Sales: From zero to hero
Wednesday, March 14, 2007/
Jack Daly is a sales guru in the US who built six businesses from scratch into national sized firms. He tells AMANDA GOME his secrets.
Jack Daly is a sales guru who built six businesses from scratch into national sized firms, two of which were sold on Wall Street, to First Boston and Salomon Brothers. One company he led was an Inc. 500 company ranked number 10 after five years of business. Now he helps companies build their businesses. He talks to Amanda Gome.
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Amanda Gome: What are the top five things that you see entrepreneurs doing badly when it comes to selling and what should they be doing?
Jack Daly: One: I see people that are good at selling from a natural technical standpoint say, ‘Gosh, I could start a business and do this on my own and make even more money’, and an awful lot of people make that transition but they don’t make it very well. They make it in the context of going out on their own and starting a business. In fact it turns out differently.
They actually work longer hours at less money with greater risk, and the reason is because they don’t get out of the way in doing the actual sales activity. They become the chief sales person for their new enterprise, their new company.
But a sales leader’s job – and if you’re the entrepreneur owner of the business, I would suggest that you’re the sales leader – a sales leader’s job is not to grow sales; it is to grow sales people in quantity and quality so they in turn will grow your sales.
So one of the areas I think that mistakes are made is that the sales person who became entrepreneurial in their business is too intimately involved in the deal making and in selling. What they should really focus on is finding other sales people to join their enterprise and growing them once they’ve got there.
What’s the second biggest mistake entrepreneurs make?
We sell too soon. We’re so driven to hitting our numbers that the person that gets overlooked all too often is the customer. Are we really needing and exceeding what the customers’ actual needs are? Are we delivering something that they actually have a desire and a need for? And so a sales person’s job is to do a lot less selling and a lot more helping people to buy.
And in fact, Amanda, one of the things that we see from the very best sales people and the very best entrepreneurs is when they discover the needs of these customers; sometimes they’re not the best resource or they’re not the best answer for those needs.
Then the best sales people in that bunch of entrepreneurs will find the match, even if it isn’t in their company, and send that referral over to someone and then when it’s their time and those customers come back to you and they don’t even shop, they don’t even look at anyone else.
Right. What’s number three?
In order to compete in today’s marketplace there is a minimum price of admission: we have to have a product or a service that generates genuine real value. The very first time that a customer elects to buy from a sales person’s entrepreneur company they don’t buy real value; they buy perceived value because the only time that you can buy real value is on the second and subsequent purchases.
You know Starbucks is known for standing in line, waiting for your coffee and when you get to the register for payment, you’re now paying $3 and $4. The very first time that anyone stood in line for that cup of coffee they weren’t standing in line because they knew it was good. What they were standing in line and willing to pay a premium for was perceived value. The very first time you win over a customer, what you’re winning them over with is perception of value.
So a great exercise for an entrepreneur owner and sales person is not only to create a product or service with real value, but they should push their organisations in themselves to figure out how they’re going to sell perceived value because the perceived value is going to be the first point of vulnerability at winning over new customers.
And then how do you turn the perceived value into the real value?
Well first of all, remember we’re suggesting the minimum price of admission is to have the real value. So if your product or service is not of genuine real value and you created an effective perceived value you’d have a lot of one time only customers.
Number 4. When we meet with success we very often get attached to the success vehicle that brought us that success. In other words, we ride the horse too long in the race and since it was a winner for us early, we’re prone to just whipping it all the way around the race track until it exhausts itself. The better organisations and entrepreneurs are always cognisant to say, ‘How much longer can I run with this and what’s coming down the road here such that I might jump off of this horse and jump on to a new one’.
And I have a business hero that is probably the absolute best model out there and that’s Steve Jobs. He first started Apple Computer but then has gone on to create Pixar in the film animation arena and now is back to Apple with tremendous success by changing the music industry by way of the iPod. And within three to six months of the latest-version iPod, he has another one is coming out.
He’s essentially putting himself out of business before his competitors do. He’s changing horses during the race. So he continuously self-destructs his own company and he says, ‘Better that I do it to my own company and reap the rewards than have a competitor look at my company and say, Ah ha, let’s change the horse that Steve brought to the race’.
And number five?
Number five is really looking at a company from an airplane view of 30,000 feet up. When we look at companies from a 30,000 feet up standpoint what happens is, is that we’re in such a hurry to go to market with a product or service, we’re in such a hurry to get our business up and running that it’s all about setting up some really basic things like invoicing the customer and following up with the invoicing, getting more sales in the door, delivering the product.
What happens over the first few years is something springs up, in most cases not by design but by default, and that is the culture of the company. What we say about the culture of the company is this: that if the entrepreneur-owner could figure a way to not only engage the employees’ minds and bodies, but if you could win over their hearts, you would have a very sustainable competitive advantage.
What are you doing in your companies by design that causes people outside to be knocking on your door saying would you please hire me? What are you doing in your company that is causing your people to say, ‘I am the happiest I’ve ever been in any company I’ve ever worked and I would never think about leaving here’.
