Managing a business requires a broad set of skills and attention to all parts of the business. Many CEO’s are good at making or selling “things” (goods and service offerings) but some don’t spend enough time monitoring the overall health of their business. Keeping close tabs on the performance of the business is critical, particularly as our economy works its way through this recovery. The easiest things to monitor are sales and cash in the bank, but that is only part of the picture. Positioning the company for growth requires additional effort to understand and monitor not only sales but also those activities that impact profitability and cash flow.  A key to successfully growing the business is identifying a set of key metrics that provide the visibility to help chart the course for the company’s growth, let’s review “What to Measure:”

Margins - The first step is to understand your gross profit margins (sales minus cost of sales). Begin by segmenting sales into groups of products or services that are similar, such as product families. Segment the cost of products and services into those same groups or product families. This will enable the monitoring of margins by product family and make decisions about pricing and position you to monitor costs in each product line.

Expenses – Next, monitor those costs that create and market the products and services, such as research and development, marketing and sales expenses. To the extent possible, group the costs to design and market products so that those costs can be compared to the margins generated by the sales of those products to facilitate decisions about continued and new investment.

Receivables – Once the products and services are sold and the quicker the receivables are collected, the sooner the cash is available for supporting the business. Speeding collections starts with taking orders accurately, invoicing correctly and following up with customers to ensure that all steps have been done by the company to support the customer’s approval process. Measuring these key steps will help reduce issues and speed collection resulting in better cash flow and reduced write-offs and increased profits

Inventory – If the company creates or buy products for resale, measure how quickly the overall inventory turns (inventory used or sold), and if the company has a process that supports it, measure how quickly groups of inventory turn. Every dollar tied up in inventory is a dollar in cash unavailable for other operating needs.

Operations – Look for operational metrics such as employee counts, number of hours billed, square footage, etc. Besides looking at those operational metrics, try to combine financial metrics with operational metrics to provide a fuller picture of the business.

Measurement steps – Create a scorecard using a spreadsheet or by purchasing a scorecarding product. In either case, look for a balance between the level of effort to collect the data and the frequency of providing the information. Start at a higher level of information and keep it simple. Add more complexity as additional areas are identified that warrant more analysis. Look at the trends in the metrics over several years to get a big picture view about where things are improving and where attention is warranted. Also, check with the bank to get industry standards so that a baseline can be established for comparison purposes.

By frequently measuring the important trends in any business the management will be in a better position to control the growth of the business.

I use to discount that response, “but we are different”, because I knew that they were not different when looking at the “required” activities needed to correct their situation.  However, after many years of working on many different operating and performance challenges for organization, I have come to the conclusion that they probably are different, but how?

Like people, organizations are like “snowflakes”, no two are exactly the same.  Even identical twins are not identical in every way say clinicians.  Why would an organization be treated as if it were the same as another?

Have you ever seen two organizations with the same exact cultures?  Cultures evolve over time based on leadership influences, operating practices, environmental factors, and results (positive or negative).

Have you ever see two organizations with the same exact operating processes?  Operating characteristics are created from external influences and proprietary methods and practices that have proven to generate the results required by the organization.

Have you seen any two organizations treat their customers in exactly the same way?  Customer relationship management is not a computer system, but a reflection of the respect that the organization has for their customers, and the customers respect they have for the organization and its products or services.

So what is the significance of knowing that no two organizations may be the same? It is important NOT to prematurely classify a company or its workforce as having the same issues or initiatives as others that may be in their same market, industry or organization type.   This means internally and externally to the enterprise.

If you’re a CEO, don’t make the mistake of trying to clone your new assignment into an exact copy of your previous assignment, no matter how successful you were.  You have a new environment that may need changing, but your success will depend on how you integrate new activities with the existing operation and culture.  It all takes time and patience.

If you’re a sales person, you better do your homework on the prospect and not assume they are like your last sale, they are not.  Your techniques may be the same, but their need for your product or service will probably be for different reasons than you last client.  Get to know them, understand them and serve them—then you will have a loyal customer.

If you’re a vendor or supplier, don’t assume that your customers require the same type of service.  They may require the same level of service, but delivered in different ways.  Your objective it so know them well enough and to care enough about them to meet their requirements for uniqueness.

No matter what your connection is to an organization, do not overlook the importance of having a trusted relationship with that organization.  It is this trusted relationship that will make that connection between the organization and yourself a more successful one.

