MAR 18TH 2009 / Issue 20

MUD OR STARS?Where you look is where you go

IS YOUR PROSPECT LIST A GOLDMINEOR A LANDMINE?

DISCOUNTINGDANGER!

What are those discounts really costing you?

Getting real with your prospect list

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NZsM / MAR 18TH 2009 / 3

MARcH 18TH / Issue 20

THIS WEEKS MUST READ

IS YOUR PROSPECT LIST A

GOLDMINE OR A LANDMINE

Richard Liew tells you how to

get real with your prospect list,

and cut it down to only those

prospects you can turn into

real business.

MUD OR STARS?

How you can train your mind

to aim for the top.

NZSM CALENDAR

TWO MINUTE TOP-UP

DISCOUNTING DANGER?

A quick, informative take on

what those discounts are really

costing you.

BOOK REVIEW

GETTING PAST NO:

NEGOTIATING IN

DIFFICULT SITUATIONS

We all want to get to yes, but

what happens when the other

person keeps saying no?

SALES TRAINING DIRECTORY

THE CLOSE

9

12

13

5

9

11

12

13

14

16

5

NZsM / MAR 18TH 2009 / 4

While many

salespeople,

especially in business

to business sales, have some or

all of their remuneration package

relying on commission, most

of the time commission is worked out on total

sales achieved for the month, quarter or relevant

commissionable time frame.

Relatively few companies though, calculate their sales

reps commission based on gross profit, either because

measuring the gross profit for each sales rep is too

complicated, or because their sales people have little

ability to influence gross profit by way of discounts,

giveaways, or other special deals, or because they

believe it’s a problem for the bean counters to sort out

instead.

But of course as a business, GP is critical. If what

you’re selling doesn’t include enough margin to

pay commissions and overheads, you won’t be in

business for long, regardless of how impressive your

sales figures are!

If you’re one of the thousands of small business

owners in New Zealand who are also the company

sales manager you’ll be aware of the dangers of

seemingly innocent discounts, but many sales

managers find themselves tearing their hair out,

having to knock back requests left, right and centre

from reps who want to do “just one more” discount,

and simply do not understand the relationship

between gross margin, discounts and sales volumes.

As an accountant this was one of the few useful

things I did learn, so when the esteemed Paul

Newsom said he wanted to do an article on

percentages I stifled a yawn and told him to send it

on through. “Hell yes our readers will enjoy it!” I

said… “It’s like eating bran flakes for breakfast – a

bit dry but rewarding in the end.”

so be sure to prove me right and check out Paul’s

article “Discounting Danger” – a great chance to

recap exactly how much extra you will have to sell for

every percentage point you give away…

Richard

ABOuT /

short and sharp, New Zealand sales Manager

is a free fortnightly e-magazine delivering

thought provoking and enlightening articles,

and industry news and information to forward-

thinking sales managers, business owners and

sales professionals.

eDITOR / Richard Liew

ART DIRecTOR / Jodi Olsson

ADVeRTIsING / Richard Liew

ADVeRTIsING/cONTeNT eNQuIRIes /

Phone Richard on 09 523 4112 or

email richardl@nzsalesmanager.co.nz.

POsTAL ADDRess /

NZ sales Manager

c/- espire Media, PO Box 137162,

Parnell Auckland 1151,

New Zealand

WeBsITe /

www.nzsalesmanager.co.nz

NZ Sales Manager is an Espire Media publication

NZsM / MAR 18TH 2009 / 5

By Richard Liew

IS YOUR PROSPECT LIST A GOLDMINE OR A LANDMINE?

T H I s W e e K ’ s M u s T R e A D

As anyone in professional selling knows, your

prospect list is your lifeline. No prospects mean no

sales, and no sales mean no money!

But have you ever looked at your prospect list and realised

this list of people you should feel excited and enthusiastic

about calling actually makes you want to do anything but

pick up the phone and start making those calls? Have you

ever looked at a name on your prospect list and thought,

“Oh no, I can’t ring them again!”

Instead of feeling like your prospect list is a goldmine

ready to provide you with unlimited commissions you

start to see it as more of a landmine – you start hesitating

to call your prospects and you get a feeling of dread

whenever you look at it!

Professional selling is one of the most challenging

professions in the world and in sales enthusiasm and energy

count for everything.

But if your current prospect list is filled with the type of

prospects that make you go “Oh no!” is it any wonder our

enthusiasm goes out the door whenever we start making

those call backs?

