Ambition Mission

Change.

The very word sparks emotion (and no I am not attempting to invoke any references to last year’s Presidential election).

When an organization is faced with growth, change is often required to break through the current level of performance. 

The challenge is not deciding that changes are required and necessary.  The challenge, often times, is convincing the staff (or customers) that these changes are good for all involved.

Sure, there are instances when the changes needed for growth are not truly going to be good for everybody (such as an automated process replaces a person’s job; great for company, not so much for employee).  These situations, however are more rare. 

The most common situation is that changes are required and the only barrier to growth becomes the staff’s resistance to the changes.  Short of handing out copies of the popular book “Who Moved My Cheese?”  which is a great thing to do by the way, here are a few tips to keep in mind during this exciting (and challenging) time in a company’s growth:

1. Be real.  Let the staff know the good, the bad, and the ugly.  There is a difference between being excited and optimistic versus exagerating and fake.
2. Be early.  Plant seeds that change is neccessary and coming soon.  Be careful not to scare people.  Early on, be brief, and non specific with an air of excitement.  Even if the staff doesn’t know what changes are coming, the fact that they are expecting some things to change helps a tremendous amount.
3. Be open.  Lay the facts out, and ask for input.  Just like the popular “Matrix” movies, the problem is choice.  If the staff feels like they chose (even a little bit) of the changes coming, it will be easier for them to accept.  Avoid a last minute decree demanding compliance.
4. Be confident.  Once the decision is made, move forward.  Don’t waver mid stream.  Planned changes may be 90% decided prior to asking staff for input, but once the plan is 100%, be confident that that is the way the company must move forward and do so.

Even with these steps, certain staff may not be ready or able to change.  During these times, staff may leave.  Understand that in companies and in life, everything happens for a very good reason.  Focus upon the growth planned for the company and that the changes are required for that growth.

 Good luck and Happy Hunting!

I recently posted a reply to a Cahnnel Insider blog about whether or not pre-sales technical folks should recieve commissions as salespeople do or in some modified form.  Here is my reply:

No commissions for technical staff, whether they assist in the sales process or otherwise.

Rather, include the technical staff in a bonus for the company’s (or sales team’s) group performance.

Also, the pre sales technical role ideally should be rotated among the technical staff on a monthly or weekly basis.  Rotation is always a good thing for the technical staff and it allows ALL staff to cheer ALL salespeople. 

If the sales team does X, then all members of the technical team get Y.

Everyone on the team is motivated to assist “Sales.”  There is no more (or less) “Us versus Them” mentality between salespeople and technical staff.  And finally, ALL staff is aligned in the direction that bringing on new customers is good for all.

Since salespeople and technical staff have hugely different motivations and personalities, commissions should never be applied to a technical staff member - in rarely, if ever, has the desired effect of putting the “carrot” in the proper place.

Matt Makowicz

Matt@AmbitionMission.com

Link to the Channel Insider blog is:  http://blogs.channelinsider.com/content001/careers_salaries/the_channel_sales_commission_conundrum.html

One of the most common questions I constantly am asked is “What should I pay a new salesperson?”Like numerous business issues/questions, I usually ask a few other questions before I answer.the short answer to the above question is - It totally depends!First, no matter how or what a salesperson is paid, the compensation must be justified.  It doesn’t matter whether it is called base, draw, commissions, bonus, expense reimbursement, spiff, or whatever - the sum of that number (Cost of Sale) must be measured in relation to revenue and profitability.Second, BEFORE one goes out looking for a salesperson, it is imperative that the company is prepared to hire such an individual.  Is the sales process documented?  Are prices and offerings established firmly?  What decisions that are related to sales and/or customers are currently only able to made by the business owner?Third, make sure that the new salesperson will be trained and managed properly.  ALL new salespeople need training before he/she will be able to sell the products and services of a company the way the company wants them sold!  NEVER assume a person’s experience translates to not needing training as a salesperson.Salespeople can be whiney, greedy, lazy, and difficult to manage - but none of those are the leading reasons why salespeople fail.  In most cases the failure is due to A) an unprepared company, B) lack of training/direction/management.Comments welcome - but not possible until new web site launched.  Visit Facebook group or email me directly.Let Ambition Be Your Mission!