I see four areas of failure that have an impact on organization because they are unsure of what the future holds.  Looking out into the future trying to predict what actions to take, without keeping focused on the near term, the organization may encounter four key failures:

• Failure to execute
• Failure in focus
• Failure in confidence
• Failure in trust

Failure to execute is an issue during both certain and uncertain times.  If the organization cannot translate their strategies into tactics and act on those tactics, the organization will continue to operate on daily activities as they occur (Parkinson’s Law), whether or not they are the correct actions.  Execution goes beyond planning and strategizing, it takes a work plan and a willing workforce to implement the plan.

Failure in focus comes from being so concerned with the unknown, that there is a paralysis of the leadership and a shortage of direction.  This inability to chart a course and take action is a symptom of an organization that is unwilling to take risk.  The enterprise will move forward, but the wasted resources from a lack of direction can take a lasting negative financial impact.

Failure in confidence points to the level of uncertainty experience within the organization.  If financial strength is an issue and a lack of focus, then the confidence that the direction will produce the desired results is weak.  Without confidence, risk becomes a major issue that cannot be easily overcome.  If a lack of confidence lingers, it can have a long term impact on the organizations culture.

Failure in trust causes operating activities to slow and the cost related to wasted resources to rise.  Internally this factor shows up on inter-departmental turf wars and office political power plays.  Externally the impact is a lack of cooperation, delayed deliveries, incomplete communication and an increased reliance on contractual measurement of performance.  The end result is a lack of cooperation and performance.

Look at these four failures as the trees and the level of uncertainty as the forest.  Knowing how to see the benefit of focusing on the trees will make the forest of uncertainty much less daunting.

Advertising does not build relationships, it only hopes to influence the moment and convert those few seconds into a buying decision for a product.  Word of Mouth (WOM) is the best and most reliable method of promoting a product.

A Testimonial from one person to another brings with it a level of positive bias and a tested experience. These endorsements or referrals are provided from one trusted person or company to another.  It is the trusted relationship that makes the recommendation more credible.

Word of Mouth (WOM) relationship building is growing rapidly due to wider use of social media applications (e.g. blogs, facebook, myspace, twitter).  How can your company use a WOM approach to expand your loyal customer base?  I am working with an organization that has some new and innovative ways to use this technology to help businesses grow – I will be writing more about this approach next month.   To provide a little more introduction and background to WOM, I am offering you a FREE look at an e-book that is the first of a series on how to use digital applications to expand your presence in your market.

Click here for your FREE eBook access: http://wom10.com/Pages/business-tools-book

PR if done correctly can be a game changer for an organization.  PR can also backfire if not taken seriously and can have a negative impact on your image with prospects, customers and your industry.  I recently read a blog post on bNet that outlined the 10 Breakthrough PR Techniques from a Master. The interview with Lou Hoffman, President and CEO of Hoffman Agency, provides an excellent set of techniques and examples of how to use PR to maximize its effectiveness.

Click here for the interview:  http://blogs.bnet.com/ceo/?p=3620&tag=content;col2

What are your experiences, positive or negative, with PR?

Let’s explore the attributes of effective teams:

Definition of an effective team- An effective team “is a small group of people who are mutually accountable to achieve a common purpose and performance goals through their collective talents and collaboration.” (Kristiina Hiukka, BigAgendaCoaching.com)

8 Attributes of an effective team leader:

• Creates a compelling mission for the team
• Knows the priorities:  1. team mission, 2. team, 3. individual members and 4. themselves
• Communicates concisely, clearly and openly (communication occurs when both sides understand what the other is trying to convey–until then it is just talking)
• Encourages feedback
• Supports and encourages diversity
• Supports members by mentoring and coaching
• Delegates authority and accountability
• Selects members for their skills and desire to participate
• Promotes continuous improvement
• Fosters a positive team culture

7 Attributes of an effective team member:

• Strong discipline skills
• Good communicator
• Proponent of working in teams
• Enjoys collaboration with other member
• Self motivated
• Strong work ethic
• Self-directed within team roles and responsibilities

10 Attributes of an effective team:

• Clear purpose
• On-going supportive leadership (coaching/mentoring)
• Enabling processes and structures
• Supportive organization
• Members possess the “right” skills
• Commitment and trust of members
• Clear roles and responsibilities
• Clear team ground rules and protocols
• Open communication
• Performance goals and accountability
• Adequate resources
• Support group diversity
• Members are us-directed
• Self-directed
• Driven to continuously improve

