Gary D. Seale
Strategy Formulation and Strategic Thinking
Internal Environment, Power /Weakness and Decision Models
The Trucon Consulting Group, LLC
November 2023
Author Note:
I have no conflict of interest to disclose.
Correspondence concerning this material should be addressed to Gary Seale.
e-mail: [email protected]
Introduction
This research paper is an investigation and discussion about evaluating the internal environment in a company, what produces power and weakness in a business, and includes a decision model discussion. The first segment of the research concerns a five-question decision-making process about the internal environment of a business. The second segment is a discussion about what gives a company power or makes them a weak player in the marketplace. The third portion of the paper is a brief review of the five-question process in comparison to an ISO-9001 quality management process. ISO is an acronym for International Standards Organization. There are also two annotated bibliographies that provide insight into the papers referenced for the power and weakness segment.
Process of Evaluating the Internal Environment
John Gamble et al., (2019) and his research associates have provided a five-question template that will allow a company to investigate its internal environment thoroughly. The following summaries will recap the questions and give examples to amplify the why behind the question. This process is critical for the short-term and long-term life of the company.
Two primary benchmarks are used to evaluate the internal aspects of the internal environment. The first one is the financial strength and the profitability of the company. There are several elementary aspects of financial strength that should be considered. The first is to meet payroll and other operating expenses without borrowing money. The ability to meet investor expectations and have credit is essential as well. The profitability of the individual products undergirds a large portion of the financial capability.
The second benchmark is the competitive strength of the products and services. Is it declining, stable, or increasing? This goes hand in hand with the company’s market standing and its products. How does the company compete in the marketplace? In other words, how does it stack up against the competition? There are additional questions that demand an answer to aid in assessing the internal strength. Some examples include: What are the trends in sales and earnings? Are stock prices trending in a firm direction? Is the company retaining its customers? How is new customer attraction trending?
The answers to these questions will determine how many adjustments or bold changes in the company strategy need to be made.
How well is the company’s strategy working?
The primary question regarding the strategy of a company is the ability of the model and strategy to match the resources and capabilities of the firm (Gamble et al, 2019). An over-aggressive strategy can deplete the companies’ resources and cause a failure to take care of customer obligations. Senior management must diligently match the internal resources with the company’s capabilities. The ability to build differentiating strengths that block entry into the market is essential. This must be an ongoing effort that cannot be allowed to become complacent. Subsequently, senior management should use a two-step process to assess the company. This includes identifying the company’s resources and capabilities. Then, determine how competitively significant they are in their ability to support a competitive advantage in the marketplace.
Identifying Competitively Important Resources and Capabilities
To aid in the comprehension of these concepts, it would be wise to provide some examples of resources and capabilities. Resources would include tangible items such as plants, distribution centers, manufacturing equipment, patents, information systems, and capital reserves or creditworthiness (Gamble et al, 2019). Intangible assets such as a well-known brand or a results-oriented organizational culture. A capability is the capacity of a firm to competently perform some internal activity. A capability may also be referred to as a competence. Capabilities or competencies also vary in form, quality, and competitive importance. Proficiently performed internal capabilities that rank superior in competitive criteria are referred to as core competencies. The search for core competencies is developed by the company on an intentional basis.
Determining the competitive power
There is a series of tests that will contribute to learning the competitive advantage of a company. Management should look for capabilities that are valuable, rare, inimitable, and non-substitutable. This forms the acronym VRIN, which is known for ascertaining competitive advantages (Gamble et al, 2019). Keep in mind that social complexity and causal ambiguity are two items that create a barrier to constrain other companies from copying competitive advantages.
What Are the Company’s Competitively Important Resources and Capabilities?
Resources and capabilities must be enhanced continuously if the company expects to use them to look into market opportunities (Gamble et al., 2019). Otherwise, these tools can grow outdated, which may cause market declines. A noncompetitive position cannot be expected to allow the company to seize new opportunities. Consequently, management must always accept the challenge of constant adjustment of the existing capabilities and resources and be on the alert to grow new capabilities.
