MAU 48 | Sales Function

 

The primary function of a business is to sell a certain product or range of products, so you’ve always got to keep your eyes on that prize. Making sure your sales function is in tip-top shape is absolutely essential to ensuring your business is in good condition, otherwise, it could mean trouble. Tom Kelly is a professional business coach and the owner of Potential In Motion. Tom sits down with Domenic Rinaldi to go into different ways through which you can improve your business’ sales function. Make sure your business is in great condition today!

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Energizing Your Sales With Tom Kelly

After decades of working with privately-held companies, the one functional area that I see many owners struggle with is sales and marketing. For some reason, many privately-held companies have difficulty recruiting, trading, motivating and managing a sales and marketing function. Too often, I see the owners of business being the primary sales and marketing resource. That is one sure way to decrease the value of your business. Our guest is one of only a few master certified coaches in the world. Tom Kelly, the Owner of Potential in Motion, is an expert in his field and specializes in working with owners, entrepreneurs, executives and salespeople on many aspects of running and operating a successful business. He has successfully coached thousands of owners and executives. I’m looking forward to him sharing some of his invaluable insights on how to build a stellar sales and marketing function. Tom, welcome to the show.

Domenic, thanks for having me. I’m excited to be here.

Tom, for the M&A Unplugged Community, maybe provide a little bit more background on yourself and the things you’ve done. You’ve got such a background and experience of working with business owners and executives. Fill in some of the blanks, please.

I’ve been a coach for years. Prior to starting my coaching business in 2002, I spent the first ten years of my career in various sales and marketing positions. I started as an outside salesperson selling construction products. I was a national account manager for a while. I ran a division of a company for a couple of years. Finally, my last “real job” before I started my own business was the director of business development running a 52-person sales team in the tech space. I have a lot of sales and marketing background. What happened at the beginning of 2002, right after September 11th, as you know the dot-com bubble had burst and the company I was working for went from 12,000 employees to 3,000 employees in about six months. Long story short, I ended up having to lay off my entire sales team and then I got laid off at the beginning of 2002. I started the business Potential in Motion actually out of necessity. I came from an industry that was decimated and I’d always been very entrepreneurial. I took about six months to do some market research and decided to become a business coach. I’ve been doing it ever since.

There are a couple of lessons here. One is we’re in the middle of this COVID crisis and there are a lot of people out there that are going to need to retool and pivot. You’re a perfect example of that. I know your experience goes way beyond sales and marketing. I know you coach owners and executives on many functions and areas and overall success. We’re going to focusing on sales and marketing. Tom, let me ask, why is it do you think that owners have such a difficult time building and maintaining a successful sales organization? Time and time again, when I go in to analyze companies, I’m shocked at how few success stories they have from a sales perspective and how often the owner is the rainmaker in the company, which you and I both know, devalues the business quite a bit.

MAU 48 | Sales Function

Sales Function: Some people who own businesses tend to shy away from certain aspects to focus only on what they’re good at, which leaves sales and marketing neglected.

 

Domenic, there are two reasons. The first reason is why they got into the business in the first place. Most people start a business because they’re good at a certain thing. For example, I’m a carpenter. I start a carpentry business or I’m an electrician or I’m good at whatever it is that I’m good at and I start a business doing that. They don’t come from a sales and marketing background and it’s foreign to them. It’s not something that they’re good at and it’s not a natural skill. The second thing and the big reason too is the mindset. Most of us have experienced a situation where you’ve had a bad experience with the salesperson. Whether that’s a telemarketer calling you and interrupting your dinner or perhaps you’ve had that used car salesperson situation where you go in to buy a car, you feel pressured, it’s awkward and it’s icky. People inherently don’t want to be that person. They tend to shy away from that part of their business and focus on their strengths and what they know well, therefore the sales and marketing piece gets neglected.

We’ll even see owners who had started with a business very young and over many years came to own the business. They bought the owner out, but they spent no time in sales and marketing. They had specific functional expertise, but no sales and marketing, and then they don’t know how to run that function. Tom, what’s your approach when you walk into a business? An owner calls you and says, “I don’t know how to build a sales and marketing function. I don’t know how to incent these people. Help me figure out how to build it.” Do you have a template that you follow? What’s your advice to an owner?

