Warning Signs in Sales

Warning Signs in Sales

Warning Signs in Sales

The cavemen used signs as communication tools when there were no other means to pass on messages. As time went by, signs have lost its significance and now we use languages instead. With the evolution of language, people have lost the ability to read signals even when signs convey rich meaning. Tribal people who have stubbornly refused to integrate into the civilized world still use signs to communicate to others.

To a caveman, signals may be a powerful means of communication. But in today’s sales parlance it is a cue that conveys information that is unobservable from a sender to recipient. Sales management is all about signaling that ultimately leads to increased revenue. Managers design campaigns through the filter of signaling, a process of sending messages with the objective of influencing purchasing behaviors. Done correctly, this can lead to the desired amount of transactional sales. On the downside, market perception may turn out to be unfavorable.

A signal can mean different things to different users (Spence, 1974). When sales executives use signaling, test the waters by experimenting it with a smaller subset of the market. This will enable them to contain rapidly any undesirable consequences and thus manage it appropriately.

When not to use signaling

However, at times, there are costs involved in marketing signaling. It may result in product line cannibalization whereby customers wait for the signaled action and delay purchasing the existing product. Or circumstances beyond the sender’s control may affect the timely delivery of preannounced product or features of it as promised. Similarly, a price cut could be the result of excess inventory or product elimination. So, it would be in the best interest of all to not engage in price war that would dilute profit.

Sign language used by companies

Price signaling raised turbine generator profit/sales ratios in the 1950s. In 1992 Ford announced a 6% price increase to signal not to start a costly war for market share.

Service firms

Firms that sell intangible products may indicate their high value through prestigious addresses, fancy club memberships, office décor, etc. Some companies hint to the customers their willingness to work around customer needs. They do it through differential pricing, increasing staff count for peak times and by providing complimentary services.


Airlines are notorious for undercutting fares on those routes that are lucrative to their competitors in a bid to undermine the best efforts of their rivals. In such cases, if the undercutting of fares is done to put a spanner in the works then the rates are brought up to the normal level as soon as the objective has been achieved even before some of the travel agents have found out.


Firms pay dividends to its shareholders as a sign of strength signaling to the market that there is no need to hoard cash. Some investors look for a company’s Corporate Social Responsibility initiatives to gauge the health of the enterprise. Such companies use CSR to signal the appropriate messages.


Restaurants open up in an up-market locale with high rents to signal to the patrons of its five-star status as well as to advertise its good food. Warranties and guarantees are other examples marketers use to show the credibility of the quality of the product. They offer insurance against faulty products to potential buyers. Longer the warranty, higher the quality.

Marketing signaling is also messages sent to other companies within the industry either to convey to or to gain information from competitors. Companies selectively leak information to manipulate the opponent’s choice of actions. Employees find press announcements to be more credible than internal communications.

Types of signaling

Kirmani and Rao (2000) distinguishes between two types of signaling based on the financial consequences. They are:

  • Default-independent signals, where companies incur financial loss, such as heavy advertising costs or fixed upfront costs, whether the signals default on their claims or not.
  • Default-contingent signals where companies suffer monetary loss only when the signals default on their claims, for instance, when a high price signal matches with equally high quality.

Keys to signaling success

Maintaining a consistency throughout the organization as to the meaning of the signals is crucial to the success of signaling marketing. Once a signaling strategy has been decided by the company executives the information must be passed on to every employee from top to bottom. Failure to do so may not only cause inconsistency in the quality level but also mar the reputation and integrity of the brand. Equally important is how the rival companies interpret the meaning of signaling.

Also, as responsible marketers, it is rather important to examine your conscience before indulging in signal marketing as using it to promote transactional sales at the detriment of brand integrity is unethical and immoral. In light of this, signaling management has become a tricky task of business leaders. The correct interpretation of sales signals enable the executives to brace themselves to avoid any potential threat or to position them to take advantage of the opportunity.

Having said that, with signaling marketing it is still hard to predict the response of the target audience. Neither is it easy to gauge the perception in the minds of the recipients. Moreover, the way one party perceives the meaning of signals may not be the way another party views them. And that is why it is advisable and a prudent strategy to test the signal response on a smaller scale in an area that closely resembles the target market.

Photo Credit: Bart Anestin

Enable Employees to Unleash Their Power

Enable Employees to Unleash Their Power

Enable Employees to Unleash Their Power

A successful Human Resources Strategy involves efficient talent acquisition, accurate performance measurement, and fair employee compensation. In every step of the employee lifecycle in a company, there is potential that lies unexploited. Managers can unlock it by EN-abling the employees. It ensures the elimination of disgruntled idle workers. In addition, it helps in reaching the full threshold of the employees. It has proven to result in a powerful transformation within both small and large enterprises. Companies are made up of employees, and it is through exploiting their latent talent that corporations have become successful.

