Interpersonal Business

Vol. LX

Dear Manager,

What determines which of these “hard assets” should be considered obsolete? It comes with the conclusion that what was previously an asset no longer sustains its value. There are clear and obvious fixed costs in retaining resources that no longer represent future revenue. Warehousing, financial carrying costs, data entry, and poor use of valuable management time in their maintenance, are just a few. The closer we look, the more apparent it becomes. When an asset is no longer an asset, it is time to cut our losses and move on. When was the last time you took an inventory of all your assets?

In this instance, I am no longer referring to the hard assets in your warehouses. What is the current financial inventory of those assets your business considers to be its good will, or “soft assets?” These include current manufacturers relationships, customers, sales territories, and staff positions within your organization. Certainly there is a constant ebb and flow in each of their evaluations. While the need to take a close look at the value of ones physical inventory may be obvious, it can be much less obvious to do the same for other organizational assets. Rarely have I seen an organization define a specific and detailed financial evaluation for this equation and each of its parts.

Begin by taking a full accounting of exactly where your revenue is generated in all aspects of your business. We often have a very general idea, yet it’s not uncommon to be well off the mark. We all know the rule of thumb that twenty percent of our assets sustain eighty percent of our revenue. I have always found this concept to be much closer to actuality than I ever anticipated.

If this is the foundation, then the bottom twenty to forty percent of your assets represent less than ten percent of your revenue. If this were true, would it not be considered obsolete inventory if professionally reviewed in any other light, or by any other form of measurement? Similar to an inventory of ones hard assets, what is the true cost of retaining underperforming and value-deprived soft assets?

For many years, I made a concerted effort to minimize the number of client manufacturers our organization represented. Our top five manufacturers represented seventy percent of our sales, with the remaining ten to twelve representing the remaining thirty percent. To take it one step further, the bottom five manufacturers represented less than five percent of our total revenue. As often as I would analyze this, adjusting the mix with the addition and subtraction of manufacturers, the bottom five manufacturers would continue to maintain a very similar percentage.

There were always other considerations in retaining some manufacturers, regardless of their current revenue. A manufacturer’s future growth potential, their significance to other areas of our presentation, or simply a foot in the door of a potentially lucrative category, all came into play. These “other considerations” should also be evaluated as part of your total inventory. I believe you will find that in all but the most rare circumstances, their net value is a few hairs above meaningless, while their carrying costs continue to be very significant. (By the way, ones ego can’t be concluded as an aspect of “other considerations.”)

My own rule of thumb always came down to the following: If, as an organization, we could double or triple the sales of one of these underperforming product categories, would they then represent any value? In almost all cases the answer was no, and the chances of actually increasing their sales by this multiple were slim to none.

We once represented a manufacturer who produced a variety of products from varied artists. They were convinced that one of their artists was being “under represented” by their national sales force. The truth was that this artist represented only one percent of their national sales, yet we were asked, and expected, to promote these products to new markets outside our current customer base. When I asked this manufacturer what percentage of their total sales this artist should represent, the response was an unequivocal, “You could double the volume!” I could hardly wait to redirect the field sales force for this dramatic potential!?!

I asked this manufacturer if they had considered the corresponding impact of this focus on the much more successful ninety-nine percent of their presentation. “If sales forces across the nation were directed to double the sales in this ultra limited category of the product mix, could your company accept reduced sales in other areas, especially your best sellers?” In fact, this was not an unusual conversation over the years.

There seems to be a tendency for all of us to minimize our risk by telling ourselves we are better protected and more secure by investing valuable resources in areas with little or no potential relating to investment. Meanwhile, time, energy and, at some level, our reputation, are being squandered on what should be considered “obsolete inventory.”

In this time of both unprecedented institutional and personal investment in the stock market and mutual funds, would we consider a similar strategy with our personal investments? Would we continue to accept losses even though our investment broker was also our best friend? These same considerations should be used with regards to the continued profitability of some of our customers. How often do we hold onto a customer due to prior profitability, personal relationships, or simply out of habit, regardless of their current value to the whole?

