This One Little Metric Could Have A Big Impact on Your Wine or Spirits Sales

When it comes to measuring and tracking the right things in the wine & spirits game (KPI’s to those of you pulling on the oars in the belly of corporate slave ships), there are far more options than there used to be. Oh, sure, you still have the old Reagan-era metrics like depletions and accounts sold. No doubt important but not very insightful if you’re looking for deeper understanding into the quality of your distribution. It’s nearly impossible to tell from these rudimentary dimensions if you’ve got the right products in the right places. In fact, for those of you given to impatience, “right places” is very much where I’m headed in this article.

And what about top ten and bottom ten? There are all kinds of ways to apply these whiffle balls (accounts, territories, distributors, states, etc.). But while this is certainly something that’s good to know the best it can do is indicate where YOU’RE doing or (not doing) business. It will never tell you where you SHOULD or should not be doing business. If it was me, I’d much rather learn about the most valuable “white space” accounts, the 20-percenters, the honey holes, the big tunas. Well, who wouldn’t, you might say? Good luck with that, some might say.
Given the unprecedented level of the competition today, it’s a fatal error to assume something can’t be quantified. I encourage all of you reading this to immediately start questioning everything- starting with what you measure and why. Sometimes you’ve got to be like Yoda and unlearn what you have learned. In case you haven’t noticed, we live in a very flat world. Literally everything can be optimized. Now I do think optimization as a concept has been overdone in certain applications (Fitbit comes to mind) but the wine & spirits business can never be accused of going overboard with it.

Which brings me to what I regard as the single most important metric: sales per point of distribution aka velocity. I know for a fact that not all accounts are equal so what I want to know is precisely which accounts are the most unequal – especially on the biggest-bang-for-the-buck end of the spectrum. “Wide and thin” used to be a popular and noble strategy for distribution but with so many more SKU’s chasing much fewer square feet of shelf space, it just isn’t a practical pursuit any longer. Fewer accounts but the RIGHT accounts -now that’s using your noodle.

And with less total points of distribution available, we must pay close attention to the retention and longevity of each placement as well. “Churn” is the mortal enemy of modern distribution and if YOU don’t pay super-close attention to it, you’ll be among its many victims. Churn is the most insidious byproduct of the too many brands / too few distributors dilemma we find ourselves in nowadays and God help you if you’re not monitoring it DAILY. Like cancer cells feed on sugar, so does the distribution machinery feast on churn. And guess where you won’t notice churn? By measuring depletions and account sold, of course.

Once you commit to relentlessly measuring velocity, like proverbial scales falling from your eyes, you’ll notice opportunities everywhere. You’ll begin to see crystal clear correlations like the one between foot traffic and velocity. You’ll see with Clark Kent clarity that certain “attributes” of one high volume account can easily be extrapolated to twenty more just like it. Look, we’ve been so used to relying on distributors for so long now, we’ve forgot how to think (and research) for ourselves. Remember when we used to set goals for “HT and MT” accounts (high traffic and medium traffic)? Maybe people still do, I don’t know. But nowadays you can apply “High Traffic” to just about everything – and you’d be very wise to do so.

Foot traffic is KEY when it comes to high velocity placements. And the data is staring you right in the face. Take on premise accounts, as an example. Restaurants with lots of private dining space and/or outdoor seating have far more foot traffic than an average restaurant. I’m not talking one or two times the traffic. I’m talking factors of ten and twenty times. Have you identified these accounts? Are you tracking them? If you were, you’d already know that these are among the highest sales per point of distribution (velocity) accounts in every market. Why do you think hotels do such high volume? You guessed it: foot traffic. Lots of people. A hotel with 1,000 or more guest rooms and 100,000 or more square feet of meeting space is typically the highest volume account in the city. Hint: they can usually be found near city centers and convention centers. Starting to see the correlation?

A quick side note: to those who say, “That’s great, Ben, but those hotels are all ‘corporate.’” To you I say don’t buy that malarkey for one minute. I spent 17 years as a VP of On-Premise chains for the US. I know from firsthand experience only about 40% of any given hotel’s volume is from the “mandates.” The other 60% is up for grabs, locally. Not only do your distributors know this, they leverage it to the hilt.

