Does the salesforce actually look at sales leads?

The ugly truth is a lot of “sales leads” go right into the trash can without even being opened.  I’ve seen it happen more times than I can count.  And at the same time they’re going in the trash, some media buyer back in marketing is listening to a sales pitch telling him that XYZ media  is delivering thousands of qualified leads coming in from the company ads and press releases.  What’s going on here?

When you drive by a billboard on the freeway, are you counted as a sales lead?

Of course not.  You may not have even noticed the billboard, let alone read and internalized the message.  Even then, you may not be in the market for that product or service.  The same thing is true of readers responding to ads or visiting the company website.  If they have not been qualified in some way, they’re basically just people driving down the freeway.  Of course in the case of the website, unless the visitor registers in some way, you would never have their contact information anyway.

The qualification process turns freeway traffic into real leads

My first job in marketing was running a little digital chip line.  I did everything from set the prices to get the datasheets written and published, train the salespeople on the line, etc.  And during the average day a half-dozen potential customers would call in looking for information on the line.  Usually they had seen an ad or a press release reprinted in one of the trade Gee-Whiz magazines.  One step up from freeway traffic — they had at least seen the billboard and read it.

During the discussion that followed, at some point they would request more information, typically in the form of datasheets.  This was before the web, so that meant mailing them copies.  And that meant they had to give up their address.  Someone that has just given you their mailing address will almost always give their phone number too, if you just ask for it.  Sometimes they’d ask for prices, and while I normally don’t believe in giving out pricing directly from marketing to customers (it should always go through sales), it was hard to avoid.  But we had a printed price list for small quantities, and I could give those out without stepping on anyone’s toes… those prices were on the high-side so the salesperson always had the ability to “work the pricing” for the customer.

Now I had to write this stuff down somewhere.  I did it during the phone call on forms I had created (in those days that just meant drawing some lines on a piece of paper with labels and running off a hundred or so on the copy machine).  At the end of the call, the form was handed to my secretary and magic happened… literature got sent, and… this is important… a copy of that form went to the appropriate salesperson in the field.  Knowing the mailing address automatically meant we knew who the closest salesperson was.  They got the copy, saw that literature had been mailed, what had been discussed, what the application was, etc.  After a week, the salesperson picked up the phone and called the prospect to be sure the material had arrived and see if they had any questions.  Now that’s a sales lead.

Real sales leads deserve follow-up

In those days offices across the country all had metal desks and on the top left side was a pullout panel that people invariably taped the office phone list to.  In my case, I kept a sheet of paper listing the deals going down that week for my product line, organized by sales area.  Each customer name was followed by two numbers which represented my worst-case and best-case guesses of the size in dollars of the deal.  About twice a week I would get into the office early… 5am (I live and work in California so 5am Calif time was 8am in Boston, Baltimore and Florida).  I’d call the sales offices on the East Coast and chat with the sales people about the deals going down in their area, what remained to be done, what was holding up the close, etc.  And then I’d run through the forms of customer phone contacts from their area, and we’d chat about their applications, who the competition was, etc.  After an hour, I’d start on the Midwest sales offices, and work my way across the country.  Those two things… the phone forms that were my version of sales leads and the followup phone calls once or twice a week made the whole thing work.  I believe that they were the real reason for my success and everything else was just details.

What makes up a real sales lead?

A real sales lead should have the complete contact information… enough so you can figure out who in the salesforce should get it, and enough detail that they can contact the prospect.  It should have a brief description of their application — how they plan to use the product.  And it should state what the next action is… follow up phone call, etc.  Those things are the bare minimum.

Of course the process does not need to start with a phone call.  It might happen at a trade show.  Most people walking the aisles have their badges swiped at booths of interest, but these are the freeway people.  The real sales leads are the people who are willing, or best of all volunteer their business card.  You can write a couple of cryptic words on the back, and bingo… a real sales lead.  A walking, talking prospect who is asking to be contacted (that’s why the business card instead of a badge swipe).  Pure gold.

