85 T he slow economy has companies scrambling to find more-profitable customers. As sales continue to move at a snail’s pace, CFOs are pushing budget cuts as a top prior- ity. In the struggle to regain lost ground, many companies make one major mistake: They fail to improve customer relationships. According to Gartner Dataquest, worldwide customer-relationship-management spending on software and services reached $23 billion in 2000. Ideally, this huge investment should deliver greater insight into customers, smoother customer communications, greater customer loy- alty, and healthier profits. However, independent research paints a different picture. Customer satisfaction has not improved. According to a CUSTOMER RELATIONSHIPS IN A SLOW ECONOMY 21 Copyright © 2006 by Gerhard Gschwandtner. Click here for terms of use. study by the University of Michigan Business School, be- tween 1994 and 2000 customer satisfaction declined an av- erage of 7.9 percent. Companies ignore customer behavior. Forrester Re- search Inc. found that only 23 percent of companies cur- rently improve their online operations by making use of the data associated with how customers use their Websites. A study by Broadbase Software Inc. found that 90 percent of online shoppers click to a competitor’s site if they experi- ence poor customer service. Companies fail to weed out unprofitable customers. Ac- cording to Newton, Massachusetts–based Meridien Re- search, 20 percent of a bank’s customers generate about 150 percent of unadjusted revenues. At the bottom end, about 30 percent of the customers actually drain 50 per- cent of the gains realized. But cutting the bottom end with- out analyzing customer data can backfire. For example, First Union Corporation found that what it had considered the lowest fifth of its customer base in income was actually its most profitable segment. Companies fail to boost customer loyalty. A customer loy- alty study by Deloitte Research showed that when manufac- turers set targets for retaining customers and strive to exceed loyalty goals, they are 60 percent more profitable than competitors that don’t track customer loyalty well. All that insight had little impact on this year’s trend of eroding loyalty. Carlson Marketing Group reported in its annual Re- lationship Builder survey that in 2000 four in 10 customers showed a genuine commitment to brands or companies. In 2001, that commitment has dropped to just three in 10 customers. Frederick F. Reichheld writes in his book Loy- MASTERING THE ESSENTIALS OF SALES 86 alty Rules (Harvard Business School Press, 2001), “Outstand- ing loyalty is the direct result of the words and deeds—the decisions and practices—of committed top executives who have personal integrity.” This insight confirms that while CRM technology does not en- sure customer loyalty, people do. The road to recovery begins with the realization that customer expectations have gone up while the economy has declined. In the dot-com economy customers found it diffi- cult to buy, hence the decline in loyalty. Today buyers make it far more difficult to sell. The message is clear: Sales won’t improve until customer relationships improve. It’s time to return to such core principles as treating customers well and saying thank you. It’s time to return to honesty and integrity. When that happens, customer satisfaction shall again be king. MASTERING THE ESSENTIALS OF SALES 87 REMINDER When the economy erodes, trust and integrity should not be mistaken for an expendable line item in the budget. This page intentionally left blank 89 R ecently I spoke with several CEOs that started their own companies. They all agreed that ideas are at the heart of selling. Sound business ideas can come from any- where. Some people have their epiphany while taking a shower, while others scribble business plans on a cocktail napkin. One woman CEO knew the exact date when the idea for her new company came to her. That idea changed her life. Ideas not only change the lives of those who find them, but also the lives of many other people. Donald Trump once told Selling Power, “There are two kinds of people—those who have good ideas and those who are good at implementing them. Normally, people with good ideas can’t implement them, and those who are good THE ROADBLOCKS TO SELLING AN IDEA 22 Copyright © 2006 by Gerhard Gschwandtner. Click here for terms of use. at implementing can’t produce a single idea.” Most CEOs agree that in order to turn a good idea into a viable business, one has to overcome four major selling challenges. First, the idea originator must be sure the idea will actually work. Many times the very act of writing down an idea will make it vanish. Most people give up in stage one only to feel a twinge of regret when they realize that someone else is making millions with an idea that they contemplated but failed to complete. Second, the idea has to be anchored in logic and sup- ported with passion. Logic and emotion are needed to sell the idea to the venture capitalist. Stage two is always a tough challenge for any entrepreneur. The venture capital market is not eager to finance a new idea unless it has a solid chance of succeeding. Third, the idea must be strong enough to persuade peo- ple to join in a collaborative effort to turn the idea into re- ality. If the original idea fails to capture the imagination of qualified talent, the idea cannot survive. Fourth, the idea must truly benefit the customer. To keep the selling cycle short, the customer has to under- stand the benefits quickly. If the idea is too complex for a short and simple presentation, the selling cycle will be too long and the cost of sales too high. Someone once said that good ideas have many fathers, while bad ideas are always orphans. A good idea fuels progress, creates jobs, increases wealth, and helps advance MASTERING THE ESSENTIALS OF SALES 90 SUCCESS PRINCIPLE Ideas are the best antidote to problems. Problems are nothing but wake-up calls for creativity. society. Thomas Jefferson once wrote, “He who receives an idea from me receives instruction himself without lessen- ing mine, as he who lights his taper at mine receives light without darkening me.” Not everyone can move a great idea through all four stages and only the most persistent people will succeed. Is it worth the effort? Ask any successful business leader and they will tell you that a good idea—well conceived and planned and carried through to the creation of a successful company—can truly light up the world. MASTERING THE ESSENTIALS OF SALES 91 This page intentionally left blank 93 S mart salespeople know that negativity spoils sales. Most daily newspapers don’t seem to understand that negative news doesn’t sell more newspapers. Think about what you read today in your daily newspaper. Did you find information that you could use to improve your life? Did you read something that would give you a positive feeling? Did you read something that would make you pick up the phone and share with a friend? The truth is that the aver- age newspaper is barely read. As a result, most papers lose subscribers by the thousands, and every month they must spend a huge amount of money to shore up eroding circulation. ARE YOU SELLING PROBLEMS OR SOLUTIONS? 