Age Verification Bypassed by Cashier

It all started at the grocery checkout with a half-case of Corona beer . . .

Amid the cacophony of bar code scanner beeps and crying babies, I almost miss a message that whirs onto the register’s colorful plasma display at my checkout station:

**Age verification bypassed by cashier**

The cashier barely looked up, but she had already made an age assessment. As the verification message scrolled up and off the screen, replaced by the odd character strings that comprise the retail shorthand for my purchases, I pondered how the cashier could have made such a hasty decision regarding my age, given the gravity of the consequences she faced had she been wrong.

What influenced her decision? I’m dressed in a black T-shirt, jeans, and running shoes. Was it a little gray hair? Slight balding at the temples? Crows feet around the eyes? Maybe I really do look fifty. In the name of Positive Customer Experience, couldn’t she have feigned a shred of age confusion, prompting her to ask me for an ID? But could my reaction of flattery be someone else’s annoyance over privacy invasion, or a twenty-something’s frustration that he doesn’t appear sufficiently old? Whatever the answer, could the enforcement of age verification be achieved without the ruthlessly cold message the Point-of-Sale system displayed?

Welcome to the murky world of personal profiling, and its collision with technology. Yes, people judge a person’s appearance, and make sales decisions based on that judgment. While web analytics enable companies selling products over the Internet to profile people at arms-length with clinical precision, face-to-face transactions require on-the-spot judgment and strong interpersonal skills. That’s a tall public relations order for anyone who must decide who to interrogate when selling alcohol or tobacco, allowing a senior-citizen discount, providing entrance into a bar, or pricing a kid’s haircut (are you eight—or nine?). Jim Barnes described related pitfalls in his March 16th blog “The Tripping Point.”

It’s not just age-related profiling that creates customer relationship problems. In 1994, Denny’s Restaurants paid a $54.4 million class action settlement to thousands of black customers who sued the chain for discrimination, alleging they were refused service or had to wait longer for service than white customers. And during a recent cab ride to the airport, I endured the driver’s diatribe about the bad tipping habits of a certain nationality (did he assume I had a different heritage?).

A recent article “Confessions of a Car Salesman,” by Chandler Phillips,
elucidates how institutionalized customer profiling infects the customer experience:

“Since I was still a “green pea” the other salesmen tried to push me to wait on undesirable ups — the undesirable customers who the salesmen thought wouldn’t or couldn’t qualify to buy a car. My manager had, at one point, described the different races and nationalities and what they were like as customers. It would be too inflammatory to repeat what he said here. But the gist of it was that the people of such-and-such nationality were “lie downs” (people who buy without negotiating), while the people of another race were “roaches” (they had bad credit), and people from that country were “mooches” (they tried to buy the car for invoice price).”

Data mining has freed many e-commerce companies from the burden of coaching employees on such sensitive issues. Sequestered in Spartan cubicles that could be anywhere in the world, analysts can look at a myriad of variables and target messages and tailor processes without offending customers. Amazon.com made business intelligence-generated recommendations famous with “Customers who bought this item also bought . . .”

The so-called statistical objectivity of analytics makes it possible to sell billions of dollars of products without customers taking umbrage. No value judgments, no offensive antecedents such as “People like you want . . . “ If a poor recommendation is made online, it’s an anomaly in the algorithm, and no one person is to blame. Most of all, no one makes a hurtful request based on how a person looks or thinks. In the cyber-world, psychographic judgments are deeply hidden in lines of code. In the bricks-and-mortar world, they’re not.

It’s not that technology and analytics hasn’t brought new ugliness to the customer experience. When caller-ID technology became widespread, many feared that it would create a two-class customer service system by routing inbound calls differently, depending on the neighborhood a person happened to be calling from. And technology-enabled profiling made headlines again when civil libertarians debated the potential abuses resulting from embedding RFID chips into clothing.

But the fact remains that for all the heavy lifting carried by today’s e-commerce workflow engines, billions of face-to-face customer-relationship interactions are conducted every day, and managing them is a less-than-perfect science. Add to the equation that any judgment based on an individual’s appearance might be considered offensive, you quickly realize this is not a job for amateurs.

As with many issues that reside in the union of social mores, technology, and the law, there are more questions than answers. Given the sensitivities over personal profiling, how should companies enforce regulations for sales of certain products to underage consumers? What constitutes appropriate management of policies? How should an appropriate customer interaction be defined? How should employees be trained? What is the role of Customer Relationship Management (CRM) systems in supporting employees when profiling must be part of the transaction? What constitutes unethical physical profiling? What risks are associated with profiling?

