This Well Organized Scam Has Tech Companies Firmly In Its Sights

At an industrial conference last week, the talk was of a new and unwanted guest at the tech party: scam artists. In two separate conversations with people who have been caught off guard, the headline is this: there is a talented gang of bad guys out there. And they make it their full-time job to get hired as high-priced sales talent–then under-perform for months, until the frustrated manager fires them.

Only after months of no-show performance and travel expense. And it’s all a very well organized scam.

When Talent is Short, Fraud is Tall

We all know about the talent shortage in tech hotspots like Silicon Valley. Well, that shortage has now gone nationwide, and not just in engineering related areas, but in business functions too. And one of the areas most in demand is sales. Folks who understand a tech product, who can qualify a lead and perform contract negotiations, leading to a closed deal? Forget about it. That animal has proven to be particularly rare.  And bad guys have stepped up to fill the gaps.

Why are sales reps, as opposed to coding geeks, the perfect cover for a dirty sack of suds? Think about it. What are the two characteristics of successful sales reps in tech?

  • They work from home
  • Their career has had them move around a lot.

This means that LinkedIn profiles are easy to fabricate. That’s the first step in setting up the mark.

The Setup

Here’s how it works. A random guy applies for a regional sales job from a job posting. The cover letter hits all your key words and the resumé shows increasing responsibility in a number of companies, some of which are out of the country, out of business or otherwise unavailable.

But the candidate has references, usually people who are not in the industry now but were heavy hitters back in the day. (One fellow told me of a reference who agreed to be interviewed over lunch near his “old office” in Silicon Valley.) With a feeling of relief, you hire the rep, who comes to your office for a week of intensive training.

The Sting

Then he takes about 90 days to slowly–ahem–build up a number of leads in the industry.  Some of these are with reasonably-known companies–but you’ve never heard of the contact  Others are exciting, up-and-coming operations that your new sales rep has found for you and only you.

Then–nothing seems to close.

This is when the talent of the dirtbag comes through. Not for selling–for keeping you, the fish, on the hook. After a time you call your new rep and one of two scenarios plays out:

  1. You say: “I notice you are not closing. Want some help?” And the rep says, “Sorry, I have been distracted. I’ll send you the contract I’ve been working on. It’s just that my dad hasn’t been well.” You think, that’s understandable. But some time later, as you notice that you haven’t in fact received the contract, the rep sends an email: “I will be out of the office. My father is in the hospital overseas.” Unfortunately, the father does not recover from an extended illness, and the rep, it has been established, is out of the country. 
  2. Or he says, “What are you worried about? I just got an email from my client saying his father is sick.” He forwards an email to you saying that we should sign in ten days. So you look at the email, and you see the “client’s” email came from a Gmail account.

The game is now on. 

Hard truth

The truth is that there’s a cabal of guys who act in various roles in the drama. Each member can be a “referral source,” a “job candidate” or bogus “client” for a number of scams that are running concurrently.

By introducing these fake personalities into the mix, the scam proceeds in ways that normal law-abiding companies find it hard to fathom.

And when they do find out, they feel embarrassed, and stay quiet. Even though, by the way, the bad guys taking the role of the candidate are using their real names. They could be prosecuted for fraud and racketeering.

What we need is someone to step up and name the fraudsters.

Skills and Capabilities Don’t Mean a Thing If You Can’t Make Connections

When you were young, your parents probably told you, “Never talk to strangers!” And this lesson sticks. People generally continue to avoid strangers into adulthood, waiting in lines in silence, walking with headphones in, and avoiding interactions with people despite literally rubbing elbows.

Not talking to strangers is great advice for children – but it’s terrible advice for a businessperson. Many focus their development time on learning the newest skills, but this isn’t enough to make your business successful. As technology and research develops, the skills you need change alongside them. It’s people that are the constant. If you don’t know how to make real connections, all your skills are for naught.

YPO member Joe Desch has made a career from connecting with people. He’s so good with people that the company he sold hired him back just to work with their customer network. He also works with the Western Golf Association Evans Scholarship Foundation to teach young people how to start building their networks right away. Desch believes that no matter how lean things are, you have to plant seeds now so you can harvest them later.

