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?

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 »

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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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.

Ford Motor company amazed the business world yesterday by achieving nearly a billion dollars in profit — despite a down economy that clobbered its US-based competitors.  However, the sales professionals who work for Ford are fooling themselves if they think happy days are here again.  The truth is that there’s no real reason to have commissioned sales reps if you’re selling automobiles retail to consumers.  They just don’t add enough value.

Now, everyone who reads this blog regularly knows I’m on the side of the sales professional.  Even so, I’m not going to pretend that every product requires a sales rep at every point in the sales process.  When a product becomes sufficiently standardized, and there’s little differentiation between competing products, a commissioned sales rep is needless overhead.

That wasn’t true in the past.  Before the Internet, customers needed commissioned sales reps to provide information about the products they intended to buy.  And commissioned sales reps had information (like the wholesale price) that the buyer lacked.

Today, however, consumers can find out everything you need to know about an automobile on the web, including where the cars are located, how much they cost the dealers, the average price of the vehicles sold, etc.  Naturally, you’d want to test drive a car before you buy it but (and here’s the important part) you don’t need to pay a commissioned sales professional to take down your name and license number, and then hand you a set of keys.

On a car lot, commissioned sales reps no longer add enough value to justify their existence. I’m sorry, but it’s true.  What’s more, car salesmen (and women) have over the years garnished such an unsavory reputation that most people would rather not deal with them.  So here’s a case where the sales pro is not just unnecessary, but actually acting as a brake on the sales process.

I hate to be the one to bear the bad news, but retail commissioned car sales are about to go the way of retail commissioned computer sales.  People are going to buy cars and get financing over the Internet… after they’ve taken a test drive a “test drive center” that will probably be located where the defunct dealership used to be.

That’s the future of car sales.  So here’s my memo to the sales pros at Ford: “Get out of the car business while you’re ahead of the game.”

That’s how I see it.  I’m curious what you guys think:

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Sales pros spend vast effort honing their meeting chops for sales pitches, but what about all those other meetings — especially the ones inside your own firm?  Wouldn’t it be great if you could twist those meetings into something useful — rather than just a waste of your valuable time?  Never fear, it’s pretty easy to hijack a meeting and make it go wherever you think is useful.  Here’s exactly how it’s done:

• STEP #1: Decide if you want to hijack that particular meeting. Compare your goals to the stated purpose of the meeting.  Can you bend it to serve?  If not, you might as well bail out, ’cause it’s a waste of time.  Otherwise, it’s hijack time…
• STEP #2: If there is no agenda, offer to write one. “Help” the meeting holder by writing up an agenda that hits the holder’s points, but has places for you to work your issues.  That feel too baldfaced?  Then make some “suggestions” with neutral-sounding placeholders where you can segue into your own issues.
• STEP #3: Provide a list of people who should also attend. The more allies you have in the meeting, the easier it will be to take it in the direction that you want.  Have a plausible reason on hand why they should attended — other than the fact that they’ll back you up on the hijack.
• STEP #4: Pre-frame the meeting with key attendees. Call key attendees (and not just the ones you invited) and lay the groundwork for discussing the issues you care about.  Make sure that you state your issues within the context of the declared reason for the meeting.
• STEP #5: Volunteer to be the official recorder. If you’re the one who’s taking notes, you are the one who defines what happened.  Memory is shifting sand; the written word is solid rock.  If there’s already somebody taking notes, take your own notes anyway.
• STEP #6: Send an immediate follow-up email. Frame the meeting so that it serves your goals by being the first to publicly define what happened and what was decided.  Unless your memo says the exactly opposite of what happened, most people will think that you’ve described the meeting accurately.

Here’s an example:

The marketing team invites you to a meeting to discuss the text of their latest brochure.  Your first impulse is to blow the meeting off as a waste of time.  However, it’s politically valuable for you to look like you’re cooperating with marketing, so you decide instead to hijack the meeting to work on something more useful.

The issue you decide to work is getting the marketing group to go attend sales training so that they can better hone their lead generation efforts.  So you get “potential customer impact” added to the agenda.  Then you make sure that the meeting list has some attendees on whom you can count.

