January 20th, 2011
In the early days of my entrepreneurial career, a very dear friend said to me, “It takes money to make money.” We kind of laughed about it and had fun with it. It was repeated often until it became somewhat of a mantra and he became a mentor to me. The further I got into the startup venture, the more I understood what that meant. Since then, the more I work with clients (yes, the entrepreneurial ones, but even many of the others), the more I find I really have to coach them on this. It boggles my mind how organizations fail to realize this over and over again.
Looking at business management statistics for successful companies, the ratios vary widely. Many will say 50% of a growing organization’s time in the (S)MB space should be spent marketing; and the number increases to 90% and greater, the further you move into that S (small) business space. Whatever the “magic number” is, suffice it to say it’s a lot larger than what most people think, and certainly than what most organizations do…except for the really successful ones anyway.
Yet, how often do we see marketing budgets slashed? Nearly every entrepreneur is so focused on getting “the product” out, they fail to pay attention to the marketing side or think it is something to address later, not realizing how long it takes to make it happen. They feel once the product is available for purchase, their biggest hurdles are over and sales will (obviously) start, and everything will be fine. Then a year later, they find they haven’t sold anything, or very little. They are still struggling with the right message. They perhaps have even put more money into further product development when the first round or two is still sitting on the shelf. This is a major balance to be sure. You can’t market (past a certain degree) with no product, but you truly can’t sell without marketing.
It is also interesting to see this phenomenon at work with hiring/budgeting trends. Where do organizations tend to hire first, sales or marketing? When sales are declining or times are getting tough (like recessions), do organizations tend to hire more sales people or more marketing people (or external marketing resources if this is their model); the real question being does investment go into sales or marketing? Almost inevitably, investment goes into sales.
This is quite interesting indeed given I have never seen a good salesperson not eager to jump on a solid lead. However, I have seen many salespeople frustrated, to the point of burning out and moving on, by not having enough leads. Further, as I work with clients and they explain to me they are struggling with sales, and leads, and building their pipeline, I find many people get really confused. When I’m trying to decipher the information and really nail down the issues, I ask some seemingly straightforward questions about whether the problem is lead generation or people to follow up on the leads, and similar type questions. I get a lot of confusion, stammering, and blank stares…or cover up calling it all semantics. It is jarring to me how many executives cannot differentiate these issues…and they are very different issues, requiring very different resources and talents to resolve the situation.
If you step back and think about the problem without truly being “in” it (so this is not your company, just look objectively at the problem at hand…pretend it’s MBA school case study time), far more people would be in agreement of a strategy that built leads to the point of having very busy salespeople, comp’ing salespeople for extra workload and having execs (or some marketing resources, or inside sales, that could be effective for a larger part of the sales cycle before handing over the leads), until sufficient business is closed to hire additional sales resources. Depending on the sales approach, partners, resellers, or consultants could also be used during this process. In other words, this is a nice problem to have, there are multiple ways to handle it, and most people involved would be pretty jazzed up about this situation.
Now flip it the other way…leads are not coming in. Salespeople are frustrated and are being asked to go further and further “back” in the sales cycle, often being asked to do a high percentage of their own lead gen. Make X number of cold calls per week/day/hour…we’ve all heard or seen the drill. I’m not saying salespeople should not be hunters and bring in net new opportunities, but in many cases, this is not the most effective, at least not for a large percentage of their time. Continuing with the scenario, there are many ideas on how to generate leads (in a good situation, or none in a bad situation that requires even further resources), but all of these take money, and there is no budget left to apply further resources to the lead gen. This does not present a jazzed up team scenario as above. In this case, people are often very frustrated and losing confidence in leadership, the organization, the product, or some combination thereof. As I said, stepping back from the situation and seeing it as generic company ABC, it is much easier to see a pathway to resolution. Chances are in this scenario, budgeting needs to be juggled to put more into marketing than other areas until the problem is resolved.
