Closing the sale comes down to the choices salespeople make when they are conversing with the customer. As they go through their sales process, they make choices about what they do next based on what they know about the customer, what they think they need to know and what they feel will help close the sale.

A Closing The Sale Choice

Sometimes, those sales growth choices are based on false assumptions, not listening carefully enough, not asking enough questions, not interpreting what they hear correctly and not being curious enough about the customer. They might feel more comfortable talking about what they know… their offer and its benefits… than actually finding out all that the customer thinks and feels. To boost sales growth, you have to get deep inside the customer’s mind.

Salespeople make choices to help close the sale based on all they know at that moment in time. If they knew more, they would make different choices about what they do next. If they knew everything that actually affects closing the sale, they might change a lot of their choices about what they do.

Salespeople Boost Sales Growth By Making Better Choices

A salesperson’s choices have more affect on whether they close the sale than their communication techniques. When those choices are based on why people buy and how they figure out perceived value, salespeople make choices that help customers justify a purchase decision and see a high enough value to pay a profitable price.

These are conscious choices salespeople can make that grow out of a deeper understanding about what actually affects the customer’s decision to buy. Closing the sale requires in-depth knowledge about the customers needs and wants, what they consider important and unimportant, what they would highly value and everything affecting them. To close the sale, salespeople have to figure out how to use all that information to influence the customer’s perceptions of value.

Every sale happens inside the mind of the customer. What that customer thinks about, how they view their situation, what they consider important and unimportant, and much more all contribute to how they see the offer and the company offering it. The more a salesperson knows about what is going on inside the customer’s mind, the more likely they are to make choices that will produce sales growth. Whatever they don’t know about the customer can and will sabotage the sale.

The Customer's Mind

Salespeople Know Less About Customers Than They Think They Know

Our research shows that, on average, experienced and trained salespeople know about 75% of the available information that could influence the customer’s purchase decision. Yet, they are often unaware that their knowledge of the customer is 25% less than it could be. How can we get salespeople to consistently seek out more information that can help them with closing the sale?

What salespeople need is a guidance system that leads them to seek out more information from the customer, determine when the information is sufficient to move the sale forward and use that information to close the sale. By learning why people buy, what affects their customers’ buying decisions and how they figure out perceived value, salespeople become motivated to seek out more information that will boost their sales growth.

How A Guidance System Helps Salespeople Close The Sale

When salespeople seek out the maximum possible information from the customer to help guide them toward a purchase decision, they do the following:

• Listen better
• Interpret what they hear better
• Avoid costly assumptions
• Become more curious about what the customer thinks
• Develop deeper relationships with more people

This leads salespeople to do the following five things that will cause more customers to say yes more often at profitable prices.

1. Increase the number of needs and wants uncovered
2. Raise how serious and compelling those needs and wants are
3. Present solutions that more closely align with the customer
4. Raise how important the customer ranks each benefit
5. Increase the perceived value of what is offered

When salespeople do all five to the max, they close more sales, increase their win rates, penetrate deeper into existing accounts, retain more customers, and increase referrals to new prospects. They boost their sales growth.

“Closing the sale is about the entire sales process, not just the end of the process. It isn’t any one thing a salesperson does that makes the difference in closing the sale. It’s everything they do that makes the difference. Closing the sale starts with the first contact and proceeds through every conversation and information exchange until the salesperson has poured a strong enough foundation for the customer to say yes.” Don Shapiro, President, First Concepts Consultants, Inc.

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how a deeper understanding about why people buy and how they figure out value could  boost your salespeople’s closing rate. Don Shapiro has been educating and inspiring salespeople with his speeches, seminars and training programs on The ABC’s Of Closing The Sale for over 25 years.

More Information

White Paper: Why People Buy

Learn some of the conclusions from Don Shapiro’s three decades of research into why people buy and what affects their purchase decisions based on his observing hundreds of salespeople and having over 3000 salespeople call on him.

Customer Value…The Ultimate Path To The Best Strategies, Products And Services

Defines what customer value is and how it can help any company to increase its sales, margins and market share. When a business becomes truly customer driven then customer value unifies everything it does.

Video: Hidden Customer Value, Pricing And Margins

Revenue Detective Don Shapiro, President of First Concepts, talks about the increasing price and margin pressure many companies are now experiencing and how to address it.

Every company seems to measure its growth success by whether it can increase sales. Yet even companies that show double digit sales growth may not be performing well. There is a much better measure of how successful a firm is at growing its revenue than its own increase in sales. Revenue Detective Don Shapiro talks about the most important measurement to evaluate if a company is really performing well and growing its market share.

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how a Revenue Investigation could help your firm increase its sales, margins and market share.

To Explore This Further

Find The Stealth Customer Value To Increase Sales (And Your Prices)

Article explores hidden customer value, what customer value is, how it affects the prices customers pay and how to increase the customer’s perceptions of value.

Customer Value…The Ultimate Path To The Best Strategies, Products And Services

Defines what customer value is and how it can help any company to increase its sales, margins and market share. When a business becomes truly customer driven then customer value unifies everything it does.

Revenue Detective Don Shapiro of First Concepts Consultants talks about the increasing margin and price pressure many companies face today and the need to find more hidden value that could help close the sale at a profitable price. One of the best ways to increase sales is by raising the customer’s perceptions of value by finding hidden value.

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how a Revenue Investigation could help your firm increase its sales, margins and market share.

To Explore This Further

Find The Stealth Customer Value To Increase Sales (And Your Prices)

Article explores hidden customer value, what customer value is, how it affects the prices customers pay and how to increase the customer’s perceptions of value.

Customer Value…The Ultimate Path To The Best Strategies, Products And Services

Defines what customer value is and how it can help any company to increase its sales, margins and market share. When a business becomes truly customer driven then customer value unifies everything it does.

Customer value is the sum total of everything a customer knows about what you offer for sale and how it compares to the competition. Inside every prospect and customer exists stealth value… value that could attract more customers and increase sales. This customer value lies outside the awareness of both customers and the companies selling to them. It can help to differentiate your offer, justify higher prices, and close the sale.

