The Problem of a Great Reputation, Part 2
• Skills critical to an organization can be easily lost
• It is always important to know how to acquire new customers
• Why strategy is important
• The need for an outside experienced opinion

Did you know that the best measure of a company’s reputation is the number of referrals it receives? Frequent referrals provide proof that the company is doing the most important things well.

Did you know, however, without commitment to a long-term growth strategy, that same company’s good reputation could actually become a problem for them? That is to say, if not handled correctly, too many referrals will actually inhibit long-term growth. This is the problem with a great reputation.

Background
I had been brought in to help a regional general contracting company. During their ten years in business, they had earned a great reputation – providing them with a large number of referrals.

But before having the luxury of responding to referrals, the company got new business the old fashioned way: aggressive networking, marketing, and hard work. The sales team was hungry for new business and continually allowed themselves to be stretched. Everyone understood that they had to take jobs requiring new skills so sometimes they would have to learn on the job. They bid every opportunity that presented itself, and they appreciated every job they were able to land.

The company enjoyed success as it became profitable. It grew. And its employees were treated well by management and remained loyal.

Despite all this, in the past few years something unexpected started happening: company growth has stagnated. The owner believes the “the team” is the reason for the company’s historical success. But the sales people believe each of them are individually the reason for it.

However, the sales staff no longer makes cold calls or attends networking functions. They have become possessive of their referral networks. Calls coming into the company are either repeat customers or referrals. If work slows enough, sales people call on past customers inquiring about remodels or plans for new buildings.

In addition, the sales staff attends one industry trade show per year. Each sales person works the booth for the entire show because no one wants to miss a visit from any of his or her customers. Off handedly, the sales staff admitted to me that they didn’t want to risk a fellow sales person poaching their customers.

New versus Old
Three new sales people in as many years have tried, but eventually each left the company failing to achieve growth in new markets. The owner wants the company to grow but no one else shares his vision enough to change, so the company continues its focus on supporting existing markets.

In fact, the sales staff convinced the owner to let them continue to work with their established customer base, leaving the new person to focus on developing new markets alone. The way they see it, they had spent years developing these customer relationships and they weren’t going to trust them to a new person.

The sales staff is not supporting the company’s growth goals

Therefore, the tenured sales staff is not supporting the company’s efforts in developing new markets. Their appetite to aggressively pursue new business has disappeared. The company loses the benefit of having experienced, proven sales people seeking out and meeting with prospects. And finally, new sales persons are isolated from their peers, and are missing out on valuable on-the-job training.

Benchmarks
Not only are new sales people on their own, but also their benchmarks are inaccurate. New sales are measured by benchmarks that are simply modified versions of existing base business benchmarks. The new sales people are expected to produce business from a combination of company- and self-generated leads. Lead conversion via marketing efforts hold the same weight as the company’s base business. For example, a phone call from a referred prospect is considered equal to a positive response from a direct mail piece. These are inaccurate measures, which set unreasonable expectations.

Goals
Not only this, but goals for new sales people are borrowed from the existing sales force. After two years of employment, the new sales person is expected to produce the same revenue as an existing sales person. The owner optimistically assumes that the new sales person would be able to capitalize on the company’s reputation. But the inexperienced sales person can’t articulate why its customers prefer the company.

It is Important to Know How to get New Customers
As it stands, a new sales person cannot be successful in this company. He works alone with impossible goals and ill-fitting benchmarks. This new sales person has the most difficult challenge – acquiring new customers – amidst antagonism or, at least indifference, from his own team members. And outside its established market, the company’s reputation won’t be enough to close new business for any sales person, experienced or inexperienced.

Why Strategy is Important
If a new sales person cannot be successful creating new business and the current sales staff won’t work to attain new business, the company simply will not grow.

The owner needs to recognize that the company must relearn how to target and acquire new customers. He has two choices:

The owner needs to recognize that the company must relearn how to target and acquire new customers.

1. Hire and charter a new team that is hungry for new business, much like when the company was first started. The company must be prepared to invest in this new “start-up” venture. Expectations need to be like those of a start-up business rather than those of an established, reputable business.

2. Convince the whole company that it must share the responsibility for growth. It is no longer acceptable for a sales person to bid only repeat and referred business. Everyone will be expected to provide more help in quoting and building new types of projects.

At the same time, the owner needs to develop ways to help customers identify more with the company as a whole and less with an individual sales person. Short-term efficiencies are created when a sales person fosters a favorite customer or project. But the company will suffer when the dynamics between its sales person and client breakdown, or if one of the sales people leaves.

The Need for an Outside Experienced Opinion
This company has an excellent foundation on which to build. Through my evaluation, the owner recognized that providing excellent service wasn’t enough to attain growth goals. We uncovered the company’s limitations and presented some clear opportunities.

My business systems model is an effective diagnostic tool and could help your company to work its way out of a difficult situation, and to achieve its full potential. Allow me to work together with you to provide a tailored, high-touch assessment of your business.

Scott Jacobson
For faster response please call 952-896-0062
scottjacobson@sightlineadvisors.com