The Problem

In sales there’s really only one reason we keep prospect

lists. And that is to have a list of people that we know, with

reasonable certainty, we can do business with right now.

As sales people we love adding names to our prospect lists

but on the flip side we hate crossing prospects off our lists!

Because once we’ve crossed a prospect off our list we know

we’re going to have to find another one to replace it – and

\\Getting real with your prospect list

NZsM / MAR 18TH 2009 / 6

that means more work!

unfortunately this attachment to our prospect lists is often

the same thing that holds us back from achieving the sales

results we’re really capable of.

We can be so reluctant to cross people off our list that

instead of having a shorter list of people ready to do

business with us right now we end up with a long list of

people who may do business with us sometime in the next

24 months! Or worse still – names on the list who will

never end up doing business with us!

Many times I’ve gone to delete a prospect from my list

but left them on telling myself, “But what if they go

ahead next month…?”.

And how inspiring is a list of names that in reality will

never turn into business? It’s not! In fact it’s de-motivating

because we fool ourselves into thinking that as long as

we have a big prospect list we’re going to meet our target!

But here’s what we all need to be very clear on - we don’t

get paid to build prospect lists – we get paid to SELL!

Whenever I talk to people who are having trouble

meeting targets the first thing I do is ask to see their prospect lists.

And often it turns out that the names on their prospect lists are the

same names that have been on there for the last six months.

Have you ever looked at your prospect list and realised that you’ve

been looking at the same names month after month after month?

(Depending on the length of your sales cycle it may be common to have

a prospect on your list for 12 months or more but you get the idea…)

The danger with this is that:

You spend all your time and energy on people who are never going •

to buy from you

You get bored with your prospect list and your enthusiasm starts to •

wane making you less effective

You don’t have any time to keep looking for new prospects because •

all your time is spent ringing back your existing ones

Your sales suffer because you run out of prospects who are •

committed to saying “Yes” now

Your dreams of a record year get further and further away•

so if this sounds familiar to you, NOW is the time to do something

about it.

If you want to close more sales, earn more money and feel excited when you look at your prospect list you need to start feeling good about crossing people off your prospect list!

NZsM / MAR 18TH 2009 / 7

What to do about it

so here’s the key. If you want to close more sales, earn more

money and feel excited when you look at your prospect list

you need to start feeling good about crossing people off your

prospect list! You need to be absolutely ruthless about it!

1Get ruthless with your prospect list. If your sales targets

are monthly targets then the only thing you want to

know is, “Who can I do business with this month?”

How many “prospects” on your list are people who:

said they would make a decision 6 months ago but •

still haven’t?

Are never available when you call and never return •

your messages?

Have never had time to look at your proposal but want •

you to call “next month”?

Have been on your list for months on end without any •

real progress?

Might turn into business next month or later?•

Right now take a look at your prospect list, and unless you

are certain that they will go ahead this month, delete any

that fall into the categories above.

Now it may seem a bit scary but once you’ve done it you’ll

feel a sense of freedom and invigoration. You’re in control

now – not your “prospects”!

Now take any prospects you think you can close next

month or after and put them on a separate prospect list –

these are now your “Future Prospects”

What you should now be left with is a list of people who

you are at least 75% sure you can close this month.

Now many of you will be saying, “But I’ve only got two

prospects left!” And to that I say “Excellent!” (Sometimes

the truth hurts!) At least now you know that you have to

start looking for new prospects right now and fill up your

list for this month so you know you can make target. And

now you won’t have to waste your time calling a long list

of existing prospects who are just going to say “call back

next month!”

Make a rule today that people are going to have to qualify to be on your prospect list! It’s a privilege not a right!

2Make a rule today that people are going to have to

qualify to be on your prospect list! It’s a privilege not

a right! You need to raise your standard for who goes

on your prospect list. Remember – you only want to know

who you can do business with this month. If you think you

can close them next month or the month after add them to

your Future Prospect list but don’t make the mistake of adding

them to your current prospects just so you feel better!

Once you start being more picky about who goes on your

prospect list you’ll find you have more time to spend

looking for new prospects rather than getting bogged down

with people who are more work than they are worth.

3Right now commit yourself to contacting 100

new potential customers within the next month.

Don’t worry about how you’re going to close

them or get bogged down with long proposals – just

contact 100 new faces and you’ll find that will set you

up with a great list of people ready to business with

you now. This is a trick I learned from Brian Tracy and

it works so give it a go.