One of the primary responsibility areas of Sales an Marketing leaders is the acquisition and retention of their team. They would do well by following the process involved in EN-abling the employees. Broadly speaking, there are seven ways to EN-able employees. They are EN-ergize, EN-gage, EN-courage, EN-tice, EN-trust, EN-tertain, and EN-d.


Workers should have an understanding of how they fit into the goals of the organization. That motivates them to do even more than what is necessary. The only way to achieve this is by EN-ergizing them. This is effectively done by having an open dialogue with them about the company’s goals. Consistent and continuous communication between the management and employees has a powerful effect than building defenses between hierarchies. Managers must make it a point to give them constant reminders of the results of their daily efforts. This can also ensure that they stay away from empty tasks.


It is a proven fact that the more satisfied the employees are in their jobs, the more inspired they are. Job-satisfaction is attained through EN-gaging workers through leadership skills by providing them meaningful feedback, relevant reviews, and quality coaching. Suggestions thus obtained can inspire employees to take action on them to improve and develop their personality thereby enhancing job satisfaction. According to Jack Welch, former CE of GE, this is the critical insight to driving phenomenal performance. Excited and animated conversations grow out of such performance that let staff share innovative ideas and bring forth camaraderie.


Sales and marketing executives tend to be more entrepreneurial in nature and disposition than the rest of the team. It is also in their nature to want to own the changes that are happening within the organization. EN-courage them to participate in the process, to share innovative ideas and ask for feedback. Inviting them to make a difference in the company goes a long way in motivating them to take action. And when things work out appreciate their great work. That would empower them to not only deliver continuous improvement but also to drive innovation throughout the organization.


Move away from “just-in-time” recruiting to “talent-funnel” recruiting. “Just-in-time” recruiting is hiring that happens once the company advertises the job position whereas “talent-funnel” recruiting is being proactive and already having a talent pool from which the company can hire top employees. The way to achieve this is by headhunting A-class Sales and Marketing Professionals in the industry and from within the company and EN-ticing them to join the talent funnel list. As time goes by and as the company recruits more and more high-potential employees from within the talent funnel the productivity and performance level is bound to go up.


It’s a process of respect. EN-trusting employees in Sales and Marketing in the democratization of decision-making to get their unique perspective can empower the teams and internalize the process. Taking such personal responsibility would also entail rewarding and recognize as well as penalizing their results equitably and appropriately. To minimize the penalties and for efficient execution of their decision actions, it is important to put a system in place that would permit real-time collaboration and communication during the implementation stage. It keeps employees aware of their pitfalls promptly and to steer clear of it.


Gary Hamel at a speech at WorkHuman articulated it better than anybody about the importance of approaching work with the same lens as we approach our lives. Our lives are full of necessary-to-do mundane tasks, but we also look forward to climbing mountains, crossing oceans or pursuing our hobbies. We set aside a certain time for our me-times. Work has to be similarly EN-tertaining. Sales and Marketing leaders must recognize the hidden interests of sales and marketing executives and allocate tasks to them they enjoy. Classic academic studies have repeatedly advocated that organizations should allow fun at work.


When employees quit the company it is a prudent idea to EN-d it on a good note. Conducting exit interviews in a strategic manner can ensure the smooth exit of the employees, especially those involved in the Sales and Marketing processes as they can turn out to be the advocates of the company for better or worse. Some companies conduct exit interviews when employees tender their resignations, on the last of their employment and six months after leaving the company. The feedback thus obtained can be used to implement changes to reduce turnover and keep workers satisfied.

The implication is rather clear. The onus is on Sales Managers, Marketing Directors, and Business Development Executives to harness the power of Sales and Marketing professionals for the progress of the companies and for pressing on towards the organizational goals and objectives. EN-abling employees would also ensure that there is a shared vision among the employees and the management. The purpose of any one of the ENs mentioned above should be to motivate employees to go that extra mile and be involved in the organizational process for enhanced productivity. The result would ideally leave corporations with increased profits and revenue.

Is Your Sales Organization in a Zero Growth Environment?

Is Your Sales Organization in a Zero Growth Environment?

Sales organizations live in zero overhead growth environments, and productivity is something that is continuously worked on. If you want to grant your organization a three percent merit pay increase, you have to find it within the organization. So if you’re not getting three percent more productive, you’re underwater.

Sales productivity is part time allocation (how much time reps have to interact with customers) and part effectiveness with that time (workload, sales process duration, and close rates). We call this combination sales capacity.