Companies such as Disney have addressed some challenges by regarding customer-facing employees as actors and patrons as guests, and providing interpersonal skills coaching along the way. Other companies need to think further about how profiling impacts the customer’s experience. Unchecked, customer profiling mutates into dangerous “—ism’s:” racism, sexism, and ageism, to name a few. Has the car dealership referenced earlier already crossed a perilous threshold? It’s worth thinking about, since once the fuzzy line has been crossed, the issues discussed around the boardroom table relate to litigation and damage control.

But companies should not ignore the opportunities! When you’re buying beer at age fifty, life seems brighter when a cashier asks you for an ID. You can bet I would tell at least twenty people, after first telling my wife! Talk about evangelizing the customer experience!

Does Your Company Differentiate by Offering Good Products with Virtue?

If you want to become wealthy, “create good products with virtue.” The man who made that recommendation, Ted Leonsis, should know. As co-founder of America Online, he has repeatedly used that idea to build a financial empire.

But today’s world is so full of non-virtuous products and customer experiences that there are websites, blogs, and government agencies dedicated to sharing information about the perpetrators. Given that, could simply creating good products with virtue provide a major differentiator for a high-performance brand?

As Mr. Leonsis observes, with the unparalleled amount of customer sentiment available to producers today, “there is no reason to have bad products or services.” If only it were so easy. Companies spend many billions of dollars in pursuit silver bullets in the name of Sustainable Differentiation—often with little results to show for the effort. So whenever I uncover a “good product with virtue,” it seems awesomely different.

Do we chronically have examples of non-virtuous products because managers and investors don’t care about having virtuous ones? Because companies don’t know how to produce good products? Because many really smart people simply talk too much? What makes a product “good and virtuous” in the first place? And how can an enterprise exploit such differentiation through its sales and operational strategies?

An example provides help toward answering these questions. I thought back—before Web 2.0, viral marketing, email, data warehouses, even before Internet itself—and remembered how a grocery retailer, Giant Food Corporation of Maryland—deployed “good and virtuous” as a formidable competitive weapon for over thirty years. What differentiated the company? Consistent delivery of quality, value, and service to every customer. More than mere words, these differentiators created complex operational challenges in a demanding, highly competitive business serving a wide demographic.

One highly-effective resource the company used was a Consumer Board, a low-technology tool that was radical and controversial during the early ‘80’s, when I served as a board member for two years. As remarkable as it was at the time for a retailer to provide consumers a voice, I learned what was more significant was [i]how[/i] Giant delivered its “good and virtuous” differentiation, gaining the largest share of the grocery market in the Washington DC area in the process.

Four important tactics stand out most in my mind:

1. Bring the consumer’s voice to the executive suite. Before any of its rivals did so, Giant not only recognized the primacy of the consumer, but organized its management and operations accordingly. The Giant consumer executive at the time, Odonna Mathews, had the authority to enact recommendations that the board made. Other boards simply provided information to a corporate representative who lacked decision-making authority.

2. Direct senior management involvement with consumers. Izzy Cohen, the Giant CEO at the time, regularly attended our meetings.

3. Tight focus on the needs of individuals and communities. In creating “good and virtuous” differentiation, Giant understood that short-term profits were worth exchanging for customer loyalty. One prominent example was the Consumer Board’s recommendation for Giant to offer tabloid- and candy-free checkout lines, which the chain implemented well before the rest of the industry.

4. Independence between quality initiatives and store-level financial performance measurements. For example, if an ailing freezer needed replacement, the store’s manager wasn’t penalized with the cost of the equipment. Giant’s expenses toward quality differentiation never impacted a store’s profitability. Internal conflicts were eliminated.

The esteem that Giant Food held in the communities it served cannot be overstated. The most compelling story occurred during the riots in Washington, DC following the assassination of Martin Luther King Jr. When hundreds of other businesses were destroyed or damaged, community activists protected the Giant Food stores, all of which survived unscathed. That relationship and commitment could not have been achieved without creating “good products with virtue.” The financial rewards speak for themselves.

Senior Moment: What Our Elders Can Teach Us About Sales

Yesterday I received a sales letter that hit me like a breath of fresh, un-digitized air. I wanted to share it with my readers:

Dear Friend:

As we enter the new year, conditions are not very good for purchasing new supplies and equipment. However, there are some signs that this may improve as the year progresses.

