Transcript

Introduction: The Power of Standard Sales Work

[0:00] And it's just like Adam Smith's pin factory. We intuitively know that a cobbler making pins is slower than 10 people making pins in standard work and single piece flow.
And so that's what this is to sales is imagine how much more throughput you can have through your sales organization with standard work, single piece flow and a quick way to understand which deals are moving forward and which deals are not.
Welcome to the Full Funnel Freedom Podcast. If you are listening to this, you are likely leading a team responsible for generating revenue.
Purpose of Full Funnel Freedom is to support people like yourself and keep your.

[0:43] Music.

[0:43] Funnels consistently, reliably full.
Welcome to the Full Funnel Freedom Podcast. I'm your host, Hamish Tanox.
Today, I am delighted to have Kirk Nelson on the podcast to tell us about a journey he went through with an an organization that was running out of cash, and they realized the constraint was their traditional sales model.

[1:06] Kirk is a native of Boston, currently living in Elon, North Carolina, where he and his wife raised their family.
Kirk has spent most of his career in a direct sales role or sales leadership, designing and implementing promotions and sales processes.
Kirk is currently between roles, having just left a marketing and product management role at Glory Global Solutions. Kirk, welcome to Full Funnel Freedom.
Thank you. It's good to be here. I appreciate the opportunity to talk about what we did, because I think it's pretty unique.

ARCA's Growth and Struggles in the Teller Cash Recycler Market

[1:31] Yeah, we talked about it offline. And it was really fascinating that, you know, the business I think you shared with me at the time was theoretically growing, but it was also running out of cash.
And there's that whole cash versus revenue thing.
And so you and the senior leadership team sat down and you had a resource that you read that sort of inspired a series of conversations. So take us back to that time.
And tell us the story, please. So the company was ARCA.
ARCA is now part of Sesame and the acquisition happened a year or two ago.
And we had at that time grown the company from roughly a million dollars in revenue in 2001 to about 23 or 24 million in revenue.
And we were stuck at that number. We couldn't grow.
And in our key segment, which was teller cash recyclers for financial institutions, institutions, we couldn't grow.
And we were struggling. We had tried all sorts of different direct and indirect traditional selling techniques.

[2:31] And I had read some of the materials from Justin Rothmarsh, his sales process engineering book, and then his book, The Machine.
And we brought Justin in in early 2012 to help us design a disruptive sales model. Now, we were.

Transitioning to a Disruptive Sales Model for Increased Sales Opportunities

[2:48] We were ready in many respects. There was a receptive market.
We had standard solutions, which could be deployed turnkey.
We had a willing partnership with a variety of banking equipment dealers to act as our service organization.
So we had a market that was ready. There was no constraint there.
Our constraint, frankly, was we didn't have enough sales.
We didn't have enough business opportunities coming into the pipeline that would allow us to have enough deals to move them forward.
We knew that when we got in front of a customer, we could win.
And so what did we do? We had eight salespeople in very traditional geographic territories.
The salespeople were responsible for all of the work of sales from prospecting, going to customer meetings. They even got involved in the post-sales training.
In fact, one of the things we learned was the worst thing our salespeople could do was win a deal because they'd spend the next 12 weeks doing deployment activities around that deal and they would stop all the other work.
So what we found was we measured everything.
We found that our eight outside salespeople between them could generate two business development meetings a week total.

[4:01] So the company had a total of about 110 business development meetings a year, which I think was, given the scale of our sales organization, probably about normal.
And where did we end up? We ended up with two outside salespeople rather than eight.
And those two outside salespeople would generate 30 or more.
Well, we're generated for them 30 or more business development meetings a week. Wow.
So we dramatically increased the number of meetings every week.
And so what how did we do that?
Well, we had read the machine from Justin Roth Marsh We did a workshop with Justin and we completely redesigned our sales process so that the sales people.

