Wearing your sales hat
With the title “owner” on your business card, you will become the most effective salesperson your company has. For me, learning this lesson took quite a while, until I discovered that being the company’s “face” to our customers was critical to the ultimate growth and profitability of the company I had acquired.
Being in the sales role does not come naturally for most searchers. Strategy, analysis and finance seem much more suitable pursuits than pounding the pavement, taking orders, or fielding customer complaints. In truth, the skill-set that you developed during search process – with your prospect pipeline, owner discussions, fundraising multi-pronged deal-making – will pay off well for you in this new Sales role.
Mastering this new “outside” role is as important for the searcher as being the CEO. You won’t be able to hire “entrepreneurial sales people”, they are already running companies! If carrying the “sales bag” conjures up images of used car salespeople or 2am TV Infomercials – just get over it; you have to learn to sell!
Leave the “big company” mindset behind
In my Product Manager positions at GE and later as President of two plastics equipment businesses for a British company, I was often “trotted” out by the sales force to meet customers. The Sales department used it as an excuse to have a “customer visit” and I would give the standard “you are a valued customer” speech before being whisked away to the next top customer. The less I knew about the technical details, the more “assistance” I received from the engineering guys who would travel with me. At one such meeting with a crusty, old-line purchasing manager at Sweetheart Cup Company, I was told “Why should I get to know you? There were five guys in your position before you, and there will be five more after you”. So much for “having an impact!”
Since I did not have a Sales background and had been well-schooled in the art of “delegation”, it seemed that the most effective way to use my skills was to stay focused on strategy, vision and operations while leveraging the sales force as the primary interface to our customers.
This changed dramatically when I purchased my own business that only had one sales person and a prior owner with a history of hiding in his office when customers showed up for fear that they wanted to talk with him about poor quality or late delivery.
Unless you are purchasing a “great” business, there is a good chance that your customers have been neglected, or taken for granted. Setting a new tone of putting customer service on top will take time, effort and repetition as you earn back the trust of your client base. The first step has to be learning how your products are being used, which features are most important, and understanding the unique needs of each of your customers.
You will need a half dozen elevator pitches with deepening layers of explanation and description of your capabilities. The 30-second, single-floor pitch can be lengthened to a ride to the 10th floor, and an even longer presentation for the 29th floor ride, are all part of the “sales” process that a CEO needs to master. Since you are not running a start-up, you can draw on your existing customer base to learn just exactly why they buy from you instead of others; you may be surprised about what you learn; but if you are not out in the field listening, you won’t hear it!
Wait until you are ready
It took some strong and repeated advice from my advisory board after my first year with the business to “get out on the road and start selling.” My own ethics made me uncomfortable with “relationship selling”–I am basically shy and did not want to do dinners, luncheons, sports tickets or just shooting the breeze with prospects and customers. In any case, I felt it was important in the first year to fully understand the business operations before feeling comfortable enough to handle the technical questions I expected from our toughest customers. Tyler Hogan and Mike Donovan at PureFlow postponed replacing a sales person who left a month before closing, which forced each of them to spend more time in front of customers, and resulted in their uncovering new business niches that had been ignored in the past.
When I took over our troublesome Hewlett-Packard sales account I discovered that my lack of specific technical knowledge was forgiven as long as I told them “I don’t know” and got back to them with answers quickly. I did everything from quoting to taking and entering orders and even delivering a couple of time-critical shipments. Knowing that my own livelihood would be impacted and I had a young family to support, they seemed more willing to share their plans, forecasts, information on competition, ideas that we should consider and ways in which we could improve and be distinctive. In some cases, it turned out that my lack of technical knowledge was a hidden advantage, forcing me to elevate the discussion to the customer’s long term plans and we were seen over time as a more strategic supplier.
As I took on more customers, it turned out that most did not need “entertaining”, and what they cared about was following through on commitments. There were many times when I was able to commit the entire organization to a customer issue because of my position, and their appreciation for this effort lasted a long time. I also “fixed” things that went wrong, and from time-to-time showed up with a “rework crew” and had my own hands in there doing the rework. It made lasting impressions on customers that the “Owner” of the company had come out to correct our errors personally.