Once again, the top customers will represent eighty percent of our revenue and probably receive, due to limited schedules, less than fifty percent of our efforts. A similar inventory can be conducted for customers by assigning a value based on the investment required to maintain them. How often are “obsolete customers” retained at the expense of developing a much more profitable customer next door? How often is time invested with a languishing customer at the expense of a new and very profitable presentation to one of our top ten clients? There are only a limited number of productive hours in the day; every decision relating to time is at the expense of a better use of our efforts!

For six years, I toiled over the development of a new division within our company, spending significant time trying to develop this category. Trade shows, the hiring process, problem solving, and hundreds of hours of staff time were invested in this endeavor. After six year’s effort, the division’s gross revenue represented less than ten percent of the whole. The division was ultimately dissolved, and the weight of the world seemed to pass in its wake. That same year, our company went on to have its largest growth year of the previous ten. The focus was back where it belonged.

There are similar situations where sales organizations try to expand into new sales regions. If, after a reasonable period of time, profitability has not been achieved, move on…quickly! You are certainly not doing the staff members in these regions any favors by subsidizing their income or sugarcoating the job’s inherent lack of potential. What we are doing is jeopardizing the balance of our staff, and their livelihood, by reducing the profitability of the whole!

Business will need to be much more streamlined than in the past. Have you ever noticed how much easier it is to increase sales at the top end of your presentation than it is at the bottom? This is certainly a very obvious statement. Equally obvious is our ability to resolve to focus a much greater investment in these areas by reducing “obsolete inventory.” Don’t the investments that we would consider to be our most valuable deserve more?
Poorly producing “assets” are historically the most time consuming aspects of our business. Could it be possible? Is eighty percent of our productivity invested in “assets” representing only twenty percent of our revenue? Sell the farm, Martha, the barn door was left open…

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2010. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Volume XXXXVI

Dear Manager,

With the evolution of how businesses and consumers manage their lives in the years to come, what is our future? The lessons of the past suggest there will continue to be major changes in how we analyze and manage the marketplace. With the sheer speed of communications, I am convinced our evolution has picked up its pace dramatically. As we look back five years from now, we will either have adapted well, or will no longer be involved in our current career.

My father was in sales for many years. I remember him being on the road for weeks at a time. I now know how difficult this time in his life was. In the 1950’s and 60’s it was very common for factories to ask their salespeople to cover a number of states. Dad was asked to cover all or part of seven western states. This meant weeks on the road in non-air conditioned cars and motels, many small towns, small diners, and most evenings devoted to the day’s paper work. Manually maintained ledger books were the only accepted form of accounting for one’s sales and expenses.

Perhaps these were simpler times than we know today. There is no question in my mind we have the opportunities to work smarter. Dad provided very well for his family. He did what he knew how to do, and did the very best job he could. Most individuals are a direct reflection of their parents, and he emulated the work ethic of his father. Would he have enjoyed a much smaller territory, more time with his family, and the many advantages we enjoy today? Without question. The very last thing I wanted to be when I grew up was a salesman!

When I was in college I developed a product that was (I thought) perfect for gift and craft stores. Since the only one interested in selling the product turned out to be me, I hit the road. Did I mention that I never wanted to be in sales? The early years took me to five states. In order to make the trips more profitable, I began to represent multiple lines. At that time, factories had very little territory data available. “Simply do the best you can” was a common form of goal-setting, and success was measured by “Oh, by the way, how are your sales?” It was much easier to please in those years!

TODAY

Our sales regions are, in most cases, much smaller than in those years. With the metro areas supporting multiple associates, travel, expenses, and nights away from family have been dramatically reduced. I continue to have a great deal of respect for those individuals who need to spend weeks on the road in rural areas. These individuals are the true sales warriors. Many metro area associates have no clue of the demands of selling in these regions.

If productivity has grown significantly over the years, so has documented accountability. Computers have provided us with near instantaneous answers to questions that were not even thought of in the past. There is no longer any place to conceal a challenged territory, or a performer inconsistent with their peers. The information is right before our eyes. Sales management is one of the largest beneficiaries of technology. There is no place to hide.

This new information demands that we look differently at our day. Productivity is now quantified. Revenue Producing Hours, RPH, hold our current and future success. With so many priorities in our lives, discipline relating to RPH is crucial. As sales people, we must protect these hours in each of our days. The one area that has neither changed from the past, nor is likely to change in the future, is the number of Revenue Producing Hours, on a daily basis. In very real terms, we are being asked to squeeze more juice from the same size orange. This can only be accomplished through our ability to manage time very, very well, in order to achieve greater results. The key for all of us is to create a plan, rather than to simply accept additional stress.

