Microsoft & Sears; Apple and Samsung

This week's post is some marketing-related thoughts that passed through my mind recently. Hope there are some lessons here you can apply to your small business.

Microsoft and Sears

I have written about both of these organizations in the past, and I saw a line in Forbes that did a great job of crystallizing their issues:

“A former Microsoft senior marketing manager concludes: “I see Microsoft as technology’s answer to Sears. In the 40s, 50s, and 60s, Sears had it nailed. It was top-notch, but now it’s just a barren wasteland. And that’s Microsoft. The company just isn’t cool anymore.””

How True, How True!

In fact, Microsoft isn't just not cool, it has become downright boring. The recent technological advances from Microsoft have simply been improvements to their products to match the competition. In fact, (and this gets a little geeky) Internet Explorer 8 still doesn't come close to passing the Acid Test 3, even though the standards have been around since 2007.

In fairness, there are many successful yet boring companies. Utility companies, for example. However, all boring companies have one thing in common: people are unwilling to pay them a premium for their products, and both their prices and margins suffer.

Microsoft now has extensive competition in each of its product lines. Many of those competitors offer equal or better products than GatesCo (BalmerCo?), and even the OpenSource products (as is FREE) have become very good. One prime indicator of all this boring-ness is the stock price. It now sits at exactly the same price is was 5 years ago.

It may be comforting to think of your business operations as Predictable and Dependable, but if the buying public has translated those terms into Boring, you are in trouble. Time to shake things up!

Apple vs Samsung Court Case

At the other end of the spectrum is the always non-boring Apple. They won a huge patent infringement case against Samsung last Friday, and Wired, CNET, and the other tech sites are alive with chatter as to what this really means for the cell phone industry and, specifically, Google/Android/Motorola Mobility.

I won't comment on the technical or legal implications here. Just some marketing thoughts:

• They say imitation is the highest form of flattery. Guess Apple just didn't feel the love.
  
• The power you gain from offering something unique, something different is Huge. If you can patent that uniqueness, it become Hugely Huge.
  
• We can't know what Steve Jobs would think about the new iPad Mini, but I am betting he's smiling about this ruling. Litigation had become a major thorn in this side over the last few years.

Even though Samsung lost the case, they have made boatloads of money selling phones with all of those Apple-like features that the public wants. They charged less for their phones, offered hardware choices that Apple didn't, and made a ton of money as a consequence. Maybe they will think of this $1 billion judgment as just the cost of doing business in the smartphone space.

Most small businesses aren't into manufacturing and, therefore, don't use product design as differentiation. This usually comes in the form of services.

The Good News: Patents can't be used to limit your ability to out-service your competition.

The Bad News: If you can't find a way to stand out with your service, you're probably in trouble.

Comparative Advertising: Get Their Attention!

In my last post, I talked about how ALL advertising is comparative. Your audience listens to what you have to say, and compare that to what they know of the competition. Whether you like it or not, you are forced into this comparative position. The best response is to capitalize on it.

You can create a comparative campaign with three degrees of aggressiveness:

• Focus on the things you do well, and the competition doesn't.
  
• Focus on the things mentioned above, but state that the competition doesn't really do these things well, and suggest the audience check out the situation for themselves.
  
• Focus on the things mentioned above, and then state that the competition (which you identify) just doesn't do these things.

Lets evaluate these three approaches one at a time.

Focus on what you do well.

You should use this tactic at a minimum. Remember, the point of advertising is to be remembered. Bland statements like “been in business for 20 years” and “have friendly staff “ won't cut through the clutter. You need to draw attention to what you do that sets you apart.

Certainly, we can all think of examples where a company used a clever line in their ads to become memorable. My only objections to this approach are that:

• This tactic is more likely to work if the company is already well known, and
  
• It usually takes a lot of repetition (which is expensive) to drive this message home.

Consequently, my preference here is to become memorable with your content (what you do) rather than clever messaging (how you say it.) Either way, find a unique message that sets you apart, and hammer away at it.

Focus on what you do well, and state that the competition doesn't.

This is one notch higher on the aggressiveness scale, and has more impact. The general message is the same as above, but it is more direct. It doesn't just imply that the competition doesn't excel in the same way you do, it states that explicitly.

If this difference might not be apparent to your audience, and if you are confident in your position, you can suggest that they (your audience) check out the competition and find out for themselves. Frankly, unless the competitors mount a campaign in response, most of your audience won't follow-up on your suggestion. They will just take your word for it. They will assume you wouldn't make the claim if it wasn't true.

Focus on what you do well, state that the competition doesn't, and mention them by name.

This is only for the strong of heart, and needs to be handled professionally. If you really do things that customers find beneficial, and that the competition doesn't do, mention all of that in your ad.

For example: “We only use dried-cured peperoni on our pizza. Domino's, and Little Ceasar's don't.”
or “Our service department is open all day Saturday to assist you. Bill's Auto and the Auto Haus aren't.”

