Tag Archives: proposals

Sales Insider

April 5, 2017 by

I love sales. It is a career where you, the sales professional, determine your income based on how skillfully you execute the duty. It has a feel of independence, ownership, and entrepreneurship, and it can be extremely rewarding. Professional selling is regarded as one of the top-earning careers on the the planet. Note to you business owners out there: If your salespeople are making more money than you, don’t be jealous, be excited because they are building your business and increasing its value.

The term “commission” is familiar to ranks of sales professionals. However, I want you to think about your income a little differently. Rather than earning commission when a sale is made, think about your pay as an hourly wage. What makes your hourly pay different from the familiar, traditional hourly jobs is that your hourly rate will change based on the activity you happen to be doing at the moment. For example, in my previous career, for every 10 presentations I made, I would close on, and get paid commission for, three orders. On the three projects I won, my hourly rate was great, but on the projects I lost, my hourly rate was $0/hour. I thought “this is just how it is in sales,” so I did little to change or improve my sales performance until I was taught to think of my compensation as hourly. Spending 60 hours per week on sending proposals to my customers meant missing out on my kids’ activities and time with family, all so I could get paid for 30 percent of my time. That made me angry. This is madness, yet a vast majority of salespeople would give you a similar story.

I think there is a better way to sell that will pay more per hour, which means one can earn their desired wage in less time. I just need to figure out how to get rid of the seven prospects who don’t buy quickly and only spend time on the three who will buy. If I can figure this out, then I will close the three orders, so my pay is the same as before, but I do not spend much time on the seven who do not buy. Can you see how my hourly wage more than doubles?

Since your time is just as valuable as your prospects’ time, only the prospects who plan to buy from you get any of it. In order to do this, you must sort all prospects who talk to you as either buyers or window shoppers. The first step in doing this is to recognize that there are four possible outcomes of a sales call: yes, no, maybe, and clear future. Let’s examine each one.

Yes: Congratulations! You achieved an order and you will earn money.

No: Shoot! Shake it off. There are plenty of other customers out there who will buy. Did you know that “no” outcomes are good, and they can actually make you money? If you get a “no,” that opportunity no longer consumes your time, which means you can divert time to those who buy, and your hourly rate actually increases.

Maybe: Stay away from the dreaded “I need to think it over.” These outcomes represent the “window shoppers” and will cost you money. These prospects waste your time and consume your resources. Therefore, when a prospect stalls, push them to “no.”  At least a “no” will make you money.

Clear future: Sometimes your product or service cannot be sold in one call. You might need multiple meetings to formulate the solution and make the sale. This positive outcome is for those prospects who see value in your solution, are willing to move the process forward, and want the sales conversation to continue on a specific day at a specific time.

Thus, the rule is “No more maybes.” If you can make this rule part of your selling system, you will increase your hourly rate and significantly grow your sales. You effectively sort the buyers from the window shoppers and spend more time on those who buy. Now, I close three out of four presentations I make, my income has increased by triple digits, and I spend less time doing it all.

So, what is you hourly wage?

Karl Schaphorst is a 27-year veteran of sales who now specializes in training other sales professionals. He is the president of Sandler Training.

 

 

 

 

 

 

 

 

 

 

 

This article was printed in the Spring 2017 edition of B2B.

Marketing Ethics

February 27, 2014 by

When Jim moved his business in the fall of 2010 from Lincoln to Omaha, he encountered a pricing problem. The cost of his services in Lincoln didn’t suit the Omaha market.

At least that was one explanation for why Jim wasn’t getting the accounts he had planned. How could Jim determine the market price for his services before he lost too many sales and crippled his business?

A colleague of Jim’s recommended a strategy: Have two or three friends who work in Omaha businesses call Jim’s competitors. Ask them to submit proposals for their services. Once the friends acquire the proposals, they tell the competitors “thank you” and inform them that they didn’t get the bid.  In this way, the friends, who didn’t want the services anyway, are in the clear, and can give the proposals to Jim to study for pricing information.

“Everyone does this,” the colleague said. “It’s an easy way to determine market price for products or services.”

Would a marketing professional recommend such a strategy? While “easy” and “efficient” are appropriate decision rules in business, they are not synonymous with ethics.

Many marketing professionals subscribe to the American Marketing Association’s Code of Ethics. The Code was created to help them remember that reputation and trust can be destroyed when they only focus on the easy way and forget to consider honesty and harm.

Codes of ethics can help business people overcome obstacles to ethical decision making. One of the obstacles is not identifying all relevant stakeholders and the impact of our actions on them (Werhane, et. al., 2013).

In the previous case, we often forget the competitors. However, think of the Golden Rule. Putting ourselves in their shoes, we realize that none of us likes wasting our time. They are harmed because they go through the work of preparing bids that have absolutely no chance of being accepted….time and expertise that they can use to really get business.

In addition, we might not recognize the impact on our friends. We are asking them to use their businesses in dishonest ways.  None of us would like to have our businesses or reputations treated in this way.

Bounded awareness is one reason we don’t identify all relevant stakeholders and the impact on them. Bounded awareness is a pattern of thinking that prevents us from noticing relevant data (Gino, Moore, and Bazerman, 2009). It can be a good psychological mechanism because it can help us survive. But bounded awareness also has ethical implications when relevant or useful data is missed and poor choices are made based on incomplete information.

Is there a remedy for the kind of bounded thinking that leads to bad marketing strategies?

Yes, and the remedy is practice.

We need to practice exercising our moral imaginations. When making a marketing decision, take the time to systematically identify all stakeholders and imagine the consequences for them when one alternative is played out, then another, and another. Start the practice by listing options and stakeholders on paper until the mental process becomes second nature. In this way, we strengthen our moral muscle and do a better job balancing the easy and efficient actions with the honest and less harmful ones.

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Beverly Kracher, Ph.D.

Daugherty Chair in Business Ethics & Society

Executive Director, Business Ethics Alliance

College of Business

Creighton University