Gamble et al., (2019) suggest that a strengths, weaknesses, opportunities, and threats (SWOT) analysis be undertaken at this phase of the process. A thorough SWOT analysis will allow the company to be objective about its position in the marketplace. This objectivity should be a guiding force when establishing strategies that will enable the company to move forward in financial, infrastructure, and product competitiveness.
Are the Company’s Cost Structure and Customer Value Proposition Competitive?
It does not matter if the company is selling a commodity item or a product that can be differentiated; price competition is always present (Gamble et al, 2019). The cost must be kept in line with the competition. The same due diligence is necessary when it comes to the value proposition. If possible, price should not be the differentiator. As a result, continued vigilance is necessary to maintain and grow the value proposition in both products and services. Every company, except possibly the micro companies, comprises many different activities that result in a finished product or service. All of these activities combine to form a value chain. This should drive management to examine activities that actually create value for the customer. How can a company determine which tasks should be retained or eliminated? Benchmarking individual functions is proposed by Gamble et al., (2019), as a fair and reasonable method to differentiate between productive activities and detrimental functions. The customer’s value proposition and cost competitiveness depend not only on the internal activities but also on its suppliers’ and channel partners’ value chain activities. Steps to improve internal value chain activities include implementing best practices, eliminating cost-producing activities, relocation to low-cost producing countries, outsourcing, and technology investments. “Resources and capabilities that are both valuable and rare provide a company with the necessary preconditions for competitive advantage. When these assets are deployed in the form of a value-creating activity, that potential is realized” (Gamble et al, 2019).
What Is the Company’s Competitive Strength Relative to Key Rivals?
This process component requires a thorough assessment of the enterprise’s competitive strengths (Gamble et al, 2019). Two questions can help gather that information. Number one is: How does the company rank relative to competitors in every important factor regarding market success? Number two is a measurement of competitive advantage compared to its major competitors. The responses to these questions can help guide sales and marketing strategies toward companies ranked lower, equal, or higher in the marketplace.
What Strategic Issues and Problems Must Be Addressed by Management?
Five questions have been proposed that will aid in analyzing the competitive issues and problems that must be addressed by the management (Gamble et al, 2019). The questions are as follows:
How well is the present strategy working? In this case, think about financial performance and competitive strength. Do the resources and capabilities have the power to give the company a sustainable competitive advantage? Consider the previously mentioned VRIN tests and a SWOT analysis. Are the cost structure and value propositions competitive? Is the company stronger or weaker than its primary competitors? Competitor ranking is important in this case. This information will have a direct impact on strategy decisions. What strategic issues and issues demand immediate action? Once this process has been executed, these issues can be prioritized for immediate action plans if necessary.
Key Source of Power or Weakness
As a student, stakeholder, and observer of business, it is evident that multiple factors can ultimately cause a business to fail. Internally, poor products, pricing policies, marketing deficiencies, supply chain issues, and weak customer service can create terminal issues (Rumelt, 2021). However, the ultimate issue is the leadership quality that can generate a thriving enterprise or cause it to terminate from noncompetitive or poor decisions. Consequently, the quality of the company’s leadership can be a key source of power or weakness.
Chandler, (2022), wrote a paper addressing the common challenges to making quality decisions at the senior management level. He addressed decision methods, analysis shortcomings, limited perspectives, and a failure to modify decisions that failed to produce results. This paper is a literature review to build a new decision model focused on a summative decision-making model to overcome dysfunctional decision-making mistakes. He proposes a new model that incorporates anticipatory foresight, vision, creative imagination, adaptation, and flexibility.
Chandler, (2022) acknowledges that making great decisions is difficult in moments of ambiguity, uncertainty, and limited information. Better decision-making is linked to better outcomes and superior outcomes. He then proceeds to dissect traditional decision-making models as being limited to information gathering and subsequent final decisions. His conclusion recommends that a new perspective should dominate the strategy/decision-making landscape. The author states that leadership is grounded in core orientations, knowledge, skills, and abilities for a more cutting-edge foresight approach. It also pivots on decisions made before, during, and after disruptive events. It is imperative to incorporate these dimensions in how leaders are prepared, equipped, and trained, and how processes and protocols are created.
