(888) 815-0802How to Accelerate Sales with Better Behaviors, with Frank Cespedes [Episode 368]
Joining me on this episode is Frank Cespedes, Senior Lecturer at Harvard Business School, and author of the book Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling, as well as numerous articles on the Harvard Business Review about sales.
Key Takeaways
- Frank was a business school professor, researching marketing and sales. Then he ran a tech firm for 12 years, sold it, and returned to Harvard to teach strategy.
- Frank mentions a McKinsey study on the effects of the 2008 recession. Companies cut the costs of goods sold, but selling & general administrative (SG&A) expenses, as a percentage of sales, have risen.
- Companies have done a good job of cutting operations costs, but have done less well with efficiencies in going to market. Productivity studies are now focusing on those costs.
- The availability of more accessible data shows clearly what it means to be a sales leader in the 21st Century. The CFO and C-suite can see easily what is happening for the enormous amount of money spent on sales.
- There is a misplaced focus on the number of activities, which means thinking about quantity, rather than quality. Activity is not outcome. Sales is about outcomes. Closed sales count.
- Andy refers to Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information, by Itamar Simonson and Emanuel Rosen, who say buyers are adept at capturing and understanding the information they need.
- In the business value chain, from sourcing to service, sales is the most specialized factor. In any industry, what works in sales at Company A, may not work selling at Company B, but sales is the factor most seen as generalized.
- The SaaS sales model took off in 2008, when it was mandatory to cut back on go-to-market costs. Any successful model is about the entire process. New models constantly disrupt mature models.
- Every generation relearns basic truisms. Putting new names on old processes can work, if it moves the meter in the right direction.
- Frank says studies support that 80% or more of sales come from 20% of salespeople. Performance variance in sales is greater than in many other areas of business.
- Frank’s tips to improve sales outcomes: improve hiring practices, including behavioral assessments; hold regular real performance reviews; use training and development, tracked.
More About Frank Cespedes
What’s your most powerful sales attribute?
I knew what I was talking about, with the product, and customer issues it solved.
Who is your sales role model?
It was a number of people I had seen, admired, and respected, and I said, I can do that.
What’s one book that every salesperson should read?
Neil Rackham’s book SPIN Selling: Situation Problem Implication Need-Payoff.
What music is on your playlist right now?
I am a big fan of Jazz music. Pianist Bill Charlap and his trio.
Episode Transcript
Andy Paul (0:35)
It’s time to Accelerate. I’m your host, Andy Paul. Join me as I host conversations with the leading experts in sales, marketing sales, automation, sales process, leadership, management, training, coaching, any resource that I believe will help you accelerate the growth of your sales, your business and most importantly, you.
(2:20) Hello, and welcome to accelerate. Joining me on the show today is Frank Cespedes. He’s the senior lecturer at Harvard Business School, and author of the book, Aligning Strategy and Sales as well as numerous articles on the Harvard Business Review about sales. Frank, welcome to accelerate.
Frank Cespedes (2:38)
Thank you very much for inviting me, Andy, my pleasure to be here.
Andy Paul (2:41)
So, take a short minute to introduce yourself, maybe fill us in a little bit about your background. How did get around teaching sales?
Frank Cespedes (2:49)
Well, in some sense, I’ve always taught it. My background is, fairly straightforward. I was your standard issue. Business School professor at Harvard Business School for a number of years. And my research always concerned, go to market channels of distribution and sales. Then I left academia, ran a business for almost 12 years. We were a software firm, but the software in many ways was an excuse for the professional services we provided in the learning management space. But when you’ve got to meet payroll, you have a new existential respect for sales. Then after getting lucky in business, I could give you a different story, but that was the truth, we sold it exactly the right time. Harvard called me back up to be a professor. And I taught strategy for a few years and I was surprised by what I didn’t find. Arguably the world does not need yet another strategy book. I also know the world does not need yet another particular sales book. But there was nothing to connect the two, nothing about the link between strategy, assuming you’ve got one, and what that means for customer acquisition and retention. And yet when you look at the numbers, and people are always surprised by these numbers; US firms alone spend over $900 billion annually. Now annually means every year, over $900 billion dollars annually on sales, that’s not marketing. That’s three times as much as they spend on all advertising, Super Bowls, everything. It’s about 20 times as much as US companies spend on all digital marketing. And it’s almost 35 times as much as they currently spend on social media. So, I always quote Mark Twain when I cite those numbers, “if you’re going to put a lot of eggs in one basket, keep your eye on that basket.” And very little written about that link. That’s why I wrote the book that I wrote.
