MAY 2013 Issue 71
ARE YOU COLLECTING USELESS DATA OR GROWING YOUR BUSINESS? Why you should do a stocktake of yourself Does cold calling still work? Secrets to a successful business attitude NZ’s e-mag for sales leaders 1 / www.nzsalesmanager.co.nz
CONTENTS 6
THIS WEEK'S MUST READ
Are you collecting useless data or growing your business? Maximising sales, profit and cash
10
Why you should do a stocktake of yourself Treat your life like a business
15
TWO MINUTE TOP UP Does cold calling still work? How one study says not
17
Resource corner Attitude 101 What every leader needs to know
18
Quick Fix Secrets to a successful business attitude It’s not what you sell, it’s how you sell
www.nzsalesmanager.co.nz / 2
19
CALENDAR
20
THE CLOSE
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ABOUT / Short and sharp, New Zealand
FROM THE EDITOR
Sales Manager is a free e-magazine delivering thought provoking and enlightening articles, and industry news and information to forwardthinking sales managers, business owners and sales professionals.
EDITOR / Paul Newsom
The guys at Rain Group (Shultz and
in some situations, and although we
Doerr) put out a research based free
need to ask the tough questions,
report a couple of weeks ago called
they are not words in my vocabulary
‘What Sales Winners Do Differently’.
for complex sales.
You should take a moment to download it and have a read. In the report they refer to another
for sales trainers in what is a very
research based sales approach
competitive market place. After
called ‘The Challenger Sale’ (2011)
all there are many thousands of
which advocates that relationship
sales books and reports to choose
building is losing its importance,
from. The discerning reader will
and that the sales person taking
need to separate the marketing
control of the sale and challenging
spin from the proven methodology
or provoking their customers, is
while implementing change in their
what differentiates the best sales
sales organisation.
authors
proclaimed
‘The
end
of solution sales’ in the Harvard Business Review.
Those who know me will know my firm view that ‘Mastering the
CONTENT ENQUIRIES /
pauln@nzsalesmanager.co.nz ADVERTISING ENQUIRIES / Phone Richard on 09 522 7257 or email richardl@espiremedia.com ADDRESS / NZ Sales Manager, C/- Espire Media, PO Box 99758, Newmarket, Auckland 1151, NZ WEBSITE / nzsalesmanager.co.nz
ISSN 2230-4762
best sales book ever written, and makes many others look pretty silly
surprisingly to me) shows the
in comparison.
and provoking customers may work
GROUP EDITOR / Trudi Caffell
Complex Sale’ by Jeff Thull is the
Shultz and Doerr’s research (not opposite. Controlling, challenging
GRAPHIC DESIGNER / Sevim Dogru
Phone Paul on 04 586 4733 or email
I guess sales research can be tailored to support any ‘point of difference’
performers. Last year the same
ART DIRECTOR / Jodi Olsson
Happy Selling Paul
NZ Sales Manager would like to acknowledge the support of our major partners
www.nzsalesmanager.co.nz / 4
E S R
U O C
We make it easy to groW your sales
Find the money-burning sales weaknesses that have held you back from your earning potential learn the inside secret to positioning yourself as an industry expert Discover how to seize on buying triggers to create a profound influence on your sales figures learn and develop the 4 different question types that uncover needs, amplify passion, and convert prospects like a dream!
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MUST READ
Are you collecting useless data or growing your business? Maximising sales, profit and cash
S
By Sue Hirst
ales, profit and cash are the key issues to focus on in business financial management. If you can get these three working you’re well on your way to building a sustainable business with capacity to grow. Most people focus on sales to begin. I’d like to start with profit! The reason to start with profit is, if
you’re making sales without profit you will go out of business.
www.nzsalesmanager.co.nz / 6
MUST READ
The best place to start making enough profit is to
associated costs like freight inwards, packaging etc.
avoid losses. Understanding break-even sales is a
If you’re selling a service, it’s labour and materials
great starting point.
on the job.