In a second paper addressing leadership, crisis management literature was investigated in two management disciplines: business administration and public administration (Sezgili, 2022). COVID-19 is considered a driving force in the study of crisis leadership for this research. The researcher based the interest level in crisis leadership on the number of papers that were cited. He also referred to the number of contributors and journals in which crisis management papers have been published. The categories of leadership included articles on responsibility, ethics, charisma, and transformational leadership. The focus of this article is on crisis management. The strategies employed in this arena are impactful for all the people involved. It is an interesting investigation because of the niche orientation. Consequently, the paper should have some inferential influence on traditional business strategy knowledge. This study bears additional research outside the scope of this assignment. However, the impact of the senior management in any organization cannot be overlooked, nor should the responsibilities of the management team be given forbearance if catastrophic circumstances overwhelm the company.
Current Decision Model and Others Under Consideration
The current decision model was extracted from Gambles five question template (Gamble et al., 2019). The five questions are listed here for easy reference’s sake. Question 1: How Well Is the Company’s Strategy Working? Question 2: What Are the Company’s Competitively Important Resources and Capabilities? Question 3: Are the Company’s Cost Structure and Customer Value Proposition Competitive? Question 4: What Is the Company’s Competitive Strength Relative to Key Rivals? Question 5: What Strategic Issues and Problems Must Be Addressed by Management?
A very common and well-respected business decision model is the ISO-9001 quality standard (Ligarski, 2020). The ISO-9001 has a process component in it for production and administrative support, as well as a top management commitment to quality. However, despite its universal acceptance, it does not favorably compare to the five-question template from chapter four of the textbook (Gamble et al., 2019). The primary requirements of ISO 9001 are the following: Top management commitment to quality, customer focus, resources, employee competence, process management, quality planning, and the design of products and services. This is an excellent platform for quality issues, but lacks the depth necessary to address a thorough internal competitiveness evaluation.
Conclusion
The five-question process for evaluating the internal competitiveness of a company is a thorough and trustworthy model that has the author’s full recommendation. These questions are: Question 1: How Well Is the Company’s Strategy Working? Question 2: What Are the Company’s Competitively Important Resources and Capabilities? Question 3: Are the Company’s Cost Structure and Customer Value Proposition Competitive? Question 4: What Is the Company’s Competitive Strength Relative to Key Rivals? Question 5: What Strategic Issues and Problems Must Be Addressed by Management?
The key source of power or weakness is discussed, considering the senior management team’s capability to manage a company and every aspect of its competitiveness and decision-making process. Management is the primary key to long-term failure or success. The benefits of the five-question model were discussed in contrast to using an ISO-9001 quality program. It was concluded that the five-step question process was superior to ISO-9001 for a competitive analysis and decision-making process tool. The two annotated bibliographies provide additional knowledge about the paper’s contents and the quality of the information provided.
This paper provides conclusive evidence that the five-question method is a superior method of assessing a company’s internal capabilities. Senior management has the primary responsibility for the success or failure of the company.
LEAN SIX SIGMA
This paper reviews Lean Six Sigma and the benefits produced by using the DMAIC process. The advantages of the process include more efficient business processes and products that benefit the company. Lean Six sigma tools include stratification, histograms, tally sheets, fishbone analysis, Pareto, scatter diagram, and control charts. These tools were defined considering their application in a case study. The third component of the LSS Tools assignment is how qualitative, quantitative and mixed methods research are evident in a LSS process.