Stealth Customer Value

Increase Sales by Tapping into Customer Value

The customer’s final decision that determines whether you close the sale or not grows out of the value they perceive in what you offer. Customers can only make those decisions based on what they know. Through First Concepts Consultants 27 years investigating stealth value as revenue detectives, we’ve found that every customer and market has unrealized value. This hidden value could give a firm a competitive edge to close the sale and get customers to accept a higher price.

That value lies inside the mind of the customer and nowhere else. Only the customer can define value. It does not exist in a product, service, or anything a firm offers for sale. You can’t convince a customer to increase the value they place on what you offer, but you can help them uncover value they were unaware of and connect it to your offer.

How Does Customer Value Help Close The Sale

The customer’s perceptions of value are formed by adding together all the compelling needs and wants the customer is aware of plus all the benefits that the customer ranks high in importance. Everything affecting their perceptions of value, including whether they see your offer as a commodity or unique is contained in the needs, wants and benefits they are aware of. They can only use it to make a decision if they know about it.

Anything outside of their awareness has zero effect on the purchase decision. Our research shows that virtually every company offering a product or service fails to uncover all the customer value that exists inside the prospect and their marketplace. Market research, executives, and salespeople all assume that the information they have gathered represents all the needs, wants, and issues affecting the customer. Nothing could be further from the truth.

There’s gold to be found inside your customers and prospects that could increase sales. You just have to deeply mine for it to find it. Of course, that means you have to start asking different questions, look underneath the carpet, search for new patterns in data, and use other investigative approaches that may be outside of your normal thinking process. Industry veterans can be especially prone to making assumptions about customers and markets that cause stealth customer value to remain hidden. When too much of that happens, customers see what’s offered as a commodity and push down prices and margins. To close the sale more often, you have to uncover as much stealth value as possible.

Questions and Issues to Discover Stealth Customer Value

When you read through this list, you’ll find that uncovering stealth value is about avoiding assumptions, thinking creatively and questioning things so obvious no one ever mentions it. To do this well requires talent in the skill and art of investigation and analysis. These are very different skill sets from being an executive, manager or technical expert which is why there is so much stealth value waiting to be discovered.

• Talking about your internal quality commitments, initiatives and measurements isn’t enough to help customers discover more value in most cases. For business to business sales, how has your product or service improved your customers’ performance, lowered cost, raised profits, increased productivity, improved customer retention and more? Have you spent time deep inside your customers’ organizations and with their customers to find out how your offer affects them where it really counts (which might be far, far removed from the buyer or decision maker) For consumer sales, how have people experienced benefits and improvements in their life by using your products or services? Have you spent time with consumers during their daily lives to see how your offer affects them directly instead of just relying on surveys?
• Even if what you offer performs the same end function as your competitors that doesn’t mean your offer is a commodity. Have you listed every single way that what you offer differs from the competition? If it is a product, is it shaped differently, is the box a different size, how does the box open, what about the internal design and engineering and so on? Does it perform the same, better, worse than others? Why do customers like what you offer? If it is a service, how do you go about delivering this service that may be different than your competitors and how does that difference affect performance and results?
• If you have a direct sales force or inside force, do they do their job exactly like your competitors? Is there anything they do for the customer that others don’t do? Is there anything in their process, conversations, insights, analysis, follow-up and more that may be distinctive? If so, how does this affect the results of the customer…how is the customer better off because of it? How do customers in your market/industry rate your salespeople compared to the competition?
• What are all the things your company does which help to produce benefits and results for customers that your customers are unaware of? What goes on behind the scenes of your company, behind the wall, out of sight that you’ve never talked about or shown the customer? Which of these might be highly valued by customers if they were aware you were doing it?
• Have you identified everything you do, the way you do it and what is contained in your offer that customers are unaware of? Have you pinpointed which of these produces a benefit or result to customers? Have you spent enough time inside your customers’ organizations and with their customers or with consumers to identify all the possible ways they could find value in what you offer?

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how a deeper understanding customer value could boost your sales and margins.

More Information

Customer Value…The Ultimate Path To The Best Strategies, Products And Services

Defines what customer value is and how it can help any company to increase its sales, margins and market share. When a business becomes truly customer driven then customer value unifies everything it does.

Video: Hidden Customer Value, Pricing And Margins

Revenue Detective Don Shapiro, President of First Concepts, talks about the increasing price and margin pressure many companies are now experiencing and how to address it.

The average experienced and trained salesperson could close more sales. They don’t go as far as they could   in uncovering their prospects’ needs, raising how high the prospect ranks the importance of benefits and boosting perceived customer value to the highest level possible. They do enough to be a good producer but lose some sales they could have closed had they done a little bit more. The reason these salespeople don’t do more has nothing to do with sales techniques or process, both of which they are usually good at. They do not fully understand what is going on inside their prospects’ minds and what would increase the probability of their saying yes.

Why People Buy

The top 10% of sales producers understand what goes on inside a prospect’s mind, which allows them to go beyond other sales professionals. While talent or a gift may account for up to 40% of a star performers production, 60% of that production gap is due to a deeper understanding about why prospects say yes and no, and a realistic sense about what they need to do next to get prospects to buy.

First Concepts has prepared a research report about why people buy and why top salespeople sell more. This report describes in more detail what is behind these findings and what salespeople can do to address them. This research was conducted by observing hundreds of salespeople calling on prospects, interviewing those prospects, and then interviewing the salespeople about the call. It was confirmed by comparing what was learned to the results of having over 3000 salespeople call on First Concepts founder Don Shapiro where he recorded what was going on in his mind during those meetings.

This study presents new information for salespeople that, while subtle in nature, can have a dramatic effect on how many prospects a salesperson closes.  First Concepts offers an advanced sales training program to teach salespeople why people buy and what that “little bit more” is they need to be doing with every prospect to increase the probability of a yes decision.

Why People Buy Research Conclusions

More Reading

Find The Stealth Customer Value To Increase Sales (And Your Prices)

Hidden value lies inside every customer and the firms selling to those customers. That value can help justify more purchase decisions and justify higher prices…if the customer was only aware it existed.

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how a deeper understanding into how prospects think out a decision to buy could help your salespeople close more sales.