Break-even sales is the amount of sales you need
When you’ve calculated variable costs per product
to make to avoid a loss i.e. to achieve a $0 profit or
or job you then calculate gross margin. For example
loss result.
if a product costs $40 (including all costs associated
This is impacted by fixed and variable costs. Fixed costs are those that you incur all the time, e.g. rent,
with getting the product ready for sale) and you’re selling it for $100, gross margin is 60 per cent.
admin wages, telephone etc. Variable costs are
Now you need to know fixed costs. Let’s say they
those incurred in making a sale, e.g. a product and
are $30,000 per month. To work out break-even
Most people focus on sales to begin. I’d like to start with profit! The reason to start with profit is, if you’re making sales without profit you will go out of business. sales - take fixed costs of $30,000 divided by gross
Gross margin is one of the most impactful results
margin of 60%, which gives a figure of $50,000.
in business. If you can’t make a decent gross
This is your monthly break-even total sales. If your
margin, it’s going to be very difficult to make a
average product sale is $100, then divide the total
net profit. One of the biggest issues we find in
sales break-even figure of $50,000 by your average
financial management is the lack of understanding
sale of $100 to come up with a figure of 500 units to
of a product or service ‘true cost’. It’s often
breakeven. In simple language this means you have to sell 500 units per month at $100 to break-even.
thought of as just the raw cost of the product or service. Items such as freight inwards, currency exchange, packaging etc. are wrongly omitted
Now you know your break-even, use this as a basis
when calculating cost. This is dangerous, because
for setting targets to achieve your desired profit.
it means when pricing a product and calculating a
For example: with every additional unit you sell
margin the true cost isn’t being accounted for. In
above the break even volume of 500 units, you will
this case the gross margin suffers and this reduces
make $60 profit, which is the gross margin per unit
what’s available to cover fixed costs. The result is
of sale. Therefore if you target to make $6000 profit
losses and a constant need to focus on more volume
you will need to sell an additional 100 units.
of sales to meet cash flow needs.
7 / www.nzsalesmanager.co.nz
MUST READ
Gross margin is one of the most impactful results in business. If you can’t make a decent gross margin, it’s going to be very difficult to make a net profit. This leads us nicely onto cash flow. So far we’ve
What’s in the Balance Sheet probably has more
considered profit, and ‘good cash flow’ comes from
impact on cash flow than anything else. I’m mainly
‘good profit’. Surprisingly though bad cash flow
referring to Accounts Receivable, Accounts Payable,
can also come from good profit. This arises due
Inventory and Work in Progress. When you make a
to the impact of factors other than those that are
sale it’s a long way for those funds to get into your
profit related i.e. sales less fixed and variable costs.
bank account. They are invoiced to customers who
You can be making money in the ‘Profit and Loss
may take 120 days to pay (if ever!) They are paid
Statement’ and losing your battle in terms of your
to suppliers who may or may not offer payment
ability to pay your expenses when they fall due (a
terms. They sit on your stock room floor in the form
cash flow issue). The key drivers for your cash flow
of products waiting to be sold. They sit in Work in
are in the ‘Balance Sheet’.
Progress in the form of labour and materials paid
www.nzsalesmanager.co.nz / 8
MUST READ
HEALTHY IS TO: •
Minimise the number of days customers take to pay
•
Maximise the number of days taken to pay suppliers
•
Minimise the number of days goods sit in stock waiting to be sold
•
Minimise the number of days jobs are in progress before being invoiced
IN SUMMARY: •
Sell the right products/services at the right price
•
Understand your true cost to get the price right and achieve a desired gross margin
•
Know your ‘break-even’ sales as a basis to calculating a target for desired profit
•
Constantly monitor variable costs to maintain your desired margin
•
Constantly manage fixed costs to avoid wastage
•
Constantly manage Accounts Receivables, Accounts Payables, Inventory and Work in Progress levels
TOOLS YOU CAN USE TO HELP: •
Inventory management system
•
Job management system
•
Accounts Receivable management system
•
Accounts Payable management system
•
Budget
•
Cash Flow Forecast
•
Accounts/bookkeeping system
for before the job gets finished and invoiced to customers. And that’s on top of paying your regular fixed costs. Your challenge to keep cash flow All these systems need to be properly set up by someone who understands the overall picture i.e. you need to understand what you want to get out of them, so they are set up with that aim in mind. Otherwise you just end up with a load of useless data and more costs. CFO On-Call is running FREE webinars in May and June on ‘How to Develop a Financial Roadmap’ to register visit http://cfooncall.co.nz/events/webinars/
Sue Hirst is a financial and business advisor who works with open-minded people, committed to business growth and achieving success. To find out more call 0800 180 400 or visit www.CFOonCall.co.nz
9 / www.nzsalesmanager.co.nz
Why you should do a stocktake of yourself Treat your life like a business By Paul King
B
asically, it all comes down to one very simple massively complex word; ‘DECISION’. How can you make the best decisions at any given time, or how
do you get that ‘edge’. Whoever you are, this is about you. It really doesn’t matter who’s reading this because it’s actually advice for everyone. It was explained to me like this; “It’s pretty simple really, just treat your life like a business. Do an inventory, figure out what’s selling and get more of that and get rid of what’s not, just do that with yourself.”
