Dirty Hands: Understanding the Consumer Products Sales Process

Engineer-type brains sometimes like to get their hands dirty, but understanding the mess that is consumer product sales may be dirtier than many engineers are comfortable with. I'll try to explain some of the basics, then tell you the dirty truths about consumer product sales.

The Basics:
1.) The consumer buys your products from: a.) you, or b.) a channel
2.) There are dozens of kinds of channels... here is the top 4:: retail, e-tail (e-tailer), System Integrator, VAR
3.) These channels buy from either: a.) you, or b.) a distributor
4.) The distributor buys from either: a.) you, or b.) an aggregater (or aggregator), or c.) a rep firm.
5.) The aggregator buys from either: a.) you, or b.) a rep firm.

So, the most direct route...
you->consumer.
The longest route...
you->rep.firm->aggregator->distributor->e-tail->consumer

And there is the rub... there are many e-tailers and most retailers who will no 'buy from you direct', especially if you are small.
Instead, you have to work with a distributor... funny, there are many (most) distributors who will not work with you directly.
So, you have to work with a rep firm or aggregator or both.

That can be a lot of hands in the pie! It is only just the beginning. In addition to the margin points that every step needs to take, each will want your marketing dollars to help make their channel/distribution succeed.

Messy yet?

Many channels require these marketing dollars (called Market Development Funds or MDF) or they will delist your product, regardless of how many you are selling.

So, how do you navigate this maze?

Very carefully, and hopefully with a lot of margin built in to your product.

Winning at Sales: Sales Dogs

Doing sales is easy, right? What the heck is doing sales anyways? So many engineering type brains wonder: why do we pay sales-people? What do they do all day? The answer is: not much... just everything.

Losing at sales is easy. Make a call, get rejected, give up, repeat. Very few sales-people do this... so their day gets FILLED with NOT GIVING UP! That's what you are paying the sales-person for: persistence.

Winning at sales is hard. I used to sell aerial photographs of peoples homes, now I've sold Killer NICs, Stock, and "the Karmaback viral marketing program"... each progressively harder. Here is a few of the things "I do all day"... and your sales-person should be doing too:

1. Manage dozens/hundreds of contacts and leads: reaching out to them via email and phone to set up pitches, keep them updated, etc.
2. Do 2 or 3 hour-long sales calls per day.
3. Research existing leads before each call & email to be up to date on their business and products.
4. Research new leads & beg friends for more leads.
5. Build custom presentations & custom proposals & custom contracts for each lead & prospect.
6. Learn/Practice everything about own company/products
7. Beg for more assets, more demos, etc.
8. ....I could go on and on....
   

In summary, Winning at Sales takes a Sales Dog! A hound that never gives up, never loses faith, always wags his tail, and works DAMN HARD!

My new company is LIVE! Karmaback: Get Some!

Karmaback is now live!
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Go, earn, spend.

What is Karmaback?

Simply put, it is a REWARDS program that gives you prizes, discounts, and more... just for sharing your thoughts, comments, preferences, etc.

That's it.

Right now, you can win some awesome Blu-Ray discs (The new Star Trek)... and our grand prize right now is a pair of AWESOME $299.99 headphones:
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Hating the customer.

If you decide to get into 'business' at all, you will have customers. The customer may be fortune 500 companies or 13 year-old kids, but you are going to be selling to someone. And you will hate them. You won't admit it, but you will feel it. Why? Because they will not behave how you want them to! They won't say the right things (FLAMES), or buy enough, or care about you. They take too long, play mind games, and pay too little. So how do I cope?

A few tips that have helped me learn to hate my customers less.
1.) accept that you cannot control others.
2.) try to learn what they 'do do' consistently.
3.) have a dialogue. JUST TALK TO THEM... normally. Don't always be selling, sometimes you just need to learn more about them.
4.) remember you exist to help them... but you can't help the un-willing.
5.) GOLDEN RULE: do unto others, as you would have them do unto you. TREAT YOUR SUPPLIERS BETTER! Really. Just consider how you treat your own suppliers, and good karma will start to flow.

For more on Karma see: http://www.karmaback.com :)
coming soon!

Photo Attributes: derivative work: — Mike.lifeguard | ^@en.wb Kittyplya03042006.JPG: Photographed by and copyright of (c) David Corby (User:Miskatonic, uploader) 2006

Say more with less.

We engineer-types tend to want to 'give all the evidence', to 'explain the results', and to 'build scientific consensus'. Sometimes we just need to say more with less.

This means 3 things for me:
1.) shorter blog posts - I'm going to shorten what I say.. probably still be long-ish every now and then... but I'll do better.

2.) stop selling when its sold - I have a real problem with this one... I tend to keep going purporting benefits, even when there are already enough benefits!

3.) use more pictures - pictures say more than words.

So, here you go, need I say more?

photo attributes: Sexy_Mouth.jpg: Nyki m derivative work: H005

A Code of Honor.

