Archive for the ‘Sales Optimization’ Category

Improve your sales close rates

Selling excellence has never been so important as it is in this low-growth world. In our experience, high performing sales representatives employ simple but powerful techniques to overcome buyer reticence and differentiate their offering. Some of these methods have been the subject of academic research, recently published in the Harvard Business Review, and summarized below.

Ask for advice

High performers pursue two important objectives in a sales relationship: 1) gain vital information on the customer’s business and personal needs, target price and decision criteria. Securing this information allows sales reps to link their products with high value and justify their price points and; 2) build trust with the buyer, especially when the seller has no previous sales relationship with the organization. Satisfying these objectives is not easy when buyers are reluctant to share information or are not accessible.

Successful sales people secure key information and develop trust using a simple approach: they ask the buyer for advice on how to overcome barriers or solve problems. Some sellers may be reluctant to do this; they may perceive this as pandering or displaying a lack of skill. In reality, the opposite is true. In their research, professors Katie Liljenquist and Adam Galinsky found that asking an opponent for advice made the seller appear more warm, humble and cooperative, improving the chance of closing the deal at a desirable price.

Asking for advice provides three key advantages (in addition to getting valuable information). First, it makes a sales rep appear more likeable, warm and cooperative. Furthermore, the buyer may be flattered because the request is an implicit endorsement of their expertise and status. Second, through conversation buyers will be able to see things from the rep’s perspective leading to more creative problem-solving and solution alignment. Finally, asking for advice could turn the buyer into an internal advocate. Providing advice is an investment of their time and effort making them more likely to follow through on their recommendations and become the seller’s champion.

The beauty of asking for advice is that it is simple, low-cost and works with most people. Sometimes, however, sales reps face a head-to-head selling situation where they need to stand out from the competition.

Give the buyer something extra

Most large organizations employ skilled buyers and rigid procurement processes to minimize purchase costs, eliminate rogue buying and qualify vendors. This creates special challenges for companies who have little or no previous selling history at the company or offer a relatively undifferentiated product. Often, at the end of the process buyers will go back to the finalists and tell them the bids are equivalent, asking them to provide “something more” to break the tie.

The typical seller will respond with the well-worn tactic of stressing the bells and whistles in their product that may be lacking in the competitors’. When that doesn’t work, sellers will usually default to price concessions, added features or better terms. According to research by professors Anderson, Narus and Wouters, most buyers are not looking for these things. Our experience is that offering late-stage price concessions can signal desperation, reduce trust (since the best price was supposed to have been submitted earlier), or introduce concerns that quality and service will be shortchanged with lower prices. The researchers assert that when buyers ask for additional value, “they are actually looking for a justifier: an element of an offering that would make a noteworthy difference to their company’s business.”

A “justifier” helps buyers visibly demonstrate to management that they are making a contribution to the overall business — without sacrificing quality, service or delivery — helping enhance their status and providing psychological validation for their choice. Providing justifiers delivers many benefits for suppliers. Firms are better able to differentiate their product, powerfully link it with the prospect’s strategic goals, and price their offerings at or near the upper end of each customer’s acceptable range.

Identifying and leveraging justifiers comes from deeply understanding how a company really uses the product and what their larger business priorities are. These differentiators could improve ease of use (and lower overall cost) through the use of special sizes, bespoke logistic services or seamless integration with complementary products. As an example, a real estate-developer client used the tactic of paying a prospective tenant’s moving costs to fill buildings. In another case, a robotics company we worked with secured a major project with this justifier – integrating two different components (one of them from another vendor) into a sub assembly, reducing the customer’s labour and inventory costs, and ensuring seamless interoperability.

In many cases, the best product, service or price will not secure the business. A skilled sales representative can still provide the edge in a competitive situation through employing proven relationship-management techniques, as well as other successful practices while creatively addressing fundamental client needs.

For more information on our services or work, please visit the Quanta Consulting Inc. web site.


