Ken Krogue

The message of Monday’s blog this week is short and sweet:

If you’re a B2B sales organization, it’s more important than ever to have a dedicated lead generation and qualification team.

The Bridge Group’s Matt Bertuzzi showed recently that 43% of organizations surveyed by CSO Insights were increasing their sales team size by at least 10%, and 24.7% were increasing there sales force by 20% or more.

Our own research in 2009 showed that inside sales hiring in B2B was going to go up 7.5% a year through 2015.

In the same vein:

The Funnelholic recently provided a list of 54 things to do when building a lead qualification team.

Marketo’s Jon Miller provides Seven Ways that Sales Development Reps Drive Revenue.

Green Leads’ Michael Damphousse demonstrates that the “actionable” activity rate of phone vs. face-to-face prospecting is much closer than any of us think.

The point of all this is simple: inside sales and lead qualification teams drive revenue, period. As much as I respect and admire the work of marketing automation technologies, inbound marketing companies, search engine marketing, and the like, it’s becoming ever more clear that direct outbound prospecting, and fast, immediate response by a qualification team to inbound inquiries are a critical strategic advantage to get leverage in the B2B Sales 2.0 era.

In some ways, this article by Josh Bernoff at Forrester is nothing we haven’t already heard: “In the Web/Sales/Marketing/Customer 2.0 world, the buyer has all the power.”

But I was interested by his particular take because it pits “customer engagement” against traditional competitive advantages: “A customer obsessed company focuses its strategy, its energy, and its budget on processes that enhance knowledge of an engagement with customers, and prioritizes these over maintaining traditional competitive barriers.”

The forces of disruption mean that unless you’ve got a huge competitive advantage in a critical market area—and maybe not even then—at some point during its life cycle, your business will have no other true value differentiation other than:

1. customer satisfaction, and
2. the processes you use to create it.

It’s very similar to something Guy Kawasaki mentions in this interview with Brian Solis. Customer “enchantment,” he states, comes from the recognition that traditional competitive advantages are incredibly difficult to attain, and even more difficult to keep—and thus customer engagement becomes a critical factor for success.

For example, Guy states, Apple’s real competitive advantage isn’t “engaging” with customers, at least not in the “social media/customer feedback” sense. Based on his first-hand observations working for the company over the years, Guy feels Apple’s corporate approach is actually kind of stand-offish and aloof. The difference is that their competitive advantage—integrating the best possible user experiences into their products—is so far ahead of everyone else they don’t need to be as outwardly “engaging.”

Josh Bernoff echoes, “You think the iPad came out of [customer engagement] surveys?”

No, it came out of Apple’s clear understanding of an “unarticulated” customer need: the desire for a smaller, lightweight, mobile, Web-enabled device with 85% of the functionality of a laptop, yet with a more intuitive, easily accessible interface. Apple has maintained its competitive advantage to this point out of sheer momentum, existing loyalty, and great product.

Why has Wal-Mart’s brand started to erode from its 1990s position of power? Because its competitive advantage—depth of distribution—no longer carries the weight that it used to. We no longer care that Wal-Mart has everything (cheaply) under the sun; we can get that sitting in the living room in our pajamas (and not have to deal with dank, underlit stores, crowds of people, ignorant customer service reps, and slow checkout lines).

The increase in customer buying power has exacerbated competitive pressures on businesses (Josh particularly mentions Harvard’s Michael Porter and his Five Competitive Strategic Forces). When customers exert more control on their markets, businesses must in turn increase responses to other competitive elements (rival organizations, threat of new entrants, bargaining power of suppliers, threat of replacement/substitute products).

Ultimately those pressures manifest themselves in different ways for different organizations.

It’s your business, your decisions. You know your executive team, your suppliers, investors, customers, employees, distributors, artisans, detractors and (hopefully) evangelists.

The question is, which of them really, deep-down, gets the most attention?

For the past 3 or 4 years, “Zappos” and “incredible customer service” have been essentially synonymous.

Bring up the the little ‘ole online shoe retailer that Amazon bought for a cool $1.2 billion, and invariably someone starts spouting stories of the company’s legendary customer satisfaction and loyalty.

The 365 day return policy. Pre-paid shipping of shoes both ways. Service reps spending 4, 5, 6 hours on the phone getting an order or a return right. The empowerment of front-line service reps to take care of problems on the spot (including issuing credits/refunds without management approval).

