SELLING 2000: The Vision and the Promise of Customer Relationship Management

The New & Updated Version of the Bestseller

SELLING 2000
The Vision & Promise of Customer Relationship Management! By Timothy McMahon … “one of the world’s top three experts in sales and marketing” !

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

1

SELLING 2000: The Vision and the Promise of Customer Relationship Management

ABOUT THE AUTHOR

top three gurus in sales and marketing” (Timothy McMahon, Tom Peters, and Al Reis). A veteran sales representative and sales manager, Tim McMahon spent over twenty years with IBM, Digital Equipment, and Dun+Bradstreet corporations in senior management positions. McMahon is the author of three books, Selling 2000, Solving the Sales Manager Equation, and the new Dear God! I Never Wanted to Be a Salesman!. He writes the syndicated column McMahon On Management and he recently completed a television special for The Computer Channel on “Selling & Technology in the 21st Century Sales Organization” For more information, contact: TIMOTHY MCMAHON WORLDWIDE Merrimack, NH (603) 424-3387 Email: tmcmahon@mcmahonworldwide.com Web: www.mcmahonworldwide.com

Timothy McMahon is one of today’s leading management consultants, and a bestselling author. In addition to keynoting major Sales, Management, Corpprate Sales Meetings, and IT conferences, he consults and trains for client companies worldwide – U.S., Canada, Europe, Middle East, and Far East -- on strategic planning, CRM strategy and implementation, and 21st Century business. At the national Sales Management Conference, McMahon was recognized as “one of the world’s

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

2

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Part VI. DEVELOPING THE STRATEGIC PLAN FOR CRM SUCCESS

TABLE OF CONTENTS
*****

Part VII. SPECIAL REPORTS: (NEW!) • Death of a Salesman? – Technology & Selling • CRM – An Opportunity for Competitive Advantage in the 21st Century Marketplace? • The Seven Secrets of Customer Relationship Management • The Quest for Market Dominance
• The Value Principle (special excerpt for Timothy McMahon’s upcoming book)

INTRODUCTION PART I: THE 5 TRUTHS OF AUTOMATION PART II: SELLING 2000: A WORLD OF CHANGE PART III: SALES MANAGERS -- THE MISSING LINK PART IV: THE COMPLEAT SALES REP PART V: INFORMATTON, PROCESS & TECHNOLOGY

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

3

SELLING 2000: The Vision and the Promise of Customer Relationship Management

INTRODUCTION What will it take to achieve real sales success in the marketplace today? One thing we do know for sure: is that selling will be about much more than a salesperson applying sales skills to close deals. Success, in fact, will come from a new synergy of strategies and tactics coming together among corporate functions, field management, and field sales operations -a synergy that creates a new and powerful competitive advantage to close quality, high-profit business. In one sense there's nothing new in this idea; however, the capability to fully realize it is very new -- the enabling technology of sales automation. Everyone directly, or even indirectly, in the business of selling has heard a great deal about Customer Relationship Management (CRM) and sales force automation, (SFA) in the last few years -- with more coming every day in magazines, industry conferences, or "how to" seminars. Salespeople, managers, and those in sales support, marketing or corporate management are beginning to suspect and appreciate the changes this new technology will bring to the business of selling and servicing customers. Many are recognizing that realizing the full potential of CRM will

require far more than providing salespeople with computers and software. The task will require new sales and management processes enabled by powerful sales automation technologies and focused upon real business issues. How that may be accomplished and a new company-wide sales synergy created is the vision and the promise of SFA/CRM. SELLING 2000 is a new and exciting vision of what sales automation can be - it's real potential to create a company-wide information highway that positions the corporation to establish maximum competitive advantage in the marketplace. More than just a vision of the future, SELLING 2000 is about how to successfully realize the promise of CRM. As far back as 1992, a Harris Poll identified that the number one information systems project of the Fortune 1000 was sales force automation -- a sophisticated combination of sales productivity software, computer systems, and communications networks designed to improve sales productivity, help identify higher probability opportunities, and create competitive advantage in the marketplace. Today, in the first decade of the new millennium, hundreds of

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

4

SELLING 2000: The Vision and the Promise of Customer Relationship Management

SFA/CRM vendors compete for a potentially multibillion dollar business What portion of Customer Relationship Management or Sales Automation systems implemented can be considered a full success? If we define success as “meeting initial expectations” the results are probably not good. But where CRM has met expectations, the results have been phenomenal. The question, of course, is “What did they do right?”. That’s what SELLING 2000 is about. On a personal note… When I first wrote SELLING 2000 we called this new sales application “Sales Force Automation” or SFA. For reasons still somewhat unclear to me, the term “Customer Relationship Management” or CRM has replaced SFA. I suppose salespeople really didn’t want to be “automated”. In updating the book I suppose that I could have done a global search and replace for CRM and Sales Automation, but I decided to generally leave the initial references intact and use the terms interchangeably. After all, who knows what we’ll decide to call it next ! Since I first wrote SELLING 2000 in 1995, much has changed – and much has not. Widespread customer

success has still not become the norm,; many companies find themselves on their 3rd or even 4th “try”. The principles of SELLING 2000, however, are proving themselves to be absolutely true – if only everyone would take them to heart! This digital version of SELLING 2000 contains all the original text of the published edition including worksheets and a completely new section of “special reports” on CRM and selling strategies. . n Timothy McMahon July, 2000

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

5

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Part I CRM and Sales Automation: The Five Truths
Let's begin with a set of five basic CRM/sales automation "truths," each of which is fundamental to achieving tangible and measurable success with CRM: One, to significantly produce more sales, drive greater productivity, and enhance sales effectiveness, the processes established behind CRM will be as or even more important than the system itself ... Two, the benefits of sales automation are as great for the company as a whole -- by providing solutions to corporate-wide business issues -- and for sales managers, as they are for the salespeople ... Three, keeping a database history file of customers, prospects, and accounts is only a start. Creating planning and performance systems that utilize this "knowledge base" are the real payoff...

Four, existing corporate structures and cultures will change... Five, salespeople and managers will need to develop new business skills to take maximum advantage of CRM technology . #1. Process - the CRM Cornerstone It is unique to automation that simply using it consistently will not necessarily produce quality results. Automating sales is unlike automating the "traditional" business applications, such as accounting, manufacturing, order entry and distribution, where substantial increases in productivity and efficiency are routine. Traditional business applications respond so successfully to computerization because they are already based on firmly defined and consistently applied process, such as standard accounting practices or manufacturing methods. Not so in sales. It is the inherent nature of computer systems that they do an outstanding job of automating process; but they are only a reflection of that process, not the creator of it! A sales automation system, then, can only be as effective as the underlying

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

6

SELLING 2000: The Vision and the Promise of Customer Relationship Management

sales and management processes that it reflects and supports. It is not that Sales does not have process ... unfortunately it usually has too much of it, or conversely too little -- and it is often inconsistent across the organization. Sales, including both field salespeople and sales managers, seems to be in a perennial tug-of-war with itself. Is sales an art? Is sales a science? Is sales some combination of the two? Is there one, consistently most effective way (or process) to go about selling and managing? Are there many equally efficient ways to reach the same objective? There are salespeople and managers who track their success to their planning and analytical skills and unrelenting use of a favorite sales methodology or process. Others, however, swear by their ability to "fly by the seat of the pants" and choose to rely more on strong selling and interpersonal skills to make sales. To work for every salesperson, then, a CRM system would theoretically have to mirror and support every individual salesperson's personal selling method, whatever that might be. Despite the overwhelming difficulties of doing this, what if there is no clearly defined -- or successful -- method or process to

support? The only result of automating a "mess" is speeding up the mess. CRM's broader task is to enhance the activities of entire organizations who support products (pre- and post sale) as well as sell them. Like salespeople, other individuals equally essential to helping find and keep satisfied customers (marketing, support, and service) may have little in common in how they work, plan or manage their businesses. So here again in the real world of selling and supporting customers there are too few fundamental common processes or methodologies. Instead we have plenty of good people, each doing their own jobs in pretty much the best way they know how -- or at least in the way their particular organization has decided. Instead of using mostly objective "hard" facts and figures, however, to make decisions, they must often deal with spotty and incomplete information and subjective "what ifs" and best guesses, depend upon interpersonal relationships, and navigate political structures. With the trend towards remote field people, or virtual offices, their efforts to work together more effectively are often limited to occasional meetings, electronic mail messages, telephone calls, and voice mail.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

7

SELLING 2000: The Vision and the Promise of Customer Relationship Management

In our vision of sales automation, customer and prospect information and process are tools to be shared among those who "touch the customer" to help each individual more reliably determine the "best next" course of action at any point in time that will advance the customer relationship. Sales automation works beautifully when people use it to apply effective processes to better information to support and really improve what they already do. It works far less well when it becomes another corporate system -- a data collector. In short, a common layer of well-defined, successful process absolutely must be in place and used throughout the organization for automation to have maximum value. What are the basics of sales process? In selling there are three: Planning Performance, and Evaluation. Every sales person, formally or informally, decides on the most effective course of action (plans), carries out those actions using sales skills (performance), and critiques the results (evaluation) to determine the next step (planning again), and so forth. Progress can usually then be measured against some set of sales

"milestones" or fundamental events in the overall sales cycle. Sales Automation can support and enhance sales processes by providing information to enable creation of better plans and strategies, through productivity tools that sharpen performance, and with analytical tools to facilitate evaluation of sales progress and effectiveness. These processes, however, need to be basically consistent across the salesforce for CRM to have any real impact. The optimal architecture of a successful sales automation system would first be based on a clear definition and implementation of planning, performance, and evaluation processes. Secondly, by identification of the or data that specifically supports these processes, and lastly by the integration of both into appropriate technology -hardware, networks, and CRM software. #2. Corporate & Management Benefits The second "truth" is that the greatest benefits of CRM will be found not only with the salespeople but also within the company as a whole and with the sales
8

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

managers. As much as automation can do for salespeople, it has proven to have an equal or even greater long-term potential to benefit sales management, service, customer support, marketing, and corporate management -- and even such diverse areas as manufacturing, distribution and administration. Consider that the sales and customer data generated by sales representatives is actually "root information." The progress of customers and prospects through the sales pipeline or funnel provides a base of data from which ultimately all other corporate functions develop plans and strategies -- and ultimately make *What is the forecast? How much should we make? *Should we hire or layoff? In what area? *Do we expand or contract the business? *Are our products competitive? What features do we need? *What is the best market/pricing for our products *How can we manage leads & the pipeline more efficiently? *Where should we invest our resources next year? *What are our customer's expectations?

*How can we improve customer satiCRMction? 'What is the competition doing? *Who is most likely to need our product today? The most successful CRM systems, in fact, tend to be those focused on solutions from a set of seven key business issues which automation can address: To provide business solutions on this scale will require a new foundation of accurate and real-time sales information -- sales data with three characteristics: it must (1) be readily accessible to any part of the company that requires it or can benefit from it (not just the sales person); (2) be complete and accurate, and (3) be consistent, i.e., reflect some level of common process across the sales organization. An automation system, then, will not only reside on salespeople's PC's in the field; it must also provide networking to a master company database and other remote PC's (such as managers, account team members, etc.) to provide common access and twoway data exchange across the company. The completeness and accuracy of data must be mandated by a cross-functional management team that

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

9

SELLING 2000: The Vision and the Promise of Customer Relationship Management

recognizes the importance of the "root information" to the company's future. One manager introduced the critical nature of CRM for the entire company in this way to the sales organization: "At corporate, there are three questions which we cannot effectively answer which are critical to the success - and euen survival -- of our company. Those questions are (1) 'Who are our customers?'; (2) 'Why do they buy from us?'; and most importantly (3) 'Why do they quit buying?"' "You in the field know the answers. At corporate we have lots of sales and product information, but not these. " "Let me ask you this: 'How can we consistently provide you, the salespeople, with the right products, with the right features, at the right time, for the right market and at the right price to give you competitive advantage if we can't answer these three questions?"' To address the global issue of Corporate Disconnect will mean creating a new Corporate Information

Highway in which CRM will play a pivotal role. This highway will provide a common communication link between corporate management, field management, and field personnel (sales, service, and support) transporting information among all three from CRM, corporate information systems, and external data sources (e.g., Dun & Bradstreet market data, product information, etc.). Sales plans, sales activity, and results data will be shared among sales, sales management, corporate marketing, account teams, and other functions that can benefit. The potential company-wide impact of a corporate information highway can be more significant than it might first appear. Traditionally management creates an annual corporate strategic business plan based on historical performance data, market research, and a large supply of "best guesses." The corporate plan then is implemented downward through the organization to divisions, regions, sales units, and finally to salespeople. No plan of course is perfect; there are always inaccuracies -- the competition does the unexpected, the economy goes down instead of up, and so forth. The "problem" is really not that corporate plans are imperfect; the problem is that corporations find it difficult if not impossible to
10

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

quickly recognize errors or market changes and adjust/reimplement the corporate plan rapidly enough to make a difference. Why? ... because corporations have never before had a source of real-time field sales information (paper systems just can't do it)! or a way to effectively communicate new plans and strategies instantaneously to the entire organization. Imagine the potential for competitive advantage of a corporation that can virtually turn on a dime to accurately and effectively respond to real-world market events! To quote Jeremy Davis, President of Sales Technologies, "If you're going to fail, fail fast, fix it, and get on with business." In short, successful planning is not being right all the time ... no one ever is. Success is measured by how quickly you know you were wrong, the ability to identify exactly what was wrong, and how fast you can do something about it. The Measure of Success in Planning is NOT if you are right all the time....no oone ever is. Being "right" is at best an informed guess...

Success is how quickly you find out you were wrong, can determine what was wrong, and how fast you can do something about it! There is no question that the technical capability to create the corporate information highway exists. The question is who are the companies who will most aggressively move to seize this source of advantage by implementing the technology and addressing the cultural and organizational challenges of this level of reengineering (more about this in "Organization Change"). Finally, field sales management takes on a new role in this information highway as a central link or node with expanded opportunities for coaching sales performance and generally managing a more productive and efficient sales operation with a new wealth of more complete information and consistent process. The impact of CRM on sales management will be covered in detail in Part III. #3. More Than A “BUD” (Big Ugly Database The third "truth" is that a single "orientation" of tracking and keeping a history file of account or
11

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

prospect activity will not be enough to achieve maximum results. Salespeople, managers, and account teams need three "views" if they are to use CRM data to most effectively leverage sales: the Past, the Present, and the Future. Past and Present are nothing new -- traditional CRM systems almost always contain detailed account history information as well as some current status of sales progress. Integrating the Future, however, represents an entirely new generation of CRM systems. The past, or account history, tells us where we have been and is a base for decision making. The present tells us where we are today through forecasts, call reports, and performance tools to analyze sales progress against the measurable milestones of the sales cycle. The future, however, is the true CRM payoff: integral Account & Sales Planning. With planning, sales automation finally pulls together all the elements of the logical sales process as sales takes what they have learned, applies it to where they are today, and plans the best course of action that represents the highest probability of achieving the goal. Plans and strategies will then be electronically shared and refined between the salesperson and manager and

with other members of a sales team (support, service, etc.) to produce a better, more consistent overall customer strategy. Marketing and corporate management can build upon this base of history and plans to develop more on target strategic and tactical plans that better reflect the real world. The intent then of integrating past, present, and future customer views is to develop greater customer satisfaction through enabling everyone who "touches the customer" to "sing from the same songbook." #4. Organizational Change For many companies existing structures and cultures may change over time with CRM. There are often strong barriers -- cultural, political, and organizational to establishing consistent process, sharing information and strategies across departmental and organizational lines, mandating accurate and complete reporting of customer data, and developing team-oriented planning. Many organizational structures are unprepared to take advantage of the potential real-world knowledge of the business CRM represents. Departments, from sales to service to manufacturing, have never actually needed (or particularly wanted) to work together as a single
12