Today, salespeople have more methods, techniques, and training available to them than ever before. There are more account management systems and CRM software programs to support their efforts. Everything about the world of selling has become much more complicated. With all of this, it can be difficult for salespeople to keep their eye on the ball, which is the most critical element to make a sale.

Salesperson uncovering the prospect's needs

My thirty years of research into why people buy and the empirical research of others have all arrived at the same conclusion. People buy because they have serious, compelling needs and wants. Without that, they don’t buy. Period. This is why virtually all sales training and selling systems today put a major emphasis on uncovering prospect needs and wants.

What Is The Prospect’s Need?

Most salespeople remain unclear about when they have finished the “uncovering needs” stage and are ready to make their presentation. What is a prospect’s need? When does it become compelling? When is the need enough to justify buying something? How serious does the need have to be to justify the price? All those “uncovering need” techniques don’t offer clear enough answers. That leaves salespeople to their own interpretations and judgment calls. Too often, they call it wrong.

Salesperson who just lost a sale

Many salespeople think that if they get the prospect complaining about the way things are right now, they have uncovered the prospects needs. Then, after trying to handle a barrage of objections during their presentation, they walk out of the prospect’s office without an order. Unfortunately, some salespeople and even their sales managers might think this calls for learning better objection handling techniques!

The term “need” doesn’t actually have a useful meaning to a salesperson. It’s not a prospect’s complaints. It’s not a prospect’s frustrations. It’s not a prospect’s issues. It’s not a prospect’s wishes or goals. Could all of those become a part of the “need” that drives the sale. Of course they could. But by themselves, none of them constitute a serious, compelling need that justifies hearing a presentation let alone the price. There are only symptoms that a need may exist.

So we now have all these salespeople who have been trained to follow certain question-asking approaches, but those salespeople often remain clueless as to when the prospect needs have actually been uncovered. They think the answers to their questions constitute the uncovering of the need and justify moving into the presentation. In most cases, it doesn’t.

Only The Prospect Knows When They Have A Need

This all stems from one simple shortcoming in all our training about uncovering needs. Salespeople haven’t been taught the signposts that confirm the prospect is aware of a sufficiently compelling need to justify buying something. Only the prospect knows what they consider a serious, compelling, and costly need—the type of need that calls out for taking action. The “need” is not something salespeople can figure out themselves. It isn’t based on hearing a certain quantity of need type statements because each prospect has a different threshold for what constitutes a need. What might be serious and compelling to one prospect could cause another to just shrug their shoulders.

Really listening to a prospect

I first discovered this problem back in 1976 as a commissioned sales representative. These discoveries formed the foundation for The ABCs Of How People Buy. Each prospect defines a compelling need in their own unique way. No two are alike. And no amount of observations alone can give a salesperson the confirmation that the prospect is ready to hear their presentation.

A prospect goes through three distinct thought stages as they travel on the road from no to yes. At the end of each of stage, they arrive at a very clear understanding, which they could state clearly. These are called buying milestones. The prospect must cross each buying milestone before they are ready to move into the next stage of their buying process.

The Prospect’s First Buying Milestone

The first buying milestone is A= Action Needed. The prospect admits they have serious, compelling needs, and want to do something about it. This means they have a need that is compelling and costly. The ABCs teach salespeople the signposts they need to confirm when a prospect is ready to move to the next step in the sales process.

Prospect need has been uncovered

It is the prospect who must be aware of his own needs. It is the prospect who must confirm this. The fact that salespeople are aware is not enough to move a sale forward. The sale happens in the prospect’s mind. When salespeople get this verbal confirmation, they have officially uncovered the prospect’s needs and are ready to move the sale forward.

More sales are lost due to this one issue than any other. Research confirms that over 60% of what affects a salesperson’s ability to close a sale comes from helping a prospect arrive at the A=Action Needed buying milestone. If salespeople did this every time, they would close a lot more sales.

Learn more about Don Shapiro’s speech for sales groups on The ABCs Of Why People Buy

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how a deeper understanding into how prospects think out a decision to buy could help your salespeople close more sales.

Customer Value versus price

The customer’s perceptions of value determine what they will buy, what they won’t buy, what they will pay a profitable price for, and what they won’t buy at any price. What customers will buy at a profitable price is the one thing that can consistently help companies make the best choices about strategies, products and services. When customer value drives strategy, firms can grow faster, generate higher profits and deliver better shareholder value.

Customer Value Lies Inside The Mind Of The Customer

Value lies inside the mind of the customer. It does not lie inside products, services, quality, excellence or strategy. That value drives every single decision to buy whether for consumers, business to business, non-profits, government, educational institutions or anything else that exists on this planet. What makes products, services and strategies successful come down to how closely aligned they are with customer value.

If you look at any market through the eyes of its customers’ perceived value, you can figure out why certain strategies succeeded while others failed. You can see why a super quality approach worked for one firm and failed for another. You can understand why great service won the day for one firm and tanked another. You can understand why deep discounting of marginal quality products succeeds sometimes.

It’s all about what causes customers to make a decision to buy or not buy and how that changes with each offering. Examine this realistic snapshot of one persons approach toward buying a variety of products and services and you can see how customer value connects back to strategy

• They buy a Lexus or BMW because they want the very best quality and reliability in their car not to mention the status. But they buy their suits at Men’s Warehouse because they don’t believe most people can tell the difference between their suits and the name brand ones. They turn around and buy the most expensive ties imaginable because they feel that makes an important statement. They get their haircut at the cheapest discount barber because one haircut is like another.
• At the office, they buy the cheapest discount copy and laser printer paper because they think the name brands are a waste of money. They buy the best engineered and most expensive production equipment possible for the manufacturing floor then turn around and pay their people the lowest wages in their local area. To boost employee morale (which sags all too easily), they are always throwing company picnics, recognition and reward events, and offer free soft drinks.
• At the super market, they buy the cheapest generic paper towels and only when they are on sale. They will fill their cart with all kinds of everyday products but bypass this certain brand of cheese they love because they can buy it at Wal-Mart for $2.00 less a pound. When their local market replaced their favorite brand of floss with another brand, they went on the internet to buy it. But for meats, fish and produce, they only buy at Whole Foods to get natural, organic products without pesticides or antibiotics even though they pay a lot more.