Keywords: Lean Six Sigma, DMAIC, qualitative, quantitative, mixed method
Introduction
This report on Lean Six Sigma tools involves a definition of the quality process tools. This encompasses the DMAIC process. These definitions are followed by including the possible benefits of using Lean Six Sigma. To augment the DMAIC component’s definitions, seven tools were identified that are used to manage and document a DMAIC process. They include stratification, histograms, tally sheets, fishbone, Pareto, scatter diagram, and control charts. These tools were defined and the use of the tools in a case study are reported. The third segment of the report included the way in which qualitative, quantitative and a mixed method research effort would be evident in a Lean Six Sigma process.
LSS and Possible Benefits
Lean Six Sigma is composed of the five elements that make up the DMAIC acronym (George, 2005). It is a structured problem-solving methodology used throughout business. The letter D stands for define. This means having a scholarly approach to providing a clear definition of the problem under review from multiple perspectives. M stands for measurement, which incorporates definitions, data acquisition, and a clear understanding of the inputs and outputs. A stands for analyze. This phase requires a definition of the inputs, in addition to understanding the root causes and their impact. The letter I represents the improvement phase of the DMAIC process. This constitutes developing potential solutions and evaluating the best options. Then the full-scale implementation is installed. The control function, represented by the letter C means developing standard operating procedures and monitoring the process to ensure its effectiveness.
The Lean Six Sigma process has been studied to determine the benefits of using it in a manufacturing process in South Africa. Mabotja & Mavutha (2024), report that the process can address customer complaints about the quality of orders and the timely delivery of the products. The process can also improve operations, procedures and communication issues. The solutions provided by the Six Sigma process improve customer satisfaction.
LSS Tools, Characteristics, and Uses
Lean Six Sigma tools include stratification, histograms, tally sheets, fishbone, Pareto, scatter diagram, and control charts (George, 2005). Stratification means to divide the data into categories that include groups, divisions and levels that aid in the comprehension of the problem under study. This tool would be used in the analysis phase of the process. A histogram or frequency plot produces a bar chart that represents the frequency of the event discovered in the investigation. This aids in directing the focus of the researcher. A check sheet is a form that is used to collect and aid in categorizing data. The quantitative data can be subjected to statistical analysis tools to indicate statistical validity or confirm the null hypothesis. A fishbone diagram aids in identifying the root causes that cause a problem (Uluskan, 2019). It literally looks like a fish skeleton when depicted on paper. This tool aids with a conceptualization of the cause-and-effect relationship between the cause and the problem. The Pareto principle states that 80% of the influence or result will emanate from only 20% of the root cause (Jum’a & Basheer, 2023). This knowledge and application help the researcher eliminate wasted time investigating potential causative factors that do not produce a significant impact. A scatter diagram represents the values from two sets of variables from a set of data. This visual chart will aid the researcher with the relationship between the two selected variables. This can provide a verification of correlation or of no relationship between the values. A control chart aids with understanding how the process changes over a period. A repetition of the process will aid in the validity of the study and promote use of the improvements and controls in real-world applications (Wang & Tsung, 2022).
Application of Lean Six Sigma Through All Types of Research
Due to the depth and range of Lean Six Sigma demonstrated by the DMAIC process, it is highly probable that qualitative, quantitative, and mixed research methods will have a bearing on case study research and business solutions. The following discussion will systematically review the three research methods and report on the research and business solutions applicability. Qualitative research seeks results by answering open ended questions about missing information or gaps in the existing research findings. This allows the researcher to draw inferential conclusions about the results from literature reviews, interviews, observations and focus groups as a method of obtaining qualitative information (Aguzzoli et al., 2024). In the case of a flexible design using qualitative methods – single case study, the use of multiple publications adds to the reliability of the reported information. This aligns with the define and measure aspects of the DMAIC process well. In business applications, it is wise to draw information from multiple sources to avoid making a short-sighted, uninformed decision. Understanding the current situation considering a historical context, current trends, and with an understanding of the technology available means that obtaining qualitative information is essential before proceeding with a proposed business solution.
Quantitative research methods are the core of measuring and analyzing data to infer causative factors. This means that two of the five DMAIC elements are in play when a researcher employs a quantitative research method to analyze a data set. Big data has become an essential factor in the analysis of buying trends and the subsequent inventory adjustments necessary to meet customer expectations (Sahoo, 2022). This form of business intelligence means that quantitative research and analysis are an integral aspect of business solutions in retail and large business to business transactions.