Andy Paul (5:15)
Those numbers are, are fascinating. So, we spend three x the amount on sales, we spent on sort of conventional, advertising, as you talked about, and how many times what’s spent on digital marketing?
Frank Cespedes (5:32)
Well, the numbers there are a little cloudy, because what people now called “Digital”, the amount spent on digital marketing is probably exaggerated a bit because it’s a way to sound 21st century, but it’s at least 20 times what people spend on digital.
Andy Paul (5:53)
You and I were talking about before we came on the air, and yeah, one of the real crises I think in sales is that, at least based on the research that’s being done, there’s this huge spend and yet we’re not we’re not really moving the needle in terms of productivity improvements. I mean, there’s all this explosion of technology, and sales technologies, and sales enablement technologies. And yet, the reports that come out, the research has shown that, close rates in the business to business space are actually declining, year after year, the same percentage of reps aren’t making quota, the number of percentage of deals that have been no decision are increasing now. 50 to 60% of deals and pipelines that have no decision. It seems like a real inflection point for us.
Frank Cespedes (6:42)
Well, it is, and I think the numbers are even in many ways bigger and even more interesting than that. There was a good study done by McKinsey about two years ago. And when you think about the impact of the Great Recession, the so-called Great Recession, depending on how you date it, starts in late 2007 or 2008. I think these numbers become a bit intuitive. But what McKenzie found is, if you look at the average S&P 500 company, motivated by the absolute necessity to cut costs, the average S&P 500 company has cut its cost of goods sold about 300 basis points. Now, that’s a big deal. That’s a very big deal, when you head up what that means that’s close to a trillion dollars. On the other hand, if you look at SGA, selling in general administrative expenses, they’ve not gone down they’ve actually gone up as a percentage of sales.
Andy Paul (07:47)
And you said, intuitively they would if you cut your cost that way.
Frank Cespedes (7:51)
Well, no, I think what’s intuitive is that you cut your cost of goods sold as a as a response to a long-sustained severe recession. What is not intuitive is that your SGA goes up. And that’s a big deal. And what you see going on, I think is not just a sales productivity issue, although it is, I think you’re exactly right about that, Andy. But what do you see going on is a big inflection point in terms of productivity studies. The reality is that most companies have actually done a pretty darn good job on cutting their costs. And by that, I mean, what they do in shared services, their back-office costs, operations, improvements, manufacturing improvements, and so forth. But they haven’t done a good job in becoming more efficient, more productive in their go to market, but I think that’s where you see the increasingly, the focus of productivity studies, and it’s there for the same reason that the famous bank robber Willie Sutton, rob banks, money, right. That’s where the money is. And I think this has implications in a number of areas, but one is for what it means to be a sales leader in the 21st century, and it’s increasingly difficult to hide. What those tools that you alluded to do, is provide people in the “C” suite, and in particular finance people with more transparency, more information, more data about what is in is not happening, and the enormous amount of money that they spend on sales. And what was traditionally a sort of black box, well, sales is what the salespeople do. I think those days are fast disappearing, and it’s going to be very important for a sales leader not only to master the processes and sales, which is a big job in its own right. But to be more literate and articulate about the finance and other areas of productivity that are important.
Andy Paul (10:12)
Well, it seems like one of the artifacts that we’re seeing, and this is still early days, right? I mean, it’s just in the last three, four years, there’s been this veritable explosion in the amount of sales technology, applications, and systems that are that are coming out. And so, I said, still early days. But one of the things that we’re seeing as an early artifact of this greater transparency, if you will, and this is an issue that I have, I think is sort of misplaced focus on activities, the amount of activities, or it’s more about quantity versus quality. And so yeah, now we’ve got greater visibility up and down the chain in terms of what’s happening in sales. And the response is, “well to do more.” As was in the .