TOMORROW

I’m sure you have noticed that the technological train is headed down the track at full throttle. There is no stopping it now! Are you going to be blown away by the vapors, or do you have reservations at the next stop? If this is the only question, then there is only one option. Don’t hesitate or delay, as seats may be limited!

If you have been sitting on the sidelines, hoping that the train would derail, then you had better make plans for a new career. Technology will play a critical part in your future, period. What would our current business lives be without the advantages of a cell phone, blackberries, and specialized computer programming; let alone the internet? Even those who have been slow to become fully computer literate they too have enjoyed huge benefits from those who are! If you remember how the last power outage crippled your ability to communicate and process information, then you can begin to understand how dramatic the changes will be in the next ten years.

Will technology herald the end of the field salesperson? Will products be bought and sold from monstrous web pages? Will reorders simply be placed electronically? At some level, all of the above will become reality! In fact, it is reality for some industries today.

At all levels, technology will demand greater skills from the seasoned sales professional. There is no question that personal and professional contact are critical to the sales equation. Sales are increased by 30% to 50% when conducted face-to-face. I believe that professional individuals will continue to flourish as technology continues to mature. Problem solving and the “the personal touch” cannot be replaced by technology. Hold on tight to these skills.

Today’s “order takers” are the dinosaurs of tomorrow. Those who are unable to take ownership of their sales region, manage their RPH effectively, and consistently drive to expand their business will no longer be needed. It will simply become more efficient and cost effective for customers to work with outsourced professional techno-marketers in the cyber-world.

The actual writing of orders in the field is currently the area of greatest transition. Many industries have already adopted the use of electronic means to develop and transmit their orders. By comparison, current options make past applications remind us of a telephone made from two cans and a long string.

With much more capable portable computers, catalogs as we know them will be gone. Orders will be entered on the computer screen. Need a different angle on a specific product? Allow me to enlarge and turn. How many do you need? No problem, I’ve placed that quantity on hold for you. In fact, your credit has been approved and your order is being printed. It will be in our warehouse for packing this afternoon and shipment in the morning. No delays, fewer mistakes, and greater opportunity for reorders due to a much quicker turn around. Imagine the immediacy of new introductions – simply wake up to them on line. Backorders will no longer exist. Efficiencies in our factories and warehouses will meet unheard-of expectations.

Oh yes, expectations. As these advantages continue to become “the norm,” they will inevitably all be taken for granted. The competitive edge in American business is about to take a major shift. Product innovation and development, the foundation of business as we know it, will take a back seat to instantaneous convenience and service at levels we cannot even begin to currently understand.

My greatest concern is for the survival of the creative, mom-and-pop start-up operations. They are the foundation for some of the best aspects of our lives. It will be exceedingly difficult for these businesses to compete with the speed and convenience of the “tech guys.”

I hope you have enjoyed this retrospective and crystal ball. Our future has never been quite so clear. We are collectively well beyond the “when,” and thundering down the track to “now.”

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2009. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Vol. XXXXIII

Dear Manager,

Or, can simple experience pave the way to our ultimate goal? Have we paid attention to the marketplace and the fundamentals of marketing? Experience tells us that the State of California will outperform the State of Wyoming in most every facet of business. Experience suggests that a three day fishing trip will generally provide a greater return than a one day trip. It becomes the principal of sheer numbers. One of the most misunderstood marketing fundamentals is the importance of critical mass.

My wife and I at one time had four teenagers between us (now there’s critical mass!). Over the years, I watched them grow and look forward to finding their first summer job. It was a very challenging time for most teenagers, because in many ways they must put themselves on the line for the first time in order to find that first job. Presenting themselves in an adult manner, dressing the part, and showing a bit of confidence is not generally consistent with other aspects and priorities in their lives. I have seen it take weeks to muster the courage to make that first step. (The timing, by the way, is often determined by the release of the latest “to die for” CD or computer game … motivation takes many forms!)

