SalesSquawk

Commissions, Risk and the Professional Sales Person

I was researching new objection handling methodologies last week for a program I am writing for a client when I discovered some great little nuggets.  One of them was that an objection was nothing more than an unanswered question, the trick is to convert the objection to a question so that it can be answered appropriately.  In my world, I had always felt that if I was getting an objection before the sale closed, I had missed something in the value discovery phase.  (Communicate)  I had a method for dealing with it but this little nugget happened to hit at a great time, when I was trading blog articles with my friend and colleague, David Cooke.  SalesCooke.com  David, a clear and brilliant thinker in the world of sales happened to post an article I disagreed with and I wrote about it here.  We traded a few posts and I never understood why I couldn't understand Dave.  Now I know. I never really understood the question.

David expressed his frustration with the lack of self confidence or temerity to take on a commission only position.  One we converted this to the real question though, it turns out the question is the lack of risk tolerance to even listen to what the sales opportunity may be.  It makes it far more difficult to find the one right person to fill that position who will be good at it, enjoy it and bring real value to the effort. I can understand that, I have had difficulty hiring the right folks too.

Years ago when managing technical education facilities, I discovered while working with a number of teachers, sales people and the owner of the company that the DNA between them all was remarkably similar with the primary difference the amount of "risk tolerance" each was willing or capable of accepting.  Teachers, while happy to be in the public eye, serve their students and support growth, had little tolerance to work for a commission and little base pay.  Sales people of course, are often happy to be sociable, serve their customers and support their customers.  Sales people however do live on a lower base pay and not make up the difference but move into a very good living through commissions.  Entrepreneurs on the other hand, live entirely on what they sell.  No base pay.  All risk.

Dave my friend, I think you are looking for an entrepreneur for this position.  I hope you find him/her.  I hope they have no other positions or personal projects they are working on and I really hope they listen to the whole opportunity before saying yes or no.

I think because you are recruiting for a position you do indeed have a sales job for the person you are looking to hire and you will need to help them overcome their own hurdles of trust and credibility to accept the position.  They will have to understand the upside of taking this on and they will have to have enough money in the bank to live until the sales cycle starts paying them.  If they are smart, they will negotiate an equity position in the company for their efforts and if the owner is smart, he will accept it with certain provisions.

If there is anyone in the world who can make this happen, Dave, it has to be you.

Respectfully submitted,
Michael D Goodman

The Binary Code of Human Behavior

I first heard the truism "People buy emotionally and justify with logic" from Tom Hopkins in what must have been the mid-70's.  He had gotten it from J. Douglas Edwards I suspect in the 50's and I frankly dismissed it as another tired, old, bumper sticker bromide that had little value to me or anyone in sales.  That was my first mistake.

When you think about that statement, if it is true, (and it is) what it means is that every time any human gives up anything to get something they want, it is always for an emotional payoff.  

Just because the payoff is in the form of a feeling or an emotion, it doesn't mean we recognize it or even see it coming when it happens.  Like putting water on a toothbrush either before or after you put the toothpaste on, has long since been relegated to a habit, one you no longer consciously think of when doing it in the mornings, many of our feelings or emotions are now habits of thought.

Diving much deeper into this conversation leads us to the book "Emotional Intelligence" by Daniel Goleman and I don't intend to get off track that way.  Suffice to say that in the nerve transmitters in our brain, what we think and what we feel are almost simultaneous and definitely connected.  What we think about leads us to what we feel and remember, many of our thoughts are habitual.

So one day I had this wild haired notion. I have lots of them and many just go away on their own.  Every once in a while one takes root and I have to chase it down to understand it.  In this case the thought was, "if we created computers in our own image, and the lowest level programmable operating system of a computer was the binary code, what would the binary code for a human be?"  Well fess up, that is not the kind of thought you want to move into an altered state and begin trying to figure out, is it?

Well, remember that bromide earlier?  "People buy emotionally and justify with logic?"  Apparently the binary code of a human operates at the emotional level.  So what 2 emotions would make up the lowest level of programmable human behavior?  And if I can find those two things, how does that help me?

The first answer, the binary code of human behavior is simply this; "People always move to a feeling of being loved or lovability, and always away from the fear of loss of love or lovability."  When we buy something, when we give up something we own in order to get something we want, it is always for the feeling of being loved or to avoid the fear of losing love.  Wait you say, that can't be.  I don't feel those things at all.  

It is easy to fight the notion when we don't recognize those feelings as motivation to action and it is almost impossible to ever recognize those feelings in the moment because of that other thing we talked about, habits of thought.  It doesn't mean they are not there, it simply means that we don't see them come and go.  However, once we accept that this thought / feeling / love / fear thing is going on inside our psyche, then we can begin the process of reverse engineering our thinking.  By observing our emotions, or our buyers emotions, we can actually begin reading what they are thinking.