Your responsibility as a department manager or property manager is to maintain your facilities in the best possible manner. I have three things to offer:

Excellent products
Good service
Fair prices

If the need arises this year for you to replace or add to your equipment, please don’t hesitate to give me a call. I will be happy to furnish you catalogs and written quotations for your consideration.

Sincerely,

My friend Stanley’s name follows below his hand-written signature.

Three paragraphs, two sentences each. There’s purity of form and a sincerity that rarely emanates from today’s marketing communications.

Stanley began his sales career before most of us were born, and he hopes to achieve the milestone of entering his ninth decade this year. He’s a retired CEO who is passionate about selling. He’s never stopped. When he started working, ‘personal selling’ meant . . . personal selling. Telephones, “snail mail,” appointment books, and cars were the indispensible tools of the sales trade.

Most of all, face-to-face dialogs created the trusted bonds between buyer and seller, and were an inextricable part of the sales process. Little wonder that Stanley’s letter says “I care” so clearly, without using those two words. He perfected that skill in the trenches, by looking at his customer in the eye.

In our Twittered, blogged, and Web 2.0’d sales world, Stanley’s selling talent has become rare. The forces of information technology, product commoditization, and cost reduction have pushed legions of salespeople from the prospect’s office to seats behind laptop screens, or to the deep innards of the call-center cube farm. Millions must make their quotas using far more sophisticated tools than Stanley had—but without ever physically shaking hands with a customer.

As Stanley approaches his 80th birthday, he has become rare in other ways as well. He’s part of a shrinking population that will all but vanish in twenty years: a self-selected group of seniors who choose not to work with a computer. He doesn’t use email or a have website for his company. He puts up with my e-marketing hubris when I rib him about not being able to accept orders online (FAX and phone work fine for him). The few times he needs Internet access, he taps an eager pool of web-savvy grandchildren. It would be easy to dismiss his knowledge as outdated.

Stanley has taught me how courtesy, respect, and sincerity have great power in sales, and the wisdom contained in his letter reminds me that when it comes to selling, seniors have a wealth of knowledge for the rest of us. I wish Stanley many more great years in selling. I still have much to learn from him.

The Problem You Solve Depends Mightily on the Questions You Ask

At your last planning meeting, were you confronted with any of these questions:

How can we improve our sales productivity?
What will enable us to make better hiring decisions?
Can we reduce costs without impacting customer service?
How can we rid the world of debilitating poverty and disease?

Venture capitalist Jacqueline Novogratz has tackled all of these, which she described in her book, The Blue Sweater: Bridging the Gap between Rich and Poor in an Interconnected World. Through trial and error, she has become skilled at recognizing innovations and projects that portend desired outcomes. Her success results partly from framing problems with the right questions.

She writes, “So often we ask ourselves the wrong question. When it comes to a disease like malaria, the question should not be whether bed nets (to protect people from mosquitoes) are sold or given away free. Both distribution methods have their place in a broader attack on the disease. The question instead is, ‘What does it take to eradicate malaria?’ It’s not ‘either-or,’ but rather ‘both-and.’” She continued, “I have been invited numerous times to sit on panels focused on determining whether water is a human right or its ownership should be privatized. Again, the question is wrong. People need water to live, and there is no better intervention to improve health on a global scale than bringing safe, affordable water to as many people as possible.”

Fee vs. free? Human right vs. privately owned? Why do people couple vexing problems to progress-inhibiting conundrums? Ms. Novogratz offers an explanation. “What also makes the process of growing solutions to poverty complex is the noise we hear in the media and among thought leaders who believe their way is the only way. They suffer from a paucity of listening skills—just at the time when listening has never been more important.” Ouch. Sound like anyone you know?

Every day, I read questions on LinkedIn discussion boards and in blogs that similarly obfuscate greater problems that must be solved. Here’s a recent sampling of popular questions, followed by my interpretation of The Greater Challenge:

Popular question: “Why won’t salespeople make more cold calls?”
The Greater Challenge: “What are the most effective ways to engage prospective customers?”

Popular question: “Why are there so few great salespeople?”
The Greater Challenge: “Which personal behaviors create business value, and how can organizations identify and nurture them?”

Popular question: “When is a customer more important than revenue?”
The Greater Challenge: “What outcomes do our customers value?”

Popular question: “How soon will the Internet turn your salespeople into dinosaurs?”
The Greater Challenge: “How will your sales strategy adapt to technological, social, regulatory, competitive, and demographic forces?”

Popular question: What’s the ROI of Social Media?
The Greater Challenge: “Which initiatives can we begin that will bring the greatest value to our company today and in the future?”

