[A lot of what I write these days reflects my observation on the street and few real life relationship with startups/small businesses.]
I go to this small tea shop in southern part of Bangalore which serves two different types of tea – regular one (costs Rs. 4/) and the premium one (Rs. 7/). The owner, right from day one served me the premium version (without even asking/giving me a choice). When he isn’t around, his employees usually ask and I end up consuming Rs. 4/ tea.
Frankly, it just doesn’t matter – neither the cost, nor the quantity (or premiumness).
The tea shop employees, in true essence of the word ‘job’ are simply doing their job, while Owner is trying to build relationships with clients (and get them to consume more).
But somewhere, the same passion/zeal/’CRM’ skills aren’t passed onto the employees. And the result is loss of sales (i.e. less consumption).
Coming back to the topic of this article, how many startups actually empower their employees to take $ decision or make certain assumptions during the sales cycle?
When I had to renew my bullet insurance, the ‘employee’ literally asked his boss to forego Re. 1/ that I didn’t give him (he didn’t have the change).
While these are true of big corporate where you need dickheads to work ‘as per the script’, how many startups actually give freedom to their sales force to take quick decision and close the deal?
Especially when time is money and one can’t afford to carry on a long-and-haggling discussion with one customer (and lose out on others) – does your sales force have the power to take quick decisions?
On this topic, I spoke to a startup/mid-size company founder who candidly said ‘I do want to keep the control and ensure that each and every penny is taken care of. ’
The bigger question to ask is – are you losing out few pennies because you are taking extra care of the pennies you are getting?
Is there an opportunity cost of ‘long and perfect sale cycle’?
What’s your opinion?
A very valid aspect of sales guys empowerment you have touched Ashish.
A longer sales cycle always increases the risk of losing a deal as it allows a lot of other variables to creep in especially new competition, change in key customer roles, budget issues etc.
I personally keep looking at ways of empowering my sales guys (just a couple). For our kind of product typical sales cycle is around 6 months or more. Most part of the cycle goes in waiting to get the next appointment. In such cases it becomes important that your sales guy can take certain pricing related decision and give some related commitments.
- We have defined certain range in which they can decide on their own. Naturally if its towards the lower side it impacts their commission, so they always try to maximize it.
- In cases where they cant take a decision I encourage them to call me from a customer meeting to take a instant decision or give a certain commitment.
- We also discuss different prospect cases from time to time and define our sales and pricing strategy which brings more clarity to the sales guy and they can make better decisions.
Being the CFO of a startup I come across this conflict pretty much every day. I hate haggling over pennies as much as the next guy and don’t believe that is the best use of anyone’s time. However, challenge is that sales guys are usually compensated on revenue and do not have enough appreciation for the downstream impacts of their decision to fore go margins.
It’s a tricky balance to maintain. More than control it’s about instilling financial discipline within the sales team.
Nice Article for new comer like me.
Its a mix of lot of questions, than just losing money. There are multiple angles to the problem, some internal and some external. I will try to touch some of them and leave rest for later
External:
1. You would lose out some extra pennies since time is money and your employees time is being wasted
2. In case of sales pitch for new customers, your potential customer’s time is being wasted when your sales person is calling multiple times for each and every decision, and here you won’t feel the pinch till customer gives up on you as his time is being taken for granted
3. You would leave an open area from where competitor can win over your customers
Internal:
1. Your employees will feel less motivated compared to your competitors
2. Less association towards company values and hence less contribution by employees..
3. Blame transfer for failures
I am sure there are many more.. In fact, this discussion is one of my favorites and I am sure others would have more to add.