Here Desch shares how selling your product is easier if you’ve first sold them on yourself:

1. Talk to everyone!

“In any industry, you’re likely to meet many new faces on a day-to-day basis,” Desch says. But most people don’t realize how important these meetings can be. Desch explains, “Even a small connection can lead to many kinds of success. Use every interaction as an opportunity to grow your business and your brand.” No connection is too small – you never know where it might lead.

2. Remember it’s called social media.

Desch explains, “I want my connections to know the whole story about me. What I do, what I can do for them, what I do for the community, what I am passionate about.” He advises filling out the profile as completely as possible. And those blogs you read? “Start leaving comments!” Desch urges. Reading without interaction isn’t networking — it’s just web surfing.” Remind the digital world of what you can offer them and what you have in common, and they’re more likely to want to work with you in the real world.

3. Don’t forget about the real world.

Once you make the digital connection, you have to use it. “It’s great to be on Facebook and LinkedIn,” says Desch, “but you have to know how to use them to drive your reputation and your business.” So follow up! Desch says, “I find that 90% of people never follow up on leads or LinkedIn connections. Get out of your comfort zone and follow-up.” Real relationships require more than digital connections.

4. Be memorable – it’s not as hard as you think.

This is do-or-die in the modern world, but it doesn’t have to be complicated. Desch points out, “In a world of instant gratification, the sales process has gotten shortened. You need to make your potential customer feel comfortable with you immediately.” Again, this requires more than a digital connection. Desch suggests, “Write a handwritten note. Send birthday cards. Mail your favorite book with a note on the inside flap. These are simple but underused ways of standing out.” You’ll be surprised at the impact of even these little things.

5. Listen up!

It might seem counterintuitive, but one of the best ways to make connections is to listen. Desch says, “Listening is about understanding. Connect on something that interests or drives you both, whether it’s eating sushi or golfing.” It’s about more than a weekend social outing. When you find these commonalities, “You make them want to stay in touch with you,” says Desch. And the dividends don’t stop there, says Desch: “From there, introducing me to where they work and live, or to people they know is easy because it is already a comfortable connection.” Listening is an opportunity to discover new ways to provide value to them with your presence, in business and in personal life.

6. Your connections are a reflection of you.

“I like to think that I was a human LinkedIn before that software was developed,” says Desch. But your relationships require discernment. “Your connections, whether personal or professional, are a reflection of you,” warns Desch. “The people you choose to work with, every piece in your portfolio, every business on your resume, every person who has given you a testimonial, demonstrates who you are.” You want to come up in conversation between other people – but make sure there will only be positive things to share.

Each week Kevin explores exclusive stories inside YPO, the world’s premiere peer-to-peer organization for chief executives, eligible at age 45 or younger.

Why Startup CEOs Still Have to Make Sales Calls

I wrote a while ago about when and how the founder in a startup should decide that he or she no longer needs to be making every sales call. My focus then was on the importance of understanding and quantifying your product’s state of development and relative maturity. The idea is that until you know exactly what you’re selling –by doing it over and over again and not as a one-off– and know that it can be sold consistently by others, you’ll need to stay in the field and keep selling.

 That’s because your product is still being developed on the fly and continually redesigned/reconfigured to better suit the real requirements and demands of the customers.  And, the fact is that ultimately only you can make the critical design and development decisions and you’ll do a much better job of that if you are hearing it directly from the end users and not from a bunch of whiny salespeople. But once you do reach that point, you need to kick yourself upstairs and focus on other things. I encouraged CEOs who spent too much effort selling to better use and optimize their time.  I suggested that they needed to find competent sales managers and others who could tee up just the right meetings for them – not “opening” meetings which are a dime a dozen – but “closing” meetings where the deals got done.

Finding these sales meat-eaters isn’t easy; they are the hardest hires for any startup, but it’s absolutely critical to have them onboard if you’re going to build a viable business. There’s no more challenging job than being the person who has to fire people. Everyone else gets to talk about what a tight-knit, stick-together group the company is (just like a “family” of friends), but the sales manager is the one who has to deliver the bad news over and over again.  This essential role doesn’t win any popularity contests and – just to be clear -most CEOs suck at it. They’re more focused on leading the charge forward and being the business’s biggest cheerleader rather than handing out the monthly pink slips. (See  handing out the monthly pink slips.

