Archive for August, 2009
There’s a sales number that’s gone missing. As a result, service contractors are blind to how well their selling.
The missing metric?
The win ratio (the percentage of bids won to those submitted).
Without knowing your win ratio you don’t know how well you’re selling. That’s important when a sudden loss of customer revenue sends you running to bring on new business fast.
A cynic might say that “as long as revenue rises who cares?”
Anyone involved with, or responsible for sales should care. Here’s why.
Rising revenue happens for many different reasons, and they’re not all a sign your sales efforts are working, such as:
- Winning 1-whale sized contract but losing most others
- Current customer expands, handing you large contracts
- Competitor goes out of business and customers have no one else to go to
The above situations are great, but can you rely entirely on them for your new business?
Why is the win ratio missing?
Sales people always report a WIN. Of course they would, a WIN generates commissions.
However, sales people rarely report LOST bids. They believe (rightly or wrongly) that tracking the win ratio reflects poorly on their performance.
And that’s the crux of the problem. Sales people would rather leave a bid as PENDING rather than say it’s LOST. Even though that outstanding bid reaches a year old.
Sales people are notorious for being overly optimistic, but what about management?
I’m at a loss as to why management doesn’t calculate the win ratio.
Doesn’t sales management warrant the same rigor as operational management? What service contractor doesn’t know its profitability – its win ratio of profits to expenses?
Easily Finding the Win Ratio
The number is simple. There are only 3 states: WON, LOST or PENDING.
PENDING bids, those awaiting a decision should be reported as LOST 90 days after submission.
Waiting 90 days is a practical length of time to truly wait for a customer’s decision. If a bid is WON after 90 days, pricing would most likely have to be reviewed and possibly revised.
If you have many sales people you can easily automate the 90-day PENDING to LOST reporting. Then you’ll have that valuable win ratio.
If you’re managing yourself or another sales person, incorporate that change manually into your own sales reporting. You are measuring your sales effectiveness, right?
Once You Have the Win Ratio
Monitor and compare it as it changes:
- This month to last
- This month to same month last year
- This quarter to last
- This quarter to same quarter last year
- Year to date this year to year to date last year
After that quick look you’ll know whether you need to do anything about your sales effectiveness.
It’ll become part of your sales management, just as important as your profit margin.
How are you determining your sales effectiveness?
~~~~~~
Chris Arlen
President, Revenue-IQ
August 26th, 2009
All marketing and selling efforts (the sales cycle) try to move customers from indifference and inaction to purchase. However, we tend to lose sight of where customers are in their purchase process (the buying cycle).
To help contractors make their sales cycle more efficient I’ve developed a table identifying marketing and selling efforts appropriate for your customers’ buying cycle. This table is best presented as a pdf , rather than laid out in a blog post.
So, the main part of this post is the 3 Stages of the Buying Cycle. A down-loadable pdf you can get by clicking here.
NOTE: When I use the term “customer” it applies both to prospective customers (those you’re not doing business with yet) and current paying customers (where you’re the incumbent).
But before you download 3 Stages of the Buying Cycle, lets define:
- 3 Stages of the Buying Cycle
- 2 States of Customer Contracts: Pre-Bid or Bid
3 Stages of the Buying Cycle
This defines where customers are during THEIR buying process, not what we’re doing trying to sell them.
MOTIVATED
Motivated customers know they have problems AND are motivated to do something about them, i.e. go out to bid AND will be likely to change contractors as the incumbent hasn’t solved their problems.
It’s as if these customers know they have a pebble in their shoe and they take the effort to get rid of that pain.
AWARE
These customers are aware they have a problem or want an improvement. However, they don’t have a compelling reason to take action. At least not yet.
These customers can feel the pebble in their shoe but it doesn’t bother them enough to stop and take off the shoe.
OBLIVIOUS
These customers don’t know if they have service problems, don’t know if they have areas in need of improvement, and aren’t particularly interested in finding out.
It’s as if these customers say “Pebble? What pebble? I didn’t even know I had a shoe?”
2 States of Customer Contracts: Pre-Bid or Bid
In sales, a properly targeted opportunity is one for life, until it becomes a paying customer.
With that said, a customer can only be in 2 states, either pre-bid, or actively in the bid process.
Even an in-house opportunity can be considered in a pre-bid state, just waiting for a contractor to help the customer see the value and benefits of outsourcing.
And lost bid opportunities, ones that were considered in the bid state, fall back into pre-bid as you work towards bidding them next chance.
How do you move customers through the buying cycle?
~~~~~~~
Chris Arlen
President, Revenue-IQ
August 22nd, 2009
This preparation is for contractors seeking to win a facility service contract of $1 million dollars annually, or more.
Why a million? Just a nice number to say a contract opportunity is worth some effort.
Isn’t a million dollars enough to put some work into a bid opportunity before the RFP comes out?
