Sales Machine

Many companies struggle with forecasting, big time and many sales forecasts are consistently dead wrong.  They spend a lot of time and energy and don’t get all much out of it.

Here’s how the sales forecasting process usually goes:

• Step #1: The sales reps provide a forecast. Each sales rep guesses what he or she thinks she might be able to sell, and then predicts they’ll make about 5% less. That way, if a deal falls through, the rep can still make the number, but if not the rep will look like an over-achiever.
• Step #2: The sales managers adjust the forecast. Because each sales manager knows that his sales reps are padding, he adds and subtracts from whatever numbers he gets from the sales reps, reflecting his best judgment of what he thinks will really happen.
• Step #3: The sales VP re-adjusts the forecast. Because the sales VP knows that the sales managers are changing the numbers, he figures that the numbers aren’t accurate, so he plays around with them some more, adding and subtracting as necessary.
• Step #4: The marketing VP does his own forecast. Because the marketing group doesn’t trust the sales group, they make their own forecast, usually based upon the numbers they would like to make combined with some BS market research.
• Step #5: The head of manufacturing does his own forecast. This long-suffering individual actually has to worry about inventory and other issues, so he makes his own forecast of what he’s going to build, hoping that whatever he builds will actually be sold.
• Step #6: The CEO makes up a new forecast. The CEO wants to make sure that the stock price keeps going up (thereby increasing the value of his options).  So he tells the investors that the company will make big numbers. He then tell the rest of the company to go back and change their forecasts match his promises.

Frankly, most of this activity isn’t all that useful.  It only creates an illusion of predictability, when in fact there is very little predictability when it comes to selling.

I wonder sometimes whether it makes sense to spend all that time and energy on what’s really just an internal political rock-fetch.

Wouldn’t it just be easier to look at what was sold over the past few months and assume that the next few months will follow about the same pattern?

Honestly, in most cases, I think you’d probably end up with a forecast about as accurate as the one that emerges from all the organizational brouhaha.

What do you think?

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There’s been a lot controversy about the enormous bonuses going to various folks in the financial industry.  The population at large is pretty darn angry that bankers are handing out tens of billions of dollars after running the world economy into a toilet and then accepting bailout money.  There’s a lot of pressure from the public to curtail those bonuses.

I disagree.  Many of those bonuses are owed to sales professionals who were operating under the understanding that they’d make that kind of money.  Since they were hired and employed under that understanding, they should get paid, on time, full amount, if they hit their quotas.  Not paying them is the same thing as not paying Joe Salesman because you decide — after he’s brought in the business — that selling isn’t all that difficult.

Now, that being said, I think that these traders and brokers are being MASSIVELY overpaid for what they do.  But I don’t hold that against them, I hold it against the idiots who hired them and who are too stupid to realize that they could pay people a lot less to do the same kind of work.  If you’re looking for somebody to blame, blame the idiot CEOs that run these firms.

I’ve been following the financial crisis story for the past two years, and when I look at the lamebrains who run the financial services industry, I’ve never seen a bigger bunch of stuffed shirts, empty suits and mooncalfs in my entire life.  It’s PAINFULLY obvious that not a single one of them really understand their business, and not a single one of them has the foresight or guts to go against the herd, even when the industry is herd of lemmings.

Just to make it clear how completely stupid these pinheads are, check out the story where Goldman Sachs and Citigroup executives sequestered doses of swine flu vaccines for their employees.  Can you possibly imagine doing anything that stupid.  Taking flu vaccines from CHILDREN in order to dose up your executive team.  As if people didn’t hate these guys enough.

So I say: pay the bonuses to the sales pros, but dump the tonedeaf, clueless fools who are running those companies. Unfortunately, since the U.S. has a government that bought and sold by big business, there will never be a requirement to have truly independent boards of directors.  So we’ll continue to have rubber stampers, which means that the idiots running these firms will never get pitched out on their fat cat tuchuses.

