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The Les Mills (East-coast, USA) story

Erin Kelly and I get on pretty well.  But when we first met, we argued about a bunch of stuff!

We disagreed on commissions, of course.  Erin wasn't so sure it made sense to convert salespeople from piece-rate pay to salaries.  Then there was the whole idea of centralizing the lion's share of sales activities — and even moving the locus of sales from the field to inside.  Erin had been around sales a long time and she wasn't quite sure how that theory would survive contact with reality!

This morning, two years on, Erin and I connected again (in the video below) and we chatted about Erin's experience implementing the plan we hatched together back in March 2011*.

Turns out that reality has been quite accommodating, where our theory is concerned. In Erin's own words, after moving all salespeople to salaries, downsizing the field team from 10 to just a few, building an inside-sales team and using events to generate around 50% of sales opportunities:

Productivity has definitely not suffered. It's actually improved. Sales performance has improved overall. Sales Revenue is up.  Costs are down, from an overhead perspective.

A big part of that is due to Erin's management capability (which is truly impressive).  But the story certainly is testament to the power of SPE.

Watch the interview and see what you think (let me know in the comments below)!

In case you're wondering, Les Mills is a really exciting organization.  It's the world leader in group fitness.  About 16,000 fitness clubs, worldwide, license Les Mills programs — and those programs are delivered by hundreds of thousands of accredited instructors.  In spite of the fact that Les Mills hails from a pretty small town in a pretty small country (Auckland, New Zealand), the organization is a global heavyweight.  It blew past $100m in revenues years ago and, in a number of countries, it's hard to operate a fitness center without providing members with Les Mills programs.

After I stopped recording the interview above, Erin mentioned that she has been attending a Challenger Sale workshop.  Over the course of this workshop, both the elimination of sales commissions and the team-based approach to sales were discussed.  In each case, Erin was the only executive in the room who had actually ventured down this path.  She was struck — as I am often — by the enormous divide between the incredulity of executives at the mere mention of these ideas and just how easy they are to apply successfully, in practice.

Why, do you think, is there such a divide?  (You can comment below.)

 

* We worked with Erin and her team for the first six months of the transition. (That was just before we transitioned from fixed-duration projects to ongoing engagements.)


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The Davcor story

Marc Cohen is no fan of consultants.

At the start of this interview, he discloses that he has a medical condition — one that results in him having a visceral aversion to consultants!

Nonetheless, Marc is here to tell the story of his first 18 months, implementing SPE.  He explains why he did it, the impact on his organization and his experiences working with us here at Ballistix.

It's an interesting story.  We discuss one particular division of Davcor (EKA) and Marc relates how:

  • He reduced his field sales team from 3 salespeople to zero
  • His opportunity pipeline exploded in size
  • Sales increased by 20% — with more good news in store as a number of high-probability opportunities move towards closure
  • His policy of giving rations to the strong has resulted in the rapid growth of a dynamic inside-sales team (where previously, there was none) 

Davcor is a $30m distributor of a range of physical security products, from locks and keys, though to commercial access-control systems. Davcor's EKA division distributes an access-control system that delivers the benefits of traditional systems to mobile assets (shipping containers, trucks, and gates).

In the interview, Marc mentions a brochure that's contained in the pre-approach package that's used to initiate approaches to potential clients.

You can page-through that brochure below.  

Growth hacking coming to Ballistix

Early next year, we will formalize the addition of a new service to our standard Ballistix (engagement) offering.

In previous posts, I've talked about our successes with online promotion (pay-per-click advertising, webinars and the like).  As we've been generating results for ourselves, we've been packaging our learnings and pushing them to our clients — assisting them with the optimization of their websites, with SEO, PPC, Webinars, landing pages and the like.

Some of the results we have generated for our engagement clients have been nothing short of spectacular. However, because this growth-hacking activity (as it's now called) is currently performed by our creative team, our capacity is pretty limited.  

For that reason, we'll be adding a full-time Growth Hacker early next year.  This will extend the already impressive array of services to which our engagement clients have unlimited (all-you-can-eat) access. 