Play games, learn more

A revolution is quietly impacting the way organizations educate students and workers. Gamification is increasingly being integrated into curriculums and courses. Incorporating game play produces a better educational experience by adding realism, fostering competition and delivering quicker progress feedback.   The value for the organization and worker is compelling:  improved problem solving and collaboration skills, higher learner engagement and greater knowledge retention.  Organizations should consider how best to leverage Gamification methods into their most important training regimes.

Gamification programs blend the principles of video game play, social networking, data analytics and behavioural psychology into a formidable platform for inciting change and engagement. Organizational training and education is a natural place to include gaming.  The teaching/learning process is often dull, data starved and overly mechanical, which depresses student engagement and makes the linking of training results to business value difficult.   Gamification accelerates learning by  leveraging the power of digital technology and intrinsic motivators such as: providing instantaneous feedback (mastery), egging on the competition (social interaction), and rewarding even tiny steps of progress (recognition).

“The basic structure of video games — having to master one level before moving to another, repeating an action numerous times, and receiving feedback in the form of results about what works and what doesn’t — mirrors how skills are developed in real life,” says David Maddocks, president of WorkSmart Education.  “The added benefit for the workplace of using games is that employees practice in a safe situation and not on live customers.”

Incorporating gaming principles has helped companies like Microsoft, Cisco, Nike and Samsung foster richer consumer-brand interactions, improve operational productivity and drive higher levels of employee engagement over the past few years. Corporate training is not far behind on the curve  Few companies have done more to incorporate Gamification into learning than SAP, one of the world’s largest software firms.

It is not easy for a sales rep to keep up to date on the ever-changing mobile offerings and technical considerations of a large, dynamic company like SAP (and then effectively leverage this knowledge in front of clients). That’s where the Roadwarrior game comes in. This game instructs sales reps through a simulated customer meeting on how to respond to the buyer’s question and what information to provide. Providing information on the customer and their needs helps the sales rep design a unique technical and business solution. By properly preparing for meetings and correctly answering clients’ questions, sales reps can move up a ladder, unlocking levels and earning points and badges on a leaderboard.

Once all customer meetings in one level have been completed, the user proceeds to the next level with new customers and requirements. This allows sales reps to gather cross-technology knowledge and to practice multi-level selling. Players can also challenge other players to uncover the best answers for difficult question. Training engagement is enhanced by the use of intrinsic motivators such as team and peer-based competition, regular socializing that foster an esprit de corps and the growing confidence that comes from handling increasingly difficult client questions and situations.

New hire orientation

Rocketeer is an ingenious idea tool to convey important corporate information.  Developed in 2011, this little flash game  welcomes SAP employees when they visit their corporate landing page.  By controlling the speed and angle of the rocket, users can navigate the rocket past obstacles, which are nothing more than signs showing key SAP factoids and news. The further you can fly the rocket without hitting any of the signs, the more you learn about SAP. Rocketeer generates more engagement and information retention than merely reading off a long list of facts.

Closer to home

Some Canadian organizations are already using gamification techniques to improve their educational experience and learning outcomes.  The York School, a leading independent school in Toronto (disclosure:  my child attends the school), is integrating game playing in the teaching of Math and Science.  According to Justin Medved, head of Learning, Innovation & Technology, “These tools give teachers unprecedented insight into the learning process while at the same time engaging students in a fun and familiar way.  The data collected through game playing is allowing us to tailor our teaching to respond to individual student needs in a way previously not possible.”   At the other end of the learning spectrum is the Canadian Military. The National Post reported that they are using popular video games like Call of Duty and specialized video simulations to enhance ordinary training. In addition to creating customizable, ‘real world’ environments, games have the important benefit of being able to train more soldiers at lower cost — and much lower risk of accidents.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.


Better B2B selling

The axiom “It’s not what you say but how you say it,” is as relevant for B2B sales as it is for fostering strong personal relationships.  New research published in the Harvard Business Review by USC professor Steve Martin suggests salespeople should go beyond the one-dimensional brochure or e-mail for their pitches. Sales representatives who employ a variety of sensory impressions — visual, auditory and kinetic — will close more deals and generate higher revenues per sale. These learnings come from the emerging field of sales linguistics.