[4:42] Became our key resource and what do we want sales people to do?
We want them to attend meetings to move the deal forward And our sales people could only talk about price terms and conditions and their main job was to understand the buying process of the customer customer and could not talk about the solution.
And so we took went from eight outside salespeople to two.
But then we took the six other outside salespeople and redeployed them as technical experts, the solution experts.
And they were the ones that could not talk about price terms and conditions.
They could only talk about the solution.
And then each of the outside salespeople was paired with a sales coordinator, someone to manage the calendar, and a promotions coordinator, someone to drive promotions.
So the other shift we made was from a traditional slow marketing model, websites, brochures, trade shows, to an extremely active promotions model.
Because if we're now suddenly going to try to do 30 or 40 business development meetings a week, we have to have a pipeline.
And so we spent a lot of time understanding our target market.
We went to places where our competition didn't or only sold through channel.

[5:56] And we stopped being involved with deals where we were the rabbit, right?
Where we were the third company invited to a deal and our goal and the bank or the credit union's purpose for inviting us in was simply to get the price lowered, right?
They had no intention of ever buying from us. You're the only company that's ever happened to you, Kirk. We're the only company that's ever happened to me.

[6:19] You're the only person that has ever had that experience. I used to joke with our CEO that the key to success was to start losing better quality deals and then once we figured out how to win those better quality deals, we'd move, So our sales organization changed tremendously. We had two outside salespeople.

Centralized Sales Management and Efficient Sales Processes

[6:39] They were centrally managed.
So their calendars were managed by their sales coordinators who worked with me.
So I could monitor the entire process from our offices in Med.
And I knew what was going on with every deal.
The salespeople didn't have to touch CRM. They didn't have to book any appointments.
They had to go to meetings that were scheduled for them and do the things that salespeople love to do, which is to talk about the company, to talk about the types of problems we can solve and to move the deals forward.
And then they got to negotiate price terms and conditions.
So that's the first bite of the apple. If you're a salesperson, the sales coordinator booked their meetings, the sales coordinator updated the CRM and the promotions coordinator kept the flow of deals into the top of their funnel. Wow.
Additionally. So, so when we started to to solve that problem of being able to generate these meetings.
And the promotions team was really the key to that, right? Developing the list, promoting, and then the follow-up phone calls to those promotions.

[7:42] We were able to suddenly see our sales process take us from a 500 to 600 day sales cycle down to roughly a 60 or 70 day sales cycle.
And yes, yeah, we had a tenfold increase in our decrease in our sales cycle simply because the process eliminates the waste of waiting right so you know you'd get a business card at a trade show you'd wait a week you'd enter it in the crm you'd follow up the week after and when we had our process running at full speed the sales people weren't at the trade shows the promotions people and the sales coordinators and others were and they would be booking those meetings right out of the trade show booth And so, again, eliminate all that waste of waiting.

Solution Development Workshops and Socratic Selling Methodology

[8:26] So what happened? The salesperson would go out, have the first appointment.
The goal of that first appointment, the offer, was a solution development workshop with one of the technical experts.
And so the salespeople would go in and here we use the Socratic selling methodology.
I'd send them in with a blank 11 by 17. And that had four quadrants in it.
The who quadrant, who am I talking to?
This is all Miller-Hyman understanding the different roles in the buying process, understanding how the customer acquires technology.

[8:57] Why am I here? Right. What are the problems you're dealing with?
And this is an area now where you can also propose some problems.
So if there are a bunch of standard problems that we know how to solve and the customer hasn't mentioned a couple of them, you can interject and you can say, how much, what do you think? Do you ever have this problem?
Do you ever have this other problem? And they'll go, yes. And you'll say, well, you know, these types of solutions can address those problems too.
So you can grow the problem set. And if you grow the problem set, you're adding more value. Totally. Then we'll lower left.
What have you tried? This is the, you know, if you if you've got these problems and you've tried something, clearly, whatever you're trying is failing because I'm here.

