Objects in Rearview Mirror May Be Closer Than They Appear

I remember it as if it were yesterday. Sitting in Driver’s Ed, excited about getting my Driver’s Permit. There was one lesson that seemed odd…make sure to check your side and rear view mirrors every 3 seconds (I believe they’ve since extended that to 5 seconds). At the time it seemed a bit excessive, but with cars whizzing by you on the Dan Ryan Expressway like it’s the Daytona 500, I can understand their concern.

In business, looking back too frequently is the beginning of the end for your company, for three reasons. First, when you relish the past and constantly talk about the golden years, you create a culture that believes the best years are behind you. It’s demotivating to your leaders. Second, the argument that “those who cannot remember the past are condemned to repeat it” is a complete fallacy. Every situation is unique, the environment was different, and the variables are many. Don’t fall for the trap. Finally, if you become consumed with what the competition did or is doing, you lose touch with what is important to your business today and in the future.

Like everything, it’s a balancing act. Make sure you spend the vast majority of your time looking forward, understanding the fundamentals of the marketplace and how customers’ needs are changing. Yes, know where your competitors are and what they are doing, but don’t dwell on it or it will become a distraction to your leaders. Best-in-Class companies understand the market, create a vector of differentiation, and focus their energy on what matters most. Remember, everyone eventually gets to the right answer, but leaders get there faster.

We all know the past is a tricky thing. It provides us valuable lessons and at the same time it clouds our judgement. For me the past provides a measuring stick for continuous improvement.  We get better or we get worse…we never stay the same. Whether your KPI is customer satisfaction, win percentage on new business, or number of defects per thousand, it’s critical that you measure what’s important in your business, and more importantly, that you focus on getting better every day. And when the KPIs go backwards (in a statistically significant way), do a root cause analysis to understand why it happened. Focus on removing that “why?” and you will drive positive change and get closer to your goals.

As every leader knows, business is a game of inches. Consultants will tell you, just do this and that and you will solve all your problems. Unfortunately, it’s never that easy. There is no silver bullet. It’s a combination of things you must do to get your company back on track. Caution: that combination of things typically spans the enterprise and is rarely owned by a single individual (but that’s for a future blog post).

Objects in Rear View Mirror May Be Closer Than They Appear. This phrase was put on mirrors back in the 80’s to avoid consumer lawsuits; however, it provides us an excellent reminder to not panic. You put a lot of thought into developing a bullet proof strategic plan. Stick to it. Take the market’s temperature quarterly, but don’t act rash and jump to the next idea. Companies that are members of the “initiative of the month club” find themselves with mediocre results and “me too” offerings that won’t get you closer to your goal. Winning requires discipline and patience. If you are persistent, you will get it; if you are consistent, you will keep it.

The 7 Secrets to Finding, Hiring, and Retaining Strong Leaders

Companies with high employee retention aren’t necessarily successful; however, successful companies almost always have high retention. For as important as this metric is, it doesn’t get near the attention it deserves. That’s the impetus for this paper: to bring employee retention to the forefront and share proven strategies for hiring and retaining top performers.

Your workforce is in constant flux. That’s normal. Although reasons vary (changing demand, strategy, regulations, etc.), management and employees are constantly making decisions that affect the size and make-up of your employee base. In addition, healthy businesses are constantly pruning under-performers or those individuals that just don’t fit. All of that is a natural part of a businesses life-cycle. However, if management is not aligned, retention can become a major problem.

Executives understand that high employee turnover ultimately manifests itself in lower revenues and profits. The insidious part of turnover is that it has a short- and long-term effect. It can negatively impact your company in five primary ways:

  1.  Lower Customer Satisfaction
  2.  Increased Costs
  3.  Distraction to Operations
  4.  Loss of Institutional Knowledge
  5.  Low Employee Morale

However, there is a new retention challenge. Gone are the days of a homogenous, one-size-fits-all workforce. Today, the workplace has 4 distinct generations: Baby Boomers, Gen X, Millennials, and Gen Z Kids. Each group has a unique set of priorities and beliefs, the most interesting of them being how they define their career. On one end of the spectrum, Baby Boomers focus more on job stability and disposable income (to acquire assets such as cars, houses, etc.). On the other end, Gen Z Kids are looking for personal fulfillment, opportunity for growth, and free time to “experience” life. These diverging priorities make retention a much more complex issue than just a few years ago. That, and the fact that as of 2017 millennials make up the largest segment of the workforce. This demands thought…and flexibility!