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

enterprise, and may even perceive their missions as mutually exclusive; that is, they think of themselves as almost separate "companies" within a larger one. This is Cultural Barbed Wire... A necessary task will be to bring down the Cultural Barbed Wire between cross-functional teams and management and establish a new shared goal of providing common value to the customer. Providing shared customer or prospect information (history, current status, plans and strategies) across the business using CRM technology is an essential first step. To fully address these issues, however, corporations will need to think about reengineering, at least culturally if not organizationally, to create Sales Enterprise Zones that refocus each function and eliminate barriers -- a re-engineering effort made possible through sales automation technology. As in the illustration, developing a company-wide sales enterprise begins by first enhancing the business enterprise of the salesperson -- providing him or her with new tools and capabilities to improve productivity and sales effectiveness. Creating the salesperson's sales enterprise is more, however, than account files and "To Do" lists. It includes recognition of the sales

territory as a functional microbusiness within the larger corporate business ... a business which needs to be funded, supported, and enabled by the "parent" company and which is responsible for providing a sufficient return on in investment. Esquire Magazine tongue-in-cheek (hopefully) recently listed some of the job requirements for Account Executives: "Duties generally involve concentrated, single actions done at the direct command of others ... contemplative and analytical powers are not mandatory and may even be considered a liability ... " The Sales Enterprise model for salespeople is exactly 180 degrees away. Salespeople, in a sense, become empowered as the executives of their own microbusinesses with a new balance of both independence and accountability. Why this approach now? Look at the trend to the home or virtual office. Much of the traditional management control exercised upon salespeople who came daily to the local branch office has evaporated. Remote sales forces (and remote sales management) make strong economic sense but create a whole new set of problems ("What's going on out there?") Not surprisingly then, the fastest-growing trend in sales compensation is
13

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

commission based on profit. In short, we are putting our salespeople slowly but surely in the role of business managers. We run the risk of a wealth of microbusiness failures unless recognize the enterprise nature of their work and can give them the information, guidance, and business tools they will need to succeed -- many of which can be provided through CRM. This same microbusiness or sales enterprise concept can be applied to sales units and regions, as illustrated, including their cross-functional counterparts in support and service, as well as to large account teams, and ultimately to the corporation as a whole. The enterprise reengineering task is to create an internal matrix of interconnected and fully functional business enterprises, focused on common goals and linked by common data and process. The point is this: the team or enterprise concept is certainly not new to the world of business. The ability to realize its full potential is. The difference is the enabling technology of CRM to provide the linkages that will successfully integrate process, information, and technology across corporate, divisional, and departmental boundaries. Strong market forces are

driving the need for organizational reengineering; technology is the bridge that will make it possible. #5. Sales & Management The fifth "truth," with CRM, the way salespeople and sales managers view and carry out their jobs will be fundamentally changed, builds upon the organizational changes many companies will experience. In fact, no group within the company will see greater and more challenging changes; and it is here that in many respects the deciding battle for CRM success will really be fought. The terms "sales representative" and "independence" were once almost synonymous: *"As long as I'm making the numbers, no one cares where I am or what I do." *"How I sell is my own business, as long as it works and I make quota." *"lt's a great life. That's why I like to sell..." The above statements just are not true anymore. As we've already said, making quota or "the numbers" is quickly being replaced with a focus on sales profitability, product mix, and individual return on
14

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

investment dollars. How and what a salesperson sells will soon be considered equally or even more important than how much is sold. Management will want to know whether established process guidelines were followed, was value added in the mind of the customer, was each sale profitable, supportable, and capable of building a loyal, referenceable customer? Furthermore, the customer relationship (and associated information) becomes a tangible, usable asset of the company, no longer residing only in the mind or private files of salespeople. It is perceived as vital to the very survival of the company (Corporate Disconnect). Sales managers (and indeed all managers) will face new challenges in planning and performance management as they move away *from "gut feel" decisions to a more "fact-based" management. The availability and useability of real-time sales progress and planning data will require managers to hone or develop new skills in strategic planning, resource allocation, and sales coaching. Sales managers will also face tasks that will determine the bottom-line success of CRM and the benefits it creates. They will be responsible for managing change at the field sales level as well as forging practical cross organizational

working links that will lead to the formation of the sales enterprise zones. In the big picture, the task represented by sales force automation is great, but so are the rewards. In the next ten years, CRM, in some form, will be a requirement just to stay even -- not an option. Competitive advantage, however, will be gained by those who can overcome the obstacles to do it right. On Teamwork-"Individual commitment to a group effort -- that is what makes a team, a company work, a society work, a civilization work." -Vince Lombardi

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

15

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Part II - A World of Change
The slow-growth economy of- the last ten years has created a highly competitive business marketplace characterized by significant changes in four primary business areas: the Marketplace, the Company, the Customer, and Sales Management. Much of the eventual measure of a company's success in the next decade will be its ability to successfully recognize and address the challenges each of these present. The solutions will require the successful integration of information into process with state-of-the-art technology as we redefine the purposes and functions of planning, performance management, and sales management.

in any given market will be successful. Marketshare growth, will then be measured primarily by a sales organization's ability to take away competitors' existing marketshare, to protect, grow, and leverage its own customer base, and, at the same time, aggressively compete and win the majority of the limited number of "new" business opportunities available. The task will be in doing these three simultaneously. The primary asset of the business then becomes not product or property or people or even intellectual, but rather its customer base. There is a "Catch-22" in this scenario -- a company which focuses its efforts on an "offensive" strategy, actively marketing for new business and pursuing its competitor's install base, can find itself suddenly fighting strong competitive intrusion in its own customer base and spending more time "firefighting" than actually selling. Unfortunately taking the opposite, a primarily defensive marketing posture, to protect the base results, at best, in a "no growth" scenario, and signals a declining revenue and market curve. The challenge then will be "competitor proofing" the customer base to limit or repel competitive intrusion, and to turn the customer base into a powerful marketing tool which directly assists sales in selling
16

THE FOUR CHANGES IN BUSINESS Change In The Marketplace In the 90's market, the simple truth is that there is not enough new business to go around. Not every vendor

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

new business marketshare.

and

attacking

the

competitor's In the "feature selling" model we can drive margin and profits by providing our customers feature-rich and aggressively priced products and services and by keeping the cost of sales low. In an "added-value" model we may maintain (or even increase) prices and cost of sales to establish a unique value-added competitive niche. Our competitive advantage (and profit margin) comes more from providing an added value to the customer which has equal or greater value than the product which the customer purchases; such as quality, safety, consulting or expertise, and so forth. In this model, the salesperson is a value-provider, not just a productprovider, or order taker. Many companies are slowly moving towards selecting one or the other of these strategies. Both are viable but mutually exclusive. That is to say you really can't do both well at the same time. Attempting to do so, taking the middle ground, I call The Corporate Mousetrap. More about mousetraps and feature us. value selling later ... but the point is that strategic choices are being made.

The 90's also offer, however, for many industries and companies a unique period of opportunity to achieve growth. In many industries, many of the "giants" who once controlled the marketplace have faltered after years of virtually absolute dominance. During those years, successful "smaller" companies strove to identify and dominate niche markets from which they hoped to eventually base further expansion. Upstarts who challenged the industry giants too often died on the marketing battlefield. Will the giants recover and reassert their dominance or will "leaner and meaner" upstarts press through the gap and create a new industry aristocracy? What will it take then, to either remain or become an industry giant? Change In The Company Corporate executives are concerned today with the dual issues of increased costs/shrinking margins and their customer's requirements to provide "added value." Many organizations will restructure their selling models and adopt either a feature-based market strategy or a value based market strategy.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

17

SELLING 2000: The Vision and the Promise of Customer Relationship Management

The second change in companies, briefly mentioned in Part I, is the identifying of "Corporate Disconnect," the corporate lack of good answers to three critical questions: Who are our customers? Why do they buy from us? Why do they quit buying? forth. In this model, the salesperson is a valueprovider, not just a product-provider, or order taker. Many companies are slowly moving towards selecting one or the other of these strategies. Both are viable but mutually exclusive. That is to say you really can't do both well at the same time. Attempting to do so, taking the middle ground, I call The Corporate Mousetrap. More about mousetraps and feature us. value selling later ... but the point is that strategic choices are being made. The second change in companies, briefly mentioned in Part I, is the identifying of "Corporate Disconnect," the corporate lack of good answers to three critical questions:

Who are our customers? Why do they buy from us? Why do they quit buying? Who does have the answers? The salespeople -- who in most cases literally "own" that knowledge. For example, when salespeople leave, are promoted, or move within an organization, critical customer information is often lost (if it was ever available to the company in the first place) -- information about the business relationship, the needs, hopes, promises, and expectations of the customer; the vital information that made the vendor/customer relationship work. The door swings open for the competition. In fact, if a salesperson leaves and then goes to work for the competition, the relationship (and revenues) that one company paid to establish passes directly into the hands of another. The point is that the full spectrum of customer information -- from relationship to service data to order history -- must become the most valued corporate resource. Only in this way can a company most effectively develop and target products and services and respond effectively to competitive pressures. Alone this may represent an organization's most significant technical and organizational challenge.
18

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Change In The Customer Recently at a sales executives' conference held in London, sixty-five CEO's and Sales VP's of large US and European corporations were asked what were the two most critical business issues they face in the 90's. The answers not surprisingly were shrinking margins and increased costs. The executives were then asked what they expected of vendors. The answer: "We want vendors who offer solutions to the problems of costs and margins by providing value to their customer's customer." In short, to maintain their margins, some companies will select vendors based on price -- the best price may represent a real value which can be passed on to the customer. Others, however, see price advantage as far less of an issue (or perhaps even a non-issue) and look for other sources of unique value (again -quality, security, consulting expertise, etc.) which directly or indirectly benefit the customer. So this brings up a fundamental question for vendors: What is Value to our customers and how do we make sure that we provide it?

It is difficult, perhaps impossible, to define what "value" might be to any customer in any given situation or for any specific company; however, we can understand how value is either created or destroyed in the mind of the customer. Value is in the customer's perception. What is Value & How Do We Provide It? VALUE is created by the combination of... Information, to make the right decisions and ... Process, to carry them out effectively ... Customer Perceived Value is created when we effectively combine Information and Process, to produce Capacity and Capability. With the correct information available when and where it is needed, we have the capacity to make better quality decisions that will benefit both the customer and the our own company. Process is the decision-making tools, methodologies, and possible sets of actions which can be applied to information to make and carry out quality decisions, i.e., the capability.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

19

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Another way to look at value, however, is to explore Value Breakdown!. In short, how does value perception erode or break down between vendor and customer? There are three elements of value breakdown. Perceived Value is lost: (1) when faulty or inadequate information results in decisions which benefit neither or only vendor or customer, (2) when decisions are made which result in taking the "wrong' actions, at the wrong time, to the wrong people, and so forth, (i.e., wrong process) and ... (3) by anyone who touches the customer! This third element -- anyone who touches the customer -- is the most important and underlies the fundamental problem in consistently providing high value to the customer. A surprisingly high number and variety of people in any company do, in fact, directly touch the customer at any point in time -- from sales and marketing to customer service, support, finance, administration, and so on. Others "touch" the customer more indirectly such as manufacturing and product engineering, and yet they too have a

responsibility for assuring customer satisfaction. Any one of these has the dual potential to build or to inadvertently reduce the customer's perception of value through making less than the best decisions through lack or misinterpretation of information and poor process. This is especially so since often only a few people really "know" the customer (usually sales or service/support). The strategy for preventing value breakdown will be to assure that anyone who interacts with the customer always has the right information and process tools necessary to make the best possible decisions and carry them out in the best possible way for the good of the company and the customer. Change In Sales Management Ultimately the responsibility for responding to many of the changes in the market, the company, and the customer's expectations will fall on sales management and through them on the entire sales organization. In the very near future the role of the sales manager may little resemble its traditional job description.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

20

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Criteria for Sales Managers Has a Vision Defines the Mission Measures Progress Has a 20/80 Perspective Uses "Master-Think" Builds Teams Displays Creativity Moves out of the "Comfort Zone" Based on surveys of CEO's and Sales & Marketing VP's in the Fortune 1000 companies, the sales manager of the 90's and the future will be less concerned with "making the numbers" and become focused more upon returning profit and productivity to the corporation. In short, the sales manager will become an "investment manager"; but in the words of one Sales Vice President, "Our sales managers are going to need a lot more information and analytical tools to achieve that!" Once again, the need for Information and Process. Over two years we asked over 500 sales and marketing managers, "What skills and abilities would you expect to find in a top performing sales manager?" Vision & Mission—top sales managers have and can communicate a clear vision of goals and objectives. Measures Progress -- "measuring" progress is different than "tracking" progress. Measuring means a manager has a clear understanding of strategic milestones and objectives which need to be achieved in the sales process to advance to closed business. The 20/80 Perspective -- top managers can specifically identify the 20% of the sales effort which results in 80% of the business ... and direct salespeople appropriately. Master-Think -- top managers are sponges; that is, make use of every possible resource to improve their planning and execution. These managers move away from isolation on "ego islands" that prevent them from accessing and utilizing the ideas and expertise of subordinates, peers, and senior management. Team Builders -- great managers are team builders, creating personal teams between themselves and their salespeople, sales unit teams, account teams, and cross-functional enterprise teams. Their skill is in
21

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

their ability to bring these teams together, facilitate their effective working together, and leverage them to build customer satisfaction. Creative -- a "creative" manager was defined as one who's motto might be "Find A Way!"... who tenaciously searches for opportunities and strategies, using all possible resources. The Comfort Zone -- A top manager creates and manages change. He or she is an expert at moving himself or herself and others out of their "comfort zones," challenging them to seek new solutions, ideas, and methods (such as CRM) to achieve greater success. So management methods and style will need to undergo much change if sales managers are to measure up to these criteria as well as become investment managers with expected ROI.. Many of today's sales managers rose from the ranks because they were top performing sales people, and continue to manage their people in much the same way they were managed, that is chartered to focus on achieving revenue numbers with minimal concern for profit or return. The sales manager now must become more of a mentor or

coach to the sales organization, responsible for not only guiding and directing sales activities but also assuring the most efficient and effective use of sales resources to achieve a broader -- and frankly more difficult -- set of goals. In summary, the "new" sales manager will have to become a true businessperson, running a sales operation like a small business -- as will the salespeople they manage! A Vision of CRM-"...to become knowledgeable with every aspect of the profession, to distinguish between gain and loss, to develop accurate judgment and understanding, to perceive that which cannot be readily seen ... " --The Book of Five Rings

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

22

SELLING 2000: The Vision and the Promise of Customer Relationship Management

rollout; and second, the tasks before them to assure success.