Frank Cespedes (11:02)
I think that’s right. I think it’s a very complex issue. However, first, I certainly agree with your main point. activity is not the same thing as an outcome. And whatever else sales is, it is fundamentally a performance art. It is about outcomes. You either close the sale or you don’t close the sale, you either get the price, or you don’t get the price. So simply to measure clicks or, what happens at this stage of the funnel, short of that outcome is very myopic. I agree with that. On the other hand, there are lots of things that are relevant factors in generating a sale, besides the heroic efforts of good salespeople, and what you do in marketing at the beginning of the funnel, what your pricing structure is counts, what you do in your online media, the so called “last click” issue, all of those things count. So, while I agree with what you’re saying, in general terms, I think there is a lot of “let’s measure what we can measure”, as opposed to the ultimate productivity metrics. There are reasons for that. And one of the reasons is that it is complex to measure what actually causes the sale, and it’s getting more complex as customers clearly use online media to do research about products and prices and competitive offerings, and so forth.
Andy Paul (12:51)
Yeah, I just had finished reading a book, I don’t know if you read it called, Absolute Value, by Simon Santa Rosa, the subtitle is, What truly influences customers in the age of nearly perfect information, and some Harvard or Stanford grad school, Business School professors. And it’s sort of interesting how they talk about, there’s this common misconception that all this information is overwhelming for buyers. And through their research, what they’re finding is actually, buyers are actually really adept at finding the information they need to help them– they define this term as absolute value, to be able to understand the experience, the value, or experience quality of a product before you buy it. But there’s research showing the buyers actually very adept at that. And as a consequence, some of the conventional tools influence began to wane, waning importance in terms of their decision making.
Frank Cespedes (13:52)
Well, I’m not sure I go as far as making that kind of generalization. I think as always in business, the answer is, “it depends”. It depends on the product, it depends on the service, it depends on the category. Certainly, there are many areas, lots of consumer goods where, as a general rule, I guess that generalization holds. But there are other areas, areas of software are a good example. The value in the product is what an economist calls usage value, or experiential value, meaning that you don’t know what that value is before you use it. And it often it really doesn’t matter how many online sites you can go to. You have to use it in your particular organization to understand that, so, I’m not sure–
Andy Paul (14:47)
But, from a decision-making standpoint you have to make a decision before you get to the usage value, though.
Frank Cespedes (14:52)
Yeah. But there are lots of ways that those folks make that decision. And there are lots of ways that sellers encourage them to make the decision. Look at the traditional SaS businesses that are so common out in your neck of the woods, right? We have the free tier, and then we have the tier that allows you to do X, Y and Z that you pay for. And then we have the premium tier that allows you to do even more. All of those are ways to move the customer through what is fundamentally a usage value of purchase. But, purchase decisions are not necessarily binary, they’re not just yes or no, or all the way the world has always been, and still is much more complex and interesting.
Andy Paul (15:38)
No, I agree. I think that’s one of the problems that that we have in sales in general. I think, the SAS sales model serve an exemplar of that, there’s this attempt to serve, reduce everything to black and white and to process, and to sort of say that it’s all a science as opposed to saying, yeah, there’s still a fairly substantial human element involved in getting the customer, what I call the last mile from whatever they can learn online and so on to answering those final questions that give to the point where they can make a decision and a choice.
Frank Cespedes (16:16)
That I agree with, and I think that’s one of the great paradoxes about sales. And here I do think the research is fairly definitive. If you look at all the elements of the so-called business value chain, if I can use that kind of jargon for a second, all the activities from sourcing, to operations to selling and service and so on. Sales is arguably the most context specific. In other words, what works in industry A doesn’t necessarily work at all and industry B. In fact, what works in sales at Company A in the same industry doesn’t necessarily work in Company B, because of that company strategy, the target customers, the buying processes of those customers, etc. At the same time, for some reason, sales is the area of the value chain where people feel most empowered to make these huge, big generalizations. Sales is all about relationships, or sales is all about this particular SaS model. And I do think, if we look at tech in general, and my reading of the blogs, basically what we have are hundreds and hundreds and hundreds of people who make these generalizations based on N equals 1, their particular experience at that particular company, but it has always been so, it had always been the case that sales is very, very context specific, but also susceptible to these huge generalizations. And at the end of the day, I think that’s what separates a good businesspeople from mediocre businesspeople. They’re the ones that are not suckers for the glib generalizations and do their homework.
Andy Paul (18:21)
Well, but I think that we have sort of an example of that, at least in my opinion, take the SaS business. There’s a new model new business model for selling software that does not determinably need for a new sales model. But people look at this new sales model, as you said, it’s really context specific. And, the failure rate of startups, hasn’t changed because they’re using this new sales model.