The apparent inconsistencies in these buying decisions are quite common. In fact, virtually everyone exhibits some type of inconsistency in their reasons for buying different products and services. Welcome to the world of Homo sapiens otherwise known as human beings and for the purposes of our discussion they are called customers. Our choices about what we will and won’t pay money for come down to what is important to us.

What Customers Consider Important Drives Customer Value…And What You Should Offer

When quality or service is of the utmost importance, we will pay a premium for it. Where it’s not, we will bypass the premium offerings for something that’s good enough to meet our needs for the lowest price we can find. Sometimes, we are willing to accept inferior quality and poor service just to buy something at a rock bottom price. Literally, quality and service are unimportant to us for certain offerings. Depending on the mix of what is and what is not important to us, we will assign a value to everything we could buy. That becomes the value we place on that offering which determines the highest price we would ever pay for it. This is customer value in action.

If a company jumps on the service excellence band wagon which forces it to raise its prices to cover the additional cost, that strategy will only work if the customers in their market consider great service highly important. As the importance of service to them declines, they will pay less and less over the original price until there comes a point where they won’t pay one penny more for that special service no matter how much it has improved.

When you know how important or unimportant every single thing you could offer is to your customers, you can figure out what to offer and what to avoid. Let customer value drive your strategies and your offerings. The most successful companies deliver the value that customers are willing to pay a profitable price to receive. That allows you to deliver satisfying value to both your customers and your shareholders. Customer value is the only thing that can successfully link the customer, company and shareholder together.

Further Reading

Find The Stealth Customer Value To Increase Sales (And Your Prices)

Hidden value exists inside every customer and the companies selling to those customers that could increase sales and justify higher prices. This article clarifies what customer value is, why it’s so important and includes a checklist of ideas and questions to help you uncover stealth customer value.

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore more about customer value and how it can help your firm increase sales, margins and market share.

Who leads the team?

That’s why it’s all about people who can lead. People at all levels in any organization have to assume a leadership role. Either that or nothing gets done. Or it doesn’t get done right. While the typical knee jerk reaction is to think of those people as the ones with the important titles, the truth is that leadership has zero to do with ones position or title. You can be a great leader without any title. In fact, the most successful organizations all have people in every function working along sides others with the same positions who assume leadership roles every day.

Those With The Titles Who Can’t Lead Destroy Results

And what about those with the important titles? Yes, it would be great if they were all effective leaders. In the best organizations, most of them are. But there are simply too many people with titles who either can’t or won’t lead. A title does not make one a leader. People with titles who fail to lead are the barrier that holds organizations back, causes them to lose customers, fail to sell customers in the first place, run cost that are too high, deliver poor quality or service, cause poor coordination and teamwork among functions, departments and divisions, and mess up the administrative support systems. They undermine these organizations missions, strategies and standards.

What organization could possibly afford the enormous cost of poor leadership? And yet too many organizations allow individuals to hold important management and supervisory titles who can’t lead and they don’t do anything about it. They either need to develop these people into Character Based Leaders, demote them or fire them. And they need to do this right now, today.

The ability to effectively lead must be a mandatory requirement for anyone with an executive, manager, or supervisory title. It needs to become the new line in the sand for anyone who oversees other people. Bestowing a title does not make one a leader. You can normally tell who will be a good leader because they are already acting like a leader without the title and people are following them even though the organization hasn’t bestowed them with any authority.

True Leaders Don’t Need A Title Or Authority

Everyone Leads

One of the best examples of this I can remember happened when I started working for a bicycle distributor in the 70’s. I took off my coat and tie as a restaurant general manager and put on a khaki uniform with work boats so I could learn this new industry from the ground up by starting in the warehouse. The warehouse had a great manager named George and an able assistant named Jesus. Sometimes both George and Jesus had to leave the warehouse to attend management meetings or handle special problems.

After they left, productivity would start to unravel amongst the warehouse crew. Things slowed down and coordination between pickers, inspectors and packers broke down as well. But only for a short while. Because every single time George and Jesus left, Skip, one of the warehouse workers would fill the leadership void and soon the warehouse was humming along as if George and Jesus had never left. No one asked him to do this. George never said anything to the crew about Skip assuming this role. He just stepped up to the plate and made it happen every single time.

In the thirty different industries I’ve worked with as a consultant, I have seen the Skips of the world stand up and lead their fellow workers. The workers would follow them and do what needed to be done yet the Skips had no titles nor any authority bestowed on them to perform this role. But if they hadn’t, performance would have suffered. In those organizations where no Skips stepped up to the plate, I witnessed disasters unfold before my very eyes. The people with the titles just can’t be there every minute to lead the team. And if they are there, they actually need to lead, not just manage.

It Takes A Team

In truth, every employee needs to lead some of the time and everyone with a title needs to lead all of the time. Leadership development is for every employee who works for an organization, not just the anointed ones. When you develop leaders this way, you always have people ready for promotion that can and will lead.

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how your firm can increase its sales, margins and market share.

Tax Credits, Small Businesses, Large Corporations, and Individuals

Economic Recovery

To really get the economy cooking, it will take the whole country and all its parts. If the public, large corporations, and government all took the appropriate actions outlined here, we would be on our way to true economic recovery. This plan is simply a management consultant’s pragmatic look at what can really affect the decisions of those who can produce economic growth. The problem with government and political analysis is that, for the most part, they don’t understand what does and doesn’t affect business choices.

There are three steps that—if done together by the general public, larger corporations, and the government—could add 1 million jobs in 2011 and up to 5 million jobs within five years. Will everyone do what I’m suggesting? The past does not give us the warm and fuzzy feeling that enough people will step up to the plate to do what needs to be done. But none of us have been thorough an economic nightmare like this before so maybe people are ready to stand up and take pragmatic action.

Let’s start with some basic concepts that form the foundation for these recommendations. Fortunately, almost everyone from all political persuasions agrees that these are a key. So we do have something in common to build from. First, small business is the key to hiring and job growth. They can hire more people and start things happening much faster than big business. Second, large corporations are mostly hiring people who are already employed instead of the unemployed. Third, America has shipped way too many jobs overseas.