Sales linguistics is the study of how salespeople and customers interact within a pitching opportunity.  Studying the dynamics of a sales pitch is important for a variety of reasons.  The cost of sales has increased significantly, putting a premium on getting the biggest bang for your sales buck.  Moreover, the selling process has become much more difficult. These days, it is difficult to get face time with prospects, have them return your e-mails, or stimulate their genuine interest in your offering. Businesses that correctly heed teachings from sales linguistics will significantly improve their closing rates and financial performance.

In a typical client pitch, sales representatives use a single sensory cue, or a combination of three — visual, auditory and kinetic (i.e. touching, sampling) — to make their case.  Which approach works best at maximizing the chances of a sale at a higher price?

The research looked at responses from three groups of participants on a wide range of items — from everyday consumer products to unique sports memorabilia. The groups were asked to estimate the price of each item and rank the comfort with the answers they gave.  Group one was shown only a picture of an item accompanied by a brief description (visual cue only). The second group was shown the same item and visual information as the first group, but the description was read to them with dramatic emphasis and accentuation, creating an auditory connection. Group three was shown the same item and exposed to the same stimuli as the first two groups.  However, they were also given a kinetic connection — the opportunity to hold and inspect the item — before providing their pricing estimate.

Below are the findings and implications for B2B sales and marketing efforts:

The more, the almost merrier

On average, group two (which received visual and auditory information) was willing to pay the highest average price for all goods, especially those with the most esoteric value.  Interestingly, group three submitted the lowest average price suggesting that hands-on experience could be reducing the perceived value of some goods or that visual or auditory stimuli were negating the kinetic experience. Although price estimates varied, the level of confidence in customer decisions tended to increase as more sensory cues were added.

Expect some messaging disconnect

Saying something (even clearly) does not mean the prospect has received the message correctly.  Getting this right is critical when a product is unique.  In the study, some participants misinterpreted the features of one of the memorabilia items thereby valuing it less.

Be mindful of verbal signals

The tone, demeanor and tempo of what’s said can have more impact than the actual message. The average price given by group two was nearly seven times that of group one and close to 20 times the average price given by group three.  With the last group, the kinetic connection may be negating the power of the spoken word and the message behind it. Heeding verbal signaling is an important point for salespeople who sell primarily over the phone or rely on e-mail as their primary communication tool. Though efficient in some ways, e-mail forfeits the power of using verbal signals.

Be careful with product evaluations

The research suggests hands-on familiarity with an item actually lowers the perception of its value not to mention slowing down the sales cycle.  This is especially risky if aggressive product claims set unrealistic expectations that cannot be met; if a product does not “demonstrate” well; or, if a complex product raises the chances of confusion. Since adding kinetic stimuli increases decision confidence, managers should consider the best time to demo a product in the sales cycle.

Get the “performance” right

Too little consideration is often paid to the seller’s “performance” which accompanies presentations and samples.  This performance includes the script that supplements the pitch and the desired verbal and non-verbal (e.g., power posturing) signals. These elements will play a critical role in shaping the prospect’s perception of value.

When it comes to pitching, the more information is not always the merrier.  Sales and marketing leaders — especially those that leverage inside sales or prospect across large territories — should focus on optimizing the interaction by using multi-sensory communication tools at the right time, tailored for the audience needs and the product’s attributes and pricing.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Cross sell to grow

In a low growth economy, many companies understand that one of the best way to grow revenues is by selling more goods and services to existing customers.  At the core of this strategy is ‘customer focus’ – providing better solutions to satisfy more customer needs.   Yet, this easier said than done. A variety of factors can combine to scuttle the best designed plans.  Managers can overcome these barriers and be ‘cross sell ready’ by optimizing their organization structure, product portfolio and incentive schemes.

