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Always Be Closing: the dirty business of direct selling

In Coaching, Management on April 13, 2013 at 9:01 pm

alec-baldwin-glengarry-glen-ross-always-be-closing (1)

It is indicative of the strains of direct sales, that the biggest issues facing customer-facing departments are the recruitment and retention of salespeople.

The sales function has an average labour turnover of 100% per annum. Small wonder! Salespeople can expect brusque rejection, high pressure targets, pick up deflected business risk and see skill go unrewarded, while ineffectual effort is recognised.

It’s a difficult job, but somebody needs to do it.

The six million involved in all variations of direct sales in the US are employed with a purpose. Teams of experts in face-to-face selling was conceptualised as a response to the burst of innovation and mass-production in the late 19th century. Firms suddenly had great need for a form of selling which consistently created need for products which the public did not understand, let alone want. The travelling salesman would pound pavements and knock doors, demonstrating why the latest output of Fordist manufacturing was an essential addition to their home.

By the 1920s, the essential characteristics of the profession had been etched. Attracting Attention, fostering Interest, forcing Decisions and driving Action continues to be the preserve of salesmen and saleswomen. Likewise, businesses knew which products benefitted from direct sales channels, namely experience goods which a demonstrable function in markets characterised by strong customer inertia and limited price transparency.

Direct selling was designed to meet the business needs of an era of transformation in manufactured goods. By going to possible customers and engaging them in a face-to-face meeting during which a sales representative hoped to create a urgency to purchase, direct sales pioneers found a way to quickly distribute products in advance of demand, at low costs (saving on promotions) and even passing the risk of failure onto the sales force.

This last point is particularly true of multi-level distribution systems which use independent contractors as salesmen. In this model, the sales force buy stock and the rights to sell in return for commission. The business is relieved of employment costs, but loses control over its sales force, the behaviour of which can establish or destroy a brand.

Recommended practice in direct sales mercilessly pushes for improved results. Managers encourage a vigorous culture of success, built on providing good careers for top salesmen and weeding out those who fail to meet the required number of conversions. Status is based on financial success, enshrined in tiered sellers clubs. Further, ostentatious consumption is institutionalised in schemes such as Eureka Forbes’ ‘Buy Your Own Bike’ incentive.

So, direct sales serve a unique and results-driven role in business. But brutalised and independently-minded salesmen are liable to strive to improve their lot by acting opportunistically. This includes jumping ship for a more attractive role in another business. Salesmen are a necessary part of business, but salesmen may not be tied to their firms until they are seen as a long term investment.

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Cracking the case: how to survive the assessment centre

In Coaching, Management on January 20, 2013 at 12:32 am

Cracking Eggs 03

As assessment centre season rolls on, HBR offers you some insight into the daunting hurdles between you and employment – and seeks to help you clear them.

Whether over the phone, in groups or in interview, a large proportion of graduates will go through case study exercises before securing their first job. These can be daunting for those without a background in business and who might feel unprepared compared to those who use SWOT diagrams and matrices daily.

Never fear! Businesses call upon case studies for the very reason that there is no unique qualifying background for many occupations. Instead, case studies seek to test general analytical and problem-solving skills. Case studies usually simulate a discussion about a business decision regarding either a problem with the company, product or competitors or an opportunity which requires exploration. The point is not to arrive at the ‘right’ solution, rather to proceed logically, raise questions, identify key issues, use frameworks and demonstrate creativity, confidence and poise. Phew! Got all that?

McKinsey & Co, world leaders in problem solving, suggest the following approach:

  1. Understand the question: ask for clarification where unclear
  2. Think broadly: don’t get bogged down in any single issue before useful areas have been explored
  3. Break down problem into logical structure
  4. Don’t be afraid to request additional information: as you better understand the problem the need for more information may become clear
  5. Test emerging thoughts: question whether you are answering the question asked
  6. Conclude: synthesise thoughts concisely and develop a recommendation, discuss trade-offs and relate back to question

McKinsey decision

That’s all very well in principle, but how do you get from an open question to an insightful response?

Learning a few basic frameworks 

There are not many better starts than Porter’s Five Forces, one of the most widely-used frameworks in business. Like any framework, it is not complete, but it is useful starting point for any discussion. Porter posits that, at the most fundamental level, there are five primary forces which determine relative competitive advantage in industries:

  • Threat of new entrants – entrants have to overcome barriers including economies of scale, product differentiation, access to distribution channels/raw materials/favourable locations and information costs.
  • Bargaining power of buyers/customers – buyer groups have influence if they are concentrated, purchase at large volumes, face small switching costs and are deciding between undifferentiated products.
  • Bargaining power of suppliers – the industry is vulnerable if it is an unimportant customer of the supplier, if the supplier group is a crucial input to the buyer’s business or suppliers pose a credible threat of forward integration.
  • Threat of substitute products – comparable products which compete on price, place, promotion or benefits are disruptive to the existing order.
  • Rivalry with competitors – competition increases if industry demonstrates slow growth, high fixed costs, well-balanced rivals or a lack of differentiation.

