The Bottom Line « Dave Stelzl's Blog

Archive for the 'The Bottom Line' Category

Feb

Selling Your Way Out

Categories: The Bottom Line
Tags: Managed Services, profit and loss, reseller, roi, sales, var

Selling your way out – it seems like common sense, yet I see this more often than you might imagine. Selling more at a loss never profits. You can’t sell more of something that just isn’t profitable and expect a return. This is likely one of the most frequent causes of business failure. This past week I reviewed financial reports of several resellers, all selling managed services offerings. In once case the numbers were all above 50% margin, with over 300 individual contracts – and for SMB (Small-Medium Business) contracts, reasonably large monthly commitments. In another case, a company who had converted many to managed contracts, using an ROI (return on investment) model – in other words, they sold their clients on moving to a monthly commitment, but didn’t do the math, and tried to save each client some money. The client is now saving money, but the contract isn’t profitable as we look back over the past 12 months.

Blindly pursuing sales, without a clear picture of the efforts involved in filling the contract is like chasing technology. Companies that will create any offering on the spot, or take on any new product, just to fill a contract, as destined for trouble. One of my clients made the astute comment in our weekly meeting, “It is so tempting to just cut the price when it looks like a sure thing,” and he’s right, but then he followed up with, “But it doesn’t make sense to do it – it won’t turn a profit by the end of the year.”

Managed contracts are like that. There is little in the way of upfront cost, so the temptation is to believe you can pull it off – manage it closely, do it more efficiently. But in the end, you will be squeezing the client, trying to get by without actually responding, just to make up for the loses. On the other hand, you might not realize your contract is a loss until it’s just too late. At that point, there’s no turning back. You can’t raise prices across the board and expect everyone to stay with you. Instead, you will be handing over clients that have taken years to build, to your nearest competitor.

Feb

Chasing Sales People…Away.

By Dave Stelzl's Blog Leave a Comment

Categories: Channel Management, Leadership and The Bottom Line
Tags: compensation plan, pay plan, quota, sales manager, sales numbers, training

Good Sales People Won’t Stand On Unemployment Lines

Talking with my son the other day (he’s sixteen right now), I was telling him, “Regardless of what you do in life, learn how to sell”. Unemployment numbers are high in the US, yet all of my clients are looking for sales people! So there are jobs, but not jobs for just anyone….there is always a job for an excellent sales person.

Here’s the problem…

If you have great sales people, make sure they are happy! Here’s a trend I run across frequently, and today is no exception. I was talking with a top sales person for a large high-tech company this morning (one everyone who know the name of). His sales last year were great – many of the reps I see on a daily basis would give a lot for the accounts this guy calls on, and would be living well if they closed the business he closed last year. But 2011 is over, and 2012 is on us – so as you might have guessed, his quota is higher.

Raising quota is normal, so neither one of us are surprised. The problem is, his management feels like they should double his quota, not because it’s low (and in fact it is far from low), but because he did well. He shared with me, that the remaining money to be collected on just one of his Q4 deals would have bought a small house in 2011, but with the new comp structure, he can buy a half-decent used car with his Q1 collections. What’s happening here?

A sales team has big hitters, those with potential, and a handful (which might be big or small) of non-performers. Sales managers have a hard time letting people go, so instead of promoting large commissions for big winners, they tend to spread the wealth by propping up low performers. By propping up, I mean setting ridiculously low quotas for one rep, while imposing astronomic quotas on their high-performance colleague. Helping one person to make enough to live on even if they produce almost nothing, while controlling another’s income because if “just seems to high”.

Why This Never Makes Sense

When this happens, and it happens all the time, the bad performers stay, while the superstars look for new jobs. For some reason, many sales managers are making choices to have a large sales team of mediocre performers, rather than a smaller team of big hitters. Big hitters will always outsell the mediocre team – while costing the company far less to maintain – why would they do this. I believe it’s fear. It’s hard to fire people, especially when they are great people (great to spend time with on social occasions), with a forecast that always seems to sound good. Everything is at 50% and is supposed to close next month…but every month, that same list rolls over to the next month.

The Goal Should be…

The goal of the sale team is to sell. When managers choose to meddle with comp plans rather than replacing low performance sales people, they are making a trade. It seems easier to change the comp plan, rather than sending someone out on the street in a bad economy. But the trade off is this…sales managers can either fire the low performers, or the good people will leave. You can’t have it both ways – you just can’t afford to keep everyone happy.