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If you listen only to Kirk Nelson's first few words in the interview below, you'll be missing out on one hell of a treat!

Kirk starts the interview by assuring me that ARCA has an accurate sales funnel and a good understanding of what's going on in the business.

That's good, right? But, where's the money?

Well, listen up, because after Kirk's understated opening, all hell breaks loose!  The real fun starts when I ask Kirk if Sales Process Engineering has had any impact on sales.

Turns out there has been an impact. Kirk started his journey in July 1, 2012.  By the end of the year, revenue was up 37%.  And Kirk expects to finish this year (2013), with another 40-50% increase in revenue.  Over this period the volume of units shipped has increased ten times.

We're delivering ten-times the number of units per month than we were a year ago

And, it gets better!  To achieve this, Kirk reduced his sales team from five people down to two.  He also scrapped the commission and bonus plan and put the remaining salespeople on straight salary. And, in spite of the fact that he has a mandate to add more salespeople when his existing team hits 80% utilization, he hasn't had to because the team is still only averaging 60%.

Bottom line, then, is that Kirk's organization has just about doubled sales with two-fifths of its original sales team and with the remaining salespeople operating at half throttle! And, no, before you ask, Kirk's organization is not a start-up!

ARCA: cash-automation technology

Kirk Nelson is an Executive VP at ARCA. ARCA provides cash-automation machines to financial institutions, retailers or anyone else who wants to automate the receipt or dispensing of cash.  (If you've ever cashed-in a pile of chips in a casino, the odds are that you've interacted with ARCA's technology.)

ARCA is both a distributor and a manufacturer of its own technologies.  The organization has been in existence for 13 years and has operations on a number of continents.  You can find ARCA here.

Ballistix's involvement: virtually none!

ARCA is another example of an organization that has implemented SPE – and achieved stunning results – with vitually no direct assistance from Ballistix.  I ran a two-day (Solution Design) workshop for ARCA in June 2012 but, aside from that, Kirk has produced this outcome using only The Machine (my upcoming book) as his guide.  (I think he also read my first book and attended a webinar or two.)

This is awesome, for two reasons:

  1. If organizations can implement SPE without the assistance of Ballistix (and a rapidly increasing number are), this is a powerful validation of SPE
  2. It's just not cricket for for me to crow about the accomplishments of our own clients.  However, if an organization can achieve a breakthrough by themselves, that's something I feel a little more comfortable making noise about!

So much value

As is often the case, the real value in this interview is not the headline.  The truly valuable nuggets are the casual revelations that Kirk makes as he tells his story: 

  1. Like when Kirk jokes that he would not like to have to answer to one of his salespeople's sales coordinators ("they are brutal", he says!, when explaining how Sales Coordinators genuinely own opportunities – in spite of the fact that they earn less than half what salespeople do)
  2. Like when Kirk reveals that he now has an uncanny ability to forecast revenues (he's close to achieving a forecasting accuracy of ±10% accuracy at 90 days)
  3. Like when Kirk explains why salaried (rather than commissioned) salespeople are actually more effective
  4. Or when he talks about how Project Leaders have been able to effortlessly convert small transactions into (much larger) enterprise-wide opportunities (and reduce opportunity-lead-time into the bargain)
  5. Or when he describes how SPE has united the organization's leadership by giving the executive team a common set of metrics (specifically, by allowing the sales function to be evaluated using metrics that make sense to executives who have been schooled in Lean and Agile)

The constraint shifts

The highlight of this interview, for me, was one of those interstitial moments when Kirk happened to mention that Mort (ARCA's CEO) had recently declared that Sales is no longer the organization's constraint.  "The speed at which we can step on the gas", says Kirk, "… is simply astonishing".

Those viewers with an operations background will really appreciate the significance of this statement.  If ARCA (or pretty much any organization) can scale sales rapidly it enables that organization to keep the constraint in production – to keep operational infrastructure operating at full utilization at all times.  

This, ladies and gentlemen, is how real money is made!

 

Update (Oct 7, 2013): An article on ARCA's progress appears in News Observer, here.