Deciding whether a customer is more important than money presents a false choice. Understanding when your sales force will lack effective skills will give you a number, but so what? Debating the answers won’t bring anyone closer to solving the root issues.

Would we see fewer distracting questions if the costs of confusion included not only time and money, but life, poverty, and disease—as it does for Jacqueline Novogratz? I don’t know. But I’m glad she recognizes how important it is that questions match the problem to be solved. Shouldn’t all of us?

Quick! Name your Prospect’s Biggest Challenge!

Author Michael Korda said “great leaders are almost always great simplifiers who cut through argument, debate, and doubt to offer a solution everyone can understand and remember . . . straightforward but potent messages.”

Simplicity alone doesn’t make a message potent. What’s missing? Two crucial factors that Howard Gardner describes in his book Leading Minds: how effectively the scripts are enunciated and how convincingly the deliverers of the communications embody the scripts. On those dimensions, “now serving food” doesn’t demand rigorous analysis.

In marketing and sales, we live and breathe message potency. We have to. Everything we do must nudge, push, or demand a change in one or more entrenched behaviors. So, when it comes to potency, could the intended change be as significant as the message itself?

To answer that, we must address a challenge even more basic than potency: how to select the right issue to address in the first place. From experience, I know it’s hard to get it right. In business, we tout high ROI when our clients want strategic enablement. We push strategic enablement when cost reduction matters most. We communicate about best practice knowledge transfer when the greater issue is how to build communities. We promote social media tools to build communities when a client’s overarching concern is managing profitable growth. Our assumptions leave us in a fog of sometimes-happy ignorance. Most exasperating, our prospective clients usually can’t tell us that we’re attacking the wrong issues because they’re not even aware of our companies or our products!

Happily, every now and then, we find a great example that reminds us that we can connect to visceral issues and make our communications potent—but first we have to understand what the issues are. An advocacy group called Food Democracy Now (FDN) has a mission is to advance “the dialogue on food, family farm, environmental and sustainability issues at the legislative and policy level.” Against a powerful food industry lobby intimate with the complexities of the Farm Bill and the machinations of the National School Lunch Program, Dave Murphy, FDN’s president, faces a daunting challenge. According to a recent article in The Washington Post (“Where Policy Grows,” March 25), Mr. Murphy recognizes that it’s not only important to understand the legislation, but to “recast the debate about good food from a moral battle to an economic one. Take the school lunch program, which Congress will review this year. Food activists have long argued that more fruits and vegetables from local producers should be included to help improve childhood nutrition. But Murphy says the better way to sell the idea to legislators is as a new economic engine to sustain small farmers and rural America as a whole (italics, mine). Talk about nutrition and you get a legislator’s attention, he said. ‘But you get his vote when you talk about economic development.’”

Bland? After all, ‘economic development’ lacks originality—many times over. In addition, because righting economic wrongs isn’t FDN’s primary mission, Mr. Murphy could be forgiven for being more pedantic about nutrition, health, and the environment. But he knows that by building an economic frame around his cause that FDN will accomplish more than it could through moral grandstanding. By going after the wrong issue Mr. Murphy would find promoting his cause a much tougher row to hoe (pun intended).

Mr. Murphy’s circumspection about issues applies equally to other marketing challenges with differing complexities. What does finding the right issue mean for achieving a targeted return on invested capital? Sales productivity? Reducing sales risks and shortening sales cycles? Meeting revenue forecasts? Everything. Attacking the wrong problems (or attacking the right problems the wrong way) creates a cascading set of selling failures. When it comes to changing entrenched behaviors, not all issues are created equal. For maximum potency, messages need a highly motivating context, and that means choosing the right issue.

Like FDN, when you find the right one, you can change the world!

Perfect Pitch: A Tribute to Billy Mays 1958 – 2009

Think you can sell ice to Eskimos? What about making a sales pitch in front of strangers for toilet bowl cleaner, picture hooks, laundry detergent, or putty. Go ahead. Step right up. See if you’re a better salesperson than Billy Mays, who died in 2009 at age 50.

Billy’s commercials for Mighty Putty, OxiClean Detergent, and Kaboom are as close as a sales process gets to haiku. He builds rapport and trust, identifies a problem, pitches a solution, and motivates action—all within a two-minute commercial. Straight up, straightforward—and straight for the jugular. Whether he’s talking about toilets or dirty laundry, with his staccato delivery, Billy doesn’t tiptoe around anything.