Prior to the meeting, privately brief your allies on what you’d like to accomplish. Get their agreement that this is a good idea.  Touch bases with the other players who are supposed to attend.  Within the context of the meeting’s stated purpose, plant some seeds.  (E.g. “As we look at the brochure copy, it might be a good idea to see how well it fits with our sales training methods.  Otherwise, we might be selling at cross-purposes.”)

When the meeting starts, volunteer to be the official recorder.  When the meeting reaches the “potential customer impact” item of the agenda, bring up the issue of having the marketing personnel take the sales training course. (E.g. “This brochure is pretty good, but I think it would be easier for marketing to write ‘on-target’ if they understood our sales process.  How about making sure that everyone in marketing attends the next sales training seminar?”)

Your allies, of course, chime in and back you up.

As soon as the meeting is over, you send off a “this is what happened” email which documents whatever nonsense happened about the brochure, but emphasizes the “decision” that was made about sales training.  Even if there was dissent, your memo should say something like “a robust discussion took place, but the general consensus was that the idea had merit.”  Make sure your memo also contains the “next step” that need to happen to achieve your goal.

That’s how it’s done.  I’ve seen cases where this technique steamrolls over the poor sap who called the meeting. Sometimes they don’t know what hit them and think that they owe the hijacker a favor because he “helped out”.

BTW, if you don’t want your own meetings to be hijacked, write your own agenda, control the list of attendees, line up your “ducks”, record your own notes and be the first to issue to the meeting report.  If you’re not doing this, I’ll bet every meeting you’ve ever called has been hijacked, probably without you even realizing that it happened!

READERS: Any other political tricks you’d like to share?

Over the past couple of weeks, I’ve lambasted sales managers in “Real Life Sales Managers from Hell” and “More Real Life Sales Managers from Hell.”   As a result, I’ve gotten a couple of emails from sales managers saying I’m being unfair and that I ought to give sales managers more of a break.  Here’s an excerpt from one of the emails:

OK. OK. We get it! Sales managers suck.  But why can’t you write about how to make sales managers better?  If there are so many turkeys out there why not write something to help out rather than b****ing and moaning?

Well, there’s something to that, I suppose.  However, as it happens, I DO write quite a bit for sales managers, but not in Sales Machine, because this blog is about selling, not about managing sales reps.  Sales managers have a different set of concerns.

My sales management writing appears primarily in two places: SellingPower magazine (which publishes six times a year), and in four SellingPower newsletters: CRM, Sales 2.0, Salesforce Partner, and Software Sales. The first three focus on sales technology while Software Sales has specific techniques for sales reps in the software industry.

Other than that, I can tell you sales managers out there that — truly — I’m not down on you.  I realize that you guys have the hardest job in the corporate hierarchy because you’re always caught in the middle between the people who are doing the essential work (the sales reps) and the people who aren’t (everybody else).

This morning’s post “More Real Life Sales Managers from Hell” provides some real horror stories about sales managers who wreak havoc.  However, not all — and not even most — sales managers are from hell.  Quite the contrary, many of them are truly committed to helping their sales team become more effective.  With that in mind, here’s two of my favorite people, Gerhard Gschwandtner, publisher of SellingPower magazine and ES Research CEO Dave Stein discussing the nature of sales leadership.  Definitely worth watching.

Full Disclosure: I write for SellingPower magazine, the producers of this video, which also has a distribution agreement with BNET for video content.

Earlier this month, I posted a gallery of Real Life Sales Managers from Hell.  In that post, I asked Sales Machine readers to send me more examples of the hellish breed.  And you didn’t disappoint me.

This post contains even some sales managers who make the ones in my original list look like sweethearts.  As before, I’ve provided some polls so that you can vote on their relative hellishness.

And the final manager in this gallery is (of course) the proverbial doozy.

READERS: EMAIL ME YOUR “MANAGER FROM HELL” STORY and I’ll add it to this gallery!

CLICK HERE for the first sales manager from hell »