Learning from Internal Struggles and Competition

[9:42] And so what have you tried? And this is an opportunity to understand an awful lot about what the real internal struggles of the organization are and also to understand what our competition is doing. done.
All sorts of problems came up here. And we learned an awful lot about the marketplace and how to do a better job of solving problems, primarily by being easier to work with.
And then the lower right, what does success look like?
And so coming out of that meeting, and again, success, you could start to propose some things.
If they missed some key metrics that we thought were important, we would propose them. And again, grow the solution.
Because if you can grow the solution, you're adding more value, the customer's willingness to pay goes up.
So coming out of that meeting, our salespeople would say, you know what?
These are types of problems we see a lot.
I'm going to suggest a solution development workshop with one of our experts, one of our engineering experts. And then that's it. The meeting's done.
And the next meeting, scheduled again by the sales coordinator, but with the solution engineer, that's the solution development workshop.
And the salesperson doesn't even have to go to that because that whole process of the solution development workshop is.

[10:53] They come in, they take that A3 or 11 by 17, and once the customer agrees that the proposed solution solves their problems and helps them achieve their goals, then and only then will we negotiate a price.
So our salespeople were going in to the two business development meetings a week the organization could get, and they would have a preconceived notion of what the solution should be, and they'd immediately cough up a price.
They'd say you know you need this widget with this piece of software and that will be x dollars without any understanding of the customer's problems or at least creating the impression that you were interested in the customer's problem absolutely because let's face it you know we had four or five standard solutions and one of those would typically solve the problem but i knew we had succeeded when our solution experts felt comfortable recommending competitors solutions because our equipment couldn't do the job.
And we made it a very safe environment for the solution experts to recommend what was best for the customer. So that was pretty exciting.
So what did we get? We needed more meetings, we needed to go faster.

[12:05] We changed the way we sell to a Socratic methodology that was inductive, ask questions.
Now this was not done, you know, we knew the questions we were gonna ask, we knew the types of things we could propose. So this wasn't done aimlessly.
This was done in a very structured way, very organized way.
And then we would let the customer sell themselves because they would see our proposal, see our solution, agree that it achieved all of their goals.
And then at that point, the price terms and conditions are pretty perfunctory.
Especially in the market segments we were targeting, which was community banks and credit unions and smaller financial institutions where our competition typically sold through channel partners rather than direct and where we were able to offer more value. you.
And so that was a pretty exciting time. And the business grew tremendously.
So we went, the overall business grew from 25 million to over 70 million in a little over three years.
And the direct revenue went from 2.6 million to 24 million in that same time.
And then we also grew our channel revenue because creating these business opportunities allowed us when we thought that the customer would be better served by a channel partner to route the deals through the channel and the channel was delighted by that and that business grew from five million to over twenty million in the same timeframe.

[13:28] So we dramatically grew our channel business, dramatically grew our direct business.
And then that put ARCA in a position to ultimately be acquired last year by Sesame, which was very exciting to add that kind of value to the system.
And the numbers, you know, with a standard process, you're also able to scale.
So we had a well understood standard process.
We would only sell solutions that were turnkey. If somebody wanted something custom, if somebody wanted something that was nonstandard, that would get taken away from the sales team and sent to the engineering department.
And a decision would be made about whether or not we should do those things.
There's nothing slows you down more than the customer saying, but can you do this?
And then you get the whole organization tied up and trying to do something that's outside of the standard solution.
And so we took that out of sales. We took repeat sales out of sales.
Sales only dealt with net new business operations and account management were responsible for all of the follow-on revenues so the salespeople would acquire an account and then that account would be handed to the account manager the salespeople would only go back into that account if we had something new to sell or if our offer had changed and we needed those sales skills reducing our sales cycle by 90% has an amazing impact you can touch a lot more deals and so So the last thing we did to understand our process is we brought in an expert in probability.