I could go on and on with many more examples of high-volume account types driven by high foot traffic (both on and off-premise). The point is if you start paying close attention to velocity, you’ll deepen your appreciation for how powerful this metric is. From there, it won’t be long before you start asking yourself, “Where are the other high traffic accounts where we’re NOT doing business?” Not only is it possible to do more with less, in today’s brutal environment, it’s mandatory.

To Sell More, Stop Doing This

It’s very tempting to focus on trivial, easy-to-measure things like the number of sales calls made each day, week, or month. But routinely keeping a tally of this useless, hollow metric may be the single biggest mistake sales leaders make.

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Keep in mind whatever you measure you get more of. It’s seems simple enough but if you want to get more of something – anything- start measuring it. But, the idea that more sales calls equates to more sales is completely unfounded. In fact, I’d go so far as to say it’s the primary reason most sales teams under perform. The false assumption being made is you can sell something simply by getting in front of someone one time and making a great “pitch.” If that were true, then yes, you should make as many sales calls as you possibly can. But, any salesperson of substance knows this is simply not how it works.

If you begin with the end in mind, the ultimate goal here is to have lots and lots of customers who are truly engaged with your products and brands. To get there, it takes multiple, high-quality interactions with customers before you can fully engage them. Building rapport and relationships is a time consuming process. By emphasizing a certain number of sales per day, you are actually inhibiting or working against this goal. Here are 4 reasons why:

The first problem with measuring the number of sales calls is it does not differentiate between high quality opportunities and low quality opportunities. Not all accounts are equal. This trite and tired metric of number of sales calls can really only measure one thing: effort. But, you can’t take effort to the bank. You can’t pay your bills with effort. You can only take revenue to the bank. “Effort” in and of itself is not a useful metric. What a great recipe for disappointing sales results: treat all customers as if they have the same value and measure the number of sales calls made on this homogenous customer base.

Secondly, the idea that making your salespeople work harder will lead to more sales is ridiculous. If you hired good salespeople to start with, they are most likely already working hard. Putting more pressure on your sales team or requiring a higher volume of work from them will actually hurt your sales – especially from your existing base of great customers which, by the way, is your best source of new distribution and revenue. Instead of focusing on the volume of work being done try looking for ways to improve your sales process and your sales approach.

Third, filling out call reports is a process-heavy task. By “process heavy” I mean time consuming. Time is THE most precious asset a salesperson has. Measuring results, by contrast, takes no time at all. Give your salespeople SMART goals, measure their progress against those goals, and stop worrying about how many sales calls it takes to reach them. There’s a name for salespeople who consistently miss their sales goals: unemployed.

Lastly, measuring the number of sales calls doesn’t tell you much about what’s really going on in the accounts or the marketplace. What if some of those sales calls you tracked were with the wrong people in the account? What if the primary buyer wasn’t present? What if the buyer was present but didn’t like your salesperson or her “pitch?” At best, this metric will give you a false sense of success. What good is a call report jam packed with a bunch of attempted and unproductive sales calls?

From the time you put an account on your target account list until the time they actually buy could be several weeks or months. We call this the “sales cycle.” There’s no set number of “touches” that it will take for them to finally buy (completing the sales cycle). Under-estimating the length of the sales cycle is a huge pitfall most companies make every day. “It takes what it takes” to get a customer to buy something. And whether or not that customer continues to buy from you regularly has everything to do with how they were treated along the way.

So what should you measure? Leading indicators like the number of customers who buy more than one SKU; sales per point of distribution (velocity) and how long a customer has been buying from you. Track real time sales results by sales rep, customer segment, channel of trade and product group. Thank goodness we live in an age when keeping your finger on the pulse of these powerful sales metrics is as easy as a couple of mouse clicks. CRM (Customer Relationship Management) tools allow you to do it 24/7– even on your mobile device. Things that used to be difficult to measure no longer are.

Isn’t it so much better to focus on sales activities that make the most sense rather than something that can easily be measured? Measure what matters. Ignore what doesn’t. Hire great sales people and let them do their job. Stop slowing them down with useless metrics and meaningless call reports. Focus on results, not effort.

Not all Accounts are equal. Not even close.

Very rare indeed is the salesperson and even rarer still the sales leader with the disciplined habit of ignoring most customers.

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They are also the best sales pros on the planet. I’d also say they are the bravest. In order to follow their internal compass and hold fast to their fervent belief that the good truly is the enemy of the best, they must endure a daily barrage of criticism from their bosses. But year after year, they receive their full bonus and grow sales at a greater rate than anyone else on the team so they stick to their guns and continue to prosper.

