Paul lays out a plan to focus your time, energy, and effort on the most viable sales opportunities.
As a salesperson, time is the currency you are investing. Be sure you’re not wasting it on the wrong opportunities.
Stop what you’re doing and put together a list of ideal targets. This is critical!
Create a profile based on the business you want to pursue as well as the business you want to avoid. Listen to the podcast to find out how.
Profit Piranhas: avoid these high-aggravation customers. If they’re not adding value, they haven’t earned your value added.
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Are you focusing on the right business?
(Transcribed from podcast)
Here’s the question, “Are you focusing on the right business?” It’s a simple question, yet our research shows that salespeople continue to invest their time, energy, and effort on less than ideal business opportunities.
We’re going to talk about that today because this is one of the most critical success factors for salespeople. We have to focus our time and energy and effort on those opportunities that will give us the greatest return on that investment.
Now before we get into that, pick up your copy of Selling Through Tough Times. In Selling Through Tough Times, we walk you through a process to select the right targets to create a profile, not only of the business that you’re trying to pursue, but also the business that you’re trying to avoid. Now you can also visit Toughtimer.com. At Toughtimer.com, we have several complimentary resources available for you, including some free chapters of the book, Selling Through Tough Times. Either way, go visit the website, go pick up your copy. Now is the time to prepare.
All right, let’s get into that question. Are you focused on the right opportunities? Now, this is a pretty simple question. But what’s interesting is that when I work with sales teams, how often they will tell me, “I’m not sure if this is the right opportunity.” “I’m not sure what the right business looks like.” “My manager has never told me what I should be focused on.” This happens more than you’d think. And you have to remember, as a salesperson, time is your currency. Time is what you have to invest. So we need to make sure that we are investing our time, our energy, our effort in the most viable sales opportunities.
We are in February. It’s the middle of Q1. If you don’t have a list of ideal targets that you’re focusing on, stop what you’re doing and put together that list. It is critical. That’s where you start. I mean, I think about this. In both Selling Through Tough Times and in Value-Added Selling, both of the processes, they start with the right target. That’s where you must begin. This is like, you’re building a house. The foundation is poured first. Selecting the right target is like pouring that foundation.
So let’s talk about how to make this happen. I’m going to give you two ideas here on creating a profile. You’re going to create a profile based on the business you want to pursue, and also the business that you want to avoid. We call this the power of discernment. The power of discernment is knowing which business to pursue and which business you want to avoid. You have to create a profile for both, because if you don’t, you don’t know what you’re looking for. So, let’s begin with the profile for good business.
So think about your current customer base. These are going to be your existing customers. These are the customers that are probably loyal. They’ve been working with you for a number of years. It’s good business. It’s high margin. It’s delivering 80% of your results, right? You know, the old 80/20 rule, that 20% of your customers are going to deliver 80% of your revenue or profit, whatever it may be. That’s who we’re looking for—that top 20%, your top customers.
Upon reviewing these customers, ask yourself what do they have in common with one another? It could be the size of the organization. It could be, you know that they’re in the same industry. It could be that they really need the value that you provide. They appreciate your value added. I want you to look at both the quantitative and the qualitative factors. And what you’re trying to create here is an extensive list. Again, look at your best customers and create an extensive list of what these customers have in common. It could be as simple as, you stole all of these customers from the same competitor. It could be all of these customers were referrals from other customers. Again, what do they all have in common? Once you have that information available, you can create a profile. Now you know what you’re looking for, right?
Now the next step is to create a list of targets that fit this profile. From experience, I know that salespeople will put together this comprehensive list. This is the profile. Some of the information or characteristics on this profile are not going to be easily found online, right? You can certainly look at and find quantitative information like employee size. You can take a look at the industry that they’re in. You can gather this information just by doing some basic research.
But there’s other qualitative factors that are going to be harder to gauge. For example, is this prospect relationship oriented? Let’s say, you know, a company that is innovative, is that easily discovered by looking online? Uh, maybe not. So, you’re going to need to meet with these prospects a few times to gather information. And as you meet with these prospects, you have to ask yourself, “Okay, does this opportunity feel like good business? Is it similar to some of my best customers that I’m already working with?” And if the answer is yes, then we need to continue to pursue those opportunities.