The first thing I do, and I think everyone should do this when they’re selling anything, is I ask them and I explore with them what their challenges are. What’s going on in the business and what are the challenges that are keeping them up at night and preventing the business from blossoming and getting to the point where they want it? That’s step number one. Step number two is what would you like it to be like? If I could wave a magic wand and make it perfect, what would the business look like? That helps us figure out where they are, what their challenges are and where they want to go. Depending on those two answers help me understand what some of the issues are in the business. There are two key things in any business. Number one, you have to have a client fulfillment system, a way to fulfill your promise to your customers. Number two, you have to have a client acquisition system or in other words, a sales and marketing system to bring customers in. That’s where most people struggle. That’s usually where I drill down and help them with that.

I’m certain that the word system is operative here in this conversation. You don’t use that word lightly.

It’s important because if you don’t have a system on both sides of the equation, if you don’t have a client acquisition system, then you’re not to get predictable results from your sales and marketing. If you don’t have a client fulfillment system, you’re not going to get consistent results when it comes to delivering your promise to the customer. The number one thing that I see that destroys a business is inconsistency. If you think about it, if you go to your favorite restaurant and one time you go, you have a fabulous meal and the next time you go, the meal is horrible, you’re probably not going to continue to go to that business. Consistency is important and the businesses that get that right, even if they’re not operating at the highest level will continue to grow their business. Think about McDonald’s for a second. McDonald’s doesn’t make the greatest burger in the world, but they have one of the greatest systems in the world. You’d get a consistent meal, even though it’s not that great, anywhere you go in the world. It’s a great example of how to systematize your business so that it’s consistent throughout.

Most people start a business because they're good at a certain thing. Click To Tweet

Tom, is your approach, “Let’s tackle the system first and we’ll worry about the people second?”

Exactly. Most of the people I start with, from a sales perspective, are in one of two camps. Number one, it’s a smaller business where either they’re getting started or they’re struggling and the owner of that business is the one that’s primarily responsible for selling. I’ll start to work with that person or it’s an existing business that maybe already has a sales team in place, they’re not operating at a high level. We need to fix that. What I look at in both of those situations is let’s troubleshoot and see what the issues are. I find issues in two areas. I always tell people, “Any result you create in your business or your life for that matter, it comes down to two things. Number one, your mindset. Number two, your strategy.” I find it’s 80% mindset, 20% strategy. I look at both of those things and figure out, “What do we need to address here in order to help them be successful?”

Talk a little bit more about mindset. What’s your approach there? How are you helping them think through their mindset and the mindset that the company has towards sales and marketing?

Most people I find when it comes to sales have some disempowering and negative beliefs around salespeople. We’ve all been interrupted at dinner by the telemarketer or we’ve all been approached by the aggressive salesperson that won’t take no for an answer and nobody wants to be that person. If your mindset is if I get on the phone and make a call to a prospect, I’m bugging them. I’m that icky salesperson, you’re not going to take action on that. I can show you the greatest system in the world and teach you exactly how to sell, but if your mindset is such that you’re afraid to do that, you’re not going to do it and you’re not going to do it consistently. Dive down into that. I look at, what are their belief systems? What are their thoughts around what it means to be a salesperson? We dive into that and I coach them around those things so we can create some shifts in how they think about things so that as they move forward, they have a positive view of what it means to be a salesperson and what it means to sell for their company. That’s how I address the mindset side of things.

I’ve seen in many companies where people that are not in the sales function have sorted this disdain towards the salespeople. They think they’re overcompensated and they’re prima donnas. They get paid for stuff that they didn’t generate. I find the mindset in companies tends to be fairly unhealthy sometimes around the sales function and the marketing function.

There tends to be tension between the two sides of the wall, so to speak. On the one side, you have the salesperson who’s the outward focusing, client-focused person. Internally, you have all the operations people and the people that are delivering that promise to the customer. Oftentimes, there’s a lot of tension between those two things simply because the salesperson’s out there meeting with that customer and trying to meet those customer needs. Those internal people, they have to step up and deliver whatever the promises that the salesperson made. Oftentimes what happens is there’s a lot of tension there. Especially when you know your operations people in your internal people don’t understand sales and they also are disconnected from what the customer needs are and the customer demands. They’re a little bit off-put by some of the things that the salesperson needs them to deliver on and that can create a lot of tension.