Any sales trainer worth his salt would stress to salespeople to never “pre-judge” if a prospect is going to buy or not.  All too often we are wrong, or more accurately put, our assumptions are incorrect.As someone who has sold various products and services over the last 18 years, I can definitely attest to the fact that I have been surprised upon numerous occasions.  We’ve all even heard the “war stories” of the “sure thing” that never happened or the “no chance in ___” buying big.Here is an exception to this all important rule:  FOLLOW YOUR GUT!I recently had a sales meeting with what would be a large customer prospect.  The dialogue was healthy, the dynamics of the meeting were fair.  The result of the meeting was statement of interest coupled with a “not now” objection.  However, the body language was off.  The meeting “felt” static.  It was like going through the motions.Everything was done right, but for whatever reason, I just felt that I would be barking up the wrong tree.  I of course followed up appropriately to get sporadic and non timely responses. - the deal is going nowhere, just like I felt I “knew” during the meeting itself.It’s difficult to teach “gut feelings.”  But when you know, you know.Advice to a new salesperson = “Never, ever, pre-judge a prospect.”Advice to a salesperson that is beginning to trust him/herself and her gut = “Never pre-judge, unless your gut tells you different.”Let Ambition Be Your Mission

According to a press release today from Microsoft and a subsequent CRN article (http://www.crn.com/software/212300577 ), Microsoft Partners can Private Label SaaS solutions to end customers.

This is good news!

Many customers, especially when leasing and financing options become more difficult to obtain as funding options for capital projects, see the value in hosted solutions (vs. Traditional “on premise”).

The big grumbling from Partners about Microsoft’s play in this area was the inability for a partner to brand the Saas solution and further be able to control and manage the valued customer relationship.

With another very powerful tool in the arsenal, Microsoft Partners are now better prepared for engaging new customers in an economic environment that can be summed up with the word “caution.”

Pay as you go, Private Label SaaS solutions that Partners can offer end customers is not new. Microsoft being the back end, however, is.

Thanks for listening Microsoft!

Happy Hunting and “Let Ambition Be Your Mission!”

- Matt Makowicz

In talking with numerous Partners (IT providers) about their goals for business growth and how to achieve them, the details of how the business owner spends his/her time frequently comes up.  The result of THAT conversation typically either shocks the business owner, takes our plan of action and goals in a new direction, or both.

On average, it seems that most business owners work a lot in their business.  There is nothing wrong with that!  The only problem that comes is when the amount of hours spent directly affects (or prevents) other areas that the business owner claims to be more important to him/her.

Different scenarios:

One scenario is the business owner is working two jobs.  They will be spending 35+ hours each week on technical work in addition to 30-40 hours each week on operations, financial management, staff management, customer management, working “on” the business and the all too common “putting out fires.”

A second scenario is the business owner who is working a lot just “running” the business.  This person will be working 65+ hours each week on managing staff, customers, finances, operations and “fires.”  This person usually finds little or no time to work “on” their business.

While there are numerous other permutations, these two seem to be the most prevalent.  Both have good points and not so good points.

The good news:

Business owners in scenario one are actually spending time to work “on” their business.  Whether this comes in the form of reading books, attending conferences, seminars, or webinars, business coaching, etc… is not as important as that there IS time being spent in this area.

Business owners in scenario two have gotten to the point where they recognize that they should NOT be performing technical work.  They realize that business management and sales are the “higher order skills” in a business.

The “not so good” news:

Scenario one owners are literally doing every job in the business at one point in the week or another.  Staff members exist as merely an extension of what the owner cannot get to.  “I can’t get to the problem at XYZ customer, so I need you to…”  The business is usually in chaos or hanging by a thread.  A business in this mode of operation cannot typically sustain a major problem – other than by pouring more hours into the week!  Left unaddressed, these business owners either get burnt out, or convince themselves that life would be simpler if they return to being a “one man show.”

Scenario two owners are similarly stressed.  They cannot figure out how to juggle all the balls effectively without dropping some.  This owner is somewhat different as he/she has a clearer understanding of WHAT he/she SHOULD be doing with the time, but not a solid idea of HOW to execute.