Part III Sales Managers: The Missing Link in CRM
Here's the question: "If we could-pick one thing that makes the d difference between real success in sales automation and just "ho-hum " results, what would it be?" The answer surprisingly is not What but Who. When all the databases have been defined and loaded, when all the laptops have been rolled out to the salesforce, there is still one critical and overriding success factor left: the first-line Sales Managers. The final success or failure of a CRM effort rests solidly upon their shoulders and ultimately they will determine just how effectively sales automation is used by the sales force. Missing the sales managers is the surest way to "miss the boat" in sales automation, and yet their role is too often overlooked. Here is a new "bottom-line" for sales force automation from a management perspective -- first, the essential role of sales managers in a CRM

The question of whether sales automation is really worth doing or can significantly improve sales efficiency and productivity (read that revenues and profits) has already been asked and debated, and the answer is pretty much in: "Well, sometimes it does and sometimes it doesn't." Still, most companies, especially larger ones, either have some level of sales automation or are well down the path of seriously looking at it. Some say, "It's the best thing we ever did!"; and others, "Well, it didn't do as much as we hoped". Nonetheless, just about everybody in business agrees it's probably a good idea with tremendous potential ... if it's done right. And there's the rub, what is "right" -- and is there even a single answer? If so, who's got it? To look for answers let's just ignore all the technology for a moment and stop thinking of sales force automation (CRM) as a computer application. Sure, there's a wealth of hardware and software here, but CRM is very unlike any traditional computer
23

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

application or system ever created. Sales Automation is people-driven not technology-driven. It would seem at first glance then that it's really the salespeople who are going to determine if CRM is a success or failure. Will they perceive it as a powerful tool to enhance their work, to help them make more money ... or will they stick with the comfortable "tried and true" methods of selling? How are we to create an automated salesforce who not only uses CRM but pushes it to its maximum potential? "Sounds like we need to do a real selling job on our salespeople if we want sales automation to work!" Well, that's one idea. But what do you do if not everyone agrees (and they won't!)? Is it still worth automating if some use it and some don't? The 100% Solution Some companies' solution has been, "Don't automate the sales managers. Avoid the Big Brother mentality. Give automation to the salespeople first. Let them get comfortable." One such company reported, after the first year, that over 60% of their salespeople were still

actively using the sales automation system -- and counted this a success story. But was it? Let's assume that the automated 60% of the sales reps experienced in the first year an improvement in their personal sales productivity and revenues. That's certainly good; but unfortunately the company missed the real CRM payoff: The 100% Solution -- or, as we discussed earlier, the ability to utilize comprehensive field sales data to fine tune the corporate sales and marketing effort for better competitive advantage. We know that automation's greatest benefits and best return on investment happen when CRM not only helps salespeople sell day-to-day, but also when it provides solutions to an organization's business issues. These "large-scale" benefits, are only possible when CRM creates a corporate sales knowledge base of accurate, reliable, and complete field sales activity data, rolled up and collected in a single master database. To create that "knowledge-base" -- and "The Big Payoff" -will simply require 100% use of CRM by the salesforce. The problem, then with the "Let the reps try it; they'll like it!" approach is that the "Big Payoff'' may never be achieved. Even though the number of salespeople
24

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

using CRM might increase over time, it will never quite get to 100%. There will always be someone who doesn't feel it works for them. In short, "selling" the reps on automation's benefits isn't going to be enough! The Corporate Disconnect problem will never really be solved. To illustrate just how critical "The 100% Solution" is, imagine a company attempting critical path financial planning and analysis but based upon incomplete and inaccurate accounting data -- some in the computer, some on paper, and some residing only in people's heads. Why bother? Organizations successful in sales force automation have created a foundation of complete and accurate sales data based upon 100% of the salespeople and managers using CRM 100% of the time, with a 100% quality information goal. They focus on developing solid analytical skills as well as assuring that users know how to operate systems; they pay equal attention to creating a 100% base of process users armed with 100% of the information they need to be effective. As shown in the illustration, to truly reach the Target Effectiveness Zone we need to focus on achieving 100% solutions in all of these areas.

In short, there is little difference between 0% and 99% of the salesforce using CRM. The 100% Solution is the only viable solution -- and assuring that turns out to be the new task of field sales management. 100% Automation—The Sales Managers Task So how is a sales manager supposed to do this? Become Big Brother? To enforce CRM use with ''The Big Stick"? "Oh great! Just what I really need, something else to do! I need to spend my time helping close business not enforcing some new system!" Predictably (and perhaps fortunately) neither "Big Brother" or "Big Stick" works -- and this manager is absolutely right. He or she doesn't need to spend valuable sales time enforcing some new corporate system. The key to making sales automation work -- to actually achieving the 100% Solution -- comes down to my First & Second Laws of Sales Automation Success. These are the foundations over which successful implementations of CRM will be built:

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

25

SELLING 2000: The Vision and the Promise of Customer Relationship Management

The 1st Law: The direct benefits to sales managers, which have been too often overlooked,, are as great or greater than CRM's benefits to the salespeople. The 2nd Law: Salespeople will invariably use automation as much and as well as they perceive their direct manager uses and depends on it. So, what are the benefits to managers and how do management users create sales rep users? The 1st Law: Management Rewards: Think about the job of a sales manager. When some years ago I was first promoted to branch sales manager I finally thought I had made it -- until I discovered how little control I really had of what was going on in the field ... and discovered "midnight madness." "Midnight Madness" -- "It's 12:00 AM and I'm wide awake. The end of the month (quarter, year) is coming up and I'm having a midnight attack of the FUDS (fears, uncertainties, & doubts). Will we make the numbers? How reliable is the forecast? Is there enough business in the pipeline? How confident do I feel?"

This was when I realized how little control I really had as a manager to impact sales -- certainly not like when I was a sales rep! I didn't really have a lot of information about what's going on in the field and I worried a lot about that. "I'll call all my reps first thing in the morning and we'll go over each deal ... again. " (They'll appreciate that!) Midnight Madness or "It's 12:00 AM; You're Wide Awake!" There are sales management questions that just have no good answers -- the kind that wake you in the middle of the night ... and keep you that way. Over two years, with more than 500 sales managers, we asked "The 12:00 AM Question" to learn what are the key questions that managers need answers to and aren't getting -- and that sales automation can provide through the 100% Solution. Here are a few "What's going on out there?"

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

26

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Perhaps because most sales managers were first successful salespeople, they're used to being in control of events and staying on top of each sales situation. All that changes as a manager when you realize that the salespeople don't relish writing activity reports, educating you on each opportunity (especially daily), and answering "Did you..." questions ("Did you qualify that deal? Did you ask for the order?...). You want to find a way to know what's going on without "micromanaging" ... and driving the sales people (and yourself) crazy. "Where did all the leads go/"

If the sales reps are in the office you know what they're doing, it just isn't selling. On the other hand when you haven't seen them for six weeks ... well, you get a little nervous! "Are we going to make the numbers?" The big question. Will we make it? How accurate is the forecast? You're trying to remember every deal that should close. Even though the rep said "Not to worry " how confident do you really feel? The pressure's on from upstairs too! "My best sales rep just quit!"

Remember the 500 leads from that trade show? When you looked through the cards there were some great "Call me ASAP!" opportunities. You know (er...think) marketing sent the leads to your sales reps. Now its been three months and it seems like nothing's happened. How? Didn't the reps follow up? (You told them to at your team meeting./) Nobody seems to be able to give you a real specific answer...black hole! "What are the Reps up to?"

If you're really lucky he or she just retired to the Bahamas. If you're really unlucky, that rep now works for the competition and is coming after his or her old customers. To make it worse, the new salesperson you assigned says that she can't find any files to speak of and nobody seems to know what "Best Rep" was working on. Oh boy... "How can I help?"

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

27

SELLING 2000: The Vision and the Promise of Customer Relationship Management

And here's the bottom-line, every manager's real question. You were probably a pretty good sales rep, even great! You love to sell, to make calls, to brainstorm and set strategies. Trouble is there's no time, the sales reps don't invite you on calls as much as you'd like, and when you do go you find its hard to really help "make it happen" because you're not as close to the account as the salesrep. (Another "schmooze" call). Rats... Every manager tries to walk the line -- between driving the salespeople crazy with reporting, business reviews, and "How's it going?" calls, and having enough information to do the real job of sales management: coaching, planning and helping close business Managers who have access to up-to-date sales progress data, as provided through CRM, spend less time asking "What's going on out there?" and more time doing their real job. They can now stay in direct touch with every account and every opportunity progressing through the sales pipeline and have the answers at hand to spell the end of "midnight madness" once and for all. Again, the First Law of Sales Automation Success: The direct benefits to sales management are as great or greater than to the salespeople.

The 2nd Law: Salespeople will invariably use automation as much and as well as they perceive their direct manager uses and depends on it. So how and why does a sales manager who is a strong user of CRM bring about 100% use and quality by the salesforce? The answer is through a new management style: Fact-based Management. Fact-based management represents perhaps the most significant change in management technique of the last fifty years. At its best, it represents a total rethinking of manager's roles; at the minimum it is at least a significant change in the corporate and management culture. Traditionally, sales managers have managed by "feel." Managers have never had much in the way of direct information on accounts, sales progress, or the buying relationships established. What information that has been available has come from written call reports or manager/salesperson conversations -- data often incomplete or inconsistent and difficult to consolidate or to analyze to any great depth. Again, the manager is walking the line between getting enough information to
28

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

manage well and using up rep's valuable selling time asking for written and oral reports. So a sales manager strives to get enough information to feel good about a deal or that the right things are being done in the field that will result in business -- call this traditional "FeelBased Management. " In Fact-Based Management, however, sales managers have direct access to all the "facts" about the progress of an account or sales opportunity combined with potentially an additional wealth of information from Corporate Information Systems and market data (from internal marketing, Dun & Bradstreet market data, etc.). They are now able to essentially view these opportunities three ways: 1. Past History -- we can see what has already happened, good and bad, and understand how we got to where we are today. 2. Present Status -- in the eyes of the salesperson, where do we stand today with this account or sales opportunity?

3. Future Plans -- what does this salesperson plan to do next in order to advance this account towards the sale or goal? These come together in a typical fact-based coaching session: Fact-Based Coaching Scenario Anne S., a sales representative for ABC Co. and her manager "meet" every Tuesday afternoon from 1:30 PM to 2:00 PM to review Anne's accounts and current sales opportunities. Anne works from her home office in St. Louis, phoning in to her manager, in New Hampshire. Both Anne and her manager ' share the sales automation database on their laptops and have her accounts displayed on the screen. They have both prepared for today's session by reviewing the top five accounts Anne has forecast to close this month. Before ABC Co. introduced sales automation this was the typical conversation: Manager: "Bring me up to date, Anne, on each of the deals you plan to close this month..."

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

29

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Anne: "Okay. Well first there's XYZ Co. and I feel good about this one. Remember how last week I was trying to get in to see the purchasing agent, well ... " Anne begins the tedious process of educating her manager on the progress she has made. Manager: "Why did you do that? Did you think about...? What are you going to do next?" And then on to the next deal ... Much of their half hour was spent bringing the manager up-to-date on what's happened during the last week -focusing on the past. Not only were her manager's "coaching" suggestions spur of the moment, Anne, like most salespeople, approached these sessions with a "Gotcha!" mentality -- her manager was reviewing her performance looking for a "Gotcha!", i.e., correcting Anne for what she could have done better. Today, with automation, that conversation -- and results - -have changed ... Manager: "Okay, Anne, let's look first at the account you have as the highest probability of closing for this

month, XYZ Co. I can see here that your plan to get in and see the purchasing agent was successful and is says here that he sees no problems with cutting a P. O. by next week. Anything more you want to add...?" Anne: "It was a good call. As I indicated, he does not meet with most vendors personally so I felt this was a good sign." " Manager: "Based on that, Anne, I tend to agree with you that this deal is an "A" account on the forecast. I'ue reviewed that you plan to meet this week with XYZ's president to wrap the deal and I think you have some good ideas. Let me give you some suggestions on how you may want to approach him ... " This was a true "Fact-Based" Coaching session, the intent to find ways to move the sale ahead, and focused on facts, not making management "feel" good about the progress of this sale. Anne and her manager have moved away from "Gotcha!" to "Mentor" management.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

30

SELLING 2000: The Vision and the Promise of Customer Relationship Management

This session "worked" for both Anne and her manager because the customer sales progress information was accurate and up to date, allowing her manager to review the data before their meeting and formulate specific questions and ideas to help her advance the sale. But what if Anne didn't want to use the system ... or was busy and didn't have a chance to update the record fully (or at all) before the coaching session? That simply wouldn't have happened because Anne's manager relies on sales automation. For example ... Manager: "Okay, Anne, let's look first at the account you have as the highest probability of closing for this month, XYZ Co. I can see here that you were not able to get in and see the purchasing agent. That's too bad. Maybe you should... " Anne: "No, I did get in and it was great. I just was a little busy and I didn't get around to putting it in the computer. Let me tell you all about it! I... " Manager: "Excuse me, Anne. You're wasting our time. The purpose of our meeting is to plan together what to do next to close this deal, not to tell me what

you've been doing. Besides that, Anne, I spent considerable time trying to develop some ideas to help you get in to see that purchasing agent and apparently that was another waste of my time... " A clear example of "The Second Law of Sales Automation Success: Salespeople will invariably use automation as much and as well as they perceive their direct manager uses and depends on it. " There are some important points to bring out from this hypothetical coaching session and what it really means to the changing job of sales management: Accountability -- CRM creates a new accountability between salesperson and manager. Forecasts and action plans are based upon a wealth of facts as recorded by the salesperson, but the accuracy and value of forecasts and plans are only as good as the quality of the information in the system. A manager too has a new accountability to the salesperson -- to be well informed, to provide well thought out guidance -- as well as greater accountability to corporate for greater forecast accuracy, more specific identification of opportunities and issues, and so forth.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

31

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Management Preparation & Analytical Skills -- Fact based management enhances the role of sales managers as strategists and tacticians and lessens their role as "activity managers." Managers will spend more time reviewing the status and development of sales opportunities, identifying successful and unsuccessful tactics, and conducting coaching sessions. "Mentor" Management & Coaching -- In the selling process, managers will need to assume a new role as a "Mentor" than a "Gotcha!" manager. This will mean creating a new, often initially foreign, relationship with salespeople. Manager and salesperson must become a "strategic team," together applying their common skills and knowledge to advance and close the sale. By itself this will be one of the most difficult tasks for sales management -- and necessary to eliminate the "Big Brother" mentality. How do salespeople react to a fact-based management style? Greater accountability and management involvement may initially be viewed as taking away a sales rep's traditional independence. Salespeople, however, managed this way find they not only close more business (because they are receiving increased help and resources) but also that they actually

empowered (and in some ways have increased independence) through less reporting and less time spent keeping their managers up-to-date. Salespeople who know what they are doing and are doing it well will likely receive less management attention than they do today -simply because they don't need it. It turns out that "Big Brother" -- especially for good salespeople -- is far more myth than reality. Creating Mentor Management & Sales Acceptance Becoming a mentor manager isn't always easy. It is not only a change in technique but also a change in the culture of the sales team. Here are some basic principles for mentor manager "wanna-be's": Don't confuse "Mentor" with ''Buddy" -- by definition, the role of a manager is somewhat authoritarian, responsible for returning goaled revenues to the corporation. For a mentor manager the best way to achieve this goal is to use his or her experience and skills to make salespeople more successful -something now finally possible through the availability of better sales progress information. This means becoming a "best resource" not a "best friend."

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

32

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Glue your computer to your hip—Well, not literally; but in the 2nd Law we said that salespeople would use CRM as well as they perceived it was used by management. In short, it's not enough for a manager to use CRM for tracking, analysis, and planning behind closed doors (in the office, at home, etc.). The manager's lap,top computer must become the "bible" of sales activity. It travels visibly with the manager at all times. Whenever an account is discussed, the manager refers to the system. During coaching sessions (especially face-to-face) the system is the primary discussion tool. Create the Sales "Team" -- Through the enabling technology of CRM and the sharing of sales progress data, successful strategies and tactics can be shared among members of a sales unit -- competitive intelligence, industry data, common large account information, etc.. The "mentor" relationship is not just between manager and salesperson but extends throughout the entire sales unit or organization. . Visibly increase your personal "Q" Factor -- "Q" is for "Quality." In a survey of salespeople regarding their opinion of their direct manager's quality, many responded that they felt managers were out of touch,

didn't really know what was going on in the field, returned little value to the salesperson from the information and reports sent in, and that "times have changed since he or she was selling". In short, it's not enough for managers to simply have better information at hand; it has to be visibly and effectively used. . Develop "Plans for Success" supported by facts Salespeople want to feel that management has a plan for success; still many are skeptical of the "sales strategy of the week" that comes from "Corporate Disconnect," i.e., "Management doesn't really know what they're doing." Mentor managers are more successful and find greater sales acceptance with the plans they develop simply because they are known to be based on comprehensive field data provided by the salespeople themselves. . Complement & Counsel—A simple technique that is an essential tool of mentor managers. In the process of CRM coaching, it's all too easy to quickly find fault ("You should have done this or that!") and create an instantaneous "Big Brother" reaction. In the coaching process, find 2 or 3 things to "complement" a person on before "counseling" what might have been done better. For example: "Bob, this looks like an excellent
33

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

new opportunity you've developed, and you've certainly qualified it well. V/hat I am concerned about is .. " . Conduct "The Sales Team Strategy Session" -- a fundamental technique for managers and salespeople which we'll discuss next in ''The Four Step Process." The Four Step Process to "The 100% Solution" In the beginning of every implementation of a sales automation system there are will be advocates ("Best idea we ever hadn't), moderates ("I'll keep an open mind and I really hope it does work ") and skeptics ("I'm not throwing my old system away but I'll try this if I have to...') We have already discussed why "selling" them on it or taking a "try it, you'll like it" approach won't work. So the question remains, "How do we initially create a 100% user base and build it to a 100% quality base?" The most effective method is The Four Step Process -- a series of evolutionary steps which has two objectives: 1) Move CRM from being a new (and perhaps initially somewhat uncomfortable) selling system to one which becomes a permanent part of the corporate culture.