And once you’ve built a good list of people you know will

enable you to meet target this month you’ll find you’re more

confident when dealing with your prospects. Remember that

your customers can smell desperation!

The truth is that as a sales professional your most precious

asset is your time.

If you learn to be ruthless with your prospect list you’ll find

you’ll have more time, close more deals, be less stressed

and enjoy your work more.

Richard Liew is the Editor of NZ Sales Manager e-magazine.

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Have you ever wondered why clichés last so long?

Perhaps time has shown they actually hold some degree of

truth. Trouble is, familiarity breeds contempt and so we’ve

long moved on from giving those silly old sayings much

value or credibility.

“Two men looked out of prison bars, one saw mud the other

saw stars.” You’ve heard that one and the partnering cliché I’m

sure - “What you see is what you get.” There’s truth in that.

Read any heading in the business section and what do you

see? Do you see mud or stars? Main street is talking about

the mud. That’s the pervading focus at the moment. can you

see where I am going with this?

As a kid I got stuck in the mud at stanley Bay. Once was

enough. I remember deciding, “I’ll never make that mistake

again.” I’ve kept my word.

In the intervening decades I trained my mind to look at the

stars rather than the mud. I look for the silver lining on the

way up. It’s paid off handsomely.

It was heartening to read the research reported last month

about what happens when you put your energy, attention

and focus on the stars rather than the mud.

It’s been revealed that when you put your focus on

appreciation, gratitude for what you have rather than what

you don’t have, on the glass half full, on the stars, there are

multiple physical and psychological benefits.

Benefits like better health, more energy, and even higher income!

Apparently we ‘star people’ sleep more soundly (true!), have

stronger relationships and live longer. Well that’s enough.

What I do know for sure is that cultivating the habit of

gratitude has increased my awareness of the abundance

that surrounds me. In my work, and in my relationships.

I’m visibly more content with my life, I’m never grumpy for

long and I’m surprisingly optimistic about the year ahead. so

much for being grateful.

As a starter, just saying ‘thank you’ is magic. It’s a forgotten

word these days. I miss it. ‘Thank you’ is a gracious doorway

to recognition and appreciation. It works among friends and

it works in the workplace.

NZsM / NOV 12TH 2008 / 9

WHERE YOU LOOK IS WHERE YOU GO\\Are you looking at the mud or the stars?

By clive Littin

NZsM / MAR 18TH 2009 / 10

I have to tell you about my friend Wendy. she’s the manager

at a local store. I blew in one morning with a pleasant

greeting: “Good morning folks, how are things?”

Wendy took the lead. “Wouldn’t mind a raise” she quipped.

Feeling a bit cheeky I pressed: “And Wendy, what would you

really like?” “Well, a ‘thank you’ from the boss would go a

long way.” Out of the mouths of babes, so to speak.

I remember challenging a friend of mine recently,

to try saying ‘thank you’ to one of his staff each day.

(He had complained to me that he didn’t really know

them.) A week later he reported back. “couldn’t do

it” was his excuse. Maybe he hadn’t noticed the table

loads of reports around revealing that for employees,

workplace recognition is up there with wages, salary

and oxygen.

These days, when you go to work on Monday morning,

what do you see? Mud or stars? It’s hard to say ‘thank

you’ to the mud I guess. Especially when you got your first

dollop with the 6am news.

This is where gratitude enters. When you start to express

gratitude, even for the smallest observation, gesture or

effort a miracle takes place. You begin to see more. You

start to feel more. A sense of having enough gradually

creeps into your consciousness. Abundance. You start to

feel good. Confident. Blessed. Then you get the urge to

pass it along - like pass the parcel.

Do you get the picture? This stuff is light years away from

allowing yourself to be devoured by fear. credit crunch.

survival. shakespeare said “Our fears are our enemies.”

The grateful person shifts their attention, energy and focus

from fear to gratitude and can then get on with the business

of performing.

Please glance at the second paragraph again. It says: “What

you see is what you get.” Thank God captain sullenberger

saw the Hudson.

I’ll round off with some practical tips that you can practise

at your leisure to get you heading in the right direction.

But they’ll only make a difference when they have become

habits. You know that. Tony Robbins teaches “Repetition is

the mother of all success.”

HOW TO sHOW YOuR APPRecIATION AT WORK:

1. Say something nice to someone within five minutes of arriving at work. For example. “That was very thoughtful thanks.” “Nice work!”

2. count up how many times you have said ‘thank you’ today.