The Foundation of Retention

Your top performers are the reason you are successful. Without them, you have no business, so you need to protect them at all costs. Top performers have some fundamental requirements, regardless of company or industry, which I refer to as the Hierarchy of Retention. I represent it as a pyramid on its point because it’s a constant balancing act, and from the bottom-up, as each builds off the foundation created by the other.

Strong-Positive Culture

When it comes to success, culture is both critical and ethereal. I’ve seen definitions range from having a clear mission statement framed in the boardroom to allowing employees to bring their dogs to work. That’s clearly inadequate. Culture is the collection of social behavior and norms that ultimately motivate employees to act. I define culture with two simple dimensions. Is the culture positive or negative; is it strong or weak. High-performers gravitate to strong-positive cultures where they believe they can thrive. Do individuals look forward to coming to work? Do they treat each other with respect? Do they want to win as a team? Zappos is an excellent example of a strong-positive culture that attracts top talent. On the other end of the spectrum is Radio Shack, a bankrupt company that continues to downsize and where employees are at best ambivalent about their future.

Strong Leaders

Now that you’ve defined your culture, you can instill it in the most important asset in your company – your managers. Throughout this paper I use the word “manager” in the most general business sense. A manager is simply a person in charge of the activities, tactics, and development of a team. A manager can reside at any level in the organization. I also use some descriptive words interchangeably, including “best manager”, “top-performer”, and “high-performer”. To me, these mean something specific – those that rank in the top quartile (25%) of the normal performance curve. We refer to these individuals as Strong Leaders and certify them along behavioral and practitioner lines.

Empowerment

With the right culture and people, you can now empower them. NOTE: Don’t waste your time hiring great managers if you won’t empower them. Many executives make the mistake of bringing on top talent and then micromanaging them right out the door. Remember, they have options. Bring on the best, set expectations, put a few guardrails in place, and get out of their way. Make midcourse corrections as needed, but ensure they have the resources they need to succeed and that’s a good start. One final item: I have seen companies that empower their people only to crush their souls with stifling bureaucracy, including overly complex processes and redundant authorizations. I’m a proponent of SOPs, but don’t enslave your employees and hinder their creativity.

 Development

Managers leave for two primary reasons. They are either underpaid or over-worked…or both. We determined the root cause for managers leaving is that they have not been armed with the skills to make their life less chaotic. In other words, because they are unable to address the inefficiencies and opportunities in the business, they become “burned out” and leave. Very early in our company’s history we analyzed the behavioral and performance data for top managers with tenure over 7 years. We found they shared a common trait – they made decisions as if they were the owner. From this single observation, we created a complete leadership training certification process called H.A.L.O, or How to Act Like an Owner. This online 90-for-90 (90 seconds for 90 days) micro-training complements your corporate training and focuses on leadership skills such as goal-setting, team-building, issue resolution, and communication.

 Summary

These four building blocks form the foundation of a best-in-class company with low employee turnover. This conclusion isn’t controversial, but it’s not obvious to many executives.

  • James Adams
  • CEO and Co-Founder
  • Revolution Trucking, LLC
  • james@revolutiontrucking.com
  • (330) 975-4145

To Diversify or Not to Diversify, That is the Question

There is no disputing it. Diversifying your investment portfolio is an important strategy to protect your personal wealth. Although your overall returns will be tempered, it hedges risk, smooth’s returns, and ensures liquidity. No, the diversification I’m talking about is a set of business strategies that expands your market and therefore your opportunity for growth.

If we get into our time machine and go back to the latter half of the 20th Century, you would see that diversification was the primary strategy for most companies. With few exceptions, those companies ending up losing their way. More than 80% of the Fortune 500 corporations from 50 years ago are gone (lack of innovation also played a role). For a story on how diversification can be taken to an absurd degree, read the History of the American Machine and Foundry (AMF) Corporation, founded in 1900 and now just operating bowling alleys.

Before we get into how and when diversification makes sense, let’s first talk about the risks. There are three main pitfalls you need to consider when going down the path of expanding your service offering. Each of them alone could ruin your business. All three are most certainly lethal.

It becomes a major distraction. If your company is like most, you have limited resources. Resources include people, money, and time – all three are usually in short order. When you embark on a diversification strategy, some of these resources get redirected (even in the case of acquisitions).  And guess who gets distracted?  Your best people, since you assigned them this important initiative. How will this impact your current business? I know both your employees and customers will miss them.

It cannibalizes existing sales. It’s very common for companies to diversify in a way that causes them to unwittingly steal market share from existing products or services. For example, when a company realizes they are stuck in the high-end of the market and feel the need to offer something at a lower price point to drive volume. The problem is the new product, even when it has a different name, can provide a higher value-price ratio than your existing offering and customers may make the trade-off, go down market, and reduce your total share of wallet.