(2) Make CRM self-perpetuating in the long term, requiring minimal impetus from management for its effective use. Not surprisingly, however, it is management that is responsible for generating CRM's initial momentum. STEP I: The Top Management Mandate Critical to the long term success of a CRM project is to quickly establish an initial base of 100% sales management and sales rep users -- true whether automation is being rolled out to a pilot group or an entire salesforce. In addition, we want to make it clear throughout the organization that CRM is not optional use -- it is not on trial or test; it is now a permanent part of the corporate culture; there are large-scale corporate reasons that make this project essential to the company (see "Corporate Disconnect"). This message absolutely must come from top corporate management -- not only because of its weight but also because a top management mandate empowers sales managers to require full CRM use by making it a part of their goals as well.
34

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Certainly this kind of mandate will not produce the. level of quality users needed -and at this point that' okay -- but it does create the starting point for develop in' a more complete corporate sales database and from which] the sales automation system can be further tuned and refined. STEP II. The Sales Team Strategy Session At the same time as we are mandating automation, we would like to begin developing some sense of system ownership by the salesforce -- especially because we want our tuning and refining efforts to reflect the needs and wants of sales as much as possible. The Sales Team Strategy Session begins this process plus requires a visible commitment by salespeople to make the CRM project successful. The Sales Team Strategy Session may be conducted at any time but is perhaps most effective in conjunction with initial roll out or user training. Led by the unit sales manager, the session is attended by direct report salespeople and other cross-functional personnel who may have an interest or eventual role in

the project, with the exception of senior management who should not attend at this point. The steps of elements of the session are as follows: 1.) Company Values: Setting the Stage—Restatement by manager of the corporate mandate and reasons why the CRM project is critical to the success of the entire company. "CRM is not an option. Our purpose today is, a a team, determine how to make this new system work for us! The company is committed to the success of this project and I have personally committed us to its success!" 2.) Identify the Sales Unit's Challenges in the Marketplace -- Identify the major challenges this specific sales team faces in its marketplace, e.g., competition, leads, demographics, customer satisfaction ... 3.) Identify Hi-Value Automation Solutions -- identify and apply the characteristics and functions of the CRM system which will be valuable in providing solutions to the identified unit challenges.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

35

SELLING 2000: The Vision and the Promise of Customer Relationship Management

4.) Identify Sales Manager's Needs & Challenges -For example, need to improve forecast accuracy, obtain and apply needed resources, strategic planning, etc. Identify CRM characteristics which address these as well. "As a team (manager and salespeople) we have both unique and common goals to address working together and towards which sales automation can be of value." 5.) Establish Team Rules & Tasks -- As a team, establish and agree upon the functional rules and tasks to make CRM successful in the unit, e.g., everyone will use CRM, weekly coaching session times and data requirements established, incentives and/or consequences defined. 6.) Statement of Position—the most important element of the team strategy session, the sales unit creates a unit statement of position which details how the team has committed to make CRM successful. The team makes a formal presentation to senior management or creates a document for submission. The fundamental results of the Sales Team Strategy Session are that team interdependencies are already being formed, management's requirements are clearly

understood, team members have had a role determining how to best utilize CRM, and, most importantly, the team has delivered a public commitment to success. At this point, we have provided a sales manager a foundation from which to work. The Sales Team Strategy Session can be even more effective when multiple sales units conduct their sessions simultaneously such as at a regional or national sales meeting. As each sales unit makes their final presentation to senior management before the entire group, all sales teams are exposed to a variety of creative strategies and ideas for maximizing CRM efficiency. STEP III: The Manager-Dependent System Once a 100% user base has been initially established and the team strategy session completed, the job of building quality begins, specifically improving the quantity and quality of data being entered by the sales representatives. This task falls to the first-line sales managers and will be the direct result of managers utilizing fact-based management techniques.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

36

SELLING 2000: The Vision and the Promise of Customer Relationship Management

In short ... The level of quality and completeness the manager requires in order to better do his or her job of managing will directly determine the quality level of the users. Users who have been moderates or skeptics begin to best perceive the value of a sales force automation system when they see it used (and are required to use it) at a high data quality level. The message to managers: Lead by example!

the team environment is built over time, interdependencies among team members are created ... like the sales manager, members count on the completeness and accuracy of CRM information in order to do their jobs. In short the use and quality of CRM is mandated and managed by peers, not only management. Peer-managed systems are not built overnight and are the result of long-term corporate and sales management commitment. They are, however, virtually self-perpetuating, can be considered to have become then a permanent part of the corporate culture, and represent the critical goal of sales force automation. So Who "Sells" the Sales Managers on CRM?

IV. The Peer-Managed Systems As we discussed earlier, one of management's automation tasks will be to develop a team environment and mutual sharing of critical sales information (large account team selling, competitive intelligence, lead distribution, industry data, and so forth). In some cases, teams may also include service and customer support field personnel who need to share and exchange account information with sales. As It becomes clear that if the sales managers are key to the success, we're going to have to "sell" them on CRM. Fortunately, many of the same techniques to develop use by the salespeople also apply to the managers:

. The Top Management Mandate sets the stage for the managers as well.
37

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

. A Management Team Strategy Session precedes the Sales Team Strategy Sessions with much the same agenda and conducted by senior sales management. .Senior Management-Dependent Systems — Upper sales management levels utilize CRM as a fact-based tool to manage their manager-level reports. .Peer-Managed Management Systems—development of interdependent management teams sharing common market, strategy, and competitive information. .Specialized Management Education — one of the most fundamental and large-scale tasks will be educating managers not only how to operate an CRM system but how to apply it as a management analysis and coaching tool. A sure recipe for failure will be to expect managers to do a job for which we have given them the tools but not training in how to use and apply them. One company preparing to conduct CRM user training for its salespeople said "Oh, the managers don't need to attend training. They're smart guys; they'll figure it out ... "

Traditional management skill training, when available, has always focused on developing coaching, leadership, motivational, and planning skills; but this kind of training never envisioned sales automation. Moreover, most managers quickly found after training that they rarely had the time or information necessary to do very much with any of their newly-acquired techniques Detailed business analysis skills training such as for using analytical software to determine where the highest potential for new business may be found in a sales territory -- has been virtually nonexistent. This new management training needs to focus on applying the "traditional" management skills but with a technology "kicker". Coaching skills, for example, must focus on how to conduct a detailed opportunity analysis, decide the best plans and tactics from a new wealth of account and market data, as well as developing one-on-one techniques with salespeople. Salespeople will also need a similar level of business analysis and skill training, specifically how to apply CRM to effectively managing a sales territory. Who's going to train them? Probably the sales managers -38

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

and this is the one area where managers' expertise will be little greater than their salespeople's. Where will this specialized training come from to develop new management skills -- and what should it cover? The training available today is still somewhat limited because the necessity is only just being recognized -- primarily because the leaps in technology to create this new level of capacity are still fairly recent. An example of management training focused specifically on developing these new skills is one of my seminar programs which has been conducted with leading sales organizations around the world …

Why Sales Automation? To Advance the Sale! * CRM - why it works ... and why it doesn't * Applying CRM to the sales and managing process The Fundamental Changes impacting Selling in the '90's * Sales Management - managing for corporate Sales ROI * The Marketplace - the competitive battle for marketshare * The Company - creating value-added selling strategies * The Customers - what they're really looking for in today's market .Information, Process, and Technology * A Strategy for Sales Effectiveness and Productivity * Creating "market knowledge" thru information and process * The role of technology: integrating Information and Sales Process Creating Added-Value and Developing Customer Advocates

A Sample Management Training Curriculum

Management Development Seminar

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

39

SELLING 2000: The Vision and the Promise of Customer Relationship Management

* Value-Breakdown - how companies win then lose loyal customers * Customer Advocates - a new level of customer partnership * Breaking down "Corporate Barbwire" to create Advocates * Creating the Sales Enterprise -- Team Selling redefined * The role of Sales Automation Technology .A New Look at Sales Planning (with CRM/Sales Automation) * Creating "living" sales plans instead of "dust collectors" * Integrating planning - from corporate to field for results * New Planning Methodologies and "The Strategic Assessment Model" * Planning - making it the most powerful coaching tool Managing Performance (with CRM/Sales Automation) * Fact-Based Management - taking the guesswork out of Coaching * Using Organizational and Analytical tools for better decisions

* Sales Process -- what it is, how to get it, and how to use it The Technology Solution * Applying Real CRM Solutions for Real Business Issues * Using Sales Automation to put "Midnight Madness" finally to rest. Sales Unit Leadership * Mentor Management - what it is, how to develop it, & how to use it * Strategies for building "The 100% Solution" * Making automation a permanent part of the sales culture

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

40

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Putting It All Together—Integrating CRM Capacity and Capability In corporate's quest to design and implement customer relationship management and sales force automation, and with the increasing capabilities of computer hardware and software, we have entered a new world of sales and marketing in which the level of what is theoretically possible has reached undreamed of heights. Unfortunately the level of business skill development to enable managers and salespeople to achieve these results has lagged far behind the ability of corporate information systems to provide technology. The message then is this. In the world of CRM, there is today the capacity, provided by technology, to create automation systems which positively impact productivity and effectiveness throughout the corporation. It is often ignored, however, that this technology is people-driven, that is, it relies upon the user's capability to apply it in order to achieve optimum results. Small wonder, then, that CRM sometimes meets with user resistance, i.e., users who

feel more confident in their capability to apply older, though less efficient manual systems. We need then to view the investment in sales force automation as two discreet elements. First, the costs of Capacity -- purchasing hardware and automation software, systems design, and user operations training -are basic elements of most project plans and well understood. To this we need to add the less well defined but critically necessary investment of Capability to assure results through specialized management and sales skill training which integrates automation technology. In summary then, one of CRM’s Big Payoffs will be found in management's new capability to direct the path of business based more on fact than feel. This capability, however, will be based on three factors: (1) the accuracy and completeness of the information collected by the salesforce (and like any other business system, anything less than 100% in unacceptable), (2) the business analysis and performance management skills of sales managers, and (3) management motivation of the salespeople to make maximum use of CRM.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

41

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Achieving this is the critical new task of field sales management -- a task that can only become reality when sales managers become the true power users of sales automation. On Management— "He made you a believer. He told you what the other team was going to do, and he told you what you had to do to beat them, and invariably he was right!" --Willie Davis on Vince Lombardi

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

42

SELLING 2000: The Vision and the Promise of Customer Relationship Management

PART IV The Compleat Sales Rep
Much has been written about sales force automation and its potential to improve salesperson productivity tools to help better organize time and territory coverage, to manage contacts, accounts, and sales opportunities, and so forth. The real question, however, is how can CRM improve the quality of the sales effort? How can a salesperson use automation to create competitive advantage ... more loyal, repeat customers? The same trends, such as new customer expectations to provide unique value, that are changing the jobs of corporate and sales managers will also impact and change the job of selling. How will sales automation help enable salespeople to respond to these challenges? Imagine winning every deal. Who hasn't? Actually it's not quite as far fetched as it sounds if you think of winning as closing every sale that can be closed, and walking away from every deal that can't before you've

invested valuable selling time. Getting "stuck" in the wrong deals is the Sales Mousetrap. Avoiding them and making the winners happen is the task of selling in the 90's. High Performance Selling isn't primarily achieved by great personal sales skills. These days you don't sell more just because you're persuasive or have a "drop dead" closing line. (That's another part of the mousetrap.) Top sales performers will look at sales in a whole new way -"Best Next" Selling: the art of continuously doing the right thing, at the right time, for the right prospect and providing unique value that sets them apart from the competition. The task ahead will be to know what the unique value we bring to the table really is, who is in the market for it, and to develop a sales process to apply it correctly to the prospect's needs using CRM. The Mousetrap Theory: How do you sell? What's your sales approach ... your selling advantage? Is it product?...or price? ...or service. The answers -- and Mousetrap Theory -- may have more of an effect on your future in selling than you imagine.
43

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

What is "Mousetrap Theory?" In the late 19th century Ralph Waldo Emerson said, "Build a better mousetrap and the world will beat a path to your door!" Emerson is well remembered for his writing; but no one, as far as anyone can determine, ever remembered Ralph as a salesman -- and probably for good reason. Mousetrap theory just plain doesn't work. The proof of "mousetrap's" failure can be seen in the scattered remains of the hundreds of high-tech start-up companies opened in the late 70's and early 80's. Often they were started by exceptional engineers with ideas for a whole new generation of better mousetraps -- except that they were called microchips or networks or software. They produced detailed "spec sheets" for their hot new products, sent out technical press releases, demonstrated at trade shows, and waited for the orders to roll in ... and waited ... and waited. Finally, many hired a sales-manager-slash-salesrepresentative if it wasn't too late and the money wasn't running out. Unfortunately usually it was and it did; and the engineers, still scratching their heads, closed up shop and returned to the big corporations, still not completely sure what went wrong.

There are a lot of mousetrap salespeople in the marketplace today. They don't sit and wait for the orders to come in but do believe that product and price advantage will bring success. Sadly, like all those ill-fated start-ups, they're probably doomed as well it's just not quite that obvious yet -- and, as we'll see, there may not be much of a future for feature-strategy salespeople. From a sales rep's point of view, I suppose, there's nothing wrong with this kind of selling. Who wouldn't want product and price advantage; the problem is in relying on it. In the best case, however, these advantages are only temporary as competitors play feature or price "leap frog" with one another to gain the upper hand in the market. More importantly, is product and price advantage what your customers are basing buying decisions upon? Remember the conference in which many large international corporations said their concerns were shrinking margins and the increased costs of doing business -- and that they looked for salespeople who could not only provide solutions to these but also offered added value to them and their customers.
44

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Feature-Based Selling A "feature" selling company has made a conscious decision that it will compete in the market based primarily upon product feature advantage, price advantage, or both. Whichever it chooses, profit margins will still remain low -due to the costs of maintaining product leadership or the necessary low pricing and discounting -- and higher profits will come from volume sales. This can be an exceptionally successful market strategy when done right but brings several phrases to mind, such as "catalog selling," "telesales," and "direct marketing." The one term you soon won't find in this kind of organization is "outside sales representative" because they are just too expensive for a low margin business. "Feature-based" selling only works without the expense of outside sales reps!

Value-Based Selling "Value-based" selling lies on the other end of the sales spectrum. It relies upon product and service quality over "newest, fastest, cheapest." In value selling there is an often intangible, value-added component that is presented to the customer as potentially having greater value than the product itself; for example, the value of reliability or support may hold far greater value to the customer than the price differential between two competing products. As a result, a true "value-added" sales organization rarely lowers price to win business and margins remain high. This kind of selling needs a highly capable direct salesperson who is able to sell not just the product at hand but even more so the intangible value to the customer. The writing is on the wall. The best future for salespeople will be found in companies who focus on providing added-value to their customers and maintain a high margin business. The jobs, income, and promotions will go to salespeople who know how to sell "Value," If that seems like a lot of words to put "on the wall," then just tack this message over your desk:
45

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Ralph Waldo Emerson was Wrong! The only justification for an outside salesperson is to sell Value, not product.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

46

SELLING 2000: The Vision and the Promise of Customer Relationship Management

"BEST NEXT" STRATEGY-- ADVANCING THE SALE Reduce selling to its simplest, most basic component. What's selling anything all about? When everything else is stripped away -- the sales techniques, marketing brochures, presentations and demonstrations -the salesperson is left to answer one critical question: "What is the Best Next thing I can do to create value and to advance the sale ... to move towards the close?" Sometimes we ask this question during a sales call. At other times, especially with large accounts or in sales involving many decision makers and issues, answering it may be a more complex process. But bottom line, it is the only question that really needs to be answered in the business of selling because the right answers spell success and the wrong answers a loss. What is the Best Next thing I can do ... ? Clearly, a sale advances and moves closer to the close when a prospect expresses agreement with a sales point or a recommendation -- the customer accepts that there is at least some direct value potential in the

product or service offered, and there is something to be gained by continuing the sales process. A sales effort also advances, however, when the salesperson creates indirect value to the buyer such as through providing service and attention, expertise, and a resource of comprehensive knowledge of the customer's business. It is the prospect's perception of created value that motivates him or her to allow us to advance the sale. The Sale only advances when Value is created ... the "Best Next" strategy and action is the one which will create the most direct or indirect value in the mind of the prospect! How do we determine what is the "best next ? In general, best next decisions can only be made when there is comprehensive and accurate information available to the salesperson in four areas: 1. Profile -- fundamental information on a company, a contact, or an opportunity including needs, authority levels, decision-making process, funding, industry data, reporting structures, competition, buying patterns, industry data, and so on.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

47

SELLING 2000: The Vision and the Promise of Customer Relationship Management

2. Past History -- how did we get to where we are today? What have we done with this customer in the immediate or distant past? What commitments have been made? What are the customer's expectations? Who in our company has "touched the customer with what results? 3. Present Status -- where do we stand today? Where are we at in the sales cycle? What issues and obstacles stand in the way of closing business and need to be resolved? What is the product mix, revenue value, and anticipated close date of the anticipated sale? 4. Performance Process -- advance the sale to where? A key element of defining the performance process is understanding and defining the "milestones" of the sales process -- not just the steps of the sales cycle but also the "steps" of the selling model such as prospecting, qualifying, solving, closing, and so forth. "Best Next" decisions are in two parts -- "Where am I advancing the sale to?" and "What is the right action to get there?"