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Most managers are excited by technology.

Technology enables us to get more done, faster. And technology is practical. Concrete. It’s not about ideas; it’s about execution.

This is certainly true in sales environments. It’s almost impossible to propose any initiative without prompting the question: is there software for that?

In sales environments, the answer to that question is yes. There is always software for that. In fact there are many thousands of software applications promising to automate every step in the sales lifecycle, from the generation of sales opportunities through to the provision of management information.

Broken promises

The dirty secret of sales environments is that, with few exceptions, this technology has done nothing to improve productivity. Nothing!

After a generation of investment in sales (and marketing) automation technologies, sales environments look (and operate) essentially the same as they did 20 years ago. There is little credible evidence that the tens (or, more commonly, hundreds) of thousands of dollars that a typical firm has spent on sales technology has caused a rise in revenues, a reduction in costs or even an improvement in customer-service quality[i].

This chapter addresses three critically important questions:

  1. Why is technology failing to produce the productivity improvements in sales that it has in other parts of the organization?
  2. What role should technology play in the design and operation of the sales function?
  3. What are the practical technology requirements of an organization transitioning to the new model?

At the end of the chapter we’ll tackle another more fundamental technology issue. We’ll explore who in the organization should accept which technology responsibilities and, more critically, which responsibilities should never be outsourced.

The sales software system

If the multitude of sales-related software applications was a planetary system, the sun around which all other planets would orbit would be called CRM. CRM stands for customer-relationship management. A CRM (application) is designed to automate the numerous workflows that exist in and around the sales environment – and to store the data that’s generated as a result of those workflows.

These workflows include the generation of sales opportunities, the prosecution of sales opportunities and the management of customer issues.

The other software applications that orbit the CRM in the sales system are dependent on the CRM, either because their reason for existence is to feed it data (new contacts, perhaps) or because they leverage the data that sits within the CRM to perform specialist functions (email broadcast, report generation and so on).

CRM is a subset of a larger class of software, known as ERP (enterprise-resource planning). ERP is the software that manages operational workflows in the organization as a whole. Things like the generation of orders, the scheduling of the production environment, the management of inventory, the processing of payables and receivables, and so on.

Although ERP and CRM are now intertwined, the two technologies had quite different beginnings. ERP evolved out of inventory control systems in the 1960’s. And CRM evolved out of contact-tracking applications in the 1980’s. Contact-tracking applications (like Act!) were software equivalents of salespeople’s day-planner calendars.

Although the two technologies have grown together over the years, their usage has not. In the modern organization, ERP is pervasive – if you removed it, the organization would simply cease to function. This is not the case with CRM. In fact, in many organizations, the removal of CRM would actually unencumber salespeople and increase their productivity!

What’s wrong with CRM?

Consider the list of standard promises made on behalf of CRM by CRM vendors:

  1. CRM will increase salespeople’s productivity
  2. CRM will cause an improvement in customer service quality
  3. CRM will drive a tighter integration of sales and marketing
  4. CRM will provide management with better quality information

As I mentioned earlier, most organizations have invested a king’s ransom in CRM but few have seen any (let alone all) of these promises realized.

Technically, however, there is nothing wrong with CRM!

As we’ll shortly discover, CRM has the potential to unleash enormous productivity improvements in sales environments. The problem with this technology is that it has been designed around the requirements of a sales environment that doesn’t actually exist.

It’s useful (and somewhat amusing) to understand why this has occurred.

A candid history of CRM

It’s arguable that the first contact-tracking applications solved a real problem for salespeople. These applications simplified the tracking of the numerous interactions between salespeople and their customers (appointments, phone calls, proposals and other tasks). Continue reading “The Machine > Part 2 > Chapter 10: Technology (why CRM sucks!)” »


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I’ve waxed lyrical about Mixergy before.

Andrew Warner is a successful entrepreneur in his own right and, every day of the week, he interviews a founder with a story worthy of note.

Typically, these founders have built (and very often sold) successful tech companies. Other times, they just have a particularly interesting story to tell.