99% of the websites out there are hoping to attract advertisers.  Most will fail in this endeavor, especially in these days of sharply reduced advertising budgets, but a few will succeed and give hope to all the others.  Look at the situation through the eyes of the advertiser.  It’s easy to “buy” zillions of eyeballs. It just takes money… a lot of it.  That’s what Budweiser does…

But no advertiser is really looking for zillions of eyeballs.  The key is getting the RIGHT eyeballs.  Very few products command a market as large as Budweiser, and that means very few can utilize mediums like TV effectively.  The problem is that, for most products, most of the TV eyeballs are not potential buyers so that most of the advertising dollars are being wasted.  Let’s say you’re trying to sell spjecial chips for building disk controllers.  How many potential buyers are there for these things?  100??  And actually you don’t necessarily want to talk to buyers and purchasing agents.  You’d probably be far more interested in talking to the engineers designing these systems or subsystems to convince them to use your chip in their next design… that’s a smaller set of people and one that’s even harder to reach.  Really think you’ll find them watching Desperate Housewives?  Maybe, but so are 10 million other people and you have to pay the network for all of them too.

OK, so TV advertising is not appropriate… what next?  A good choice might be what are termed “space” ads — generally magazines.  Now you’re probably not going to advertise in Time magazine.  It has the same problem as TV… it’s too broad.  What you’d really like to find is a publication called Disk Controller News… but if there are really only 100 potential readers for this subject, it’s extremely unlikely that there would be a magazine just for them.

That means we’ll have to find a compromise magazine, one that has our 100 target readers without too many others.  To put hard numbers on this, there used to be a magazine called Computer Design with a circulation of about 80,000 readers.  Buying a full 2-page spread (so you can tell the whole story) cost about $15,000.  That meant that running our disk controller chip ad in Computer Design was costing us $150 for each of our 100 target readers… certainly no bargain.  Another way to look at is is that you’re paying for 79,900 readers you don’t care about.

To be fair, this is a terrible example to use in a space advertising environment.  The target audience is so narrow and so specialized, the numbers will always look terrible.  A real-world advertiser would never run a large ad targeted at such a narrow group of readers.  It’s just too expensive.  Instead, they would run an ad covering multiple chip families, one of which was the disk controller chip.  That would spread the cost of the ad out over many more readers.  Of course, it would also limit the message you could deliver for each chip.

But this just makes our point.  If you could find a way of targeting readers in a more effective way, it would make it feasible to promote much more specialized types of products.  That’s what the web does or at least tries to do.  Now don’t misunderstand here.  It’s very easy to spend $15,000 on a website to promote a set of complex, highly specialized set of chips.  In fact, you could easily spend much more.  But if you could somehow attract those 100 target individuals to the website, you could turn them into a community and proactively interact with them and make them part of your process, from chip design to sales cycle.  That’s a lot better than paying $15,000 EVERY time you ran the magazine ad in the hopes of catching the readers you were targeting.

When you build a website dedicated to something as narrow as disk controllers, you are essentially becoming a publisher on that subject.  In the heyday of trade magazine publishing, there were six main magazines and another dozen or so second tier publications with lower, slightly more specialized circulation.  There was no way to beat the problem of buying all those extra readers.  But with the ability to create dedicated websites, it’s as though Disk Controller News just sprang into existence.

Here in Silicon Valley we have an interesting group of car washes.  Maybe it’s the same all over the country, I have no idea, but some of our car wash spots here have themes.  There’s one called the Delta Queen which is built to a very realistic approximation of an old paddlewheel riverboat.  The one in my neighborhood is a reconstruction of the buildings that occupied the corner 40 years ago when it was mainly orchards, accurate right down to the live chickens in the coop.  Fun stuff.  I’ve been going there on an occasional basis for years.

Originally you pulled in and a kid with a clipboard talked you through the choices… just a wash or do you want wax too… what about the interior… want us to make the tires look black again?  Pretty simple and took just a second.  But as they became more popular the range of services got more extensive… too extensive for a quick chat with clipboard Bob.  Then they added a touch of product marketing and “productized” the service.  They grouped the services into a couple of different lists… one was called “The Classic” and another, “The Works.”  All together these days there’s about five of these, so nowdays the conversation with Bob goes along the lines of “I’ll take the works.”  OK.  Done.

Now notice what the operation did NOT do.

1. They did not name the offerings with numbers.  No one had to pull up and say, “I’ll take 9047LPDTL,” for instance. No, that would be what a chip company would do.  Instead they came up with simple, easy to remember names… what a breakthrough!

2. They put up a big sign with the prices… “The Works… $19.95.”  This set people’s expectations right up front, since they could see the sign and vector themselves into the level of wash they felt matched what they felt like spending.  Simple.