Those are the people that are going to come in hourly on their own initiative. They’re going to stay late on their own initiative, and when the customer needs something they’re going to jump before any of the customers say they need to be jumping. In fact, they’re going to ask how high they should jump. And as an owner-entrepreneur that’s not something you can very easily dictate.
So one of the things that we have to push our entrepreneurs to monitor is whether they are setting up the processes that will give the company a culture that makes people ga-ga over how it company runs and expresses that in every way, every day. And the problem in getting that to happen in so many companies is that the things that fall under the culture umbrella don’t meet this word “urgent”.
They meet the word “important”. I have an expression for that: people and companies tend to underperform because they rush to the urgent at the expense of the important.
It is so urgent for us to go to market, introduce our products and services, win over some customers, bring in some cash that at the end of the week, month, quarter and year, if we were to look back through the rear view mirror of our business, how much time did we spend on the important things that are cultural in nature?
What are we doing to proactively communicate in our companies? Communication is a very key indicator of how a culture is working in a company. What are we doing in terms of recognition systems? Not an occasional recognition of an employee but regular ongoing systematic processes for recognising people.
In fact, we ask the question: how many people are overly recognised in your firm today? If I were to ask the employees in any company that, I don’t think I’d find many hands up. But if the entrepreneurial owner could find a way to prioritise that then they have something that’s called a very sustainable advantage.
And what sort of things would they be? What might you have done every day in your business to do that?
Well, let’s talk about communication and let’s talk about recognition for just a couple of examples. In the communication area I have several of my clients that have implemented something now called a daily huddle. It occurs Monday through Friday and we would just pick a certain moment in time, say, 11 o’clock in the morning.
All of the employees, regardless of their position in the corporate office, would all get together in the lobby at 11 o’clock in the morning, Monday through Friday for no greater than 15 minutes and we would just talk about what took place in the preivous 24 hours, success stories, momentous events and how the company performed financially.
How is it doing so far this week and this month and what do we have and does anybody have anything scheduled that’s really outrageously great today?
What if you’ve had a bad week?
If you’ve had a bad day or several days in that week you’re still openly communicating. It’s better to talk about those things in an open forum than to have people talking about them in their own little offices or work stations because we can then put it into proper perspective and talk about what we’re going to do with it.
One of the things that I’ve always aspired to do is this: as an owner-entrepreneur I can take good news and I can take bad news. What really scares me as an entrepreneur is no news. So the daily huddle enables me to take and get that no news out of the equation. Good news, bad news, we can deal with.
You start new recruits with a celebration. What do you do?
Starting people with a celebration takes off from this concept. In many companies if somebody has worked in the company for five years and they decide that they have to quit because they’re relocating to another place, and there’s no way to legitimately keep them employed in the firm, they’ll stay for a couple of weeks working through some of their outstanding issues or make sure the conversion is good and then an awful lot of companies will do something for that person and that is they’ll throw them a going-away party.
Now they’re leaving the company and yet we’re throwing them a party so we’ve taken the concept and said, ‘We like the concept. We just think it’s on the wrong end. And so why not throw parties for new hires?’ So now I want you to envisage coming to work for one of my companies. You walk into the lobby on your first day and there’s a big whiteboard hanging up in the lobby that says, ‘Welcome Amanda, to the XYZ company, we are thrilled that you are joining us’. And you go over and you check in at the front desk which is manned incidentally not by a receptionist, we call them something different, they’re called Director of First Impressions.
And so you are greeted by the Director of First Impressions and you say, ‘Hey, I’m Amanda’, and the person there says, ‘Wow, we’ve heard some really thrilling things about you. Let me take you back to your desk’. When we go back to your desk from the ceiling there are streamers hanging from the ceiling around our desk.
There are helium-filled balloons tied to your chair. There’s a card signed by the owners saying, ‘Welcome to the company’. There’s a card signed by the team members that you’ll be working with saying, ‘Welcome to the team’. There’s a company logo shirt laying on your desk. And there’s a box of business cards with your name on them waiting for you upon arrival, as opposed to the sales manager saying, ‘Here’s 50 of my cards, scratch my name out and write yours on it.’
In the conference room at lunch everybody on the team will tell you how long they’ve been there, what they’re doing, what their family looks like, and the new hire will get 15 minutes to do the same. At the end of the day I visualise the new hire putting on the new shirt, their logo shirt.
I visualise them stuffing their pockets with the business cards to go home to their significant other or spouse, who asks about their first day, and they say, ‘You’re not going to believe what a great decision I made. They threw me a party’. They go on describing everything I’ve just described, except that their significant others stops them midway and says, ‘Yeah, I had a feeling it was going to be like that’.
How would you have a feeling it was going to be like that? Well look at this: they sent a bottle of wine home, to crack open over dinner and celebrate the beginning of a great journey together. Now talk to me about …
Wow, I’m coming to work for you.
That’s exactly right.
What about recognition systems? That’s something that comes up a lot. How do you recognise your best sales people?