When you’re hiring sales talent, you need to also be careful to avoid the empire builders. There’s a whole generation or two of sales management types whose experience is in large organizations. I have found fairly consistently that they are the wrongest guys possible for a startup because they grew up in a system where they measured their value and their success by the sheer number of people they managed rather than the results that those folks delivered. Nothing kills a young business faster than bloat and bureaucracy and having too many sales people sitting on their hands and not selling is the worst kind of poison. So be careful what you wish for and who you hire for this critical job.

And, at the other end of the spectrum, I’m also seeing more and more startup CEOs who discover way too soon that they don’t like the wear and tear, the travel, and the rejection that are all crucial parts of selling a new product or service.  So they retreat, thinking they can run their businesses while they’re sitting on their butts behind a desk back in the office. That’s not how this game works; that behavior is a formula for failure. You may not be an extrovert, you may not be the world’s greatest storyteller or presenter, and you may not even know the technology that underlies your business as well as half the other people in the company.  You are, however, the boss and today that fact alone means a lot, at least to the people who make the final purchasing decisions.  Remember that these buyers are typically older than you, they grew up in strictly hierarchical systems where titles count, and they need to be made to feel important and respected if they’re gonna sign off on your deal. No offense to any of the members of your team, but they don’t want to deal with the monkey– they need to see the organ grinder. That’s you.

Why? For all the obvious reasons. (1) People don’t really care how much you know until they know how much you care. Showing up shows them that you actually do care. (2) Startups are notoriously scattered and in a hurry.  Focus and attention to detail are scarce commodities and the customers want to know that you personally are connected, paying attention, and directly engaged with their business, their concerns and their problems. And finally, (3) they want to hear it from the horse’s mouth. Not second hand. They want commitments and assurances from you (since they know that the sales guys will tell them anything and promise them the world) that you will stand up for and stand behind your product or service and make good on whatever they’ve been promised. The buck always stops with you.

None of this is very tough. You just have to say what you’re going to do and do what you said you would and everything will be hunky-dory.

Kohl’s and Aldi Have a Really Creative Idea That Could Totally Change How Their Stores Work

Kohl’s has a problem–and they’re teaming up with Aldi supermarkets in what might amount to a really creative solution. 

First the problem: There are too many Kohl’s stores, and a lot of them are too big. 

This is actually affects the entire retail industry, as big companies are learning that customers shop more online, and that some stores with smaller square footage actually wind up selling just as much as larger stores.

Hence, you have companies like Macy’s and Lord and Taylor doing deals with WeWork “to lease or sell floors in their buildings,” as Marketwatch explained.

So, back in January, Kohl’s CEO Kevin Mansell said his company’s plan was to start

“‘right-sizing’ its locations by creating smaller, more profitable stores within its 87,000-square-foot boxes, leaving unused space at some 300 locations that could benefit from traffic-generating retailers like those that sell food.”

Newer Kohl’s stores are less than half that size–about 35,000 square feet–but of course they still own the bigger, older stores.

At the time, there was speculation that the lead candidate for this kind of placement would be Whole Foods, since Kohl’s already had a partnership with Amazon.

But a few days ago, Mansell said they’re going to start with Aldi, the German-owned cult favorite among U.S. supermarkets whose parent company also owns Trader joe’s.

They’re starting with just 10 stores, but Mansell said in an earnings call that he has a vision of expanding the store-sharing idea as many as 500 Kohl’s around the United States.

That’s not to say they’d all be partnerships with Aldi, however.

“The filters start at places like groceries, supermarket chains, just because they drive a lot of traffic, but it’s certainly not limited to that. There are other sectors that I think are good pairings with us,” Mansell said.

Among them: fitness centers, he suggested. “I think are great combination with Kohl’s, and there’s many others. But it’s traffic drivers, strong brands, strong balance sheets where we know that we can coexist together for a long time.”

One of the big questions that wasn’t answered on the call is whether Kohl’s and Aldi would actually merge their operations within these arrangements.

Would employees would work on both sides and customers could check out products at either company’s registers–or whether they’d remain entirely separate operations?

Regardless of how things work out from an operational perspective, as Progressive Grocer points out, this isn’t the first time Kohl’s has had a grocery store behind its doors.