These factors are important because they impact businesses’ ability to make money. Competition pressurises firms into minimising price and adding benefits to attract customers. Therefore, markets with intense competition allow only minimal profit margins. Conversely, mild competition gives companies the freedom to operate at wider profit margins.

Hopefully, this has started you on the right track. Other frameworks to look out for include (click to enlarge):

Frameworks

Keep calm, progress logically and remember that recruiters don’t want experts, they want thinkers. Good luck!

Three tenets of marketing communications

In Coaching, Management, Marketing on December 10, 2012 at 12:26 pm

katie price snickers

Marketing campaigns have taken innumerable forms under the pressures of competitive capitalism. However, the most successful examples share three qualities.

The best marketing communication campaigns are distinctive, customer-orientated and conscious of the positioning, qualities and perceived value of the product they are pushing.

Firstly, successful campaigns reach, resonate and register with potential customers. In order to build profitable customer relationships, successful campaigns take a dazzling variety of forms, from Domino’s Times Square interactive billboard on to a Boots deal on the back of a bus ticket. A race for distinctive communications has steered some agencies away from focus group research, finding public input drives campaigns towards the middle ground. Campaigns which take on a cultural life of their own are celebrated within the industry and mainstream media. For instance, the Old Spice campaign saw millions of people engaging with a brand that had been consigned to the grave.

Secondly, marketing communications should grow out of an understanding of the customer. Tesco Mobile knows that parodying iPhone ads aligns their offer with price-sensitive customers looking for no-nonsense service in contrast with the glamorous positioning of competing brands. A campaign may have high production values, stylish design and be enviably placed but, without an idea of the customer needs, wants and desires at stake, it will fail. This means differentiation is vital.

Thirdly. In order to be accepted by consumers marketing messages, however abstract, must be built on the qualities of the product, service or brand. Snickers’s 2012 ‘hungry celebrity’ Twitter campaign referenced the bar’s everyday snack appeal, but would undermine a luxury brand like Hotel Chocolat which celebrates high grade and high prices in the gift market.

Successful campaigns differ in many ways but have consistently provided distinctive, imaginative, targeted and authentic communications.

After 6,000 years, are we doing it right?

In Coaching, Management on October 3, 2012 at 7:41 pm

Since its inception, the evolution of writing has responded to and prompted dramatic shifts in the focus and capabilities of human society.

Around the 4th millennium BC, the complexity of trade and administration in Mesopotamia outgrew human memory.  Clay tokens had been used to represent commodities and labour, but with the diversification of the ancient near eastern economy the variety of these tokens in circulation ballooned to more than a hundred categories. The need for simplicity spurred invention and a new communication form was created: writing. Tokens were wrapped and fired in clay, with makings to indicate the kind of tokens within. Archaeologists have convincingly argued that these were the prototype for writing tablets.

Since then, technology has transformed our use of the written word, but not reduced its importance. The Egyptian pharaohs read from papyrus, the British Domesday Book was arduously written on sheepskin parchment and Gutenberg revolutionised communication with the invention of the printing press. Today, available channels are so diffuse and varied that Twitter can sell itself on the basis of a 140-character limit – excess is available in excess.

But there are constants too. In 2012, we’re still dealing with services and commodities, but clay tokens have become a huge array of national currencies. Like the ancients, our response to the complexity of the global economy has been to simplify – translating the perceived worth of a company into share and stock options within a single system of trade.
This still leaves an economy as massive as it is intricate. Our secondary response has, therefore, been an accelerated process of specialisation. The high level of expertise required to negotiate the trading floor has meant many in the financial sector have operated without adequate scrutiny. This year alone, banks have been criticised for fixing key interest rates and mis-selling personal payment insurance and financial products to small businesses. Sir Mervyn King, Head of the Bank of England, stated this week “Something went very wrong with the UK banking industry and we need to put it right.”

While the modern economy has been made possible by mathematics,transforming the culture informing the behaviours of economic operatives will take written communication – capable of conveying narrative, emotion and a sense of duty and responsibility.

Kingbofe

So, what does this mean for communicators today? As written communication has developed from counting to the instrument of discourse and persuasion, communicators have had to be more sophisticated in their approach. It’s now necessary to analyse your audience, leverage your resources and find a unique voice to engage and convey authority and invite action within your organisation. We come to writing 6,000 years into its development; in this period of change for many organisations, we would do well to learn how to use it effectively.