It damages your brand. I put this last as I believe this could be the greatest risk. You’ve spent years building and honing your reputation. Your customers have come to expect a certain level of quality, service, and price. When the new product/service falls short of expectations, you’ve hurt your brand equity. This could negatively impact a large swath of customers, taking you years to recover.

Now that I’ve sufficiently scared you away from even mentioning the word diversification, let’s talk about when and how it makes sense. When you have become a dominant player in your market and you are enjoying excellent margins with a stellar reputation, diversification could be an exciting opportunity. There are 5 fairly unique diversification strategies that make sense. Remember to start small.

New Geographies.  The easiest form of diversification is geographic diversification. If you sell in a region of a country, sell in other regions (Northeast US to Midwest US). If you are in one country, look at the next logical country (US to Canada), and so on and so forth. As I’m sure you know, selling into other countries comes with it’s own set of challenges; however, these are easily overcome with the right people. The Internet has made the world borderless (nearly), so ignore this at your own peril.

Product Line Extensions. This is typically a minor change to a product in the same category that can expand your market. It could be as simple as a new flavor, color, or package size. Coke is the simplest example. Cherry coke was created because people were adding cherry syrup to regular coke. Diet coke for those people that didn’t want the calories. 2 liter bottles for people that wanted to save money by buying in bulk. All of these carry low risk and provide a pivot that expands your market. Who would argue with that rationale? Of course, do the proper market research and testing to ensure you are delivering on your promise.

Add on Services. This is one of my favorites and often overlooked. GE saw they could make more money from financing the equipment than on selling the equipment. GE Capital was born. How about buying insurance for your phone from BestBuy. You would be surprised how lucrative service contracts can be because the cost to service is so low and you have a captive audience (low sales and marketing costs).

Brand Extensions. This is where you leverage your strong brand equity to sell a new product in a similar market. Under Armour provides a classic example. They developed a breathable material and developed casual sportswear for active people. They used athletes to market their product because if it’s good enough for them, it must be good enough for the weekend warrior. Using that same technology, they moved into running shoes, golf shoes, sports accessories…all targeted at the same active consumer.

New Industries. This one is trickier than it sounds. Just because a product or service is used in multiple industries doesn’t mean the price, quality, and volume expectations are the same. This can be as easy as going from the industrial to the consumer sector or as complex as going from serving business offices to serving hospitals, the difference in expectations can be vast. Be smart and find a new industry that requires a small pivot but provides significant upside and small risk.  Again, it probably requires you to hire an industry expert, but that is small price to potentially multiply your available market.

Then there are some companies that have taken all of these to the extreme. Think Richard Branson and the Virgin Group. From a small record company in 1970 to more than 400 companies today (including a global commercial airline). That is one powerful brand.

Diversification can provide quick upside without a large investment when done right, or it can challenge the strongest companies. Remember, you don’t have to go it alone. You can partner, white label, or acquire your way into diversification strategies, but that’s for another blog.

Like Magic, Selling is Both Art and Science

Everyone loves a good magic trick. You want to believe in the supernatural even though you know it’s just slight of hand. The reason I like magic tricks is because they are filled with both art and science. The art involves ones ability to gain the confidence of others and hold their interest. The science is that magic tricks often play off the basic laws of physics.

Like magic, most people feel that the sales role is either really easy or really difficult. This binary outcome can be attributed to the fact that more than any other function, sales is a role that requires both a strong right and left-brain. The art (right-brain) includes marketing, relationship building, and negotiating. The science (left-brain) requires skills like pricing, pipeline management, and contracts.

For this discussion, let’s take the need for right-brain skills as a given. If you cannot earn someone’s trust, be able to connect with them emotionally, and motivate them to act, there is no reason to continue. That’s the art…and yes, it can be taught. Instead, let’s focus on the science, or left-brain, requirements of growing top line revenue.

In my experience, successful salespeople utilize three interdependent left-brain components: analytics, process, and technology.

1. Analytics: Surprisingly, most salespeople are not comfortable with numbers (except when it comes to calculating their quarterly commissions). That’s because they are left-brain dependent and got into the business because they prefer relationship building. I’ve always looked for solid analytical skills, because like an economist, the salesperson needs to be able to account for a number of variables to deliver the optimal outcome. I’ve secured major deals because I was able to calculate a number of factors in my head during negotiations, helping to short-cycle the sales process. The other reason I like analytical salespeople is they tend to better understand the financial aspects of their role, e.g. the interplay between pricing, volumes, margins, and probabilities and how it impacts forecasting and the income statement. A side benefit is that I don’t always have to double-check their work.

