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Making It Happen

Enter the numbers from the Key Financial Indicators Worksheet (3.7) for
the current month as well as a running total for the year to date. You can
then provide a simple analysis at the bottom of the page by determining
which of the key items is up or down and translating the importance of
these items for your employees. Attach the important financial work-
sheets developed in this section.



Reality Check

Consider these questions about your completed worksheet:

• Are you on target for where you expected to be at this point in the
year?

• Are there things employees can do to help your company reach its
financial goals and projections?

• Do employees understand the numbers and concepts presented
in this worksheet? If not, how long will it take to teach them the
things they need to know?

• Are you celebrating good news and acknowledging the effect of
the hard work of particular employees?

• Do you ask the employees responsible for the changes you see to
provide the explanation to the rest of the employees?
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Understanding the Numbers



Worksheet 3.8
Financial Report to Employees
Two
Current Prior Months
Month Month Ago Year-to-Date
Sales
Expenses
Cost of goods sold
Gross profit margin
Sales expense
Administration
Total Expense
Income (Sales ’ Expenses)
Cash
Inventory $
Accounts receivable days (how long it
takes people to pay our invoices)
Accounts payable days (how long it
takes us to pay our bills)
Inventory turn days (how long it
would take to use up the inventory
we have on hand right now without
adding to it)
Attachments:
1. Year-at-a-Glance Income Statement
Sales were (above/below) projections by %
Expenses were (over/under) budget by %. Especially over budget were the following
items:




2. Key Financial Indicators
Profits were (above/below) projections by %

3. Analysis of Cash Position
Our cash was (under/over) projections by %
112 Set High Standards




W H AT ™ S N E X T

In the next part, we switch from measuring the results to driving the
business. Your ability to increase revenue in a way that is profitable
is key to making your business work. It is also essential to be able to
turn first-time sales into long-term customer relationships or face
the prospect of spending all of your time in the selling process.
PART III
BUILD
LONG-TERM GROWTH
4
MASTERING THE
ART OF THE SALE
Always bear in mind that your own resolution to
succeed is more important than any other one thing.
”Abraham Lincoln




I n some ways, sales and customer service are simple and direct, but
their very simplicity is what makes them difficult because they offer
no margin for error. That is, a sale either happens or falls through.

If marketing is mostly theory, selling is mostly action. Selling is one-to-
one contact with the customer”talking, listening, and taking the order.
Customer service is about getting another order.

Some CEOs come from sales backgrounds and love the showmanship
and one-to-one contact. Other CEOs find sales a challenge and take
every rejection personally. Whether you have a sales or other back-
ground, your company must constantly and aggressively sell its product.
It must follow every lead to new prospects and new customers and meet
new needs for existing customers. The CEO is the company™s number one
salesperson, and, as with everything else, what the CEO focuses on gets
done. Sales must always be a primary focus.



SALES AND PROFITABILITY

Obviously, sales must be profitable or nothing else matters. Before you
analyze any other aspect of your business, determine the profitability of
your products and your customers. You can™t set up appropriate sales ef-
forts or sales compensation programs if you don™t.


115
116 Build Long-Term Growth



In general, 80 percent of your sales profits will come from 20 percent of
your customers. Try listing last year™s top 25 highest dollar-volume cus-
tomers. Determine what they buy from you and how much money you
take in per unit. Then, looking at your costs for these products, deter-
mine which customers bring in”not the most revenue”but the most
profits to your business.

Sometimes your biggest customers negotiate such good deals (because
they can) that profits are severely eroded. Similarly, your smallest cus-
tomers can be the most costly because they don™t buy enough goods to
justify the cost of servicing the account. Don™t be afraid to “fire” your
least profitable customers by raising prices.

Once you ensure that your sales are profitable, the next step is to get to
know your best customers. Your goal is twofold: You want to make exist-
ing customers™ experiences with your company better to retain and in-
crease their patronage, and you want to recruit more loyal customers
like them.



CUSTOMER FOCUS

Whomever and wherever they are, your customers can get just about
anything they want any time they want it. They can purchase products
or services they need from you or from someone else, usually on the
terms they want. Consumers have grown accustomed to getting better
products faster and with a high quality of customer service. In fact,
products are generally sold on one or more of three criteria”quality,
value (more useful concept than cost), and service.




