How a Dedicated Sales Force Can Bring Your Professional Firm to Its Knees

by Tom "Bald Dog" Varjan, Organisational Provocateur

Many service professionals are dreaming of the day when they can hire some commission-based sales people, who can take care of "dirty" sales matters, while the professionals can focus on "professional" issues, like delivering the service.

And managers at some firms are so everlastingly stupid, that, to make bookkeeping simpler, they hire salespeople as contractors on 100% commission.

I am working with an information technology firm that is in the middle of transforming from "fixing boxes" to "information technology consulting".

Both the owners the managers and the people are a real bliss to work with, but we have an issue about the sales force. While in the business of fixing boxes, the firm maintained a dedicated sales force that was pounding pavements, dialling for dollars and barging through "No Solicitors" signs on a daily basis, it is just complete nonsense to sustain when transforming to consulting. They wanted to save on marketing, so they just went out and were selling "fixing".

But now they want to work as consultants, that is, fiduciaries selling care, protection and guidance, but have a hard time to realise that selling through a dedicated sales force would do more harm than help.

In my experience, while selling through a dedicated sales force works nicely in selling "things", it is a call for disaster in professional firms.

In general, accountants understand it, so do lawyers and medical professionals. But there is a problem with, among others, information technology consulting firms that try to pose as consultants but they hand over the selling (a.k.a. relationship-building) part of the business to a dedicated sales force with an average annual attrition rate of 43%.

Is it surprising then that industries like information technology, fitness and Internet-related services can never achieve the "trusted advisor" status because they build relationships using mercenaries they have just hired off the streets either on a commission or minimum wage basis. And why is that?

Simple.

Firm partners and top executives don't want to be accountable for growing the business, so they abdicate it to these sales mercenaries with quotas and demands to perform. So, what is the problem? These sales people are highly volatile and, due to the nature of their roles, have a very low sense of care to build a relationship. They are paid to "close", which may be all right peddling bibles or encyclopaedias, but is an absolute no-no in building a trust-based relationship to sell consulting services.

Considering that a client is someone who is under the care and protection of a professional, then ask yourself this question, "Can we achieve this perception by the way we operate?"

There is a huge difference between responding to bids and creating a natural demand, a sort of "buyer's gravity" for your services. Commissioned sales people can do the former, but only people who are part of the firm's structure and culture can do the latter.

There are four main reasons that make selling professional services diametrically different from selling "things". So, let's take them apart one by one:

1. Buying services usually involves longer buying cycles


2. Buying services usually involves higher investment


3. Buying services usually has no tangible deliverables, only a future improvement in the client's condition through care, protection and guidance


4. Products are bought by customers, but services are bought by clients

1. Longer Buying Cycles

People who are used to selling "things" have learnt that in traditional sales you prospect, set the appointment, present and close. Then take the order and the money and move on to the next customer. In my view, selling professional services is a totally different ked of worms, thus it needs a totally different approach.

It may well take several meetings to define the objectives and the scope of the project. It may take a couple of presentations or an extensive test drive to initiate commencement, and it all takes time. It can take months or even years to turn an interested prospect into a paying client.

Nevertheless, regardless of the length of the buying cycle, you must say in touch with prospects and wait for the moment when they are ready and willing to move forward.

Many service firms hire dedicated sales people for this purpose, hoping that the sales force will take care of this nurturing process, so the professionals can get on with their normal daily work.

There is one problem here: Providing services requires trust-based relationships. Essentially clients buy care, protection and guidance.

But look at what happens in the traditional sales force driven professional firm.

Trust builds up between the salesperson and the prospect. When, after converting the prospect into a paying client, the salesperson disappears and the technical - IT, fitness, etc. - experts appear and trust often goes down the toilet.

Prospects say, "Do you mean that after getting to know me and taking my money you relegate me to someone who I don't know and who doesn't know me and my business? Thanks but no thanks. I want my money back and I'm out of here.

There is also another problem here. Most firms want to compensate their salespeople with commissions, which focuses short-term financial gain.

The problem is that your people have only one reason to stay with your firm, and as soon as somebody offers just a tiny bit higher commissions, you start losing your people.

So, if you consider the long buying cycles, the commission structure goes totally against it. Salespeople will turn around 2-3 times between first contact and signed contract.

I know a financial planning firm that employed commissioned telemarketers to get new business. They thought it was a great investment and a very cheap way of getting business. There was one problem: The telemarketers did everything humanly possible to get the business. The result: The firm was losing clients twice as fast as gaining new ones. The telemarketers managed to sweet-talk people into signing up for the service, but the financial planners were unable to keep up with the telemarketers' exaggerated promises and sometimes even downright lies. The firm wanted to build long-term relationships for repeat and referral business, but compensated its telemarketers on short-term financial gain and volume.

2. Higher Investments

We have to look at investments in professional services from two distinctive perspectives, and compare them to "things".

Preventive action is the steps we take when we do something to avoid a problem. Smart people do regular physical exercise because they know the benefits, such as mentally alert, physically and emotionally relaxed, less prone to injuries and illnesses, higher performance, better sex life, and many others. And what is the monthly investment? Maybe $50 a month on your gym membership, $100 on good vitamin and mineral supplements and maybe $1000 in a personal trainer. If this sounds too much, then calculate how much you spend on coffee and junk food every month, which only regress your performance and productivity and speeds up your journey to your grave.

If as a result of being more focused, your overall performance goes up by 25%, you gain that money back in the form of extra revenue and qualitative enhancements in your life.

At the same time there is a large herd of idiots who justify why they don't have time to exercise because they are too busy. Yes, too busy working harder with a scattered mind and an on-the-bring-of-final-breakdown body. It is like "speeding" down the highway in second gear, with the handbrake on. You can make small progress, but run your car to the ground in the process.

In business, the preventive action is about making an investment to avoid a future problem. The problem I have seen over the years is that so many service professionals absolutely refuse to invest in their own businesses. They put their money in mutual funds, stocks, but when approached by a consultant that, "I can help you to improve your lead generation efforts, so you can acquire 25% more expensive projects", 99% of business owners will tell this consultant to get lost. Is it surprising that the professional service firm is the most lacklustre business structure with the poorest cashflow and lowest margins?

Service professional must learn that regardless of how arrogant and know-it-all they are, there is always space for improvement. It is just a matter of having the spine, guts and balls to admit it. And if you are not the number 1 in your field, there is definitely a lot of space for improvement.

Contingent action is when people spend a lifetime being busy and stressed out and in their late forties and early fifties they hit the operating theatres for heart bypass surgery or something even more sinister. Many of them can never go back to work and spend all of their earlier accumulated money on medication and surgery just to stay alive for a few more miserable years. That is the moment they wish they had taken preventive action.

In business the contingency action is about catching up with the investment that should have been made in the past to avoid prevent future problems.

In the summer of 2002 I was sitting in the president's office of a high-tech firm in North Vancouver, Canada. The firm had some serious sales problems. When I asked him about their marketing, he told me they had neither time nor money to waste on "this marketing garbage". They were also too busy. Then he said, "Tom, if you can guarantee that you can put some substantial amount of money into our bank account within three days, I hire you." I gave him a big smile, realising he was in desperate need of psychiatric counselling, and left.

The funny thing was that the president - allegedly - had lots of money in his other companies, but was reluctant to invest it into his newest endeavour. A few months later the firm went tits-up, which leads me to the conclusion that none of the president's companies was making money.

The other problem is that many professionals take as much money out of their businesses as possible, and neglect to invest in the future. They have nice homes, cars, boats and other things, but have no marketing budget and no bonus plan for their own people (The people who actually generate all that money for the owner).

Yes, the business world has become more and more short-term focused. Firms are looking for instant gratification, and are only willing to invest in areas that offer instant return on their investments. That is why so many firms operate like whorehouses, jumping on anything that can make instant money. The emphasis is on "instant".

3. Buying Services Usually Has No Tangible Deliverables, Only a Future Improvement in the Client's Condition Through Your Care, Protection and Guidance

Unlike in any other businesses, in professional services there are no tangible deliverables that represent significant value. Sadly most firms are still working towards performing certain number of hours of manual labour and creating a certain tonnage of deliverables, such as reports, manuals, memos and other similar worthless rubbish because they believe that is their added value lies.

Also unlike in other businesses, in professional service businesses it is quality that counts not quantity. A small appreciative clientele is far more valuable, than a large clientele that keeps complaining about your fees and demanding more manual labour from you.

The value of the service lies in the quality of the relationship and the projected improvement in the client's condition.

While you can buy products like cars or washing soap based on performance, you can't do that with professional services.

Products like cars or washing soap has performance built into them. It is only so fast a car can go, or it is only so much stuff one cup of washing soap can wash well.