One of the best books on building teams is Rich Dad's Advisors: Building a Business Team That Wins. It talks about making not just a 'company mission statement' or a 'values list'...but a "code of honor". For those that read this blog, you know how important I believe company values and mission statements are. When I read this book, it took my feelings to the new heights (Picture at right is from my capsule at the top of the millenium wheel in London, 2009). I'm so lucky to be able to start a new business and bring some of the ideas from my last venture (Bigfoot Networks) into the new one (Karmaback), and also to heighten them with new ideas such as "A Company Code of Honor". So far, all the employees of Karmaback have agreed to the code of honor, and it is working well. Here is how Karmaback's code of honor works, and publicly, here is our code of honor. We live this code not just with each other, but also with our suppliers, partners, end users, and customers.

Karmaback's mission:
Karmaback is dedicated to developing new technology that combines rewards with social media and customer feedback to deliver new and unique buying experiences. We believe in being an ear-piece rather than just another mouth-piece.

Here are the rules of our Code of Honor:
We, the Employees of Karmaback, subscribe to a code of honor. A code of honor is a set of common beliefs and rules that we agree to hold ourselves and our peers to in all of our dealings (each other, our partners, and our customers).
We “call it” privately, when someone violates this code by telling them about their discretion ASAP.
We “reward it” publicly, when someone upholds the code in a novel or successful way.
We “accept it” internally, when we are called on it, or rewarded for it.

Karmaback Code of Honor:
We take complete ownership of our assignments.
We never abandon a team-mate or partner in need.
We always offer a chance for redemption.
We always celebrate wins as a team.
We are always direct and honest with everyone.
We never squash or punish ideas or opinions.
We are always passionate about our individual contribution.

What is your code of honor? What do you think of ours?
Have you ever worked in a place that not only 'said' these things, but believed and lived them?

To me, a great place to work is one where ownership is clear, direct, and everyone is passionate about their contribution.

Companies that measure, win: AKA Engineering Control Theory

Companies that do not wise up to the fact that measurement is MORE important than spending money are going to die. The ones with more cash (Apple, Microsoft) will die slowly. The ones with less cash on hand (start-ups, struggling businesses) will fail quicker. Marketing and advertising can be up to 40% of annual expenses, but very few companies measure their effectiveness. How can you 'correct' what you cannot measure? Why would you spend $10,000 on a banner ad, and then only measure how many 'clicks' it generated? Companies need to measure the effects of their activities in terms of the whole system, including sales. I believe so strongly in this, I started a company, Karmaback, to try to help businesses solve this problem.

Engineer-types call any measured system where the input is adjusted based on the output a 'control system'. Many people call this a feedback system. If only more engineer-types went into marketing! The major problem is that generating 'clicks' is easy, and generating sales is hard. There are SO MANY more variables than just the banner itself that goes into the sale. All of those variables need to be considered and adjusted based on the true measure of success: not clicks, sales. Finding the knobs that move sales, not just getting more 'clicks', is they key to success. In order to find those knobs, we must measure sales, and begin to create a hysteresis pattern leading to win.

Engineer-types understand the word hysteresis. The idea is simple: for any measured system, where the output is not 'easily' predicted by its input... under-correction and over-correction create a 'ringing' pattern called hysteresis. Anyone who drives a car understands this intuitively: it's the steering-wheel micro-adjustments you make while you drive. You see the car is going a tad too far right, you steer a tad to the left and vice versa. In business, we have many steering-wheels (knobs), and going the way you want is, hopefully, growing sales not clicks.

I leave you with 1 last thought. Any banner with a hot girl or an outrageous claim is going to get clicks. What knob, however, is going to get sales, and how are you going to measure it?


photo attributes:

http://www.flickr.com/photos/chinaspree/ / CC BY 2.0

Why I started a new business.

I started a new company called Karmaback. It is still mostly 'stealth', although we are just about ready to launch. I will of course write more about the company in the future, but today I just wanted to explain why I started a new company. It starts with this: many people think I prefer to be a technologist over a businessman. If you read this blog, you probably know that is bunk. I switched over to business ever since I made my first $1 Million in revenue as CEO of my last company. So, why did such a hard-core engineer turn truly into a businessman? Why did I decide to start on this adventure AGAIN?

1. I love to teach. This sounds crazy, but leading a company for me means getting to teach my employees, my partners, my customers, the press, and you. It's a true passion.
2. I believe in company culture. I don't necessarily think I have the best culture of all time: but I know I have a good one for me. More than that, I enjoy the challenge of building a team to fit the culture and growing the culture for the better over time. A healthy company really is like a child growing up.
3. I genuinely want to help others succeed. This probably ties in to teaching, but I really enjoy seeing others win. I like my customers to win. I like my employees to win. Heck, I even like helping other peoples unrelated businesses to win.
4. I want to make a mark. I'm not fame-hungry, but I do want to make a difference in this world. I believe that having a successful company living and growing, creating jobs, and contributing to community... will make a mark in my small part.
5. I enjoy the tremendous challenge. Without doubt, I get bored easily. I'm not the best engineer in the world, but I can logic my way out of almost any box. Figuring out a pricing strategy now, that is true challenge! (click the link if you can help!)


Stay tuned for more on Karmaback.