In most cases, teens will have their eyes peeled for that magical sign that suggests a business is looking for them. “Dad, if they were looking for me they would have a help wanted sign out … don’t you know?!” Once the sign is found and their confidence has been strapped on, they march in. A sense of satisfaction has been earned and a job has been applied for. Now the wait begins. Surely, it will just be a matter of days until they are rewarded for this initial effort.

I have found a very similar tendency in business once these teenagers have grown up. A well conceived idea is developed yet never fully executed. A bad idea, very well executed has a much greater ratio for success than a very good idea poorly executed. It is the law of critical mass. If an individual were looking to publish a manuscript, would their chances be greater with a single query letter to prospective publishers or one hundred? I would bet on one hundred, regardless of the manuscript’s literary merits! With niche marketing so successful, there is a market for most anything. You simply have to have the resolve to find it.

As I have taught, encouraged, each of my own teenagers, reach for maximum visibility! If you actually want to be recognized, throw your hat in the ring and make an impact. Want a job? Then present yourself in the most favorable light, again, again, again and then again.

Working with many top sales professionals over the years has shown me the impact of critical mass. From account penetration to market saturation, the very best sales people must execute on a daily basis, or fail. These individuals are possessed with market expansion.

I once worked with an individual who opened in excess of 100 new customers her first year. Until she arrived, this was a territory that was considered a very mature and well developed region. With her efforts, all previously established standards of performance went out the window. How did she do it?

She established a goal to open 10 new accounts per month. This was then broken down into a weekly expectation and reviewed on a daily basis. It was an excellent plan, yet it is one thing to establish a plan and another to execute the plan. This is where many salespeople and managers fall through the cracks. I believe that it all comes down to “how bad do you want it, and are you willing to pay the price?”

By contrast, this individual (a former top vacuum cleaner salesperson by the way) approached her goal with the heart of a champion. With little fanfare, she simply proceeded confidently to achieve her objective. Do you really think she opened 10 new accounts per month by calling on only ten accounts? If so, let me sell you a vacuum!

Her first few attempts brought limited results, yet provided a very strong foundation. Repeated effort establishes the work habits that become a way of life. With time, her presentation developed, her batting average improved and her confidence soared. In each call it became no longer a question of if, but of when. Within “the critical mass” there is abundance available to all of us. Those who suggest otherwise are not being honest with themselves (or their manager!).

The greatest advantage of critical mass is in the number of options it brings to the table. Would we not prefer to evaluate the opportunities and values of ten options as compared to one? Each will have its own advantages, one will be a home run! Human nature often encourages us to take the easy way out, the first and only option. Perhaps it is less a result of human nature than it is of simply being too busy or too lazy.

As managers of our sales and of our companies, we must fight this tendency at every turn. Have you ever reviewed the potential of a product, individual, or service with only a surface amount of information? I have, as have many managers. We can be anxious to form a conclusion based on the information at hand, rather than explore the many options available with patience and commitment to greater understanding. Our fast-paced world challenges this premise each and every day.

The alternative is “garbage in, garbage out.” We owe it to ourselves to explore these options with a firm grasp of critical mass, and a firm grasp on reality in the decision making process.

ASK THE TOUGH QUESTIONS …

… again and again, not only of yourself but of those you manage. We
must demand this of ourselves, regardless of excuses or the pace of our
schedule. Anything less, and all of the investment we have made relating to our ideas and to the individuals that have the right to expect our best was an absolute waste of time! If we are unwilling to properly execute our plan, trusting the laws of critical mass, then it is time to fold our tent and accept all consequences. The ideas and execution will now be left to the competition.

Personal Regards,

Keenan

INTERPERSONAL7#169; is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2009. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Vol. XXXXII

Dear Managers,

In the “new world economy” that we hear about on a daily basis, change becomes a way of life as we now embrace the twenty-first century. Change has become a necessity in order to compete, survive and flourish. Some are on the cutting edge of new technologies and the anticipated wave of change in the marketplace. These individuals will be in the forefront with a subtle smile of satisfaction. Others will absolutely be six feet under (the ultimate change!) before considering a new perspective of doing business. As managers we must embrace change enthusiastically. To do so, we must all have a greater understanding and acceptance of the dynamics of change.