[14:57] Because we'd had enough of statistics.
We know how to manage a funnel with statistics.
What I really wanted to know is if we know certain information by a certain point in the deal, can we know that we will win the deal?
Got it. Nobody believes these numbers, but we knew that because we had targeted our market segments segments correctly because we were doing our promotions and marketing correctly.
We knew that if we could get a solution development workshop, we had something like an 80% chance of winning. That's amazing. And so we did.
It was the only time that I've ever, as a sales leader, been able to accurately forecast because we knew the numbers coming out of each stage of the funnel.
And then we got to decide, right? Our salespeople were fully utilized, each one.

[15:46] Had at least 20 meetings a week. And now we decide, do we want to add a third team?
And then we say, well, the demand isn't necessarily there.
Do we want to do some marketing in other areas and then scale up with a whole new team?
And the whole new team is a salesperson, a sales coordinator, and a promotions coordinator.
Because we never got to a point where our solution experts were fully utilized.
We had a lot of slack there.

[16:11] And so we were able to do solution development workshops very quickly.
And they even got to a point where they were able to do them remotely, which became really important during COVID.
Fair enough. So there we had a business that went from two business development meetings a week to 30 or more.
I believe at the time that made us the leading generator of business opportunities in our market.
And that had a dramatic impact on revenue, right? Because what we did was we focused on the deals which which were going forward.
So every deal was reviewed every week. And the question, my key question as the sales leader was, is there a next action with a date that the customers agreed to?
And if the answer was no, we'd flag that as a dead deal.
And so that had a dramatic impact on the funnel as well.
You can imagine because most sales organizations have a lot of dead deals whopping.

[17:05] There are organizations that have a target for the salespeople.
The salesperson's its funnel has to be a certain percentage of that target.
And that creates a perverse incentive to keep deals alive when everyone knows those deals are dead.
And so I did the exact opposite. I created an incentive to, to mark deals as dead because we had so much flow into the funnel that, boy, if the customer's not playing ball with us, let's deprioritize that deal.
And so we'd mark the opportunity as dead and we'd put the customer back into a normal promotion cycle with the expectation that they would come around the horn again at some point.

[17:43] We refused to be the rabbit. You get a call from a bank saying we'd like a quote on these recyclers. I'll say, well, fine.

[17:51] We'll send a salesperson out for the first appointment next week and they're like no no no no no no we just want to quote and say well we won't do that right we wouldn't work with the top 20 banks or credit units we just wouldn't work with them especially because they all want something custom nothing's turned got it and so again to keep the sales people focused on deals we can win we excluded the top 20 banks and we went where the competition wasn't and that means that we had to get profitable on fewer units.
When we started this process, our cost of customer acquisition was around $30,000.
And that meant we had to sell them quite a few units to be profitable on that particular deal.
We eventually got our cost of customer acquisition down to under $10,000.
And that meant we could actually be profitable on a single unit deal.
And so for me, this became a job of understanding the the numbers, understanding the probabilities of a win, and then really working with the promotions team to make sure we had enough appointments coming that we could keep the salespeople both at 20 plus meetings per week.
And then we're able to say, okay, each meeting is worth Y amount of dollars.
Because if our revenue was X, and that revenue came from these hundreds of business meetings we could put a number on that and start to count that as inventory so we plan meetings eight ten twelve weeks out.

Transforming the Company and Achieving Success

[19:19] And so i was able to report to the senior management that based on the number of meetings we had in the next 12 weeks that was worth this much in terms of revenue to the company absolutely he had that predictability exactly exactly exactly so it was a really exciting time and to um you know it was a nantucket sleigh ride if you're familiar with that we we we harpooned the whale and then it was off to the races for three or four years but it transformed the company it allowed allowed ARCA to acquire one of its vendors, allowed ARCA to become a global organization instead of United States and Canada, and ultimately for the founders to have a successful exit to Sesame.
So I'm very proud to have contributed to that.
Sales leaders, AI is here, and it means that sales is evolving. Is your sales team?
Download our new guide on AI and sales, and you will learn how to support your sellers in leveraging AI to to gain a competitive advantage, communicate more effectively with their buyers, and ultimately sell more with less effort.
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Transforming a company with hidden challenges into success