But I can dream, can’t I?

The archetype of sales professional is an outgoing, extroverted, “people-person.”  Therefore, it’s not surprising that some people wonder whether that personality type is required in order to be successful in sales.  A reader from Australia writes:

I have been reading your blog recently and find it quite insightful.  I really love the psychology of sales ( I enjoy trying to pick people’s brains ).  My biggest fear about the jump is my introverted personality.  I am not a natural networker but realize this is an essential skill.  Just curious of your opinion.

Interesting question.  Rather than just give my opinion, I think I’ll ask the Sales Machine readership.

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With unemployment reaching levels not seen for decades, this isn’t a time to find yourself suddenly job-hunting.  If your company is having a layoff — or might have one — you need to know what to look for, and what to do, so that you can land on top.  Here’s a quick quiz to test your “layoff IQ.”  If you get all four answers right, then you’ll probably land on top, no matter what proverbial substance hits the proverbial fan.

CLICK for the first question »

Apple computer just invented the planet’s dumbest marketing idea.  It’s a  patented form of online advertising that FORCES you to pay attention.  It locks up your computer or phone until you take some action (like correctly answering a question about the ad) that proves you’re paying mental attention to the ad.

It’s not just SPAM.   It’s Nazi-SPAM.  Achtung! You vill read zis ad or else!

The New York Times article decribing the method says that Apple thinks this marketing technique would “enable computers and other consumer products to be offered to customers free or at a reduced price.”

Here’s why this is a seriously dumb idea.

First, the free-if-you’ll-accept-intrusive-ads concept has bombed every time it’s been attempted.  (E.g. the “Free PC” in the U.S., the “Henphone” in China.)

Second, Nazi-SPAM is a great way to make prospects and customers hate your guts.  When ads go beyond what’s normal on broadcast TV or radio, I think that most people start to actively avoid the product being advertised.

I’ll say this much: if an ad EVER hung my device until I asked answered some jackass question, I would NEVER NEVER NEVER NEVER NEVER NEVER buy whatever was being advertised. NEVER.  And I would badmouth that product and that company every chance I got, to anyone who’d be willing to listen to me.

I don’t care if I got the device for “free.”  I would deeply resent ANY advertiser who interrupted what I was doing in order to FORCE me to pay attention the ad.

And I believe that would be true for any product sold in any environment.  Take B2B for instance.

Imagine doing sales for a company that was creating “brand awareness” using Nazi-SPAM. The only way you’d get a prospect to talk with you would be to claim you worked for somebody else.  You’d have to a fake a coughing fit every time the customer asked for your firm’s name.

But maybe I’m wrong. Maybe Nazi-SPAM is the greatest idea since the Ipod.

READERS: What do YOU think? Feel free to leave a comment.

Microsoft just gave its Xbox customer base a major spanking.  Turns out that about million Xbox users had modified their game consoles so that they could play pirated software.  Apparently Microsoft finally got sick of being ripped off and yanked out the Xbox Live accounts, so that the game consoles won’t work online any more.

Needless to say, it takes a fair amount of corporate cojones to completely alienate a million customers, even if those customers were acting in a questionable manner.  I understand the logic; Microsoft loses money on the Xbox hardware, which it regains through license fees for (non-pirated) gaming software.

Microsoft’s willingness to spank away is, in my view, part of a larger tendency that’s developing in the B2B world, of separating customers into two piles: good (i.e. profitable) and bad (i.e. not profitable).  Once that takes place, the “good” customers get all the attention and perks, while the bad ones are told to take a hike.

There are two problems with that approach.

First, today’s bad customer could become tomorrow’s good customer, either because their business changes to make them a better customer, or your business changes so that what was bad is now good.  For example, if Microsoft started making money downloading movies to Xboxes, it might be better off with a million more units in the field.

Second, when you spank a customer, that customer generally spends the next ten years telling his friends, family and colleague that your company sucks.  Now, in Microsoft’s case, they’re probably so thick-skinned by this time that nobody in Redmond cares all that much.