I bring this up because late last week, Robb Young, InsideSales.com’s Director of Operations and I got back from a visit to Zappos corporate headquarters just down the dusty road of I-15 in Henderson, Nevada.

The visit was nothing short of a revelation.

Are the stories true?

Most of them. Here’s my 3 Biggest Takeaway’s from the visit:

Takeaway #1

Customer service is a culture, not an action item.

If I could convey one thing from the visit, it would be the feel, the atmosphere in the building.

This was a company with an identity. The culture from top to bottom intrinsically reflected leadership’s values. Conversations, employee activity, even the physical space design reflected the deep commitment to the customer.

Takeaway #2

Their employees self-police for metric variances.

Like any business, Zappos has certain hard and fast metrics that are non-negotiable. But many are entirely fluid, based on employee discretion.

The 6-hour service call stories about Zappos are the stuff of legend, and a huge PR boon for them. But it doesn’t necessarily mean Zappos wants their reps taking one of those calls a week.

Interestingly, Zappos trusts their employees to make the distinction. They review certain cases to see how certain employee actions were done, and if things deviate too far from the norm, they certainly address the issue. But the front-line employees are empowered and expected to create their own collective process of customer care.

Takeaway #3

The process determines the metrics, not the other way around.

Here’s one example: Zappos does not want to leave clients on hold. They’re intensely interested in getting callers off of hold, and talking to a live agent.

Once they’re talking, however, there’s no set time frame for how long it takes for the rep to resolve the issue.

By default they follow the “80/20″ rule: 80% of calls need to be answered in 20 seconds or less, but after that, it’s entirely up to the rep’s discretion how to keep the customer satisfied. There’s no time limit, no urging support agents to get off the phone as quickly as possible. Take care of the customer in front of you, then worry about what’s next.

“Resolving issues as fast as possible” takes a back seat to taking care of the customer, period.

No business is perfect, even Zappos—but watching a company this focused, this committed to their own vision inspired me, and gave me a glimpse of how we could better transform InsideSales.com.

It’s a tough pill for new and inexperienced sales reps to swallow, but it’s absolutely true: it’s just as easy to lose a deal on the last five percent of the journey as it is on the first five.

High performance sales reps know you can get a deal 95% right—and still leave a customer highly dissatisfied.

A co-worker related an experience last week that proves this point in absolute clarity. Apparently he had gone in to get a new pair of eyeglasses from a local retailer, and 9/10 of the experience was unaccountably pleasant. Service was prompt and efficient, the optometrist demonstrated a high level of competence, and the business carried a quality selection of frames and lenses. He chose a style of frame that suited him, the order was placed, and it arrived a day ahead of schedule.

So far, so good.

Except when the lenses and frames arrived, the lens makers had sent the wrong size (for this business, the frames and lenses were generally ordered separately and assembled on location).

At this point, the company had two choices:

1. Fix the problem by re-ordering the right lenses, even though it meant the customer wouldn’t get their glasses for another week.
2. Try to grind/reshape the lenses on-premise, and/or jury-rig the frames to make them fit.

Not a great situation, but eminently fix-able. Depending on what the customer wanted, either could potentially be a long-term win for the customer and the business.

Unfortunately, the rep didn’t even bother to ask.

Maybe she was trying to avoid a “customer service disaster” by “making the customer happy.” Maybe it was because it was late, and the rep just wanted to go home and not have to deal with the problem. Or maybe it was just “too inconvenient” to re-order the lenses. But for whatever reason, and without any input from the customer, the rep chose Option #2.

Strike 1: Not asking the customer what they wanted.

Unfortunately, Strike 1 was immediately followed up with Strike 2: She didn’t even get it right.

The rep took the lenses into a back room and started grinding around the edges. Then without even giving my co-worker the “right of denial,” she took a pair of needle-nose pliers to his brand new, never-been-worn, $300 Titanium flex frames and started bending and twisting. When the lenses still wouldn’t fit, she went back and did some more grinding. Then a third time.

Finally, she ended up taking a set of screws that weren’t even the right size for the frames, shoved the lenses into the sockets, forced the screws through, and snipped off the screw ends.