A corporate buzzword for the past decade, CF is a simple idea:  understanding and targeting a customer’s full gamut of needs will enable the delivery of solution value, therefore catalyzing the cross selling of other products. Our clients that have gotten CF right have generated millions of dollars in profitable, new revenue along with higher customer satisfaction scores and lower marketing costs. Though each firm had a unique CF strategy, they all share three important characteristics:  a deep understanding of customer needs across a purchase life cycle; a shift from selling products to marketing solutions and; a focus on relationships versus transactions.

Despite a compelling premise, increasing cross-selling rates is not a slam dunk.  There can be multiple organizational barriers to better performance.  For example, most firms are organized in product, geographic or functional silos making information sharing, collaboration, and joint selling very difficult.  These silos often extend down to the IT systems, restricting visibility into a client’s sales history and requirements. Secondly, compensation schemes and metrics often do not support cross selling versus other goals like client acquisition.  Finally, the culture in many organizations is a barrier to implementing a CF mandate, collaborating or cross selling.

Our consulting experience suggests that the difference between leading cross sellers and under-performers comes down to who can get the 3Cs of organizational alchemy right:


Customer-focused firms have deep knowledgeable of their customers and the capabilities to enable them.  Len Lyons, General Manager of Workplace Medical Corporation a leading occupational health service company, asserts: “We demonstrate to our clients that we’re experts in our field and in theirs. People maintain strong loyalty to someone they trust and for us, this has had the added benefit of significant growth through customer referrals.”   Companies with a strong CF have well-developed people, technology and marketing competencies.  Their workforce features a large coterie of generalist, and team-driven problem solvers who can interact directly with the customer.  Formal corporate education programs and defined career paths cultivate and reinforce these vital individual traits.  Moreover, these firms will have: an advanced CRM and data management systems that deliver a comprehensive view of each customer and prospect’s buying behavior; a long term, relationship-inspired sales approach and; product and R&D teams that are connected directly with buyers and users.


Being internally cooperative (as well as with channel and supply chain partners) is critical to aligning around customer needs and deploying maximum capabilities.  Workplace Medical implemented this shift in two steps.  Says Lyons, “first, we systematically recalibrated our entire organization and marketing strategy from a transaction focus to a solution-driven model. Then, we led our clients through a paradigm shift in the way they perceive the nature and value of our service.”

Customer-focused enterprises encourage and reward cooperation across the organization.  For example, they foster accountability by having all team members measured against key performance indicators like customer satisfaction and cross selling rates.  And, they subordinate departmental metrics to larger, more customer-centric measures.  However, achieving higher levels of cooperation and information sharing will be problematic in low-trust cultures. Many firms will need to undertake change management initiatives to get recalcitrant or skeptical employees (particularly disinclined sales people) to go along.


Maximizing cross selling activities requires internal departments as well as channel partners to be strategically and tactically aligned.  High levels of coordination – enabled through supporting technology, regular communication and processes – are needed to share information, efficiently deploy resources and solve multi-faceted customer problems. One way customer-focused companies achieve this is by putting sufficient authority in the hands of an ‘owner’ who is closest to the customer or segment’s requirements – and opportunities. In some of our clients, the leaders needed to dismantle their siloed department-based structures and replace them with multi-functional, autonomous customer-based teams.

Improving a firm’s organizational model to deliver high cross selling rates is not for the impatient or clumsy.  It is part culture change, process redesign and incentive re-engineering.  Furthermore, cross selling efforts need to be consistent with the company’s value proposition and brand image, not to mention the best interests of the client.   Managers should expect to spend at least six months transitioning to a new model while they work through hiccups.   Though the process is time consuming, the rewards are undeniable.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

The end of Solution Selling?

Conventional wisdom says that solution selling is the most effective way to penetrate B2B customers.  Though this strategy is quite common, it no longer works all that well in many accounts, according to new thought leadership published in the Harvard Business Review. Sales managers would be wise to consider another approach that focuses more on engaging prospects differently and a lot earlier in the buying process.