A mixed methods research report integrates qualitative and quantitative research methods to provide a publication that employs these methods to deliver a trustworthy article. In a business context the use of Lean Six Sigma, which entails using both methods, should deliver a superior business decision (Sá et al., 2022). From an empirical perspective, both qualitative and quantitative research is used to make sales and marketing decisions to facilitate the most efficient management of an organization.
Conclusion This review of Lean Six Sigma Tools (LSST), required a definition of LSST and the benefits derived from using the process. This means defining the DMAIC acronyms and associating a benefit with their use. DMAIC stands for define, measure, analyze, improvement, and control. The second segment reveals seven LSST tools that aid in the discovery, data acquisition and measurement phases of the process. Each tool identified is associated with a contribution to a case study. The third segment of the paper delivered a discussion regarding qualitative, quantitative, and mixed methods research. These three research methods were analyzed in respect to their bearing in a LSST process. Their influence on case study research and potential business solutions is included. Each research method has its benefits and drawbacks. Each method should be given the scrutiny necessary to produce a viable document worthy of reliable business
10 Steps in a Cold Calling Perspective
1. Have the right attitude
As the saying goes, 90 percent of everything in life is attitude.
The same goes for sales.
Before you ever pick up the phone, you need to have the right attitude.
Before you make a call or sit down to type an email, the first thing you should do is get your head wrapped around the concept.
You have the skills to sell in any situation. It doesn’t matter if it’s 58 cents or $58 million.
Give yourself a little pep talk each time and remind yourself: “Hey, I can sell this person.”
2. Believe in your product
You’ve got to believe in what you’re selling.
You’ve got to believe your product is worth at least 10 times the money and the time your prospect will invest in it.
If you don’t believe in the product you’re selling, each time you pick up the phone, you’ll become increasingly unconvincing and robotic.
Sell yourself before trying to sell anyone else.
3. Be persistent
You’ve got to be willing to keep calling people back again and again until you reach them, and they are willing to speak with you.
InsideSales.com research has shown that on average, reps give up after only 1.3 contact attempts. That’s not enough. Stats reveal contact attempts of 8-12 times may be necessary. You have to adopt a mentality that you won’t quit and bring that into every sales call you make. When a prospect sees your commitment and dedication, they’ll become much more receptive to your message.
4. Master the pitch
You’ve got to have your pitch down. That’s why scripts are valuable and important.
Whenever you’re making a sales call, whether it’s two minutes or 14 minutes, you need to know your goal.
The best cold calls are 30-45 seconds long
What are you hoping to get out of that call? Is it to close a deal? Is it to find out who the decision makers are? Is it to get an appointment?
Know your goal and tailor your pitch accordingly, because each of these calls will require a slightly different approach.
My cold call format:
- Ask for the decision maker by name
- When and if connected: State your name and company name clearly. Ask…Do you have a moment, or have I caught you at a bad time?
- When and if you get an OK to proceed. Tell them your benefits first. A maximum of three. Not your history, referral list, or your qualifications.
- Next step my be an e-mail, an additional conversation, or an internal referral. Schedule it if at all possible.
5. The significant differentiating claim
We do our best to provide call scripts with a strong differentiating message. If they don’t please let Gary Seale know as soon as possible.
Your claim has to be something a prospect cannot regurgitate and a competitor cannot imitate.
In other words, your prospect can’t ignore your claim and your competitors can’t match its value.
Your claim must become a hook that sinks so deep in the client that it literally creates a picture they can’t erase.
Nobody buys anything except for one reason, to solve a problem. With your big claim, make sure to clearly express how you will solve your prospect’s problem.
Remember, sometimes people won’t recognize they have a problem until you point it out. Wow them with what you know and what you can deliver.
6. Gains and losses
Before making a cold call, many people complain of nervous jitters.