So you tell me, is that a powerful thought or what.  How powerful a force for change can we be by simply understanding what our prospects are feeling and thinking?  Just for a moment, beyond revenue, into changing everything that is important to you from people you love to the community you live in how much more can you make this a better place to live.

Sales people spend their entire lives getting better at creating change, there is no one better prepared to lead the charge to create change that has real value.  Understanding the binary code for human behavior can step up the horsepower.  Use it in good health, and for healthy good.

Lovingly submitted,
Michael D Goodman

Game Over

Over the last few days I have been having an excellent time discussing the relative merits of short term, commission only sales opportunities specifically for people who would be served by an interim position while looking for a more permanent sales position.  In fact I rather ambushed a good friend and extraordinary colleague with this discussion as it was he who posted the original piece of it and I kind of challenged him without letting him know ahead of time I was going to do that.  Yesterday he commented on my blog post in a manner suggesting he had better things to do, like actually supporting his clients than playing silly games with me.  (Well, ok, I extrapolated that last part, it isn't what he said...)  His full comment is here.  http://networkedblogs.com/6WiBQ?a=comment

The man's name is Dave Cooke and he writes two blogs filled with powerful information on developing revenue.  One is called SalesCooke http://bit.ly/bMSG6R and the other is called SuRF, for Sustainable Revenue Formula,  http://www.sustainablerevenues.com/   Clearly a guy who gets the bigger picture of Revenue versus sales.

The fact is, I respect him immensely, and if it is time to let go of childish things, then I suppose I must.  It is sad to see the game go away however.  People I know were starting to get into the conversation and one of the Analytics tools I used led me to a google search where the conversation had come up in 7th place on the page.  Cool.

What I liked best though was how it was impacting folks I know and care about, and people who know both Dave and I.  Tracey described it as a kind of "Clash of the Titans, only friendlier."  Ted, called it a sales smackdown, my sales mentor, John Buie took the time to comment and Chris Cayer as well.  Good stuff in those comments if you want to read them,http://bit.ly/writeoutloud (sometimes it is easier to link from the far right column on this page),  and I know it was pretty valuable to people because the conversation peaked my readership by more than 10 times normal.  Apparently from Brighton, England, Slovenia & Finland.  Places I don't normally reach.  

 When I described it online as not really a sales smackdown, but more like a conversation on sales at the Pub with Dave, I was advised that we should record those conversations.  Uh, uh.  That isn't going to happen.  Let's just say theres too much ambient noise and leave it at that.  

So while the game is over, Dave and I move back to a more normal life, and this blog gets a little less interesting, just know that I am over here, watching, lurking, looking for the next good time to pounce.  This was fun.

Regards,
Michael D Goodman

So Dave, Why?

Yesterday one of the top sales consultants I have ever met and I traded a few posts regarding commission only sales.  Mine are below and you can find Dave Cooke here, SalesCooke, The essence is he believes there are few worthy sales professionals who have the capacity or temerity to work a commission only position, especially while they are looking for another position somewhere else.  After a lengthy post, I thought I had outlined the concerns to both the business owner and the sales professional from engaging in that behavior most of the time.

I must say, the simple fact Dave, a real sales management professional whom I know and respect, is involved allays a number of the concerns I would have if I were thinking about an opportunity of that kind. And the fact someone understood they needed support from an external professional such as Dave suggests they are smart enough to know that they don't know and aren't afraid to get the kind of help that prevents problems.

I still believe many sales professionals, not really understanding the players in this mix would be turned off precisely because of how they have been taken advantage of by less integral business owners in the past,  Whether or not the sales professionals Dave is looking for are concerned about anything I wrote, or any answer Dave may have to resolve those issues, there is still one overwhelming question that any sales professional worth his salt must answer to any prospective buyer.  Ready?  Here goes.

Why?  

You say there is risk here and reward Dave.  You say the sales people in Phoenix lack the self confidence and temerity to see this opportunity and run with it.  I concur that with you in the game Dave, the management risk is mitigated but I have to wonder, is their sufficient value in this opportunity for me to give up the time prospecting for my own new job to take on this other project that may or may not bring financial rewards.  And if there is sufficient financial reward, how do I know that from the outside?

We know sales is an ROI equation and you are asking sales people who barely know you to take a risk for an unclear Return.  Why would I as a sales professional want to do that?  What is the payoff to me to take that risk?

I once interviewed a sales candidate who shared with me that while he was off work, he had gone to Home Depot, purchased a number of stick on "No Soliciting" signs for company doors, then went door to door in business areas "installing" them and collecting five bucks apiece. His presentation was simply, "I am here to install this "No Soliciting" sign and I will need to collect five dollars when I am through."  He told me he had an almost 90% close rate and an 80% commission on each one.  While I don't condone this kind of salesmanship, I do have to wonder, why is a commission only position for someone else, better than some kind of creativity for my own self.

