Is this a familiar scenario? You’re this close to landing the biggest deal you ever encountered. The solution you are pitching is nearly one hundred thousand dollars and will keep you busy the better part of the long Winter months ahead and possibly into the Spring. You planned about 4 months worth of consulting and are eager to begin. Now, at the final meeting with your client, you are about to get the sweet answer you’ve been working hard to get for months. There’s not much else that compares to the excitement of getting a signature on a huge deal you’ve been working on for what seems like forever. But here you are, actually watching the client sign your order.
You’re set. You go out and celebrate that night with your spouse and talk about how much you deserved this and what it meant to your income and, of course, your business. The long hours. The pressure. The sacrifices. But now that’s all over and you got what you deserved. A huge contract that will yield a lot of consulting dollars for your relatively small operation.
The next day you order the products or materials from your vendor. It arrives in a couple days and having already set up the first meeting with your client, you set out with everything you need to begin work. The first few weeks would include discussions and interviews for the discovery analysis. Then the planning phase. And finally the customizations, implementation, training, and roll out. The plan is perfect and you are the right man, or woman, for the job.
Reality Hits
Did you ever wake up out of a dream and have no idea where you are or how you got there? Well, that’s how you feel months later when you realize that your project is coming to a close. It is a great success. Your client loves you. The users are getting on board with the project and are very enthusiastic. The program works like a charm. Everything is coming together. Except for one thing — Your Business! You suddenly realize as you finalize this long-term project that your business is totally stagnating, and you have no idea how you got to that point.
As if you were a prisoner being paroled after a 20 year sentence and seeing how society has totally changed in your absence, you emerge to find that you have absolutely no opportunities lined up to pursue. Worse than that, your vendors thought you went out of business. You lost all your status as a premier reseller or buyer, which means you lost all the privileges from your vendor’s reseller program; such as leads, special promotions, co-op dollars, attention from their local field representatives, and most important, a higher discount rate that is based on volume sales. You also shot yourself in the foot by not generating any leads yourself through marketing activities you could have been doing over the past several months. So your pipeline is dry, no one in the area knows of your business any more, and you are back to ground zero.
Has this ever happened to you? If it hasn’t it could. In this example, months ago you thought you were such a huge success, pulling in a large deal involving huge revenue for your business. How were you to know that at the same time you were destroying the very business you were trying to build?
What To Do?
If this, or something less dramatic yet similar, has ever happened to you, then you could be experiencing the Saw-Tooth Effect. What’s the Saw-Tooth Effect? It’s all very simple to understand. But not many businesses realize it until it is too late. Here’s how it works. Draw a horizontal line. Above the line are marketing and sales related activities. Below the line are technical and implementation related activities. In the beginning of your sales cycle you spend all your time above the line marketing your business, generating leads, and closing a sale. Then you “disappear” for a finite amount of time below the line implementing the solution you just sold. When that job is completed, you go back to the above-the-line activities and start all over again. This up-and-down process repeats itself until something breaks – usually your business.
While below the line, you do nothing above the line. And, when above the line, you do nothing below the line. Pretty simple and quite binary – you do one or the other. But the problem is, when you’re below the line, no one is above the line generating business and finding your next opportunity for when you rise above the line again, or re-emerge from your project implementation.
Recommendation
This scenario is a classic example of what happens to smaller businesses who haven’t staffed up properly. To resolve this self-defeating situation you, as the business owner, may need to do a lot of soul searching to decide what it is you are really good at versus what you really like to do. You may realize that you really enjoy selling solutions and would benefit most by concentrating all your energies on the sales and marketing activities (above the line) that your company will need to do to succeed.
Let’s say that is the case and you decide to focus on sales and marketing. You’ll then need to hire staff to do all the technical work. Now, you shouldn’t go overboard and hire more people than you could initially put to work. Let’s say you remember how important it was to do the up-front planning and discovery analysis, not to mention the on-going project management. So you first hire a project manager who is experienced with doing the planning phase. Next, you hire a technician who would concentrate on implementations. Your project manager, or even you, would do the training initially until you have enough business to sustain a full-time trainer. But first things first.
Your plan will be to spend your time marketing, selling, and running your business, all above-the-line activities, while your technical people spend all their time below the line. While they are doing the implementations, you’ll be generating new business for them to implement. You will build and feed your “Pipeline”.
You have to go out and catch the lion. Then you bring it back and throw it into the tent where someone else skins the lion while you go back out and catch the next one. The question is – Do you want to “catch” the lion or “skin” the lion?” This will, and should, have a dramatic effect on your business; specifically its growth and success. In time, as your business continues to grow you can start hiring sales people, which will allow you to focus more on running your business, or even taking some well-deserved time off.
Summary
You have undoubtedly looked at a saw and noticed how the teeth go up and down and up and down and so forth. But, have you ever noticed a similarity in how your business might be following the same pattern? Sales go up for a while, then down, then up again and down again, repeatedly. If you haven’t noticed, you might want to take a closer look.
One telltale sign that you suffer from the Saw Tooth Effect is your purchasing patterns. Do you purchase a lot of products or material every other quarter, for instance? Or, is there some sort of pattern that has you purchasing something now, then nothing for a while, then something again, then nothing for a while, and so on? These are signs that you might be going through a specific mode of operation of buying product, implementing it, then buying more, and implementing it, over and over again, instead of having a consistent and perpetual flow of selling and implementing on a continual, parallel, and steady basis. You cannot do both selling and implementing. You never see a NASCAR driver get out and change his own tires, do you? If he did, he’d lose the race every time. You need a team of specialists who focus on their own aspect of the business.
The Saw Tooth Effect is not a healthy business model for your company since it doesn’t allow you to sustain a consistent revenue flow. The scenario discussed earlier was perhaps an exaggeration of what is happening in your business, although I have seen this happen to various sizes of business. Even if it reflects only partial reality, it is something to be concerned about. It’s all a matter of balancing resources. Some resources should be dedicated to marketing and selling, while others should focus on installing and implementing. Using the same resources to do both can cause the Saw Tooth Effect and result in inconsistent revenue and growth for your business, which can lead to a variety of negative effects including poor customer retention and harmful relationships with your vendors, not to mention your accountant.
As you plan your business’ future, be sure to take into account the Saw Tooth Effect and how you can avoid it. It will truly liberate you from the prison of inconsistent business growth.
Good luck and good selling!
Russ Lombardo is President of PEAK Sales Consulting, LLC and an experienced CRM and Sales consultant, trainer, writer, speaker and radio show host. Russ works with businesses to help improve their customer acquisition and retention for increased revenue and success. Russ is author of the books, “CyberSelling”, “CRM For The Common Man” and “Smart Marketing”. He can be reached at 702-655-5652 and emailed at russ@peaksalesconsulting.com.