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Thursday, January 20, 2011

THE COLD, HARD TRUTH: Prospecting 101, Part 11

Gabriel SiegelThe Cold, Hard Truth with Gabriel Siegel

THE BOTTOM LINE: Too many organizations, as well as entrepreneurs, fail to recognize the changes taking place in their markets and therefore with their customers. Regardless of your situation, you need to be aware of the following:
  • Older companies are closing and are often replaced with younger and more aggressive organizations.
  • Buyers are demanding a greater level of sophistication and savvy from their suppliers.
  • The “lowest price” doesn’t always win.
  • Newer, agile and hungry competitors are visiting your “established” clients.
  • You need a systematic, realistic and aggressive plan for getting new clients.
Of all the E mails I receive from our readers, most ask about prospecting, specifically the use of cold-calling to create new customers in view of changing market conditions. Whether you sell to consumers or Business to Business (B2B), you can “milk” your existing customers only so far for either referrals or add-on products or services. Prospecting for new clients, even for an established enterprise, has now become “do-or-die”.

Other writers have noticed a shift in the “demographics” of their business. A few have gone so far as to say that they now have to spend most of their time in re-building their business. In one E mail I received, the writer said “I now have to spend most of my time cold calling for new business. I should have been doing this all along”. Another writer wrote “I’m working twice as hard for the same money I made before”.

CHANGING DEMOGRAPHICS CAN ALSO MEAN A WHOLE NEW RANGE OF POSSIBILITIES FOR YOUR COMPANY. The alert entrepreneur needs to be aware of the changing needs in his market. Consider the following example from a company located in my town:

A small SAT tutoring service near my home recently began to advertise for middle school students by offering “test prep”. The owner of the company began to notice the testing pressures placed on this age range and the fear and frustration of the parents. He began to advertise for this age group and he recently told me that his income has increased in the first year by almost 50%.

These entrepreneurs recognized a need and were quick to capitalize on this new market.

Several years ago, I was invited to lunch with the Training Director for a large New York based insurance company. He observed that within the first five years of an agent’s career, he opened the majority of accounts. From years 6 to 10, most of their agent’s business came from existing accounts with a corresponding “leveling off” of the agent’s income. Agents with 11 or more years with the company opened even fewer accounts and lost some business with a decrease in income.

I received this letter from a National Networker reader:

Dear Gabriel:

“I’m the Sales Manager for a Mid-Western manufacturer’s rep group selling to the automotive market. We have 7 salespeople compensated on salary plus commission. In the past 3 years our sales have declined in each territory, due to the problems with the auto industry and their related suppliers. Many of the companies with whom we’ve done business have closed, or they’ve been replaced by start-up enterprises, founded and staffed with savvy, younger and aggressive automotive engineers. Our sales force has had only limited success with this emerging group”.

The insurance company and the manufacturers’ rep group reflect problems faced by all sales managers:
  • Difficulty in opening new accounts
  • Reluctance of “older” salespeople to prospect
  • A salesperson has reached a “financial comfort level”
  • Salesmanship vs. order-taking
  • A shift in an industry’s demographics (adjusting to new markets)
We set up a series of PROSPECTING ROUNDTABLES for one office of the insurance company. We paired an established producer with a newer agent. We worked on cold-calling approaches, referral-getting and interviewing techniques. Each new agent had to report to his senior partner on his weekly progress in getting new accounts and discuss problems encountered in the field.

Something else was at play. The company was in the process of introducing B2B products where heretofore they were selling to individuals. Therefore, each producer had to develop a new level of clientele which of course meant prospecting. Success in developing new clients would also determine whether or not the producer would be getting, or keeping, a private office as well as their jobs.

Did all the producers buy into this PROSPECTING ROUNDTABLE/MENTORING approach? Of course not! Approximately one-third of the sales force either left or was terminated. However, for those who stayed and adapted to the new processes, their incomes reflected their efforts. About a year later one of the older agents told me that it “salvaged” his career.

The moral is never underestimate the power of mentoring combined with re-training. It can work. You need to make the commitment. If you’re dealing with a mature and complacent sales force, try it. If you’re a solo entrepreneur, ask for help.

The Mid-Western manufacturers’ rep group was a “mature” organization. The sales manager was recently hired to revitalize the company’s presence in a challenging environment. Each salesperson suffered a minimum of a 25% decrease in commissions with 2011 shaping up to be even more difficult. The sales force was demoralized and they feared the owners, second generation family with no loyalties, would be making some serious cuts.

The sales manager discovered that within each territory were companies that had never, or rarely, been contacted! It appeared to him the sales force was content to visit their customary (safe) clients and take orders. It was the sales manager’s feeling that unless contact was made with these new entities the entire sales force would need to be replaced.

The entire sales force was terminated. The new owners and the sales manager visited each client. They discovered that much of the work could be done over the phone. They created a new, internal “sales associate” position thus freeing the as-yet-to-be-hired sales people to focus on developing new clients.

The owners and sales manager are also prospecting for new clients. They reported to me they are cautiously optimistic and when a sales force is put into place, they envision a comfortable future for the company.

In a recent phone conversation with one of the owners, he made the following points:
  • Prospecting (cold-calling) is critical to getting new customers.
  • The salesman must be a “problem solver”.
  • The salesman must devote a part of every day to cold calling.
  • The salesman must respect and understand the competition.
For the “emerging enterprise”, solo entrepreneur or group, always remember that your lifeline, your key to survival and your income is tied to your ability to bring in new clients. You need to be making those phone calls and wearing out your “shoe leather”. It does work! Any doubts? Check your competitors. They’re doing what you need to do in order to survive.

Changing demographics and a changing economy will have an impact on your business. You may lose or gain sales. As needs change, what people want can also change. You need to be “out there” calling new people and questioning even your existing customers to determine what the market wants.

In my next article I will be sharing you the progress of the Manufacturers’ Rep group, how they established their PROSPECTING ROUNDTABLES and the expectations for the new sales group. I will also be sharing information on how several companies are coping with shifts in their markets.

For anyone wishing to share thoughts or comments, the writer can be reached at I respond to E mails quicker and more thoughtfully than I do when contacted on social networking sites.

For more information, please visit Gabriel's TNNWC Bio.

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