My largest sales force that I had personal leadership of was 2600 people. One piece of the recognition system that I had in that company was that all 2600 people would get a birthday card sent to their homes signed by me. Also, they would get an anniversary card of whenever it was their anniversary date with the company came up, and the way the system was put into place was that the person that ran the People Department, the HR department, they by the 15th of the month would provide to me already pre-addressed envelopes and the cards ready to go for everybody’s birthday and anniversary that was going on a card the next month.
So I needed to just sign them and maybe make a personal note on anyone that I knew on a more personal basis. And then it was taken care of. So there was a system to ensure that that took place. Now I want you to visualise me walking into one of my offices that were located all over the nation and a person came up to me, this woman came up to me with tears in her eyes and said, Mr Daly, I just need to tell you that I worked in five other companies previously and yours is the first where the president of the company actually took time to send a birthday card to my home.
I want you to know that I sat this card at our dinner table at home with our two sons and my husband and I said, ‘I want you to look at that card and whenever you start to wonder why I stay late or go in early or work an occasional weekend, I want you to tell me when the last time you saw the president of the company send you or anyone a birthday card’.
Lastly, what about pay? Do you have to pay your senior sales people equity? How do you reward your best sales people at the top?
Whenever you get into compensation you can go into a lot of different theories but my theory is pay for performance and you cannot overpay a top performer. The optimal for me is 100% commission only with no base salary. Now that’s pretty revolutionary stuff, however I have had commission-only sales people that in our companies that have made more than any of the owners in any respective year they’ve worked.
Doesn’t that lead though to an issue that they are only focused on their bonuses rather than the whole company?
Well they’ve focused on the thing that they have most control over and I think the responsibility of the entrepreneur-owner is to make sure that everybody is properly aligned with the vision and values and the direction of the company.
But if we can look at sales people as people that are supposed to bring in quality business, and if we’re assured that the business is of a quality nature, then the fact that they are primarily or exclusively focused on them and their results, I’m still good with that. Now from a compensation standpoint I’m also going to go on record to tell you that once the basic needs are taken care of from a financial standpoint of a person, the things that carry more mileage and weight at the end of the day are non financially related.
And do you mean like the recognition and the trust and building that kind of atmosphere?
That’s right. And so as an example, instead of giving someone as a top producer a $5000 gift of a bonus, I’d rather take them and their significant other off onto a cruise with the other 10 people for the week and have a real recognition event take place, because those memories will be a lot longer lasting than the $5000, which would get lost in the shuffle and somewhere in their life.
Any new trends coming from the United States to do with sales?
Well, what we’re finding is that I would say two things. One is that the sales person who is staying with the static, ‘this is the way I did business last year’, is a sales person that is at tremendous risk. The amount of change that’s coming at us has to be embraced by the sales person and a lot of it is being technologically driven.
That doesn’t mean that a good sales person needs to be a technology person. What it does mean, though, is they have to be cognisant of the changes that are going on out there so they can leverage the technology and become more effective at what they do. As an example let’s use Google.
The ability to go into the internet and Google more information about your prospects and your customers and your clients – that information is so much more readily available today to a sales person, there’s no reason to go into a company and call on them without having a tremendous amount of information before your arrival.
So if you were in the old school it would be to spend time with your prospects learning more about their business and asking them a lot of questions. Today, that would not be as effective. I’m not suggesting you’d only have questions, but it’s the nature of the questions that you ask now has changed.
What we should do, is we should have so much information about the client before we arrive that what we’re now doing is asking them questions about what we’ve learned and showing the customer that we’ve already taken the initial professional step to get informed, and so we’re going to really make a distinction between the guy 10 years ago that pre-internet, pre-Google sells versus the way we sell today.
But watch out: some of the old tried, true basic things that a sales person does are falling by the wayside. As an example there’s hardly a sales person out there in the marketplace today that isn’t “packing”, isn’t carrying on their person some type of a personal digital assistant, a PDA of some nature. Let’s call it a BlackBerry. And a lot of us are using those to send thankyou emails when we make our calls, but before there was anything like a PDA and before there was anything like email, the good sales person used to sit down and write an old, traditional, thankyou note in hand form.
Well the more that email becomes ubiquitous the more prevalent that becomes, the more it looks like everyone else. And so as a result, a handwritten note more often than not is going to stand out as you are really on top of your game and you’re more unique and different than anyone else. So what we recommend is, you marry the two. You send the email immediately after you’ve called.
You can do that from the lobby of the building or the car then you can write them a handwritten note and end it by way of the postal system and within a day or two they get another hit from you saying, ‘I appreciated the time and look forward to doing business with you’. The double hit will be much more effective marrying today’s technology with the tried-and-true of the past but as we see it, people that are embracing some of this technology are leaving some real winners on the table from the past.
OK. Thanks Jack, and may we all go out and sell more. And you’re coming to Australia in a few weeks; time with The Executive Connection to do some seminars?
Actually I am on an aeroplane tomorrow evening and headed to Perth and in just a few days we will start a journey of five cities in Australia.
For information on Jack Daly’s Australia tour, starting March 15, click here
This is an edited transcript of the interview which is available by podcast.
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