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Thursday, April 13, 2006

In her excellent book "Selling to BIG companies", Jill Konrath has a chapter on Targeting.

Jill says that, in today's hypercompetitive market, buyers "prefer to work with experts who understand their business". A key to success in getting in front of potential major new accounts, is targeting: it's not a "numbers game" anymore.

I couldn't agree more. In fact, I sometimes think that Jill's book could have been based on my life ;-)

Clearly understanding what your customers want and being able to find the right person are crucial factors to opening doors with large organisations.

The other day, I set up a meeting for a client with a Senior Departmental Head within a major global company. I found the contact through my online network and then approached him by phone. Because I knew exactly what this guy was interested in, I was able to quickly identify where my client could help him.

My client called me after the meeting. Not only was it a great meeting which we're confident will result in some very lucrative business, but the guy said this to my client:

"Tell David his approach was spot on. I get 100's of calls every week and it's very rare that I agree to meetings, but he was right on the money".

To me, that's the power in targeting. It respects people's time and seeks out real win-win propositions. And while everyone else is "cold-calling" and making so much white-noise, our approach clearly stands out.

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Posted by: David Regler @ 4:08 pm |  0 comments  | Links to this post  

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Saturday, April 01, 2006

"Pay Per Performance" is a concept that appeals to many interested in sales outsourcing. It makes sense, after all, to only pay when you get results, doesn't it?

Of course, in order to interest an individual or company to work on this basis, there needs to be a significant reward to compensate for the risk and costs you have removed from yourself (not entirely though, as we're not discussing opportunity costs here; we'll save that for another blog).

When you've got no revenue, and non-performance costs you nothing, then how much of the upside are you willing to share? 50%? 60%?

I know another business development company that, on a pay-per-performance basis, takes 75% of any profit made on the deal. Would you be OK with that?

Here's a story from Outsourcing the Sales Function which illustrates the potential problem.

In the 1990's, Jeffrey Katzenberg, a Disney executive, agreed to produce a movie on an entirely performance basis - 2% of the proceeds. At the time, Disney didn't hold high expectations for the project. To everyone's surprise, The Lion King, became a runaway hit and Disney made over a billion dollars in profit.

The performance pay that Disney owed Katzenberg was so large that Chairman Michael Eisner simply refused to pay him. Katzenberg took Disney to court, holding up his contract as exhibit A. Disney eventually settled.

So here's the rub with "pay per performance" - when things go really well, the large rewards can generate regret and envy, even though it was all agreed happily at the start.

In our experience, once sales start to come through, companies will quickly want to re-negotiate the level of performance pay. Of course, if there's a pipeline of business that's been generated and starting to flow, your sales outsourcing company will be reluctant to do this. After all, they've done the "hard work", now it's just a matter of closing the deals taking the lion's share of the revenue.

As always, having a clear exit and hand-over strategy is essential to avoiding potential problems in these type of arrangements.

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Posted by: David Regler @ 2:05 pm |  0 comments  | Links to this post  

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