23 Copyright © 2006 by Gerhard Gschwandtner. Click here for terms of use. A number of recent studies indicate that Americans are tired of picking up newspapers that are overloaded with negative news, cynical reporting, and highly distorted im- ages of the real world. For example, research conducted by the Times Mirror Center for the People and the Press found that 71 percent of Americans think the press “gets in the way of society solving its problems.” Poor journalists have a lot in common with poor sales- people. While poor salespeople tend to believe that they can make the sale if they exaggerate the positive side of their product, poor journalists tend to believe that they can im- press their customers if they exaggerate the negative side of the news. It is sad that both the poor journalist and the poor salesperson are completely unaware of how their pro- fessional malpractice affects their customers. Kathleen Hall Jamieson, director of the Annenberg School for Communication at the University of Pennsylva- nia, was quoted in The New York Times as saying, “If you cover the world cynically and assume that everybody is Machiavellian and motivated by their own self-interest, you invite your readers to reject journalism as a mode of communication because it must be cynical, too.” It does not take a Gallup Poll to know that there are more Americans looking for solutions than Americans look- ing for problems. Ask yourself: What is the ratio of prob- lems to solutions in your daily newspaper? Ten to one? A hundred to one? The truth is most readers have enough problems to handle in a 24-hour period. People all over America want practical, can-do information that they can use to build positive and productive lives. But they can’t find it in their daily papers. MASTERING THE ESSENTIALS OF SALES 94 [...]... called the Zeitgeist This is a wonderful German word for which there is no English equivalent, but it denotes the collective thoughts and feelings that dominate the era we live in While the word Zeit means time, the word Geist has two meanings: One is spirit, the other ghost Loosely translated it could mean the “spirit of our time” or the “ghost of our time.” For example, the Zeitgeist in the era of Y2K... that the Consistent success is front page of the Science seconly attained by tion had some problems with cultivating the same the color, so I sent a note to the territory longer, better, production manager asking and more passionately her if we supplied crayons to than anybody else our readers for that edition.” 98 MASTERING THE ESSENTIALS OF SALES When people read a story in The New York Times, they... 2000 I 101 Copyright © 2006 by Gerhard Gschwandtner Click here for terms of use MASTERING THE ESSENTIALS OF SALES The Zeitgeist of the dot-com boom was marked by euphoria caused by the illusion of growth without limits It was like a pied piper that invited people to foolishly join in a happy parade celebrating greed The Zeitgeist of post-9/11 was like a fire-breathing dragon that attacked at dawn, killed... notes 102 MASTERING THE ESSENTIALS OF SALES instead of hastily punched out SUCCESS PRINCIPLE electronic messages Our progress does not Visionary leaders know depend so much on that the Zeitgeist is really a understanding the times composite of the past that ofwe live in; it depends ten ignores future possibilities more on understanding While today’s Zeitgeist urges ourselves and the us to dwell on the past,... if their product caused such a negative reaction? They would immediately recall the cereal, improve the product, conduct more surveys, and thank their customers for giving them a second chance What do newspaper companies do? They call people while they are eating dinner, trying to sell them a subscription 95 This page intentionally left blank 24 THE INDOMITABLE TIMES have always been curious about the. .. more seconds looking into another person’s eyes The big question is what changes the Zeitgeist? History tells us that the pendulum of time keeps swinging Psychologists tell us that people who suffer disappointment tend to retreat and rediscover their true strength What feeds the Zeitgeist of our time is fear What will change the Zeitgeist of our time is courage It takes a lot of courage to objectively... The experts of the day were astounded Ochs added greater value with better editorial content He cut out fiction He cut stale columns He targeted the paper toward “men in business.” He also launched an illustrated Sunday magazine with half-tone photographs and further I 97 Copyright © 2006 by Gerhard Gschwandtner Click here for terms of use MASTERING THE ESSENTIALS OF SALES set himself apart from the. .. When I visited his office, he had a Remington typewriter on one side behind his desk and a computer on the other I asked him if he used both and he said, “Yes, I learned how to read my email, but when it comes to writing a letter, I use SUCCESS PRINCIPLE the typewriter.” What was the Success is often last letter he typed? “Oh, just measured by the height the other day,” he replied with of a single achievement... the mastermind behind The New York Times In 1896, Adolph Ochs took over the reins of the struggling newspaper that, at the time, competed with more than a dozen New York dailies With a total circulation of only 9,000 copies, Ochs had to move quickly Fortunately, he was an astute salesman He lowered the price of the paper from three cents to one penny and promised to publish the news impartially, without... actor who becomes invisible in the portrayal of a character The Sulzberger family has channeled its energies into the character of the paper Doing that for more than 100 years—without a lot of fanfare or fighting—that’s indomitable character 99 This page intentionally left blank 25 HOW CAN WE MANAGE THE ZEITGEIST? am not an economist, but I have my own theory of what influences financial decisions And . Loy- MASTERING THE ESSENTIALS OF SALES 86 alty Rules (Harvard Business School Press, 2001), “Outstand- ing loyalty is the direct result of the words and deeds the decisions and practices of committed. poor salespeople tend to believe that they can make the sale if they exaggerate the positive side of their product, poor journalists tend to believe that they can im- press their customers if they. creation of a successful company—can truly light up the world. MASTERING THE ESSENTIALS OF SALES 91 This page intentionally left blank 93 S mart salespeople know that negativity spoils sales. Most