Selling solutions that aren’t glamorous, for problems that aren’t pretty is much, much harder than it looks. And while it’s tempting to analyze Billy’s effectiveness by looking at the [i]components[/i] of his sales pitches, his commercials are best appreciated without being encumbered by details. Billy connects with emotions, not with intellect. Who wouldn’t buy bonding putty that sets instantly, with the strength to pull a tractor trailer? I saw it in the commercial! And Billy just tripled the offer to six sticks!

What separates Billy Mays from other great salespeople isn’t his mastery of sales techniques. It’s not his effective deployment of people, processes, and technology. It’s his ability to delight the buyer. On that measure, he has few equals.

Whether we’re marketing gardening tools or ERP software, Billy Mays offers sales lessons for all us. In the meantime, a haiku tribute to Billy Mays, who could sell ice to Eskimos:

Top sales producer.
An opening. Hard sell. Close.
Buyer spends money.

Can Johnny Raise Money? How Public Schools Exploit Social Networks

Reading, writing, ‘rithmetic, and raising money. For public education, building the latter competency has never been more important. Schools want your money and they are pushing harder than ever to get it. If you haven’t already felt the heat, you will soon.

This month, a strange envelope arrived in our postal mailbox at home. It looked like a bill, but different, because the envelope had three windows instead of the usual one, and because our name and address was scrawled in freehand. On closer inspection, I saw the handwritten name of our nephew above the printed name of his elementary school in Florida. (My wife and I live in Virginia.) I bit the curiosity bait and opened the letter.

It begins with a handwritten salutation: “Dear Aunt Barbara and Uncle Andy,” followed by preprinted text saying, “We’re hoping to raise much-needed funds through the sales of magazine subscriptions—either new ones or renewals!” At the bottom: our four-year-old nephew’s name—written in adult cursive. How’s that for bravado? And just the week before, we received a similarly-packaged solicitation from our niece (not related to our nephew) asking us to buy magazine subscriptions to benefit her school in California!

Both letters contained several pieces of collateral, and a convenient postcard to send to our school-aged loved one informing him or her of our donation to the school. The postcard was thoughtfully pre-printed with the salutation “Dear,” a message, and amazingly, a closing sentiment, “Love,” followed by a blank line for me to fill in my name. (This technique of fundraising enables all parties to be equally perfunctory!)

Even stranger is what’s not included. The communication didn’t provide any information about how the proceeds will be used, or how our relatives will benefit. (Great American Opportunities, the marketing company that sent one of the solicitations, doesn’t provide an address or corporate website to learn more.) There isn’t a website listed for the school, or even a picture of the school (or of any school, for that matter!) to make a visual connection.

All of which leaves me feeling weirdly hollow about my role in a value chain that encompasses magazine publishers, marketing promotion companies, school districts, nieces and nephews—and finally, me. Here’s why:

1. Schools are part of the fabric of local communities. I support close family ties, but those bonds don’t mean I feel compelled to fund my niece and nephew’s schools. That’s the fiscal responsibility of their neighbors, and local government and businesses.

2. The marketing junctions don’t work. Family members making product pitches on behalf of big media companies ostensibly in support of vague school programs seems an odd and convoluted arrangement.

3. The charity request is utterly insincere.

4. The economics are flawed. One letter touts that “Forty percent of every dollar goes to our school.” Assuming the claim is valid, wouldn’t my niece or nephew’s school be twice as well off if I contributed 80% directly, and saved the remaining 20% percent myself? Clearly, media companies are the primary beneficiaries of this marketing program.

The low-overhead appeal of this fundraising tactic is undeniable. Schools compete for the diminishing number of volunteer hours of time-strapped parents. So they ask parents to tap address books and dash off thirty or so letters to relatives and acquaintances, and voila! Money for the school! And no one even had to get off the sofa!

But what’s sacrificed in the process? For starters, sixty percent of every dollar spent. In addition, local communities are circumvented and kids lose the valuable experience of learning face-to-face sales—an important skill no matter what field they enter. Finally—as I can personally attest—away goes the goodwill of otherwise affectionate relatives who now get hit up for donations anytime and anywhere.

Maybe I’m wistful for a kinder, less harried time. When I was in elementary school, a fundraising drive meant hopping on my bike to get every neighbor on Oak Leaf Lane to buy one or more boxes of peanut brittle. That was before “working mom” became a mainstream term, before No Child Left Behind, before federal and state school budget cuts, before child predators, and yes, before big marketing companies salivated over how social networks and heartstrings promotions can stem declining sales for products like magazines in the age of the Internet.