My definition of an Entrepreneur is an individual or group of individuals that take an idea, and develop that idea and manage their business to the point where it becomes sustainable.  A sustainable business is an enterprise that can generate cash flow levels that support itself on a going-forward basis.  It is no longer depending on investor funding or credit to support its operations.  Investors that have believed in an idea, invested in an “Entrepreneur” and eventually saw their investment disappear due to company failure, know exactly what sustainability or the lack of it means to them.  More than likely that Entrepreneur may have not been an Entrepreneur at all, they may have been a Permopreneur^TM.

What is a “Permopreneur^TM”?  They are those individuals or groups that take an idea and create a business based on that idea, but are unable to generate enough cash flow to sustain their operation on its own.  There are two types of Permopreneurs^TM; The first type are those that are blessed with the gift of turning ideas into business opportunities, and are very secure in their abilities to know when to turn the business over to professional leaders and operators.  They usually employ professional operators to help raise additional funding and direct the company to sustainability.  The second type of Permopreneur^TM is either intentionally or unintentionally headed toward failure.  They are very skilled at convincing investors to finance their idea or technology, skilled employees to join their company, and they believe they can operate their way to sustainability.  Unfortunately, they don’t have the leadership ability and operating skills to keep the company from eventual failure.   The end result is another failed business with a bewildered promopreneur wondering what happened with a following number of devastated investors and employees. A more sinister version of the Permopreneur^TM has no intention of taking the company to sustainability.  Their “rush” comes from raising money to support a luxury life-style while they look for the next idea, and the cycle is repeated.  They have no intention of taking the company to cash flow sustainability.  They know there are plenty of investors that fail to do a proper job of due diligence and are greedy enough to feed the Permopreneur^TM ego with lots of opportunities.

I have had experience with Entrepreneurism for many years, having worked with Entrepreneurs and I have held the title myself.   I have tremendous respect for those Entrepreneurs and Permopreneurs^TM that have successful track records for creating sustainable businesses.  If you consider yourself an Entrepreneur, it would be worth your time to do a self-evaluation to honestly determine if you have the skills (not just the desire) to direct your business idea all the way to the goal line -cash flow sustainability.  If you are not sure, then look for the right time to hand off the company to a skilled leader and operator and consider yourself a successful Permopreneur^TM.

Most students learn about marketing through an explanation of the “Four P’s of Marketing”, as first mentioned by E. Jerome McCarthy.  However, this article expands the discussion of the marketing viewpoint to include a fifth “P.”  These five P’s should be included in any discussion about promoting the organization’s products within a target market.  Our “five Ps” of marketing are:

1. Product
2. Price
3. Place
4. Promotion
5. Profitability

Product- A product comprises a physical item or service which an organization produces for sale to customers within a selected market, whether directly to consumers or through wholesalers/resellers, retailers, original equipment manufacturers (OEMs), value-added resellers (VAR), etc.  Factors that should be considered in marketing the “product” are the following:

• Form

• Functionality

• Quality

• Packaging

• Support

• Warranty/maintenance/repairs

• Branding

Form - The look and feel of a physical item or the description of a service.  How does the product look to the potential consumer?  If the intended consumer cannot visualize how they will benefit from the product at first glance, then the demand for the product must be generated from one of the other attributes of the product.

Functionality- How does the product function? What does it do? How does it do it?  How does the product benefit the intended customer?  How does the product surpass the functionality of that offered by the competition?  Marketing the functionality of the product is a key point in most campaigns.  If the form factor is not distinguishable from the competition’s product or service, but there is a difference in functionality, then a neutral form factor may not be a limiting issue.

Quality- How well does the product function or benefit the customer?  Is it constructed in a way that the customer believes it is worth purchasing?  Does the customer perceive that the service will benefit her?  Does the way it is presented give the prospective customer the feeling of a quality program?  Will the product hold up over time?  Can it be reused repeatedly?  Are the benefits of the service sustainable over time in order to make the expense worthwhile?

Packaging- Is the product packaged in a way that it catches the eye of the prospective customer?  Does the packaging reflect other attributes of the product (functionality, quality, benefits, price, etc.)?  Does the packaging design reflect the mission of the organization as well as the product attributes?  Packaging always should be considered as a piece of advertising for both the product and the organization.