A quick story from my own experience. Early in my sales career, I took great pride in the fact that I “knew everyone” in the market – especially within my own sales territory. They knew me and I knew them. Lots of them. I would wake up every day with one mission: find a customer who wasn’t doing business with me and go “close” them. Opening up new accounts was the rush. Far more thrilling than the drudgery of servicing the accounts I’d already sold. I believed my sales manager when he said, “No one ever sold anything from the office.” I measured my own success by the volume of my work.

Then one day, I was on the phone with the big boss of a competitor who was thinking of hiring me. Sitting up straighter in my chair, I challenged the interviewer to “ask around about me.” Typical of my ego in those days, I volunteered the fact that I thought there was no better salesman in the territory than me. Unmoved, he replied, “There are better salesmen than you. Several of them.” It was like a punch in my gut and all I could think of was to ask, “Who? Give me a name?” And so he did.

Now, the punch line of this story is I had never heard of this man. Didn’t have a clue who he was. I then launched into a self-indulgent tirade slathered in righteous indignation. “How could he be such a great salesperson if I’d never heard of him? Why have I never run into him? I’m on the street every day!” That day I set out on a mission to find this man (we’ll call him Bob) and find out what made him, allegedly, so much better than me.

I did indeed find out why Bob was so much better than me and it caused a profound change in my selling style and philosophy that has stuck with me to this day. While the rest of us undisciplined fools were running around the marketplace like headless poultry chasing down anything that moved and naively confusing activity with achievement, Bob was in his office. He was studying, analyzing, and preparing. While I and my hapless peers executed a “fire now-aim later” approach, Bob practiced a ready-ready-aim-aim-aim-fire” style. Bob was a big game hunter. While I saw 10 customers in a day (and sold 6 or 8 cases), Bob saw maybe 2-3 customers a week. But since he had prequalified them as being the very largest customers, he often walked out with orders of 1,000-2,000 cases at a time. Bob understood that not all accounts are equal. Not even close. If fact 80% of the business was being done by 20% of the customers. Bob ignored the 80%, and, instead, focused his time (including preparation time) on the 20% exclusively.

I had never heard of Bob before that job interview and he had certainly never heard of me. Up until that time, I behaved like most salespeople do today. I placed a high value on things like effort, # of sales calls made per day, # of accounts sold, and hard work. I was the busiest person you ever saw. And, in case you didn’t notice, I would tell you about it.

Bob, by contrast, placed the highest possible value on his time. He was very miserly with his time because a) he understood it was limited and b) he expected the maximum return for it. By taking extra time to prepare to sell, his closing ratio was 8-10 times higher than mine. By narrowing the focus of his customer base to only the most attractive accounts in the market, he sold 10-20 times more than me. He blew away his goals every year and received his full bonus every year.

It is a sad (but true) indictment on the typical sales department that we tend to reward personal sacrifice instead of personal productivity. We know this because we like to measure the quantity of work (# sales calls, # of days in the field, etc.) rather than the quality (the end result). How you reach your sales quota should not be nearly as important as IF you reach your sales quote. But, ask most sales people today and you’ll hear horror stories about being micro-managed by their sales leaders. I’ll save this for another blog post, but whatever you measure you’ll get more of. Want more sales calls? Measure # of sales calls. Want more sales? Measure results.

Ignoring 80% of the customer base is very difficult. No question about it. But it is the absolute key to dramatically accelerating salesforce performance! If salespeople are to sharpen the focus of their sales activity to only the most attractive accounts, their sales leaders will have to insist on it. Salespeople who operate this way on their own are extremely rare. Left to their own devices, most salespeople will behave more like the “Ben” in this story than the “Bob.” Moving from Ben’s intuitive approach that says, “Just do it” to Bob’s more systematic approach that considers account sales potential as a key determinant to success must be done intentionally. It won’t happen on its own.

We’re talking a major shift in sales culture and sales philosophy here. So, a good next step is to ask yourself: do you want good results or do you want great results? It is not only possible to accomplish more by doing less, it is mandatory. Time to start focusing on results instead of dedication. And, as always, I’m here to help if you need me.