In fact, Kohl’s started as a Wisconsin supermarket in 1946, became the biggest grocery chain in the Milwaukee area, and only launched its first department store in 1962.

A long, complicated series of acquisitions, sales, opens and closings followed, culminating with A&A buying all of the Kohl’s Food Stores locations, and then deciding to close them.

Now, at least for this pilot program, the future looks a lot like the long-forgotten past.

3 Brilliant Ways to Win a Price Negotiation

I’ve personally negotiated well over a hundred contracts for my own services and helped many of my erstwhile clients negotiate some truly big-money deals.

There are, of course, hundreds of books about negotiation in general and dozens about price negotiations, but I have three techniques to which I keep returning, probably because they actually work in B2B situations:

1. Getting the buyer to agree to the financial impact of NOT buying.

Every B2B offering promises to either increase the customer’s revenue, reduce the customer’s expenses, or a combination of both.

The financial impact of not-buying is the sum of the revenue increase and the expense decrease. The bigger that total, the more likely it is that the customer will buy and the more you can charge for your offering.

Therefore, before you start talking about price, identify all the ways your product will increase revenue greater customer loyalty and all the ways it will reduce expenses. For example:

Ways your offering might increase your customer’s revenue:

  1. More customers for your customer (worth $x more per year)
  2. Bigger purchases from your customer’s customer (worth $x per year)
  3. Greater customer loyalty (worth $x in referrals per year)

Ways your offering might reduce your customer’s expenses:

  1. Less inventory (worth $x in carried interest)
  2. Lower shipping costs (worth $x per year)
  3. Less customer attrition (worth $x in lost revenue)
  4. Lower customer acquisition cost (worth $x per customer)
  5. Less paperwork (worth $x in lower clerical costs)

Those are just some suggestions; the specific revenue boosts and cost reductions will of course be specific to your offering.

Important: get the customer to agree that your estimates for all these metrics are reasonable. Once that’s happened, your offering will probably seem like a bargain, regardless of what you’re charging.

Very Important: frame the impact as an amount that’s lost by not buying rather than something that’s gained by buying. Customers (like everyone else) are far more motivated by avoiding pain (loss) than obtaining pleasure (gain).

2. Providing a range of pricing but leaving your final price open.

OK. If you’ve ever sold B2B, you’re probably asking yourself: what if the customer wants a price quote before even talking with me?

Blurting out a number is not in your best interest because, unless you’ve gotten agreement on the financial impact, that number will probably both seem too high to the customer AND be less than what your offering might otherwise command.

On the other hand, if you stonewall and delay quoting a price (because you know it will seem too high and be too low), the customer will probably get irritated and think that you’re wasting their time.

Your challenge when you’re asked for an up-front price quote is to respond without locking yourself into a low price. Here’s how.

Phrase the request like so: “Well, there’s a range involved, depending upon the specifics. Normally, something like this falls somewhere between $x,xxx and $xx,xxx, but I’m certain we can work together to find the best price for your individual situation.

The $x,xxx should be lowest price you could comfortably tolerate and $xx,xxx should be upper range of what you believe your offering might command. If the customer chokes on the $x,xxx number, they’re not a real customer, BTW.

3. Discounting only when you get concessions from the buyer.

The previous two techniques are executed before you’ve quoted a price. If you execute them correctly (especially agreed-upon financial impact), the price you quote will probably go unquestioned and you’ll probably make the sale.

However, it’s not unknown (actually it’s quite common) for customers to ask for a discount after you’ve provided the price. Although the request might be framed as “we can only pay $xxx” or “if you can’t go down by 10% the deal is off” what they’re actually doing is testing you to see if you gave them the best price.

When this happens you must NEVER say “OK, I’ll give you the discount” to close the deal. If you do that, I guarantee that the testing process will continue and you’ll get more demands for further discounts. Because by giving them the discount you admitted that you weren’t giving them the best price, so why should they believe you now?

You’re usually better off just standing pat with “I gave you my best price; I’m sorry but I can’t discount any further.” However, if the customer absolutely insists–perhaps pleading that they simply don’t have the money–then you can offer a lower price… but ONLY if you take something off the table.

Example: “I can give you that price if lower your service level from platinum to bronze.”

Note, though, that you’re usually better off just holding the line, especially if your offering has already been customized to what you know the customer really needs.

