Years ago, I had the privilege to meet Hank Johnston, a former EDS executive. Hank was recruited as a board member for our technology company. Our CEO sent him my way to learn about our sales organization. When Hank showed up to my office, I thought it must be a joke. He had jeans, boots, a plaid shirt with snaps, and a belt buckle that screamed “Texas”. (Not the word, just the size.) In the end, Hank taught me a lesson about judging a book by its cover, and a lot more.
Hank sat down and proceeded to explore our sales model and the outcomes. I could tell by the grimaces, raised eyebrows, and head shaking he wasn’t impressed with our approach or key metrics including average contract value, large deal size and discounting practices.
When he was done grilling me, he said, “Kevin, do you mind if I make an observation?” I gave a nod with my head, Hank continued, “Y’all are a bunch of coal miners in a gold mine!”
I’m sure my face was red with anger. I felt certain he insulted our sales organization, and every fiber in my body was on fire with rage. Before I had the chance to blurt out something I would regret, somewhere in the frontal lobe of my mind, a simple question formed; “What do you mean by that?” To this day, I’m still surprised I said it out loud given the strong emotional reaction I was experiencing. Hank smiled his approval at my curiosity.
Hank went on to paint a verbal picture that has stuck with me for years. He said, “Every day your sales people go to work through this long, dark tunnel in order to hack a few hundred dollars’ worth of coal out of the walls. On their way, they keep tripping over these large yellow rocks. In order to make their path smoother, they kick the yellow rocks out of the way. What they don’t realize is those yellow rocks are gold. They’ve been mining coal for so long they don’t recognize gold when it’s staring them in the face.”
Hank could tell I “got it”. He smiled as the concept cemented itself in my mind. Then, we engaged in a longer conversation about how to turn coal miners into gold miners. Although Hank got up and left my office, my journey had just begun. Our coal mining sales organization transformed into a gold mining team within a few short months.
In retrospect, we executed on a major exercise in sales agility. We learned to call on more powerful stakeholders outside of I.T. We learned how to leverage a wider product portfolio and introduce services as a game changing differentiator in the face of competition. And we learned how to uncover the value proposition that could motivate our new stakeholders to take action on our behalf. As a result, our largest deal sizes quadrupled, discounting dropped by 50%, and we continued on the path to raise the average productivity per rep from $1.4M per year to over $10M per year.
In the years since my introduction to Hank, I’ve had the privilege to bring these lessons in sales agility to sales teams around the world. Cisco learned how to box Juniper into a corner by bringing the conversation to the business side of the opportunity. Dell used it to expand the product line into servers, storage and services, successfully executing a multi-billion dollar growth opportunity. And most recently, Polycom has used it to learn how to create opportunities outside the grasp of I.T., delivering market share gains in a business surrounded by free alternatives.
In a recent example, Polycom engaged a regional bank and asked about the biggest problem they were facing in their business. The executive in the bank was happy to share. They had 110 branches, but only about 50 loan officers. If a potential customer walked into a branch looking for a loan, there was almost a 50% chance they would walk out without any help. Polycom proposed installing a video collaboration solution in every bank, making a loan officer available in every circumstance. After a short time period, they discovered that one loan officer could actually support upwards of ten branches and still generate more business than sitting in one branch by themselves. The bank was able to restructure their staffing, saving millions, and improved their loan business substantially. That’s gold mining!
If you look at a typical operating statement for most publicly held companies, I.T. is usually allocated about 2% of the overall budget. Compare that to upwards of 50% of revenue allocated for the combined sales, marketing and general administration budget. Where would you rather hunt for a sale? Most technology sales organizations sell to I.T. as if it’s the only way. As a result, they spend tons of resources on long evaluations, face a high number of no decision outcomes, get small orders, and not a single thank you for improving the customer’s business.
Is your sales team ready to learn how to gold mine?