With traditional solution selling, a sales representative seeks to link their solution with a customer need and expound why it is better than the competition’s. Good solution sellers’ focus on identifying customers with a burning need; elegantly positioning their solution against this need, and finally, finding a friendly advocate within the prospect who can champion the solution and help navigate the company.

End of an era?

There are two fundamental flaws with this approach. First, every firm practices it.  As a result, the sales experience can appear canned and insincere.  “What keeps you up at night” quickly rings hollow, possibly causing the sales rep to lose credibility and trust. Secondly, Solution Selling is no longer working. A Corporate Executive Board study of more than 1,400 B2B customers found that those customers undertook, on average, nearly 60% of the typical purchasing decision activities (e.g., researching solutions, ranking options, setting requirements, benchmarking pricing, etc.) before even having a conversation with a supplier.

Savvy companies are increasingly bypassing solution-selling sales reps.  For example, customers are using internal experts to diagnose their own needs and design solutions.  Furthermore, they are utilizing sophisticated procurement departments and third-party purchasing consultants to secure the best possible deals from suppliers.

Prescient sales leaders are recognizing the limitations of solution selling. “You can no longer rely on having built a superior ‘mousetrap’ to book a deal,” said David Linds, senior vice president, business development and relationship management at CIBC Mellon. “The solution gets you in the door and keeps you in the game, but the heavy lifting in the sales process is over by the time the RFP is out the door and in the hands of procurement. The critical work must have been done early on during the relationship building phase. The prospect must already know you, trust you and your firm, and in fact have already seen the solution in action. If the RFP is the first contact – forget it!”  Solution sellers may soon be a dying breed – unless they switch gears and become relevant again.

Retooling the approach

In their HBR article, “The End of Solution Sales,” authors Brent Adamson, Matthew Dixon, and Nicholas Toman contend that Insight Selling is a better way to sell.  Its effectiveness is backed up by CEB research of thousands of sales reps from hundreds of companies.   An Insight Selling strategy is a major departure from traditional sales approaches.  Some of its tactics include:

  • Target prospects with needs that are not yet defined (i.e. emerging demand) versus prospects with a clear understanding of their requirements and the competitive alternatives (i.e. established demand)
  • Engage a very different set of stakeholders, preferring skeptical change agents and internal mobilizers over friendly informants. A sales rep’s job is to help the mobilizers champion their vision.
  • Coach those change agents on how to buy, instead of quizzing them about their company’s purchasing processes.  Insight sellers will often seek to reframe the RFP to better compete versus addressing the RFP as is.

A number of companies are already using this new strategy. According to Harry France, a former country manager for HP, “Customers are searching for a consultative sales approach whereby the sales rep guides key constituents through the buying process based on an in-depth knowledge of existing business needs and previous successes with other customers. This personalized selling approach combines Solution Selling and the Insight Selling into a hybrid model where the client views the sales rep as their trusted advisor.”

Despite the research and anecdotes, one should be careful not to jettison solution selling so readily. Many purchasing decisions will continue to be made in advance, having nothing to do with the sales strategy employed.  Moreover, it is not evident that Insight Selling will be any more effective than Solution Selling in the long term given the advanced purchasing tools currently available to corporate buyers.

What is clear is that the times are a chang’in for Solution Selling, an approach that’s been around since the 1980s. This evolution – enabled by technology, analytics and buyer practices – will only accelerate with time.  Clearly, adaptive sales organizations who seek out prospects that are primed for change, who challenge them with provocative insights, and coach them on how to buy will be best positioned to maximize sales effectiveness.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

The worst question in a sales conversation

Perhaps the most popular opener of many sales reps is the question: “What keeps you up at night?”  A recent article in the Harvard Business Review by the authors of a new book, The Challenger Sale:  Taking Control of the Customer Conversation says that this technique may prevent sales and reduce customer loyalty.  According to Matthew Dixon and Brent Adamson and proven through our consulting experience, a better strategy would be to redesign the entire sales experience.