Why Auto Companies Should Fear Millennial Buyers More than Self-Driving Cars

Self-driving cars have earned headlines as a potential threat to the auto industry, but a more imminent threat may be millennial shoppers who have little tolerance for old-school buying experiences.

My wife and I have been shopping for a new car recently, and I feel like we’ve taken a trip back in time. Salespeople can’t quote a price without running to the manager. We keep getting low-balled on the trade-in. Each model comes with a seemingly random assortment of features, and few dealers have exactly the configuration we want.

It’s a ridiculous process that seems designed to confuse people. At the root of the problem is that dealers are competing against each other to sell the same product, ensuring that no two people will pay the same price for the same car. It’s as if all the Apple Stores in the region were selling the iPhone 10 at different prices.

The result is a chaotic shopping experience that not only makes individual dealerships look bad, it reflects negatively on the car brands themselves. (While there are some new sales models out there, including Carvana and Roadster, these businesses ironically add additional middlemen to the process, creating more distance from car brands.)

The generation that has grown up with Apple and Amazon has little patience for this kind of buying experience, so the auto industry–like many others–needs a fresh approach. Here are three important factors to remember if you to want to attract and keep millennial customers.

1. Buyers value transparency and simplicity.

Today’s buyers do not like gimmicks; they want to deal with a brand that is upfront. In recent discussion that I had with Nicholas Rellas, founder of the fast-growing alcohol delivery service Drizly, he shared that price transparency was more important to his buyers than convenience.

Remember what happened to the mattress industry? The top brands applied different names to identical products, leveraged resellers to capitalize on this lack of transparency, and made big bucks. Then, almost overnight, the industry was disrupted by folks like Casper and Helix Sleep offering direct-to-consumer products without the middlemen. The newcomers made shopping simple and price comparison easy, transforming the industry and leading to dark days for traditional mattress retailers.

2. Buyers want a fair and consistent price–even if it’s not the lowest.

Amazon does not always have the lowest price, but most people I know don’t even look elsewhere when they buy online. They trust that Amazon will not overcharge them, and they value the convenience, familiarity, customer service and benefits that come with Amazon Prime.

In the auto industry, Saturn pioneered fixed pricing but suffered because it offered a low-quality product. Now electric car company Tesla might finally be getting it right. The company has avoided third-party dealers and adopted a fixed pricing model for each car based on its specifications; there is no haggling. For the company’s soon-to-be-released Model 3, 400,000 customers put down $1,000 ($400 million in deposits) to reserve cars almost two years in advance of the first shipment. This kind of advance buying is unheard-of in the auto industry. Clearly customers like both the product and the pricing model.

In other industries, many companies match low prices offered by their competitors. This policy reassures customers they are getting the best deal. I haven’t seen price-matching on offer at any of the car dealerships I’ve visited, but maybe someone should try it.

3. Millennials prefer to ditch the middlemen.

Salespeople and dealers today often know less about products than their customers do. The model car we are considering was completely redesigned for 2018, yet one salesperson told my wife that there were no changes this year. Unless salespeople add value with in-depth knowledge about their products, millennials aren’t going to want to buy through them. Since online research is easy to do, businesses have to be ready to market to very savvy buyers.

Today’s consumer products are bought, not sold. That means companies have to make it easy for customers to find what they want at the best price point without a lot of hassles. Those who forget this critical feature of marketing to millennials may also soon find themselves disrupted right out of business.

How to Write a Killer Sales Plan

Most people are familiar with a marketing plan, a document that describes how you intend to generate sales leads and turn them into potential customers. A sales plan (aka sales campaign plan) is different: it provides a roadmap for an individual sales effort.

Sales plans are overkill when selling to smallish companies with simple decision-making processes. However, if you’re selling to large companies that have complex decision-making and purchasing processes, a sales plan is essential because:

  1. It helps you keep track of the sales effort, so that you’re not relying upon memory alone, which can be faulty, especially if you’re juggling multiple sales efforts.
  2. It enlists your primary contact or sponsor in the customer organization in your sales process, thereby increasing the likelihood that a sale will take place.
  3. It documents the timeline by which the decision-making and buying process will take place, so that you don’t end up wondering “what’s going on?”