These same principles apply in B2B, B2C, ecommerce, and other go to market strategies. It doesn’t matter how many products you have or how good they are, if no one knows about them and the messaging is not strong enough or on target to turn those prospects into leads and ultimately buyers, the company will never be successful. We are not all Apple or Nike. We are not in a situation that whatever we put out in the market, people will at least try it because of the name brand that’s on it…and oh by the way…why do you know when there is a new “i” anything? Yes, marketing budget!
No matter what business we are in, money is required to develop the right message and touch prospects. If all money is spent in other areas, this problem will never be resolved. Marketing does not come free and takes time, attention, and tweaking, particularly in early stages of a product, to really hit the mark. It is also not stagnant so what worked a couple years ago is not necessarily the same as what will work today so it has to be changed. This requires constant investment (i.e., marketing it not a one-time cost). The bottom line being, watch your resources and your ratios carefully. Don’t get overly caught up in one area. There is one thing that is absolutely true no matter what way you look at it…
It takes money to make money. Yes, another orange peel.
Let this become your mantra.
October 26th, 2010
It seems it should be pretty easy to tell the difference between success and failure, doesn’t it? Any grammar school teacher would mark you correct for listing them as opposites. Yet more often than we think, I would venture a bet, we should be asking this question.
If your business is stuck in idle, is this success for holding on during the recession or failure to innovate and find some new way to help your customers? If you are able to promote from within to a new position, or consolidate groups to have one manager rather than two, and you save a bunch of money but this person is simply adequate, is this success or failure? What if you had two dynamite people instead, that cost more but brought in many times their cost to the bottom line? What about a killer salesperson who can close the big deals, but oversells the customer and in a very short time, the customer is not happy? Contrast this with an average deal maker, but resulting in highly satisfied customers who come back and buy more as they need it?
You can begin to see that the question is not so black and white. Or is it?
I recently was talking with a client about an internal struggle that had arisen. They found themselves in a situation where they had assigned an employee, let’s say Shelby, as the lead over a particular long-term project. After some shuffling of positions over time for various reasons, Shelby’s manager ended up on the project team, so for the purposes of the project, was reporting to Shelby. All was well for a while but then the manager, let’s call this person Pat, wasn’t carrying their weight. Pat wasn’t missing deadlines (yet) or doing something that was immediately addressable, however Pat was no longer being a valuable member of the team. In fact, Pat’s lack of participation and constant barrage of “devil’s advocate” or “just for the sake of argument” discussion was stalling the group’s progress, and ultimately undermining what Shelby and the group were trying to accomplish (which in turn, costs the company money).
The client tried talking with Pat, but this did not help. Still the same, except it became a larger issue now for Shelby. However, Pat was a pretty good employee otherwise, not exceptional, but pretty good. They were afraid of losing Pat, or if they cut Pat, what it would cost to bring in someone new, train them, etc. The rest of the team that Pat managed, liked Pat in general and was pretty happy. So they basically told Pat and Shelby to work it out among themselves. Where was the success or failure? Which is/was which?
Here is where I had to work with the client to examine the issue a little more closely. So you have Pat and you have Shelby. Both pretty good workers, been with the company more than 5 years, and all is well, until this situation occurs. Before you ask…As the recession had hit, people were shuffled some as positions were not filled, others as positions were eliminated or groups were merged…so the obvious question of do they both have to remain on the project team was moot. However, even if it wasn’t, I’m not sure I would have changed my mind.
How successful is Pat really if Pat can’t handle a change in leadership? Sometimes team players have to play a different role to achieve the overall goal. Companies are most successful when they work to everyone’s strengths….when they have the right people in the right seats on the bus. And sometimes the business has needs for people to serve in various capacities for the needs of the business, and the very reason they need them to serve in that capacity is because of the seat they fill on the bus. So if you run into this situation, and with guidance and support, it does not resolve, you have most likely hit the capacity of the employee. If the employee is not comfortable remaining in that position, and can’t act effectively while other people might progress, it’s time to address the situation. Not addressing it is failure.
