success

  • Cost, Application and Relationship.

Using the terms “HUNTER” Buyer and “FARMER” Buyer is not pejorative it is descriptive,

BOTH of these Buyer Types are doing a great job for their Company (and themselves!).



image

“Hunter Buyers” are predators; they are always looking for new ‘victims’. 

Their staple diet is inexperienced sales people, who think they have “found” a sale. 

The Buyer commences to eat the ‘Seller’ for breakfast!

 

 




image



“Farmer Buyers” have found their
meal ticket’ and nurture their
Account ‘Manager' with small gifts
(small orders). 
Meanwhile, ‘training’ the Seller to bring
best offer best pricing, special deals and
all in costs’ to “Keep the Relationship”.




 
When you run a Customer Profitability Analysis across your Customer base,
then some of the poorest performers are:

Long term Customers with a ‘Farmer’ (long tenure Account Manager)

or the new accounts brought in by your ‘Hunter’ sales people on a “Loss leader sale”!

Profitability ‘Pereto’ usually shows that 20% of your Customers are delivering 80% of your profits.  These Top Performing Profit Accounts have a newly appointed “Account Managers”,
or a Margin incentivised Hunter-Gatherer Sales people!

I have carried out extensive Behavioural Analysis on Buyers (3,000) sales calls.

Their Behaviour, verbal behaviour that is, follows clear patterns.

I have devised 4 categories over the years Hunter, Farmer, Poacher and Skinner.

The real question is:
how do I match my Sellers
to these Buyer profiles?

I will continue to Blog on this.