But since providing professional services is a collaborative process, it takes two to make it happen. Clients can't tell their consultants, "Here it is, get on with it, and don't disturb me too much", or "Here is my prospect list, get on the phone and increase my sales while I'm on vacation.

And very often improvement is not even tangible. They can be increased personal time for executives, improved morale, better corporate image, better client and talent retention. These improvements don't make money that can be directly tracked in the books, but anyone with more brain cells know that the improvement in any of these factors mean new money in the bank. You just have to make sure your buyers have more than two brain cells, which in many cases is not the case.

Also, make sure that your buyers understand that you are there to help, but it is their responsibility to create the desired improvement.

4. Products are Bought by Customers, but Services Are Experienced by Client

There is a world of difference between customers and clients. Customers buy commodities in transactional relationships. The whole idea is the "here is the money and give me three buckets of stuff".

But when we by services, we actually engage the care, protection and guidance of a fiduciary who works WITH us (not FOR us), and helps us to solve our own problems. In Harvard marketing guru, Theodore Levitt's words, "service professionals sell an experience."

Re-read here: They don't solve problems FOR clients. They enable and empower clients to solve their own problems. One typical example is the financial advisor on TV, Suze Orman. Every word she speaks encourages viewers to solve their own financial problems and taking charge of their financial futures without giving it all away to a financial planner on a "take care of my money FOR me" basis. Robert Kiyosaki teaches the same thing. Be your own financial planner. Ask for situational help from several people, but don't abdicate your future to someone else.

In contrast, just think of what so many service professionals do. They create dependency for their clients. Just think about it.

Do you have full access to your website. Are you able to update it and modify it? Do you know all the usernames and passwords to your site admin panel?

I have heard more and more stories when service professionals lose their sites and their databases because their webmasters control everything, but suddenly the webmaster vanished.

And always make certain that you are not dispensing your expertise as though it were a commodity. Have you every heard lawyers, doctors or accountants dispense advise over dinner or at networking events? No. So, it is only fair to say that no service professional should do that. No one.

Now let's take a quick look at the type of clients we can have, because they can make a huge difference either way.

The Three Categories of Buyers: Customers or Clients

1. Joe Buyer says, "Don't bother me with your salespeople. Send me your stuff quickly and cheaply, but be careful for I have tonnes of competitors to choose from. So you'd better dance to the beat of my drum, mate". This is a kind of Wal-Mart approach of selling cheap, low-profile (usually low quality, a.k.a cheap crap) commodity items through transactional selling. In commodity items value is inherent in the "thing" itself, so no extra value is needed in the form of relationships. This is a typical customer.

2. Jeff Buyer says, "We are looking for some strategic alliances, upon whom we can leverage our operation". Basically, Jeff is looking for some suckers who are willing to sell Jeff's merchandise to their own customers for a meagre commission. In the information technology industry lots of companies hang on to major suppliers' coat tails and start selling their "boxes" for a piitance of 5-10% commission, while foregoing the huge margins they could make on "real" consulting. This is retarded, and also proves how short-sighted most technology firms are.

For instance, Microsoft is not too keen on hiring more sales people (Hey, who needs more headache?), so through its "partnership" programme MS recruits thousands of companies, and those companies end up peddling MS bits and bobs to their own customers. (No, they are not clients).

Many companies also have the idea of hiring a consulting firm and paying them in the future, based on achieved results. A strategic alliance is not a consulting relationship. This is a business partnership, and should not be mistaken with a consulting assignment. Let me repeat it: If you are an advisor to the firm, you are not a partner.

While the traditional sales force can handle the first two scenarios, it utterly fails to deal with the third case. Our emphasis is on Jill's scenario, for that is the real consultative approach.

3. Jill Buyer says, "We have a problem we haven't been able to solve for a long time, and now we need some help. But instead of solving it for us, help us and guide us through the process, so we can solve it together, and we can keep the problem solved after you are gone." This is the ideal consulting relationship, but most consultants don't operate this way. They create dependency for their clients, "Don't even try it without us." In my view that is both short-sighted and unethical. Jill is a typical collaborative client, ideal for consulting. Realistically, the only type of buyer, suitable for a consulting engagement.

Think for a Moment...

Look at law firms. Do they have dedicated cold-calling, pavement-pounding salespeople? No.

Look at accounting firms. Do they? No.

Look at medical establishments. Do they have? No.

Then how come that so many consulting firms want to rise to the same level of trust and respect as doctors, lawyers and accountants by sending out armies of salespeople pounding pavements, dialling for dollars and wrestling with gatekeepers?