No one likes rejection, but that’s part of the sales process.
Every sales professional should remember that with each call, they have everything to gain and nothing to lose.
Great salespeople know this and it serves as a powerful confidence booster and motivator.
7. The best value
Every salesperson must believe they have the best value, regardless of price.
What that means is you have to convince yourself that even if you’re four times the price tag, you’re still the best value.
Understand what makes you better. Why should someone buy your product or service over anyone else’s, even when it’s pricier?
Make sure to convince yourself of this value as well as your prospect.
8. Respect your prospects
Treat everyone with respect.
Sales reps who are calling people all day can start treating new prospects like the last eight people they failed to sell. This is a big problem with cold calls.
You need to start fresh with every call and treat each new prospect with respect.
9. The Database – Target Market
Trucon works diligently to provide a database that is composed of prospects that meet the target demographic for each customer. No database is perfect and there will be employees who have left the company, bad numbers or companies that have gone out of business. Please note that in your call log so those numbers are not redialed. It may be necessary to adjust the database if it is discovered that the database is not directed at a viable group of prospects. Please keep Gary Seale appraised of your experience with the database.
10. Have the Right tools
Have the Right tools
Viable CRM, Computer and screen
Strong Wifi or line connection
Keyboard skills or yellow pad
Give yourself a physical/mental breaks – Practice good personal ergonomics
Reminder Scrip in front of you
Scrip available for copy paste and resending w/Graphics
Source: Gary D. Seale The Trucon Consulting Group 512-529-7045
GDS – Trucon Consulting Group
Emotional Intelligence
First of all, know yourself. Know what makes you angry or happy. Perhaps set up a scale for yourself. Explain how difficult it is to be objective about yourself.
Take the Strengths Finder 2.0 test – Followed by a DISC, Meyers Briggs and Sally Hogshead Fascinate
Think about how your demeanor impacts you, your associates, your prospects and customers. How you react emotionally and physically. That’s individual emotional intelligence.
Social EQ is how well you know and recognize emotions in others to help you understand and coach them to work in their area of strengths.
It’s the tangible intangible that helps you demonstrate self-control, navigate social complexities, and make personal decisions that product positive results.
It’s an important concept to understand because our brains are designed to feel an emotion first before we logically process it. Hence, the old sales adage, sales is about a combination of emotional and logical persuasion.
Psychologists tell us that every event or thought has an emotion attached to it. Obviously, some emotions are much stronger than other emotions and have different levels of behavioral impact.
The impact in productivity is significant. People want to know you care and have their best interest in mind. However, do not allow every whim that crosses an associates’ mind to direct company policy.
Example: Bob Gaines from Vallen, “Boys, this is not a democracy.”
Bradberry and Greaves wrote in Leadership 2.0 that 90% of the most successful leaders are high in Emotional Leadership. And the good news is that you can learn emotional leadership. (Remind listeners about their DISC scores. For some the learning curve may be steeper.)
Leaders high is social awareness are remarkably clear of what they do well that motivates and satisfies them, and which people and situations push their buttons. (Remember H.A.L.T. acronym)
As self-awareness increases, people’s satisfaction with life, (as defined by achieving their goals at work and home-skyrockets)
When you are self-aware, you are far more likely to pursue the right opportunities, put your strengths to work, and keep your emotions from holding you back.
How many times have you been told that management has an important communication for you, and it simply turns out to be another directive from “on-high.” It’s not for you at all unless you take a long-term perspective that what’s good for the company is ultimately good for you. That becomes an element of trust.
As a sales manager, you are tasked with productivity. That involves knowing the products, your industry, selling skills and company policy. However, for you as a manager, it should involve far more that these basic fundamentals. You will be wise to start purposefully developing and engaging your emotional intelligence.
I remember a story from my very first sales job with 3M. We had two sales teams in the regional office. Both had capable managers, productive salespeople and the DFW area was growing. The future looked bright for everyone involved.