Recommendations:

First breath.  Second, step back.

We cannot improve what we don’t (or cannot) measure.  So begin by documenting the activities each week.  This will likely cause surprise in both the amount of hours being worked in or on the business as well as the breakdown of what those hours were spent doing.  Do this for at least two weeks, but preferably one month to get a good “baseline.” 

Next, write down “YOUR IDEAL WEEK.”  This week should add up to 168 hours and encompass every area of one’s life.  Start by putting activities on the list that are “non-negotiable” in your personal life such as a certain number of hours of sleep each night, church, or coaching a child’s soccer team on Saturdays.  Then add “non-negotiable” activities in your business such as sales, financial management/review, and staff meetings.

Separately, create a list of all other business and personal activities that you either have been doing or would like to be doing along with the number of hours each week that activity is expected to take.  This list should be broken into two – a business list, and a personal list.  The personal list may be a weekly dinner with your spouse, volunteering at the charity of your choice, or practicing that musical instrument.  The business list may contain items such as attending educational webinars, visiting customers, working on identifying (or implementing) a PSA tool for the business, etc… 

Prioritize each of these lists.

Finally, fill into YOUR IDEAL WEEK, each of these activities for business and personal.  Find a way to delegate what was on your lists but didn’t fit into the ideal week.  It will be amazing that the activity of “watching TV” is rarely on the list in anywhere near the amount it may have been previously! 

The fantastic news:

Now that you have YOUR IDEAL WEEK, make copies.  Give a copy to your spouse.  Hang it on your wall in your office and on your vanity mirror at home.  You are now among the few, the minute few business owners who actually know in which direction you are heading!

Happy Hunting!

Let Ambition Be Your Mission!

~ Matt Makowicz

(P.S. Any blog readers care to share a copy of YOUR IDEAL WEEK with me for comment or accountability, email it to me)

Today’s coverage of the election is commonly called “Decision ‘08.”  For some, an easy decision, for others a tough decision.  I am certain there are enough blogs out there dedicating something political to the fray today, so I will not add.

 I will however draw a parallel to business.  There is a reason we have term limits and elections.  First, nothing lasts forever.  Second, It is necessary to continue to challenge (and sometimes revisit) previous decisions.  Elections force us to do that with our government’s leadership.  Unfortunately, nothing forces it in quite the same way in a small business.

I speak with hundreds of small business owners each month and some, I am afraid to say are simply on “auto-pilot.”  VERY FEW change the way in which they market, sell, hire, operate, do their books, compensate staff, compensate themselves, or even answer the phone.  I am not advocating change for the sake of change,  (please don’t read into that too much) but it IS necessary to take a look at all areas of one’s business regularly - sometimes a hard look.

Here is an example that is common and based on the conversations I’ve been having with Partners out there seems to be all too familiar in this market/economy, etc…  The scenario is when to cut back on expenses.  In particular, when is it the right time to let an employee go?  This is such an emotionally charged topic, that concepts of fairness, guilt, regret, responsibility and fear all get in the way of making a business decision. 

I was talking with a business owner that had hired staff too quickly.  (hired staff and then began selling)  When business didn’t grow as quickly as anticipated to support the new expense of the additional staff, a decision had to be made.  The options, as the business owner saw them were

1) just sell more, it will take care of itself

2) fire the last person hired (that’s fair right?) [note: this was owner’s least desirable option]

3) cut back on other expenses, such as benefits for all staff

4) dramatically reduce the owner’s compensation (for the time being)

The owner was looking at emotional reasons and NOT looking at his business.  He was not analyzing the P&L, sales pipeline, balance sheet, and cash flow analysis - but he should have been.  In this case, he was considering lowering his pay by 50% to $4,000/mo and cut benefits such as mileage reimbursement and some other healthcare and fringe benefits to all employees.  His total savings would equate to approximately $6,500/mo.  Alternatively, as I saw it his other option was to let go one of his high paid (slightly overpaid) techs.  This single change would save approximately $8,000/mo when everything from payroll, taxes, benefits, mileage, etc was factored in.

Which is more emotionally taxing for the business owner?

