Whatever happened to Sears Roebuck, Kodak, Blackberry, Encyclopedia Britannica and other companies who once had industry prominence? The question might well be if they knew, why didn’t they take corrective action? And if they didn’t know, why is that? You cannot know what you do not know.
When leaders, managers and trainers review their current success, their egos often impair their ability to evaluate what they are doing and search for the truth; thus, achieving some degree of success blinds them from examining what is evident in the aftermath. Despite impractical methods and a less-than-imposing “net pre-tax” profit, they are making what they consider “good money.” The companies named above were in the same position (a common blind spot).
Specialty companies (windows, siding, roofing, re-bath, etc.) in today’s marketplace need to make at the very least a 10 percent pre-tax net profit (the more efficient companies make 15 percent or more). Only then do companies have the available capital to address unanticipated issues and to invest in growth, education and efficiencies, all of which contribute to sustained growth.
Companies specializing in general remodeling, design-build or similar, should aim for 6 to 8 percent pre-tax net profit with the same admonitions.
Smaller companies who grew from “word of mouth” recommendations/referrals often feel they do not need to examine modern marketing and sales techniques; thus, disavowing the need without examining “content and purpose.” Plus, they are ignoring potential positive outcomes for themselves and their customers. They also fail to examine what their customers really want, versus what “so called” experts tell them about “customer satisfaction” in today’s market.
With “growth” comes increased “needs.” Growing companies need to examine the market (territory) in which they operate then define the marketing method that best “fits.” Modern sales and marketing methods are a science, not an art form. Marketing that produces leads requires a formula that produces sales which, in turn, produces an appropriate profitability.
Pomposity Within Growing Companies
A 40 percent close rate against leads issued is not a logical return for “high-cost leads.” If a salesforce of 10 or more average a 40 percent close rate versus leads issued, it means that some salespeople may close 50 to 65 percent of their presentations counterbalanced by salespeople of lesser skills who close 20 percent (sometimes less) of the leads they are issued. These inequalities are tolerated and may even be considered effective as selling prices continue to increase.
A recent survey indicates the fully loaded cost* of an issued lead runs from a low of $250 to highs in the $700 range. (Fully loaded: All costs associated with lead development: advertising, marketing methods, lead intake, home shows, job signs, rent and other costs for showrooms, samples and personnel affiliated with lead development.)
Improving Marketing Efficiency
Distribution and control of the leads is a prime requirement. Salespeople, project managers and designers do not own the leads. The company made the investment. The seller (whichever title) needs to understand that a “step system” that meets the needs of both buyer and seller must be standardized and presented totally and efficiently on every call. It’s not a simple task for either design or implementation but an absolute requirement to grow and maintain “customer satisfaction.” Efficient use of costly leads creates a profitable return on marketing investment.
“The true efficiency of a direct-to-consumer sales organization is measured by the quantity and quality of leads produced, balanced by the quality of the sales organization entrusted with converting those leads into quality contracts.”
The Sales Manager
The sales manager is a critical management position (often the role of the owner in smaller companies), although it is badly misnamed. The job calls for managing people, not sales. In most successful companies, the sales manager has to be the one who interviews, evaluates, hires, then trains the fledgling salesperson while managing to upgrade the skills of those in the job for a longer period. They also have to handle the often-complex behavior of the veteran and sometimes “prima donna” salespeople.
This series of tasks is vastly improved with the use of DISC analysis profiles for hiring and training purposes. The latter accurately describes the behavior of new hires as well as that of those already employed. (*DISC analysis profile: A format that aids in determining whether they can do the job. Will they do the job? Do they fit the model and style of the business?)
A sales manager must have a job description that clearly defines the various responsibilities within the management role, along with weekly, monthly and annual goals for performance.
Sales Management Responsibilities
A primary responsibility of effective sales management is the grading of each salesperson’s performance in the various categories of the sales role, e.g., the “sit/presentation and close rate” against leads issued, estimating, and pricing the contract, the net retention rate, and even the number of referrals generated by the individual salesperson. Within these categories are subsets, all of which can be graded on a scale of 1 to 5, enabling management to determine the aid and assistance level that must be provided.
An efficient sales manager does “ride alongs” with salespeople, measuring the proficiency of the presentation in each step of the sales methodology. In these modern times there are even virtual “ride alongs.” Not to utilize “ride alongs” in some form seriously impairs sales and marketing efficiency.
Extending Training and Coaching: 8 Keys
An effective sales manager is inspirational and acts as the team leader, striving to become a great teacher and mentor to those whom he or she manages. In today’s competitive and changing marketplace, the selection, training and growth development of the sales manager is a crucial ingredient.
All of this raises the question: Are your personnel prepared for the changes that may occur with a changing economy—inflation, rising costs requiring retail price increases, increased operating costs, etc.? Have you structured methods/systems that will aid the company in becoming more efficient?
- Develop a training model (methodology) that becomes a standard operating procedure. Create analytics and measurements with effective goals. Train and enforce the use of these.
- Make sure that all personnel (associates) clearly understand their role and responsibilities—and the standard of performance that is expected of them. Don’t equate “telling” with training and coaching.
- To bring to light for your personnel those phases of performance that are better than average and, at the same time, give all those being managed a clear picture of where their performance could stand improvement. Show them, coach them, encourage them.
- Use the behavioral analysis to develop an ongoing plan for improving your communication techniques and those whom you train and supervise—coach them to elevate their awareness, capitalizing on their skills and utilizing their strengths.
- Evaluate your appraisal methods for job performance. Are they fair, accurate, objective and teachable? Are they having the effect desired?
- Emphasize regularly that you and the organization are interested in helping each employee grow and improve in their present assignment. Help them set goals to improve their performance with realistic timing.
- Encourage those being trained/supervised to make them feel they can look to you for guidance in changing times. Hold confidential meetings with those struggling with training or adapting to social and economic changes. Redefine your role as a manager, trainer and supervisor. Ever knowing equals ever growing.
- Set goals to know and better understand the person and their behavior—and for them to know you and understand your behavior and purpose as a basis for healthy two-way communication. QR
Dave Yoho Associates is the oldest (since 1962), largest and most successful consulting company representing the remodeling and home improvement industries. They maintain a group of account executives and advisers who develop plans, training and execution for large and small home improvement companies, manufacturers and other service providers. They offer a (no charge) 30-minute confidential consultation. You can contact Dave directly at 703.591.2490 or via email at firstname.lastname@example.org.