However, on of the best producers, Chris, a high energy, happy go lucky young man had just gotten the shock of his life. His wife, who was a stunningly good-looking woman, had just informed him she wanted a divorce.
Now Chris had become a bitter, lonely, low energy, non-producing member of the team. This is a clear example of a non-job life situation that was having a huge impact on Chris’s lively hood and the company income. The emotional impact on him was self-evident, but in other cases it may not be so clear. Be sure to be aware of the macro and micro events in your workplace. Practice purposeful visits and inspections to monitor morale factors. Learn more about people reading skills. Energy, voice and tone inflections, body language, a drop off in quality.
Have an involvement process that says we care about you and your mental health.
In Chris’s case what would you do?
- Ignore it, it’s none of your business
- Refer him to the company insurance paid counseling program
- Step in as a concerned team member to listen and encourage him
- Chew him out because he’s not producing – Tell him to be a man and suck it up
Solution Selling
By: Gary D. Seale – Principal – The Trucon Consulting Group, LLC
Many traditional sales instructions advocate a probing question process to identify the prospect’s real needs. Once those needs are identified, then the salesperson is tasked to present the product to the prospect so they will decide to purchase.
This process makes a major assumption. It assumes that the prospect has enough trust and interest to answer all those questions. This can be an issue due to the reticence of new prospects answering questions from a relative stranger. If you are in the early stages of developing awareness and interest in your product, then the deep question mode has inherent difficulties.
A solution selling perspective must rely on the marketing activities of the company to uncover viable prospects and quality them regarding the authority to make a purchasing decision. By necessity, if you have a small firm, then many of the marketing responsibilities will fall back on the owner or salesperson. Never-the-less it will always remain imperative to focus on your target market audience and qualify them before there is too much sunk cost in a non-viable potential customer.
“The changes in the marketplace driven by the information available on the internet and the willingness of your prospect to do a deep level of research have made a solution selling strategy viable and necessary in many cases.“
Your prospects are looking for real solutions that solve problems. That is why I have stressed the importance of the salesperson becoming a subject matter expert in the past.
In this case, it not simply just the salesperson, but the entire company that must be willing to offer a package of customized, bundled products and services to solve issues and earn business.
One of the distinct keys to having success with this approach is retaining salespeople who are schooled and experienced enough in the target market industry to be able to interact as a true resource to their prospects.
They should be able to put a unique proposal together that gives the prospect a new way to manage or approach their business. As a salesperson, they should be so knowledgeable about the prospect’s business that it serves as a foundation that allows them to make firm recommendations to the prospect’s staff and methods of doing business.
The salesperson should know what the real market drivers are for that industry. For example, in the crude oil marketplace in the domestic United States, $60 a barrel represents a benchmark of profitability that will allow a drilling company and producer to pay for the drilling, production and transportation costs and still make a viable profit. In contrast, crude oil produced in Saudi Arabia requires a higher cost per barrel price due to the commitment to the extensive royal family to provide living subsidies. This market data is available on a daily basis. An awareness of these market drivers and the influence they make will allow the salesperson to make better decisions and have a more superior interaction with a client.
The Solution Selling method may entail having the salesperson teach the prospect’s staff and production people about how their product will make them more competitive in the marketplace. Which is essentially another aspect of making the salesperson a subject matter expert.
As an engaged sales agent in the process, this strategy will challenge you to provide alternatives and act as an ongoing consultant. Make sure that as the representative for the supplier company you are in communication with every department in the company where your solution will have an impact.
All of these strong capabilities will allow you to challenge the prospect to make a purchasing and implementation decision.
The author has seen this method work very well in the semiconductor production tool and wafer manufacturing business. The strongest supplier in the static control and static induced contamination control market dominated the minds and purchasing decisions of the major players in the semi market due to PhD level research, publications, association participation and highly knowledgeable system of direct representatives and well-respected rep firms. They challenged the semiconductor contamination staff at the manufacturers with research from their own labs that exceeded the research at the manufacturer’s people. And they dominated the market!