Now, a lot of salespeople ask me, “Well, how many high-value targets should we have?” It really depends on your industry. It really depends on your organization, your sales process, so on and so forth. I would stick with 10 high-value targets. Find 10 opportunities that fit the profile for good business, and you want to dedicate your time and energy and effort on pursuing those targets. This is especially critical during a tough market, because during a tough market, salespeople believe that opportunities are scarce, so they become more desperate. They’re willing to lower their standards as to what they deem as good business. The key is to remain hyper-focused even when you are tempted to go after those less-than-ideal targets. So create that profile and make sure that the opportunities you’re pursuing fit that profile. And just constantly ask yourself, “Is this a good fit? Does it feel like a stronger fit? Is there enough overlap between this prospect’s criteria and my criteria for good business?” When the answer is yes, keep pursuing.
Now, as I mentioned in the beginning, we need to know what business to pursue, but we also need to know which business to avoid. If you look at your customer universe right now, look at your account base, your CRM, whatever it is. There is a group of customers that are low margin/high aggravation/slow-pay-or-no-pay type customers. These customers, they tend to create internal strife. They chew away at your resources, and we call these profit piranhas.
These profit piranhas… Earlier I mentioned that your high value targets, they will contribute 80% of your revenue, right? The 20% will contribute 80% of your revenue—80% of your profit. Well, this group, the profit piranhas, although it’s a small percentage of your total customer base, they will create 80% of your headaches. This business is a thorn in your side. Now, what’s interesting is that we put up with this. To me, I just don’t get it. Salespeople say, “Well, we don’t want to lose a customer. All business is good business.” No, it’s not. Profit piranhas are taking—they’re zapping your energy. They are preventing you from going out there and finding better high-value targets. And it’s because they take up so much time.
So here’s what I would encourage you to do. Take a look at your worst customers. These are the customers, again, that are going to be the low-margin/high-aggravation business that you want to go to the competition. Look at these types of customers and ask yourself, “Okay, what do they have in common with one another. Your worst customers are going to have a lot in common with one another. If you can create a profile based on that, now you know what to avoid. This is critical, because initially, some of these profit piranhas may seem like a great opportunity, maybe because it’s high volume, it’s a prestigious opportunity, it’s a well-known company, whatever it may be. We focus too much or we’re enamored by that criteria, and not the criteria that truly makes it a great fit for our company. So again, I would encourage you, look at your worst customers. Ask yourself, “What do they have in common?” That’s the profit-piranha profile. Man, that’s a mouthful.
Anyway, so you may be thinking, “Okay, we’ve got these profit piranhas that I’m currently working with. How do we manage them?” So I wanted to leave you with a final, all right?
Number one, with these types of customers, stop doing them favors. If they’re not value-added type companies, they haven’t earned the right. They haven’t earned the right to take away your time from other customers. So stop doing them favors.
Raise your prices. Have a business conversation with this profit piranha and say, “Look, we can’t service you. We can’t provide you the level of service you need at the prices that we’re charging. Here’s what we’re going to do…”. Now keep in mind they may say, “Well, we’re not going to pay that higher price.” And if that’s what they say, that’s what they say, right? You can let them know, “Hey, you can buy this product somewhere else, or you can look for other alternatives. But if we’re going to continue to work together, here’s where we need to be from a pricing standpoint.”
So you can raise your prices you can also charge for your value-added services—all of those value-added extras that you’re providing: maybe it’s training, maybe it’s expedited delivery, engineering, consulting services, whatever it may be, begin charging for those value-added extras. And here’s what’s going to happen. You’re either going to be able to gain more profit to the point where it does become worth it to actually serve this customer, or they’re going to go to the competition. Either way, you are better off than you were before.
Alright, everyone. So a quick summary. Number one, create a profile of the business that you want to pursue. And how you do this is by looking at your best customers already. Also, create a profile for the business that you want to avoid. These are those profit piranhas. With two profiles, it makes it easier to invest your time. It’s easier to decide who you want to spend your time with.
Make it a big day.