Monday Nov 18, 2019
EP12: Get the DeLorean; My Profession is Stuck in 1855.
Today, when you examine the toolbox of the modern sales professional, many of us immediately see the abundance of options in the marketing and sales stacks that decorate most of our desktops…I have tools that can disguise my phone number, I know when someone opens an email, I can do a virtual face to face meeting…AI and machine learning tools even tell me what to say and who I should say it to…a scale of portable technology and advancement and capital on any ordinary rep desktop that would leave an Apollo-era NASA slide-ruled engineer in your dust.
But what about the techniques, behaviors, and go to market strategies of that same modern sales professional?
Sadly, for most of us, we’re still stranded in mid-century America. But not the mid 20th Century, rather, I’m speaking of the mid 19th Century America of 33 states. The mid-century of America where the new hot book on the scene was not Good To Great or The Lean Startup, but instead a fresh little nautical fiction text entitled Moby Dick.
In this episode, Chris takes us through a virtual time warp of strategy, territories, and compensation as a salesperson.
Some things have indeed changed, But some remain firmly entrenched in a midcentury President Franklin Pierce’s America. This is the Market Dominance Guys and today’s episode “Get the DeLorean; My Profession is Stuck in 1855!”
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The complete transcript of this episode is below:
Corey Frank (02:42):
When we were doing the test drive with you, at Stormwind we had ConnectAndSell, and we were doing pretty well and we're spending lots of money. Tom says we should probably try another competitor just in case. Well, there are no other competitors. Came back with this company called ConnectLeader.
Chris Beall (02:57):
Corey Frank (02:57):
Oh, okay. Well, sure I kind of felt that yeah, that's the right thing to do for the business.
Chris Beall (03:03):
Corey Frank (03:03):
You know, brought those guys in and you know how the movie ends, right? We probably lasted maybe, gosh, maybe a month with those guys after like three months with you. And then I come crawling back to you and the services, give or take let's just say from Tom's perspective, the services were roughly the same. The biggest difference was the trust factor that I had, because we've probably known each other maybe 10 years before Stormwind and had various interactions. So I did trust you more than I trusted myself. Right? And people like Chad or Steve in the marketplace as well, there are certain folks that I do trust, which is why you seek out their counsel, you seek out their advice. You probably don't set one foot in the AASP Conference in Chicago, you don't even get into the breakout rooms before somebody sees you at the hotel check-in and says, "Oh wait, Chris, I got a quick question about ABC vendor. You're familiar with them."
Chris Beall (04:04):
I can't physically get into the building, which is great.
Corey Frank (04:11):
Yeah, because this trust oozes from you, people do trust you. Is that a little bit of that I may have a superior product? I may have even an exceptional list, but if my salespeople are not trained with true empathy and I don't hire to that, that they'll never get to that threshold. Or I may succeed in spite of my sales team, but how conscious should I be as we're going down this path of market dominance in the selection of the people who give that message?
Chris Beall (04:46):
Hugely careful, this is where hiring somebody who even exaggerates a little bit is highly problematic. I know some who do and get away with it, but they exaggerate transparently. That is, it's a joke. You know, Steve's the opposite. Steve Richard is hyper precise. Steve will never tell you a number that he doesn't know is true. He just won't do it. So there are two personalities out there in the public that take different approaches to it. But when you're hiring a salesperson and you get that person who shades what they say a little bit in order to influence somebody, the problem is that it is the web of lies problem. You can't play it. At some point it just gets problematic.
But the other problem is, human beings are to sincerity as wolves are to fear. They smell it, our insincerity, right? Human beings smell insincerity, and the only people that can get away with being insincere in a sales situation are psychopaths. And there are psychopaths out there, sociopath's whatever you want to call them, who actually have perfected the art of causing people to trust them, even though their intentions are very, very bad. Those people exist. They make up a special subset of society they've existed for all time. They have some function out there. I'm sure you can send them in among your enemies. You might get something good to happen. Some of them are in certain industries that are interesting. I would imagine if I were going to be, say a true undercover spy, living in somebody else's society for 40 years, with intent to subvert them, it would probably be pretty handy to be a sociopath or psychopath because then I could get people to trust me because I manufacture it.