Which is more emotionally taxing for the remainder of the staff?

And finally, the most important question (and really the only one that matters) is:

Which course of action is best for the health of the business both long and short term? 

Here is my point. 

When making dramatic decisions in your business, always do two things:  First, Pretend you are not the owner/operator but rather an investor looking out for the long term value of the business.  Second, be certain to look at major decisions from multiple angles and not be clouded by emotion.

Good luck and happy hunting!

P.S.  If you find yourself at this decision point and want an objective opinion from one’s who’s been there, reach out to me, I will be glad to listen and offer my opinion and help however I can.

Let Ambition Be Your Mission!

~ Matt Makowicz

Here in NJ, the slogan goes… “NJ and you, perfect together.” 

While I can practially hear the snickers through the Internet (especially from you folks out West), hopefully one we can all agree upon is the title of this post:  “Projects & Service Contracts - Perfect together!”

Service contracts = recurring revenue.  Projects are (by their nature) transactional sales.  BUT, if we can somehow marry a project sale with a service contract, then Projects (can) equal recurring revenue. 

Here’s how to do just that:

First, understand that the project is what the customer has a perceived need for almost in all cases.  Rarely does a customer complain that they need a monthly IT service contract.  They do, however usually agree with and understand the need for a new server, new equipment, or even new software - it’s easier for a customer to grasp.

 Thus, it is necessary to do a good job demonstrating value for & selling the project.  REALLY addressing the customer’s needs (both perceived and otherwise) as it relates to the PROJECT, will lay the groundwork for the service contract sale.

The problem:

Most IT providers see the project and service contract as two separate sales.  Furthermore, if the IT provider is seeking recurring revenue, the focus is therefore shifted from wanting to make project sales to wanting to make service contract sales.  (the opposite of what the customer thinks they need).

The solution:

Marry the two sales.  Act as if the project is a student sky-diver tethered to an instructor.  Regardless of how much the project may feel the most important, the instructor is in charge.  The service contract (and recurring revenue that goes with it) is always there - an integral part of the sale.  To remove it will… well only the instructor has a parachute. 

Even if not asked for directly, every project proposal should be accompanied by a service contract proposal.  Remember that the real SOLUTION to the customer’s pain is NOT Small Business Server, a new firewall, or even a great line of business software application.  The real solution is YOUR SUPPORT OFFERING!  Would the customer be in the situation they’re in now if they were already on your support offering?  No.  Would they be able to focus upon their business and its growth and sustenance if they were not on your support?  Likely not.  Your offering is the solution.  Presenting your support offering with every project proposal is as critical as having a parachute when skydiving - it simply doesn’t make sense without it!

This is why I advocate a very thorough proposal for the project.  Since that is the part the customer wants to hear about, I would spend the majority of the time presenting the details, options, and scheduling of the project.  All the while demonstrating through “picture painting” and “seed planting” that the company is thorough, has attention to detail, has considered the business’ needs and recommended an APPROPRIATE solution.  These emotional qualities will then be translated by the customer to the support offering and make it an easier sale.

The last critical tethering is that of a discount.  The desired outcome (best for the customer & best for the IT company) is for the customer to go ahead with BOTH the project and the support contract.  So the “carrot” needs to be placed to incentivize that outcome.  This is done, most easily by presenting a built in discount if the customer says yes to the project and yes to try out the support contract. 

The way I used to do this (with greater than 95% success) is to offer the project with two prices A) T&M estimate and B) reduced, fixed price.  The “A” price was really an inflated premium price I would charge the customer because a customer that only wants a project took us outside of our desired business model and therefore had to be charged a premium.  The “B” price was the price I really wanted to charge to be profitable on the project.  The difference between “A” and “B” was usually NO GREATER than one quarter of the support contract.  I then presented this difference as a discount the customer would receive if they “went ahead and gave our support a try.”  The result:  Most customers felt silly to NOT try out the support and of course not one ever cancelled after a quarter, because the customer realizes by then how integral our service was to his business and has trouble contemplating how his business survived without our service for this long. 

 Happy Hunting!