Conventional wisdom underscored by numerous sales training programs says that the above question is a good beginning to a sales conversation.  The objective is to identify a client’s burning needs so that the rep can promote his or her own solution aka help them sleep at night.  No doubt, this approach has worked with many clients.  However, it suffers from three important but habitually ignored flaws which limit its effectiveness: 

  1. Diagnosing needs by a sales rep is a very difficult undertaking, especially in real time.  The more complex the product or problem, the tougher the process;
  2. We have seen this seemingly innocuous question be perceived as disingenuous or cliché when delivered crudely and;
  3. The question is based on an unproven assumption that companies including their agents will always understand or will admit to a stranger their true needs.

A new strategy

A better sales path would be to tell customers what they need to know.  In essence, the sales person educates customers on problems and solutions that they may not be aware of.   This isn’t your standard solution-selling approach, focused on open-ended needs diagnosis. Instead, this sales strategy emphasizes delivering valuable information to customers instead of extracting information from them. In effect, the sales rep assumes the role of a problem-solving, trusted advisor at the beginning of the conversation. 

Customers benefit in many ways from this new approach.  They get fact-based insights and solutions from the outset; they feel that they are not being “sold to” and; they experience real empathy for their concerns.  These types of sales interactions will predictably improve closing rates, increase client satisfaction scores and enhance loyalty.  In our research, sales outcomes improve for a variety of reasons: 1)  a company or sales rep can more easily differentiate themselves, particularly in highly transactional or commodity markets;  2) delivering value up-front establishes an implicit obligation for the client to continue a conversation and;  3)  providing rich insights clearly demonstrates corporate capabilities and knowledge.

Research-based findings

Dealings such as these are core elements of a client-centered sales experience, which has been proven by research to be the major driver of customer loyalty. Dixon and Adamson conducted a loyalty study on 5,000 business customers. The biggest driver by a factor of 2x is something most companies don’t even consider: the Sales Experience, which was identified as a loyalty driver by 53% of all customers.  For perspective, Product & Service Delivery and Company & Brand Impact was each noted by 19% of the respondents.  Interestingly, the Price-to-Value Ratio was identified as a customer loyalty driver by only 9% of respondents.

According to the study, customers will reward suppliers who offer a compelling sales experience which includes “offering unique and valuable perspectives on the market” and “educate them on new issues and outcomes.” Simply put, loyalty and closing rates are more a function of how you sell than what you sell.

Turning theory into practice

Importantly, figuring out the right sales experience is not something to leave to your individual reps to figure out. The entire organization plays a part.  For example, sales management has a key role in designing a differentiated, advisor-based experience based on a customer’s stated and hidden needs and the seller’s unique capabilities. Specifically, we have used the principles of behavioral psychology to help tailor the experience – messages, practices and process – to the customer’s unconscious drivers of feelings and behaviors. Finally, marketing plays a critical role in identifying and messaging the teachable insights and equipping reps with the sales tools to deliver them to customers.

For more information on services and work, please visit the Quanta Consulting Inc. web site.

The trouble with employee financial incentives

In the current economic climate, many companies are pulling out all stops to improve employee performance particularly for jobs with top and bottom line responsibility such as sales reps, investment bankers and plant managers.  Conventional wisdom (supported by extensive research) says that pay-for-performance incentives in the form of bonuses and commissions are an excellent tool to motivate desired behavior. Interestingly, a recent article published in Knowledge@Wharton, a Wharton School of Business publication, highlights research that shows the opposite; namely, that using financial incentives carry significant costs as well.

The article’s authors, Adam Grant and Jitendra Singh, demonstrate that financial incentive schemes can trigger unintended and counter-productive behaviors that lead to poor organizational dynamics.  The article lists three major concerns:

1.  Unethical actions

In one example, the vegetable brand Green Giant had a problem with insect parts ending up being packaged in its frozen pees. To correct this, management created an incentive plan that rewarded employees for finding contaminants in the products.  Unfortunately, some employees took this as an opportunity to cheat by planting insect parts in the packages in order to collect the bonus.  Clearly, incentives by themselves do not ensure that employees will pursue the the most ethical or moral path to earn them. 