Sales organizations interested in increasing the productivity of their teams should focus on these two areas:

  • Time. Our studies have shown that, on average, sales resources spend 44% of their time focused on selling activities. In other words, over 50% of their time is spent on non-selling or non-revenue generating activities (such as travel, service, administration, and internal meetings). In this 24/7 fully-accessible world, sales roles are continually asked to do more tasks, beyond the job description of selling. This work is important, but not as critical to the business as meeting with customers and selling the products or services.
    Sales leaders can increase the amount of time their sales people have by:

    1. Measuring so you can manage. Track and catalog how much time reps spend on selling versus non-selling activities. Tools are available to sample the organization (kind of like a Fitbit for the sales organization).
      • Understanding the job role. What is the optimal objective of that job? What are the value added and non-value activities for the company and for the job?
      • Decontaminating the sales roles. Move the right activities to the right roles. For example, shift transactional activities to lower cost roles. Allocate the more strategic activities to the more strategic sales roles. Sales organizations can then calculate the ROI from shifting administrative work to lower cost resources and allowing sales people to hunt. Decontaminating sales roles can have a significant impact on productivity. For example, for an organization with $2B of revenue and 500 quota bearing reps that spends only 50% of its time selling, adding 5% more selling time at only 20% of the current revenue per hour yields an additional $40M in sales capacity.
    2. Effectiveness. The second part of sales capacity is how effective sales people are with the time they have. Sales leaders can improve the effectiveness of their sales people by measuring and managing:
      • Workload. How much time does it takes a rep, in hours per week, to win a deal? What percent of his time each week does he spend on a specific deal?
      • Duration. Length of time it takes (weeks or months) to close a deal. How quickly can a rep move a client through the sales process?
      • Close Rates. How many deals in the pipeline does it takes to win one deal?

Sales effectiveness can be improved by qualifying deals according to more rigorous criteria. We all want a big pipeline because it feels safe. But it takes a lot of time to manage all those opportunities, and it is deceptive to yourself and the organization. Sales effectiveness can also be improved by getting deals out of the pipeline sooner. Flush out the opportunities that have a low chance of making it right away.

How to Break the Rules to Reach the Decision Maker

How to Break the Rules to Reach the Decision Maker

One of the greatest challenges for any sales professional is gaining access to the ultimate decision maker. But what if we’ve made this challenge even more daunting by believing an antiquated set of self imposed rules need a little updating?  Rules that may have been created by lack of experience, fear or misguided assumptions? These are the “old” calling high rules I’m referring to:

  • You must earn the right to call high.
  • You must do massive amounts of homework to see what product you should pitch.
  • You need to be prepared to pitch; at least an executive summary.
  • You only get one shot.
  • You must do what they tell you to do.
  • My inside coach says he has the budget and is the decision maker. I don’t need to call high.

When calling at the C-Suite, which I call selling Above the Line (ATL), you need to change the rules. Why? Because ATL buyers have different decision criteria than Below the Line (BTL) buyers, those responsible for using the product or service you’re selling.

Different value proposition, different rules.

Calling on the ATL Buyer Rules:

  • Call early. Don’t waste their company resources or yours on something that isn’t critical to the ATL buyer’s agenda.
  • Do homework on what’s important to them. Either read their website, their LinkedIn account, or their quarterly reports. Read about the industry and their title so you know how to tailor questions. (What keeps a CMO awake at night in 2015? What are the 2015 trends in the medical device industry?)
  • Call and ask questions about their initiatives, goals or objectives, and ask about the ones they’re having the biggest problems with. Worst case, prime the pump and be prepared to ask questions using the homework you’ve done.
  • Time travel. All ATL executives live in the past 3 or next 3-6 months. Questions regarding “now” are not in their wheelhouse.

To be effective at the ATL level, you need to forget all the rules you have been trained on:  feature/benefit, respond to the person making the inquiry, win the demo, and do a great RFP.

Bottom line. You need wins at both BTL and ATL. Follow the BTL rules, but when going after the second value proposition of your deal, the ATL value prop, you need to change the rules. Try it. I guarantee you’ll have a lot more fun.

Join SMEI for a webinar on this subject on February 10, 2015.

Tom Latourette is Managing Partner, M3 Learning

Five Steps for Beating Your Team’s Sales Quota

Five Steps for Beating Your Team’s Sales Quota

An estimated 40-50% of sales reps don’t make quota, and that leads to a high percentage of sales teams missing quota, too. Ultimately this qualifies as a failure of sales management and only a holistic approach can lead to improving on these results.

What are some of the reasons for this?

First, managers may not be hiring the right reps.

Legendary Alabama football coach Bear Bryant used to say, “You can’t make chicken salad without chickens.” And if you don’t hire the best people you’ll end up with sub-par results, no matter how well you manage them.

It’s not always obvious from looking at a resume who the best sales people actually are. The success of some reps is due more to the brand equity and offerings of the companies that they’re selling for than their sales skills. And too many managers rely on intuition and a quick assessment based on first impressions; they may feel that the only route to sales success is the one that they themselves took.

Secondly, new reps are often not properly onboarded.