Support- Customer support is a significant product attribute for customers.  The customer wants to know that he will have support if he should have questions or problems with the product.  Is there personal support through a toll free number?  Is there email support? How about the availability of a frequently asked questions (FAQ) listing? Is there a physical location where customers can go for assistance?  Often, customers will pay a higher price if they know they will have good customer support available.

Warranty/maintenance/repairs- In addition to support, how well does the organization stand behind the quality of its product?  How comprehensive is the warranty and what is the warranty coverage period?  How easy is it to return the product to have it maintained, or to return for repair or replacement?  Not mentioning these benefits may cause a customer to shy away from the product.  Assuming all other attributes are comparable, good warranties sell products. Repeat sales come from customers who have been treated well when products have problems.  How the customer is treated when a product fails may determine if that customer makes another purchase.

Branding- How recognizable is the name of the organization or product?  Is the organization or product logo recognizable to most customers?  How powerful is the brand? Can it create a market segment such as Kleenex, Coca-Cola, Google, etc?  When you need a tissue, do you ask for a Kleenex or do you ask for a tissue?  When you are thirsty, do you ask for a cola or a Coke?  If you are searching the Internet, do you say you are searching it or are you “Googling” it?  These are all examples of extensive branding efforts that have survived the test of time.  In order that customers ask for a product by brand name, the goal is to have a brand that reflects the attributes of the products provided by the organization.

Price- Product pricing should always be developed through the collaboration of many disciplines within an organization.  Make sure that the price established will generate adequate profits or returns to the organization after all expenses, including those costs required to produce and sell the product.  Pricing strategies are key issues when developing successful marketing programs and often consume much of the marketing attention in many organizations.  Pricing schemes should include, at a minimum, the following items:

• Base Price

• Discounting

• Discrimination Pricing

Base Price- The price the organization believes is a reasonable starting point for the market they are approaching. This is often called “suggested retail price” (SRP) or “manufacturer’s suggested retail price (MSRP).  The base price is the level on which all further reductions, for whatever reason, are based.  The base price should be at a level being anticipated by the market we are attempting to penetrate.

Discounting- Discounts are price reductions that are extended under defined circumstances.  The primary reasons for providing discounts are to increase the number of units sold or to stay competitive within a price-sensitive market.  A commodity-based market is an example of a price-sensitive market.  This is true because in a commodities market there are very little product function or feature differences between sellers, so the price is the primary differentiator.

There are many ways to provide discounts that are tailored for the purpose of stimulating sales:

- Volume discount-Offering a lower price based on the larger number of product units being purchased or the total dollar volume of the order (can be retail or wholesale).

- Seasonal discount-Offering a lower price for products that will not be demanded due to entering a new season, e.g., summer clothing sales in the fall..

- Bundle discount- Offering a lower price when a customer purchases more than one product at the same time.

- Special Pricing- Offering a special price is a form of discounting that is based on a particular circumstance.  Special pricing may be offered to an organization that partners with the selling organization to cross-sell each other’s products.  Also, special pricing may be offered in a co-branding agreement, which benefits both companies promoting their products or organizations into the future.

Discrimination Pricing- Price discrimination is the process of offering the same product to different customers at different prices.  Price discrimination is done every day, and the only time it becomes visible is when someone calls attention to it.  If an organization sells its product to one organization under the exact same terms as to another organization – but for a different price – it is practicing price discrimination.

There are dangers to the selling organization for treating the organization’s customers differently.  An organization that is exposed for using this practice may lose customers due to their dissatisfaction with this inequality of pricing.  There are state and federal laws that protect consumers and organizations from pure discriminating practices, and an organization may be subject to punitive measures if found guilty of willful price discrimination.

Place- “Placing the product” implies focusing on all of the distribution components required to deliver the product to the customer.  When it comes to placing the product, there are two primary issues that may impact an organization:

• Product availability
• The cost of moving product to each market

Customers do not want to wait for a product.   Instead, they want it is stock when they are ready to purchase it.  Furthermore, organizations do not want to pay a high cost to get the product to those customers.  To balance these two issues, there are four factors that come into play. These factors include:

• Transportation

• Warehousing

• Distribution

• Order/Inventory Control

Transportation- How are the products getting to the customer, to distribution centers and to warehouses?  Which form of transportation highway, rail, air or sea is the most cost effective to satisfy the needs of the market?  Shipping by sea can be the least expensive way to move product overseas, but it may take too long to replenish inventories from the customer’s perspective.  In many cases, there can be a combination of transportation methods used, such as sending by rail to a distribution point and then trucking to the customer location.