[20:34] I love it. Well, thank you for sharing. What a great story for our listeners today to hear how you can take a company that theoretically looks good, you know, at least on a revenue perspective, but has some pretty serious challenges underneath the surface.
And really, as you've identified, transform that organization where there's predictability, where there is significant growth, not only in the direct sales.
I'm glad you highlighted the channel model because channel is very important.
And sometimes that relationship can get really, really sticky.
So I always tell our salespeople that when the channel was involved is try to bring it to the channel because the channel can sell more by accident than we can sell on purpose.
Amen, brother. Amen. I love that. So a couple of quick questions for you.
Now, you've certainly mentioned The Machine by Justin Roof Marsh.
I've read that book. Justin's been a guest on the Full Funnel Freedom podcast previously.

[21:27] What else have you read, watched, listened to, whether it's recently or in the past that you would encourage the audience of sales leaders to check out to further their own learning?
So I think the number one sales team, I forget the author, but I've got several well-thumbed copies.
And that's what I use for managing the sales people.
And that's where the idea of questioning them about what's the next action with a date that the customers agree to and understanding the different funnel stages we would use.
And so that's the number one sales team. I think it's by Schiffman. Okay.
We'll put a link to that in the show notes. He's a well-known author in inside sales that's a great book frankly a lot of lean stuff right the machine that changed the world and other lean thinking and then three or four books on Socratic selling if you go to amazon.com and just google in Socratic selling I think that's a great methodology because it's it's inductive.

[22:24] You're never telling the customer what you think they need to hear.
You're asking them questions and then you're teeing up your solution expert to come in and propose the right solution to match those questions.
And so our our customers had a very odd experience with us.
They had been used to being sold and we came in and we were doing the exact opposite.
We're trying to understand their problems and then be very genuine to say, do we have a solution that will fit that problem? Absolutely.
Something we teach our clients to do as well. Exactly. Exactly.

[22:56] And yes, certainly giving those referrals to the competitors raise that credibility because ultimately I know for some of our clients where they've done that and then the buyer comes back and goes, hey, I appreciate you did that and it didn't go very well. Can we have a conversation?
And ultimately our clients have closed that business. So last question for you, Kirk, today is aside from all the amazing ideas and insights you've already given us.
What is a closing bit of wisdom, a final thought, something to plug, the floor is yours.

The importance of being brave and making bold decisions

[23:23] Well, you've got to be brave because one of the things that we did is we took everybody off commissions and we put everybody on a salary.
Now it was a generous salary and the salary we assumed for the establishment of the salaries that everybody hit their sales target.
So everybody got a very big raise in year one. That was expensive to the organization, but now we we had a capped cost of sales we knew what the sales organization was going to cost us right and so you've got to be brave you've got to be willing to go out there and take an approach that is different than everybody else in your industry or in your segment because i promise you there are very few sales organizations that are willing to have the commission conversation and take commissions off the table but once you've taken commissions off the table you are now created a safe place for your people to operate.

[24:17] And you've also created a place where you can go out and start to experiment on how to lose.
So if we needed to know what the price ceiling was, I'd tell the sales team to go out there and start raising the price until we lost the deal on price.
And it turns out there was a lot more headroom out there than we thought.