The unbelievable thing about Mixergy is you can subscribe to Andrew’s site for free and watch each of his interviews as he posts them (all are live for a week before disappearing behind a paywall).

If my last story about Mixergy didn’t compel you to get over there and subscribe, you should probably do it now.

But first, maybe you should take some time to watch Andrew’s interview with yours truly on September 26!

In almost an hour and a half (yep, it’s an in-depth interview), Andrew covers a lot of ground. From my first vocation (ballet dancer) to my introduction to business (selling insurance) and the long story of Ballistix, including the four pivots (as they’re now called) that have lead us to our current model.  I think it’s a great interview (but I’m biased, of course).

Oh, and a big thank you to Maria Sipka (who has her own exciting start-up) for recommending me to Andrew.

The finest day of my life

In case you’re wondering why it took me so long to post news of the Mixergy interview, I have more news I feel compelled to share.

I don’t normally share personal stuff but this is so momentous, I’ll have to ask you to humor me.

On October 3, on the Sunshine Coast in Queensland (Australia), Bo and I were married.

bo_justin_wedding

I met Bo at LAX about four years ago. We were both checking baggage and we got chatting about software development and quality assurance (Bo leads the quality initiative at Guthy Renker).

Obviously, with such a gift for casual conversation, we couldn’t stand to spend much time apart – and so we’ve chosen not to!

(As I write this, Bo is working on a little Ruby on Rails application for Ballistix and I’m pestering her with unwanted advice on system architecture!)


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I love webinars and, increasingly, our clients are learning to love them too! In this post I’ll share some of our experiences with webinars over the last 7 months and show you why we’re so enthusiastic about them.

The results

In a previous post, I told you how we build our list (generate new relationships).  And I shared how our overall lead-generation machine is self-liquidating (the revenue from Solution Design Workshops  is more than the total costs associated with the generation of the sales opportunities for these workshops) – meaning that it costs us (less than) nothing to generate sales opportunities for our Outsourced Sales Operations engagements.

What I didn’t tell you is how we convert new relationships (people who have requested an extract from The Machine) into sales of Solution Design Workshops.

The key to that is webinars.

I’ll explain the why and how of webinars shortly. First let me share the results.

image

Since March this year, we have run 9 events.  Roughly half have been run in the morning (LA time), to suit our US subscribers and the other half in the evening, to suit our Aussie audience.

Across those nine events, 797 bookings have yielded 380 attendees and 116 requests for Best Practice Briefings. A Best Practice Briefings is the intermediate step before a Solution Design Workshop.

That means our conversion rates from booking-to-attendee and attendee-to-briefing are 48% and 31% respectively.  Actually, in recent times, we’ve pushed both conversion rates up to almost 50% which is much better than standard rules of thumb.

In the spirit of full disclosure, the following chart shows our numbers across all nine events.

image

And, in case you’re wondering, here’s the breakdown across each event type.  These numbers are of limited value because we have promoted the Death of Field Sales event more heavily than the other two. (We did this because the Death of Field Sales headline outperformed the others in tests we ran with pay-per-click advertising.) Continue reading “The wonder of webinars (our stats revealed)” »


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7 comments

I’m so happy to post this video!

On the one hand it demonstrates that organizations can implement SPE without the assistance of Ballistix.

On the other hand it suggests that we’ve made huge progress in our efforts to codify and communicate both the principles and the practice of SPE.

Aside from reading our books and attending our events, Daniel Dunsford had no help from Ballistix. But that didn’t stop him from following our prescription (almost to the letter), and, as a consequence:

  • Slashing his sales-related costs
  • Boosting his sales revenues
  • Multiplying his firm’s profitability

Daniel is the principal of AR Cash Flow, a provider of receivables financing, based in Sydney, Australia. One of the things that I found striking about this interview is that Daniel made the correct call on a number of tough decisions:

  • From day-one, he established the critical 1:1 ratio between sales coordinators and salespeople – and scaled-down his sales team to make this possible (rather than under-resourcing the sales coordinator role and rendering the transition impossible)
  • He saw the light and eliminated sales commissions right away (rather that allowing them to cast a pall over the team-based structure)
  • He bit the bullet and took-on the business development role himself – until he had proof of concept (rather than relying on indirect feedback)

Anyway, that’s enough from me. Here’s Daniel telling the story, in his own words.