MAU 48 | Sales Function

Sales Function: Talking to customers is going to give you an additional viewpoint of the outside world and what their experience is like going through your sales process.

 

Let’s back up a bit. You started to talk about the system. What is your approach to helping an owner look at and build a successful sales and marketing system?

From a sales perspective, I said there’s a four-step process that I like to teach people. Whether you’re brand new to sales and you’ve never sold anything before or you’re an experienced veteran salesperson, there are four key things that you need to focus on when you’re trying to sell someone something. First of all, it’s a mindset shift. I don’t look at sales in the traditional way of most people thinking of salespeople. I look at a salesperson more as a consultant. The salesperson’s job is to understand is there an opportunity with this customer? The way we determine that is what are the customer’s challenges? Do I have a solution that can meet those challenges and help them solve that problem? Step number one to the system is understanding what that customer’s challenges are.

For example, if I’m talking to someone about their business and around coaching, I’ll ask them a question. What is your biggest business challenge? What that does is it opens up a conversation about what those things are that they’re challenged with and what they’re struggling with in their business. I’ll explore that in a deep and meaningful way to understand what the pain points are and what the challenges are. That’s step number one. Step number two is the opposite of that. What would you like it to be like? In a perfect world, if we were able to solve all these challenges, what would that end state look like? What is the outcome that you’re trying to generate? Digging into that on a deep level and understanding what it is that they want.

Number three is the key to sales and that’s, “What’s preventing you from having that?”. I like to call it the problem under the problem. Most people are not going to tell you upfront exactly what their challenges. For example, if I ask a business owner, “What’s your biggest challenge?” They say, “We need more business,” I explore that deeply with them. Finally I ask them, “What’s preventing you from getting business?” They say, “I don’t know how to sell.” The real problem is they don’t know what they’re doing from a sales perspective, but they are not going to tell you that upfront. That third question of what’s preventing you from getting that outcome is important. Finally, the fourth thing is if I could show you a way to solve that problem so that you can get over those challenges and create the result that you want, what value does that have to you? This is critically important because as long as the value is greater than what you’re going to charge them for that product or service, you’re going to make that sale every time. If the value in their eyes is less than what you’re going to charge them, you’re going to have a hard time connecting the dots and making that sale.

Tom, there’s so much there to unpack. You’re in consulting with an owner about how to build a sales and marketing function and you’re stripping it down to these four components. Are you interviewing the owner at this point? Is the owner providing the answers to these questions so that you can then go back and build a sales process that works for their clientele and prospects? How does that work from your perspective?

It depends on the business. If the business is such that the owner is the person selling, absolutely I’m going to start with that owner. If it’s a larger business that has a sales team in place and a sales manager, I always like to start with the owner because that gives me a 30,000-foot view of what’s going on in the business. From there, I’m going to want to talk to that sales manager and I’m also going to want to talk to the salespeople and get a good understanding of where they’re at with things and what their thought process is. I get a 360-degree view of what the challenges are and what the problems are. Also, sometimes what I will do is I will use some assessment tools that I have that will give me some black and white detail as far as what the skills are, the salespeople and the sales manager to give me an even deeper view of what some of the challenges are, what those issues are before I move forward.

Let’s come back and talk about assessment tools, but let’s stick on these four components. Is there ever a time where you would also, maybe on behalf of the company, interview clients and prospects?

As long as the value of what you're selling is greater than what you're charging, you're going to make the sale every time. Click To Tweet

Absolutely. I’m going to do whatever it takes and whatever I need to from a coaching perspective to understand what the challenge and the problem is. Talking to customers is going to give me that additional viewpoint of that outside world and what their experience is like going through that process and that can be tremendously important.

It also validates, does the company have their finger on the pulse of their clients and their prospects? Are they more in a, “We wish our clients and prospects wanted this and that,” versus “This is what they want?”

I always tell my clients that you’ve got to get clear about where you are at. You don’t want to make it worse than it is. You don’t want to make it better than it is. Sometimes there’s a huge disconnect there. The leader of the company or even the sales manager, salespeople think they’re doing something and it’s working well. When you go talk to the customers, they’re giving you a completely different story.

Tom, is the outcome of these four areas, is it some process tool or system that you then can deliver back to the owner so that they have the process and the system to follow and you train and recruit the right salespeople with? Is that what happens from this?