I frequently talk to companies/clients that want to hide the price from people until they have pretty much convinced them to do the deal… at least that’s what they think.  In my experience, people recognize this and resent it.  You can save everyone sooooo much time by just getting the price out up front.  If people have a real need, they’re not going to run.  Putting the prices out in a visible way also settles the question of upgrades.  If one product costs $19.95 but the premium version only costs $21.95 and PEOPLE SEE THAT AT THE BEGINING, a much higher percentage will want the premium.  This is much easier than trying to upsell them later.

By grouping the services this way, you’re sending a subtle message to people that these are the things other customers tend to choose.  That’s comforting and saves lots of explanations.  Now Bob never refuses to sell you something.  But it’s a lot easier for the customer to say, “I want the Classic but skip the phony new car deoderant… it makes me sneeze all the way home.”  Bob has only one response to anything you say… “Got it.”  I sometimes tell people that a good way to approach marketing is to find out what’s easiest to sell, and then find ways to make it easier yet.

Actually I hate being exposed to sales people that try to pretend they’re not in the sales mode.  This happens frequently on the phone when someone starts the conversation with, “Are you having a good day?”  What the heck does that have to do with anything?  This is a stranger talking… does he think I’m fooled by this opening?  What an idiot.  When I’m in the sales mode the “opening” I tend to use the most is just a casual, “I’m here to sell you something.”  That usually shocks people into a listening mode for a minute, and it’s so novel because it happens to be the truth.  Sometimes when I’m in a particularly expansive mood, I’ll make it, “I’m here to sell you something.  I like to get that out right up front so there’s no confusion about what I’m doing here.”

This has never — not once — resulted in the other person ordering me off the premises.  About half the time it provokes a chuckle.  For me it has always resulted in the other person giving me their attention and listening, but I don’t offer this to you with any sort of guarantee… just the opinion that trying to hide the sales intention is terminally stupid.

The term “sales channel” is used all the time, but what does it mean?  I think the easiest way to get your mind around the sales channel is to consider the functions it serves.  We’ve been describing the six functions that make up Big-M Marketing, but you can’t consider these in a vacuum because side by side with that Big-M Marketing Group is a sales channel, and the boundaries between the two can get fuzzy at times.  So let’s pause for a moment in our description of the marketing functions to describe the functions of the sales channel.

I like to break the sales channel into six basic functions.  Just like the six Big-M Marketing functions, you have to be sure your sales channel is doing all four of these.  But whereas in marketing, there is little or no overlap of the functions across marketing groups, in the case of the sales channel it is common to find the functions being repeated in two or more groups.  In this post, we’re not really going to describe those groups, but concentrate instead on the functions.

Simply put, the sales channel has to accomplish six things:

1. Find customers
2. Service those customers
3. Provide technical assistance
4. Provide credit to the customers
5. Deliver the goods
6. Administer the whole thing

Finding Customers

This may seem obvious but we like to explicitly make finding customers the first function to separate it from marketing, who by and large does not find customers. It is a common mistake in marketing to think they provide valuable sales leads to the sales force.  The truth is these “leads” are typically unqualified responses to an ad or press release — marketing tracks the numbers with great enthusiasm and mails them to the sales offices with notes like, “more hot sales leads.”  Sales immediately throws them out without even being opened.  Remember, the first job of the sales force is to find real customers — not to call on names from computer printouts supplied by marketing.

Servicing Customers

The process of interacting with customers is done in a well-rehearsed dance known by both sides.  Sales people get their parts “qualified’ with the customer… basically evaluated and found acceptable.  Then the customer requests a quotation… pricing for the quantities and delivery schedules needed.  The sales people provide that pricing, either quoting “book prices” or getting special pricing from marketing.  Assuming the order is granted and accepted, the customer may need shedule updates.  After delivery, there may be some defective units that have to go through a failure analysis to the customer’s satisfaction.  It goes on and on, but the sum total of all those mini-transactions make up what we call “servicing the customer.”

Providing Technical Assistance

There is a practical limit to how much information can be put on the company website.  At some point, customer engineers need some face-to-face time with an expert.  Filling this need are the company Field Application Engineers (FAE’s), assigned to the sales regions and chartered with making visits to customers to help them with their designs.  Good FAE’s are notoriously hard to recruit, and I’ve never known a good sales manager who wasn’t looking for one virtually all the time.  FAE’s on the company payroll only provide assistance for the company’s products, but distributors and even reps may also have FAE’s, though in these cases they cover multiple product lines and therefore are less knowledgeable about any one of them.  The quickest way to assess a sales channel is to just check the extent of the FAE coverage.  Channels with a full complement of FAE’s are powerful forces in the market and tough competitors.