Frank Cespedes (18:49)
No, I agree. And I think there are a couple of things there. One is like any model, it gets developed, it gets refined and it gets mature and saturated. Now, if you sort of think about how the SaS model, and I assume that what you’re referring to there is primarily an inside sales approach, SDR, BDR, content marketing, etc. A couple of things to be said about that, it is no coincidence that it took off circa 2008, 2009. Essentially, you needed a lower cost go to market. Secondly, I don’t think it’s a coincidence that if you look at the human resources, that staff that model, they’re mainly, at least at the SDR stage, fresh out of business, fresh out of undergraduate types. During a recession, those people have trouble finding jobs that were willing take those jobs. And some of those models have worked very, very nicely. But boy, that’s an increasingly saturated space, increasingly what we call content marketing, we used to call the yellow pages. So, lead generation is increasingly difficult in that model. And as with any model, it’s about the entire process. It’s not about any particular portion of that process.
Andy Paul (20:24)
Right. But my point is that served been touted, as sort of the end-all deal, to your point, it’s becoming saturated. I had a conversation with a VP of sales are a high-profile startup in the valley, he’s actually been at multiple companies. And his fear was, to just to your point, exactly, it just becomes saturated, it’s increasingly difficult to track the attention of the customers and, they almost feel like being used as a service / burn strategy.
Frank Cespedes (20:53)
But I’m a bit optimistic about that, Andy, because as you know, there is no such thing in any competitive economy, as the end all be all. And when you get people, and especially investors, either talking or acting that way, smart, clever people disrupt that model with more interesting things. And I see no reason not to believe that’s not going to happen. And it’s ultimately, it’s good not just for business, but it’s good for society.
Andy Paul (21:24)
Well, but to a question you and I talked about a little bit before we came on the air, and I am interested in knowing your thoughts on this, assuming all the SaS model, inside sales models, have certainly been disruptive to some degree, but when we see the research reports about some fundamental measures of performance throughout the sales business, they are really unchanged or getting worse, slightly worse on a trend basis over the last 5, 10, 15, 20 years. So, what’s your thought about that? What really can disrupt, the basic productivity of sales?
Frank Cespedes (22:05)
Well, I think there are a couple of things that are going on. And you know, productivity is a mystery in the general economy for economists, as you would expect, because productivity is ultimately the outcome of human behavior. And when you find something more complex than human behavior, I’m all ears, let me know. But I think there are a couple of things going on. One is, we are living through an inflationary and innovative period with sales enablement technologies. And there’s no reason not to believe that as with any technology, it takes people some time to figure out what in fact, it really is good and not good for, and we’re still in the relatively early days of that. So, comment number one is give it a little bit of time. Come in number two is most of those studies look at technology-based businesses. SaS is a good example. Where the price curve is not exactly one that cheers up investors, the price curve in many of those businesses looks like a ski slope in Aspen. So, if by productivity we mean how much is sold by a salesperson, price has something to do with that. And then number three, I think is a managerial issue. And that ultimately, as I mentioned earlier, it’s about understanding the buyer, understanding the buying process that’s relevant in your business. Selling is always more about buying than it is about selling, and understanding that any of these tools, any of these technologies are enablers, they are not the end game itself. And well, that sounds obvious when someone says it. It’s a truism that, as far as I can tell, every generation of managers has to re-experience for itself.
Andy Paul (24:16)
That’s an interesting point, I really start chuckling at that, because getting back to your point about the endless sales books that exist out there, I think part of the reason that we see this continuing sort of cycling and recycling of sales methodologies, if you will, is that there is no carryover from generation to generation. Every new generation, entering the workforce in the salesforce has to relearn these basic truisms since you’re talking about.
Frank Cespedes (24:48)
Yeah, but again, I’m a bit more sanguine and optimistic about that. I think you are describing the reality, but the reason I’m a bit more sanguine about that is, the following business is not physics. The important things in business are relatively easy to say. Be customer focused, make sure you focus on buying etc. They’re relatively easy to say but darn hard to do. And so, I have no problem with people putting old wine in new bottles. I think that is one of the ways that a social activity, like business does get better and better, the challenger sale which, at least for a few years, my sense is it’s,sort of beyond the horizon now. For a few years, was very, very popular. As far as I could tell, what Brent and others did was repackage what we’ve always known is true in b2b sales, and it’s a really good idea to get specified. But I have no problem with that, I have no problem with putting new words, new frameworks around perennial truths if it actually moves the meter in the organization. And I do think you do see that constant recycling in sales. But sales is in large part about motivation. And I think that’s part of what motivation is.