We’re talking about proactive effort for the million dollar prep. Every contractor expends reactive effort responding to RFPs, but that is after the RFP arrives in email inboxes.
Bid Preparation is Project Management
Many contractors respond to RFPs only when they receive them. Isn’t that strange considering that sometimes they’re the incumbent?
Wouldn’t you hope the incumbent would know:
a) When their current contract ends?
b) When their customer may want to start the bid process to cover that contract end date?
…And knowing that the incumbent would get started early?
However, many incumbent and competitor contractors still wait for the RFP before they get started.
As a result, they end up spending most of their 2 weeks before the bid is due visiting customer sites and working up pricing.
There’s rarely time left to do thinking work and get it into the proposal.
By then it’s the 11th hour and all that’s left is the chaotic sprint to print, review, spell check, correct, reprint, bind and then drive like the wind to FedEx and get the package off in time for delivery.
Too true, isn’t it?
Poor Project Management
Contractors’ subject matter expertise and creativity rarely gets into the proposal doc and that’s what customers are really looking for.
It’s the contractor’s approach to delivering at the customer’s site that is of greatest value. And that’s what customers “try” to give the most weight to in their RFP evaluation.
But most contractors don’t give themselves the time to prepare it, even though they may be the most qualified on the subject. Guess they never read “Don’t Wait for RFPs – Start Proposals Early“.
What a shame.
When is the Right Time to Start?
How about starting to gather that critical bid info before Procurement’s cone of silence descends on your contacts and they can’t talk because the RFP is out?
It’s a million or more in spend for the customer, right?
So customers’ Procurement needs to get that bid project on their plate and teed up to complete the award and startup by the end of the current contract.
What’s so hard to figure out?
From the contract end date work backwards. The million dollar bid project will take Procurement anywhere from 3 to 6 months to work.
So if you’re in sales, you’d better be gathering that info between 9 to 12 months before the contract’s end date.
Of course, you’re never done info gathering. You’re constantly adding to and updating. But wouldn’t you rather be “adding to” than “guessing at” when the RFP arrives.
RFPs Don’t Tell You What You Need To Know to Win
The million dollar preparation only applies if you recognize that RFPs don’t really tell you what customers are seeking in terms of solutions for their specific situations.
Most RFPs are inadequate dinosaurs that should have been replaced with current, accurate requests for solutions to customers’ specific facility service issues and goals.
The Million Dollar Preparation
My strong recommendation is for you and your firm to start this prep list for your targeted “A” prospects, those over $1 million dollars annually IN ADVANCE OF THE RFP.
You’ll want to capture this data in a sales database, such as Salesforce.com or ACT or whatever you use.
The data will change over time so it’ll need to be updated as it becomes available.
So here it is. The million dollar preparation. A wish list of bid information gathering. The more you get, the better position you’ll be in when the RFP does come out. You’ll have the inside scoop for creating a truly compelling and persuasive service solution.
Contract end date –> start data gathering min. of 12 months before, give more attention at least 9 months before end date
Current provider (in-house or contractor) –> you can figure out and counter weaknesses, theirs and yours
Competing bidders –> knowing who your likely competition is helps you rephrase your shortfalls into strengths
Decision making process –> online auction, cross-functional team, departmental team only, etc.
Decision makers –> their titles, departments, experience with your service & their roles in decision making
Customer’s current service issues (pains)
Customer’s business areas impacted by those service issues –> this is critical to help make your proposal compelling to the entire organization, not just your service contact
Customer’s business state –> declining, growing, flat, profits going up or down, taken over, in merger talks, laying off, or shutting down
Customer’s industry –> gives insight on customer’s future & helps you better understand their strategic initiatives
Customer’s strategic initiatives –> retooling through technology? reaching for government business? refocusing on core businesses? Going publicly green?
Customer’s brand (public image/face) –> understanding how a customer wants to be perceived means you can better align your proposal to help them achieve that brand image
Customer’s culture –> knowing how the customer wants to work among itself and with partners helps you align to better support them
There will be additional information to gather that is unique to each bid opportunity and customer. But the above list covers most of the critical areas.
What else helps you put together a winning proposal when the RFP comes out?
~~~~~~~~~
Chris Arlen
President, Revenue-IQ
August 12th, 2009
U.S. immigration laws, enforcement and politics are tied up in an overwhelmingly complex knot.
Immigration touches all areas of society: the economy, publicly funded social systems, and universal human rights.
At a business level, immigration confuses and frightens workers and employers alike.
For low-wage service industries in particular, immigration is the tornado in the distance, a quickening wind now with an unknown future impact.
Here are a few observations for facility service contractors regarding immigration. (This is not legal advice, seek experienced counsel for that).
Customers & Business Competition
Contractors who play by the rules feel they lose business to shady contractors who break the law and sell at lower pricing.
But what if customers knowingly choose contractors who hire unauthorized alien workers and don’t pay taxes or overtime?