Why, in so many aspects of life, do individuals maintain an aversion to change? The best explanation is that we are each manipulated by our own comfort zones. We have grown up to fear the actual or perceived risk in change. We have been taught that change is hard. The unknown strikes terror into the hearts of many.

At a very young age, confidence was developed through consistency, routine, and familiar surroundings. If these aspects of life are what felt good as a child, they must also feel good today. Understanding their roots will assist us in looking at their dynamics objectively as an adult.

We all know individuals who have held the same job since graduating from high school or college. Many of these same people would admit to having devoted their entire working career to a position defined by nothing more than chance. Why? Over the years, adult responsibilities make it seemingly impossible to justify change. At least the status quo pays the bills. Those who cannot embrace change are destined to their own fate, and that’s all that needs to be said!

Those who have consistently endured change have, in retrospect, gained confidence in the process, and faith in their ability to land on their feet. Change can indeed become a blessing in disguise. It all comes down to the uncertainty that most feel in the process. More often than not, personal victory comes through accepting change … head on.

CORPORATE TRANSITION

For example, the change in ownership of a company can create sheer panic and a worst-case mentality from management and staff alike. Regardless of their current circumstances (good or bad), the overwhelming conclusion is that the future is in jeopardy. Some mistakes will inevitably be made. I have personally found, however, that in most cases the new ownership has brought heightened enthusiasm, innovation, and a much stronger sense of opportunity. There were reasons why the previous owner chose this option. New ownership can bring renewed vitality to an organization.

The only individuals who should feel insecure in their positions are those who are incompetent, and I support their insecurity! Competent individuals will rise to the top, retain their positions or secure greater and unforeseen opportunities elsewhere. There are always multiple options for the blue chip staff member! Those who are able to accept the adventure of change will see unlimited possibilities for their life and career.

VIRTUAL REALITY IN SALES

As salespeople, we must realize that the individuals we sell to are often the least accepting of change. Even the professional buyer may be caught acting like a child. It is critical in the training of new sales staff for managers to address this issue up front. Whenever there is change, many customers will immediately form the following conclusions:

• The new sales associate will lack adequate knowledge
• I will not like this individual as well as their predecessor
• I will be expected to purchase products I don’t want
• The new individual will not be as reliable
• I will be greatly inconvenienced by this transition
• My service and product needs will be adversely impacted

Obviously, these conclusions are not a reflection of reality, or a personal statement about the new salesperson. How can they possibly be, as no relationship has yet been established? This is the “worst case” mentality associated with change. By realizing this, salespeople can begin to develop effective strategies to disarm the inherent opposition. To ease the anxieties of change, we must candidly address the customers’ concerns face-to-face. When contacted by phone (by the dreaded “new” salesperson), many customers will suggest a follow-up call … in perhaps six to twelve months! This simply won’t do.

Relationships can only be developed out of mutual need. Customers may be forced to adapt, or choose other less threatening options. As salespeople, the majority of these concerns can be addressed in a brief personal meeting. Express an understanding of the dynamics of change and a wish to live up to – and improve upon – past relationships. Suggest an openness to feedback, and the hope for their assistance in the transition.

This one-on-one commitment to mutual success is absolutely fundamental to maintaining good will and developing the future opportunities needed for growth. Begin with the key relationships in your territories. Be relentless, and at the same time subtle, in counteracting their anxieties.

AS SEASONS CHANGE

It is now time to accept, encourage and search out new opportunities available through change. Similar to the seasons of the year, change brings renewal. Change challenges us to excel. All previous comfort zones evaporate. It has the potential to bring out the best in all of us. We all want to improve upon our previous best experience!

When change is thrust upon us, it demands that we give 120% to the effort. In these circumstances, nothing can be taken for granted or accepted at face value. With each day we learn, processing and absorbing our surroundings, tasting all aspects of our new reality. Is this not an approach that would assist all of our endeavors, regardless of current comfort levels or our need for change?

If there is one constant … it is change. Regardless of our belief in this old adage, (which we may have formed at a very young age!), I think it is time for all of us to not only accept but to encourage change in our lives. The option to revert back to former ways is always available to us! How can one possibly understand and evaluate the potential in oneself without embracing the elements only available to us through change?

As a favorite quotation suggests, “Without a strategy and acceptance for change, we are destined for the same result.”

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2009. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM