Search CompleteMarkets

...ve.   Some sales-training courses recommend an aggressive 'up-front cl...

Trust Your Gut Marketing
Far too often, marketers turn out to be their own worst enemies. It seems easy for them to commit the unpardonable sin of business: they start believing their own baloney. Marketing is neither mysterious nor esoteric. It's about real-life issues. In this document, John Graham provides some fundamental marketing guidelines. With all their limitations, warts, and crazy ideas, marketers can play a critical role in the success of your business. Unfortunately, they're often overruled by management and, more often than not, by the sales department. For example, is it fair to blame marketers for Proctor & Gamble's ill-fated Dryel? In effect, someone figured out ways to clean P&G's coffers of $400 million in a year or so on the development and introduction of this home clothing care kit. The only problem: Dryel, which sold for $9.95 and soaked up precious shelf space in the nation's supermarkets and discount stores, didn't clean clothes. It just made them smell better. Now, isn't that exactly what the average consumer wants? Perfumed dirty clothes. What marketing research revealed this enlightening insight? After a year, P&G evidently smelled something rotten and pulled the plug on Dryel. P&G is a marketing company — a good one by any standard. So, why did this happen? Unfortunately, P&G doesn't hold the patent on stupidity. The 2001 holiday selling season saw an astounding number of large specialty retailers lining up like lemmings to sell sweaters — all of which looked alike except for different 'designer' logos. Sweaters were the feeding frenzy. And where were the marketers? At the head of the line urging the store buyers on. In the end, retailers were awash in sweaters. And they were still up to their eyeballs in sweater inventory even after offering up to 70% discounts early in the Christmas selling season. Is it fair to blame marketers for these horrendous mistakes? Perhaps they advised against introducing Dryel. Perhaps GM's marketers weren't involved in the development of the Pontiac Aztec and the Buick Rendezvous. Let's hope that their loud protests were ignored. There are other examples, of course, such as the spate of home delivery services a la Webvan, Peapod, and the like. Hundreds of millions of dollars were swallowed up by these outfits that demonstrated an insatiable appetite for capital. Worse yet, venture capitalists stood in line outbidding one another to see who was going to give them the biggest pile of money. Didn't home delivery die out when women went from being everyday housewives to job holders? Isn't it a little strange that no one asked this question? Isn't it bizarre to think that no one researched the history of home delivery? Is it possible that no one listened to the contrary views? The head of a large organization called in a marketer to promote a credit card to its members. At a meeting with the president a few weeks later, the marketer laid out reasons why he believed the membership response would be minimal. Before he finished his report, the president was clearly agitated. Standing up, he said to the marketer, 'Do you want to do this or will I have to get someone else?' Three months after the credit card was introduced, a total of 1% of the membership had responded. Was the marketing at fault? The marketing manager had pointed out in his report that the membership was older and mostly retired, fit the profile of those who didn't use credit cards, and belonged to a socio-economic group that might make it difficult for them to qualify. The results supported his report. It might be that the marketers' recommendations are ignored or not even sought because they sometimes shoot themselves in the foot by making others feel uninformed and even stupid. This is why marketers need to open their doors far wider than they are today, give up some nonsensical pretensions, and focus on these fundamental guidelines: BEWARE OF BRANDING BULL Jargon always confuses, never clarifies. Branding is a prime example. To call branding bull is heresy or worse. Big names have made big bucks touting branding as the solution. You can't pick up a business publication or attend a seminar without encountering 'branding.' But 'creating the brand,' 'protecting the brand,' 'managing the brand,' and 'branding it,' are nothing more than high level abstractions that might make interesting cocktail party conversation, create a certain level of phony superiority, and even cause a bit of excitement & — but these terms mean nothing! If you're looking to be profound, figure out what the customer values. Learn what makes the customer's heart go pitter-pat, not what turns you on. Nurturing this value is serious business. Doing everything possible to align with and then stay close to the customer takes talent, commitment, and zeal — not jargon. BE SKEPTICAL OF MARKETING RESEARCH Don't be intimidated by anyone who attempts to dazzle you with screen after screen of charts and countless columns of research results. They're rarely meaningful. The problem is that we're often intimidated by nonsense, especially when it's passing in front of us at warp speed. The biggest con job of all comes from the folks who provide 'focus group' meeting facilities. Of course, the major feature of research palaces is the 'viewing room' where the client, ad agency reps, marketing managers, and assorted other executives can gather to eat, drink, and make meaningless banter while watching people who are being paid to voice their opinions. All this comes to mind while watching an 89-year-old interviewer talk about his latest book. Studs Terkel has been listening to and recording the views, opinions, and experiences of just plain people for more than half a century. What's the point? He listens and learns. He has well-tuned antennae. Where did Chrysler get the idea for the fast-selling P.T. Cruiser? Not from a carefully planned and superbly executed marketing concept. It was born from the experience of a man who loves cars and knows the people who buy them — Bob Lutz. To its credit, General Motors finally figured out that all the marketing research money can buy might not be as good as the insight of a Bob Lutz at age 70. He's the Studs Terkel of the auto industry. Much of current marketing research is a smokescreen, carefully designed to pass the buck if something goes wrong. Far too often, it substitutes for insight, experience, and common sense. It can become little more than a tool for avoiding personal responsibility. DON'T BUY INTO THE 'LET'S MAKE A BIG SPLASH!' MENTALITY Far too many marketers get their jollies from what they like to call 'Wow!' They seem to think they're doing something when they spend lots of money to make lots of noise. They love attacking the market with full force. They thrive on making a big splash. And then 'pfuff!' It's all gone — both the budget and their customers. P&G spent millions on advertising and promoting Dryel. Once the budget was gone, so were the customers. So was Dryel. All that remained were thousands and thousands of boxes of Dryel on supermarket shelves. Big splash means fun times for marketers. They get to party and drink, party and drink. This is why would-be marketers light up when you ask them what area they're interested in. 'I want to get into event planning.' That's where the 'wow!' is. Why is it so easy for marketers to forget what marketing's all about? The legendary Theodore Leavitt of Harvard Business School defined marketing as all the little, seemingly insignificant and often bothersome things that a company does day in and day out to attract and hold customers. Marketing is about doing one thing right: Marketing is the task of constantly 'pulling customers' closer and closer to your company, product, or service so that they decide that it's in their best interest to do business with you. That means keeping your hand on the rope every minute of every day. 'Wow!' PUT MARKETING IDEAS, STRATEGIES, AND PLANS TO THE ONLY TEST There's always the feeling that to justify your existence you need to make the simple look complex and the easy ever so difficult and complicated. Marketing is no exception. But marketing is too important — too valuable to your business — to permit it to be distorted and misunderstood. Although it takes lots of skill and a creative mind to be a good marketer, it takes just one thing to determine if marketing is on the right track. There's a simple marketing test that's accurate — and infallible — because it places marketing in the context of everyday experience. Here it is: When faced with making a marketing decision, just ask this question: Does it make sense to you? Does it square with your experience? Is it easy to understand? Or does it make you wonder if it will work? Does it raise questions or create doubts? If you ask questions, do you get reasonable, common sense answers? If the explanation you get doesn't compute, don't do it. That's it. Nothing more. Marketing is about what you do every day to get closer to the customer. It's about making sense.

Managing, Transferring, And Acquiring Family Insurance Agencies
  MANAGING, TRANSFERRING, AND ACQUIRING FAMILY INSURANCE AGENCIES by Carol Hammes Independent insurance agencies are often family businesses. Many current owners took over the agency from their father or mother and they’d very much like to be able to eventually turn it over to their children. This goal seems to makes sense since the firm is their legacy and they might care about it more than other people will. Carol Hammes examines whether this is the best way to facilitate a perpetuation plan.   In reality, running and transferring a family business isn’t as easy as it might first seem to be. The intertwining of business and family relationships can make management and perpetuation issues even more difficult. In the past 23 years of consulting with insurance agencies we’ve seen some very sad situations in which poorly managed relationships tore apart the family and/or the business. We’ve also seen some phenomenal success stories in which family members joined together to create thriving and valuable agency operations. It takes careful management and planning but it can also be extremely rewarding to bring family into the firm and have them be the basis of the perpetuation transfer process. Firms wishing to acquire a family agency need to carefully examine the background of family members to make sure that they’re actually getting what they think they are. It’s attractive to see one or two producers, and perhaps a manager, to fold into your agency. But it’s also important to delve into the background of these people to make sure that they are, in fact, producers and managers. Because they’re family members they might’ve received books of business without doing much production on their own. Likewise, they could be managers simply because of their name, rather than their ability to lead effectively. It’s important for parents or siblings to recognize that their family members might resent the pressure of an obligation to come into the agency and the insurance business. They could arrive with a chip already on their shoulders, particularly if they’re members of the 'new' generation that seem to have an exaggerated sense of entitlement. The situation might become even worse if they come directly out of school without any previous job experience. In that case, resentment among other employees will make it even harder for them to become productive team members. With careful training processes and appropriate management, the first five or so years of a younger family member in the agency might often go smoothly. But, if this person succeeds as a producer or manager, they might start to become dissatisfied with their level of authority, compensation, or both. And if the family member hasn’t been doing a good job, the parent/sibling principal can become upset or uneasy and start to wonder what to do about the mess. This is particularly critical for larger agencies in which key non-family employees are also becoming concerned about the situation. We’ve observed that the third generation of family members often creates the biggest problem. The second generation generally has the same entrepreneurial drive as the first, perhaps because they grew up watching their parents work long and hard with little short-term financial return. There can be a positive outcome to eating macaroni and cheese every night for a week. But, once the second generation takes over and makes the agency even more profitable, their children might grow up with a 'silver spoon syndrome.' Because all of their needs are met as children, they don’t see why they should work hard to get economic rewards. Receiving a lucrative job in the family business, rather than having to work in a normal job environment to earn a living, perpetuates this sense of entitlement. They simply don’t understand that they have to produce results in order to enjoy the rewards. The impact on morale can be devastating and endanger the possible success of an internal perpetuation plan. The agency can then end up on the market for lack of any other solution. Let the buyer beware. There are some good reasons why many larger agencies have developed anti-nepotism rules and why most management consultants advise against bringing family members into the agency. It’s tough enough to run an independent agency as a business without adding another set of emotional problems to the equation. Having said this, it can also be highly rewarding to have your children or siblings flourish professionally and personally. This article offers a number of observations and recommendations for principals in family agencies. Prospective buyers should use these guidelines as part of their due diligence process. Have the family member work somewhere else first. It’s not absolutely necessary that it be in an insurance company or agency, although this would be helpful. They must prove to themselves, to you, and to the other employees that they can succeed on their own. It’s also far healthier for the business to have them come in with some fresh ideas. Don’t expect more or less of them than you would of any other employees. Family members might try harder — or they might not try at all. They need motivation from the boss, just like any other employee. Apply all agency rules to family members and adhere strictly to performance evaluations and salary administration. Give family members responsibility and authority as they become ready for it. Give them enough rope to prove themselves and don’t second-guess their decisions within the parameters of authority that you’ve granted. This is difficult to do with any employee and much more troublesome with family members, especially children. Don’t create a job for a family member. Either you have an opening for which they qualify, or you don’t. If there’s no suitable opening, wait until you need to hire someone and/or they have the appropriate qualifications. Keep family and business issues separate. Never discuss family matters in front of other people in the agency and try not to call each other 'Dad', 'Mom', or 'Junior' during business hours. Do everything that you can to de-emphasize the family relationship when around other employees. Don’t discuss business at family gatherings since this can put a strain on personal relationships. Keep open lines of communication. Let family members know your perpetuation plans so that they know what you expect from them long before they’re old enough to come into the agency. Don’t expect them to read your mind. And be careful with children who’ve grown up resenting all the time that you’ve spent with the agency. If they feel that they’ve been short-changed for your affection they might be harboring destructive tendencies toward the business that could surface down the road. Never leave the agency to two people (family members or not) on the basis of 50/50 ownership. The buck always has to stop some place. And two siblings can already have some built-in differences of opinion that make decisions more difficult to handle effectively. If possible, develop an organizational chart that has family members reporting to people other than you or other family employees. Make sure that the other employees understand their relation to the family members and to whom they’re responsible. Just because someone has the same last name of the owner doesn’t mean that they have the same level of authority — and everyone needs to know this. Unclear relationships can cause confusion and dissension and can cost the agency some good employees. Create a board of directors that includes non-family members. When you need advice on dealing with sticky issues, it’s important to have someone involved with no familial emotional attachments. Make family members pay for ownership, even if it’s at a discount. They’ll appreciate it more and will do a better job of running the agency if they have to sacrifice something for it. Also, if there are children who aren’t associated with the agency it’s unfair to them to give them part or all of what’s probably your major asset. And, of course, keep the IRS in mind. You must properly value the ownership that you’re turning over to family members either through gifts or cash transactions. Otherwise you could face serious tax consequences. This is one time when investing in an outside appraiser can be well worth the fee. To get a rough idea of the agency’s worth, multiply the last 12 months’ pro forma profit by six and add or subtract the balance sheet value. It’s important that the current owners of family agencies play a key role in the perpetuation process. If it appears that the younger family members won’t be ready to take over the reins when the current owners want to get out, accept this fact and make other plans for selling the agency before the situation deteriorates to the point that the value has gone down. At that juncture, everyone in the family loses. And remember that the more successful the agency, the more difficult it is to pass onto another generation. This is a reality that has dismayed many agencies. Success can create a number of problems that no one contemplated when they developed and executed the marketing and sales plan. As the agency gets larger, the shoes to fill grow far too big and the value becomes so great that the transfer of ownership is simply too complex and too expensive. A number of consultants who deal with family businesses offer advice on perpetuation that’s similar to the guidelines we’ve provided. For example, in Success and Survival of the Family Business Pat Alcorn lists four stages in perpetuating a family business. Stage One lasts for the first four years when things are pretty good. The children appreciate the fact that the father or mother has provided the opportunity for them to be involved and the parents are happy that their heirs have chosen this as their profession. Stage Two, generally from years four through ten, is termed 'trouble on the horizon.' This is the period in which the younger people become less cooperative. They tend to want to change things in the operation while their parents remain in the mode of 'if it’s worked for 50 years, don’t change it.' We’ve often seen this attitude in the agency. As the marketplace continues to change, the failure of parents or other older family members to listen to the younger people can be deadly. Because change is essential today not letting younger voices be heard could actually destroy the agency. Stage Three generally occurs during years 10-16. Alcorn dubs this period as 'something has to give.' This is when the younger family members have to decide whether to stick with the agency or strike out on their own. They might have produced far more business than the older family members and feel that they’re being exploited. They’re also increasingly insistent on having a say in how things are run. This period often generates open hostility, which can be fueled by the parent’s perception that the child needs to work long and hard for very little money to pay their dues, regardless of their success in the business. In Stage Four the major personality conflicts and power struggles have been resolved and the younger members are clearly directing the destiny of the organization. Success in this stage comes from both parties recognizing their psychological dependence on the business and the ability to work together to deal with natural and inevitable separation anxieties. Most successors will be impatient, while the current owners will be reluctant to let go of the reins. It’s essential to recognize these facts early on for the successful perpetuation of a family business. And if the decision is made to sell to a third party, a calm and rational atmosphere will go a long way to increasing the value of the agency. Jerry Kleiman, PhD, is the co-founder of Optimal Resolutions, Inc., a consulting firm for family-owned businesses. He has developed a set of seven rules for family businesses that have succeeded