The challenge, of course, is becoming spread too thinly in wearing both the CEO and Sales hats. As our account base began to stabilize, I worked hard to train inside program managers to provide the same level of service and commitment as I provided. After a couple of years, I was able to focus more time on new prospects. Each new opportunity was a stretch for the company and from the position I was in, I could make commitments and be sure that we delivered.
More importantly, with my ear to the ground I began to listen for the new services, features and opportunities that would differentiate us from competition, provide higher margins and open up new markets. Relationships nurtured with our supply chain allowed us to offer the customer more alternatives by knowing what could be committed to quickly. Within 10 years, 80% of our customers were new; reinforcing the prediction that the business you purchase will not be the same a decade later.
Using your personal leverage to improve margins
When it becomes time to address pricing issues, your newfound sales credibility will allow you to proceed with sincerity and tact. There were not many company owners or presidents calling on our customer’s purchasing people. Relating your own story about becoming an entrepreneur generally wins a lot of respect and admiration. Of course, you don’t want to show up in a fancy new car; best to be understated. Pressing for improved margins with an appeal that it is important to your own personal “survival” has more of an impact than if you worked for a large firm.
The “owner premium” can also be used when necessary to extract premium fees for value-added-services. Committing your entire organization to improve a delivery date for a customer can be accompanied by a “expediting charge” because you have promised to “make it happen”. I was able to see a 15% “premium” in our overall pricing over competition from this level of personal engagement.
Being owner may also permit you to get more “last looks” on quotations and to hold on to business longer than many of your competitors who did not have a similar “touch.” Remember, only you can set the tone for these “bet the customer” decisions. Be prepared to take a stand and walk away from volume if the profitability is eroding. You don’t want to be “big”, just very profitable.
Be careful to avoid the large company mantra of just going after the “large accounts”; these can be seductively devastating to your business if you land them – expending all of your resources on a single, large account is a recipe for jeopardizing longer term profits – you won’t hold your margins up for long when competition comes after you. Best to stay focused on the smaller, niche opportunities that yield higher returns and have lower impact when one of them inevitably stumbles and stops ordering.
Finding additional opportunities
Prospecting for new business entails a deep understanding of customer needs, and also being able to retain customer mind-share even when you are not around. Develop “samples” that display the creative ways your company provides solutions, and leave them for your customers with your contact information; much better than a coffee mug which may migrate away from the buyer’s or engineer’s desk. Our “leave behind” samples very seldom got thrown away!
Always ask about competitive activity in your markets. Buyers will often share plans, promotions and even pricing if pressed. Even little details like seeing how a customer stores your products on their inventory shelves can prompt a packaging change to be distinguishable from other suppliers.
Be as transparent with customers as you can – they appreciate your candor. Doren Spinner at Norfil concluded that he would share his planned shift in sourcing strategy with one of his customers rather than keeping them private. By doing so, he was able to both improve his margins and avoid future surprises with the customer’s supply chain.
With a partnered search, generally one partner will focus on sales to complement the other. However, I strongly advocate that both partners continually participate with customers to leverage the effect of dual “Ownership”. While Dennis Kogan took the early lead on expanding the salesforce at S-CAPE, after two years, his partner Bjoern von Siemens became very active in the local European market for their specialized operating room displays and equipment.
You won’t learn much about selling while getting an MBA; marketing yes, but not prospecting, repetitive contact, pricing strategy, contract negotiation and relationship building. Instead, take a 1-2 day intensive course for “buyers” to learn how they think about handling vendor’s salespeople; that be you! Understand what they are thinking, the tactics you can expect and glean the ways to circumvent them getting the lowest price for the most value from you! Your business card will get you a place at the table, but you want to be fully aware of what the house rules are, and what your customer’s purchasing agents are thinking.
Putting yourself regularly into a position to hear the “voice of the customer” will help shape the success of your business. When your prospect’s words come unfiltered right into your own ears, you can become the “rainmaker” in spotting opportunities, and developing solutions for new customers and markets.
Using the “owner” title gives you a competitive advantage over most of your competition. Be sure to take full advantage of it to present your unique value proposition, optimize your pricing, get those “last looks” during competitive bidding and nurture that deep sense of knowing your customer.
Feel free to share some of your own best practices or experiences in dealing with these issues in the blog comments. I encourage comments and dialog, allowing all to learn from both my views and the views of others – a virtuous learning cycle. Jump right in!