3. If you’re not the boss suggest to him/her that you include a moment of recognition for someone at staff meetings.

4. You may even go so far as to have a planned event of recognition and reward. For example a monthly ‘best idea’ award.

5. set a tone of approval and appreciation. Add those qualities to your personality.

Mark Twain said: “I can live for two months on a good compliment.”

If you want your team to be focused on the stars and not the mud, it has to start at the top.

Clive Littin is an internationally renowned trainer and coach and author of “Appreciate Your Way To Fame and Fortune” - the book and the workshop. You can visit his website at www.clivelittin.com.

NZsM / MAR 18TH 2009 / 11

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NZsMcALeNDAR

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NZsM / MAR 18TH 2009 / 12

Paul Newsom is Learning & Development Manager for the Rev Sales Network, a personal and professional development network for sales professionals. Visit www.rsn.co.nz for more info.

DISCOUNTING DANGER

Price pressure is a common reality of doing business

at the moment. It is perhaps timely to remind

ourselves to resist the temptation to discount as our

only tactic to win business.

Price will be one of several buying motives for most people. If

you are not competing in the price basement market, but price

is the only motive you are responding to, then price will be all

people will judge you by.

Find ways of maintaining your price by adding value in other

ways.

While reducing price to get the sale might help grow the

revenue, it has a significant impact on the bottom line profit.

Did you realize that if you normally sell a product for $100,

and make $40 profit, then if you discount by 10%, you will

have to sell 1/3 more product to make the same amount of

profit that you did before you started discounting?

Here’s how it works:

exAMPLe

(Gross Margin = the % of sale price left after deducting costs)

(Gross Profit = Total sales less direct costs)

Your product has a sale price of $100 and direct cost of $60

Gross Profit per item is $100 - $60 = $40

Gross Margin is $100-$60 = 40%

So if you sell 10 units, the profit will be $40 x 10 = $400

Now, if you take $10 off the price, (a discount of 10%), then

sale price will become $90 and the cost remains at $60

Profit per item is now $90 - $60 = $30

To maintain your profit of $400 at this discounted sale price

will require sales of $400 = 13.3 units or 33% more units sold.

There is a useful tool on the next page which will help you to

calculate this:

First work out your product margin at list price, which is

shown on the top row of the table.

Then work out the percentage discount you are offering.

Go down the margin column, and along the percentage

discount row to calculate the percentage increase in sales

you need to make to maintain the profit you would have

been making at list price.

The table stops at 25% discount. The numbers get too scary

above this. Hopefully you are not discounting more than 25%!

$100

$30

By Paul Newsom\\What are those discounts

really costing you?

T W O M I N u T e T O P - u P

NZsM / MAR 18TH 2009 / 13

R e s O u R c e c O R N e R

We all want to get

to yes, but what

happens when the

other person keeps saying no?

How can you negotiate

successfully with a stubborn

boss, an irate customer, or a

deceitful coworker?

In Getting Past No, William ury of Harvard Law school’s

Program on Negotiation offers a proven breakthrough

strategy for turning adversaries into negotiating partners.

You’ll learn how to:

- stay in control under pressure

- Defuse anger and hostility

- Find out what the other side really wants

- counter dirty tricks

- use power to bring the other side back to the table

- Reach agreements that satisfy both sides needs

Getting Past No is the state-of-the-art book on negotiation

for the twenty-first century. It will help you deal with tough

times, tough people, and tough negotiations. You don’t

have to get mad or get even.

Instead, you can get what

you want!

GETTING PAST NO: NEGOTIATING IN DIFFICULT SITUATIONSBy William ury Published by Bantam Books

$36.95 from

Your current Gross Margin

20% 25% 30% 35% 40% 45% 50% 55% 60%

Discount % % Increase In Sales Needed To Make The Same Gross Profit

2

11 9 7 6 5 5 4 4 3

4

25 19 15 13 11 10 9 8 7

6

43 32 25 21 18 15 14 12 11

8

67 47 36 30 25 22 19 17 15

10

100 67 50 40 33 29 25 22 20

12

150 92 67 52 43 36 32 28 25

16

400 178 114 84 67 55 47 41 36

20

- 400 200 133 100 80 67 57 50

25

- - 500 250 167 125 100 83 71

Discounting Table

NZsM / MAR 18TH 2009 / 14

NZsM / MAR 18TH 2009 / 16

“

“If it flies, floats or fornicates, always rent it… It’s cheaper in the long run.Felix Dennis, Founder of Dennis Publishing, Britain’s 95th wealthiest individual, author of ‘How to Get Rich’.