If you can help me understand the value to me of taking a position like this over what I can do on my own, than I will personally do what I can to help you find your sales people.  I am all eyes and ears Dave.

With significant respect and baited breath,
Michael D Goodman

Dave and the Art Of Commission Only Sales

My friend Dave Cooke lamented online today about sales professionals who are looking for work and are absolutely uninterested in working short term for some of his clients while they look for other work.  He postulates that while you are looking, there is no reason not to accept a commission only position for his clients and in fact, those who don't have the heart to work for commission only are not really sales professionals at all.  Dave is not only my friend, he is a man I trust, a consultant I respect and a sales philosopher I listen to. Except today.

You see, as a sales consultant, and the founder of Arizona's largest professional sales association, (AzSalesPros) I went down this road also.  In fact, I have engaged out of work sales professionals for short term work AND payed them a stipend from my client in the process.  I have found the value available from this arrangement and I have seen the price paid by all involved.  While it does indeed have value in the very short term, it is in many ways a dangerous trap.

On the upside, an out of work sales professional has a "job" to be hired from, keeps his skills sharp, has a place to go every day and a purpose in life, and can make a few bucks if the stars all line up, the sun shines and God makes his countenance to shine upon you.  For the business owner, the sales reps efforts help uncover new opportunities, perhaps bring a deal to fruition while there, and can often provide much needed knowledge on how to actually close deals that may be in progress when he/she gets there.  All this is good and when it works, the Angels sing.

The dark side of this story Luke, is that it generally doesn't work for anyone.  It looks good on paper but in real life the heartaches outweigh the payoffs.  Here's why for the sales guy;

• The length of a sales cycle from finding the opportunity to implementing the sale sufficiently to be paid a commission is often longer than a good sales person will be available.  Of course, the sales pro can be paid after he is gone but then he has to turn the sales effort over to the owner of the business to close and clearly the owner needed help with that already.
• I have watched literally hundreds of business owners who don't understand the sales process, blame the sales person for not providing results on the business owners schedule regardless of reality.
• Business owners who are already under-capitalized, (it's why they want commission only sales people) are sometimes (read this as often) sketchy about actually paying commissions once the sales professional has moved on.  I have seen them make a variety of excuses as to why the sales person doesn't deserve the money and it should instead go to either the owner or the operation of the company.
• The small business owners are most often unaware at all of how their behavior affects the sales person, and don't understand they are responsible for managing all the leading success indicators (activity.) Consequently, they expect the sales person to go off and "do some of that sales stuff" that makes their revenue happen.  When their expectations aren't met, it is always the salespersons fault.
• In under-capitalized organizations like this, the sales person generally has to create all the marketing material, all the correspondence and all of the sales process. (not including the organizations Dave is involved in of course.)  Unless there is a separate agreement on the creation of these materials, and I have yet to see one in well over 35 years in sales, the sales professional is giving up sweat equity to the owner for no reward.  The owner on the other hand is getting free marketing.

The downside to the business owner includes;

• No real control of the sales effort
• No real control of what the sales person says to or about the company while they are selling.
• No real way to capture the efforts of the sales person as the sales person doesn't really have to use any database if they don't want to, and they often don't.
• If the sales person gives away the farm while selling, the owner still has to honor "bad" deals AND pay the sales person for bringing it.
• Constant training of product knowledge so the sales person can understand and speak to the value the product brings buyers
• Constant hiring process to cover effort due to extremely high turnover.
• Innumerable distractions from the salesperson asking questions of the owner to respond to prospects.
• Limited mind share or concern from the sales person on behalf of the owner, their real concern is getting back to money based on what they had previously earned.
• Limited pool of talented people to pull from as the people Dave really wants to hire are rarely without a sales job in the first place.

Interestingly enough, on the AzSalesPros discussion list we had these conversations about 8 years ago and these were the overwhelming responses.  Since then I have consulted with a number of companies and advised them against this plan.  Just to be sure, I tested it with a client.  I experienced all these issues and have watched as companies went against my advice and experienced them as well.

Some of these issues will be offset by having a professional sales consultant in the mix for as long as the consultant is there.  Once gone however, the owner is subject to potentially business fatal results.

To be fair, there are businesses where the entire compensation plan is based on performance only.  Things like real estate, insurance sales and even specialty items (Logo pens and the like) as industries are commission only by their nature.  I am not speaking of companies designed and prepared for this kind of effort, only those that are small companies, thinking commission only compensation is the way to get ahead.  

