NZ Sales Manager e-Magazine Issue 71

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.

www.nzsalesmanager.co.nz / 12

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

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