The first couple weeks of a new rep’s time at a company can set her up for success – or failure. Onboarding needs to consist of more than the four hours of filling out forms for HR.

Too many new reps are just thrown into the deep end and expected to swim. Many first year reps don’t make quota, but that isn’t necessarily because they can’t in the future. Sometimes “on the job training” is being used as a substitute for a true onboarding process.

Based on the industry that you’re in and the type of sales that you’ve hired the person to do (inside, field, transactional, consultative, etc.) you’ll need to have a training program that meets their particular needs. And even if they came over from a competitor, you’ll need to educate them on your company’s view of the industry and customer, as well as your products, services, presentations, and cases — your company’s entire sales methodology.

If reps and teams aren’t meeting quota there may be a simple reason: the quotas aren’t realistic.

Setting quota is a careful tradeoff between making it challenging yet attainable, versus too easy (on one hand) or impossible (on the other).

Leading companies don’t just impose quotas from the top down but involve the sales team in creating them. The reps know the customers better than anyone and will have the best ideas on where growth can come from, and what’s standing in the way of them closing more deals.

Reps who have been involved in creating the quota will be far more invested in reaching it, too

Earlier I mentioned that coachability is a key attribute to look for when hiring new reps. But it doesn’t help if they’re coachable but you’re not coaching them.

Weekly coaching sessions with individual reps and/or the team should include going through their accounts and opportunities at a detailed level, as well as working on improving skills through role plays and practice.

Finally, in many companies there’s a poor alignment between marketing and sales.

Companies today need to take a revenue approach that bring sales and marketing together. That begins with the writing of a written Service Level Agreement ( SLA) in which marketing commits to what it will deliver to sales, and sales commits to what it will produce and how it will respond to qualified leads from marketing. Marketing and sales need to have a common understanding of the market and the buyers, and even what a “lead” is.

Marketing can also be instrumental in creating the later-stage content that helps sales reps close deals.

Finally, you need the technology and metrics in place to facilitate cooperation between sales and marketing, and the generation of and appropriate response to new, qualified leads.

In this post I’ve only touch on some of the key points along the way to beating your team’s sales quota. I’ll be expanding on these in a webinar for SMEI on November 4, 2014. I hope that you’ll join me for that, and for the following Q&A.

Louis Gudema is the president of revenue + associates, which helps companies significantly increase revenue through measurable improvements in sales and marketing.

Share Your Financials to Boost Employee Engagement and Increase Customer Retention

Share Your Financials to Boost Employee Engagement and Increase Customer Retention

If you’re searching for ways to improve employee engagement, you’ll find lots of laundry lists of advice. But the statistics suggest that following such advice is harder than it looks—some 70% of U.S. workers say they don’t feel engaged on the job, a number that hasn’t changed much in recent years.

We have a different way of thinking about engagement, because we have a different idea of what it is.

Our approach begins with a question: Who do you think is more engaged in the business, the farmer or the hired hand? The store owner or the clerk behind the counter? The answers are obvious, but they raise an equally obvious objection. Not everyone can be an owner.

But the objection misses the essence of ownership. It isn’t just that owners are in charge. It’s that they’re players. They’re in the game. They know the rules. They act, and they watch the numbers to find out whether their actions were on track or misguided. If they win the game, they know there’ll be a payoff. Most people think of engagement in individual terms—feeling fulfilled by the task at hand, wanting to do a good job. We see engagement as being part of a team that’s competing to win.

It’s surprisingly easy to generate this kind of engagement among employees when you make the economics of the business come alive by sharing some key financial numbers. It’s an open-book approach: people begin to watch these indicators. Then they figure out how to move them in the right direction.

Higher employee engagement goes beyond the walls of the company – it reaches the customer. Right Management conducted a major study of engagement that supports this connection. While only 51% of customers dealing with disengaged employees strongly agreed that they thought highly of the company’s products and services, 88% strongly agreed when interacting with an engaged employee.

We’ve witnessed similar results at many other companies that follow the open-book path to engagement. A designer at a D.C.–area design/build firm says she notices “everyone caring more and being more accountable and taking responsibility.” The CEO of a midsized manufacturing company told us, “I don’t have employees in my plant anymore. I have entrepreneurs who are looking to find ways to make more money.”

When employees think and act like owners, they get the bigger-picture significance of each customer relationship. Customer retention soars.

Join SMEI for a webinar on Employee Engagement and Customer Retention on October 9, 2014.

Bill Fotsch of Open-Book Coaching has worked with nearly 400 companies over the past 20+ years (including several larger organizations such as Southwest Airlines and Capital One, BHP Billiton and many smaller, privately held businesses), helping them develop a systematic approach to open-book implementation and success.

Bill has presented in varied speaking roles at numerous functions, including being a guest lecturer at University of Chicago Business School, and conducts webinar presentations on a regular basis.