International business consultant Frank Cespedes explains how you can build your platform, drive effective sales, and increase the growth potential of your business.
I’ve learned so much from my mistakes, as well as the mistakes and wisdom of my peers. In business, and in life, you have to keep listening and learning if you want to succeed.
Many entrepreneurs get started and get stuck! So, how do you grow your business when you don’t know where to start? I asked Frank Cespedes, Senior Lecturer at Harvard Business School, to help me shed some light on this topic. Frank has consulted businesses around the world and his latest book, Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling, has been hailed “The best sales book of the year” by Strategy+Business Magazine. Here’s what Frank had to say:
It’s tough to start a business that gets traction with paying customers. Data indicate that less than half of US start-ups survive beyond three years. But it’s much harder to grow. Even for businesses that attract venture funding, fewer than 6% achieve more than $10 million in revenues and fewer than 2% more than $50 million. The increase in angel groups, the advent of crowd-funding, the slow but steady spread of VC money beyond its traditional few cities, and mechanisms like incubators make it more possible to start a business. But as one investor says, “It has never been easier to start a company, and never harder to build one.”
Read the full article on Inc.com.
When we published the first Top 50 Influencers list back in 2012, it was an original and unique idea, which had never been seen before. Since then many have followed suit with their own lists. Does this render the exercise as pointless? No, we don’t think so. Anything that helps raise the profiles of so many really talented sales commentators and experts has to be good for the sales space.
Read the full article at Top Sales World.
My sincere thank-you to DrivingSales and Paul Moran for his response, “Does Social Media Sell? A Harvard Professor Says No,” to my HBR.org article, “Is Social Media Actually Helping Your Company’s Bottom Line?” Paul says I am taking “a shallow perspective” on this topic. I disagree, and here’s why:
First, Paul does not take issue with the facts in my article: that most companies don’t have ROI measures for their social media investments; that few companies, according to the McKinsey research, even have accountable managers in place for that spending; that much online discourse about products and companies is fake, bought, or otherwise engineered, not “engagement” with potential customers; and that the comScore data about the unviewability of many display ads is bad news. Well, Mrs. Lincoln, except for those details, it’s a great play!
In fact, Paul agrees that many companies “are digging themselves into a large social media hole that will be very hard to climb out of.” His agreement supports a basic point in my article: “people tend to overhype new technologies and misallocate resources, especially marketers.” Don’t shoot the messenger who points out what the emperor is not wearing.
Read the full article on DrivingSales.
This week Likeable Radio embraces the new, with our first ever Meerkat session – fueled by host Dave Kerpen’s passion for the new streaming video app. This week’s guest is Frank Cespedes, a senior lecturer at Harvard Business School who has consulted businesses around the world. He has written over 40 case studies about companies and numerous notes on varios topics. He is also the author of the highly-acclaimed Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling. Sold? I thought so!
Listen to the podcast.
CFOs play an increasingly integral role within an organization – so much so that Frank Cespedes, Senior Lecturer in the Entrepreneurial Management Unit at Harvard Business School and author of “Aligning Strategy and Sales,” says that CFOs can and should start acting as a catalyst to help integrate roles across C-Suite functions, particularly between the sales and strategy teams. I spoke with Frank to learn more about what CFOs can do to foster these connections.
Read the full article on Forbes.
When it comes to business, we talk too much about social media and expect too little. It’s like the old joke about sales people: one person says, “I made some valuable contacts today,” and the other responds, “I didn’t get any orders, either.” Companies measure the market results of their sales investments. But few have measures or even have accountable managers in place for their social media investments, and only 7% say their organizations “understand the exact value at stake from digital.” Meanwhile, according to a Gallup survey, 62% of U.S. adults who use social media say these sites have no influence on their purchasing decisions and only 5% say they have a great deal of influence.
Read the full article on HBR.org.
If you have a monopoly, then your reward is a quiet life, one devoid of having to deal with competition. But most firms face changing competition, threats to their installed base, and quarterly investor expectations — all of which place sometimes conflicting demands on sales efforts. Sales forces are expected to both:
Maintain the current business: Be predictable and consistent. Because the company relies on existing sources of revenue to keep the business going, sales faces constant pressure to “make the numbers” and focus on the short term. “Nothing happens until you make a sale” and achieve target numbers, and there are typically firm-wide consequences if you don’t.
Adapt to the new: Keep innovating. Current numbers are important, but preparing for future needs creates the necessary foundation for profitable growth. Sales must also generate new sources of revenue and so learn to sell new products, through expanded channels and applications, to new customer segments. This becomes more critical as market life cycles shorten and the time in which companies can maintain product differentiation shrinks.