Warehousing- Storing products as close as possible to the greatest number of prospective customers is the overall objective of warehousing.

In order to satisfy customer orders, where is the best place to store product in the most cost effective manner while meeting customer demands?

Different products have varying warehousing requirements, e.g., heavy duty equipment, electronics, perishable goods, etc.  Organizations shipping product by rail may find warehousing requirements need to include being next to the rail-line or the availability of a rail spurs to allow for more effective material- handling activities.  Long haul trucking methods for moving product cross country may require warehousing near major interstate highways.

Distribution- Developing the best distribution channel for an organization’s product is important to how an organization will market its product and to what degree.  There are four primary distribution channels. They are:

• Direct- Selling direct to customers through company stores, catalog, Internet, door-to-door, etc.

• Agents- Independent individuals or groups may sell product on behalf of the organization to customers, distributors or retailers.  Agents usually do not purchase product from the selling organization. Generally, they take orders and the selling organization fulfills those orders and pays the agent a commission or other form of compensation.

• Distributors- Independent individuals or groups that purchase the product directly from the selling organization mark up the price for their profit margin and resell to the customer. Distributors are also called wholesalers or resellers.

• Retail- Retailers buy product from the selling organization or agents of the selling organization and sell directly to the customers.

Order/Inventory Control- The order/inventory control process is essential to ensure that product orders are properly handled through delivery to the customer and that adequate quantities of product are available to fulfill orders.  Use of real-time computer systems or Internet systems can provide instantaneous communication between customers and suppliers.  Orders can easily be tracked and customers can feel more confident that their orders are going to be fulfilled properly.  Inventory control systems work through the supply chain to ensure that components and finished product quantities are managed properly so that product is available when the customer places the order.

Promotion- Promotion is the process of communicating information about the organization and its product to target markets with the goal of stimulating demand and, therefore, generating additional sales of product.  Promotion represents several different forms of marketing communication.   Key factors within the marketing communications tactics are as follows:

• Advertising

• Sales Promotion

• Public Relations

Advertising- Advertising is the method used by an organization to publicize and position products to their target market, including product launches, image and brand building.  Organizations control the content, the target audience and timing for their advertising, all with the intention of reaching the greatest number of potential customers.  Forms of advertising include media (TV, Radio, Print, etc); direct mail, brochures, car/bus signage, bill- boards, handouts, web site/web networks and a direct sales force.

Sales Promotions- Sales promotions include several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers or other organizational customers in order to stimulate immediate sales. These efforts are an attempt to encourage product interest, product trials, and purchases. Examples of techniques used in sales promotion include event sponsorships, coupons, samples, premiums, point-of-purchase displays, contests, rebates, and give-a ways.

Public Relations- Public relations (PR) consist of a variety of activities that are intended to promote a positive relationship or image with customers and prospective customers.  Image building and maintenance is the role of public relations.  Tools used include press release announcements, trade articles, charity events or contributions, and integration with promotional activities.

Profitability- The fifth “P” of marketing is Profitability, which is calculated as the sales price minus all costs associated with creating and selling the product.  What does marketing have to do with profitability?  Everything!  Marketing people must keep all their activities geared toward the primary goal of creating demand for and the selling of a product at a price that generates the profits planned during the earliest stages of product design.  All too often, marketing people are only concerned about sales, market penetrations and customer response.  However, if all these numbers are excellent and the product is selling below profit targets, the organization will miss its profitability goals.

How does marketing make such a miscalculation?  Occasionally, marketing has full authority for pricing and discounting.  If the product base price is not set correctly or if this base price is discounted improperly, then the end results are reduced profits.  There needs to be a check and balance with leadership to ensure that pricing contributes the correct and anticipated (budgeted) profit margins.

Often, promotion and advertising activities that were planned to generate sales are deemed inadequate; and, therefore, new programs are put in place and executed at a higher price without making a change in selling price.  The effect of this tactic is lower profits.

Whether the organization has a product or a service for sale, in order to be in the most advantageous position to convert prospects into customers, the marketing department must focus its efforts on Product, Price, Place, Promotion and Profitability.

The five Ps are the core disciplines to an effective marketing function within any organization.