In truth Dave, commission only compensation is a lot like drinking sea water to slake your thirst.  It seems like a good idea at the time, all the way up until it kills you.

Respectfully submitted,
Michael D Goodman

Solomon Says: "The Holy Grail in Sales Is Understanding Motivation To Action"

 The magic moment in sales is when our buyers go from shaking their head no, whether internally and unseen to vehemently in our face, to shaking their head yes in acceptance of how what we are presenting to them brings them value and is worth the price we are asking.  It is special for so much more than the sale, it includes a moment of intimacy where someone who didn't trust us now realizes we are there for their best interest and value, it includes a moment of knowing we have done a job well for them, for our company, and for all the people that income will support and it is the personal victory, a payoff for all the people who shut us down along the way to this moment.  It is also the root of another Solomon Says Proverb, "All of sales is an ROI equation, the sale happens when the buyers perception of return exceeds the investment."

Most of us in sales, really want to get there with dignity and integrity.  We want to make sure the moment is not only good for us, but good for our buyers in this moment and in the years to come.  So the question then, is how do we get to the magic moment in a way that is good for our buyers, that we can tell them the process we are using and why, before we move forward?  For years the sales gurus have all said, "ask more questions."  I have said that.  I hate to say it but I have gone back to a client years later and they asked a few questions because I told them to and then moved right into all their old selling patterns.  No wonder I was back again...

The Holy Grail in sales is really in knowing which questions matter.  There are three that make up the driving force behind the magic moment and completely eliminate the need for convincing or manipulation to make a sale.  They are; "what do you have now?," "What would you really want to have?," and "What is the measured difference (or delta) between the two?"  By understanding the measurement of difference between the two, you force recognition on the table of the level of the problem.  You remove the motivation to buy from hiding in the shadows and bring it to the light of day.  You load up the R side of the ROI equation and make it possible to sell without discounting.  Most importantly, you discover the level of qualification the person has to actually be a customer, and if it isn't there, you learn that too.

Some say it may be heresy to let a customer go who isn't qualified.  I say it is an act of love for them, and good business for you.

Lovingly submitted,
Michael D Goodman

Solomon Says: Communication is Capital!

Right in the middle of the sales cycle, within the structure of sales lives this one little phase called "communicate." and while seemingly innocent sitting there is the kick in the pants that drives all things sales.  Done well, it drives joy and happiness throughout the customers world, and the sales persons company.  Done poorly, it creates anger, distrust and bad reviews for the "no longer a prospect," and causes the sales person to hang his head low in shame and guilt.

Communicate is the collection of meetings and presentations after discovering some value to the prospect that invites the sales interaction.  It is where we as sales professionals earn our keep as people who can help our prospects recognize our value to them or we recognize we cannot and disqualify them gracefully and move on.  It is where we spend the most effort managing their natural inclination to ensure they are getting the best value for their purpose and not being taken advantage of, AKA, their defenses.

The only mindset that matters here as a sales professional is one that believes, " I must help my customer discover they have more value than cost in going forward with me, or I must help them decide not to go there."  That mindset operates with dignity, integrity and value for the customer, and fosters long term relationships and a huge referral base. Failure to do so costs the salesperson and everyone else in the sales community.

So look around at the sales people in your office.  If there is a rep who is consistently on top of the leader board and has been for a long time, watch how he/she does it.  My bet is their customers love them.  This is why.

Next, the Holy Grail on how you do it.

Respectfully submitted,
Michael D Goodman

Solomon Says: "The Structure of Sales Matters"

Solomon Says: "Structure of Sales = Mental Preparation, Finding, Engaging, Advancing, Qualify, Communicate, Commit, Implement, Satisfy, & Repeat"

All sales efforts are not created equal.  

Neither are sales people, sales managers, sales organizations, products or buyers.  

Because of this, the sales effort that worked in one company will not necessarily work in another.  Unfortunately, the training a sales professional received in one organization will often not translate well either.  In fact, the best spend a company can make in training is one that is customized to their own product or service!  While more expensive to start, the long term reduction in "cost of sales", and "time to money" from a new sales person is far more impressive than a bank executives bonus!

Rather than purchase a one size fits all sales training program, either for the company or the sales professional, the most effective path is to understand the structure of sales, and then build your companies sales process, and sales education around the structure you actually operate in.

To create the greatest possible efficiency in sales, Solomon offers the following structure as the fastest path to money with the lowest effort and cost.  

    

Mental and Emotional Preparation
3 Major Sales Phases
Opportunity Discovery	Sales Prosecution	Post - Sale
Find	Qualify	Implement
Engage	Communicate	Satisfy
Advance	Commit	Repeat / Referral

If I can help you with this, give a shout.  Your career in sales matters!

Respectfully submitted,
Solomon