While most people agree with these three concepts, ideas on how to get small businesses to come out of their cocoons, how to get companies to hire those who are out of work, and how to end or minimize outsourcing do not reflect what it will really take to make this happen. Small businesses are trying to avoid risk at all cost because what they see is a gloomy picture and they are cash starved. Large corporations generally do what is in their best financial interest and need incentives and pressure to change.

Here are the actions that can change the decisions of small and large businesses.

Business Tax Credits

Business Tax Credits

The key idea here is to offer large payroll tax credits for businesses that hire new employees and major first-year depreciation write offs strictly for small businesses that buy equipment.

The focus here is on small businesses. Large businesses don’t need these credits and will benefit greatly from the increased economic activity of the small businesses. Currently, large businesses are mostly hiring people who are already employed, so a smaller credit to hire the unemployed should be offered to them.

The HIRE Act passed by Congress in March 2010 is an example of Congress voting an act to brag that they did something, but the act itself doesn’t motivate anyone to do anything. It offers a 50% credit on Social Security taxes (not Medicare) for payroll in 2010, and if a new employee stays a year, the business gets a $1000 tax credit. Wake me when it’s over. The act produced no results because it didn’t offer enough incentive to cause a business to do what is needed—hire the unemployed right now. Compare that to my proposal with credits on actual payroll from 30% to 50% for smaller businesses and 10% to 25% for larger businesses. We are talking about thousands of dollars, and maybe even $10,000 or more in tax credits for each employee hired.

These credits will work because they attack the cause of small business inaction—risk. Small businesses don’t want to borrow money right now because they don’t want to add to their expenses in any way. Borrowing is risky, especially when the outlook doesn’t look promising. It’s too bad the government didn’t actually talk with small business owners and management consultants before they passed their recent legislation providing small business loans. But before we go further into why these credits would work, let’s dispense with the most common political proposal to help the economy, which involves income taxes.

A deep review of income tax cuts from the Bush and Reagan administrations does not provide a clear connection between these cuts and economic growth. Yes, hiring did increase and the gross national product did go up after these cuts, but a thorough economic analysis does not show a strong cause and effect relationship. In both cases, the cuts occurred right at the end of a prolonged recession. In all recessions since World War II, with the exception of the current one, economic activity and hiring rose substantially when a recession ended. It is more likely that caused the increases then the tax cuts themselves.

In my forty years in business and twenty-five years as a consultant working with business owners and executives, I have yet to hear that income taxes were a major factor in making a go or no-go decision on a business expansion plan. If a business can generate more profit, it will do so even if the tax rate is higher. Just because the tax percentage goes up, a business is still left with more money after tax from expanded sales than it had before the expansion.

I have discovered that when income tax rates are higher, businesses often spend more to get additional tax deductions and use those to help fund their expansions. The higher the tax rate, the more it pays to increase deductible expenses as long as those expenses can contribute to growth. While there may be an occasional business person that puts more emphasis on income tax rates, generally taxes do not drive business decisions.

What does affect business decisions, especially small business decisions? First, business people look to see if there is anyone else out there who might buy what they offer. They need to see prospective customers. Second, they tend to respond to anything that will help them reduce their expenditures while allowing them to pursue more business. Third, they want to grow but not take on additional burdens like loans or more employees in a weak economy. Fourth, they do want to grow and are thinking about how they can do so if only there was a way that made economic sense. It’s sort of like the old adage about which came first, the chicken or the egg.

So the answer lies in doing something that substantially reduces business risk and offers an economic deal like we’ve never seen before and likely will never see again. It has to be that good. There are tens of thousands of businesses out there that are thinking about expansion. Many see opportunities where they could sell more, but are afraid to take the risk right now.

Businesses need something huge to get them off the dime—and really big, targeted business tax credits will do that. If the risk of hiring a new employee and purchasing more equipment is reduced enough, it creates a deal that’s just too good to pass up. They will want to take advantage of this deal, especially since it only last for one year. It’s now or never to take advantage of one of the best small business deals of all time.

Targeted Tax Credit Details:

Businesses with 2010 gross sales under $2 million

50% tax credit on all payroll and payroll taxes paid on new hires who come from the unemployed during 2011 only. This is huge. It’s gigantic. My business is planning on hiring someone near the end of 2011, but if this credit were in place, I’d probably move that up to the second quarter to take advantage of the savings. This would pay for all my hiring and training cost and much more. It’s simply too good to pass up. Hire in 2011 or lose the tax credit.

50% first-year depreciation write-off on equipment purchases in 2011. Large corporations will love this one because this will get small businesses buying a lot of equipment from them. They will also have to hire more people to meet the demand. Once again, it’s only good for a year. Buy in 2011 or lose the write off.

Businesses with 2010 gross sales under $10 million

40% tax credit on all payroll and payroll taxes paid on new hires from the unemployed during the year 2011 only.

40% first-year depreciation write-off on equipment purchases in 2011.

Businesses with 2010 gross sales under $25 million

30% tax credit on all payroll and payroll taxes paid on new hires from the unemployed during the year 2011 only.

30% first-year depreciation write-off on equipment purchases in 2011.

Large Businesses and Job Growth

1. Large Businesses

10% tax credit on all payroll and payroll taxes for new hires only from the unemployed during the year 2011. A 25% tax credit if they hire someone who has been out of work for at least two years.

While large business don’t need any tax credits and have the cash to hire, the problem right now is that they are mostly hiring people who are already employed. So the little hiring from larger corporations that is occurring is not promoting job growth or economic recovery. While this tax credit is much lower, it is enough to get big companies interested because of the number of people they hire. These dollars add up fast. They are generally extremely focused on saving money and if they can get a small tax credit for hiring unemployed people instead of the already employed, it will cause them to shift their hiring practices in 2011 dramatically. If they can only get this incentive in 2011, they will hire more than they normally would to take advantage of the credit.

Large corporations have been very short sighted in their hiring practices during this recession. They have become a part of the problem instead of a part of the solution. To maximize job growth and economic recovery, it’s the unemployed who need to be hired, not those who already have a job. It might be nice if every large corporation voluntarily reported what percentage of their total hires each month came from the unemployed and how long they had been unemployed.