These brief comments provide an outline of the thought processes necessary to stepping in with a business solution proposal. To implement these changes may require some deep training or attracting people from your target market that can provide you with the expertise necessary to deliver real solution selling alternatives. Be careful that you don’t allow this perspective to be ignored. It could be a vein of pure gold for your company.
No Clearly Defined Target Market
Perhaps nothing more can hurt or delay the sales efforts of a business or new salesperson more than the failure to have a clearly defined target market. Ultimately this responsibility falls on the shoulders of the business owner or senior management. Should the organization be fortunate enough to start off with a full complement of sales, marketing and research resources, then that responsibility should be delegated down to them.
The consequences for failing to have a clear definition can run from some level of rejection frustration all the way to failure of the business. The cost of your sales and marketing efforts that are not rewarded with revenue can be a critical mistake to the business that starts with little or no margin for mistakes. However, don’t be surprised to have some mistakes or strong need for course correction in the early days of your business.
Even the best research can be rebuffed by the responses from your prospects. It is best to be on the alert for trends that are seen by the sales team as they follow up and attempt to close business. The speed of change is more rapid than it was twenty or twenty-five years ago due to the information readily available on the internet, the number of well-informed competitors and the analytical tools now available in the marketplace.
Even based on the best analysis, assume that it will take six to eight weeks to make enough contacts to determine that you are approaching the wrong prospects. Then multiply your projected monthly revenues times those time periods and calculate the potential damage inflicted upon your gross revenue and net profit. This projection should be eye opening to the point that it will drive you to take market research seriously.
From an owner’s perspective, place yourself in the shoes of the new or inexperienced salesperson that is tasked with learning the product, the industry and the company culture. If that individual is instructed to call on the wrong people, then the challenge to get acclaimed and produce revenue can be the cause of self-doubt and a level of distrust with the management’s capabilities.
Do your best to refine your target market down to the point where you have a clear written profile of the ideal prospect. This may include far more than the ability to buy your product. Ideally, we would all like to do business with people that are agreeable, allow you to deliver your expertise without a great deal of push back and pay their bills on time. Consequently, it’s a great idea to look at every aspect of your prospect’s demographics and psychographics before you engage with them on a long-term basis.
If you are just getting started in business, have a clear idea of your expertise and differentiation message as you begin to visualize your ideal customer profile.
There are a number of ways to determine if you have a viable market for your product. They run from relatively inexpensive, manual methods to large scale statistical research studies and focus group research.
Here are a couple methods that you can use that do not require an extensive investment in time and capital.
- Determine a title of the individual that you believe who has the power to purchase your product. Use your Linkedin account to do a search for those people. Petition people for a connection that fit your geographic/demographic niche. Monitor for connections and start a systematic outreach to determine who will engage with you and provide feedback about the need of a product similar to yours.
- Purchase a list of prospects from a list supplier such as D&B Hoovers or Sales Genie. Be sure to pinpoint the industry, SIC Code, size by number of employees and sales dollars, geography and titles of the individuals you want to contact. Look at the company bio for the consumption of the product category you supply.
- Use the Navigator feature in Linkedin to set up a demographic parameter and see how many companies match your profile.
- Run a simple Google search and make a series of phone calls into those prospects to obtain feedback. Be determined to obtain at least 30 qualified responses before you attempt to qualify a market potential.
- Consider running a regression analysis with the data you collect to determine the reliability of your information.
- Hire a research company to perform concept testing.
- Do internet research to determine how many competitive products or companies exist in your potential marketplace.
- Conduct a potential customer survey (Social media ads or existing e-mail list) and analyze the results to determine market potential. Always ensure that you obtain enough responses to confirm that your results are statistically viable. Thirty results are an absolute minimum. A larger sample will increase the trustworthiness of your research.
The important take away from this discussion is to not be duped into thinking that everyone is a prospect. It is simply a beginner’s mistake that you cannot allow yourself to make. It is imperative that you focus on your identified target market.
Gary D. Seale- Principal
The Trucon Consulting Group, LLC