Andy Paul (26:22)
Well, let me ask another question, slightly orthogonal and talking about, but we’ve been talking about generalizations to some degree. And in a recent article you’d written, you talked about the parade distribution of sales, and sort of said that, everyone sort of believes that’s true across the board, but is that actually true? Has anybody ever been on sales basis—have anyone done any research that you’re aware that says, “yeah, this is really the case?”
Frank Cespedes (26:53)
The case you’re talking about is the variance.
Andy Paul (26:55)
Yeah. 80% of sales come from 20% of salespeople.
Frank Cespedes (27:01)
Yes, I think a number of research studies support that. And in many cases, it’s more than 80%. The fact is that variance in actual performance in sales is much more than it is in many other areas of business. And again, I think once you think about this, you can see why. Sales is ultimately what takes place in the marketplace. Value in any business is ultimately created or destroyed out there in the market, with customers, in a competitive changing environment. And that’s qualitatively different than for example, manufacturing productivity, where we’ve got more control over our factory and our operations. It’s qualitatively more complex and different than in our human resource policies where we can set those policies. And as a result, what you see in studies that go way back, and studies done today is that the productivity of salesperson A versus salesperson B, in the same firm, varies by three to five times, 300 to 500%. For me, the most interesting one that I’ve seen is a study of retail salespeople at the same counter. In other words, they’re at the same counter selling the same products. And their average variance is about 200%. So yes, this is not speculation. This is, you know, as close to empirical fact as you’re going to find, there are such things as stars in sales organizations, and they’re very, very ubiquitous across sales organizations.
Andy Paul (28:54)
So, let’s take that example of the retail counter because, what did the study say that accounted for 200% variable between people sitting side by side?
Frank Cespedes (29:04)
Well, I hate to put it this way, but some people do work harder and smarter than others. That accounts for the majority of the variance, they’re just better at presenting the product, they’re better at selling, they’re better at connecting with the retail customers, they often develop a clientele and as a result and annuity revenue base, all of those things that one sees among good highly productive salespeople across industries were also true behind the retail counter.
Andy Paul (29:38)
So where does it start, though? Sometimes this is really interesting to me, I think there’s this dichotomy, because of the research you’ve done or seen on this, is that a lot of training done on skills, improvements for sales, but to me it seems that it really starts at a basic level, sort of basic behaviors and habits, right? I can’t train somebody to become more skilled at questioning, unless they’re in the habit of asking questions to start with.
Frank Cespedes (30:10)
Well, I yeah. And I guess I always point to three things as the places to look at and continually be good at in building a world class sales organization. The first is hiring, because it is about people. And here, the research tells us that hiring practices in general, in business, but especially in sales, I don’t know any other word to use are abominable, just terrible, classic examples of the cloning bias. In other words, I sit down with you, and after an interview or two, I am outrageously confident that on the basis of those interviews, I can predict your actual on the job performance. The research tells us that the vast majority of managers have no right to that confidence. In fact, and this is not an exaggeration, Andy, what a lot of the research says is that many, many companies would literally be better off not interviewing when they hire, but instead picking resumes at random that it’s at. It is at the stage.
Andy Paul (31:26)
by the way,
Frank Cespedes (31:27)
What do you do to get better at that? One, is you get serious about hiring, you go beyond these generic job descriptions. And most importantly, you do what I think more and more companies are actually doing, and that is, you not only do interviews, but you have all sorts of behavioral assessments, and for that matter, on the job, behavioral assessments as well. Because again, sales is about behavior, but you’d begin with hiring. And again, the data here tends to surprise people but average turnover among salespeople across industries in the United States averages between 25 and 30% annually. Now what is what does that mean? That means that for most companies, every four years or so they are in effect, having to hire, develop, train, socialize the equivalent of the entire sales force. Any human resource investment of that magnitude demands rigorous oversight. So that’s hiring. Second for me is the most underutilized lever for affecting behavior in sales based on my experience, is performance reviews, busy sales managers, very often don’t really do performance reviews. They do what I call, drive by reviews that are not really about development and evaluation, they tend to be— you will earn, get your salary-raise discussion. And that is a trainable skill. It is a trainable skill to get people better at performance reviews. I wish I had spent more time and more money in the business I ran around performance reviews, and most companies have a long way to go in that area.
Andy Paul (33:21)
And so, what’s the ideal frequency for the performance for you?