The special 25% tax credit to motivate larger companies to hire people who have been out of work for at least two years could really make a difference. This is not a normal recession. It’s not just that the unemployment rate has stayed stubbornly high for a long time. It’s that there are too many people who have been out of work for years. They really need jobs and they need those jobs now. To hire someone who is already employed over these people is disgraceful. Large corporations need to be doing their part to improve the economy and this is one of the best things they could do.

The key to this is the size of the tax credits and write offs and they are only available for one year. There should be no extensions on this for any reason. It ends December 31, 2011. Use or lose it by then.

The high tax credits for small businesses benefit large businesses. When people are put back to work that gets more money circulating in the economy, which increases demand for goods and services. Large corporation sales will rise. A large percentage of equipment purchases by small businesses will be from large corporations further increasing their sales. All of that will cause large corporations to start hiring more too. If the large corporations hire more people from the unemployed, that further drops the unemployment rate.

If congress and the executive branch tweak this recommendation at all, I will not support it and recommend against its passage. It’s time to leave the party ideologies and lobbying effects aside and finally do something that will work. Pragmatism trumps ideology.

2. Small Businesses

Small Businesses Need Help

In addition to the ideas above, large businesses need to dut prices on their products and services to small businesses by 25% to 50%. The tax credits and write-offs are only part of the entire solution. These do substantially reduce risk and create an attractive savings, but considering how scared small businesses are right now, they need even more of a break to really get them cranking and growing. I realize that no large corporation wants to cut into its profits. I personally believe the shareholders will understand and support this action. It’s the right thing to do.

This economy is not responding as previous economies have responded. This is the recession that just keeps on going and going (even though we’ve been told that technically the recession is over). There may be more here than just an economic contraction—it is entirely possible we are in the middle of an economic restructuring.

The more financial breaks small businesses can get right now, the more likely they are to hire and invest for growth. That gets more money flowing in the economy, which lifts all economic activity. At the same time, it gets people back to work and off of unemployment.

Why should large businesses help small businesses? Because large businesses know that small business is the economic engine that can lift the economy. Large businesses can, for the most part, only respond to what is already happening or take away sales from a competitor. In this economy, their activity will not break us out of the economic log jam we are in. This discount can prime the economic pump which will accelerate large business growth. It’s a win-win situation. It’s also time for small businesses get a break, and not just the businesses that can buy at the highest volume levels.

I recently approached a firm that specializes in generating sales leads about using their services for my consulting practice. We could easily increase their hiring by over 500% within two years. That’s the type of hiring growth the economy needs. But this firm, whose services tend to be used by businesses much larger than mine, refused to drop their prices or minimum purchase level for me even after I had explained my size level, cash dilemma, and ability to help the economy. Their decision was very short sighted. They admitted to me their sales are down, but seem to be unwilling to do something that could get the economy moving.

If I was the CEO of a large corporation selling in the business to business market today, I would create a special program just for small businesses with a pricing structure lower than any of my other customers paid. This is what all large corporations should do right now this month. If they did, they would be amazed at the economic activity it would create.

3. All Americans and Outsourcing

Outsourcing

Everyone in the United States must demand that large corporations make a written commitment by a specific date to bring overseas jobs back to America and hold them to it.

The issue of outsourcing has been talked about for decades. While there has been a small group of Americans who have been very vocal about this, most Americans have never lifted a finger to do anything about it. This is not about buying American because many of the products that Americans want are made overseas. Asking Americans to buy something they don’t want will not go very far and most of the jobs that went overseas are for things that are not done in America much anymore.

So what would it take to get large corporations to bring their call centers and manufacturing jobs back to America? They are not going to do this on their own just because I suggested it. Americans do not understand the economic power they have, which is one of the reasons they hardly ever use it. If they really knew what they were capable of, a lot of things could change and change fast.

Corporations do everything based on what their customers actually demand and what keeps their cost low. The jobs went overseas to lower their cost so they could offer better prices. Americans like low prices, so they were willing to accept all these goods and services from overseas without putting up a fight. But with today’s advanced manufacturing and technology processes, facilities can be built in America that would be so productive there would be little change in prices especially when companies don’t have to pay shipping and import taxes on those goods anymore.

The truth is that if a corporation knew it was going to lose a significant number of customers unless it brought jobs back to the US, it would make the change. No corporation can afford to lose a large portion of their customers. That would be business suicide. But, up until now, they haven’t lost customers or faced a legitimate threat of losing many customers due to shipping jobs overseas.

Americans can change this anytime they want. Now would be a pretty good time. There is one and only one thing everyone needs to know about corporations. It’s all about the numbers. They count. Everything they do comes from adding up the numbers. If only 10,000 or 50,000 or 1,000,000 out of 350,000,000 Americans tell a corporation they will stop buying from them unless they change a business practice, the corporation will shrug it off. Those numbers are just way too low to matter. And the corporation will discount these numbers because they know a certain percentage of those individuals are probably bluffing.

It takes numbers much, much larger than that to move corporate America to change something as entrenched as outsourcing. We are talking about 50,000,000 or 100,000,000 or 150,000,000 Americans all demanding the same thing at the same time and not bluffing about it.

If 50,000,000 people wrote letters to the CEOs of every major bank, credit card, computer company, airline, and hotel company to bring all their customer service and technical support call centers back to America by a certain date or they will switch to another company, you would see something happen. This will work if nobody bluffs. If a commitment letter signed by the CEO and Board is not forthcoming by X date, they all have to stop buying or using that company. Period. When this happens to just one company, all their competitors will immediately make the commitment.

If 100,000,000 people write to the CEO of Wal-Mart, Target, Kmart, Macy’s, Gap, and a few more that they want all of their clothes and shoes to be made in America or they will shop elsewhere, it will happen if they are not bluffing. That means if Wal-Mart does not produce a commitment letter signed by the CEO and Board by a certain date, everyone has to stop buying their clothes and shoes from Wal-Mart until they do. It’s just that simple. Huge numbers and decisive action. When enough Americans walk the talk, they can change anything corporate America does.

The problem is that most Americans don’t think their voice or their single action makes a difference. It is an act of faith to write the letter without knowing that 100,000,000 other Americans may write that letter too. But these are the type of numbers it will take to get companies to bring the jobs back to America. The kinds of jobs that would come home include customer service and technical support call centers; computer and computer component manufacturing; cell phone, smart phone, iPods and other electronic device manufacturing; clothing and shoe manufacturing.