5 Ways to Stop “Heat Loss” in Your Sales Process

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Last summer I was doing some research for a speech I was giving about the role of technology in the “flavor experience.” I was fascinated by the latest advancements in commercial cooktops. With the old way of cooking, you light a gas burner and place the pot or pan on the flame to heat the contents. In the new way of cooking, vessels are heated via magnetic induction. Not only can you achieve rapid increases in temperature, but there is virtually zero “heat loss” and more “thermal efficiency.”  It turns out when you use an open gas flame, 70-80% of the usable heat is lost into the environment. Only 20-30% of the heat makes it to the pot or pan.

Ever since I’ve learned this, I’ve been relating this phenomenon to “heat loss” in the context of selling. Just stop and think for a moment how much energy is wasted by the average sales team: by pursuing low value customers, by failing to keep track of every last detail, and from poor follow up. What if the same “heat loss” percentages that apply to conventional cooktops also applied to conventional sales teams? That got me thinking about the importance of identifying (and then drastically reducing) the “leaks.”

If you want a 1-to-1 return on your time, money and energy, (zero heat loss), you need to first identify the specific areas where heat loss is occurring. Here are five of the most common ways to stop value leakage in your organization and maximize the high cost of having a sales team.

1)      Stop treating all customers as if they had the same value to your organization.

Failure to embrace the 80/20 rule may be the single biggest source of heat loss for a sales organization. You must put in the time and research to identify the most attractive and responsive accounts. Focus the majority of your time and energy where it will make the biggest impact to your organization. Identifying the best prospects should never be a matter of opinion or “gut feel.” The DATA will tell you where to aim so aim precisely!

2)      Set specific goals and have a system by which to measure progress against them.

One of our firm’s strategic partners is GreatVines, a CRM provider with over 10,000 sales users. Tim Jones the Co-Founder likes to ask, “What 3 strategic initiatives must we execute to ultimately achieve our goals?” Tim goes on to say you need KPI’s that are true leading indicators (as opposed to lagging indicators). Eliminate heat loss by making sure your goals and key measurements are perfectly aligned with your business objectives.

3)      Track every last detail of ALL conversations, activities, events, and commitments- with your mobile device.

Let me be 100% clear about something. It is 2016. If you are not using a cloud-based CRM system in your organization, you are experiencing major heat loss! Maybe you are currently keeping track of details but how are you doing it? In Excel spreadsheets? In Outlook? God forbid, on a legal pad? Even if you’re diligent about it, it’s impossible to share that information across your entire organization. Meanwhile, your competitors are doing all of this seamlessly – with their cell phones and tablets. We live in a world where nothing should ever fall through the cracks. Zero heat loss. Feel free to join the rest of us at any time.

4)      Systematize collaboration across your organization.

Ask yourself this question and give yourself an honest answer: “Is teamwork elevated to an exalted status at my company or is it seen by most as a hindrance to productivity?” Do people share info & resources or hoard it? Great gobs of heat loss occur every day because companies have neither the culture nor the technology to collaborate across functional lines. I challenge you to take 1 hour of your day to research two things: a) why so many companies utilize popular collaboration apps like Slack, Base Camp, and Chatter and b) the benefits of having a cloud-based CRM system. The ultimate goal here is to pursue and retain the best customers faster and with greater ease – with zero heat loss!

5)      Don’t step over a dollar to pick up a dime.

One of my favorite sayings is “You can’t save your way to prosperity.” I see many companies paying the equivalent of $100 per hour to a top tier sales pro and then asking him or her to do $20 per hour administrative work. Much heat loss is experienced when salespeople do not have adequate tools and support to do their jobs. I’m not talking so much of admin support people as I am providing your sales team with the latest technology tools (and the training in how to use them effectively). These tools not only cut down dramatically on the amount of time spent on administrative tasks but they provide rich, actionable data to everyone in the organization. Why should a salesperson spend an hour preparing reports and updates to his manager or his marketing team when the info can easily be only a few mouse clicks away? Is CRM expensive? “Expensive” is a relative term and the only way to answer the question is to ask a another question: what is the return on capital invested?

I hope this post has caused you to think more deeply about ways to identify “heat loss” in your sales organization. Identifying them and taking steps to reduce them is a very cost effective way to do more with less. There’s an old Vaudeville joke about a guy who goes to the doctor complaining about a sharp pain in his eye every time he drinks coffee. The doctor replies, “Take the spoon out of the cup.” Start looking for the spoons in your organization.