Furthermore, the employees most motivated by incentives could also be most likely to act unethically.  Studies by Wharton management professor Maurice Schweitzer and colleagues showed that individuals most inspired by goal achievement are also more likely to engage in unethical actions such as cheating or overstating their performance.

2.  Pay inequality

By it’s very nature, financial incentives magnify real and perceived pay inequality.  Numerous studies have shown that people judge the fairness of their pay not in absolute terms, but rather in terms of how it compares with the pay earned by peers. As a result, pay inequality can lead to workplace strife when overlooked employees begin to feel jealousy, disappointment and resentment towards high performers.  The result is usually higher employee turnover, reduced collaboration and lower organizational productivity.

A wealth of research underscores the negative implications of pay inequality. In one interesting case, Notre Dame researcher Matt Bloom found that major league baseball teams with larger gaps between the highest-paid and lowest-paid players lose more games, score fewer runs and give up more runs than teams with more equitable pay distributions.

3.  Lower intrinsic motivation

Financial incentives can result in worse, rather than better, performance by diminishing intrinsic behavioral drivers like having pride in ones work or enjoying challenges.  Studies out of the University of Rochester has shown that rewards often undermine a person’s intrinsic motivation to work on interesting or challenging tasks – especially when the rewards are announced in advance or delivered in a controlling manner.  For the employee, what may be seen as fun and rewarding initially can soon be viewed as stressful and less interesting when performance begins to be rewarded.

As a consultant, I have witnessed the aforementioned issues as byproducts of successful pay-for-performance in sectors as diverse as Retail, IT and Manufacturing.  My key takeaway is not that pay for performance strategies should not be tried or do not work.  They do – assuming factors like quality, service and pricing are competititive.  Rather, the lesson is that managers need to design and deploy incentive programs carefully with an eye towards the full organizational impact.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Till death do our client relationships part

Challenged by service commoditization, margin pressure, and higher client expectations, smart Business-to-Business (B2B) firms are rethinking their approach to business development and client retention.  Since it is increasingly difficult and expensive to acquire new customers, prudent B2B firms are concentrating on maximizing client retention and selling more products & services to them. Maintaining client loyalty makes intuitive sense given the 80/20 rule – 80% of revenue and profit comes from 20% of the clients.  High retention is also strongly correlated with high profitability, operational efficiency and likelihood to refer (i.e. the Net Promoter Score).  For example, loyal clients are more likely to purchase additional offerings, beta test new products and be easier to support.

Creating tighter relationships, however, is easier said than done. Deep connections are often elusive due to a variety of business and organizational factors such as poorly designed reward systems, strategic misalignments and misguided business processes.  How can firms overcome these challenges to get more out of their relationships?

One way is to design your product strategies, service plans and capabilities into your most valuable and highest potential relationships. Tighter integration between firms often leads to higher retention, share of customer wallet and customer satisfaction. For the client, they really get what they need, when they need it and how they need it. This relationship-driven model is best deployed through the sales & marketing functions using a 3-step framework: 

Analyze & Prioritize

Since every company has limited resources and time, leaders need to focus their efforts on identifying and understanding strategic accounts. To find these accounts, managers need to analyze the revenue and margin contribution of each client and then estimate what additional revenue can be garnered by cross or up-selling other products.  Managers should also drill down into these clients to understand their needs, behaviors and business drivers.  Estimating revenue risk is critical so companies need to have a good understanding of competitive offerings and the unique value they bring. Once this analysis is complete, clients can be grouped according to common needs, opportunities and characteristics.  This clustering would enable sales teams to identify cross sell opportunities, at-risk clients and accounts where higher pricing could be supported. 

