When I was a kid, I had an uncanny ability to visualize how things fit together. I could walk into a room where my younger brother had pulled apart all of his toy cars and trucks, and I could put them back together without ever seeing how he dismantled them.
As a young man I rode motorcycles. And once again, I could easily reassemble a previously dismantled bike to where it would run in tip-top shape.
When I entered the copier world, this knack was a wonderful thing when it came to refurbishing machines for resale. Today, I use that same ability as I work with dealers trying to build their future. Looking from the outside in and putting the parts together to build their future correctly seems easy. Or is it?
Someone once told me that good things come in threes. This past month, I’ve had three terrific conversations with dealers sincerely trying to find their way to the future. I’m not saying they were failing; as a matter of fact, two of them are consistently busy. There seems to be enormous pressure on dealers to be all things to all people, but trying to determine when to add new products or services takes skill and timing.
Rethink Your “Growth” Definition
Adding new products or transforming your hardware business into a services business demands a thorough review of your current position, performance and results. I can’t tell you how many times I’ve heard “We’re doing very well,” which could be translated as, “We’re doing better than we did last year.” Here is a great truth: just because you’re doing well now, it doesn’t mean your business is positioned to do as well, or better, in the future.
Do you know how many calls I get about someone losing two or three of their top reps because one left, found better compensation and then told their buddies? Too many! Then there’s the also-frequent, “We’ve lost a large client and it’s going to kill our year.” Growing is not an indicator that you’re prepared for the future, and doesn’t mean things can’t or won’t change. So get ready for the future, because it’s coming whether you’re prepared or not.
I just connected with a leader who handles the direct-sales organization of a large manufacturer in our industry. I was told “We’re doing great,” and yet I know many of their sales managers and reps who share a different story. I’m told, “Most of my reps are not at quota, and our sales department has a spinning revolving door.” Two different points of view from within the same company.
Before any organization’s leaders can nail down success and their future, they have to be honest with themselves. Real “greatness” isn’t that you’re growing—it’s that you’re delivering the maximum growth results possible. Doing better than last year is often a reason for saying “We’re doing great!” But if you lost 20 percent last year, that may not be an accurate statement.
Even if your company is experiencing growth, if you have only 20 percent of your sales team at quota and you don’t retain career-minded sales reps, is that a platform on which you can build a future?
Some believe that improperly injecting new products or services into a partially successful sales organization can injure your current performance levels, or cause the launch to be a complete failure. I think this is one of the strongest reasons why many sales organizations don’t get their MPS off the ground. Dividing the bandwidth and focus of a moderate-to-weak sales organization only lessens their effectiveness.
Time to Evaluate and Re-Evaluate
First, do a thorough product lifecycle review for all existing products you sell. Determine their relevance and how far into the future they might remain relevant. Remember, “products” can be services as well as hardware.
Second, divide last year’s invoices by product mix and profitability. Any product not producing an appropriate amount of sales or profit should be evaluated to see if it remains in your product list. You might want to rework how you go to market with the under-performers—or completely eliminate them.
Third, review your sales organization and see how your current products overlay your current team. Who’s responsible for what? Are any sales reps handling products that aren’t successful? If those products are to remain in your mix, then you need to fix that disconnect. Relevant products should also have an annual revenue expectation. Be specific about how much of each product do you expect to sell annually.
I also believe that if you try to support “me, too” products without specific goals and responsibilities, most likely they’ll just be a distraction. This is very important. Although everyone loves every single dollar of revenue, I’ve never seen the “me, too” product’s results—with all their possible distractions—outperform a strong, intentional high-value product’s performance with a proper go-to-market strategy.
A full review of your company’s back-end delivery, support and implementation services must also be reviewed to establish if your company can support new products or services. If your support teams are maxed, the timing is not right. Don’t destroy the momentum you have just to say you offer MPS, for example.
Next, review your sales team’s historic sales results. You’re looking for the success elements within the team. Identify weak links, and remember to be fair to both sides. But you must face reality, because your discoveries may demand that you reshape your entire sales-team model.
Now that you’ve evaluated your product lifecycles, product mix, profitability, support services and sales team’s results, you’re ready to decide if new products should be brought in. They should be young in their lifecycles, and your market should have a strong desire for them. Depending on your market research and opportunities, you may not sell the same products or services as other dealers. The most important thing to remember is this: adding new products should help, not hurt, your business.
Focus on Core Competencies
A recent conversation with a smaller East Coast dealer wanting to sell MPS revealed that the timing simply wasn’t right for adding these services. They were very profitable with their current products and had no immediate need to change their trajectory.
Their shortest path to growth was to beef up their business-development team and tools. Since they produce a healthy profit and had more bandwidth to offer, driving more of their existing offerings was the right thing for them. So they put a hold on MPS—at least for now. They may not be able to sell and deliver MPS services today, but their current trends are very good and adding those products now might distract or stall their organization’s performance.
When you look at transitioning your business to the future and acquiring products to help assure your success, your sales organization should be achieving about 80 percent in sustainable sales performance and results. Taking the time to review your products, services and your sales organization—before adding to the mix—can make all the difference in the future of your business.