Nov

Happy Thanksgiving – How Well Do You Know Your History?

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Categories: The Bottom Line
Tags: celebrating thanksgiving, do you know your history, Thanksgiving history, the first thanksgiving

1. Did the Pilgrims depart from England to come to the new world? Well, yes and no. They started in England, but spent about 14 years in Delftshaven, Holland before sailing back through Southhampton, England to America.

2. Did they head to America for freedom? Not really – they went to Holland for freedom. In fact, they found freedom in Holland, however, having left their wealth behind, life was difficult there, and the pressures on their children to abandon the family where great. Wanting to keep their families focused on God and their religious practices, they decided to leave as a group and head for the new world.

3. Did many die on the trip over? No, only two – one of the sailors who continually troubled the Pilgrims, and a servant named William Butten, who died from scurvy (should have drank his lemon juice.)

4. Did they land at Plymouth? No, they initially landed at Cape Cod…however they were supposed to be landing down near the mouth of the Hudson where people had already established towns. The plan was to land among an established people. Instead they landed at Cape Cod, but due to the shallow water, were forced to head south to Plymouth where they agreed to establish their new homes.

5. Did they immediately celebrate Thanksgiving for a safe trip over? No, they worked hard to build shelters to get them through the winter, and to protect them from Indians. Their first winter brought 47 of the 102 original voyagers (including Pilgrims and sailors) to their death due to sickness.

6. Where does the Thanksgiving feast come in? As winter turned to spring, Samoset, an English speaking Indian arrived, who a week later returned with Squanto, another English speaking Indian from a tribe who had completely died from a mysterious illness. It was Squanto who taught the Pilgrims how to plant, fish, and make medicine from the local herbs, and who introduced them to pop corn! That fall, after the harvest, more than enough food was brought in to take them through the winter. Thankful for Squanto, and thankful to God for bringing them through the winter and providing through the summer, they agreed to hold a feast which lasted three days (the first Thanksgiving was held in October). They served wild turkeys and deer, vegetables, fruit, pies, and other treats, calling this celebration “Thanksgiving”. The day began with prayers of thanksgiving, led by their pastor, William Brewster, followed by games, feasts, and expressions of thanks. Enjoy your Thanksgiving, and recall the good things around us…

Oct

The Fear of Man

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Categories: The Bottom Line and Wise Counsel
Tags: fear, overcoming, sales, selling, wild bear

Taken By Tina Stelzl - Yes this is a wild bear!

Fear is disabling. It’s easy to become busy with work, and then to wonder why the sales are slow. Could it be that fear has refocused you on busy work rather than on reaching the goal? Moving up to meet decision makers, presenting new ideas, and reaching out to new prospects, all lead to one of two things, either new relationships or rejection. It’s always easier to call on those you are used to calling on, even if they have no money, and easier to keep meeting with those who cannot make a decision or create new budget than it is to reach out to new people, higher up the ladder. Rejection is hard, and most of our sales successes from the past required us to go through many rejections before winning the prize.

Don’t get caught in the trap of working without a plan pushes you toward new business. Assume people along the way will reject your offers, look down on your ideas, and shop your prices. It takes many new prospects to lead to one new client, but then, if it were easy, everyone would be doing it and you might not have a job. Start this last quarter with some goals; goals to establish new relationships, broaden your contacts within your existing accounts, and a strong focus on moving up in the organizations you serve.

Jun

Will They Buy From You?

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Categories: The Bottom Line
Tags: channel strategy, David Stelzl, executive selling, information security sales speaker, reseller, resellers strategy, sales, sales strategy, sellling, technology marketing consultant, technology sales speaker, training

There are thousands of sales techniques out there, but when you boil it all down, people buy from you (or don’t) because you are you. So what value do you bring to the sale? You’ve heard it said, “People like to buy, but hate to be sold.” I’ve heard this for years, so whoever claims it is their unique tagline is probably lying…but the statement is true. The question is, “Do they like to buy from you?”