A comprehensive sales plan has five sections:

  1. Requirements. A brief description of the problem that the customer needs to solve or the opportunity that the customer is not currently able to realize.
  2. Solution. A brief description of the agreed-upon solution that will solve the customer problem or realized the opportunity.
  3. Stakeholders. The names, positions, roles and contact information of everybody in the customer organization must either approve or can block the sale.
  4. The Decision Process. A step-by-step description of how the customer organization will make the decision to buy, with specific dates for each milestone.
  5. The Purchasing Process. A step-by step description of how the customer organization will pay for, and accept delivery of, the solution after purchase.

SAMPLE SALES PLAN

In my 2011 book, How To Say It: Business to Business Selling, I provided a detailed example of a sales plan. Below is an improved version, based upon what I’ve learned since then.

Note: As you can see from the example below, a sales plan need not be (nor should it be) a tome. Keep it short and sweet, and update it as you go along. 

1. Requirements

Microsemi offers a variety of embedded devices, including eight-bit microcontrollers; specialty memory products such as electrically erasable programmable read-only memories; and code-hopping devices used in keyless locks, garage door openers, and smart cards. Its chips are used by tens of thousands of customers in the automotive, computing, consumer, industrial, medical, and networking markets.

Microsemi is experiencing significant quality problems due to their outsourcing of supply chain to rural China. They need a convenient way to accumulate test results on components in order to identify problems before they ripple through the supply chain, creating bad runs at their final assembly plants. Preliminary estimates are that this problem is costing them $2 million a year, roughly 1 percent of their $200 million a year revenue stream.

2. Solution

Our silver-level supply chain report module, along with customizations to make sure that it can draw data from their existing ERP system. Estimated cost is $1 million, which will provide an ROI within six months.

3. Stakeholders

The following people will need to be fully committed in order for a purchase to take place:

  1. Terry Moon, VP of Manufacturing. Responsible for the problem and has the most stake in fixing it. He’s well regarded in the company, but not seen as a power player, which is why this hasn’t been addressed sooner. [phone, email]
  2. Mikel Kallima, CIO. Holds the budget for all IT purchases. Will need to be brought on board or he can block the sale. [phone, email]
  3. Will Jorryn, CFO. Insists on signing off on any purchase greater than $500k. [phone, email]
  4. Brasen Rangle, Director of Supply Chain Logistics. He’s my initial contact and source. He reports to Terry. He’ll be responsible for training personnel on the new system, so he needs to be in the loop. [phone, email]
  5. Skip Karsen, Engineer Emeritus. He’s the architect of the ERP customization and usually against “foreign” additions to his system. He may present a problem and will need to be won over to this approach. [phone, email]

4. The Decision-Making Process

Problem recognition. The problem is widely recognized inside the manufacturing group, which has been complaining about it for years. However, top management has been focused on stock growth. I will need to raise the priority of this problem by meeting with Kallima and his team.

  1. Define economic consequences. We will need a confirmation that the estimates are correct. To do this, I’ll need to work with Moon, who will be able to set me up with Jorryn in order to confirm the numbers. Expected date of completion: xx/xx/xx
  2. Commit funding. At this point, Moon will need to sponsor me to a meeting of the steering committee to present the results of the previous two stages, along with a draft solution. Prior to that, I’ll need to set up meetings between Rangle, Skip, and our engineers to confirm feasibility. Expected date of completion: xx/xx/xx
  3. Define decision criteria. The company seldom writes official RFPs, so we’ll be able to move forward with a letter of intention. This should be joint-authored by Moon, Rangel, Kallima, and Karsen. Expected date of completion: xx/xx/xx
  4. Evaluate alternatives. Karsen will probably want to confirm that their current ERP vendor lacks this capability and make certain that there’s not a better approach. I’ll need to give a presentation to an evaluation team (unclear at this point who will be on the team). Expected date of completion: xx/xx/xx
  5. Select vendor solution. Assuming we are the selected vendor, we’ll work through the details and move forward with the installation. Expected date of completion: xx/xx/xx

5. The Purchasing Process

Once consensus is reached, Moon will write an official request to Kallima, enclosing our sales proposal. Expected date of completion: xx/xx/xx

Once the request is signed off on by Kallima, Jorryn will free up funds, which can be paid out according to a PO from our offices. Expected data of completion: xx/xx/xx