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So, simple enough then. Sales people are famously bad at doing this. I’d
wake up to a sea of rejection with a few nuggets of success (if we’re lucky). I suppose we’re a bit
been in sales for nearly 25 years when I heard this.
like gold miners or sea fishermen, we can use
However, since this advice came from someone
experience, knowledge and technology to improve
standing next to their suspiciously shaped car
the odds but that’s all that’s happening. Sometimes
covered in a fitted white cover with ‘McLaren’ in red
of course, we can get lucky and markets just go in
on the wing mirrors…
our favour, but even then, we need to know when to
There is only one of you. You need an edge. The
cash up.
problem is that there are very few (well, I can’t
There’s countless analogies: you can’t win a V8
think of any) other careers whereby every day you
super car tournament in a standard saloon, you
To be in the best mental state, you need to treat your life like a business; continually taking stock and making sure you have the best stuff available and as little of the rubbish as possible. can’t catch a marlin on trout fly rod, you can’t do an
in the best mental state, you need to treat your life
impressive difficult thing if you’re not able to do an
like a business; continually taking stock and making
impressive difficult thing etc.
sure you have the best stuff available and as little of
Continuing with the analogy theme, we’re into
the rubbish as possible.
sows ears and silk purses. You can’t make the best decisions unless you are in the best possible mental
That’s easy then.
state to make them (and don’t believe the thing
Take stock of what? Everything! However, rather
about luck and working harder, sometimes luck
like eating an elephant, you do it one bit at a time.
plays a huge part, but you just can’t rely on it). To be
Every ‘thing’ (e.g. ‘work’) consists of a number of
11 / www.nzsalesmanager.co.nz
variables, some of which you can do something
why not try it. There is no limit to how many
about and some you can’t. For instance, the boss,
variables a subject or sub-subject can be broken
the boss’s boss, co-workers, suppliers, status, income, benefits, car, holidays, hours, bonuses,
into. What’s important for you?
prospects, travel, rush hour, temperature, comfort…
When I first started doing this, I designed a grid
keep going by all means. The idea is to take a
and a numerical system so I could have a relative
subject and break it down into its variables. The
measurement of how good or bad a variable was
subject could be broad, like ‘work’ or narrower, like ‘boss’ (age, race, accent, smell, speech patterns, money, management style… etc.). Another broad
and a way to distinguish which variables I could change and which I couldn’t. Now, I’m practiced
subject could be ‘family’ for instance, you can
enough to go through this exercise mentally, but I
probably imagine how this could be broken down,
do constantly run this stock take on myself.
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Let’s assume that the variables are as they are
different) thought to it. That’s the bit that needs a
and you can’t opt out of them (of course, you
bit of work.
will actually have the final choice over whether something remains in your life or not). The next step is deciding what you can change and what you can’t. If you can change something, you’ll need to figure out the best way to do that, and do it. If you can’t, there’s another important test to apply which is, does it really matter? As in, in (say) six months, will it have made any real difference? If something can’t be changed and it does matter, you have a bit of work to do. These things you will need to accept. The mere act of acceptance usually makes something much easier to live with because you
What we’re doing here is simply applying good business practice to ourselves, which if you think about it, makes more sense for a sales person than any other professional. We ARE our business, when we’re the one doing the selling. However, in every decision we make, it’s important that we are doing so in the best ‘state’ possible. Good examples of this are martial arts experts, special forces, surgeons etc. Of course, they won’t all have perfect lives, but the best seem to have a ‘calm’ about them, they make it look easy, they have an edge!