C OM M I T M E N T TO QUA L I T Y A N D SE RV IC E

Austin-based Whole Foods Market is one company whose constant
focus on quality and service has paid off. It is the market leader in
natural foods retailing with sales three times greater over the past
12 months than its next competitor. The company™s oft-quoted
measures of success include customer satisfaction, team member
excellence and happiness, return on capital investment, improve-
ment in the state of the environment, and community support.
117
Mastering the Art of the Sale




Whole Foods Market describes customers as, “our most important
stakeholders in our business and the lifeblood of our business.”
The more than 20-year-old company”known for selling the highest
quality natural and organic products available”operates 150 stores
under 6 different names and employs more than 27,000 workers
throughout the United States. Each store has a distinct personality
and purchasing strategy designed to match the community it serves.

After an initial training, each new team member becomes part of
the “buddy system” and is partnered with a veteran employee for
additional one-on-one training and mentoring. Over time, individ-
uals looking for promotional opportunities within the store can
take mini-courses on leadership. To emphasize the value of each
employee, company policy states that no one person can earn more
than 14 times the average employee™s salary, including the CEO.
Policy limits the cash compensation paid in any one year to any of-
ficer to 14 times the average salary of all full-time team members.
Team members are eligible for gain sharing based on four-week
sales cycles. Teams also meet every four weeks to discuss problems
and opportunities for increased sales.

Whole Foods Market has pursued an aggressive acquisition strategy
over the past five years and hopes to increase its number of stores to
approximately 300 by 2010. The company™s commitment to customer
satisfaction, team member excellence, return on capital investment,
and community involvement are at the root of its success.




WHO ARE YOUR CUSTOMERS?

To determine who your top 25 customers are, you might ask what they
have in common. Discover whether they™re businesses or individuals and
if they fall into a particular geographic area, income bracket, gender, or
age category. Finally, you should ask whether they buy more from your
competitors or from you.

A simple but very effective way to get an idea about what your cus-
tomers think about your industry and your product is with focus groups.
You can attract customers or potential customers to your focus groups
by using small amounts of cash or product samples as inducements. In-
terview them and describe your product or service”or, better yet,
118 Build Long-Term Growth



show them”and ask for feedback. You then watch and listen to their
reactions.

It™s important to review the results of focus groups with as many man-
agers as feasible. This educates your staff about the problems the product
will face and gives your company the chance to respond. Staff needs to
hear customers talking about what they want; it arouses their attention
and makes innovation more likely.

You might also set up phone, mail, or in-person interviews with targeted
customers. Send out written surveys to larger groups of customers or po-
tential customers. Ask them to describe their responses in some detail.



Here are some specific things to look for in a focus group or survey:

• Find out how customers rate quality, value, and service in rela-
tion to your product.

• Look for information about price ranges and barriers, format
or style preferences, service requirements, probable buying
patterns.

• Find out how customers perceive your competition and how
your customers get information about competitors and their
products”advertising, direct mail, or word of mouth.

When you analyze the responses, focus on the features your prod-
uct should have and what would make it more attractive. Determine
where you outperform or lag your competition. Illustrate your re-
sults in graphic form and publicize them in your company. Let
coworkers know what customers think of their work and what cus-
tomers look for in the future.



Customer research also seeks to learn what motivates people to buy what
you sell. In this process, anything that tracks sales in a detailed way
helps you”this is why big retailers offer their own credit cards, encour-
age catalog orders, code their register receipts, and solicit web site regis-
tration. It™s also the reason that direct mail marketers offer free items.

In summary, you can™t control marketplace forces, but you can mini-
mize your marketing risks. When you own a reliable base of data about
your customers and their tendencies, you can sell selectively to people
119
Mastering the Art of the Sale



most likely to buy a particular product. If you know that middle-aged
Philadelphia men buy red ties in February, you may know all you need to
know to effectively use your marketing and sales budget.


QUALITY SALES

Studies of consumer and corporate buying habits consistently reinforce
the notion that great service is key to quality sales. In some markets, cus-
tomers rate service more highly than quality in choosing one product
over another. Market research is an important tool for determining how
well you serve your customers. However, your customers™ needs and ex-
pectations constantly change, no matter what industry you™re in. As a re-
sult, how often do you overpromise and underdeliver?