So knowing what to do is only half the equation for sales success; knowing how to do it is the other. Knowing how still means having the essential sales skills to carry out the right task -- that elusive mix of persuasive skills and product expertise that leads a customer to the decision table and closes deals. What sets a top sales performer apart from the average is more than just being able to determine the Best Next action and execute it very, very well. Top performers understand that answering the "Best Next" question takes priority over anything else in selling. There's just no worth to ever doing the less than best thing (which too often turns out to be exactly the wrong thing) no matter how well we do it. To make it worse, it always seems that the competition comes up with the Best Next right after we manage to shoot ourselves in the foot? We let them learn from our mistakes. Sadly, too many average sales performers spend years perfecting and honing their basic sales skills without ever figuring out the Best Next concept. Instead they agonize over lost sales, or get sidetracked or stalled in accounts. Sales cycles get longer, selling time is used up, frustration builds, and in the end fewer commission checks get written. What they did they
48

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

did perfectly ... they just weren't the best things they could have done. An interesting paradox is that it is usually much easier to execute the right thing than the wrong thing in selling. The Best Next action is always easier -- better received by the prospect, runs into fewer "land mines" and generally requires a lot less fast talking or technique. To look at it another way, salespeople have two and only two -- variables which they can control in selling: Strategies and Tactics. Everything else is either fixed, such as products and territories, or is under someone else's control, like the customer's final decision. Strategies are the Best Next decisions. Tactics are how we execute them! That's it; that's all that's in the bag; that's all there is to work with. Top performers think about nothing else. There is an important distinction to be made about sales strategies -between global strategies and Best Next strategies. For example, Vince Lombardi, the legendary coach of the Green Bay Packers who was considered football's greatest strategist, designed before every game a detailed game plan based on his knowledge of the strengths and weaknesses of the

Packers' opponent that week -his global strategy. On game day, however, the task of advancing the ball yard-by-yard to the goal line came down to calling the right play at the right time and only then executing it perfectly. Lombardi was great because he was better than anyone else at determining the Best Next Strategy to advance the ball, and not just because his team might have hit harder or run faster or were more motivated than the competition. The Green Bay Packers were, in the Lombardi era, the finest team in professional football simply because they had a game plan and then ran the right plays and ran them well. In the business of selling it's important to have a game plan, but the sale is still advanced play by play. Figuring out the Best Next strategy ... How? That's the first question. To do it effectively we'll have to take a new look at exactly how and why a sale advances (or doesn't), the changing customer expectations in the marketplace, and explore the concept of setting sales milestones to measure progress and create a sales roadmap. On this foundation, we can build the new sales automation process of Planning, Performance, &
49

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Feedback to support and answer the Best Next question -- a strategy that allows us to win where we can win and walk where we can't. To "Advance the Sale" is simply the fundamental task -- and ultimate measure -of a salesperson ... to move quickly and efficiently, with as little use of time and resources as possible from that first "getting to know you" call to putting ink on paper. That's how quotas get beaten and big commission checks get written. In the process of finding and closing sales opportunities, suspects get identified and qualified and advanced to prospects, prospects advanced to become new customers, new customers and advanced to satisfied customers, and finally advanced to become repeat customers. The goal is to move the prospect along this pathway with minimum deviation or distraction; that is, with a minimum of competitive intrusion, keeping priorities straight, with an open and positive buyer. Sales Milestones are the measure of how efficiently that sale advances. Milestones are the critical events in a sales cycle which we know every sales must pass

successfully through. Typical milestones for a sales organization might include some variation of: 1. Initial contact (Finding) 2. Needs assessment (Qualifying) 3. Presentation (Solving) 4. Commitment (Closing) 5. Implementation (Installing) Establishing and tracking milestones in the sales process is a critical function of CRM. Milestones provide the essential basis for tracking sales opportunities and evaluating their business potential to close. "Best Next" strategies and tactics are based on moving a sale to the next milestone. Most successful salespeople have strong interpersonal sales skills. They have a solid expertise in the tasks and techniques of effective prospecting, qualifying, solving, objection handling, and closing deals. They pretty much know the right questions to ask, how to handle most objections, and, in general, the right things to say for almost any sales situation. Milestones create a basis for decisions on how, when, and to whom skills should be applied.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

50

SELLING 2000: The Vision and the Promise of Customer Relationship Management

What is the right strategy or tactic? Why does a customer choose to advance the sale? The true reason a sale advances -- or fails to -- is determined as much by a salesperson's ability to provide three basic Value Products as by the particular product or service for sale: THE BASIC VALUE PRODUCTS 1. Customer Service and Attention 2. Displaying Visible Expertise 3 Comprehensive Customer Knowledge. In a recent report from a nationally known sales and marketing consulting firm, a majority of their clients surveyed indicated that vendors too often only provide real attention and service at contract time or when there is a crisis; and that vendor value-added programs were often long on structure but short on substance. Customers and prospects want and expect our attention and responsiveness to their needs. It is the visible display of how much a vendor values a customer's business. Unfortunately, when faced with (or to avoid) a criticism such as "We never see you!,"

too many sales organizations and salespeople go too far in the other direction and become "long on structure, short on substance." Suddenly we're calling on customers and prospects with much increased frequency just to give them attention -- to make sure they know we're interested. This uses up a lot of sales time -- and expense dollars -- justified by no other defined goal than "developing a closer personal relationship with the buyer." Strong personal relationships undeniably drive sales but how efficient and productive is this kind of activity? The task then is to organize and track account and contact activity such that we can identify when, what type, and in what amount customer attention is really needed -a key CRM capability. Before making an "Attention and Service" call, ask "What unique value can I provide right now? New information? An idea or recommendation? Asking a question that will help me serve them better?" If the answer to these is "none", making that call will be more likely to destroy value than create it. The message to the customer is "I'm just here to schmooze
51

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

(and waste your time)," "Just checking to see if you still love me!," or "How's my deal coming along?" In short, we didn't do anything for the customer and the sale didn't advance. In general, attention and service efforts fail because they miss points 2 and 3: the salesperson fails to provide valuable expertise to the prospect because he or she lacks a comprehensive understanding of the prospect's needs and business. 2. Displaying Expertise A salesperson is valuable to a customer when he or she has and can apply product or service expertise which is more than what can be found in a product "spec" sheet, a marketing brochure, or a reference manual. This expertise usually takes the form of showing a prospect how a product or service solves an existing business issue of the prospect or of the prospect's customer. Customer information recorded in and shared through CRM provides a framework for all those who touch the customer and direct management to have a clear understanding of the customer's needs or business issues and our proposed solutions. The result? The

company as a whole better supports the salesperson's efforts. 3. Comprehensive Customer Knowledge Both attention and service and displaying expertise clearly rely on the salesperson having a thorough knowledge of the customer. Comprehensive knowledge, however, means that the salesperson understands corporate needs, goals, and strategies, organizational and power structures, the history of the unique customer/vendor relationship, and the current status of the relationship. Customers usually perceive this as high value in a vendor -- if the sales person is able to make use of it. The sources of comprehensive customer knowledge are not just the efforts of the sales rep. They additionally come from corporate information systems, industry data sources, and especially those who have worked with a customer or prospect in the past. Again, automation is the focal collection point to bring this data to the salesperson. An effective sales automation system must support the creation and delivery of these three value products.
52

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

How then do we put these together? How do we develop and use the value products and combine them with our sales skills to make sure we are always doing the right thing at the right time to the right person in the best possible way? -- through developing a Value Partner strategy. FROM VALUE PRODUCTS TO VALUE PARTNERS The right "Best Next" sales step is invariably the one that creates a unique added-value in the mind of the customer -that moues the prospect towards creation of a "Value Partnership" between the customer and the salesperson -the powerful Advocate relationship. A value partner to a customer is more than just a vendor who provides some sort of added-value -- as we have said, the customer sees that value provided as not only benefiting the company but that it is also directly passed on to their customer. Value Partnerships, by their very nature, exclude competition because the customer sees separation from the vendor as doing potential damage to the business.

Perhaps more importantly, from a sales perspective, value partners to a salesperson are a primary selling tool in a value-based marketing organization. They are a step past the traditional "Happy Customer" -- which turns out to be the most dangerous customer a salesperson can have - to creation of an "Advocate." In today's competitive marketplace, salespeople must actively protect their customer base while at the same time pursuing new opportunities. The problem with "happy customers" is that they are highly vulnerable to competitive intrusion. Ask any of your "happy customers this question: "If my competitor came in your office today and told you that his or her new product performed twice as well as mine and was only half the price, would you let him or her sit down and tell you about it?" Notice that the question was not "Would you buy from them ? " I only wanted to know if that "happy" customer would listen. But ninety-nine times out of one hundred the answer will be "Of course I'd listen! I always want to know what's new out there ..." Here's
53

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

the point: even "happy customers" will let the competition in the door if they have a good sales line. And here's the problem: too often we don't know about it. Why? Because we're busy spending time servicing unhappy customers (who make a lot of noise) or looking for new customers. So we may lose what we thought was a good customer or end up spending valuable selling time putting out a competitive fire. Value Partners or Advocates resist competition. The special value of our company and its products to the success of the customer is so well defined to them that they are unwilling to waste their precious time looking at competition's products without a very good reason. Even more importantly to our efforts, they actually drive new sales opportunities both internally, as references, and externally through their interaction with peers in the marketplace. The result is that customer Advocates consistently provide salespeople with more efficient and productive selling time. Not all customers can be or want to be our Advocates. In fact, customers, like vendors, come in

two flavors: Feature Buyers and Value Buyers. Some companies will always buy on price or feature, others based on added value. So knowing a customer's buying style is critical to avoid selling what a prospect will never pay for; i.e., added value. Even the best salesperson will rarely change a feature-buyer into a value-buyer ... and vice versa. Value Partners then will be those who have a "cultural compatibility" with what and how we sell and are therefore prime candidates and worth our time and efforts. The trick will be not to waste valuable sales time on the "transient customers" who currently do business with us but whose buying style is really not well aligned with our selling style. A typical transient customer might be one who typically buys on feature or price and became a customer only through a special price marketing promotion. At some point we will quite likely lose that customer. They will find a more compatible vendor. The greater loss is if we put futile selling time into trying to keep them. What are the most high-payoff functions of sales automation, then, for salespeople? Simply put, which are those that support salespeople in their ability to

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

54

SELLING 2000: The Vision and the Promise of Customer Relationship Management

create strategies, to plan and execute effective tactics which "advance the sale," and assist in the creation of value partnerships and customer Advocates?

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

55

SELLING 2000: The Vision and the Promise of Customer Relationship Management

A Simple Sales Automation Checklist If a CRM system is to be successful from the salesperson's perspective it needs to have the following general characteristics: A Comprehensive Information Base: Customer and prospect information needs to be available from the three primary perspectives of a salesperson (company, contact, opportunity) and include Profile, Past History, and Present Status. These are the basis for best next decisions. This information should be available from all necessary sources: sales rep input, corporate information systems, external data sources, and the input of other company personnel who may have interaction with the customer. * Established Sales Milestones: Sales progress milestones must be in place for sales opportunity and prospect pipeline progress to be measured and evaluated. Process Support: To guide salespeople in the most effective use of information and milestones (and to enable managers to coach most effectively), consistent

and common processes for Planning, Performance, and Evaluation should be in place across the organization. Integral sales planning within the CRM system typically begins with logging of basic "To Do's" and may progress to storing account and opportunity sales plans within a specific account or opportunity record. * Communication "Backbone": A CRM system which stands alone on a salesperson's laptop computer is an extremely limited tool. Salespeople want and need the ability to electronically communicate and exchange sales and account information, leads, do general communications (E-mail, etc.), and access "marketing encyclopedias." Analytical Tools: Since best next selling is based on making the best possible decisions given accurate and complete information, analytical tools need to be in place that empower a salesperson to make decisions. Much of a salesperson's decision needs will center around "slicing and dicing" territory and demographic data to prioritize, identify, contact, and evaluate highpotential opportunities.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

56

SELLING 2000: The Vision and the Promise of Customer Relationship Management

In an article in Personal Selling Power Magazine, twelve key reasons were suggested why salespeople fail. Here is that list in which are identified the success capabilities which can and should be addressed through an effective sales automation system. "Fundamentals win it. Football is two things: it's blocking and it's tackling...If you block and tackle better than the team you 're playing, you'll win. " Vince Lombardi Fundamentals. While we will probably never get the laptop computer to listen for us or ask for the order (nor should it!), CRM can be a valuable "selling basics" tool. Making enough calls -- "Am I making enough prospecting calls to generate the business I need to this year? When was the last time I called on that customer? Am I making the right mix of calls?" Follow Thru -- "Have I forgotten anything? Did I deliver what I promised on-time? Did I make that follow up call?"

Having A Plan -- "I have the information necessary (profile + past history + present status) to plan the 'best next' strategies and tactics to advance the sale to the next milestone. " Call Preparation -- "Before today's call, I need to refresh my memory on what we discussed previously, promises made, expectations. Since that last call, has anyone else in the company 'touched' my customer? With what result?" Negative Assumptions -- "With the right information available on this company, this contact, the industry, and our history with them, I know I'm selling from strength ... with greater confidence in my ability to meet and exceed the customer's needs." Changing & Growing -- "Using CRM is pushing me to develop new business skills and a more 'fact-based' selling style. Both, however, are strong sources of competitive advantage for me in the marketplace ... a way to outperform my competitor by establishing greater perceived value in the mind of my customer."

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

57

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Wrong Priorities -- "What is the 'best next' to advance the sale? Which of my activities produce the greatest rewards? Where in my territory are the companies with the greatest potential for business?" Productive and Effective -- "There's only so much time in a day. The trick to selling is not working more hours, it's getting more out of each hour with the right focus on the right actions to the right opportunities."