~Matt

Price comparison in a fragile or down economy is of utmost importance and crosses industries…

 My friend, Lisa, owns a territory of FIVE GUYS chain restaurants, here in NJ.  Her sales are UP close to 50% over this time last year.  The reason?  The down economy!

(for those of you who don’t know FIVE GUYS, it is a restaurant chain that serves high quality burgers & fries made from top quality, fresh ingredients)

 Here’s why - in a “good” economy, people “traded-up” from the franchise burger places (McDonald’s, Wendy’s, Burger King and the like).  In a “bad” economy, people “trade-down” from other chains (Fridays, Applebees, etc…). 

When people compared FIVE GUYS with the franchise burger places, i.e. lower end places, the value AND price was higher at FIVE GUYS.  The result was a 50/50 choice… A) lower price and lower value vs. B) higher price and higher value.  Now that the economy is not as good, there is an additional set of customers.  These new customers are those who choose between FIVE GUYS and a chain place where a lunch or dinner with the the family could easily cost twice as much.  In fact, in some ways, the better quality burger at FIVE GUYS is a higher value than one can obtain at a chain.  So these new customers choose between A) higher value and lower price vs. B) higher price and lower or equal value.

This is similar to the topic of today’s Ambition Mission Community webinar - “Comparing Price: Why comparing your managed services offering to an IT department compels prospects to say “I’ll take it.”.  The prospect is more likely to engage  in a managed services offering if what they compare the offering to is higher in price and equal or lesser in value.  This is the case when comparing a fixed price, managed services agreement for a small business customer to that customer having an internal IT department or dedicated IT professional on staff.  The benefits to the business with the managed services offering are equal if not higher than the business hiring full time IT pros and the managed services offering is a mere fraction of the cost.

Here is a slide from today’s webinar that shows where the value and price questions are answered for a customer in realtion to 1) a T &M solution, 2) an in house IT Department or IT Pro, and 3) a proactive maintenance ans support (managed services) offering:

Good luck and happy hunting…

Let Ambition Be Your Mission!

~Matt

So many folks talk about Marketing & Sales as if they are synonymous, but they are not the same.  True, Sales and Marketing are closely related and in smaller companies there can be one individual responsible for both, but they are not the same.

Whether Sales and Marketing are two different departments in your company or simply two different “hats” worn by an individual in a business, it is critical to observe the difference between Sales and Marketing.  It is only in the separation of the goals and responsibilities of each “department” that each can be focused upon properly for the upmost growth of the company.

So simply put, “Sales” is defined as the process by which an opportunity or lead is converted into a customer.  The most common analogy is that of a funnel.  The wide mouth at the top of the funnel is where opportunities and/or leads are put.  “Sales” meets with the customer, determines needs via analysis, presents solutions, prepares contracts, negotiates with prospects, and garners commitments to successfully convert the opportunity/lead/prospect into a customer.  “Sales” final task is to transition the new customer to the Operational or Implementation department of the company to execute the solution just sold and committed to by the customer.

“Marketing” is generating or finding the opportunities or leads for “Sales” to work through the process described above. 

Observe the funnel below…

Clearly “Sales” and “Marketing” need to work together.  If Marketing floods the top of the funnel with too many opportunities for Sales to be able to give attention to, Sales will become frustrated and not work on any of the opportunities for there may be too much “bad” opportunities to get through to get to the “good” or qualified ones.  An example of this would be the purchase of a cold list from a website that sells this information.

Conversely, if Marketing over qualifies opportunities, Sales will likewise become frustrated becuase they will feel that there are not enough opportunities to work on and that Marketing is not keeping them busy enough.  An example of this is when 100% (or close to 100%) of all opportunities come from referrals or word of mouth sources.  Another complication of this situation is that the Sales department usually will be overconfident in their ability to convert opportunities to customers and consequently unprepared to work different types of opportunities (generated from different marketing strategies) through the sales process.

My recommendation is to first, understand the very different roles of “Sales” and “Marketing” in order to execute on each effectively.  Second, add additional marketing strategies to the overall marketing plan rather than simply relying upon referrals only to ensure that the Sales department effectively understands its capabilities and appreciates when an super qualified referral is dropped in their lap.

Happy hunting and Let Ambition Be Your Mission!

Matt Makowicz