selling, management

To ruin a good salesman, promote him to sales manager. So runs one of the most familiar maxims of management. The implication is that selling is a distinct activity, remote from managing, and of lower status. Even sales management is far down the pecking order - and sales directors rarely, if ever, become chief executive. Yet all businesses, save the tiny minority whose products or services sell themselves, depend for their very existence on the sales function. Moreover, compared to other management activities, selling is far more thoroughly grounded in empirically proven techniques and results-based knowledge.

Do you know, for example, the ratio of orders achieved per arranged customer call? Do you know what will happen if you double the number of visits, or halve them? The answer should be that out of five appointments made by cold-calling, one won't be kept by the appointee, three will have no result, and one will hit the jackpot. With twice the number of visits, the success ratio will rise, not by double, but by 2.3 times. Halve the calls, and the success ratio declines by two-thirds. And these are self-evidently facts whose importance goes far beyond selling.

If the sales force is under-performing, because it's not getting enough appointments or is converting them below the 20% benchmark, the likelihood is that marketing effort is running to waste, manufacturing capacity is being under-utilised, and strategy is missing its objectives. The wise executive won't consider selling as a separate function, like facilities management, say: rather, selling is an integral part of the corporate spectrum, from strategy formation all the way to service - which doesn't mean just after-sales service. If the before-sales service (that is, selling) is poor, there won't be any sales: hence, no after-sales, either.

THE 'LOST' CUSTOMERS
The ratios derived from selling activity are fundamental in identifying poor performance and pointing towards major improvement. That was vividly demonstrated by the experience of French service guru Jacques Horovitz with one retail client. The ratio that the consultant attacked was the number of people who entered the shops intending to buy, but left without purchasing. It was staggeringly high: 40%. In other words, if these customers hadn't been 'lost', turnover would have risen by two-thirds! Whatever caused the loss was hideously expensive - and every reader of Thinking Managers knows the possible causes.

Either the item wanted wasn't in stock; or the would-be customers couldn't find a salesperson; or they found one, but the person was no good. While these are elementary faults, they have profound implications for corporate policy. Out-of-stock could, for instance, trace back to inadequate information systems and poor supplier relationships. Poor selling is a symptom of bad recruitment and ineffective training - which won't just be confined to the front end. Lack of staff could well result from what's been described in the Financial Times as 'corporate anorexia.'

My own recent studies in retail businesses have produced several anorexic examples. Because staff costs are so high in retailing, managements strive to protect margins by constantly reducing headcounts. But service levels are intimately linked with staff numbers - and service is the key to customer satisfaction and is intimately linked with vital customer retention. Hence the familiar phenomenon of the business which cuts back on staff, yet still finds its margins declining. Quite plainly, this is what Gary Hamel and C. K. Prahalad criticise as 'denominator management', which aims to improve profitability by acting on costs, but ignores the potential of raising revenue.

Those retail managements would have been far better employed on finding ways in which to raise revenue per employee without cutting their numbers. Often, retail employees not only have no selling skills, but - because of the work overload - have little or no time to sell, anyway. One of the companies I visited had cut staff at a strategic outlet to a level which meant that, at any given time, one person manned the shop - which, for all practical purposes, meant the cash register. One thing was certain - customers wouldn't wait indefinitely to be served. Why? The shop was in an airport....

Research by Kalchas, the strategic consultants, into 100 major UK companies found that 21% had failed to grow real revenues over the previous five years. This analysis concentrated on how more effective pricing could improve the top line. Over half the CEOs interviewed agreed that not enough attention was given to 'challenging revenue opportunities', especially pricing, an area where 'significant profit upside remained untapped.'

PRICING STRATEGY
One internal obstacle to tapping this potential is leaving the responsibility for pricing to the sales department. To quote one CEO, 'I have never seen a salesman yet who wanted to increase price.' Selling is thus again deeply implicated with a crucial strategic issue. Give proper training on pricing issues to salespeople, and gear their remuneration to price and profitability rather than to simple volume, and the revenue benefits will flow into the top line, and straight down to the bottom one.