In simple terms, marketing is described as the process of stimulating demand for a product or service.  A sale is the process of closing a sale, and I would add an important factor that is often overlooked as a part of the sales process. That is the collection of sales proceeds that are booked as revenues for the organization.  However, if the organization is non-profit, then sales is the process of closing on the contribution AND collecting the funds.  In many organizations, once the salesperson or team arrives back at the office with the signed contract, they consider that sale complete; and, it is then up to accounting to collect the cash from the customer or contributor.

Most sales leadership will say that sales should be selling, not collecting; and, they are correct in most cases.  Then again, if the customer or contributor does not follow through by paying the funds as agreed to in the transaction, who then has the best relationship with the customer or contributor? Accounting?  Doubtful.  No, it is the sales person who closed the transaction initially.  They should assist in the collections process if there is a need; after all, the life blood of any organization is cash flow, not signed contracts or donation pledges.

Marketing consists of a number of activities that are required to stimulate demand for a product or service.  Those are covered in detail under the marketing process titled The Four Ps of Marketing by Jerome McCarthy.

Going one step further, Arago Partners LLC has published an article which expands the description of the activities of marketing to The Five Ps of Marketing ( http://www.aragopartnersllc.com/documents/MarketingandSalesDifferencesPDF.pdf) .  The activities for stimulating demand for a product are the structural aspects of the product (design, feature, function, quality, etc.), the price, the placement, the promotion, and the profitability.  Each of these five Ps of marketing is an activity that must be developed, tested and launched in order for the sales process to most effective.  Of course, the sales process can proceed while all activities are being completed; but, they should all be in place to enhance the greatest level of effectiveness for the sales process.

As stated earlier, the sales process has the overall objective of closing the sale.  Closing the sale should mean the customer signs the contract or pledge and commits to the payment of funds to consummate the transaction under the terms of the contract or pledge.  So far, the emphasis of this article is to point to the differences between Sales and Marketing, and that primarily means the “closing of the sale”.  The close is the final step in the sales process, so let’s discuss the initial steps that lead up to the close.

The sales process is made up of seven stages:

• Leads
• Qualifying the lead
• Contact
• Presentation
• Handling objections
• Closing the sale
• Post-sale service

Leads- Finding prospective sales clients or customers can represent up to as much as 60% of a sales person’s time, depending on the market and types of products or services being offered.  Since Marketing has the objective of stimulating demand, if there is an effective marketing program in place, the availability of sales prospects should be adequate.  There are several proven techniques for finding prospects: referrals, networking, and lists.

Referrals are the best form of prospect gathering.  They are often from other satisfied customers and come with an endorsement from a satisfied customer, a certain amount of product or service knowledge and a certain level of commitment toward the product or service.  Always make sure to show gratitude to the appropriate customer for the referral.

Networking requires the effort to reach out to prospects, to introduce them to the products or services and to let them know where to learn more about the products or services.  Networking is most effective within associations, social networking groups, trade shows, publications, and events.  Cold calling is usually the least effective and least desirable method; but, depending on the market and product or service, it may be the method of choice.  One-on-one contact produces the most effective results but comes at the highest cost.  Relationship building on a personal basis will produce the greatest results over time, if the sales process is considered a marathon and not a sprint.

Lists can be purchased or developed; but, in both cases, they will contain a number of prospects who meet a profile that should be conducive to a sale of the product or service.  Lists can be developed as a result of doing a mailing, telemarketing, surveys, contests, a give-away, and follow-up from networking at large events.  There are several listing organizations that will sell a directory or list of names and contact information based on a desired profile.

A method for determining the effectiveness of a lead generation program is to compare its results to the Rule of 45, which simply states that 45% of all leads should be converted into a sale.

Qualifying the lead- Converting a lead into a sale implies that the lead needs to be evaluated to see if they truly are a candidate for the product or service, which, in turn, increases the probability of closing the sale.  This evaluation process requires a certain amount of information about the prospect to determine if there would be a demand for the product or service.

Are they in an industry that would have a need for the product or service? Have they shown interest in the product or service in the past, either directly or indirectly?  Would their operation need the product or service?  Would they have the financial strength to purchase the product or service? Are they similar to other existing or past customers?  All these questions are ways to qualify the prospect before taking the next step.