We can stop there. If we bring those back, that would represent several million jobs. It might be nice if these returning jobs are placed in the communities that need them the most instead of the states that offer the best incentives.

This is a three-step pragmatic plan that is guaranteed to drive economic recovery and sustain that recovery over the long term. Our government can’t solve problems of this size. They can’t even come close. Sorry, all you politicians running for office with job creation and economic boosting promises you can’t keep. But the government can do some things that will help as long as all businesses and Americans do their part too. It takes everyone working together to right an economy that’s gone wrong. Let’s all pitch in and show we can get the job done.

How Salespeople Can Drive Economic Recovery

If salespeople could all start selling more, it would create more jobs because it would increase the need to produce more goods and deliver services. Is that possible? Based on our 30 years of our studying prospects and salespeople the answer is a big yes. Every sales force in America could boost their sales by at least 10% over what they are budgeting for 2012. We have conducted a research study about why people buy and how this can help even experienced salespeople boost their sales.

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how your firm can increase its sales, margins and market share.

Eleven Essential Steps To Turn Sales Training Into Long-Term Sales Increases

Preparing The Sales Budget

Right now sales executives are either getting ready to negotiate their sales budgets and goals for next year or they’ve already been set. Either way, you are now faced with the big question: how are you going to get your sales people to deliver those numbers in this economy and is there any way to actually beat those numbers? Further, is there a way to move past the quarterly quota push and wow top management, the board, and shareholders with an ever rising, sustainable increase in sales that can carry into 2013, 2014, and beyond?

Many sales executives are probably making list of all the tools, tactics, and strategies that have worked in the past, trying to figure out which ones might make the difference this time. Maybe more sales training or a new type of sales training will help. Or a new sales contest. Possibly ramping up field coaching could do the trick. Some will simply focus on raising activity quotas like cold calls or some new fangled sales report. The list goes on and on. Trouble is that these tools usually result in short-term sales bursts often followed by performance returning to where it was before. To break out of this cycle, you have to manage everything you and your sales people do as one integrated sales management system.

Consider these sobering facts. A survey of 10,000 prospects after they made a purchase decision (win/loss analysis) showed that prospects only tell salespeople the truth about why they lost the sale 40% of the time. That means for 60% of the sales your firm has lost, you and your salespeople don’t know why you really lost those sales. Add to that recent surveys of buyers that show they are saying no to salespeople primarily because the salesperson didn’t understand their needs well enough, didn’t focus enough on their issues, and were not prepared to talk in depth about their firm’s issues in a presentation. These were salespeople from Fortune 500 corporations who are very well trained.

First Concepts has studied sales why people buy for 30 years. Even experienced and trained salespeople can use this knowledge to increase their sales.

Effective Sales Management Systems and Championship Sports Teams

You can think about your sales management system like a professional sports team. Notice that each team has the same number of players. Those players have been carefully selected to represent the best talent in that sport. There are coaches and trainers for every specific task and skill required by each player on the team. They use measurements of each player’s performance that, through statistics and observations, go much farther than most businesses measures their sales people.

Yet not all teams perform the same. Some consistently perform better than others. Certain coaches can take over a mediocre team and turn it into a championship force then go to another team and do the same thing. Through all this, the other teams that have all the same talent and support don’t seem to be able to get the whole thing to come together and perform at a peak level. On paper, some of these teams have every part and piece necessary to win. But on the field, their system does not function well enough.

Think of Your Sales Management System Like a Sports Team

In championship teams, the sum of all the parts and pieces of that team is greater than the whole. For the other teams, the sum of all their parts and pieces is less than the whole. The difference is in how well the head coach and manager work the team as a complex and integrated system so that every part and piece supports and enhances every other. Together, all those parts and pieces add up to something much greater than any single player or support element.

Without Treating Sales Management As A System Too Many Sales Are Lost

Unfortunately, in the vast majority of sales management systems, the parts and pieces that make up all that sales management does do not equal the whole output. They actually produce far less than the potential sales that system could deliver because those parts and pieces are not working like a system at all. Instead, most actions are treated like a separate island under the notion that somehow doing all these individual activities will cause the sales force to keep selling more. Lots of activity does not make a system function as a system. It just wastes a lot of time and effort, produces huge inefficiencies and lowers productivity.

Too many companies are leaving 20%, 30%, and even 40% of potential sales on the table instead of the income statement. And yet, as the end of each quarter approaches, sales management runs around like a chicken with its head cut off, pushing everyone to meet and beat their quota.

If we added up all the time sales management spends just pushing for the quarterly quota, it would probably add up to 25% of management’s time during the year and maybe even more in some cases. Just think about that. 25% of your time spent on a short-term sales push that does nothing to pour a stronger foundation for lasting sales increases that could blow away your typical quarterly results. Pushing for the quarterly quota is just one of many activities that is a part and piece of the sales management system, which is not run like a system at all.

So do you want to continue carrying water uphill by pushing, pushing, pushing to meet those quotas and maybe squeak past them? Or do you want to start acting like a championship sports team and run the sales function as an integrated system where every single thing you do supports and enhances everything else you and your sales people do?

Eleven-Step Sales Management System To Deliver Effective Sales Force Training

A real world example may help clarify what it means to manage everything as a system. If you want to improve how well sales people sell, they need some type of training that involves skills, techniques, and knowledge that should be tailored to the specific sales force’s needs. Training does not exist in a vacuum. It must be implemented as part of an integrated sales management effort for a long enough period of time to be effective.

This means sales people have been conditioned to apply close to 100% of what they were trained to do with every prospect on every call, every day. Total retention and reinforcement of what a training program covered is the measure of whether the training is successful, but 99% of all sales training currently being delivered fails to come anywhere close to that standard. So what is all that sales training money going for? Short term sales burst? Sales people picking up a few techniques to put in their toolbox? The only way to produce a high return on investment (money, time, and effort) is to manage everything you do as a system.