Frank Cespedes (33:24)
Well, I think that varies depending on the company, but certainly at least once a year and probably much more often. But it leads to my third point, what we know about development of people in any activity, but especially a creative activity like sales is, feedback is important, but also what you do after the feedback for follow up. What performance reviews need to do is to be linked to the other elements of performance management in a company, that would include training, in sales that would include ride along, it would include all sorts of informal coaching that in a good sales environment take place. But in answer your question, those are the three things that I point to, they’re not exotic, I think their fundamental. Hiring, performance reviews, and then the following training and other performance management practices.
Andy Paul (34:29)
Yeah, I agree. For me, hiring– you have to test for the skills that you that you need in the job. I mean, if you go beyond doing so, the rudimentary job description you’re talking about, if you’re putting together a set of job specifications, that’s something somebody needs to be able to do in the jobs you need to test, assess whether they can actually do it or not.
Frank Cespedes (34:54)
Yeah, but I think you’ve got to do that by A, understanding what really the sales tasks are. And again, sales tasks are determined by your company’s strategy and target buyers, not by a generic selling methodology. And then you’ve got to have things in place that encourage and enable the folks doing the hiring; and in sales, this is mainly frontline sales managers, things that encourage and enable the folks doing the hiring to do more than “well, you know, looks like me, sounds like me, this worked for me when I was his or her age.” And you can see there are other social implications to that cloning bias. Including other forms of bias that have to do with gender, race, etc. It is not a happy situation.
Andy Paul (35:51)
I think in in some of the inside sales company or companies. We see it in inside sales, they got this bifurcation between their SDRs and their account executives, their account execs they call the closers. And so, job descriptions are all these sort of testosterone laden terms, closer, hunter, extrovert blah, blah, that don’t attract women if the role.
Frank Cespedes (36:16)
Well, my favorite story, a true story. I remember business I ran, as I said it, we had software, but it was fundamentally a professional services organization. And until we reached about 40 people, I interviewed for every job, and I mean every job, secretary, everything. And in sales, I’ll always remember interviewing this one wise guy, I gave him my standard speech, which is that this is a service business, we deal, we have big clients, it’s all about people, you’ve got to understand that going in. Are you okay with that? Now in 12 years, I never had anyone tell me “no, I’m not okay with people.” But I always remember this one wise guy who said, “people, some of my best friends are people”. You know that sounds funny, but unfortunately, when you’re dealing with the platitudes that describe most sales positions, that is what a lot of hiring managers fall back on.
Andy Paul (37:14)
Yeah, tell me your strengths and weaknesses. Another example of a “penetrating question”. And so, Frank now in the last segment, the show I’ve got some standard questions I ask all my guests. And the first one is a hypothetical scenario in which you, Frank have just been hired as the VP of sales by a company whose sales have stalled out, and the CEO is anxious to hit the reset button, get things back on track. So, what two things could you do in your first week on the job that could have the biggest impact?
Frank Cespedes (37:43)
Well, the biggest impact is to sort of come up with hypotheses about what is going on. Now, it may be a question of effort, it may be that people are either not working hard enough or smart enough. On the other hand, it maybe a question of the marketplace, do we still have the relevant product and approach? And what you do is very, very different depending upon what that diagnosis is. So, that’s number one. I will say this, based on experience. One of the things that is constantly surprised me, and all the data I’ve seen says this isn’t changing. But basically, if you look at sales compensation policies in the United States, the number I’m about to cite has been remarkably stable, give or take a few percentage points for 30 years. If you look at incentive comp, and you ask yourself, “alright, how does a salesperson who understands his incentive comp plan” — and the vast majority do, they just do, if this is how you eat, you will study that plan. If you ask yourself, “how do they make money?” Basically, what in most 70% of incentive comp plan say, is you make money by selling more. And it doesn’t matter whether that’s a high profit sale or a low profit sale, whether you sold to a customer the high costs, the server, the low-cost server. So, you can see what the message is to salespeople in a plan like that. There is no such thing as a bad customer, go forth and multiply. And that’s what they do. So, the second thing I would do is look at the plan, see what the incentive is and what that means for the orders we are getting. And very often what is going on in many, many organizations is that independent of whatever the espouse strategy is, the real strategy of the company is being determined by that plan. And in effect, what we’re doing, and this very often stalls sales, what we’re doing is asking some of our customers to subsidize others. And in the 21st century where there’s more information and more transparency, that’s a difficult thing to do.