in perpetuating themselves. Dr. Kleiman’s list mirrors and reinforces the guidelines outlined above: Set clear boundaries around the business and the family. The key to success in a family-owned business is clarity on where the family ends and the business begins. Relationship issues and personal needs that might not have been attended to in the family can often play themselves out in the business. Develop a succession plan. Successful family businesses plan for their succession. When the owner decides to pass the baton it means that they’re getting ready to enter into a new stage of life. It’s not just a question of what they’re leaving or retiring from but what they are retiring to. Succession planning is a major issue because business and family transitions intersect. Successful succession planning is a long-term project and the ability to take long-range perspectives is one of the advantages of having a family-owned business. Formulate a business and strategic plan. A family business is more likely to have the flexibility needed to anticipate and adapt to changes in the marketplace. Developing job descriptions, entry criteria and a compensation formula is helpful. Problems often occur when family members perform multiple tasks without a clear delineation of responsibilities. Sibling issues can often arise when leadership fails to address the issues of job descriptions, compensation, or succession. Hold regularly scheduled business meetings. No matter how small the firm, schedule regular meetings with an agenda that includes only business and not family items. These meetings provide a good opportunity to clarify expectations so that resentments don’t smolder. They also give the younger generation an opportunity to begin taking responsibility for corporate initiatives. Plan regularly occurring family gatherings. We believe that 'better family means better business.' These gatherings help insure that emotional needs are gratified within the family without using the business to fulfill these needs. Focus on developing and maintaining healthy family relationships to prevent business roles from enveloping the more basic familial roles. Develop conflict resolution skills. It’s impossible for mature individuals to coexist in perfect, total, and perpetual harmony. Both family and non-family members must feel free to express their thoughts and feelings. This might mean that there will need to be constructive arguments. Communication is necessary — and it might become heated at times. All parties need to develop the skills to fight constructively. Appoint an outside board of directors. Outside advisors are critical in helping to establish succession, compensation, entry criteria, developing marketing strategy and, if necessary, helping diffuse sibling rivalry. Unbiased professionals who aren’t members of the family can give input and help you make decisions that might be emotionally laden. No successful family-owned business should be without an outside board. For more information, call Optimal Resolutions, Inc. at (516) 365-7192 or visit www.optimalresolutions.com. We appreciate Dr. Kleiman’s willingness to share his comments. Reproduced from The Middleton Letter with permission from Carol A. Hammes, CPCU. Carol Hammes can be reached at The Middleton Letter, P.O. Box 459, Pine, CO 80470, (303) 838-7385, (303) 838-7387 Fax, e -mail [email protected], or Web site www.middletongroup.com.

Ask The Right Questions Before Taking Your Next Sales
If you're in sales, you can identify with this situation - about two weeks after starting a new job, you begin to doubt your decision. You detect a widening gap between what you were told to expect and what actually occurs. After only a month on the job, you conclude, 'I think I made a mistake.' You're probably right, because salespersons seem to be more prone to selecting the wrong job. Too often, their profession's tendency to stress the positive and minimize negative factors extend into their approach in choosing a job. Salespeople are often good customers who are receptive a solid sales pitch. Even though they know they're getting a sales pitch, they may be more easily swayed than job candidates outside their profession. To avoid taking the wrong job, here are 10 questions to ask before accepting a new sales position: Does the sales manager make me feel inferior? You are the only person who can answer this question. It's important because sales managers are often known for their well-developed, and sometimes oversized, egos. If the person you'll be reporting to makes you feel uncomfortable or inferior during the initial interview, just imagine how you'll feel once you're on the job. Is it realistic to think that it will be different in a month or a year? If you're uncomfortable at the start, it isn't going to change. The best way out of the situation is to tell the sales manager that you're not ready for such an outstanding opportunity. You deeply appreciate the offer. In fact, you're overwhelmed, but you need to learn a lot more before you are prepared to take on this level of responsibility. Can I learn more about you? Express interest in the sales manager and ask to take a look at his or her resume. This isn't pushing the envelope because the individual will be so impressed by your personal interest that the resume will almost jump out of the file. What you're looking for is the manager's employment track record. If the resume reveals a lot of jumping around, hand it back quickly with the biggest smile you can muster. Then leave as fast as you can! This manager's probably unstable, ineffective, and incompetent. Where will I get my leads? This may be one of your most important questions. If the answer is indefinite, garbled or at all unclear, you can be sure that there is just one way you're going to get your leads - by getting them yourself. If you want to spend all your time trying to figure out where your next prospect is coming from, go ahead and take the job. But you'll never get very