Make sure your market research helps your company by collecting
information and adapting this knowledge to your changing mar-
kets. Do the following to make the most of your market research:

• Identify and define customer expectations concerning service.

• Translate expectations into clear, deliverable service features.

• Arrange efficient, responsive, and integrated service delivery
systems and structures.

• Monitor and control service quality and performance.

• Provide quick, cost-effective responses to customers™ needs.


Marketing™s primary role is to create sales opportunities. If, for example,
you enhance your product™s usefulness to your customer by offering valu-
able benefits from a related line, you create an interested listener ready to
learn more about your products. Each time you propose an innovative ap-
proach to a real need, you create a sales opportunity. To do these things,
your sales force must know exactly how customers use your products.


THE RIGHT PERSON FOR THE JOB

Sales reps can be unpopular in an organization. They are often the bear-
ers of bad news from customers. It™s sometimes difficult to come to terms
with the fact that your product may not be meeting all the customer™s
120 Build Long-Term Growth



needs or that your competitors are producing a better product more
cheaply than you are.

Make sure to pick the right people for these jobs”not everyone can do
them. Salespeople thrive on contact with people, so make sure they
have lots of contact with people inside and outside your organization.
Expect some “us against them” problems, especially if you primarily
pay salespeople on commission. A commission system makes salespeo-
ple very vulnerable to the performance of the rest of the company and
can result in one group of employees “preventing” another from maxi-
mizing its income.

Salespeople are typically the most highly compensated employees, often
earning more than the CEO. They also often receive trips and other perks
for high performance. In my role as CEO, I found there was often jealousy
between salespeople and other employees when it came to compensation
and general attention. There was a constant need to reeducate employees
about the risk and reward aspect of a salesperson™s role. I found the best
technique for minimizing problems was to pay a lot of attention to sales-
people while also training them to pay attention and give credit to others
in the company. Some salespeople understand this relationship and do it
naturally; others need to be trained to appreciate what it™s like for the rest
of the staff.

Most sales are based equally on belief in a product and trust in the per-
son selling it. People do business with people, not demographic surveys.
Customers want”and need”to believe in what and from whom they
buy. You have a great deal of control over shaping their beliefs.



CUSTOMER SERVICE PROFESSIONALS

It™s an irony of business that your customers™ perception of your com-
pany may be based on their contacts with some of your lowest paid em-
ployees: your customer service representatives. How these employees
feel about you and your company can determine how your customers feel
about you.

It™s essential to set high standards for professionalism, etiquette, ethics,
and positive attitude among your customer service reps. All of us have
bad days, but having a bad day probably won™t be a disaster in other
areas of your company; in customer service, it will. As a business leader,
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Mastering the Art of the Sale



you can make it easy and fun for your customer service reps to help your
customers. For example, you might create quizzes to test employees on
product information and other information that customer service reps
are frequently asked; then award prizes and announce winners in the
employee newsletter.

Most importantly, train everyone working with customers how to handle
difficult situations. Keep good records about how many calls come in,
the average time it takes to handle a call efficiently and completely, and
common customer questions and issues. Also keep track of absenteeism
and employee complaints.

Make sure that your computer programs provide easy access to virtually
every aspect of product information. You should also set up programs that
make it easy for your customer service reps to place orders and to track
shipments and change information while customers are on the phone.
Making it easy for your customer service reps will make it easy for your
customers to use and enjoy your products and services.



SALES MANAGEMENT

Now that we™ve covered some of the basics about who™s who in your sales
and marketing effort, we turn to the topic of how you can manage and
monitor sales. It™s estimated that the average small company loses 20
percent of its customers each year. That means you should probably aim
for 25 percent to 33 percent of each year™s sales to come from new cus-
tomers for your company to grow. Both new and existing sales are essen-
tial to the prosperity of your business: New sales bring increases to your
top line and help grow your company, whereas sales from existing cus-
tomers are generally the most profitable.

Keep meticulous track of all your sales and categorize them in different
ways. For example, you might identify top products, what you sell, to

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