The master clue in that last sentence is 'training.' Sales personnel get more and better quality training than any management function in my experience. The facts above about cold-calling ratios come from an Australian author and selling guru named Allan Pease. People like him have brought practices such as cold-calling to a fine art - almost a science - that can be taught as precisely as plastering or running a computer program. It's an excellent idea to use the phoned person's name, for example: but no more than five times, after which it becomes counter-productive.

Then, use 'please' and 'thank you' a lot - but don't use 'I'. Smile while you're talking, even though you can't see the other person - and match your speaking pace to his or her's. Nobody, but nobody likes to cold-call: so set aside time, make a list, clear your desk, and don't stop until you've finished the disagreeable task. Note, however, that it isn't a task only for salespeople - nor do the rules apply only to cold-calling. Phone conversations and other interviews occupy huge tracts of managerial time. But how many managers are trained or skilled in the effective use of these vital activities?

That raises another large issue in which salespeople outscore managers: personal development. They are the world's greatest enthusiasts for self-improvement and for the commercial use of popular psychology. Managers sometimes get exposed to these approaches on seminars, or read about them in business magazines. When sales trainers use personality typing, though, it's for practical purposes. Before understanding others - which is the key to successful selling - you have to understand yourself.

So, given a choice between a triangle, a circle, a vertical oblong, a square or a wavy squiggle, which one would you doodle? Try it: the answer will be given later. But salespeople know that, if they score low on the eight attributes of personal effectiveness, they can and must improve: the eight, acording to another author and sales trainer, Peter Thomson, are attitude, self-esteem, goals, time management, balance, appearance, confidence and 'doing it now.' All eight are equally important in management effectiveness at all levels. Most managers appreciate their significance, but won't consciously strive to improve.

UNDER-PERFORMANCE
The consequence, when allied with under-training, is probably under-performance. The most successful managers are those who are most entrepreneurial. I've never come across a list of entrepreneurial attributes to match the one, quoted some time ago in Thinking Managers, that derives from a Harvard Business Review study by Geoffrey A. Timmons. It translates into these questions. Do you have...

1. A high level of drive and energy?
2. Enough self-confidence to take carefully calculated, moderate risks?
3. A clear idea of money as a way of keeping score, and as a means of generating more money still?
4. The ability to get other people to work with and for you productively?
5. High but realistic, achievable goals?
6. Belief that you can control your own destiny?
7. Readiness to learn from your own mistakes and failures?
8. A long-term vision of the future of your business?
9. Intense competitive urge, with self-imposed standards?

With management audiences, it's extremely rare for a single hand to rise claiming more than six of these attributes: in an audience of 300 salespeople, nobody claimed less than six, and several claimed all nine. That's perfectly feasible, since all the attributes, like Thomson's eight, can be developed: if you don't feel you possess them, or have them only weakly, that should never be the end of the story.

That's true for any personality type - which comes back to the triangle, circle, oblong, square and squiggle. Leaders choose the triangle; the circle denotes people orientation; the oblong is picked by somebody whose life is undergoing change; the square is the detail person; and the squiggle is picked by oddballs - try it with an audience, and it's amazing how many squigglers have beards. This pop psychology is good clean fun: but it carries a powerful lesson - that understanding your own personality and the personalities you are dealing with is as essential for managing as for sales.

Send a 'bulldozer' - a hard-driving salesman - to call on a key account that requires the diplomatic skills of an 'ambassador', and the account may well be lost. The same dread result will follow if the ambassador is sent into a hard-selling situation. Sales trainers are fond of simplifying processes like key account management: no doubt, they over-simplify. But that's better by far than over-complication. Moreover, the habit of reducing issues to clear and easily followed components is useful - often vital - at any level of management. It not only helps to organise thought (and people), but directs attention to opportunities.

Thomson actually uses a matrix under the headline 'Windows of Opportunity.' Down the left-hand side you write the names of your customers on each line: along the bottom you list your products. You than place crosses in the appropriate box where, say, Customer 3 buys Product A. When the exercise is completed, there will be several blank spaces - windows of opportunity, in which customers can be offered products they are not currently buying. That's not all. New windows can be opened either by adding new products or finding new customers or both. Again, a very simple exercise - but if the matrix is much the same between one year-end and the next, the business is heading for trouble.