2. Process: Most salespeople abhor process. They usually associate process with bureaucracy (sometimes they are correct). In fact, most salespeople circumvent processes, even the processes they helped create. You could write a book on why process is critical to this role, but let me discuss two. First, a scalable and repeatable sales process is about time management. Others in the organization know how and when to get involved each step of the way. Second, a robust sales process ensures consistency in the deliverables (presentation, pricing, contracts, etc.) and the quality improves each time.

3. Technology: When I first started in sales in the 80’s the available technology was a pen, day planner, calculator, and marketing materials. Cell Phones, computers, and the Internet were still years away from being ubiquitous. Today, technology is a must-have and it starts with your CRM system. CRM helps streamline processes and makes real-time decision making possible. The better question is how are salespeople using the technology? I’ve helped numerous companies that had all the technology, but didn’t know how to properly utilize it. Technology is about two things. First, having access to information that allows the salesperson to make better decisions. That could be the price of certain commodities or it could be a service failure that happened 10 minutes before a client meeting. Second, technology is about time-management. My goal has always been to maximize the amount of time the salesperson is in front of the client. Each minute saved is another minute they can push an existing deal over the finish line or prospect for a new client.

There is a reason why the average tenure for the VP of Sales position is only 2 years. Most of that turnover can be attributed to their inability to tap into their left-brain and setup a scalable sales organization based on rigorous analytics, repeatable processes, and time-saving technology. Obviously, there are other factors; however, when these three are implemented properly, your sales organization will become a true growth engine and your top line will see significant and immediate lift.

Crisis in Lead Generation for Complex Sales

Many organizations rely on inside sales departments and/or third party firms to generate leads for their outside sales teams. Investments in marketing automation systems, such as Marketo, Hubspot, Eloqua, and others, along with increased inside sales headcount and program budgets, have set lofty expectations for your business.

The crisis is that for many companies, the investments are not generating significantly more qualified leads for the sales organization. Why is that?

Three major factors are contributing to the crisis:

1. Office Phones Are Rarely Answered. Contacts that are able to make decisions within large firms are rarely in their offices due to meetings and travel, so they rarely answer phone calls from unknown numbers. Calling their cell phones would be a logical alternative, right? Two major challenges exist in that department: the contact’s cell phone is often not in the lead list or CRM system, and calling cell phones is risky except for the most skilled people making outbound calls that know when to call. And in many organizations, leads are delivered to outside sales people for the sales person to try to set an appointment. Think about it—the inside sales or third-party organization succeeds in getting through to the prospect. Then they say thank you very much and I’ll have the outside sales person contact you to set up an appointment.

2. Emails Aren’t Getting Through.  Your and your competitors’ marketing automation systems are carpet bombing email addresses, so getting your snazzy template emails through is hard and getting harder. There is a whole industry focused on stopping the mass emails from marketing automation systems, and they are good and getting better. And if your outbound emails are not highly targeted and customized, they are rarely opened. Email average open rates are in the low 20% range, with average click through rates (CTR) less than 5%. The higher the person is in the organization, the lower the open and click through rates.

3. Sales People Don’t Like Leads From Marketing Automation Systems. Marketing automation systems easily handle hundreds of thousands of email addresses for marketing campaigns. Companies didn’t make marketing automation investments to deliver the same number of leads as before automation. Typically, we see lead generation goals increase by multiples once the systems are up and running. So the number of leads handed to outside sales teams increases by approximately the same multiple. The issue is that the quality of the leads decreases. To that end, the outside sales teams lose confidence in the leads and tend to ignore all but the most encouraging leads.

The sales leaders are key to solving the crisis. Sales organizations scream for more and better leads from marketing. Unfortunately, rarely do sales managers incorporate lead management discussions with their sales people. Sales leaders need real-time reports and dashboards so they can monitor how well their teams are following up on leads and the corresponding results. It is critical that low quality or bad leads be tagged with the right amount of feedback so marketing can understand how they need to adjust their qualification criteria and monitor the effectiveness of their calling resources.

All of these challenges can be addressed in most organizations, but the marketing department cannot tackle it on their own. They need help from sales leadership and the marketing operations teams. It often requires a revamping of processes, adjusting expectations, reestablishing trust with the sales organization, and providing sales leaders with tools so that they can be front and center on addressing the crisis. It’s not easy, but we can’t afford to ignore the crisis, as it will continue to be a drag on firm growth.