No help from Ballistix: AR Cash Flow goes it alone and multiplies profits


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When Megara – a Melbourne (Australia) based manufacturer of polypropylene products – was contemplating radical changes to the design of their sales function, a list of concerns was identified:

  • Would customers be happy dealing (by phone, rather than face-to-face) with account managers who were located in another region?
  • Would customers tolerate the requirement to interact with multiple specialists – rather than with a single generalist?
  • Would customers be comfortable with the idea of an assistant scheduling meetings for a field-based salesperson?
  • Would telephone contact be as effective as face-to-face in most selling situations?

Today, only a few months on, the results are in. And, without exception, the answer to each of the questions above is YES.

Something had to change

As Andrew explains in the video below, the decision to reengineer sales was not one that the Megara management team took lightly. The team was well aware of the magnitude of the changes – and the associated risks – the new direction entailed.

But, there was no question that the standard model was broken. Attempts to grow revenue by building-out the sales team (11 salespeople and an experienced sales manager) had failed. In the wake of that failure, the maintenance of the status quo was starting to feel like a more radical option than the Sales Process Engineering message espoused in the workshops the Megara team had been attending!

Video: Andrew Rundle (who leads Megara’s packaging division)
discusses the SPE journey with Justin Roff-Marsh

New model

Today, in place of 11 field-based salespeople (and one sales manager), Megara has the following specialist functions:

  • Inside sales: a team of head-office based account managers (all accounts and opportunities are now owned by internal personnel)
  • Business-development manager: in the near-term, this (field-based) role will be filled by Andrew, who will dedicate two days a week to new-account acquisition

Continue reading “Radical restructure for plastics manufacturer drives costs down and sales activity up” »


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A little over a year ago, I posted on our initial experiments with “social media” (or, more specifically, with pay-per-click advertising).

That post was well received so this one is an update. Actually, it’s more than an update: it’s a review of our entire US lead-generation machine. I hope it provides you an idea or two – or, perhaps, the courage to run some of your own promotional experiments with new media.

So, back in February 2011, I talked about how we launched our US operations at the depth of the recession and struggled to generate sales opportunities the way we do in Australia. The problem was that, in Australia, we had a house list containing many tens of thousands of executives – and in the US, we didn’t (and still don’t)!

I talked about how, when we launched here, we squandered a small fortune on PR, tradeshows, traditional advertising and traditional direct mail campaigns. And I related some encouraging results we were getting using pay-per-click (PPC) advertising (predominantly on LinkedIn) to give away reports and, in so doing, generate sales opportunities.

Since then we’ve done quite a bit of additional experimentation and automation. Here are the results. (If any of this doesn’t make sense, it’ll pay to read – or re-read – Chapter 9 of The Machine, which I posted last week.)

Offers

We tested a number of offers early in 2011 and the clear winner (by a ridiculous margin) was a sampler of The Machine (the first three chapters).

Of course, I love the fact that this offer is our best-performing because it means that we’re building the audience for the upcoming book at the same time we’re generating sales opportunities.

Because this is our best performing offer, pretty much all of our campaigns over this period point to versions of the one landing page, offering copies of The Machine (the sampler), along with a DVD containing a copy of my first book, a 2.5hr luncheon presentation and other good stuff.

Experiences with Lead Gen2

It makes sense to have all campaigns point to the one ultimate offer as we have done because it simplifies opportunity management and enables you to automate your lead management to a greater degree.

On that note:

  1. We use AWeber  to automate our lead-management process (form generation, auto-responders and list management)
  2. We have automated the import of sales opportunities into our CRM
  3. We pay a person I found here in LA (on Craigslist) to do all of our mail handling (she mail merges letters direct from our CRM and uses stamps.com to generate postage labels)

Audience (media)

The following chart shows most of the sales opportunities we have generated since January 2011, broken-down by campaign category.