By now small scuff marks had appeared along the joints of the frames, the screws were visibly misaligned, and the ear pieces of the frame were now running slightly but noticeably askew (he showed me the glasses himself).

The service rep handed the glasses back with a smile and a happy “Here you go,” absolutely certain that she had just made herself into a customer service superstar by “fixing the customer’s problem.”

Never mind that my co-worker friend would have been more than happy to wait the extra 5-7 days to get the right set of lenses. Never mind that the rep’s “exemplary service” had subtly changed the basic shape of the frames so that they no longer felt like the demo pair that had won him over in the first place.

Why he didn’t immediately protest, I don’t know. “I didn’t want to cause a scene,” he told me. “I thought, Well, everything up to this point has been great, so I guess I’m willing to cut them a little slack. And it’s not like the glasses are unwearable, or anything, it’s just that I should have been given the choice. If the entire process up to that point hadn’t been absolutely stellar, I probably would’ve demanded an exchange for a new set of frames and lenses, but as it stands, I’m definitely not going to go back, or recommending them.”

I should have been given the choice.

The morals of the story:

1. Never, ever assume you know what the customer needs. Ask them. Then when they tell you, ask again until you really know.
2. Remember: you can lose a customer’s trust—and consequently their future business— at the “11th hour” just as easily as on Day 1.

There’s an old saying, “Hoe to the end of the row,” which a lot of people assume means that you need to stay longer, keep working after everyone else has left.

But it also means never cutting corners, sacrificing quality for convenience, and it especially means never assuming “It’s what the customer wants.”

A couple of weeks ago, we showed a client an early beta mockup of a custom development project we were doing for them. It was a big project, and it was taking quite a bit development resources (read: time) to complete.

The client’s feedback was, shall we say, “pointed” (though not unfair, and certainly relevant).

After the client meeting, the support liaison emailed them the following (I’m paraphrasing here):

“I apologize that we’re not finished yet. The main features you’ve requested are already built, and meet the requirements you scoped. When the other components get added to it, we’re confident it will be what you want.”

On the surface there’s nothing wrong with that, right? Just a reminder to the customer about the scope of the project, what was agreed on, and that there’s more to come.

Here’s the problem: In spite of its good intentions, the response includes the implied assumption that if the end product isn’t what the client wants, it’s their fault for not scoping it properly.

That’s something you never tell a client. As vendors, we don’t get to decide what’s “good enough.” Ever.

Sometimes, of course, we make the choice to prematurely stop working on a project. The return on investment isn’t there, or the opportunity costs too high. In that case, we work on the project until we decide it’s not worth it anymore, and the customer can take it or leave it. Depending on the circumstances, there’s absolutely nothing wrong with that choice—but that’s entirely different than the customer deciding that it’s “good enough.”

Telling a client “Well, that’s how you scoped it!” doesn’t solve the problem, it creates resentment. A client didn’t pay for a product scope, they paid for a solution, and if what they see isn’t meeting they’re needs, they have every right to voice their concern.

Telling a client that a product that doesn’t meet their needs is exactly what they asked for is a recipe for massive discontent, and if they think there’s a serious enough breach of contract, say hello to the lawyers.

When a client attacks our work, sometimes we get defensive—”Well, we’ve worked hard on this, we put our best people on it, we built this two weeks ahead of schedule.”

Unfortunately, defensiveness only exacerbates the problem. The client doesn’t care; it’s not what they want. Telling them how hard you worked, and the resources you invested doesn’t increase their confidence, it degrades it. Now not only is the client panicked that they’re not getting what they need, they also feel they can no longer trust you to understand what they need. In the prospect’s mind, if you don’t understand what they need, you have zero shot of producing it for them.

Look, I understand that sometimes a client’s expectations are unrealistic, and ironically, they’re usually the ones least equipped to make your solution work. If they knew what they wanted/needed, they wouldn’t be flailing around in the dark asking you to fix it, and it’s hardly your job to work miracles (of course it begs the question why you took a contract with an overly-demanding, pain-in-the-butt client to begin with—but that’s a whole other story).

But if a client’s not happy with what you’re producing, be darn sure before you throw out a nonchalant “It is what it is,” that you’ve done your part. If the cost-to-benefit of making them happy is too high, hand over what you’ve done and call it good. Just don’t presume to tell the client that it’s “good enough” when you’re finished.

Is this your sales pipeline?