Whether or not such promotions are successful, they’re degrading. If schools need to raise money, they might be better served to hire marketing specialists that understand the nuances of fundraising. In the meantime, my advice: don’t overlook appealing to local community. The most valuable social networks are just a bike ride away.

ROI Hype: Finance for Fools?

ROI. Finance for fools? “Guidance” for the gullible? It’s hard to say, but it’s chic to pay homage to its numerology. Today I read an article that stated “your best ROI starts with selecting the right team for the job.” Clear as mud.

Have salespeople and marketers corrupted a useful financial equation—and made it so generic that evoking the term eludes comprehension? To find out, I dusted off my lightly-used college textbook, Techniques of Financial Analysis, by Erich Helfert. Here’s his definition, followed by an example:

“ROI = Average annual operating cash flow divided by net investment. = $25,000 divided by $100,000 = 25%.”

Then he wrote, “With no reference to economic life . . . all the measure indicates is that $25,000 happens to be 25 percent of $100,000. Note that the same answer would be obtained if the economic life were 1 year, 10 years, or 100 years. In fact, the return shown would be true in an economic sense only if the investment provided $25,000 per year in perpetuity; only then could we speak of a true return of 25 percent.” (If you sell a B2B solution and are willing to commit to that interpretation, please share your contact information below.)

Ignoring this not-so-trivial caveat, thousands of blogs, Tweets, conversations and sales proposals unabashedly pontificate ROI, a metric that ignores time and risk—two key business decision-making variables. How helpful is that? For insight, I contacted a person who understands the ins and outs of investment strategy, accounting professor Robert Kemp at the University of Virginia’s McIntire School of Commerce.

He prefaced his comments by sharing that the overarching objective of an organization is to create value, and that organizations favor transactions in which value received is greater than value given up. That makes sense. And ROI enables decision-makers to uncover the answer?

Not exactly, he explained. “There are three questions about value that decision makers must answer. What do I get, when do I get it, and how certain are the answers to the first two questions?” He said that ROI can answer the first question, but not the second or third. Further complicating the sometimes-assumed precision of ROI is that financial executives don’t regard the variables of cash flow benefits and investments consistently, because both are “subject to SWAG’s in accrual accounting,” according to Kemp. ROI’s usefulness clearly has limits. Just ask anyone who invested with Bernie Madoff.

More robust calculations such as Net Present Value (NPV), which offsets the present value of cash outflows against the present value of cash inflows, consider time and risk. According to Robert Higgins, author of Analysis for Financial Management, “a crowning achievement of finance has been to transform value creation from a catchy management slogan into a practical decision-making tool that not only indicates which activities create value but also estimates the amount of value created.” With that nifty endorsement, you’d expect business developers around to world to flavor conversations with NPV instead of ROI, but it hasn’t happened.

Whether a business decision involves IT, Marketing, or Operations, Kemp believes that a key question to answer is “what is the value to the total organization if I approve a given initiative, versus what is the value if I do nothing? That requires comparing marginal benefit to marginal cost.” He cautions that decision makers face a dangerous trap by exploring that question without looking into the future.

He illustrated the conundrum using Netflix and once-archrival Blockbuster, which used vastly different value-producing strategies. Thriving Netflix adopted a long-term view of the business value of web-enablement, and invested accordingly. Failed Blockbuster, bloated on their doomed late-fee cash cow, focused on maximizing current period earnings. Happily, Netflix executives didn’t limit their investment analysis to performing a simple ROI calculation. If they did, they’d be sitting at the bar with ex-Blockbuster executives, talking about the good old days when decision makers could be fat, dumb and happy.

ROI hype creates numerical misalignment—with marketers and salespeople on one side, and CFO’s and financial decision makers on the other. Ironically, when salespeople tout time- and risk-agnostic ROI, they reinforce the same dysfunctional short-term, Blockbuster-like thinking they’re often trying to overcome.

But if ROI’s calculus has flaws, why do vendors persist in using it when “proving the business case?” It’s how we’ve been brought up. As marketers and salespeople, we aren’t rewarded for casting doubt on what we sell. We’re certain. We’re confident. We succeed because we’re concrete in the visions we create. In a sales meeting, mentioning risk and being vague about Time to Value grates like a discordant note. Little wonder that we resist embedding those variables in the calculations we offer to decision makers. Kemp put it this way, “change creates enormous amounts of risk.” But by hyping ROI, we don’t acknowledge that fact. Our customers and prospects aren’t stupid. They’ll figure out what increases value—and what threatens it.