far because your time will be spent prospecting, not selling. If you see yourself as a professional salesperson, never take a sales position unless there is a well-defined, continuous lead-generation program. It's the company's job to market its products or services in ways that produce prospects. If it doesn't, you will become a canvasser, not a salesperson. And don't fall for the story that the company has 'a great new business development program in the works.' You can bet it doesn't. May I see your office? This is another question for a sales manager. (Of course, if you happen to be in the person's office at the moment, skip this question.) What's in the office that should grab your interest? If you see a sales scoreboard on the wall, get out quick. This company is not interested in developing customers - it only wants to push product to meet quotas. Your only value will be measured by where you stand in the weekly, monthly, or quarterly ratings. If you're at the top, you're great. If you're at the bottom, you're gone. What you do to retain customers doesn't count. What you do to grow accounts isn't important. What you do to educate prospects isn't worth anything. May I take a look at the company's sales literature? You want to ask to see the company's sales materials. Although the person interviewing you will be impressed with your intense interest in learning more about the company, focus on your objective, which is to discover the company's attitude toward marketing. If the promotional materials are customer-focused, you can be sure that the company is committed to understanding and fulfilling the needs of those it serves. If, on the other hand, the brochures are company-centered - aimed solely on the wonders of the firm and its position in the field - head straight for the elevator and push down. You don't want to find yourself in a company that is unable to see beyond its narrow interests. When are the slow periods? This question portrays your ability to quickly grasp how a company operates. Because this is a question that catches the person you're talking to off-guard, you'll get a straight answer. Assume the answer is 'May and June are never very good, and we just write off November and December.' This seemingly innocent piece of corporate intelligence reveals far more than the downtimes. You have also learned that down periods are an entrenched tradition around the place. Everyone has come to accept that sales during one-third of the year are going to be lousy. You might guess that the employees have come to look forward to these peaceful, quiet days of spring and fall. But you also know that nobody has ever thought of developing a marketing program to change this pattern. Remember, when sales go down in the valley, someone is eventually going to have to scale the mountain - without a rope (other than the one around your neck). May I go with you on a sales call? With this question, you start to make your move. This is the one that separates you from the rest of the pack. It shows that you're willing to take time and go along on a sales call to get a better feel for the operation. There is more to your plan, however. Once you're in the customer's office, you're ready to go to work without saying a word. You should be listening for the 90-10 test. This term means that the customer should do 90% of the talking and the salesperson 10%. If the sales rep's mouth is open most of the time, this is probably a product-pushing sales organization, not one that values customer relationships. If this happens, bail out now. What gives this company an edge in your market? Now you're learning more about the business. Gentle probing gives you more information. You're objective is to discover if this is a price-driven sales operation. What's the sales manager's philosophy? Is price all that sets the company apart from its competition? If you don't have the lowest price, will you lose orders? If that's it, this isn't the company for you. The only way you'll keep a customer is to push the price down as low as possible - and then some. Your customers won't see you as a competent professional, but simply as someone to threaten and intimidate. If you don't have the right price, the customer is gone. What can you teach me? Now you're on a roll, so go all the way. When you're huddling with the sales manager as you wait to meet the vice president of a department or the CEO, quietly ask what the manager can teach you. Since sales managers tend to be made from the same mold, your flattering question may trigger this response: 'Hey, you're OK. If you come with us, I'll teach you every trick in the book, and then some. I'll make you great.' What an offer! Who could possibly refuse? You. Without realizing it, the sales manager has let you know that clever techniques and tricks are what make sales. 'It's all a matter or orchestrating the customer,' the manager whispers. 'I'll show you how to do it.' At this point, announce that your mother is very sick and that you must return to your home in the Fiji Islands. You'll call him in a month or so. May I visit your marketing department? If someone directs you down the hall and says, 'Turn to your right. It's the second door on your left just beyond the restrooms,' you will see that the marketing department is the closet where the sales literature is stored. If the answer is, 'You've already met Judy, our receptionist who sends out requests for information,' then you've discovered that this company does not understand or value marketing. At this point, don't delay your escape. Just get away as quickly as possible because this is a hopeless outfit. While some of the questions may seem frivolous, they're dead serious. These questions will give you the information you need to make an informed decision about working in a company's sales department. Selling should be demanding and challenging, but not painful and abusive. Ask the right questions and you'll find yourself in the right place to be successful.