will feel more at ease with it. You will feel more at
On the subject of perfection (and this is important),
ease because you are applying a different (or some
if you think about it, perfection doesn’t exist in as
What we’re doing here is simply applying good business practice to ourselves, which if you think about it, makes more sense for a sales person than any other professional. We ARE our business, when we’re the one doing the selling. much as we can create it. This isn’t an invitation
There are a number of mindful and cognitive
to an argument about babies being ‘perfect’ and
techniques and exercises which can be used in
such like nor in any way religious, that’s not what’s
improving your experience of the variables involved
meant. This applies to fallible human beings driving themselves half mad by striving for ‘perfection’. There is no such thing as, nor can there ever be, a
with the situations which make up your life. However, if you just ask yourself a simple question:
perfect business, nor can there be a perfect ‘you’.
would a business run better with or without a
So, my advice, relax on this one, just try to be better
regular stock take and a look at how things could be
than you were yesterday in any way you can.
improved? I hope you’ll agree, it’s a good start!
Paul King (A.K.A. Mr. Anonymous) is a speaker, coach and mentor. Paul started cold calling insurance sales and has gone on to holds senior roles with large multi-nationals in the UK and New Zealand. To find out more visit www.mranonymous.biz
13 / www.nzsalesmanager.co.nz
2 Minute top-up
Does cold calling still work How one study says not By Brett Burgess
I
rank cold calling at the bottom of the list as
Ask these same successful salespeople if they still
far as prospecting activities are concerned.
cold call and the answer is always “no”, as their
This often causes a number of comments, so
business now comes from referrals.
let’s address them. I define a cold call as “calling on someone who doesn’t know you and is not
“But everyone has to cold call to get started”, I hear some of you saying. The answer is that if you don’t
expecting your call or visit.”
have any other prospecting systems, then yes, you
Now most experienced salespeople will have their
will have to cold call when starting out. The plan
cold calling story of the “big one” they got as a
then is to have your prospecting plan organised to
result of cold calling a prospect. However for every
get enough referrals to fill your diaries.
one of those there are 100’s of prospects they burnt
I was reading an article recently by Frank
along the way as a result of a cold call.
Rumbauskas the author of “Never Cold Call Again”
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2 Minute top-up
and he mentioned some research by the Keller
per cent. Assuming an average closing rate of 20
Research Centre at Baylor University in Texas.
per cent, that would equate to just under 4 sales,
The study was based on a group of 50 experienced
from 6,264 cold calls.
and qualified salespeople who made a total of 6,264
Now that you have seen the horrific numbers
phone-based cold calls over a two week period.
experienced during the study, here is the conclusion
And the results were far worse than even he would
drawn from it.
have expected. “Dismal” would be a compliment
Experienced salespeople can expect to spend
says Frank.
7.5 hours of cold calling to get one qualified
Here’s how it turned out:
appointment. That’s an appointment - not a sale!
72 per cent of the calls were outright rejections.
Cold-calling is a numbers game – a big numbers
People saying “no way,” hang-ups and so on.
game - and one we are bound to loose.
28 per cent of the calls were labelled as “productive”. These were people who didn’t hang up right away, showed some interest, gave a
My suggestion is to follow a structured prospecting plan which will lead to the right number of referred leads and sales.
referral, asked to be called at a later time and so on. But what was most interesting is that the majority of the two week study period was spent working on and following up with this 28 per cent of the list. The time that went into it was extraordinary and very eye-opening when you see the final results. That 28 per cent, totalling 1,774 calls, resulted in just 19 appointments. Out of a total of 6,264 cold calls made! The success rate of cold calls to appointments is 0.3
Brett Burgess helps equip salespeople and business owners with processes and systems to increase the amount of sales they make on a consistent basis. To find out more visit www.salesimpactgroup.co.nz
15 / www.nzsalesmanager.co.nz
Resource CorneR
Attitude 101
WHAT EVERY LEADER NEEDS TO KNOW
Authors: John C Maxwell Publisher: Thomas Nelson Price: US$8.34 from www.amazon.com
A
ttitude can make or break you and the
•
people you lead. Good attitudes on a team do not
thinking in yourself and others •
guarantee its success, but bad attitudes guarantee its ruin. So says New York Times best-selling author and leadership expert John C. Maxwell in this highly practical primer, Attitude 101. Anyone who has
With this concise and reader-friendly guidebook,
Identify six common attitude problems that undermine teamwork
•
Discover the secret to changing a bad attitude
•
Create new definitions of failure and success that will improve performance
tried to lead people with bad attitudes knows the frustration it can bring.