Andy Paul (40:10)
That’s a great point. All right, good answer. Love it. So just to finish up, we got some rapid-fire questions. You can give one-word answers or elaborate if you wish. So, when you’re out running your business, and you had to go out and sell what was your most powerful sales attribute?
Frank Cespedes (40:27)
Meaning, what is it I think I did well? Well, at least in our particular space, I knew what I was talking about when it came to the product and at least going in issues at customers. And I emphasize that because the basics in sales are very, very important. It really helps to know what you’re talking about when you’re in front of a customer. Now I know that may sound glib–
Andy Paul (41:02)
I was going to say, shocking.
Frank Cespedes (41:03)
I have been astounded at how many salespeople do not, and that is a training issue. The basics here are basics for good reason, product knowledge, up to date, product knowledge counts. Now, again, I consider that a necessary but not sufficient cause of being an effective salesperson, but it is a necessary pause. And I’d like to think that I sort of knew where we applied, potentially, and where we didn’t. Okay,
Andy Paul (41:39)
So, here’s the question. Let’s see if it’s appropriate as is for here in your situation. So, who is your sales role model?
Frank Cespedes (41:51)
Oh, I had many. I think it’s a very good question because I think sales again, it’s a performance art, it’s an experiential art. How do you become a good salesperson the same way you get to Carnegie Hall, practice, practice, practice. To use the more technical jargon, it’s a classic example of what the behavioral folks call modeling behavior. And I think what you find is that what good salespeople do is pick and choose, they see what someone does to develop contacts, and they pick what fits them, they see what someone else does to close, and they pick what fits them. And I was very much like that of myself. So, it wasn’t one individual, but a number of people that I had seen, and admired, and respected, and said to myself, I can do that. There were others I admired and respected. And when I saw the way they sold– I as I say I admired it, but I just said, “I can’t do that. I’m not that good.” But modeling behavior and many models.
Andy Paul (43:01)
So other than your own book, what’s one book you’d recommend every salesperson should read?
Frank Cespedes (43:07)
I’m still a big fan of Neil Rackham, his book Spin Selling. Neil, unlike most folks who write about sales– every sales trainer has an incentive, basically, to say my book applies everywhere. And that’s just not true. Again, it’s a very context specific activity. And there are two things I still admire about Neil’s work. One, is he knows where his research applies and where he doesn’t. And he’s pretty darn clear about that. So, there’s just good intellectual integrity. And secondly, the bulk of that book is about how to ask questions. We all know that asking questions and listening is important in sales. Surprise, surprise. What Neil does in that book is operationalizing what kinds of questions depending upon the context, so Again, the books 25 years old, but it’s just the place where I urge my students to begin.
Andy Paul (44:05)
All right. All right, great answer. So, the last question for you is what music is on your playlist these days?
Frank Cespedes (44:12)
I am a big fan of jazz music. I am a big fan. I just listen to this morning, Bill Charla. I have no idea what you know who Bill Charla in his trio is. And you should get from the west coast to the east coast. Go to New York, you’ll see him constantly in one club or another in New York. And he’s one of the great jazz pianists of our generation.
Frank Cespedes (44:42)
Well, I’m a huge Keith Jarrett fan. So that’s on my list.
Andy Paul (44:46)
Well, we share that obsession.
Frank Cespedes (44:48)
I am a big fan of his solo concerts as well.
Andy Paul (44:51)
Yeah, that’s my writing music. I put that on, it’s like a Pavlovian response. I just start writing. So. All right. Well, Frank, thanks for being on the show. Tell folks how they can connect. with you.
Frank Cespedes (45:02)
Well, I’ve got a website, frankcespedes.com. And I’m a professor at a business school. And I guess all the other usual suspects these days, via LinkedIn and so forth.
Andy Paul (45:17)
Well, thanks again. And remember friends. Thanks for taking part of your day to listen to the show. And remember to make it part of your daily routine to deliberately learn something new to help you accelerate your success. And one easy way to do that segment, subscribe to this podcast Accelerate. That way you won’t miss any of my conversations with top business experts like my guest today, Frank Cespedes, who shared his expertise about how to accelerate the growth of your business. So, thanks for joining and until next time, this is Andy Paul. Good selling everyone.
Thanks for listening to the show. If you like what you heard and want to make sure you don’t miss any upcoming episodes, please subscribe to this podcast on iTunes or stitcher.com. For more information about today’s guests, visit my website at andypaul.com.