In sales, when we lose an opportunity, we sometimes say “the customer didn’t buy the math.” Maybe they don’t buy the equation, either.

In an Uncertain Economy, Sales Success Means Knowing When to Throw–and Catch–a Hot Potato

Sales risk has always been a business hot potato. It’s more comfortable when someone else is holding it. In this economy, the risk potato has become scalding hot.

Salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities.

As a sign of the times, one software client told me, “We’re looking for a salesperson who will work on full commission.” In other words, “We can’t afford to invest anything in case he or she doesn’t produce.” My response: “If you find that person, don’t forecast the revenue. Moving all of the risk to someone else’s shoulders won’t make your sales strategy successful.” The problem is, in an uncertain economy, few companies want to absorb any more risk, and the trembling has become palpable.

My client’s effort to avoid risk is not altogether wrong. Sane businesspeople don’t seek risk; they manage it! But eliminating risk altogether is a zero-sum game. Without risk, there’s no return. What are my client’s options?

• Disaggregate. Follow Henry Ford’s lead. One hundred years ago, he recognized that production efficiencies were enabled by specialization of tasks. Some selling tasks, such as prospecting, are so inefficient that it’s better for outside organizations to manage those processes. Many sales organizations cope by creating hybrid selling models that embed third-party prospecting and lead management resources. Can such a hybrid sales process appear seamless to customers?

  Beth Schrager of Schrager and Associates, a Massachusetts-based outsourced sales provider, believes so. Her firm provides full-service outsourced sales solutions, and her record of long-term client retention corroborates her success. According to Schrager, “We bring to the table proven, tactical sales experience that enables companies to generate more revenue without increasing sales costs.”

  Not every outsourced provider works the same way. Further, keeping costs flat while increasing revenue reduces financial risks but creates new ones. Past assumptions are no longer certain. The salesperson we talk to might not be an employee of the company we buy from. Some outsourced firms impart that information with a subtle semantic hint, scripting salespeople to say “I’m calling on behalf of . . . ” While some prospects might ignore the distinction, others find the disclaimer unsettling. Outsourced selling models require particular attention to how to disclose information because trust and rapport can be damaged when communications are not handled properly.

• Listen first—then shout! Many organizations begin the selling process by spending mightily on broadcasting messages to prospects. That strategy means shouting first, then waiting for prospects to communicate interest. But there’s great financial risk in that approach. Why? Because customers and prospects can block perceived noise using widely-available tools that are becoming increasingly sophisticated.

  But thanks to social media and a fabulous online tool called alerts, a method has emerged that inverts the old model—lowering risk in the process. Through services such as Google Alerts, Yortify.com and Alerts.com, salespeople can monitor thousands of conversations simultaneously and identify highly qualified opportunities. My Aug. 19, 2008 CustomerThink blog post, Don’t Bother Me With Social Media, described how one company converted its dominant sales tactic from shouting to online listening. Instead of producing mass-market e-newsletters and other lead-generation campaigns, the company’s small sales staff looked for online conversations that mentioned competitors and identified a large universe of highly qualified prospects in the process. From there, a salesperson-initiated phone call began the direct communication.

• Create sales intermediaries. Sales intermediaries, such as independent channel sales partners, enable producers to share selling risks and to extend market reach. But channel sales models don’t fit every organization. Are you comfortable riding in the business-development passenger seat while someone else drives? If not, channel sales will bring you uncomfortable new risks. Selling your company’s product might be your priority, but it’s one that your channel partner might not share. On the other hand, recruiting, hiring, training, developing, managing and retaining a dedicated in-house sales force require financial resources that not every company can afford. Adopting a channel sales model offers a viable solution because the financial risks can be more easily absorbed if they are spread between multiple organizations.

  Larry Bossidy and Ram Charan describe channel sales risk trade-offs this way in their book, Confronting Reality—Doing What Matters to Get Things Right (Crown Business, 2004):

  Learning about end users is harder for companies that sell through intermediaries, and whose ultimate buyer may be several steps down a distribution chain. They generally don’t have mechanisms designed to capture information about the customer and end user.” But selling through intermediaries has benefits. “There may be steps that can be eliminated, cost reductions, or insights into how value is added (or subtracted) along the way. The result can be to make the entire chain not only more cost-competitive, but also more effective in delivering value.