Pinpoint problem feelings, behaviours, and
•
Adopt the attitude that helps a leader keep going to the next level
you can master attitude issues. Learn to:
Attitude is contagious!
•
Recognize how individuals’ attitudes impact
You want to make sure your team is catching the
their performance
right one!
www.nzsalesmanager.co.nz / 16
QUICK FIX
QUICK FIX it’s not what you sell, it’s how you sell.
Secrets to a successful business attitude BUSINESS 1. U & I are in it, without U & I, there is no business 2. U comes before I. U have priority, it is good business to put the customer first. 3. I is silent. Don’t talk yourself out of a sale. Master the fine art of shutting up and tuning into your customer. 4. U is pronounced like an I. The biggest secret of good business and good selling is to strive to see the ‘U’ from the ‘I” perspective. Walk in your customers shoes. Source: unknown.
17 / www.nzsalesmanager.co.nz
CALENDAR
DATE
NAME
PLACE
COMPANY LINK
Tuesday 4th June
Cold Calling and Prospecting
Auckland
Top Achievers Sales Training
www.topachieverssalestraining.co.nz
Wednesday 5th June -
Managing Major Bids
Wellington
Shipley NZ
http://www.shipleywins.co.nz/public-
Thursday 6th June
training-schedule.html
Thursday 6th June
Sales Process
Auckland
Top Achievers Sales Training
www.topachieverssalestraining.co.nz
Monday 10th June -
FranklinCovey: The 7
Wellington
David Forman
www.davidforman.co.nz
Wednesday 12th June
Habits of Highly Effective
The Marketing Company
http://events.themarketingcompany. co.nz/courses/3-professionalrelationship-selling
Auckland
Scotwork Negotiating Skills NZ
http://www.scotwork.co.nz/
Auckland
Top Achievers
www.topachieverssalestraining.co.nz
People Tuesday 11th June
Professional
Hamilton
Relationship Selling
Tuesday 11th June -
Scotwork Advancing
Thursday 13th June
Negotiating Skills
Thursday 13th June
Social Media and Sales
Sales Training Thursday 13th June -
Essential Marketing
Friday 14th June
Boot Camp
Monday 17th June -
Christchurch
The Marketing Company
http://events.themarketingcompany. co.nz/courses/1-essential-marketingboot-camp
Sales Development
Wellington
David Forman
www.davidforman.co.nz
Tuesday 18th June
Sales Basics
Auckland
Geewiz
http://www.geewiz.co.nz
Wednesday 19th June
Sales Ignition Day
Auckland
The Marketing Company
http://events.themarketingcompany.
North
http://www.shipleywins.co.nz/publictraining-schedule.html
Thursday 20th June
co.nz/courses/2-sales-ignition-day
Monday 24th June
Directors Forum
Christchurch
Shipley NZ
Tuesday 25th June
Sales Basics
Christchurch
Geewiz
http://www.geewiz.co.nz
Wednesday 26th June
Sales Management
Christchurch
Geewiz
http://www.geewiz.co.nz
Thursday 27th June -
Capturing Business
Auckland
Shipley NZ
http://www.shipleywins.co.nz/publictraining-schedule.html
Friday 28th June
www.nzsalesmanager.co.nz / 18
THE CLOSE
“At the age of three, we all possessed three important skills to make the sale: Persistence, creativity, and the ability to ask one question after another.” - Dirk Zeller
Have you subscribed to NZ Sales Manager? It’s free! Simply visit www.nzsalesmanager.co.nz to get a copy of NZ Sales Manager delivered straight to your inbox monthly!
19 / www.nzsalesmanager.co.nz