In a simple format, absolutely. To be clear, as a coach, I don’t do that work. I coach them on that and make them do the work, which is even more powerful because they’re having to build that themselves versus me building it and giving it to them. When you have someone else do the work, they have a more vested interest in making that successful. I work with them and coach and consult them on how to build that system so that once they have that system, a couple of things happen. Number one, when they hire salespeople, they know exactly what they’re looking for because they know what their system is and who’s going to thrive in that system. It helps from the hiring perspective. The second thing, when you’re onboarding that salesperson, now you have something to train them to.

Also, you have metrics. For example, if you have a sales force of ten people and you’ve been running the system and tracking the results for a year, you know exactly what an average salesperson is doing in your system. We can do a couple of things with that. Number one, now I can benchmark the salespeople against that. Are you below average, above average, or right in the middle and what kind of results are you getting? Number two, I can help them optimize that system by looking at each step of the process and we can keep tweaking that until it gets better and better and we get better outputs at the other end.

The ability to track key performance indicators against an average makes a ton of sense. Tom, you had mentioned assessment tools, and I know that we’ve worked with you in the past on some of this stuff. Even in former lives, I’ve done a fair number of assessment tools. Let’s talk a little bit about that in the role that they play in maybe the selection, training and all of those other areas.

It’s assessments. I always recommend to my clients that at the end of their interview process, they use some type of an assessment to get a real black and white view of what they’re hiring and who they’re hiring. This is so important, especially for salespeople, because most salespeople, if they’re even halfway good at what they do, can sell you on the fact that they can do the job. They’re going to tell you how great they are. They’re going to tell you they can get results. The assessment’s going to tell you what their skills and talents are and can they actually do what they say they’re going to do? When you hire someone, you want to make sure that maybe you interview ten people and you narrow it down to 2 or 3, and you use the assessment to screen out as that final cut who’s going to be the best fit.

MAU 48 | Sales Function

The biggest motivator for a salesperson is to win and to compete. The way they measure their success is by how much money they’re making.

 

The other thing that’s important if you have a sales team is I can benchmark your best salespeople using an assessment tool and then when you interview, we can compare the people you’re interviewing to the cream of the crop on your team to see how they match up. It will tell you exactly who you’re hiring and what you’re hiring from a skill perspective. The other thing it does is it gives you a document on how to coach them. You know exactly where their strengths are and where their opportunities are. As you onboard them, you can work with them as a sales manager or as a business owner in those areas that they need some help to constantly improve their skillsets. You can use it from a hiring perspective right there. I also use them when I’m developing salespeople. I can go in and do assessments on different salespeople within your organization and identify what their strengths and opportunities are. Build a coaching plan and a development plan and coach them up in those areas that they need some help so that they’re better at what they do.

These are all tremendous tools. All in the spirit of every company needs a healthy pipeline of prospects and a good client base, and having a solid sales and marketing function matters. It will increase the value of your business dramatically if you, as the owner, do not have to be in a sales role and you’ve got salespeople that can bring in business, take care of repeat clients and do that on autopilot and you don’t have to worry about it. Let’s dive into one other area and I don’t know how much you get into this, but I find a big disconnect as well in the area of compensation. Even if an owner is capable of finding salespeople and onboarding them, I oftentimes see that the compensation is completely misaligned with what the owner ultimately wants. They’re constantly having to tweak and play with the compensation. As you and I both know, one sure way to demotivate your salespeople and create turnover is to tweak their compensation. What’s your approach there with owners? Do you delve into the area of compensation and helping them understand what the right compensation package would be and mix between base and bonus or commission and how those should be structured?

It’s critical, Domenic because as you said, the biggest motivator for a salesperson is to win or compete. The way they measure their success is by how much money they’re making. It’s also critical to the business because you want to make sure that your salespeople are highly incentivized to go out and sell and to bring in business. At the same time, you don’t want to overpay them or put yourself in a situation where they’re bringing in more and more business and you’re losing more and more money. You’ve got to make sure that you’re adjusting your compensation and it’s in the right ballpark there from that perspective. Also, you need to look at what is the behavior you want to incentivize, what are the key metrics that you want them to focus on. Number two, what type of salesperson are you talking about?