Bumped into an incredibly thought-provoking blog by former programmer and VC investor Jason Cohen over on his blog, A Smart Bear.

His point is simple:

If you’re an “early phase” startup, when it comes to choosing clients, never say “no,” but rarely say “yes.”

“Wait a minute,” you might say. “This is an inside sales blog, right? What’s all this about ‘choosing’ clients?”

It goes back to something I read last year on the Sales 2.0 Network and InflexionPoint blogs: there’s only two reasons a rep ever loses a sale, either he or she wasn’t supposed to be there in the first place (i.e., pursuing an unqualified opportunity), or they get outsold by a competitor.

In the original post, author Donal Daley states that one of his consulting firm’s challenges is to change the mindset of sales reps to take on fewer deals, not more.

“We discuss ways to help sales teams win 4 of 7 deals, instead of 3 of 10. This means that you pursue fewer opportunities. It’s not about ‘getting up to bat’ more often (emphasis added). In fact it’s the opposite.”

Bottom line: high-performance sales reps don’t take on unqualified prospects, or fight for deals they can’t win.

One more thing: in the same blog, Donal states that it takes the average sales rep 50% longer to lose a deal than to win one.

Think about that for a second.

If your average close rate is 25%, it means you’re spending four and a half hours on losing deals for every hour you spend on winning.

If you were to sit down and analyze your “10 best” prospects in your pipeline, is it possible you’d discover three that could be tossed out right now—and it would have a negligible impact on your performance? In fact, might it actually improve your performance?

Believe me, I understand more than anyone that sales is a numbers game—but it’s too easy for the all-powerful, sacred quota to become something other than a goal, a number on a wall. It starts to live, breathe, stalk us in our cubicles.

Its all-consuming power persuades us to fill our pipelines with something, anything, even if some (most?) of it is crap and sludge. I’m sure some companies are immune, but I suspect for a lot us (myself and InsideSales.com included), two or three out of ten opportunities actually aren’t. We’re chasing “rainbow sunshine,” half-committed buyers, and people that might say “yes” but only if the conditions of their acceptance are prohibitively in their favor.

It’s the same principle Jason Cohen is espousing for pursuing potentially disruptive clients:

Set the conditions of ‘yes’ such that:

1. If they say ‘yes,’ you’re happy because the terms or money are so good, it more than compensates for the distraction.
2. If they say ‘no,’ you’re happy because it wasn’t a great fit anyway, so it’s not worthwhile for a small return on your time and effort.”

If you’re selling into a commoditized market, you may not have much choice in who your customers are; you take whatever you can get.

But in high-touch B2B sales, don’t be too quick to dismiss the idea that less is potentially more. One very good client is often worth four mediocre-to-bad ones, in my experience—and somewhere along the line, a sales rep was involved either way.

Occasionally we all get a reminder that what we do in business, at its core, takes a back seat to things that are far more important. Brief moments, sometimes historic to the world, sometimes only to us within the realm of our own lives and struggles.

President Obama’s address to the country late last night stating that Osama Bin Laden had been killed by U.S. Special Forces was one such moment for me.

Some have said that celebrating someone’s death, regardless of the justice merited by the event, should not be undertaken lightly, and I agree. But the President’s announcement was both stunning and poignant.

In a rush I got taken back to 1983 and my time as a know-it-all, slightly rebellious 17-year-old kid at the Naval Academy in Annapolis.

I remembered the people, the men and women I served with, the friends I met.

I heard President Obama’s report to the nation and wondered how many Navy SEALs, how many Army Rangers, how many Marines put their lives on the line to make it happen.

I thought about how many had died already to protect this great nation I am so blessed to live in.

Am I getting a little bit sentimental here, a bit maudlin?

Maybe.

But there’s a lesson to be found in moments like these, moments that come to us in such sharp focus, such vividness, that it forces us to reflect on what goes into the makeup of our lives, the things far more valuable than what can be captured on a résumé.

Who we are, what we stand for, our belief in the power of the human spirit, are more important than next month’s P&L report, or last week’s marketing ROI. We forget—probably far too often—that how we approach our business is often more important than how successful the business actually is.

Integrity is not dead. Treating customers with honesty and professionalism will never be passe. Looking for ways to be successful without sacrificing our values is the truest of entrepreneurial spirits.