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

58

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Part V. Information Process and Technology
Information. The media call the 90's the Information Age and refer to the "information explosion." It is said that in the 1990's we have more information available than at any time in the history of man. In the business world alone, there has been an explosion of companies dedicated solely to providing unheard of amounts of corporate data -- *om financial and credit information, to industry, market segment, and even personal data on company executives. Dun & Bradstreet alone advertises data available for more than 10.5 million US companies! Artificial intelligence systems promote that they can provide "propensity to buy" information, targeting organizations that have the highest probability of purchasing, or having a need to purchase, any manufacturer's product or service. With such information available, sales and marketing organizations should be able to become more productive and effective in finding and closing more

sales. Internally in almost every company, information systems departments keep databases of information on customers and prospects. And, of course, an even greater wealth of customer and market knowledge resides in the minds of field sales, support, and service personnel. Key words to use when looking at this explosion of information are available and usable. Yes, valuable information exists, but is it readily and easily available to everyone who can benefit from it? More importantly, if available is it in a form that it is usable, that is, timely, accurate, complete, easy-to-use? These are the challenges: (1) Customer and prospect information needs to be complete. That is, to be effectively used in making better decisions, all data sources need to be accessed -external, internal systems, and field. (2) It needs to be deliverable and available to everyone who needs it (everyone who touches the customer) exactly when they need it. (3) It must be usable -- delivered by a method or format easy-to-use and which lends itself to easy
59

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

analysis and conclusions. Fifty-page printouts from Information Systems are of benefit only to the paper industry. (4) It must be real-time -- out of date information is as bad as bad information. (5) It must be full-spectrum -- facts and feelings. Customer information is a delicate combination of factual data (order history, financial, demographics, etc.) and relationship data (opinions, evaluations, conclusions, motivations, issues, problems, and concerns). In one sense, there is nothing new in this. Corporations have wrestled with these issues for years. The problems exist in two areas, firstly because full spectrum information has simply not been available, and secondly, inadequate collection and delivery systems to provide real-time, usable information. So the best decisions that can be made are too often made with the best inadequate information available. Process

Let us assume that any information, even less than perfectly accurate, real time, or complete has some value (even though the connection between bad data and bad decisions is obvious). In fact, let's assume that perfect information in terms of how we have described it is available to everyone who needs it. What would we do with it? How could we increase the odds that after all the effort of providing "good data" the right decisions would be made? "We hire smart, experienced people!" "The policy and procedures manual explains what to do!" One way or another, decision-making comes down to "Process." The dictionary defines it as a set of actions...in a specific order; a course of action using some special method. As we discussed earlier, in the world of sales, process takes three forms: Planning, Performance, and Evaluation. Within these, process may be thought of as being comprised of three elements: Analysis, Action, and Measurement: consistent, planned ways of (1) looking at information, reaching decisions and evaluating results; (2) determining the best possible actions to carry decisions out successfully; and (3) consistently and accurately measuring results or progress.
60

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Actually, everyone is a process user. Formally or informally, we all analyze the information we have and plan what to do in some way based on some set of factors and judgment. We carry out those actions as well as we can (performance), and we evaluate the results of them ... and hopefully we learn from them. This is not true only in our professions. This is life, and some of us naturally manage it better than others. In the business world, however, the inconsistencies of Process Planning, Performance and Evaluation carried out different ways by different people at different times hinders the company's potential for achieving the maximum possible results and goals. To again use the dictionary, "company" is defined as a group of people joined together for some common purpose. The issue is whether we present ourselves to the customer or prospect as individuals or as a common entity. Is the customer tied to an individual representing the company or to the collective company itself? If we decide that it is, in fact, the company that holds or should hold the customer relationship, it follows that

there needs to be common, consistent process among all members of the company. Establishing or defining process is strangely enough not a real problem for most sales organizations. Many companies and managers have successfully developed their own methodologies for sales planning, selling, and evaluation. Millions of dollars are spent by others annually to train field personnel in structured planning methodologies and sales skills. The "issue" is making process actually work. The "solution" lies in "The 3 C's of Process." The first task is to establish Consistency, that is, getting salespeople to use a common process methodology regularly and in a fundamentally uniform manner. One industry analyst estimates that as few as 15% of people trained in a process methodology such as account planning still use that process as taught after one year. This doesn't mean we create a salesforce of robots; it does mean we establish a functional, measurable framework within which to carry out business.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

61

SELLING 2000: The Vision and the Promise of Customer Relationship Management

The second task is Coordination. Account team selling has become a sales watchword, especially as the reengineered sales team is expanded to include sales, service, support and the others who "touch the customer." As such, the changing plans and strategies, actions, and their results become interdependent among the team members and must be coordinated to most effectively advance the sales effort, i.e., everyone must "sing from the same songbook" to create the value partnership. Traditional team planning sessions and account status meetings fall short with today's more geographically dispersed sales and support organizations, not to mention the time demands. To complicate matters, people may concurrently belong to any number of different sales teams. The third and final task of Process is Communication. Process planning, performance, and evaluation need to be a dynamic that goes on continuously. Results of any sales team member's actions -- or any plan change -- will need to drive real-time changes to potentially any number of other member's plans, and even in the overall customer strategy. To do this requires an ability for effectively immediate communication among members of the sales team as well as management levels.

Technology Enter technology into the information/process equation. The purpose, potential, and role of technology within the sales enterprise are often misunderstood. We repeat, then, and expand upon some fundamental statements of technology and selling: No one ever solved a sales problem by throwing computer hard ware and software at it! — though many have tried . Technology is a bridge whose sole purpose is to move necessary Information to where it's needed, when it's needed, and to whom it's needed, in order that Process can be applied to that information, creating Knowledge, from which better Decisions can be reached, resulting in the production of mutual Value to the company and the customer. Let's break this definition down into its individual components: Technology is a bridge... to move necessary Information: as the bridge concept implies, technology's role is to let the full-spectrum of needed
62

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

information cross the "corporate chasms," that is, the cultural and organizational gulfs that exist between disparate areas of the company -- sales, marketing, corporate, MIS, manufacturing, administration, service, support, and finance and among individuals within those organizations. ... to where it's needed: automation systems cannot be limited geographically or demographically, i.e., only available at a terminal in the branch office. The technology requires mobility. ...when it's needed, to whom it's needed: information must be current and readily accessible to whomever requires it. For example, a sales representative whose laptop computer contains a database of all assigned customer/prospect accounts, regularly updated by a central database with any pertinent customer information from across the company accesses a customer record prior to a sales call. The purpose? To review previous activity and plans and to learn if anyone else in the organization has "touched" that customer, e.g., service or support ... in order that Process can be applied to that Information: consistent process methodology can be more effectively applied to information that is more

complete, more accurate, and more timely with more consistent results. ...to create Knowledge: according to Webster, knowledge is "all that is known or can be learned; a clear and certain mental perception, understanding." ... from which better Decisions can be reached: decisions that, because they are based on knowledge, have higher success probabilities and enjoy a greater level or confidence from all concerned. ... resulting in the production of mutual value: a reminder that decisions that benefit only the company or only the customer are not decisions that produce value. Unless a proposed technology can meet this definition or test, its ultimate value to the company must be questioned. This is not to say that personal contact manager systems, which make up the bulk of the sales automation vendors, cannot have real value, or planning only software systems cannot be worthwhile, or that automation products that track activity but do not support process methodologies cannot help drive sales. But clearly these cannot even be compared with
63

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

the potential benefit of broad-based corporate-wide systems that integrate information and process. What is also clear is that, of the three elements of Information, Process, & Technology, the technology element may be the easiest to achieve, with an increasing number of viable automation software products now available that can meet our criteria. Information and Process may involve significant reengineering of the corporation: a rethinking of organizational structures and job descriptions, the tearing down of internal cultural and political barriers that prevent departments and individuals from sharing information and strategy, redefinition of customer data as a corporate asset, an analysis of information sources and values, process methodology definition, and mandatory implementation.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

64

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Part VI. Developing The Strategic Plan For CRM
Creating a Strategic Plan for CRM There are many reasons why a company might report lack of satisfaction with the results for their CRM project, and we have looked at many of them so far missing the managers, lack of process, not focusing on business issues and solutions. The most common reason, however, for dissatisfaction particularly in the first two years are goals and expectations which are either poorly defined or simply unachievable. To be honest, misaligned expectations are rarely the fault of the project team, especially since most are venturing into new and somewhat uncharted corporate areas with CRM. Unfortunately, however, those responsible for funding and approving the project begin to ask for significant and measurable results shortly after implementation -and too rarely find them. For this reason, some projects will never get beyond the pilot phase.

I have found creating a separate strategic project plan based on business solutions and not technology with representation from all cross-functional business groups interested in the project is a critical step in getting a project off the ground right. We developed a business planning method, The Strategic Assessment Model, as a guide for this process. STEP 1: MISSION To begin with, the session team is asked to define first a functional Mission for the CRM project. What is it's purpose, it's intent? As a starting point, compare the team's mission statement to the corporate mission statement. Both should be in alignment with one another. STEP 2: LONG-TERM GOALS Define the Long-Term Goals of the CRM project, typically those to be achieved in a 3 to 5 year timeframe. A useful question is "Why did we start this project to begin with?" At some point in time, someone suggested that the

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

65

SELLING 2000: The Vision and the Promise of Customer Relationship Management

company should take a look at CRM because it showed potential to solve what problems? In short, the long term goals are the specific business issues we want to address, such as those described in the preceding chapter. Long Term Goals: (sample)

can be targeted for achievement into one of four 90 Day Plans and from which quantitative and/or observable results can be tracked. Short-Term Objectives fall into three categories for the three classes of users: 1. field users (i.e., sales, support, etc.)

1. Improve overall lead management and our marketing focus. 2. Enhance management coaching and involvement in the sales process 3. Increase Forecast accuracy 4.... STEP 3: SHORT-TERM OBJECTIVES Usually the longest portion -- and quite possibly the most critical element -- of the strategic assessment is clearly defining Short-Term Objectives. Short-Term Objectives are defined as those goals which can be realized within a one-year timeframe, and

2. field management (field sales & support mars.) 3. corporate users (marketing, executives, etc.) (1) Functional Goals: Within the first 90 days, what functions should each class of user be able to perform in CRM? Basic account management and reporting functions? Select and sort on accounts? Mail merge with word processing? Reprioritize pipeline sales opportunities? In the second 90 days? The third?, and so forth. These goals are clearly measurable and testable. The rule for targeting an objective to a specific 90 day plan is that 100% of users can display 100% competency in the correct and appropriate operation and usage of that function or task.
66

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

(2) Effectiveness Goals: These are the subjective goals of the project -- the Quality objectives. They are critically important but especially early on defy hard quantitative analysis. Effectiveness Goals: (sample) 1. improved customer satisfaction 2. shorten sales cycle 3. better sales focus on hi-potential opportunities. 4.... (3) Productivity Goals: Productivity goals are objective and clearly measurable: increased sales units or revenues, number of sales calls made, prospects added to the pipeline, and so on. As a rule: There should be minimal or no productivity improvement goals in the first 90 day plan. The focus should be on establishing accurate baseline data for each productivity goal. Why? We should assume that field and marketing data collected prior to beginning CRM is incomplete and

inaccurate. The early 90-day plans then should be used to establish productivity baselines, otherwise we may end up comparing apples and oranges. Although it is interesting to compare before CRM and after CRM data, the important comparison is how much CRM improves productivity from month to month after it's implemented. Question: What should the productivity baseline goals be? Answer: Those which directly link to solving identified business issues Beware the tendency to establish measurable goals simply because they are something which can be measured: Productivity Goals must be a direct reflection of both the long term goals and the effectiveness objectives! STEP 4: AVAILABLE RESOURCES The fourth step in the Strategic Assessment is the identification of Available Resources. It's critical that all project members know what resources have been
67

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

4. missing or shortages of funding, time, expertise, etc. dedicated to the project -- and what will be required of each of them. Typical resource categories include: 1. technical -- support and training 2. personnel -- team members and support staff 3. funds available 4. time -- meeting, status reports, etc. 5. Other sources of assistance/expertise STEP 5: ANTICIPATED OBSTACLES Resources are followed by identification of Anticipated Obstacles, such as: 1. human factors -- resistance to organizational, behavioral, and cultural change 2. organizational/reengineering issues 3. technical issues (hardware/software/networks) Tactics are actions. We decide how we will specifically overcome each of the anticipated obstacles using available resources. Tactics are a sanity check in this process. Do we have everything in place, i.e., all necessary resources, so that we have a reasonable expectation of success? STEP 7: REQUIREMENTS As we decide how to apply resources against obstacles we may find we still come up short; that is, our resources are minimal or inadequate to overcome the obstacles which will likely stand in the way of our project success. In this case we are presented with two options:
68

. STEP 6: TACTICS Finally the discussion turns to tactics. Tactics are the application of resources against obstacles to achieve specified objectives.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

1. revise tactics to make more effective use of our limited resources; or... 2. develop a list of the minimum necessary added resources (requirements) to meet goals. The strategic plan is, in the final analysis, a tool to direct and maximize the use of an organization's resources and/or to create a solid business plan to assist an organization in obtaining such resources. STEP 8: EVALUATION Finally the team must decide on an evaluation methodology for use at the end of each of the 90-day plan periods. The objectives of the evaluation are not only to assess results but as importantly to identify addressable problems (user operational competency, application ability, willingness to use a new system, etc.) and areas for improvement of the CRM database, user interface, etc. CRITICAL QUESTIONS

We have discussed the importance of defined processes and what constitutes valuable information. We have tried to clarify the role of technology as an enabling tool for salespeople, managers, and corporate functions to make better strategic and tactical decisions that establish competitive advantage. We have focused on business issues and solutions and the potential financial return-on-investment they can represent ... and we have looked at the elements of developing a strategic plan to assure CRM/SFA success. Still there are critical questions that need to be answered by any sales organization as a basic step in beginning the SFA project. They are “think questions” that form a foundation for approaching and designing the unique and specific processes that sales automation will support and enhance in your organization. They are questions about your sales philosophy, competitive and market strategies, and success factors for salespeople and managers. And so here at the end of this book, I offer a starting point with that set of questions that still need good

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

69

SELLING 2000: The Vision and the Promise of Customer Relationship Management

answers -- answers that will help you in determine just where to begin in SFA.

The Plan What is our Sales Philosophy? ...our source of competitive edge: (Value/Feature)

**** How has this changed in the last five years? CRITICAL QUESTIONS Objectives: This group of pre-SFA questions focus on four main areas of the sales operation: The Plan, The Customer, The Market, Sales Management, and Sales Representatives. Its intent is to develop an understanding of the perceptions of sales executives regarding the current and short-term future (1-3 years) success factors surrounding each of these areas, i.e., what does it take to be successful today, what will it take tomorrow, what is standing in the way of achieving the desired level of success. From this we can begin to identify the capabilities and business solutions which should be considered high-value or "Big Payofft' items in an SFA system. How will this change in the next five years? Customer Profile Describe a typical customer of our company. Will this change in the future? How? What are the primary sources of business? (direct mail, cold calls, repeat customers, etc.) Do we expect these to continue to be the primary sources in the future? What are we doing to maximize their effectiveness? Why do they buy from us rather than our competitors? Why do they quit buying? How do we assure long-term customer satisfaction?

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

70

SELLING 2000: The Vision and the Promise of Customer Relationship Management

What would our customers say we do very well? What would our customers say we could do better? How are we addressing this today ... in the future? What are our current and future strategies to keep and grow our current customers?

What then will be our long-term strategy to address these?

The Sales Organization How is success measured?—revenue attainment, profitability, customer satisfaction? Is this changing and how? How are salespeople and managers compensated? Will this change and how? As an organization, what are the greatest strengths which contribute to meeting sales goals? What are the greatest inefficiencies in sales & marketing and what is their impact? What do salespeople need that they do not currently have to maximize their productivity and efficiency? In addition to the salesperson, who in our company also "touches" the customer?

The Marketplace What is our current market position? (leader, contender, marketshare increasing/decreasing? What factors have done the most to make us successful, i.e., win business? What factors have caused or contributed to sales losses? How are we addressing these today? How will these win/loss factors change from competition, economics, customer expectations?

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

71

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Is team selling a current or future requirement? How would we rate the effectiveness of current programs and why?

What skills are most critical to develop in a trainee? How do we do this? Do we actively use a sales planning methodology? What is its value to us? What % of salespeople consistently utilize it?

The Sales Representatives

|

How do we define our selling process or model? Do we anticipate this will change? What are its strengths and weaknesses? What are the chief characteristics of our successful salespeople today? Has this changed from the past? How will it change in the future? How will we help them adapt? Why do salespeople fail? Aside from personal skills or product issues, what obstacles stand in the way of our salespeople? (organizational, demographics, financial, informational ...) As we hire new sales reps in the future, what skills or experience will we look for and how has this changed?

The Sales Managers What are the chief characteristics of our successful sales managers today? Has this changed from the past? How will it change in the future? How will we help them adapt? Why do sales managers fail? Aside from personal skills or product issues, what obstacles stand in the way of our sales managers? (organizational, demographics, financial, informational ...) As we promote new managers in the future, what skills or experience will we look for and how has this changed?