In an uncertain economy, executives who look through a risk-reduction lens when creating sales strategies will make better decisions than those who look through a cost-reduction lens alone. Why? Because cost reduction skews decisions by failing to consider the financial impact of the concomitant risks. I’m talking about market risks, communication risks, hiring risks, sales cycle risks, ethical risks, brand-image risks—and yes, financial risks. You must fully consider each one.

What will my client do to achieve his sales objective? It’s unclear. Given the economy, there are few guideposts and many forks in the road ahead. One thing is certain: When it comes to selling, to get the right results, you must provide effort. That requires the ability to catch the risk hot potato—not just the ability to throw it.

Do Salespeople Bug You? Here’s Why They’re Not Going Away

Search the phrase death of a salesperson on Google, and it will return around 15,000 results. This corruption of the title of Arthur Miller’s iconic play Death of a Salesman has become embedded in blogs and articles worldwide. But as Mark Twain said, “the rumors of my death have been greatly exaggerated.” Unless you live in Cuba, North Korea, Laos, Vietnam or China, sales professionals won’t vanish. Not now. Not soon. Not ever.

Why? In capitalist economies, organizations must acquire customers to survive, and that requires leading change—and leading change requires selling ideas. People malign the art of selling, people diminish its importance, people even wish it away. But whether you’re discussing weight-loss plans or economic reform, minds won’t change without one very human interaction: someone must sell an idea. And we work with idea sellers every day. They’re called Associates, Agents, Account Executives, Senior Solutions Marketing Managers, Directors of Product Management, VP Sales, Senior VP Global Sales and Business Development, Chief Marketing Officers, Customer Account Managers. Add your own title and the list goes on.

In 2006, the U.S. Bureau of Labor Statistics reported that out of 132,600,000 US workers, 10,464,000 were in “Sales and related” jobs—about 8% of the workforce. This number of jobs—sub-classified as retail salespersons, cashiers, sales representatives, and their first-line supervisors—reflects both the diversity and complexity of the selling process. Selling change isn’t easy. And there’s friction because salespeople and customers don’t always get along. Not all salespeople provide value. Not all customers are open-minded. Some products aren’t easy to buy. And when it comes to fair play, no party to a business transaction can claim exclusivity on the ethical high road.

There’s additional upheaval. Foundations of trust shift. Technology and other forces change once-stable commercial relationships. In some sectors, sales jobs are lost—in others, they’re gained. But it’s illogical to interpret recent trends as portents for the eventual demise of the sales professional. Automation and business process reengineering will no more eliminate the need for salespeople than changes in healthcare delivery models will eliminate the need for doctors and nurses.

I’ll take a contrarian position from many hyper-caffeinated emarketing and social media experts: we’re a long way from replacing salespeople with mouse clicks and drop-down menus. When it comes to Great Customer Experience, the automation we’ve created stinks. Proof? We can scale our selling models through information technology, but we still can’t wean ourselves off “human intervention” (oh, come on, Andy, just use the word salespeople!) “To speak to a representative, press zero.” “If you need help selecting a product, just ask one of our retail floor Associates.” “To initiate online chat, click here.” “If you’d like to meet with one of our Sales Representatives, enter your email address.”

Still, the critics complain that salespeople often inject themselves into the buying mix. “We don’t need them,” the critics say. “After all, they’re only thinking about their next commission.” I’ll accept the criticism. As my VP of sales fittingly said “any salesperson who doesn’t add value risks being replaced by a kiosk.” But over 10,000,000 “sales and related” US jobs suggests that buyers also need salespeople.

The critics won’t admit it. “Salespeople are unethical.” “Social media changes everything. We get better information through blogs and online product reviews.” “Let me tell you about my last encounter with a salesman . . .” I’ve held these sentiments myself—and I’m a salesman! But much of the enmity is misplaced. Salespeople are not inherently bad. It’s the culture under which salespeople work that needs overhaul. Customer relationship problems start with people at the top of the organization chart, whose faces aren’t often public. Those executives create business plans that contain financial forecasts that are divided into sales quotas that are measured in revenue that are credited against the salesperson’s “individual goal.” Ready to talk about improving the “customer experience?” You’ve heard it before: It’s the system, stupid!

Maybe what’s needed is a redefinition of sales itself. What does sales mean in the context of leading change? After all, isn’t leading change fundamental to every organization’s strategy? Interpretations will be the progenitor of new ways that sellers and buyers connect and relate, new processes, and new best practices.

Perhaps it’s gratuitous for a salesperson to espouse that nothing happens until somebody sells something. But in the non-communist world, I haven’t found a more accurate statement. The sales professional is far from dead.