Read the full article on HBR.org.
The goal of strategy is sustained profitable growth, and that means earning returns above your cost of capital or what economists call “Economic Profit” (EP). Companies seeking profitable growth, therefore, face two interdependent tasks: grow the top line and manage the costs and financial efficiency of their customer-acquisition efforts. While sales growth contains the “sizzle,” continuous cost-productivity improvements are the “steak” that feeds the bottom line.
But these tasks are often disconnected in companies. Employees then view cost-reduction initiatives as “what Finance does” (if Finance does them) in a series of one-time initiatives, not an ongoing process. Conversely, the top line is Sales’ domain and Finance does after-the-fact scorekeeping of revenues and margins. The results of that silo’d approach are not good. An analysis of nearly 3,000 nonfinancial companies from 2007–2011 found that the top quintile of firms accounted for 90% of all the EP measured, while the bottom two quintiles destroyed more than $450 billion in EP during this period.
CFOs can change these results by providing leadership and shining light on key links between sales activities, cost management, and profitable growth. To play that role, a CFO must set clear goals. Cost management requires training, preparation, and hours of execution, so pick your shots, not try to manage too many categories too quickly. Prioritize the important areas (usually those with the greatest saving opportunity) and establish the right metrics for measuring effectiveness on an ongoing basis.
Read the full article on The Price of Business
What does it take to be a good salesperson? There’s a wide range of responses. Most reflect what you’d expect to find in the Boy Scout Handbook, with commonly cited traits like modesty, listening, curiosity, achievement orientation, and lack of discouragement. In pop culture, it’s a different story. Salespeople are represented by the likes of Leonardo DiCaprio’s flamboyant character in The Wolf of Wall Street, who addresses a group on how to make a sale by challenging them to “sell me this pen.” And popular business author Dan Pink comes at it from yet another angle, touting a personality study which claims that “ambiverts” (people neither extremely introverted or extroverted) sell best.
These traits are so broad that, at best, they simply say that people tend to do business with people they like (but not always and not as often as many sales trainers assume). At worst, they recycle the old cynical description of a salesperson as someone who practices “the art of arresting the human intelligence long enough to get money from it.” In both cases, they’re stereotypes — formulaic and hackneyed images that obscure the realities.
For the realities, look at successful entrepreneurs—most of whom, in early-stage ventures, must sell—and their diverse paths. Jim Koch, for instance, went from bar to bar with six packs of beer to get Sam Adams started. Larry Ellison adopted famously aggressive sales tactics when he started Oracle Technology, a business where, if you win, you win a long-term contract and a string of licensing fees, and if you lose, you’re out of that account for years. It pays to be aggressive in that situation. But Mary Kay Ash focused her cosmetics salespeople on a combination of visible incentives (the signature pink Cadillacs), the intrinsic rewards and constant celebration of female achievement (when outlets for such achievements were more limited), and the kinder and gentler power of social networks.
Read the full article on Fortune.
The gap between a company’s sales and strategy are important now more than ever. While we may or may not be recovering from a lengthly recession, it has been a slippery slope towards recovery for many years. The average S&P company decreased its COGS by over 250 basis points, indicating that the prolonged recession has had an impact on firms. While this seems like a large number, SG&A has increased a percentage of the firms’ total costs. Shifts being made to include customer-acquisition, back office, and supply-chain costs as well as other go-to-market strategies have steered the focus to productivity improvements.
Most executives are surprised by the amount of money that is spent on sales. U.S. Companies spend 3-times their total media ad spend, more than 20-times their spending on all online ads, and 100-times their current spend on social media annually. The greatest point of implementation for most firms is selling yet, research indicates that less than 50% of employees fully understand their firm’s strategy. In relation to sales and service people at companies, the percentage beings to decrease even further. The outlook is not much better at the board level. A 2013 McKinsey survey of 772 directors found that only 34% of those surveyed believed their boards understood their companies’ strategies, proving that it is not only about sales but good governance as well.
Reducing operating costs is a good way to increase profitability. Aligning both strategy and sales has an impact on cost and revenues. Consider how costs and asset-utilization patterns are established in companies, specifically in B2B organizations that account for much of the economic activity in most countries. For the seller in a transaction, an order touches several functions as it transfers from a customer’s RFP or quote to a purchase order, through pre-sale applications, and post-sale services (ex./warranty or field engineering). The sales process continues through nearly all activities. The sales rep generally receives the customer’s questions, complaints, and is the one who interactions with other functions in order to respond appropriately to the customer’s need. Cost management without the proper attention to the relevant procurement and selling process is essentially limited.
Read the full article and listen to the interview on The Price of Business.