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

72

SELLING 2000: The Vision and the Promise of Customer Relationship Management

What skills are most critical to develop in a manager? How do we do this? Do we actively use a sales planning methodology? What is its value to us? What % of sales managers consistently utilize it ?

- exists, and it improves by leaps and bounds every day. It waits only to be taken advantage of. The reality, however, is that technology is in many ways the simplest element of the CRM equation. CRM success will prove to be found not only within "enabling technology" but even more from implementing organizational, cultural, and behavioral change throughout the organization. Change is always painful, yet change is what is needed if we are to effectively address the new marketplace. Tackling the large-scale "application" of sales force automation is too big a task for any one organization within a company. It will require the teamwork -- and bringing down of barriers -- between cross-functional groups (sales, marketing, information systems, support, and corporate management) from the very beginning. It will require the virtual redefinition of the company as an organization dedicated and physically linked in processes, information, and technology to providing a single, coordinated interface to the customer focused on added value and true customer satisfaction.

Final Thoughts... For Sales Force Automation and Customer Relationship Management there will always be both a Vision and a Reality. The vision of CRM as a tool and catalyst for corporate change to build competitive advantage is enormous and exciting. The potential exists to redesign and restructure business as never before -- to bring down the "cultural barbed wire," to re-engineer the corporation towards providing real customer value, and to reach new levels of productivity and effectiveness. Each of these is critical to business today and will become only more so as we sell in the years 2000. The good news is that, in the main, the technology of sales automation -- hardware, software, and networks -

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

73

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Part VII. SPECIAL REPORTS
Special Report

What Willy couldn’t have imagined was the computer as an essential sales tool, much less the Internet, electronic mail, sales force automation, and on and on and on. Willy might have asked, “Why do I need all this technology? It’s just taking time away from the real business of selling: face-to-face time with the customer!” As sales organisations and their corporations make ever larger investments in these new technologies, the question surfaces, “Do salespeople really need all this technology?”. Do we all need to become computer users? Does today’s sales rep need to acquire and master a new range of skills apart from selling? The simple answer is a resounding “Yes!” Willy: “It seems to me that these companies have just fallen in love with these new technology toys and don’t really know much about selling. My customers don’t care about whether or not I have a computer!” Willy is partially right; his customers don’t care whether or not he has a computer. Customer expectations of their salespeople are changing,
74

DEATH OF A SALESMAN? Technology & Selling
Willy Loman didn’t have one. He couldn’t even have imagined one. Even if he could have imagined one he wouldn’t have been able to see why he would need one. “Willy”, of course, is playwright Arthur Miller’s most famous character from Death of a Salesman. He was the master salesman of the 1950’s who in Miller’s play is told that what he’s done successfully for so many years just doesn’t work anymore... that times and the world around him changed but he hasn’t. His company simply doesn’t need him anymore! For Willy, selling was straightforward. It was travelling the territory, making calls on customers and prospects, “detailing” the product, building one-to-one customer relationships, and using his well-honed sales skills.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

however. Today’s customer increasingly expects his or her sales representative to: • be better informed; • to have virtually instant information to accurate and up-to-date pricing and product information; • to respond quicker to customer requests, questions, and issues; • to produce and deliver proposals and other written communications faster and error-free; • to have a better knowledge of competition, • to know more about the customer’s company. • To make more effective and productive use of the customer’s time A salesperson’s ability – or inability – to meet these expectations becomes as much a part of his or her competitive advantage as product or price. Today’s “technology toys” are specifically designed to provide salespeople with exactly these capabilities. As far as face-to-face time, the “new technologies of selling” are designed to make that time more productive and more effective. How much time did

Willy spend gathering needed information (if he could get it) on a customer or prospect, or to prepare for a sales call? How many times did he say to a customer, “I’ll get back to you with that information” because he didn’t have it readily available – and have to make a second sales call instead of one? Most importantly, how would he have fared against more efficient, productive, and effective competitors? Willy’s customers are not the only ones who are changing. So is his company. Customer expectations extend not only to the salesperson, they include his or her company as well. Many companies have traditionally operated more like a group of smaller companies who needed to work together but didn’t very well. Those small companies were called sales, customer service, marketing, finance, manufacturing, operations, administration and so on. Willy: “That’s true. I’ve had customers ask me ‘Don’t your departments ever talk to one another?’ I’ve lost customers because I was the only one who seemed to understand their needs . I always wondered why the company couldn’t fix that problem.”

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

75

SELLING 2000: The Vision and the Promise of Customer Relationship Management

There was a pretty good reason why that “problem” couldn’t be fixed: communications. Before computer systems became common in business (the “Paper Age”) it was virtually impossible to collect, collate, and share (i.e., communicate) accurate and real-time customer information across the business enterprise -to everyone who touched the customer. Until the fairly recent advent of personal computers and networks, computer systems were only used for scientific applications or to process accounting or financial data and track manufacturing and distribution – and even then it was difficult to get information to those who really needed it. Until salespeople could be provided with portable notebook computers and powerful data communications capabilities, few companies had realtime, accurate information on their customers or could communicate needed information directly to the salesforce. One of the most important corporate changes of the last ten years is the Enterprise Concept, and it was brought about entirely by the new technologies. Under the Enterprise Concept, each and every area or function of a company is dependent on and works hand-in-hand with every other function across the business enterprise. Each contributes and shares a

corporate Knowledge Base (using advanced database technology and data communications) for improved decision-making and to better meet customer needs. The investment value is clear even though the technology costs and implementation challenges are great. The greatest challenge to implementing the Enterprise Concept, however, has been changing the way people throughout the company view their jobs. No longer can an employee be just a part of the sales department or marketing, service, finance, and so forth. Willy:“It sounds like you’re trying to tell me that there’s more to my job than Selling”. Ultimately we are all now in the “sales department”. Every employee in every function potentially makes a contribution that impacts our ability as a company to sell our product and meet customer needs. Salespeople are unique - they are the only people in the entire company who really “know” the customer – his/her needs, goals, business issues, satisfaction, likes and dislikes. There is no information more vital to the success of the company and it can only come from one source: field sales. When an organisation is successful with the Enterprise Concept and armed
76

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

with better customer and market information, it is able to produce the right products, at the right time, marketed and priced in the right way, to the right customers to produce competitive advantage for its salesforce. And that’s what “selling” is all about! Willy: “Well, I see what you’re saying. Still, I just don’t like computers. All this Windows stuff confuses me. I guess I’m just an old dog who can’t learn a new trick.” If only there was an easy answer to this! Too many salespeople – and sales managers - continue to be needlessly concerned over whether they can learn to use today’s computers and software. Without exception, the answer is again “Yes they can!”, with the caveat “but it may take some time and practice and a little frustration from time to time”. Many new computer users fear breaking the computer, erasing all those bits and bytes of data, or being asked to learn a programming language. It’s important to understand that, unlike the “computer systems” many of us began with even 15 or 20 years ago, computers and their “application software” are increasingly easy to use and understand (even though they occasionally still do “strange” things for which there appears to be no

reasonable explanation). No business user will be asked to “program” and, following simple procedures, it is unlikely that a user will ever permanently “wipe out” all the data he or she has entered or “break” the computer. Salespeople are not the only professionals who have felt – and had to adapt – to the demands of technology. Up until the mid-1970’s, many accountants still utilized manual ledgers for company bookkeeping; manufacturing managers had to learn state-of –the-art systems for capacity planning and inventory management; and on and on. At the same time that some of us are busy “adapting” , an entirely new breed of salesperson has been emerging over the last 10 years from today’s schools and universities. He or she is more than computer literate – they are computer adept. They already have years of hands-on experience in computer systems and fundamental Office applications such as word processing and spreadsheets. They are proficient at “surfing” the Internet and researching information, and especially strong in the use of new communications tools such as electronic mail and network conferencing. As they seek professional employment,
77

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

they view these technology tools as necessities not “nice to haves”. More and more companies are finding that their ability to attract and keep top sales talent relies, in part, on staying on the leading edge of selling and corporate technology. Willy: “That’s true. In my company we hired a new marketing manager six months ago. He quit recently and said it was because he couldn’t do his job here – that he couldn’t get the information he needed because we didn’t have a good marketing database. At the time I thought that was fine; get rid of another computer guy. Now I’m not so sure ...” The bottom line simply is this: the business of selling - for better or worse and even if we might prefer it otherwise - has changed, is changing, and will continue to change. Technology and changing customer expectations are at the very root of this change and both will continue to set its future direction. The challenge for today’s professional salesperson is more than just to adapt to the new technologies; it is to master them and learn how to leverage them as powerful tools to create new sources of selling advantage.

Even Willy might have agreed ... # Key Learning Points: 1. The purpose of technology in selling is to help salespeople better meet and exceed increasing customer expectations 2. Use selling technologies to make face-to-face time with the customer more effective and productive, not just more frequent 3. Perhaps the most important benefit of selling technologies will be to create a coordinated Business Enterprise that more effectively serves the needs of the customers. 4. The most important information in the company – customer information -- is held by the sales force. Technology is a communications vehicle to share that information to those who need it. 5. The challenge for salespeople is not just to adapt to the new technologies, but to master them as an important competitive advantage tool.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

78

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Special Report

CUSTOMER RELATIONSHIP MANAGEMENT -AN OPPORTUNITY FOR COMPETITIVE ADVANTAGE?

raised. Finally I asked, “How many of you think that your CRM strategy is being well executed and is making a measurable difference?". Now only a few hands could be seen, half-raised, among the crowd. There’s the problem. We all embrace CRM as a good idea but when it comes to developing a customer relationship strategy and then executing it ... well, we’re a bit less confident. We shouldn’t feel that way about something as critical to the success of our businesses as CRM. There are two fundamental questions you must ask – and successfully answer – if you want to develop a customer relationship management strategy, i.e., one that helps you gain new customers, maximize the potential of current customers, and protect your most important customers from competitive intrusion: What kind of relationship do you want to establish with your customer? And What must you do to create and maintain that relationship? What kind of relationship do you want to establish with your customer?

Customer Relationship Management ... it seems there is a new business “buzz word” every year. This year it’s “Customer Relationship Management” or “CRM”. Not long ago it was Partnering. Added-Value is still around as well. Actually CRM is a pretty good catch phrase simply because there is nothing more important than the relationships we establish and maintain with our customers. I spoke at a recent sales conference and asked my audience, “How many of you think that customer relationship management is important?”. Not surprisingly, every head nodded and every hand went up. Then I asked, “How many of you have a clear strategy in your company for customer relationship management?”. Many, but not all, hands again were

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

79

SELLING 2000: The Vision and the Promise of Customer Relationship Management

When we think about relationships, many of us – and most salespeople – think of the personal one-on-one relationships we establish with key customer personnel. Without question, personal relationships are important. The axiom “People buy from people they like” is still true. The problem is that people come and go in the business world, both in the customer’s company and in our own. So, as useful as personal relationships may be, they’re dangerous to depend on for long term success. The real question is What kind of relationship do you want your Company to establish with your customers? • Your customers will directly or indirectly interact with many different people in your company across the enterprise, not just your sales representatives. How do you want your customer to feel about his or her overall interaction with your company? What do you want your customer’s to value about you as a result? • What are the Key Values you bring your customers; that is, what are the reasons your customers should only want to buy from

you? Your key value(s) should form the basis of the customer relationship you want to create. Can you clearly and succinctly define and communicate your key values? • Are your Key Values unique and important enough to your customers that if they fully understood and appreciated them they would clearly prefer you over your competitors? Take a few moments before you answer this question and take a hard look. Remember that you simply cannot build a powerful business relationship if you can’t offer something the customer needs and values better than your competition. You may need to rethink your key values. • Does the customer’s every interaction with your entire company support, sell, and enhance this key value message? Does each interaction enhance and build the relationship?

Let’s look at the mythical ABC Company. ABC believes its key values are the quality of its products and the responsiveness of its people. ABC must first ask itself if its
80

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

customers feel these key values are important – important enough to establish an exclusive business relationship with ABC. ABC must then ask itself if its quality and responsiveness are unique enough to base its customer relationships upon. If the answer to both questions is “Yes”, they must then ask whether every customer interaction – with sales, service, billing, delivery, etc. – actively supports the messages of quality and responsiveness. Finally, does the customer consistently feel that their relationship with the company as a whole is so strong that it can easily survive any change in ABC’s personnel? What must we do to create and maintain that relationship
Step 1: Definition & Action Plans Creating and managing the customer relationship is clearly an enterprise-wide task. The company as a whole must define – and clearly communicate to every employee -- what it wants to be the basis of the

customer relationship (key values). Each function of the company must clearly define: • (1) how it contributes and impacts (positively or negatively) the customer relationship, • (2) develop a specific action plan of what it can do to provide a greater contribution, and • (3) how it depends upon and needs to interact better with other functions. Step 2: Customer Communication & Internal Change If there is a “single point of failure” in CRM, this is it! Too many companies do a good job of defining why customers should buy from them (other than just product or price) but seem to forget to tell the customer! In other words, we create a potentially powerful message that could help build stronger customer relationships but fail to clearly establish it in the mind of the customer. So in the final analysis it’s still business as usual. It is an important consideration that unless your company’s customer relationships are already exactly as you want them, you will have to do something
81

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

different than you are today. Different results are the result of different actions. This means that everyone in your company – and especially the sales force – will have to do some things differently than in the past. As the prime point of customer contact – and as the people who set the direction of the customer relationship -- this directly impacts your sales organization. Look again at ABC Company. They did a fine job defining their key values upon which to base the customer relationship. They determined what each job function and each employee needed to do and they communicated it well to their organization. New marketing and advertising focused on the unique value ABC offered. Unfortunately nothing really changed – sales and win/loss ratios stayed the same and the company won and lost the same number of new and old customers as the year before. Clearly customer relationships were not strengthened or enhanced. What went wrong? The problem was ABC’s salesforce. It wasn’t that they weren’t good salespeople. The problem is they were excellent salespeople! In fact, they were so good that they were not about to change what had worked

for them in the past. Their “sales pitch” stayed the same and they continued “building” the customer relationship one-on-one, not “company-tocompany”. To a lesser degree the same was true with employees in other job functions; they continued to do their jobs they way they always had with lip service to the company’s CRM initiatives. Step 3: Managing the Initiatives as a New Product So in the end it’s all about execution. Companies successful in Customer Relationship Management have learned that results happen when employees actively embrace new initiatives (much like they would an exciting new product) and carry out the prescribed action plan (to sell it). In other words, try viewing and positioning your Customer Relationship Management initiative as a true product, the cost to the customer of which is embedded in the price of the “standard” products you sell. After all, your CRM program is designed to first benefit your customer and through them your company. It is the responsibility of every employee to both “sell” and “deliver” the CRM product successfully to the customer.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

82

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Package your CRM program as you would a product, supported with marketing collateral, support, and a strong selling strategy. Put the same effort and enthusiasm into teaching your salesforce your CRM product and how to sell it as you do teaching them to sell any new product. Make sure that managers in all functions clearly understand the initiatives and action plans and how each employee is expected to perform. Assure that each manager understands that it is his or her responsibility to manage their business as expected. Finally create a series of metrics or measurements of how you will measure the success of CRM – and tie an element of employee compensation (sales, managers, and others) to achieving those metrics. Aggressively track and measure.

your company’s most powerful tool for increased sales, customer loyalty, and competitive advantage.

Customer Relationship Management – it’s a good phrase and a good idea. While simple in concept, however, developing a CRM program is a complex initiative which will require enterprise-wide input, communications, and commitment ... if it is to become

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

83

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Special Report

The Seven Secrets of CRM
Not long ago I was asked by the editor of a national sales magazine if I would be interested in writing an article on “The Top 10 Tips for CRM Success”. “Absolutely”, I said., and I sat down at my laptop to create my handy-dandy list of great tips. It was all going fine until I realized that I was coming up with the same hackneyed list of “tips” that, in one form or another, have been around for years. “Get management commitment, build upon sales processes, do a pilot, etc. etc.”. Sound familiar? All solid ideas, just nothing new. And we do need something new. Customer Relationship Management systems, like all field sales and management applications, are complex, difficult systems that don’t come with a guarantee of success. If the prime users (salespeople) don’t use it then none of the potential company-wide benefits of CRM will ever be realized. So what is CRM success? Let’s make it easy: success happens when the sales organization actively, accurately, and consistently uses the CRM system.