INNOVATION PROFITS
When Ryuzaburo Kaku was a young man in Canon's finance department, he spotted that profits rose in any year when the company introduced new products and stagnated or fell in years without innovation. On becoming president, he instigated a constant flood of new products, with the predicted and highly gratifying results - and still kept in his jacket pocket the original graph on which he had plotted this relationship. New is the most emotive word in selling (along with free). So once again the needs of sales management and those of strategic management coincide.

That coincidence has become even more pervasive with the move of service to the fore. Service objectives happen to be exactly the same as the aims of a classic sales operation - where you don't sell products, but solutions: where you identify and satisfy wants, not needs. Thus, a Danish company selling filters still makes them, but has shifted its marketing platform to selling clean air. The salesman sells a promise. Likewise, company after company these days is making a promise of excellent service. If you make that promise, you've got to deliver - you must create highly satisfied customers, whose expectations have been exceeded, who even write or phone to tell you so, and who remain customers.

That won't be achieved unless the company also creates highly satisfied managers, who exceed the company's expectations, who are told so in writing or words, and who remain with the company. One of the great Japanese sales directors, Seisei Kato of Toyota, offered advice on sales that unmistakably translates into all management. First developed in rescuing the Osaka sales region from the mire of dismal performance, the principles were later applied to the painstaking, sometimes painful drive that made Toyota the top US import. He stressed five points:

1. Delegate authority
2. Achieve the optimum number of sales outlets and representatives (i.e., organise an efficient workload and appropriate levels of staffing).
3. Monitor efficiency of all activities and improve it.
4. Never fail to reward merit, and never let a fault go unremarked.
5. Promote strictly on merit.

I've never come across a better (or briefer) management catechism.

Note the fourth point: another expert sales trainer, Richard Denny, reminds audiences of how good parents use praise and encouragement to help infants to smile and take their first steps - not only in walking, but in everything else. The children are encouraged to take the right actions and discouraged from doing what is wrong. Too much management, though, operates on the Theory X policy of alternating the carrot with the stick: like one door-to-door company that paid salesmen heavy commissions, but automatically fired the bottom man in the monthly league.

This lowly position, of course, was no evidence whatsoever of the man's ability - as the father of quality management, W. Edwards Deming, would have been first to argue. As he invariably taught, somebody has to be bottom in any group of companies or competitors. If the cause is poor performance, far better to correct it by training and encouragement. That's not an argument that would cut much ice at Microsoft; any of the software giant's people who get the bottom rating on a one-to-five scale also get cast into outer darkness. As for encouragement, the living legend, Bill Gates, believes in the opposite technique: witness this quotation from Fred Moody's I Sing the Body Electronic:

'A group developing software to drive network printers once got no more than two minutes into a presentation I was watching before Gates started shouting. Their voices soon were quavering, their sweaty hands dropping transparencies and inserting them into their overhead projector upside down and sideways.'

MISSED DEADLINES
It's no surprise to learn that missed deadlines, 'although anathema at Microsoft', are a fact of life: 'no new product in company history has ever been finished on time.' The error is to correlate the Gates style with the company's enormous, billionaire-building success. That stems from relentless exploitation of the amazing deal struck in the company's infancy with IBM, which not only gave Gates the contract to supply the operating system for its planned PC, but gave him carte blanche to market to anybody and everybody else. For his first meeting with IBM, note, Gates shed his normal jeans and put on a suit: in other words, he played an appropriate selling role - just as a top sales manager would have insisted.

Whatever their position, and whether they know (or like) it or not, managers are selling all the time: and the main commodity they are selling is themselves. You sell yourself, not only to customers, but to subordinates, colleagues, bosses, partners, suppliers - in face-to-face meetings, on the telephone, in letters, and in front of audiences, live and through the camera. For the latter, relatively rare occasions, managers sometimes attend courses to improve their presentation and master the tricks of the trade. The techniques and stratagems of selling are at least as valuable - and just as teachable - for other encounters, formal or informal. But the main lessons that good selling practice teaches are the eternal value of learning and the sovereign importance of its objective - strengthening the top line, revenue, by real organic growth.