Anyway, I’m curious what you think. Here’s a poll:

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Just wanted to give the Sales Machine community a heads-up that we won another award. This time it’s a “silver Azbees” in the “Blog — How-To/Tips/Service” category, from the American Society of Business Publication Editors.  The award

As with any award for a blog, the judge’s decisions are based as much upon the quality of the comments as on the quality of the original writing.  When I look back on the past year, I’m not surprised we’ve been winning awards since, as a group, we’ve worked on most important aspects of selling:

How to Be Successful at Cold Calling

• What’s the Best Time to Cold Call
• The Ultimate Cold Calling Tool

How to Give Better Presentations

• What’s the Best Opening Remark?
• 10 Big Reasons Your Presentation Sucks

How to Work Complex Sales Issues

• B2B Selling: Can You Win the Game?
• Sell to the CEO!  Can You Win the Game?

How to Stay Motivated and Positive

• How to Motivate Yourself in 60 Seconds
• The Ultimate Sales Motivation Tool

How to Deal Identify Selling Mistakes

• Top 10 Dumb Mistakes Sales Reps Make
• Top 10 Dumb Mistakes Customers Make

How to Cope with Managers and Customers

• Sales Managers: A Field Guide
• B2B Customers: A Field Guide

I’m sure we’ll continue to discuss these issues (and more) in the coming months.  For now, though, I think we can all give ourselves a pat on the back for a job well done.

For myself, I would have LONG ago given up on this blog if it weren’t for the constant input and communication from the regular readers.  This really is a team creation and I hope to be the “chief discussion sparker” for a long time to come.

Today’s New York Times contains an article explaining how some businesses are locating next to “medical” marijuana stores, as well as advertising to attract “medical” marijuana users.  The businesses in the article sell “munchies” appropriate for the suddenly ravenous, but I know a trend when I see it.

For millenia, sales professionals have used alcohol to loosen up customers, build rapport and move a sale forward.  So, with marijuana going legal, how long do you think it will be before sales pros and prospects start lighting up a doobie before (or after) doing some serious business?

And I’m not entirely sure that’s a good idea.

I must admit that my specific experiences with marijuana fall into the general category of “if you can remember the 60s you weren’t really there.”

However, I do recall that pot smokers were dull conversationalists.  The typical example either talked about 1) how stoned he was; 2) how stoned he was last time he got stoned; or 3) his ear.

That last item might require a bit of explanation.  For some reason, every time somebody took a hit of pot, they’d hand the joint to the next person and say “Ear.”  I never did figure out why.

Anyway, I’m having trouble imagining what kind of business deals will emerge from these smokey powwows.  I do know one thing, though.  The stock prices for potato chip firms will rise through the roof!!

Anyway, here’s an (anonymous) poll so you can express your opinion freely:

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I’ve been rereading Jeff Thull’s book “Exceptional Selling“.  He’s peppered the book with interesting observations and insight about selling, many of which have sparked me to think about key sales issues.

Here are some of his gems, with my own interpretation of their deeper meaning:

• INSIGHT #1: Salespeople are guilty until proven innocent. While you and I know that selling is the soul of business and a good way to help people, most folk (even in business) tend to look upon the profession with suspicion.  The minute you walk into an office, you need to prove that you can add value and that you’re not trying to pull a fast one.  Sad but true.
• INSIGHT #2: When you’re feeling pressure, you’re doing something wrong. If you’re constantly end the quarter with a flurry of activity, trying desperately to make your numbers, you haven’t managed your time, or you’re not thinking your sales process through.  Selling is not an “unnatural act.”  It’s supposed to be easy, not a struggle against time and fate.
• INSIGHT #3: Never answer an unasked question. It’s all too easy to scuttle a sale by raising issues that haven’t yet entered a prospect’s head.  Such behavior usually occurs when the sales professional is so afraid of losing the sale that he begins surfacing (and answering) objections that exist only in his own paranoia.  Remember, you can’t read minds, so don’t try.
• INSIGHT #4: One opinion does not make a consensus. It’s human nature to take one opinion (usually the last you just heard) and turn it into a final judgment.  However, one opinion is meaningless.  Just because the last prospect thought your offering was a waste of time, doesn’t mean that the next prospect will feel the same way.
• INSIGHT #5: Always protect the customer’s self-esteem. It’s absolutely true that EXACTLY half of all the customer you meet will be of below average intelligence within their demographic.  Even so, it’s your job to help them make good decisions and advance their careers.  And you have to do this gently, without making them feel foolish.
• INSIGHT #7: The purpose of a proposal is to reinforce already-made decisions. While proposals can sometimes help to develop an opportunity, in most cases, the proposal requesting (and writing) process happens after the prospect has already defined the problem and (probably) defined the solution as well.
• INSIGHT #8: Remain professionally involved and emotionally detached. This is perhaps the best advice that anyone ever gave a sales professional.  Taking things personally is the surest way to make yourself miserable.  You can care about the customer, your career and your own firm, but it’s crazy to use any of those as a proof point for your self worth.

READERS: Got any additional insights to share?

Today New York’s attorney general Andrew Cuomo filed a federal antitrust lawsuit Wednesday against Intel, charging that Intel violated state and federal laws by abusing its dominant position in the chip market to squelch other CPU chip makers, especially Advanced Micro Devices.

I haven’t read the legal briefs, but I have discussed this issue with two former heads of two major PC manufacturing units — when they were not longer employed in the PC sector.  If what they’ve told me is true, that lawsuit is a load of bull pucky.

Here’s the real scoop.  From what I’ve heard, the reason that PC manufacturers keep choosing Intel over AMD is that Intel does a better job of building relationships with PC makers. And, more importantly, Intel invests in making sales easier for the PC vendors that use their chips.

John Harris, former head of Panasonic’s U.S. PC business told me: “Intel was extraordinarily generous and helpful.  If we put the ‘Intel Inside’ logo on our ads, they’d reimburse us between 50% and 70% of both the cost to produce and the cost to run the ad.”  Harris said that it was Intel’s willingness to spend big bucks to make its partners successful that made the difference.

Rod Keller, formerly head of Toshiba’s U.S. PC business (and now a top exec at Cisco) told me: “A PC company may be able to save a few dollars buying from AMD rather than Intel. But Intel is willing to offer tens of millions in marketing dollars to drive demand which offsets the potential savings in PC manufacturing costs.  While I was at Toshiba we entered into a conversation with AMD but decided that we could make more money if we maintained an exclusive position with Intel. ”

I don’t know about you, but that just sounds like Intel is outselling AMD, by using its own marketing dollars to help its their partners successful.  Frankly, I fail to see what’s wrong with that.

Of course, it could be that Intel has since strayed from that path and, if so, I’m sure we’ll hear all about it.  However, until I hear differently, I’m going to have go with my gut, which is that Intel is just better at selling and marketing than AMD.  Nothing against AMD.  Their execs are smart guys.  But Intel…  They’re one of the hottest companies on the planet when it comes to creating product preference.

The New York lawsuit is supposedly based upon the European lawsuit, which is (on the surface) completely absurd, since European PC manufacturers make, what?, about 1 percent of the PCs on the planet.  It seems perfectly clear to me that Cuomo hopes to follow in Spitzer’s footsteps and use a high-profile antitrust suit to build national recognition.

But Intel isn’t Microsoft.  Microsoft’s operating system DOES lock out other technologies.  CPU chips from other manufacturers are 100 percent compatible.  There’s no technological lock out, so all Intel is doing is using it’s deep pockets to fund marketing efforts and offer CPUs at lower prices than the competition.  They can do that because they have economies of scale and, frankly, no competitor has managed to establish a clear reason to dump them.