But for most of us, for the vast, vast majority of people, we're stuck with actually having good intentions, sincerely having good intentions in order to be trusted. And that's a funny place for a sales person to be. In fact, when we compensate salespeople, we're basically saying to them, "you know what, I don't trust you to actually put the effort in and do this correctly so I'm only going to pay you for what you bring in." Everybody else in the company we pay because they do what we asked them to do and we've designed that process. If they do a diligently and they interact with other people in the company, in a way that's helpful, or at least not too hurtful, we keep paying their salaries and unless their job description goes away, they get to stay with us, right?
Salespeople, we give them the opposite message. We say, you're an outsider. We're going to pay you as little as possible for doing the job and as much as possible for the results, we don't care how you get the results. We just don't care. Just bring in the number, right? And then we kind of hope that we get sincere people. It used to be, you didn't have to be that sincere to play the scan. So now we have a new situation. It's going to be very interesting to me to see what happens in the world of sales compensation. Sales compensation is based on the notion that sales itself is an external function of the company. Sales is not inside the company, it's outside. It's an appendage, notice where it is on the P and L S G and A sales general and administrative. What, what in the world?
We've lumped it in with the electricity that we buy, the rent that we pay. You have to have a sales function, whatever that is right? The sales job was always to convert inventory that was being generated by a factory. So it's the essence of how sales is thought of as an outgrowth of the core structure of capitalism. So capitalism says this, Hey, I got to have capital to make stuff, because you make stuff with machines, right? That's why capitalism was interesting because machines represent the ability to make more than an individual human working with their hands, with the tools they might've accumulated, say were handed from their mom, their dad, right? So if I'm a carpenter in 1600, well, I apprentice to a carpenter, probably my dad. I borrow his tools for a while and then when my dad retires or passes on or cuts his hand off or whatever the hell he does, those tools become mine. And my skills are mine and I take my trade out and I do my trade.
Chris Beall (10:04):
That's not capitalism. What's the upside of having capital? That would do you no good. In fact, it'd be bad. It would take away the spirit to go out and work.
Corey Frank (10:14):
Chris Beall (10:14):
Idleness, right? I've seen books, very sacred books that talk about how dangerous it is to have [crosstalk 00:10:22]. They're not the right ones, the [inaudible 00:10:25] issues. So there's only so many forms of entertainment.
Corey Frank (10:30):
Chris Beall (10:31):
So then we come along and it's like, okay, wait a second, we figured out how to take the stuff of the earth; coal, rain falls uphill and runs downhill. Just a couple of things and turn that stuff into motion. And we figured out how to harness that motion and turn that motion into inputs turning into valuable outputs without a person doing it. And now we say, "Oh, well look at this. I can make cotton gin."
Well, what does a cotton gin do? It solves one problem and it creates another problem. The problem is I can run the thing all day long. I can run it all night long. I can do it with two people, one in the day, one in the night, because people need to sleep. That's it, two people doing the job of a hundred people. So now I have this output. I got to dispose of the output. Now I need sales to dispose of the output and turn it into cash.
Why do I want the cash? Because the cash is capital to get a new machine and double my productivity, double my production, not my productivity, but my production. So, capitalism produced this beautiful thing, which is a positive feedback loop between the gross profit produced by sales and the future size of my company. Because as long as I have access to the inputs, which is why big companies became vertically integrated, I need my own coal. I need my own iron ore, right? They have integrated supply chains and they did that because interruption of supply would cause your capital to go idle. Your machines would go idle.
Sales' job was to keep up with the output and the primary way sales did that was by dynamically adjusting price within individual markets called territories; it was always geographical, in order to make sure that all the output was disposed of. So the reason for the great discounting culture in sales is that the job of sales was to dispose of the output. You can't have inventory buildup forever. You got to sell the stuff off in order to be able to buy the raw materials that you needed to make the stuff in the first place and then in order to be able to potentially expand the business. So sales is still stuck in 1855. Still looks exactly like it did in 1855, which is, I hire you, I give you a territory and you have discounting authority. And you'll only exercise it to a particular degree because your commission depends on how much you sell. So the discipline is provided by the commission.
Corey Frank (12:59):
And I have extra inventory and I need to get it down to a certain level to keep these machines going and I need a machine [inaudible 00:13:06].