[24:34] And so I think this is not something that can be implemented by the sales organization without significant support of the executive team and the board.
And they've got to be brave.
And it's just like Adam Smith's pin factory.
We intuitively know that a cobbler making pins is slower than 10 people making pins in standard work and single piece flow.
And so that's what this is to sales is imagine how much more throughput you can have through your sales organization with standard work, single piece flow and a quick way to understand which deals are moving forward and which deals are not.
Love it. What a great way to wrap us up. Kirk, I had a blast chatting with you today.
Thank you very much for sharing your story and for being a guest on Full Funnel Freedom today. My pleasure. It's nice to be here. Thank you.
Sales leaders, that was an incredible story that Kirk shared with us about how everything looked good on the surface in terms of revenue, but there were some pretty serious challenges underneath on the sales side.
My big takeaways from that conversation today, number one, know your niche.

[25:42] Something that Kirk said that really stood out to me is they would not work with the top 20 banks who were their target.
And for a lot of organizations, they all want to chase those elephants and they want to say that we work with this logo and that logo and this logo and that logo.
However, ultimately for them, they knew that if they were going to get bogged down in custom solutions, that was going to really affect the success of their organization. Now.

[26:10] Ultimately know your niche means make a choice. And that's something that I know our clients have struggled with when they first start working with my team and I is they're like, well, we have to say no.
Yeah, you're going to have to say no because if you say yes to everybody, you're ultimately going to run your business into the ground.
The other big takeaway was around predictability.
A colleague of mine was working with a $100 million company down in the southern in the United States, their 30, 60, 90 day sales pipeline was 84% accurate.
So 84 cents of every dollar in their 30, 60, 90 went in their bank account.
And that was because they had process and systems locked down and that everybody followed so that they knew if something went in that 30, 60, 90, 84% of the time it was coming across the finish line.
And then lastly, that idea of asking questions, right?
I coach all of my clients to gather more information than they give and those questions around, you know, who are they?
We coach the sellers we work with and the sales leader should ask, who's the cast of characters, right?
Who's all involved in this conversation?

[27:20] The why, one of the other core beliefs to instill in your sellers is no one invites a seller in without a reason.
If one of our sellers has booked a meeting with a buyer, the buyer has a reason for inviting that seller in.
That's not just to hear about features and benefits or to get a price quote.
Although as Kirk said, maybe that was the case and we want to suss that out on the phone.
Also understanding what have they tried before? Because ultimately we are all commodities in the minds of our buyers.
And if we don't differentiate on how we sell, not what we sell, our buyer is going to look at what the solution our seller proposes and goes, yeah, we already tried that. Why are you wasting my time?
And now Now our sellers lost credibility and we might actually be kicked out of that and opportunity to work with that buyer for a long period of time.
And then the other key question, and I coach people.

[28:08] Sellers and sales leaders to ask this question very early on.
What does success look like to you? Or what is your vision of the solution?
Every buyer has a vision of the solution that they want before they interact with a seller.
And that's getting more and more true as more and more information gets online.
So when you're hiring sellers, ask them a question. What does success look like to you in this role?
Have your sellers go out and ask their buyers very early on, One, what does success look like to you in terms of solving these problems?
Or what's your vision of the solution for these problems to be solved?
Gathering that information up front not only differentiates us on how we sell, not what we sell, it also helps our seller understand if there are some potential yellow or red flags to working with this buyer.
Because sometimes the vision that the buyer has doesn't make sense in the real world.
And if we don't ask that question and we blindly go through a sales cycle and then show up with a proposal and that in no way matches the buyer's vision, even though the buyer's vision cannot be done, ultimately we lose credibility.
We waste a ton of time and the predictability in our sales funnel goes down.
Let me know what your big takeaways were on our social media.
Until we connect on the next episode, go create full funnel freedom.

[29:27] Thanks for listening to today's episode of the Full Funnel Freedom Podcast. podcast.
You can continue to support us by leaving us a review and a rating, sharing this episode with a couple of sales leaders in your network who you care about.
I'd love to connect with you. I'm easy to find Hamish Knox on LinkedIn.
Also, if you'd like a free 15 minute call with me, go to www.hamish.sandler.com forward slash how to Sandler.
Until we connect on the next episode, go create full funnel freedom.

[30:00] Music.