Design & Implement

Richer relationships are fostered by tightly integrating a strategic client’s current and future needs within your firm’s delivery model (e.g., business development, support and product development functions).  This need not be an onerous task.  Often, firms have the right platform and structure in place but the wrong resources, policies and mandate attached to it. Companies must also ensure that their internal teams and partners are aligned in theory and practice with the vision and that their culture is conducive to a relationship-centric approach. For example, I have often observed how reluctant some sales representatives and channel partners are to asking clients two basic questions:  “How are we delivering on your needs?” and “Will you buy other products and services from us.”

Measure & Manage

To be successful, your relationship strategy needs metrics that can be collected, tracked and managed.  These metrics could include customer satisfaction, Net Promoter Score, cross-selling or retention rates.  Regardless of the choice, they should be part of the company’s strategic planning and performance measurement system  in order to guarantee internal alignment and proper resource allocation. 

Tight client integration must be a vital part of your corporate B2B strategy.  To make this happen, it pays to follow a systematic and cross-functional approach to relationship planning and implementation.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Analytics: Data x Math x Computing = Profit

The holy grail of CRM, the ability to leverage and monetize internal data, is now within reach of most medium to large enterprises. Low cost computing power, new software tools and sophisticated math skills have converged to enable high-level data analytics, a powerful capability that can drive incremental revenue, improve workflow efficiency and enhance customer satisfaction.  Basically, advanced analytics uses special algorithms to comb through large databases of transactions looking for important causal relationships between variables that can be leveraged to improve the efficiency and effectiveness of a program or process. For example, Internet Services and Retail companies are mining millions of their transactions to uncover critical (and hitherto unseen) insights about consumer and supplier behavior.  In other cases, some firms in the Consulting and Software industries are using observations from their own mountain’s of data (as well as the clients they serve) to launch new practices focusing on data management and consulting. 

The business of helping firms make sense out of proliferating data is growing quickly. This industry, which includes leading IT players such as IBM, SAP, Microsoft and Oracle, has estimated revenues in excess of $100B.  The markets is growing at almost 10% a year, roughly twice as fast as the software market as a whole.

I found 3 ‘best practices’ firms, in MIT’s Technology Review and The Economist magazine, who are using data analytics with great success:


IBM is a pioneer in the use of mathematical models to analyze huge data sets.  IBM’s analytics business began as an internal project undertaken by in-house mathematicians, who wanted to learn how to maximize revenue per client by analyzing years of sales data.  The insights discovered in their work prompted them to retool their sales teams by account size & industry and to tweak their service offering.   The result was $1B in new revenues and better sales coverage.  Not surprisingly, IBM concluded that others could benefit from these capabilities and they built an entirely new business analytics and optimization group within IBM Global Business Services to support it.  To date, this group has already trained 4,000 consultants

And they are busy.  IBM mathematicians are using high-quantile modeling in its workforce analytics practice to help clients make decisions about human resources issues such as how best to deploy their sales people.  In other cases, their mathematicians are using stochastic optimization algorithms in their human resources and marketing practice areas to help clients find new customers and determine the right mix of experienced and junior programmers to staff large software projects.


Walmart generates reams of data through their Retail Link inventory management system.  The Company is using sophisticated analytics to crunch this data in a myriad of ways, turning information into a powerful profit accelerator.  In one impressive example, Walmart’s analysis showed that they should offload inventory management to their suppliers and not to take ownership of the products until the point of sale.  This new strategy allowed the firm to decrease inventory risk, conserve cash flow and reduce its costs.


Like many telecoms providers, Cablecom has grappled with churn.  Using advanced data analytics, Cablecom discovered that although customer defections peaked in the 13th month, the decision to leave was typically around the 9th month (as indicated by things like the number of calls to customer support services).  To reduce defections, Cablecom offered at-risk customers special deals 7 months into their subscription.  The results were impressive:  customer defections fell from 20% of subscribers a year to under 5%, enabling the firm to save significant marketing acquisition costs while boosting customer satisfaction.  

Regardless of your data management objectives and strategy, there is gold in those terabytes of data.

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