This is also only advisable for the nimble of foot, for the competition may respond in attack mode with their own ads, or they may just modify their practices to match yours. Either way, this ad approach can be very effective, even if it has only a short life-span.

Some advertisers object to this type of ad, because they believe it just gives the competition some free advertising. My opinion, however, is that the audience already knows who your competitors are, and your ads give you a chance to improve your position in the audience's mind.

The take-away here should be that all ads have a comparative element and, in order to be memorable, you shouldn't shy away from using that to your advantage.

It's the Comparison that Counts!

The Political Season is upon us. Perhaps it never really goes away, but it certainly is here in all its fury . My comments in this post are not about the politics, but rather the advertising. And, more importantly, the incorrect lessons that may be drawn.

The political ad is the ultimate in Comparative Advertising (today's subject.) Much of the advertising produced in this cycle takes direct, and critical, aim at the opponent:

• He will just raise your taxes.
• She won't support middle-class priorities.
• He is against creating jobs.
• She isn't really like us.

And with all of this harshness in our ears, we come to think of Comparative Advertising as a bad thing. Yes, this political form of the advertising science is bad. But Comparative Advertising in general is a wonderful tool, if used correctly, and the concept should be embraced.

In fact, this facet of advertising can't be ignored, because ALL ADVERTISING IS COMPARATIVE.

Every ad you run, even if it never mentions your competition, is comparative. This may not seem obvious at first, because the comparison doesn't really take place in the ad copy. It takes place in the head of the audience, the people you are trying to reach.

Whenever someone hears / sees your ad, they quickly digest who you are and what you do. Then, they slot you onto the hierarchical ladder of companies they know in your industry. This helps them simplify their choices. The top rungs of the ladder are their first choices when it comes time to buy. Obviously, getting you on one of those top rungs should be the goal of your advertising.

Who's in that position already, and how can you take their place?

People use many methods to determine which companies are on the top rung:

• The last company that provided a good buying experience.
• A company with a highly-creative ad campaign.
• The perceived “leader” in the industry.
• A company mentioned favorably by a colleague.
• The easiest company to buy from.
• And a dozen other reasons.

Every time you touch a prospect (with an TV/ radio ad, a flier, an e-mail, a handshake at the Chamber bar-b-cue, etc.), you get a chance to move up the ladder. And, even if you never mention the competition, the prospect is analyzing what you say and making that comparison for you.

Don't let the harshness of the political season and its horrible ads affect your advertising judgment. Recognize that your ads will treated in a comparative manner, capitalize on that fact, and build some positive comparisons into every contact opportunity.

Just how you do that is the subject of the next post. Until then, here's an idea:

Practical Tip of the Day:

• Look over your advertising material from the last year.
• Eliminate all of the bland verbiage like your name, location, contact info, and general platitudes.
• Make a list of what's left. That's what people (may) remember.
• Is there a pattern? Does it reflect the image you want? Will it move you up the ladder?

Dea(r)th of a Salesman, Part 2.

(With apologies again to Arthur Miller)

In last week's post, I wrote about the death of sales training initiatives. This week, I will focus on how sales compensation programs often don't provide the motivation that they should.

Three compensation strategies in common use are:

• The100% monthly commission program.
• The “extra bonus when you hit your target” strategy.
• The geographic quota plan.

Each of these plans can work, but they also have pitfalls. And, too often, I find them used in place of active sales management.

The 100% Monthly Commission Solution

Managers like simple plans. Simple to understand, simple to forecast, simple to implement.

An obvious strategy is to pay a commission on every sale. Period. No salary, no bonus, no SPIFFs, just a straight commission. This is easy to administer. No budgets, quotas, or targets are required. And it has a good cost control mechanism built in: if sales fall, so does compensation.

So, what's not to like?

In this scheme, the salesman very quickly sees that his ability to put food on the table this month is directly related to the number of deals he closes this month. And so, predictably, he focuses all of his attention on those “high-potential” prospects that are likely to buy this month. Those that need some extra attention, or aren't quite ready to sign, will (maybe) get looked at later.

Ironically, the common sign of a problem with this approach is the management complaint that sales people won't spend time on long-term relationship building activities.

If you want your sales staff to spend time working on long-term projects, you need to think beyond the 100% commission program. Options could include:

• A base salary with a lower commission rate on top.
• A bonus program that includes incentives for completing non-sales objectives (cold calls, relationship building meetings, competitive analysis, new account recruiting, etc.)
• A multiple rate commission plan that puts special reward on certain types of accounts.

Each of these can help shift the salesman's focus into different time frames and activities. Unfortunately, they also require a higher level of active management on the part of the Boss.

The “Extra pay when you hit your Target” Program.

This approach ties commissions and bonuses to annual targets or quotas. Again, this has a cost control benefit: those that hit the higher sales numbers get the extra amounts. It can be very effective, but you should be aware of the downsides.

First, targets set exclusively by senior management are often viewed sceptically by the sales staff. They are perceived as a strategy for Not Paying Commissions, which obviously decreases their motivational impact.