Aren’t they complicit with the bad contractors? Is there no justice for good contractors? Read on.
Wal-Mart’s business is based on selling at the lowest prices. Unfortunately, it has a history of buying the lowest price too, without looking any further. ICE (Immigrations and Customs Enforcement) has enhanced Wal-Mart’s vision .
In 2001 ICE arrested 100 illegal immigrant janitors at Wal-Mart stores in 4 states.
In October 2003 ICE’s “Operation Rollback” arrested an additional 245 at 60 Wal-Mart stores in 21 states.
The 12 contractors that employed janitors for Wal-Mart plead guilty to criminal charges and paid $4 million to the government.
Wal-Mart, to end the ICE investigations, paid a $11.2 million settlement to the Justice Department.
The story continued. Some of the illegal immigrant janitors arrested at Wal-Mart, filed a class action law suit against Wal-Mart claiming violation of the RICO Act. This long drawn out battle was started by Wal-Mart contractors paying flat amounts between $350-$500 per week for 7 days per week, 60+ hours per week, no overtime, no taxes and no time off.
These contractors were criminal, but Wal-Mart chose repeatedly not to know what they should have known.
Check out the many other ICE enforcement stories on their web site under NEWS, then select WORKSITE for the topic. Interesting reading.
FOR CONTRACTORS THIS MEANS:
- Know your current customers very well – they may be ICE targets, and you with them
- Do your homework on prospective customers – know who you’re committing to
- Always be rigorous in your I-9 practices
- Consider enrolling in IMAGE (ICE Mutual Agreement Between Government and Employers) to lessen the likelihood of I-9 violations
Immigration Enforcement Increases
In the last several years I-9 investigations are increasing. ICE sent out 652 Notices of Inspection (NOIs) on July 1, 2009, compared to 503 in all of 2008.
FOR CONTRACTORS THIS MEANS:
- A more level playing field for I-9 compliant contractors
- An increase in the possibility you’ll be investigated – but likely still a low probability
- Always be rigorous in your I-9 practices
- Consider enrolling in IMAGE
Some Customers Continue to Hire Non-compliant I-9 Contractors
This was the story with Wal-Mart, who has now converted to become a very rigorous vetter of their contractors and subcontractors.
However, there will always be customers who work outside the law’s intent and letter.
FOR CONTRACTORS THIS MEANS:
- Avoid those customers like the plague, because they are
Authorized Workers are Protected
When workers are I-9 eligible and verified for employment they gain the protection of U.S. labor laws.
Compliant contractors want all employers to comply with minimum wages, taxes, and over time pay laws.
FOR CONTRACTORS THIS MEANS:
- A more level playing field for customer pricing
- An employment market freeing you to spend your time more productively
Contractors in the Middle of Changing Compliance
Currently, I-9 compliance doesn’t require verifying the authenticity of individual’s identity document(s).
According to U.S. Citizenship and Immigration Services…
“All U.S. employers must complete and retain a Form I-9 for each individual they hire for employment in the United States. This includes citizens and noncitizens. On the form, the employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and relate to the individual and record the document information on the Form I-9.”
Does the following phrase seem open to interpretation?
“…the employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and relate to the individual…”
It doesn’t say check applicants name and social security numbers with the Social Security Administration.
But that’s one way to resolve the issue – by using E-Verify. It’s the Department of Homeland Security (DHS) and the Social Security Administration (SSA) free online service to match newly hired employees’ names with Social Security numbers.
Heads up, E-Verify is not foolproof. There have been 0.3% of 6.4 million queries in 2009 that have resulted in “No-match”, meaning the names and numbers didn’t match, but later proved incorrect (this meant 19,200 people had delays in getting hired).
As a result, employers get “no-match” letters. And the DHS/SSA are continuing to refine the legal definition and intrepretation of the “no-match” letter program.
Their instructions on what an employer should do, and when, were challenged in 2007 in the U.S. District Court of Northern California.
As a result, it’s not always clear which protocol contractors/employers should follow.
FOR CONTRACTORS THIS MEANS:
- Confer with experienced counsel
- Follow the employer safe harbor procedures announced before the no-match rule was enjoined: (1) within 30 days of receiving a no-match letter, check internal records; (2) within 90 days, ask the employee to go to the SSA or the U.S. Citizenship and Immigration Services to resolve the issue; and (3) within 93 days, complete a new I-9 form (use identification documents other than those that initially created the mismatch.)
But What About?
Here are several questions I’d like to hear from you about, anonymously if you’d like:
- What about your long-term employees that were hired before I-9 had gotten stringent –> Do you go back & E-Verify their SS#s?
- What about accounts where you have lots of employees who may or may not be authorized aliens –> Do you go back & E-Verify their SS#s?
- How would you hire new, eligible employees fast enough to backfill lost employees to I-9 investigations?
~~~~~~~~~~~
Chris Arlen,
President, Revenue-IQ
August 6th, 2009