Pat undermining Shelby impacts the team no matter what. Initially people might hold it together and ignore the situation or feel it doesn’t pertain to them. But eventually some other issue will arise and the team’s productivity will be negatively impacted. This costs money. A lot of money. A lot more money than addressing the problem with one person. The team will feel management is not effective at handling these situations and will have a loss of faith, perhaps respect, and eventually loyalty. And now, the problem has snowballed into a team issue rather than one person. It would have been far better to address the situation earlier on, immediately validating the issue and if remedial action was not effective in resolving the issue. The difficult choice to eliminate the person has to be made. Otherwise, you have one spoiled apple disrupting the whole cart.
I have actually encountered this situation, or very similar, multiple times over the past few years. It kind of boggles my mind really. We are in a recession so hiring great talent is easier than it has ever been. However, I find that organizations are simply afraid to move, period. It’s like they are sitting, holding their collective breath, hoping things don’t fall down, but afraid to take a step in any direction for fear of it being the wrong one.
Analysts hold that smaller, more innovative companies always come out on top after a recession. These companies are more nimble and have a culture of innovation, so they can quickly position themselves to take advantage of the opportunities in a recession. Yes, there are opportunities in a recession! They might be a little more difficult to find, but they are there. So whether not addressing employee situations, not maintaining the integrity of management and leadership, or not looking for innovative ways to meet your customers changing needs, inaction is action unto itself. Inaction is failure. Let’s not deny it anymore.
October 19th, 2010
I admit, I somewhat stole the headline. Recently an article entitled, “Meet the New Boss,” ran in The Dallas Morning News, featuring Chuck Greenberg, the new owner of the Texas Rangers. It’s a great article and full of great advice for any, or shall I say every, manager, no matter how big or small the company. The article spoke about Greenberg meeting the fans face to face, his goal to watch at least several innings from every location in the ballpark, lowering (yes that’s right, lowering) concession and parking prices…and that’s just the beginning according to Greenberg. He has made it a priority to truly understand the fans experience and make it the best it could be. Some things truly are simple if you just knew about them. How true this is for every manager. Why do you have to be a new boss to get in touch with your employees and customers? The impact of such a journey is at your fingertips.
When is the last time you made it a point to spend a few hours in each department in your organization? When did you last answer the phone or sit at the receptionist desk, greeting customers or visitors? How about taking customer service or support calls? Wouldn’t it be something to call customer service and get the CEO…how many of us would love to hear, “this is the CEO. I am spending time in customer service today, hearing directly from you….thank you for being a customer and I will get someone who can immediately solve your problem.” Wow, what an impact that would have. I can see and hear the social media buzz already!
Now let’s take a walk internally. Do you know all of your employees? Probably it depends on the size of the organization. Let’s not use that as an excuse however. When is the last time you took a walk or spent some time in each area? Had lunch with different groups/levels of employees rather than your executive team? Held regular “internal open house” where employees are encouraged to come into your office and chat…about work, interests, whatever the case may be…it’s open house. Lay out the drink and treat, send an invitation, make it a regular event. Invite them in, and invite yourself out to their environments. Perhaps have departmental open houses to build an understanding and appreciation for the value each area brings.
Many organizations spend thousands or millions of dollars a year on high priced consultants to come in, take the temperature of the organization, survey employee/customer satisfaction, facilitate team building, and so on. How much of this could we do on our own by coming out of our cocoons, fostering the right environments, building some simple practices into our culture? Study after study has demonstrated these types of behaviors lead to superior satisfaction, which builds loyalty, which translates pretty quickly to your bottom line. And I’m willing to bet, it costs less than some of those consultants, with far better results!
So get out of your office. Slip into something comfortable. Take a walk. Say hello. Open your doors. Even if you’re the captain, you’re still ON the team…so act like it, be there, be part of warm ups, play the game, and chat in the locker room. Don’t call it a day until all are accounted for.
Check out the difference in the next game.