I put salespeople into two categories. Number one is the hunter-type salesperson. The hunter-type salesperson is the person that’s good at going out and getting new business. They’re able to network and develop new leads, turn those new leads into business. Those types of salespeople are worth their weight in gold. The second type is your farmer-type salesperson. This is a salesperson that’s good at building relationships with your existing customer base and growing those relationships by cross-selling them, upselling them and making sure that you retain those customers. Oftentimes, you want to incentivize those salespeople in different ways because they’re driven by different things.

Typically, your hunter-type of a salesperson is going to be on commission and they’re going to eat what they kill, so to speak. They’re driven by being able to make a lot of money based on the results that they create. Your farmer-type salespeople are steadier in their approach and they’re usually better compensated on a base plus bonus type situation because they’re a little bit more cautious from the standpoint of wanting that job security and wanting that steady base. You want those people on your team as well. You need a good mix of both of those types of salespeople.

Make sure you're tracking and using your metrics. Click To Tweet

I know you and I are over-simplifying here because there are many different shades of compensation and getting the right mix can be hard, but these constructs are very helpful. You have to tweak it to make it work for your individual business.

What’s interesting too is I work with a lot of my clients on their sales process and I find that a lot of times, what happens is in their sales process a lot of the costs of selling is at the beginning of the process. In other words, they’re showcasing and maybe demonstrating a lot of their products or maybe even doing designs for somebody or showing what they can deliver at the frontend of the process, which is costing them a lot of money. What I do is I come in and show them how to push that off to the backend of the process after they made the sale so that their sales system does not cost them so much money and that they can get the customer and start generating revenue before they’re having to outlay those costs, which is also important.

Tom, what overarching thoughts would you provide to owners of businesses or even buyers who are looking to buy a business in analyzing the sales and marketing function of that target business they are looking to acquire? What advice would you offer to people?

There are two things. First of all, if you’re a business owner, there are two key systems you need to have. You need to have a client acquisition system, the sales and marketing, so you can bring in customers and you need to have a client fulfillment system. Those two things need to work in conjunction. If you’re bringing in all these clients, but you can’t service that business, you’re going to damage your brand in the marketplace. If you don’t have enough sales, you’re not going to be able to survive. It’s the lifeblood of your company. If you want to add more value to your business and you want to grow your business, you have to nail the sales piece. If you’re buying a business, there are great opportunities out there right now.

When you look at a business and you say, “This is a business as a great product and they have a great operation system,” but maybe they are not where they need to be from a sales perspective. Oftentimes, if you have that expertise or if you can work with someone like myself that can help you with that expertise to go in and rearrange, retool and refocus their sales systems, you can double and triple the revenues of the business pretty quickly. If you’re out there looking to buy a business, the number one thing I would look for as a business that has a great product or service, but they’re not getting the sales piece right.

Because if you’ve got that skillset, you can put that business on steroids.

You’re in the buying and selling business and helping people with that. There are many businesses out there right now that may be in a turnaround situation or they’re at the end of the life of the business owner. They’re looking to retire or they’re looking to go in a different direction and get out of that business. Usually, what happens when they’re at that point is they’ve lost that passion and that focus on the business. You can almost see it in them that they need to have somebody else come in and take over that business, and take it to that next level because it’s not reaching its potential.

This has been great. You’re a great coach. This was great information. If people wanted to get in touch with you, how could they reach you?

The best way to reach me is online. They can go to my website, BusinessCoachChicago.com. They can also call me directly in my office, which is (630) 668-3005 or they can email me. My email’s [email protected].

Tom, thanks again. I appreciate you being here.

You’re welcome. Thanks for the opportunity. Hopefully, this adds value for everyone that’s reading.

It certainly will.

M&A Unplugged community, if you would like to learn more about the process of acquiring or selling a business, please visit our website at SunAcquisitions.com or feel free to reach out to me at [email protected]. I look forward to seeing you again next time. Until then, please remember that scaling, acquiring or selling a business takes time, preparation and proper knowledge.

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About Tom Kelly

MAU 48 | Sales FunctionTom is a Professional Business Coach and the owner of Potential In Motion, a coaching company that focuses on coaching salespeople, entrepreneurs, small business owners, and corporate executives. He is one of a few coaches in the world to hold the prestigious Master Certified Coach designation through the International Coaching Federation, and has coached thousands of business owners, entrepreneurs, salespeople, and Fortune 500 executives during his eighteen years as a professional coach.

 

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