Jun

Technical Sales Should not be Technical

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Categories: Solution Strategy, The Bottom Line and Wise Counsel
Tags: David Stelzl, decision maker, IT, Marketing, pricing, selling technology, technical buyer, Technology, Value Proposition, Voip

By David Stelzl

Nov

The Technical Support Money Hole

By Dave Stelzl's Blog Leave a Comment

Categories: The Bottom Line
Tags: contractor, managed services pricing, mssp pricing, pricing, profit and loss, sales training, selling managed services, staff augmentation, two hour minimum

When I was growing up my father used to refer to our boat as a hole you throw money into. You probably have something like a boat; something that continually eats away at the bottom line. When it comes to selling support work, there are several holes I’ve identified. Things to avoid if you want to produce hard-dollar profit:

1. Selling managed services with a contractual agreement to be on site. Make sure your fee is high enough to include the cost of staff augmentation if you do this. In most cases it is unnecessary.

2. Selling on site support or engineering (staff augmentation) with a commitment to be on site two or three days per week. This is especially bad when the person is to be there every other day – it is nearly impossible to fill the other days. This is break-even at best. Another trap is selling half days. What will they do the other half?

3. Billing a client for three hours. You’ll never recover that 4th hour before lunch or the end of the day.

4. Support calls with no minimum charge.

5. A close second is, too small of a minimum charge. Consider two hours…if the engineer has to drive an hour in traffic one way, the support call will be break-even at best.

6. Not understanding burden cost. If a support engineer drives two hours (there and back) between every two hour minimum time call, the profit is zero in most cases. Move to contracted managed support with annual contracts, spread your risk, and make sure your fees cover your cost with the required profit.

7. Converting support calls to managed contracts without a clear understanding of your cost and profit. Once converted, good luck increasing prices! You should be making more on managed contracts, not less.

Sep

Customers want it now!

By Dave Stelzl's Blog 4 Comments

Categories: The Bottom Line
Tags: concealed weapon permit renewal, Customer Service, glock 19, union county sheriff

We want it now! Why do companies still make us wait? With the Internet in place, most things can be purchased any time of day and overnighted. There is no waiting anymore, and that is what people have come to expect. But this morning didn’t turn out that way. First, I was surprised to find out that my Concealed Handgun permit is on the verge of expiring…this happens every 5 years, but why doesn’t the sheriff’s department automatically notify the card holder? With today’s automation and the given tax rates, you would think this would be standard. If the card lapses, you’re starting the process over (which means taking a class, taking a test, and paying a higher fee). This is not customer focused! (Thank you very much Union Country Sheriff”s department.

So luckily I happened to be flipping through some cards in my wallet and noticed the expiration is next month. So I called – and actually got through. The papers are easy to fill out (however you need a notary), no finger printing required on a renewal, but can you just mail the papers in? No, you have to drive an hour to the next town, pay in cash, and then wait…not a few days, but up to three months! Three months to process some papers? What’s that all about? Is this done locally or do they outsource this to India?

My final question was, “Will you then send me my card?” You already know the answer. No! You can simply drive all the way out here when we call you. In the mean time your current permit will have expired so you can’t use it until you get the new card.

In government we don’t really have a choice unless we want to move. In business (expect when speaking of the airlines and phone company) we do have a choice. How easy is it to do business with your company? Are you monitoring your online reputation? I’m sure the Union County Sheriff’s department doesn’t care, and I’ve never hear from US Airways, even though I complain about them online almost weekly, but for everyone else, this is a must.

Note: I am sure some people won’t like the fact that I have firearms in the house…last time the police responded to our alarm it took 20 minutes to get here. You do the math.

Sep

Frankfurt – Day 19; Airline Customer Support

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Categories: The Bottom Line
Tags: bangalore, best airline, best business class seats, choosing your airline, frankfurt airport, lufthansa, singapore airlines, united airlines, usairways customer service

Heading home at last! It was a great trip, but long…I left Bangalore on Thursday at 2:00 AM, heading for Frankfurt, then Boston, and a final leg to Charlotte. This completes my “around the world” tour and I am looking forward to being back with the family.

A few notes for those who may be traveling internationally (and perhaps the airlines will see this at some point):

1. United Airlines Customer Support (SFO to SID): This part of the trip was one of the best. US based airlines often get bashed when compared to those in other countries, but here are the facts (from my perspective):

The seat was top notch. United Airlines 747-400 seats lay completely flat to create a bed that even side-sleepers can use. It was a little narrow, but for a normal size person, not an issue.
Customer service was very good, the food was great, and United Airlines business class entertainment choices were bigger and better than other flights on the “around the world” tour.
All flights were on time.
This was a 14.5 hour flight so I had plenty of time to experience United Airlines!