When will a sales organization use CRM? Again, simply put, when they believe that it actively helps them sell more. Forget about saving time, enhancing productivity, and all the other nice phrases. The only thing a sales representative really cares about is selling more (just ask one!). If you can’t give me that then you will never get my support! Finally, how can a CRM system or strategy help salespeople sell more? That’s the million dollar question. The following is a list of seven ways (The 7 Secrets) your CRM system could help your salespeople. Take a long, hard look at your CRM system and strategy and ask yourself, “Does our system do these; do our salespeople know it?” 1. Help them find the BEST sales opportunities? The best accounts and opportunities are the one’s I can win with the least expenditure of resources (time, money, etc.) and which can best help me meet my goals (revenue, profit, product mix, etc.). Can your CRM system help me accurately identify and go after these? How?

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

84

SELLING 2000: The Vision and the Promise of Customer Relationship Management

2. Map the quickest route to the Close for each opportunity? In sales, time is my greatest enemy. Can your CRM system help me better define sales opportunities, identify and work through the customer’s buying process? Can it clearly help me shorten the sales process from qualification to close? How? 3. Determine the best Sales Strategies and make the Best Decisions? Success in selling is about creating the right sales strategies and “doing the right things, at the right time, with the right contacts, to get the right results”. Can your CRM system help me create better sales strategies? Can it help me plan out a more effective sales action plan? How? 4. Measure Opportunity Progress? Can your CRM system help me keep track of my progress through the sales process with a customer? Can it help me better organize my business, keep track of what I need to do, and create action plans to move to the next “milestone” in an effective sales process? How?

5. Plan, Manage, and Grow their sales Territory as a Business? It’s not just about working sales opportunities, CRM is about helping me build and grow a business that is successful this year and in all the years to come. It’s about helping me plan and manage the satisfaction and growth of all the accounts in my sales territory and establishing a solid competitive position. How can you help me? 6. Organize & Focus sales efforts for Optimal ROI? In the business of selling, it’s all about ROI or “return on investment”. I only have so much time, so many opportunities and accounts I can handle, and so many resources available. To maximize my sales success, I can’t afford to be doing the wrong things. Can your CRM system help me focus my efforts every day to achieve the greatest possible sales return? How? 7. Customer Relationship Management – it’s not about Technology … or process … or information. It’s just about Selling!

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

85

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Special Report

THE QUEST FOR MARKET DOMINANCE
Market Dominance. It is the often unstated but very real goal of every business. For many companies, however, it is more a dream than an achievable reality. Nonetheless, today's marketplace is full of opportunity for companies with the vision, drive, and knowledge to become market leaders. "Market Dominance" may be thought of as an organisation attaining the majority share of the available market for their products or services and establishing an unassailable, long-term competitive position. The definition may be straightforward but the "how to" is somewhat less so. After all, achieving market dominance will mean unseating the current market leader (which may be a much larger company with greater resources). It means winning new customers by taking "satisfied" customers away from the competition! It will require a focused effort by the company with a high degree of risk! No wonder

many organisations think twice before launching a concerted drive to become the market leader. Is the key to market dominance found in new product innovation? Added-value selling? Superior customer service? Aggressive pricing? Intensive marketing? Improved sales skills? Expanded manufacturing/distribution capacity? New technologies such as sales automation or the internet? The answer is "all of these ... and much more". By itself, any one of these -- new products, added-value selling, customer service, pricing, marketing, skills, capacity, and technology -- can produce a sales benefit and a competitive edge (at least until it is equaled or surpassed by a competitor). Market dominance requires all of these and one more ... a Victory of Strategy.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

86

SELLING 2000: The Vision and the Promise of Customer Relationship Management

The Rule of Market Dominance To dominate a market, you must dominate every sales territory or market area. To dominate a territory you must dominate the key accounts (customers) within it. To dominate the key accounts, you must win the majority of the sales opportunities in each account. To dominate the opportunities you must dominate the contact relationships, i.e., individual contacts who make or influence each sales decision ...and to lose one is to lose all. Strategy Tools Market dominance requires a new set of sales tools. In order of importance, the first is "Strategy Tools". As "The Rule of Market Dominance" suggests, it requires an increasingly complex set of strategies and tactics to win each of the contact relationships, opportunities, accounts, and territories that make up a company's market. For example, winning a complex sales opportunity (multiple contacts, long and complex decision cycle, etc.) requires a different set of strategies and sales tactics than "winning" an individual contact relationship. Winning a key account requires a

salesperson to win all contacts plus win all account opportunities plus develop a plan to develop and protect the account ... and so forth. Salespeople, for the most part, have been poorly equipped to plan and manage more than their contacts. Traditionally many sales organisations have focused only on building relationships with contacts, assuming that "winning" at this level was enough, i.e. if you won the contacts, the opportunities, accounts, and the territory must follow by default. Unfortunately it doesn't work out that way. A market dominance strategy -- from territory to contact -- requires a new focus by the entire sales organisation, and a set of integrated business planning tools ... or processes ... to help salespeople manage the added complexity of opportunities, key accounts, and territories. Technology Tools Unlike the past, today's salespeople rarely work in a vacuum. Not only must salespeople often work effectively with other parts of the organisation (sales teams, management, service, support, manufacturing,
87

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

finance, etc.), their ability to execute their strategies increasingly depends on coordinating and communicating their strategies and customer data to each of them. The ultimate value of sales force automation (CRM) technology is not in the "sales productivity tools" it contains, such as calendar, "to do" management, etc. CRM's greatest value is as a strategic planning tool and a company-wide communications infrastructure. To begin with, the sales planning and analysis processes for contact, opportunity, account, and territory management should be built directly into CRM software. This allows for easy updating of plans throughout the year -- and the ability to electronically share real-time plan and sales progress data with sales team members, sales management, marketing, and others who can benefit from "live" customer information. Other CRM sales tools such as product configurators can help salespeople quote and price products more rapidly than ever before -- and may even provide specific value and convenience to the customer. Again, however, their greatest value may be in

increased configuration accuracy with immediate communications to order entry and manufacturing or distribution -- resulting in increased customer satisfaction. Technology further provides the company (and salesperson) improved ways to communicate directly with the customer. Marketing encyclopedias can deliver extremely detailed and accurate product data via a variety of media and communications technologies. Even "simple" tools such as electronic mail, web sites, and fax enhance customer communications. Technology tools can link the customer to the company through the salesperson or directly through on-line computer capabilities such as the internet or intranets. In either case, both company and customer can mutually provide and share information critical to the success and satiCRMction of both.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

88

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Putting It All Together We began with the question: "Is the key to market dominance found in new product innovation? Addedvalue selling? Superior customer service? Aggressive pricing? Intensive marketing? Improved sales skills? Expanded manufacturing/distribution capacity? New technologies such as sales automation or the internet?" The answer was: "All of these ... and more". A company's potential to excel in each of these areas -and potential for market dominance -- can be viewed in terms of its strategic and its technology tools. • New product innovation can create market position but only if the new product is one which will create customer demand. Using technology can enable a product planning group to more accurately assess customer needs and new product response. • Added-Value Selling strategies depend on an understanding of what represents real value to a customer. "Live" customer data combined with "strategic account, opportunity, and contact profiling can enable the sales organization to develop and deliver "on-target" added-value programs.

• Superior customer service depends on customer knowledge by "everyone who touches the customer". Customer information and business plans, provided through technology tools, enables the development of focused offerings with more "personalized" customer service. • Aggressive pricing can be an effective sales tool when used to attain a defined market goal and based on the availability of the comprehensive, accurate market knowledge that technology and strategy tools can provide. • Marketing programs are only as good as their focus. Are they targeted at the right buyers, with the right message, at the right time? The solution: again, comprehensive, accurate market knowledge that technology and strategy tools can provide. • The ability of manufacturing/distribution to correctly anticipate demand is critical to any organisation's success. Connecting these groups directly to the sales "pipeline" -- current sales opportunities -- allows them to track progress and more accurately adjust long term capacity and inventory planning. • And Sales Skills ... salespeople who are "armed" with better customer and prospect information and
89

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

comprehensive planning processes increase their capability to make better sales decisions, i.e. execute the right sales tactic, the to right contact, with the right message, at the right time, to achieve optimum results. In Summary Achieving market dominance is, of course, more than just implementing strategy and technology tools. It depends upon people -- people in every area of the company who are motivated, willing, and capable of doing their jobs in a superior manner. This may be the greatest challenge of all. We do know one thing for sure, however. Our people will never do their jobs in a manner than enables us to create market dominance if we fail to provide them with the necessary tools.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

90

SELLING 2000: The Vision and the Promise of Customer Relationship Management

Special Book Excerpt … from Tim McMahon’s upcoming new book

THE VALUE PRINCIPLE
Transcript from a recent executive meeting at “NoName Corporation”: Charles Smith, CEO of NoName : Ladies and gentlemen, our competition is increasing. They have just significantly lowered their prices and our customers are pressuring us to do the same. The problem is, I really don’t want to cut prices. I feel it’s a poor competitive strategy but it may be our only option. Before I go ahead with a cut I want to hear your thoughts.. Ann Baxter, Support Services Director: Well, I think it’s clear. We provide the best service and support in the industry. Our customers should be reminded how important that is to them. We shouldn’t have to sell at a lower price!

Terry Sheldon, Sales & Marketing Director: Ann, I agree we have the best service but our competitor’s is pretty good too. It’s just not enough to counter the price difference. If we’re not going to lower prices then we need new products! Carl Martin, Manufacturing Manger: Terry, we just don’t have any new products in the pipeline for this year. The good news, however, is that with the additional manufacturing capacity we put in, we’ve been able to fill 99% of all customer orders on-time. Our quality is the best in the industry! Shouldn’t these be important to our customers? Terry: It should be, Carl. In sales, our people have worked hard to build stronger relationships with our customers! We’ve done customer focus groups and surveys, needs analysis, and even joint business planning with our key accounts. Still, I don’t know if it’s enough … Anita Carson, IT Director: In IT we’ve implemented new systems for Customer Relationship Management, Supply Chain, Data Warehousing, and a new Internet site. All of these make it easier for our

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

91

SELLING 2000: The Vision and the Promise of Customer Relationship Management

customers to work with us. I would think that should have some value to our customers! Charles: You all make some very good points. You’ve all worked hard developing customer value programs. But to tell you the truth when it comes to price, I’m just not really sure that our customers care all that much about our value programs. No, I think what we’ll do is go ahead and cut our prices to match our competitor’s. I want manufacturing to try and get some kind of new product out in three months. I want salespeople to start making more calls. We’re all going to have to tighten our belts – we’ll start by reducing expenses and canceling the new hires we planned. We may have to make some personnel cuts, and … ***** It sounds good. Like our hypothetical “NoName Corporation”, we would like our customers to buy from us because of the “Total Value Package”(TVP) we offer them: quality products, excellent service and systems, our ability to meet their needs and requirements, and the strong relationships built by our sales organization - all provided at a fair price that represents a good value to the customer and a honest

profit to us. Our “Total Value Package” should be our greatest source of Competitive Advantage! It ought to work that way but it often doesn’t. Product and Price keep getting in the way. Despite our best efforts, it seems that when a competitor lowers prices or introduces a new product, the value of all our “added-value” goes right out the window! It shouldn’t but it, again, too often does. We’re tempted to say, “The customers really don’t care about added-value!”, but somehow that doesn’t seem quite right. We innately know that they should care. Are they aware of our TVP (we’ve probably spent a lot of sales and marketing time telling them about it)? Maybe they don’t care enough? If they don’t know, don’t care, or don’t care enough, we have to ask WHY?. What are we doing wrong? The problem is in how we “sell” Value. Actually we “tell” value more than “sell” it! We often do an excellent job of telling our customers about all the “unique value” we offer them. We tell them, hopefully, how this Value benefits them. We tell them why it should be a deciding factor in their purchase decisions. The customers nod their heads, appear to
92

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

agree with us, and we think we’ve “sold” them on our Value package – locked out the competition, won the day, and created loyal customers. And that lasts just until “product” and “price” rear their ugly heads once again!

In other words, when a customer does not “value” the Total Value Package we provide them, it’s not necessarily because they don’t know about it; it’s because they haven’t really experienced it. What does it mean for a customer to “experience” value? The Second Concept of The Value Principle states: “Successful Customers Buy More !” The best customers are those whose businesses are successful. If they are successful then they are in a position to continue to purchase from us and may likely even increase their purchase volumes. The converse is obvious: Unsuccessful customers will buy less. As providers or products or services it is clearly in our best interests to help our customers’ businesses become more successful. Ultimately, this should be the bottom-line purpose of all the Value we are trying to provide our customers: to help make them more successful.

THE VALUE PRINCIPLE The answer lies in the First Concept of The Value Principle: “Value is created in the mind of the customer when it is transformed from something we PERCEIVE to something the Customer EXPERIENCES !” We know the Value that we offer the customer. We know why the customer should appreciate it. We know why the customer should base their buying decision on it. And perhaps we have done a pretty fair job of telling the customer about it. Our customers hear us; they say they understand and agree with what we’re saying. We all perceive the same thing. But all the perceived value in the world doesn’t matter unless the customer clearly experiences our value!

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

93

SELLING 2000: The Vision and the Promise of Customer Relationship Management

We can say, then, that a customer will “experience” our Value when he or she achieves increased business success as a direct result. The challenge this concept presents to our sales, marketing, and service organizations is to do more than just “sell” value – that’s just the starting point. The real task is to assure that the customer’s company actually achieves the maximum potential of our Value. Our ability to make our customers more successful then becomes our true source of Competitive Advantage in the marketplace. It is also the leverage that allows us to successfully command a premium price for our products and services. Still unanswered is the question, “How do we then ‘transform’ our Total Value Package into customer business success?” and leads us to The Third Concept of The Value Principle: “To transform ‘Perceived Value’ into ‘Experienced Value’, our Expertise in the Business of our Customers Must be as Great as our Expertise in our Own Business.”

Clearly we cannot expect to know all aspects of our customer’s businesses as well as they do, but we can build the kind of relationships that will enable us to understand their challenges and business issues as well as their current and planned business strategies and initiatives. We can qualify and quantify how our Total Value Package can positively impact each of these! To accomplish this, however, may require a real change in how many of our own people do their jobs. For example, a salesperson is typically viewed as an expert in presenting his or her company and it’s products and services. A salesperson’s job has been to show a customer how a product or service meets a stated customer need or requirement. It has traditionally been left up to the customer to translate meeting a need or requirement into increased business success. A “Value Principle” salesperson (and Company) would have a depth of customer knowledge and an understanding of business issues that would allow him or her to work with a customer at both a “technical” or product level and at a “business” level, actively helping the customer transform the TVP into increased business success, i.e. Experienced Value. This means
94

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

SELLING 2000: The Vision and the Promise of Customer Relationship Management

that a salesperson must be capable of having “executive-level” conversations with customers, not just “product-level” – for many a very new skill set. When, as an organization, a company gains this level of customer knowledge and expertise, it also gains the ability to develop and target its total package of value and significantly enhances its ability to leverage Value for competitive advantage. Next Steps Implementing The Value Principle is based upon a set of twenty-one “Standards”, eleven strategic and ten tactical. The Strategic Standards help an organization develop the knowledge, resource, and capability base to create a targeted “Total Value Proposition” or package. The ten Tactical Standards develop the “business” skills of field organizations to enable them to build executive-level relationships and create Experienced Value.

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

95

SELLING 2000: The Vision and the Promise of Customer Relationship Management

© 1995, 1998,2000, Timothy McMahon & Co./Worldwide All Rights Reserved TIMOTHY MCMAHON & CO. WORLDWIDE Tel: 603.424.3387 Email: tmcmahon@mcmahonworldwide.com WEB : www.mcmahonworldwide.com

96

Sign up to vote on this title
UsefulNot useful