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This issue's topic was suggested by a sales rep for a small manufacturing company. I was asked to comment about the impact of excessive optimism on the part of salespeople and sales managers.
In the sales rep's own words...
"I was required to call on every account because there was the slightest potential of a sale. My boss was so optimistic about every account that it clouded any professional decision he could make. For example- he told me that he called on some accounts every other week for 5-8 years before they gave him any sales. The average customer we sold to would give us around 1-10k in sales a year at an average of 18% gross profit. With a high overhead, this did not allow (profit wise) for us to spend all our time on these accounts. We needed to seek out all the accounts that had the potential and were willing to purchase off of us in a timely matter. While calling on many smaller accounts that averaged sales 1-10k yearly, we were not developing other territories that were less competitive and offered much more sales and profit potential.
"He spent tens of thousands of dollars developing accounts that he will not make money on for years because he was so optimistic they would buy, while there was perhaps much more profitable and open minded accounts waiting for a more customer service oriented company to serve them. His optimism (I Think) clouded his judgement to decide who we should sell to and how much time you should dedicate to one company before you see that it is not going to be profitable in the long run.
"We have had nothing but horible responses to our presence in front of our competitors largest customers that it leads me to believe that there are going to be companies you sell to and companies you do not.
"I'm the salesman, and I have the knowledge and expertise to decide when a customer has the desire/purchasing power to buy. These customers are screaming no. But my boss is telling me yes. I'm trying to be a professional about this, but when customers tell you straight up, do not come back. I feel that I need to respect that, and I need to move on and focus my energy on more prospective customers. My boss won't acknowledge that from customers, he insists that they will buy, and you must be back the next week regardless of what they say."
Thanks for sharing your experience with us. I don't know how many times I have heard stories like this. Each and every story is painful to listen to because I know how hard of a situation this is.
The person who knows the most about the prospect is the sales rep who is calling on the account. There are too many sales managers who don't or won't listen to their salespeople. We are hired for our intelligence, our energy, and yes our ability to produce results. If a sales manager just wants to tell you what to do, then he should hire a retail clerk who will simply follow orders.
One of the first principles of maximizing your revenue as a sales rep and as a company is to focus. You must know who is most likely to buy from you, and who is most likely to buy from your competition. The top sales reps know this. They can spot someone who will buy, versus someone who will ultimately buy from the competition.
What if you work for a big company, and your main competitors are small companies? This could be either a blessing or a curse. If all of your prospects are Fortune 500 companies, or aspiring growth companies, you'll probably be in good shape. On the other hand, if all of your prospects are small companies, your probably in bad shape. This is what I call a cultural mismatch. Your prospects are probably going to feel more comfortable buying from your other smaller competitors. Why? One reason could be that they believe your competitor's commitment and service to be more personal.
It's a good idea to have a written profile of your ideal customer - that is, the customer who is most likely to buy from you. Company culture, demographics such as revenue, industry, and buying style are all things that you want to consider in creating this.
As Chinese general Sun Tzu said, "He will win who knows when to fight, and when not to fight."
Following this principle saved my ass a few years ago. While working for Vantive, I was asked to take on a sales opportunity that would have earned me a 6-figure commission on just one single sale. After making a phone call, and a face-to-face sales call, I concluded that the deal was wired for my main competitor, Siebel Systems. I backed out the deal. My sales VP was pissed. She assigned another rep to the deal. The sale eventually went to Siebel for the reasons I predicted, and the sales rep who worked the opportunity lost his job shortly after that.
If all of your prospects are already customers of your competition, then you must take a different tack. When I worked for IBM, we had teams of sales reps who did nothing but "invest" in competitive accounts. IBM spent tens of thousands of dollars each year schmoozing these accounts, working over time to gain their trust and waiting for the competition to slip up. But small companies don't have the cash and time that an IBM has. So you have to be choosy.
When the competition has set the rules of the battle by owning the accounts, there is only one thing to do: change the rules. If you can change the rules of the battle, you have a chance. If not, you are on a suicide mission. While at IBM, most of our competition went after accounts with a "latest technology" or a "low price" strategy. IBM typically was neither of those. We had to change the rules to focus the decision on "total cost of ownership". Because when all factors of cost were included - maintenance, service staffing, reliability, etc. - we were the lowest total cost solution. We generally needed to call higher in the account to accomplish this.
When you can't win, don't be macho, and try to sell ice to Eskimos. Create a written profile of your ideal customer. Start by looking at the common characteristics of deals that you have won, and customers that are happy with you and your company. When an opportunity looks hopeless, change the rules so that you can win, or walk away (even if the prospect is begging you to sell them).