Providing Credit and Payment Services

Whether the product is a software program or a million microprocessors, they have to be paid for.  For customer / supplier relationships that are ongoing, it benefits both sides to have credit terms extended to the customer.  Normally these are 30 day terms, perhaps with a 2% discount for payment within 10 days.  But sometimes credit terms may be extended over much longer periods in exchange for some sort of exclusivity agreement.  In any event, the extension of credit is a huge function in the sales channel, and one that carries all sorts of risks.  Whereas large customers may deal directly with the supplier and use the credit extended to them by that supplier, smaller customers that are unknown outside of their region may go through a distributor who provides the credit function.  In fact, this is one of the most important roles distributors play.

Delivery of the Goods

Shipping the parts to the customer… who does that?  Before you argue, “not sales,” keep in mind that carrying inventories and shipping to customers is one of the main roles of distributors.  Of course, the company itself must also ship directly to customers.  While this is not normally part of the sales group, it is definitely part of the sales channel.  Making sure customers can get your products in any quantity from one to a million is critical.  I’ve seen too many companies set up shipping systems with minimum ship quantities of 100 or more.  How is the customer expected to do their prototype system designs if they can’t buy parts in handfuls rather than cartons?

Administration of the Channel

Believe me, every sale carries a story, and that story has strong implications for the division of the commissions, hiring new people, expense reporting, and so on.  Marrying the story and trends of the sales in each individual sales region is a time-consuming task and one best left to specialists.  Virtually none of this directly impacts the bottom line, so there is no driving need to have the Finance Department track this information… in fact, unless they’ve got people dedicated to doing it, they don’t have the time.  As companies grow, they invariably hire administration people reporting to the head of sales.  They chase the monthly forecast through the various sales levels and make sure it gets done on time.  They track expenses in the various sales offices and help with things like leasing space for new offices, cars, and expense accounts.  They track the level of credit adjustments being given to the distributors.  And they track, manage, and report what are called commission splits — the division of a commission for a specific sale between the sales person, the FAE, and frequently sales people in other regions.

We will discuss these in detail in upcoming posts, but I wanted to describe them in an overview as we look at the marketing functions because of the way marketing and sales must dovetail.

Every company has a organizational hierarchy of sales people… in some, “Area Manager” is the top slot… in others, it’s “Regional Manager.”  Add in District Managers, Sales Associates, Sales Engineers, and on and on.  The problem comes when companies add the term “Sales Representative” to their list of company sales personnel.  And when we refer to them as company personnel, well that’s the point.  All of these people are on the payroll… they work for us… why they’re, um, employees.

So what’s wrong with calling some of them “sales reps?”  Because, by definition, a sales representative is NOT an employee.  More typically a firm, a sales representative firm is an independent company that does not take title or possession of the goods.  They represent you, for a commission, along with the other companies on their line card.  Have any sales employees selling other products besides yours?  Not that you know of, right?  Cause if they were, you’d be calling them for career adjustment meetings.  But that’s what reps do, and it’s a good thing that they do it because that’s the only way they can afford to call on customers to small to send in a direct sales person.

The key isn’t that they are carrying other product lines… it’s that they don’t carry competing product lines.  And because of that, they tend to be loyal parts of the channel.  I know rep firms that have kept some of their major lines for 15 years or more.  In Silicon Valley, at one time the average employee changed companies every 7 years.  Now tell me, who has the most loyalty?  So don’t call your direct sales employees “sales representatives”… it just confuses the heck out of people.

Everyone faces this issue from time to time.  You need a rep firm in, say Huntsville, to carry your products.  How to find one?  The time honored method is to ask the customers in that area.  After all, you must have some customers or you wouldn’t be worried about a rep, right?  So you ask the customers who their favorite reps are.  The quality of response you get to this question should only serve as a starting point, since their view of a rep firm can be dramatically influenced by whether or not they got invited to the annual rep BBQ, or whether he brings donuts to the early morning meetings.

Another way, in my view a better one, is to find a couple of complementary products, and then look to see who they have for reps.  By complementary products I mean those that are normally used side-by-side with yours.  The obvious example is a company selling bolts.  If you need a rep, look for the ones selling nuts.  Then contact the nut guys — believe me, they’ll be very interested in taking on a bolt line.

Finding complementary products is usually not this obvious, but it’s a good thing to do.  Once you have, make a list of ALL their reps across the country.  That gives you a candidate list when unexpected things happen and you need to replace someone quickly.  Not a bad idea to be in communication with them anyway… you can get a lot of local market intelligence from them.