Sales management is a thankless task, even in the best of times. Steadily increasing revenues have to be delivered every quarter, requiring good people management as well as expert organisational skills.
In the worst of times, customer decisions are often deferred, leaving sales pipelines empty further than three months ahead. There may be plenty of attractive-looking prospects, but recessions make converting them ever more difficult, especially if buyers sense an air of desperation in the people selling to them.
This is especially true for companies that are purely product-based. Customers become more frugal and less likely to replace products when times are hard. My advice to business owners is to try and re-position your company as a service provider.
At least a fifth of every product offering can be defined as a service, such as support or training. All you need to do is ask the customer what they want; more often than not they will ask for additional services.
The dream of every sales manager is to have a healthy pipeline of customers who provide them with recurring revenue as part of a long-term service contract.
Managing a sales pipeline should be the same process as managing people, with a service rather than a product mentality. This approach will seem more natural and thus sit well with both your salespeople and the customers themselves.
Some companies end up at this point by accident; others set themselves up specifically to take advantage of this mutually advantageous business relationship.
Steve Booth started his sales career in advertising and then moved to a security company specialising in closed circuit television systems for retailers. He soon realised that the value was not so much in the hardware itself, but in the data that it generated.
While preventing shoplifting was important, much more valuable was to use the captured data to help improve retailers' knowledge of the footfall around their outlets. Margins in retailing are notoriously thin, so any competitive advantage is highly prized.
His first foray into this business in 1997 was not a success, ending up in administration. Booth puts this down to bad timing, difficult market conditions and the wrong combination of unproven technology and investors.
In 2002 he started again and formed Springboard, which now provides automated customer counting services for high streets, shopping centres, retail parks, entertainment centres and even transport interchanges.
Among Springboard's customers is the British Retail Consortium, the trade association, which uses Springboard's system to monitor shoppers' activity.
Retailers spend significant amounts on marketing to get people to visit shops and once they are there an even greater effort is made to convert them into regular customers.
Crucial to this process are the valuable services that Springboard provides on a recurring basis, which must make their sales manager sleep much easier at night.
The recurring revenue concept is a fundamental part of Springboard's business model. The company develops a long-term relationship with a client, providing a continuing service based on measurable outcomes. While the software and hardware are interesting for the technical people, they are seen merely as detail in the delivery process, rather than an end in themselves.
This neatly summarises the business challenge of every high-tech start-up, including those where I was responsible for selling the software. Smart people had written clever software that had dozens of potential practical applications, but none that were yet proven in the real world.
What was needed was to combine hot technology with a real social driver to deliver a genuine business benefit. Looking back, I was mistaken to try and sell technology as a product.
If I had re-positioned the software as a service, not only would it have been easier to sell on an incremental basis, it would also have ultimately delivered a long-term and recurring service revenue, once proven.
Springboard can be found at www.spring-board.info
Originally published in The Financial Times. Copyright © Mike Southon 2012. All Rights Reserved. Not to be reproduced without permission in writing. Mike Southon is the co-author of The Beermat Entrepreneur and a business speaker.