2. Singapore Airlines (Sidney to Singapore)

Singapore Airlines customer support is the best. These people really understand how to make customers feel welcome and are very focused on attending to every need. I also noticed their flight attendants are neatly dressed, and look very professional.
Singapore airlines business class seating is not the best. They advertise the widest seat, and this is certainly true, however the foot rest is too close to the seat to stretch out your legs if you are 5”11” of more. The seat however does turn into a full length bed so this would be fine for a side sleeper during a night-time flight. I flew during the day, Sidney to Singapore for 9.5 hours and was ready to get out of my seat long before the flight ended. This was the Airbus 380.
Another problem with the Airbus 380 was, my computer bag on wheels did not fit in the overhead! If you’ve flown on the 747-400, which is a smaller plane, you know that the overhead bin is giant! Not the case on the 380 – but the customer focused crew did immediately resolve the issue by moving it to a nearby closet.
The food was excellent as well as in-flight entertainment (but not as broad a selection as United Airlines).
I then flew their 777 to Bangalore which was just as great, but a short flight in comparison.

3. Lufthansa (Bangalore to Franfurt and Frankfurt to Boston)

I had heard that Lufthansa was the best airline to fly, but that was not my experience. It was good, but third on the list for me. We flew 747-400′s on both legs which I Really like. 9.5 hours from India to Germany, at night, however this seat is not like the United Airlines seat. While it does stretch out, and is plenty long, it is far from Horizontal. If you are a side sleeper, you’ll be tossing an turning all night because this is a recliner that is sort of flat, but only on your back. I took Tylenol PM which knocked me out for a few hours regardless of the seat.
The Lufthansa customer service level was also third on the list. They didn’t offer to hang up my coat, which is a norm for most business class flights, and they didn’t seem turned into customer needs. It was almost like being back on USAirways, but not as rude. The second leg was a definite improvement, so I assume it was just that first crew having a bad day.
The food was limited if you don’t like weird stuff, and the in-flight entertainment was definitely limited in comparison to United Airlines or Singapore Air.
Everything else was fine and I would fly them again over USAirways.

4. USAirways.

As I mentioned, I flew through Boston to avoid flying USAirways overseas. I’ve done the USAirways international flight before and have vowed to not do it again. I was shocked back into reality as we waited to board in Boston. The gate attendant was downright rude with one lady who couldn’t hear one of the announcements over the speakers. The customer was polite in asking what it was, but the gate attendant made some rude remark and marched off.
We flew the Airbus 320 back to Charlotte – After 16 hours of flying and having been up for over 24 hours (at least not having a bed or even full reclining seat to sleep in) the first class seat on USAirways was miserable. However, I was grateful to not be sitting in the cattle car section which advertises less leg room than any other major airline. And if you want to sit toward the front, you’ll pay an upgrade fee even through the leg room is the same.

Well, there you have it…choose your airline carefully when you do have a choice, which in most cases I really don’t.

Jul

On Boarding and Maintaining

By Dave Stelzl's Blog Leave a Comment

Categories: The Bottom Line
Tags: business service sales training, channel management programs, effective channel manager, information security sales training, partner development programs, reseller, var, vendor training

As some companies are seeing signs of recovery in their business, they are turning back to hiring as well as working to retain the people they need. I was talking with a successful entrepreneur in Dallas on this topic – that of bringing in great people and keeping those you need. His words “Training is one of the most important investments business owners can make”, caught my ear. Here are a few excerpts from our call:

1. Long term employees that don’t receive regular training from qualified trainers, actually decrees in ability over time and may go down in IQ (from studies he has conducted in him company).

2. Employees that receive good training and take it seriously grow in their value to the organization, are therefore worth more and receive greater raises, which in turn keep them from going out to seek other employment. (In Stephen Covey’s words – WIN/WIN)

3. Those who receive no training, yet stay, become a liability over time.

4. Regular training programs keep people interested in learning and stimulate creativity. Creativity brings forth invention which is at the heart of value-differentiation.

5. Training comes from classes, books, and mentors. It’s the greatest investment a company can make in it’s people.

If your people are not worth investing in, fire them and hire new ones, then begin training.