Two quick hits on some stuff I found interesting:

I.

Craig Rosenberg is generally a pretty smart and insightful guy. As the self-proclaimed “Funnelholic” and Focus.com VP of Products and Services, his extensive background in B2B sales and marketing gives his voice some weight in our space.

So when Craig (@funnelholic on Twitter) recently posted that “Being a B2B buyer sucks,” I snapped to attention.

All four of his points were excellent, so read the article, but I was particularly taken by Point #4:

The ‘contact us’ box sucks. I see that, and I just think black hole. The dropdown you provide doesn’t make me feel like I am going to go in the right direction. When you walk into a good store, someone asks, ‘How can I help you today?’ How about taking that methodology to the ‘front door’ of your buying process?”

Craig, you have no idea how true that is–and the Harvard Business Review proved it.

According to the HBR article, 26% of all online “Contact Us” Web form requests go completely unanswered (our own internal studies show the number can range from 25% to as high 40%). It’s as if the business believes you don’t exist.

Another 25% wait over 24 hours to get back with you, the real-world equivalent of walking into Nordstrom’s and having the cashier tell you, “Come back tomorrow when we feel like talking to you.” Another 6% wait between 12 and 24 hours to contact you.

Is it just me, or is the ridiculousness of this state of affairs beyond description?

Everyone—and I mean, EVERYONE—talks about paying more attention to the customer, treating clients and prospects like gold, because they’re getting harder win and keep. Yet if you’re the average company, nearly 60% of direct Web-generated inquiries—people who come to YOUR Web site and specifically ask to be contacted—have to wait at least 12 hours to hear back from you, assuming you get back to them at all.

I know I beat this nearly-dead horse on a regular basis. But for some odd reason, I keep finding opportunities to address the issue (wonder why).

II.

Loved this quote from Kevin Davis in his article, “Are You Selling Too Fast?” over on the American Express Open Forum:

I’ve been delivering sales seminars for 20+ years. When I ask salespeople to tell me how they sell, they rattle off the steps of their sales process. When I ask how their customers buy, they are stumped.

This disconnect between selling and buying is the root cause of many sales problems.”

It’s easy to park our rear ends in our office chairs and plot our pipelines for the month—but we’re not really thinking about what the prospect is going through to make their buying decision.

The best sales reps know how to get into the customer’s buying cycle, and engage with how the prospect’s decision will be made, not how the product will be delivered.

It’s one of the oldest clichés in recorded history: “Never discount the power of a first impression.”

But when it comes to sales hiring, just how long does a real “first impression” last?

The Bridge Group states that the average tenure of a typical Inside Sales rep is just under 3 years–2.9, to be exact.

But just how long does it really take to know if a rep is going to work out?

Anthony Iannarino over at The Sales Blog gives some pretty good advice for just how long a sales hire’s “first impression” should last:

“What you have seen in the first ninety days of your salesperson’s employment is what you can expect to see in the future. If they haven’t done the prospecting that you have agreed to during that time, they aren’t going to. If they haven’t met their activity quota, they aren’t going to. If they haven’t built the pipeline or won the opportunities that you agreed to and that are what should reasonably be expected of them, they aren’t going to.”

Great advice, and something we’ve followed for years over at InsideSales.com. All of our sales hires are given a 90-day “evaluation period,” where they’re offered full compensation for their work, but with the understanding that continued employment is conditional based on the work they do during their eval. If the 90-day initial review doesn’t show the results we’d like, we have a serious conversation with the rep about whether they’re going to stick around.

Does that sound cruel? In reality, for most reps it’s a breath of fresh air and sigh of relief, to know that they’re not going to be “BS-ing” themselves (and their managers) about a job they weren’t particularly qualified for or enjoying.

A few months back, I mentioned that we had started on the process of doing a project for a local Utah non-profit, the Center for Women and Children in Crisis (see their Web site here).

And last week, we put the “rubber to the road” and actually did it.

We feel extremely blessed to have had the opportunity to participate in this project. InsideSales.com CEO Dave Elkington and I have made a specific commitment to finding opportunities like this, and giving back to the community, particularly to at-need and at-risk groups.

If any of you have knowledge of other opportunities like this one, please don’t hesitate to contact me. Call in to the company, and ask to talk to me directly about a charitable work opportunity.