The Green Sheet Online Edition
March 3, 2013 • 13:03:02
The rewards of lean thinking
What do salespeople have in common with factories? Remember that without salespeople, no orders would be placed. And without orders, factories wouldn't operate. We have something else in common: both factories and salespeople are expected to produce, quarter after quarter, and year after year.
As the first quarter of 2013 draws to a close, it's time once again to ask ourselves how we're doing, to take stock and to evaluate performance. As we all know, it's not easy to step away from our fast-paced, high-pressure jobs to analyze last quarter's results. However, most merchant level salespeople (MLSs) find quarterly reviews essential to effective territory management.
Learning from earnings
Look at any earnings report, and you'll see a thorough evaluation of what went well, areas in need of improvement, and a near-term forecast. Most forward-looking statements are based to a certain extent on input from people like you and me, who manage territories and close sales. MLSs who don't work for public companies would still benefit from self-evaluation, asking tough questions, such as:
- What's my closing ratio?
This metric is calculated by dividing total number of sales by the number of sales calls. If this is new to you, here's an example: if you made 40 sales calls last quarter and closed 20 of them, divide 20 by 40 to arrive at your closing ratio of 50 percent. - What is my income goal for next quarter?
An income goal should factor in overhead, anticipated expenses, savings, discretionary spending and incentives, such as a new car or vacation that would motivate you. - How many more calls do I need to make, based on my current closing ratio, to achieve my income goal?
If you have a 50 percent closing ratio, double up on appointments to achieve the requisite number of signed accounts. - Which accounts do we expect to sign in the next three months?
Accurate forecasting requires knowledge of your prospects, their willingness to buy and any barriers that stand in the way of getting a sale. - What is the revenue potential of each of these relationships?
Don't just rely on what you see on the merchant statement. Do your research. What are the merchant's plans? Are e-commerce and mobile requirements being met?
Follow the lean manufacturing playbook
Manufacturers recognize the importance of performance analysis and accurate forecasts. The concept of lean manufacturing, derived in the 1980s from the Toyota Production System, grew out of the idea of conserving energy while minimizing waste. The concept gained popularity with the 1996 book Lean Thinking, by James P. Womack and Daniel T. Jones.
Womack and Jones describe lean thinking as "a way to specify value, line up value-creating actions in the best sequence, conduct these activities without interruption whenever someone requests them, and perform them more and more effectively. In short, lean thinking is lean because it provides a way to do more and more with less and less - less human effort, less equipment, less time and less space - while coming closer and closer to providing customers with exactly what they want." So how does lean thinking lead to lean activities, and what strategies can MLSs use in their day-to-day routines that will help them do more with less?
Following are the five steps of lean thinking:
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1. Specify value. The key to delivering anything of value is to fully understand the needs and desires of the customer or end-user. This is Habit Five of Stephen R. Covey's The 7 Habits of Highly Effective People: "Seek first to understand, then to be understood."
A large number of sales professionals prepare for sales meetings by studying up on their own company's products and services, but they devote little to no time researching their prospects. They may win the business using this approach. But they'll never really know what additional opportunities were left on the table, because they didn't take the time to figure out if the business was worth pursuing, if they could win it, and the potential fit between their companies.
2. Identify steps. Once you've done your research on your customer and are in a position to confirm your understanding of the company's vision, mission, needs and requirements, you can begin to organize your notes and identify a path forward. At a high level, this may look pretty much the same from one customer to the next. But this is your ground game. You and only you understand what steps need to be taken with each prospect to carve out a business relationship and establish objectives for yourself, for the customer, and for the synergy between the two companies that transforms the relationship into an "us."
3. Process flow. In manufacturing, process flow is fairly straightforward. Business blogger Cindy Phillips described it as a fluid process in which each step "should flow into the next step without hesitation. The entire process, from start to finish, should literally move like a well-oiled machine. The process should be tight and void of any unnecessary maneuvers. Since the steps are identified and mapped out, the margins of error are greatly reduced or eliminated." To read more of Phillips' "Five Principles of Lean Manufacturing" at eHow.com, visit www.ehow.com/info_8068416_five-principles-lean-manufacturing.html#ixzz2MFDrrVWu.
In sales, we enhance process flow when we take the time to analyze performance, improve our forecasts and closing ratios, and do the presale preparation that enables us to right-size our solutions for our customers.
4. Pull inventory. If the basic idea of pull inventory is using only what you need when you need it, then most salespeople excel at this principle. Most of us grab what we need when we need it and run. But the concept of pull goes deeper than just-in-time manufacturing.
When salespeople have pull, customers seek them out. People want to do business with them. In Kenneth E. Meyer's book Pull Thinking, written with Jeffrey A. Lebow, Meyer described pull as a force that motivates people to take action. "Common sense tells us that the most powerful way to effect the motivation in others is to understand what attracts, motivates or delights them. When everyone responds with complete and total integrity ... the result is Ultimate Service Resonance." You can't fake pull, because it's based on the laws of attraction. The best way to cultivate it is to be genuinely interested in people.
5. Continuous improvement. Inevitably, as we grow in our professions, we learn from our mistakes and successes and become better at what we do.
Being of value
Let's face it: We all have days when we feel like we're on an assembly line, cranking stuff out and trying to make our numbers. But we should also admit that we have great days - glorious, even - in this business.
To return to my original question: What do salespeople have in common with factories, besides making them possible? Whether we're building devices or relationships, both salespeople and factories play vital roles in creating value for our customers.
Dale Laszig is a writer and payments industry executive specializing in business development and sales performance improvement. She manages channel sales at Castles Technology and sales effectiveness programs through IMPAX Corp. and C3ET Credit Card Consortia for Education & Training Inc. She can be reached at 973-930-0331 or dale_laszig@castechusa.com.
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