Chris Beall (13:06):
It's very simple, right? Why sales exists and why it sits there on SGNA. Why sales doesn't sit, where it should set today, which is right in R and D. Sales is actually a form of development at this point. It's development of the thing you need more than a product, which is a market. The scarcity in the world has gone away from products. You can build products anytime you want. See this product here, this little coffee cup with all of this stuff on it, it's my wife's name and all this cool stuff. I can go on Zazzle and have one of these things made for me. I can have a hundred mate, I can have 10,000 made. And all I do is go click, click, "no I don't want it to say this, I want it to say this. No, I don't want the color to be white I want the color to be beige. No, I don't want that size, I want the handle to look different." Right?
Think what that used to take 150 years ago, a hundred years ago, 50 years, 30 years ago. That's huge to make that design decision. We made molds, we have jigs, we have this, we have that. My capital had to be affected. Products are nothing nowadays. Markets are [inaudible 00:14:11]. I was talking to a guy last night about a radical product, a product that will change the world. I can describe it at the very highest levels. It's a product that would allow any owner of any company to know what their company is worth at no cost. Just like you can know what your house is worth through Zillow, you can know what your company is [crosstalk 00:14:34] super valuable product.
Anybody can see how valuable it is, right? If you could do that and make the product, you do it. Well, you can do that and make the product. It turns out to build that product, if you have the deep knowledge of that domain, which this individual happens to have, is a matter of calling up [inaudible 00:14:50] and saying, Hey, Tesh would you take a $100,000 to build this for me in six weeks? And he goes, sure, yeah, maybe whatever. I don't know, I'm busy, whatever. Right? So say decides to do it. You're going to get a usable product within six weeks that will change the world. [crosstalk 00:15:06] a marketing problem.
Corey Frank (15:08):
Chris Beall (15:09):
Your product problem has gone down, which is why VCs will no longer fund ideas because the products are so easy to build. They're going, if you bring me an idea, what's wrong with you, why didn't you build the product? So they won't play that game anymore. But the [inaudible 00:15:26], is to go to market game as a demo for a future acquire. But if you're a serious corporate, that is, you're stuck with survival. As a corporation when you get to a certain point, the option of just throwing yourself away, is not so great. If you're a startup, fine, you throw yourself away. You get bought by somebody for whatever the going price is. Everybody's got a formula such and such X revenue, but this category of company, blah, blah, blah, right? But if you're running a hundred million dollar company that you've built up over time, you don't have one market you dominate?
Somehow say two of your markets that you used to dominate dissolved through secular forces, they're not there anymore. So you're going to go out of business. It's not an "if" it is a "when". You will go out of business essentially for a simple mathematical reason, someone else will come in and dominate one of your markets that you're playing in. And as you lose share, you'll have to discount like an old fashioned sales guy in order to maintain what feels like share in the market but it actually is going down because the gross profit contribution of each unit that you're selling in that market on a repeated basis is going down and you're hollowing out your company.
Corey Frank (16:33):
Okay, so if I take this in continuous equation here, superior products, better than average products may not necessarily win in the end if their go to market strategy, their sales staff is not at a superior level. In other words, all of the things being equal in a vacuum, a superior sales force with a substandard product will beat a standard product with a substandard sales force over time, over an extended period of time.
Chris Beall (17:05):
Overtime, every time. There will be no exceptions to that. There's a certain class of product that is not a superior product that is sort of the mindblowing product where somebody gets it just right. And it resonates in the market. Slack is an example of a mindful product. There were a hundred Slacks, right? There were a thousand Slacks at one point and they happen to get it together just right and "bing" the thing resonated and it spread. And everybody uses those as examples, but when you look at those examples, they apply to a tiny, tiny fraction of the kinds of products that you can feel out there. Almost all products you can feel for the enterprise can't work like Slack in terms of the spread, because the unit of adoption isn't the human.
Dropbox was like this, the unit of adoption was the individual and then they did this thing. Most products, the math doesn't work like that in [inaudible 00:17:58]. The unit of adoption normally is the work group or the department or the division of the company. [crosstalk 00:18:07] And the unit of adoption or unit of change is above the level of the individual, product is essentially, not meaningless, but secondary to go to market strategy. Did I make a list? So, it doesn't get easier and easier or harder and harder?
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