Contact- Either prospects will initiate contact or the selling organization will initiate contact with the prospect.  In either case, it is important to be prepared for this first contact with a plan as to what is to be accomplished.  The goal is to move the prospect closer to a decision to purchase the product or service.  An effective sales contact establishes a level of interest in the product or service and gains a commitment for a second contact. This can be either a face-to-face appointment or a second call with the potential to send out additional information about the product or service to be used during the second meeting.  As long as the prospect’s final answer is not an unequivocal NO, then the contact was a success and there is still an opportunity to make the sale.

Presentation- This stage provides the opportunity to present the pertinent information about the product or service that is thought to be of most value to the prospect.  All the reasons why the prospect should want to purchase the product or service should be explored during the presentation.  Highlight the strongest benefits of the product or service as well as the potential cost savings or ability to generate greater sales by the prospect.

Show how the prospect can better compete in its marketplace due to the benefits of the product or service.  If the presentation is a telephone call, try to send materials in advance of the call so that the prospect can follow along with your presentation while on the phone. If possible, tailor the presentation to the culture of the prospect.  If they have a casual culture, then do not prepare a long, formal presentation.  Just use talking points and brochures/catalogs that can be referenced by the talking points.  Make sure to rehearse the presentation, try to anticipate any objections, and be prepared to convert the objections into positives.  If the presentation is in person, arrive 10-15 minutes early, dress professionally, know who you are meeting with as well as their direct contact number, and provide handouts of the presentation materials. If applicable, bring a sample product, demonstrate it, and be prepared to make a follow-up appointment before leaving.

Handling objections-There will be objections during the sales presentation.  The handling of these objections in a positive manner can still lead to the sale.  It is important to address each objection head-on.  Objections often point to a lack of understanding by the prospect, and their objection is a way to show they need more information about your product or service.  A few proven techniques for handling objections are as follows:

Ask the prospect to explain their reasons for not wanting to purchase the product; take notes in order to be prepared to address these issues.

If the prospect is incorrect, carefully show the facts about the product that would refute the prospect’s error. Do not say “you’re wrong”, as that will put the prospect on the defensive and bring the conversation to a quick negative close.

Paraphrase the prospect’s objection to make sure you understand their position, soliciting a confirmation from the prospect that you have the correct understanding of their objection.

Closing the sale-This stage separates marketing from sales.  Closing a sale requires a prospect to commit to purchase the product by signing a contract, issuing a purchase order and or making a down payment.  Verbal commitments should not be considered closed sales, no matter how strong the relationship with the prospect.  Sales should be considered closed once the revenues are booked on the selling   firm’s accounting system and the prospect begins making payment, either partial or in full, for the product or service.  There will be signs during the sales process that indicate the prospect’s readiness to purchase the product. Here are a few to look for:

• They ask about specific price, terms, warranties, availability.
• They ask about options and features, especially if customized to their application.
• They request a sample or trial of product or service.  Make this a condition of the sale and make it available once the sale is closed.
• They discuss customer support.
• They ask for references from satisfied customers.

To help the prospect come to the decision to purchase, try the following:

• Incentives can help, whether in price, feature, service or delivery.
• Trials of product or service as a condition of a sale.
• Walk through all the positive reasons the prospect has already mentioned that the product or service is good for their situation.  Make sure to keep a list during the sales presentation, so it can be used at this stage.
• Ask them for the sale.  “We want your business. You understand the benefits of our product or service to your organization, so let’s get your order entered.”
• Fight through the objections until either the prospect declares unequivocally that they do not want the product or they move forward and enter an order.

Post-sale service-The only way to insure future sales to an existing customer base is to make sure they receive the services that they expect.   Long-term relationships built upon positive service results increase the potential for additional sales from existing and referred customers.  Referral prospects provide a much lower sales cost, because they come already interested in your product or service as a result of the benefits they have seen from the organization referring them.  That existing customer has done most of the “heavy lifting” of the sales process and now the closing process is all that is left.

Post-sale service is most often neglected by organizations and is one of the primary causes for unsatisfied customers and loss of future business.  Organizations invest heavily in marketing and public relations to promote their product and organizational image, all for the purpose to increase sales or donations.  Yet, if the post-sales services are not maintained in a positive fashion, then those investments are not likely to produce the desired results.

Marketing and Sales are very much aligned in the purpose of increasing revenues for most organizations, but they clearly are different functions, requiring different skill sets and strategies.   Another way to look at it is marketing hooks prospects and sales lands customers.