Second, they really only motivate the sales people that believe their normal performance will get them close to the goal. Those that believe they are very unlikely to hit their targets are not motivated to work harder. Similarly, those that think their normal efforts will put them well beyond the targets aren't motivated either. Consequently, only the staff in the middle of the pack will think of this extra money as a reason to put forth extra effort.

The Geographic Quota Plan

This common strategy bases sales quotas on population stats. It is certainly convenient, and takes the appearance of arbitrary decision-making out of the equation. It is also easy to sell to senior management, who may not know much about the sales staff, but can read a map and population tables.

Unfortunately, I have rarely seen a population-only quota system that actually works. Too many other factors can come into play:

• Different economic activity levels in the regions, for reasons other than population.
• Different competitive positions in the regions.
• Different strategic account penetrations among the regions, etc.

All of these factors can produce good and bad sales performances among the regions, not directly tied to the skill and efforts of the sales staff. As a consequence, motivation suffers.

I once worked in partnership with a company in Canada that had 7 sales reps across the country. Each rep had an annual sale quota based on population but, because of outside economic issues, one region significantly outperformed year after year (and one rep significantly out-earned all of the others.) In order to keep the plan “simple” and still keep it “fair”, the company took the expedient of capping that one rep's annual compensation. He responded by only working 3 days a week every summer, giving him more time to spend on his boat.

The point I would like to end with is this:

• It is easy to come up with a sales compensation plan that is simple to implement and manage.
  
• It is hard to come up with one that actually keeps all of your sales staff motivated, unless you add some significant sales management effort.

Keeping your sales staff motivated takes a lot more than just a simple commission plan.

Dea(r)th of a Salesman, Part 1.

(With apologies to Arthur Miller)

Far too often we hear the complaint, “I can't find enough good salespeople anymore.” I don't think salesmen are too hard to find, just hard to develop and keep because of prevailing business attitudes.

I like salespeople. I like them because they use their smarts, personality, drive, and initiative everyday in an extremely difficult environment. I like them because they persevere under very trying conditions. I like them because they enjoy being with other people. (Further, I like them because I am one!)

But they have become the most under-appreciated, misunderstood, and scapegoated employees in business today. I have two peeves about the way businesses treat their sales staff:

• Sales training has become almost non-existent , to the detriment of both the sale staff and the business. (The topic of this post.)
  
• Commission programs have become a poor and ineffective substitute for Sales Management. (Next week's installment.)

Why everyone benefits from sales training, and why it has disappeared.

The best known and most profitable companies in the past always had great sales organizations. (Think IBM and General Motors.) The activities of the sales department were the public face of the company, and a key differentiator between organizations. Successful companies put a lot of emphasis on sales training, to ensure the job was being done right, done differently than the competition, and done in a way to enhance the company image.

This approach worked well. Salespeople learned all about the product, and what the customers were looking for. They learned how the company's products helped the customers in their everyday life, and how they were superior to the competition. They also learned how the company expected to be represented to the buying public. That's the kind of training that makes salespeople and companies great.

Somewhere along the way, this concept got lost in the desire to hold down costs. The reasons given to justify reducing training efforts are:

• With high sales staff turnover, whatever training you do will just benefit the next company (competitor?) that hires them.
  
• If you hire salesmen from the industry, sales training is not needed.
  
• If you hire great sales staff, they will resent you trying to tell them how to do their job.

The answer to all of the above is three simple words. Ba. Lo. Ney.

The current issue of the Harvard Business Review has a great article on sales staff turnover, and a key element is the lack of training, mentoring and career development. So, if your turnover seems too high, INCREASE training, don't cut it back. Good salespeople want to be appreciated, and want you to show that by investing in them.

Another fallacy is that if you hire from withing the industry, more training isn't required. This logic only holds if your competitors do a great job of training. Yet, as the above paragraph states, if they were doing a great job of training, they probably wouldn't be losing their good salespeople to you. Further, sales training gives your staff the tools they need to differentiate your company from the competition. And that is something only YOU can do.

Finally, good salesmen are looking for leadership, and the training you offer is part of that leadership. Show them what you want done, why you want it done that way, and how it will benefit both them and the company. Good people will appreciate your efforts and your commitment to them.


So, What is the real reason behind this Lack of Training?

I think, often, small business senior management has become remote from both their customers and the selling process. They have completely delegated the selling function to others, and are too removed from the activity to feel comfortable in the training role. They use the excuses given above, and abdicate their responsibilities.

Everyone suffers. The Business. The Boss. The Salespeople. The Customers.

Practical Tip of the Day:

Option #1: Spend some time on the road with your salespeople. Find out how they spend their time, and what their accounts are saying. Firsthand. Look for patterns that training could improve.

Option #2: Look for some “Best Practices” opportunities. What are your best people doing that the rest of the staff could benefit from learning? The top people will appreciate the attention, and the learners will appreciate the advice.

Next Post: Counter-Productive Sales Compensation Plans.