Here are the minimum sales management elements that must be integrated together for a company to come anywhere close to condition 100% of their sales people to apply 100% of the training:

1.  Customized Training. Any training offered must be specific to your company’s products or services, your industry, your prospective customers’ needs, and your selling methodology. Additionally, it should address weaknesses that have been identified in your specific sales force. Is your training an isolated event or is it integrated into your sales management system? Generic training can’t raise all your sales people’s performance consistently and build a foundation to sustain those increases.

Further, does your training teach your salespeople how prospects and customers actually think out a decision to buy? Do they know what really affects them? Do they know what turns them off? Do they know how prospects figure out their perceptions of value which affect their level of price resistance? There is new information about how people think out their decisions and what affects them during the sales process your salespeople need to know if they are going to consistently win against the competition.

2.  Follow Up Training. Multiple training sessions on the same subject matter provides sales people with clarification of those parts of the training that are fuzzy or not working for them in the field. Usually, there needs to be at least two follow up training programs to provide sufficient clarification and review. These programs also tell the sales people that what was covered in the original training is important. It helps reinforce the message that they do need to learn this and apply it.

3. Communications and Coaching. Daily communications and regular field coaching by management needs to emphasize what was covered in the training. Every phone conversation, email and in-person contact with sales people must reinforce the training. This often involves asking sales people questions about what is going on with their most recent sales calls where the answers require knowledge and application of the training. When sales people know this is what their sales manager is going to ask them about, they will make sure they are up to speed the next time they talk.

Coaching also delivers in-the-field training to further clarify what they learned and see how to apply it with real prospects. Finally, coaching provides immediate feedback on how well they are applying the training and goals for what they need to improve at. There is no way to condition sales people to apply training without this level of management involvement.

4.  Measurement. There must be a way of measuring sales activity and results that can be tied to what was trained. Measurement tells sales people the training is important and connects their clarity at applying the training to feedback about how well they are doing.

5.   Sales Meetings. Every sales meeting must have time allocated to discuss how the training is being applied. It is important for sales people to have an opportunity to talk about their experiences, hear success stories from other sales people, and identify areas that have proved challenging. Sales management needs to listen carefully so they can provide the necessary additional training and clarification that will move sales people toward conditioned application.

6.  CRM and Reports. Elements of the training should be built into the CRM and other technology solutions as well as sales reports.

7.  Evaluation. Sales people should be surveyed about their experiences applying the training so common issues can be identified and presented in follow-up training. This will also help improve future training.

8.  Compensation. Sales people must see a strong connection between their compensation and their own efforts. If their sales go up as a result of applying the training, their compensation should rise as well. This direct connection between their actions and their pay is a critical element in the feedback loop that reinforces the training.

9.   Sales Contest. A sales contest that is connected to new measurements tied to the training further reinforces the importance of applying what was learned by introducing competition and excitement. Sales contests that are not connected to any management initiatives have little long-term impact. Contests should always be seen as one part of an integrated effort to raise sales performance.

10. Cascading Reinforcement. It’s not just the sales people that need reinforcement. For sales management to consistently and frequently reinforce the sales force, management needs their actions reinforced as well. Someone needs to be reminding them to do all these reinforcement tasks, clarify how to do these tasks, address issues that come up, handle frustrations, and provide feedback. Otherwise, management will get side tracked by the next quarterly quota push and stop their reinforcement activities.

Sales management, by its very nature, tends to focus on tactical short-term activities instead of strategic long term initiatives. Sales management teams need frequent reinforcement to counter this tendency. This is called “cascading reinforcement” meaning that each level in an organization needs to reinforce the next level. That’s the difference between an organization functioning as a system versus a group of unconnected parts and pieces. Yes, even the Vice President of Sales needs reinforcement.

11. Time. This entire process using all these elements needs to continue for many months, usually six months at a minimum, to lay a strong foundation. Then it needs to continue with more reinforcement along with additional training. Any company that can stick with a systems approach to training for at least a year will probably beat their annual sales budget by a wide margin. Turning training into conditioned behaviors in the field takes time. It takes time to clarify everything so sales people have no gaps in understanding every part of the training and how to apply it with prospects. It takes time to repeat behaviors after the task are ultra clear before they become habits. And once they are habits, they still need constant reinforcement to remain habits.

These eleven sales management elements are only a minimum. In some cases, more will need to be built into the system. In other cases, issues that frustrate sales people or things that create a lack of clarity about their job need to be addressed so these don’t work against the training. For example, if sales people are complaining about the poor quality of leads or their territory has not been focused in a useful way, they are not going to be motivated to learn new selling approaches.

When the sales force’s job is clear and they see a connection between their effort and results, they will be highly motivated to learn and apply something new because they can see how the training will help them to sell even more. When sales people lack task clarity, any effort to boost sales will be short lived.

Notice that each of the eleven elements is not treated as a separate, unrelated task or support piece. Each one is linked to the training and they are all tied together so you have multiple ways that you are reinforcing the training. Feedback, measurement, and compensation are included in the elements as well as several different ways to clarify the training. This sends a clear and constant message to the sales force that they are expected to apply this training and the company will help them any way needed to make this happen.

This is just one example of a systems thinking approach to managing your sales force. In truth, everything sales management does needs to be integrated into a system so that each element and task enhance and support all the others. When you manage your sales force as a system, the sum of all the parts will be greater than the whole and that’s when your sales go through the roof.

Questions?

Schedule a phone conversation with Don Shapiro, President of First Concepts Consultants, Inc., to answer your questions and explore how your sales force could boost it’s long term performance above existing forecast.

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First Concepts Sales Training and Reinforcement System can increase sales above forecast within six months.

To increase your rate of growth and market share, consider a 360 degree comprehensive revenue investigation.

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Postscript: Applying Systems Thinking To Organization Success

This article was based on applying systems thinking or general systems theory to business. Don Shapiro has been studying systems thinking along with other major thinking processes since the 1970’s. This led First Concepts Consultants to follow a core philosophy that knowledge and experience are not enough to produce the best results, solutions and analysis of options. Thinking processes can identify opportunities and methods of execution that go beyond what industry veterans typically find. Thinking processes have been woven into First Concepts way of doing business since its founding and reflect the key to how it helps clients increase pretax profits and ROI. You can learn more about these thinking processes by reading the article It’s All About Thinking.