Experiences with Lead Gen1

You can see that PPC advertising on LinkedIn turned out to be a winner. It’s not our least expensive form of promotion (in terms of cost-per-opportunity) but it’s certainly the most scalable.

You can also see that we’re getting great value from this blog (with SEO referrals increasing steadily over the period) and from referrals. The Fortune Summit entry exists because Verne Harnish was kind enough to invite me to the stage to speak about our approach to sales commissions after Dan Pink’s presentation last year.

Creative execution

One of the great things about PPC advertising is that the creative component (words and pictures) is easy. Most media (e.g. Google, LinkedIn and Facebook) provide you with a limited amount of space and strict controls on how you can use it.

Here’s a sample of one of our many LinkedIn ads. (We have many because we’re regularly trialing new versions and because the response to individual versions fades quite quickly.)

Experiences with Lead Gen3

The other creative component of these campaigns is the landing (or squeeze) page. You can see a sample of one of them above.

Here, creative execution can make a big difference. For example, we recently more than doubled our on-page conversion by adding a video of yours truly, imploring visitors to request the book.

The results

Let me tell you the results of just our LinkedIn activities. It makes sense to focus on LinkedIn because it’s the source of more than 50% of our opportunities and also because it’s the one media that we can readily scale.

Here’s a chart of our sampler requests over the period.

Experiences with Lead Gen4

It’s important to note that much of the variability in these numbers comes from us running experiments and – in many cases – deliberately throttling-back our LinkedIn expenditure, either because Charlene (my sales coordinator) is overwhelmed or, more recently, because we have run out of delivery capacity here in the US (we’ll be adding more shortly).

Okay then, enough with the pretty pictures; let me show you how all this activity translates into money!

The economics

Over the period we’ve spent $29,071 with LinkedIn. From 24.3m impressions (showings of our ads), we’ve generated 5,687 clicks, at a cost of $5.11 each.

An average of 11% of these clicks have converted into sampler requests (this rate has risen markedly in recent times), meaning that we gave away 607 samplers (and generated the same number of sales opportunities).

It has cost us a little under $8 to fulfill each book request, meaning our total LinkedIn-related promotional expenditure is $33,927.

Now, this may sound like a lot but we need to compare it with the income we expect these opportunities will yield over time. Understandably, I wouldn’t give you this number even if I knew it, but I am prepared to admit that the lifetime value of a new client is significant enough to easily justify all this expenditure (and more).

The interesting thing in our case (and many of our clients have followed our lead here) is that we sell a Solution Design Workshop as part of our engagement process (i.e. before we ask for the ultimate order).

This means that our opportunity-management process generates income as well as incurring costs. This also means that it’s possible – at least in theory – to build a self-liquidating opportunity-management process and drive the overall cost-of-sale down to zero.

In our case, over the period in question, we can attribute at least six Solution Design Workshops to our LinkedIn campaign. These have generated an average (net) income of $6,160. If divide our total LinkedIn-related promotional expenditure by six you can see that it has cost us $5,654 to sell each of these workshops.

In other words the promotional cost of each is negative $500!

There’s no question in my mind that this analysis grossly undervalues our LinkedIn campaign. It ignores the Solution Design Workshops we have yet to sell to the 607 new people we’ve added to our house list. It ignores all the income we will earn over the years by introducing a percentage of these people to our Outsourced Sales Operations engagements. And it ignores the audience we are building for my upcoming book – and all the knock-on benefits that will ultimately flow from that.

But I have little interest in trying to quantify any of that right now. After all, a couple of years ago we were bleeding red ink in the US and struggling to generate any sales opportunities. Now, our constraint has shifted to where it belongs (our consultants), meaning that we can knuckle-down and focus on replicating the simple model we have operating right now.

I must admit that, moving to the US and starting here without a captive audience (outside of the TOC community) has forced me to learn lessons that I could have learned back in Australia, but probably wouldn’t have. If you’re not running these kinds of promotional experiments now I encourage you to do so – while you don’t need to!


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