Sales | The Barefoot Spirit

Base Compensation on Sales, Growth, and Profitability

Michael Houlihan & Bonnie Harvey — Thu, 24 Mar 2016 17:00:21 +0000

Brian Tracy once said that most employee behavioral problems are caused by compensation systems. In short, you get what you pay for. Nowhere is this more critical than in how you compensate your sales team. For years we paid our salespeople a commission based on sales alone. Much later we realized that our compensation plan was incomplete. We had to find a way to also reward for growth and profits!

Growth is the key to survival for any new startup. But be careful. Your sales team will do exactly what you pay them to do! If you pay by the hour, then you are giving them the message that you pay for attendance. They will put in the time but not necessarily do the job you need them to do. The alternatives require some serious thought: If you pay a guaranteed flat rate plus commission, how big is the guarantee? What is the commission based on? And what are the levels and how are they set? Can these levels be achieved at any cost, because if they can, your sales team will spend as much as necessary to make sales, thereby reducing your overall profitability.

So you need a system that rewards for sales, growth and profitability.

This may sound simple, but it’s not. Your salespeople must be provided with last year’s sales figures. They have to be aware of the cost of sales. And they should understand the cost of goods of each of the products your company sells. Although they have no control over the cost of goods, they can increase profitability by offering discounts on products that have a lower cost of goods, rather than discount products that have a higher cost of goods.

We built our system over a period of years of trial and error. First, all sides had to agree on the term, what was being measured, when, and why. We started by providing a small base salary that would basically cover their bills.

Every territory was different and had to be treated differently when analyzing sales. In each, we used the sales for each month last year and the cost of those sales per case. That became our baseline to compare to this month’s sales figures. We then determined profitability per case in that territory.

But some argued it wasn’t fair because of special market dynamics that created one-time anomalies. So we calculated a 3-month average, using the previous month, the same month, plus the following month of the previous year. This became our new baseline for sales this month this year.

Now we needed a plan that would reward for growth, which was sales greater than the baseline. We paid commission on each case sold that exceeded last year’s 3-month baseline.

Then, if in any given month, sales exceeded the baseline by a pre-agreed upon amount, say 25%, the commission would double on all cases back to the baseline. And if sales exceeded the baseline by 50%, all cases over the baseline were worth 3 times as much in commissions.

So the same case could be worth one, two, or three times the commission if the salesperson hit the various plateaus. Our salespeople naturally would push for the next highest plateau every month!

We also kept a close eye on their cost of sales and would reward them for savings in this area, or penalize them for increased costs. This kept them mindful of the costs and use of marketing materials, sales trips, distributors’ incentives and other costs required to make sales. Our sales staff became very resourceful and frugal!

Finally we were paying for sales, growth and profitability. Within two years of implementing this plan, we became one of the fastest growing wine brands in the country. It was well worth the effort! Now, with the proper compensation plan in effect, you too can watch your sales, growth, and profitability soar!

Who We Are

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at www.consumerbrandbuilders.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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The 9 Selling Seasons: Seasonal Selling Can Get You More Sales, Part 2

Michael Houlihan & Bonnie Harvey — Thu, 28 Jan 2016 18:00:29 +0000

The calendar year is already divided up into at least 9 distinctive selling seasons. Each selling season, for the most part, is named after the 3-day holiday they run through. The selling seasons all start right after the previous holiday and end on the next holiday. These selling seasons can last anywhere from 2 weeks to 2 months and they all have their particular festive themes. By understanding and anticipating these various seasonal themes, astute brand builders can secure displays and lever their marketing and merchandising materials.

Last time we examined the first 5 selling seasons of the year: Martin Luther King, Jr. Day, Valentine’s Day/Presidents Day, St Patrick’s Day/Easter, Memorial Day, and Independence Day. Now let’s take a look at the remaining 4:

Labor Day – Starts the day after Independence Day and runs for 2 months. This is the “official” end of the summer and the beginning of back-to-school days. This is the last chance of the year to promote anything “summer” such as picnics, outdoor activities and summer vacations.

Halloween – This is another relatively long, 2-month plus selling season interrupted only by Columbus Day, which, although a Federal 3-day-weekend holiday, does not sport a “Columbus” theme with much popularity. Although Halloween is not a 3-day-weekend holiday, many Americans enjoy celebrating it, and the markets are decorated with the fall harvest color theme of gold, orange, brown and rusty red. Plus, there are the mandatory pumpkins and goblins.

Thanksgiving – The time between Halloween and Thanksgiving is just over 3 weeks. Now we are officially into “The Holidays.” With the addition of Veterans Day on November 11^th which is also a Federal Holiday, the dominating theme during this period of time is family, food, and home. Discover how your product or service fits in, and how you can best present your offerings in a way that compliments these predominant themes.

Christmas-New Years – From Thanksgiving to New Years is about 5 weeks and the theme is holiday shopping, home, family and friends. Vacation time adventures, snow recreation, and year-end themes also abound. This is the most competitive time of the year for many businesses but a relatively slow time for others that rely on fair weather. Savvy consumer products marketers will have already pre-sold displays to retailers many months prior. They will be watching their inventory to replenish it when it depletes at every level including the supplier, manufacturer, distributor, and retailer warehouses. They will also be watching the retailers’ shelves for out-of-stocks. They will point out that retailers can order more without fear of over stock because they can sell off any unsold balances during the Valentine’s Day- MLK Day selling season starting January 2. This also is the last chance for brand builders to move product that will be counted in the total sales for the year. Those numbers will be critical in January when most buyers make all their buying decisions for what to keep and what to discontinue for the coming year.

The key to seasonal selling success is to look at the year in advance and decide how your products and services can work with the various holiday themes that already exist in the marketplace. Make plans sufficiently in advance so you can reserve the space, pricing and programming, and have all the celebratory materials designed, produced and delivered in ample time to take advantage of these seasonal opportunities.

Seasonal selling seasons are going on whether you jump on them or not, so get with the program and plan ahead!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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The 9 Selling Seasons: Seasonal Selling Can Get You More Sales

Michael Houlihan & Bonnie Harvey — Thu, 21 Jan 2016 18:00:08 +0000

Everybody in the consumer products business knows how important the winter holidays are to retail sales. But wait, there’s more, a whole lot more! In fact the entire year can be divided up into at least 9 selling seasons. Each one can have special significance for your product or service.

What most selling seasons have in common is that they begin right after the last 3-day bank holiday weekend and run through the next 3-day bank holiday weekend. During that period most retailers and smart producers are putting out signs, decorations, and trade dress on their consumer products in an effort to take advantage of the seasonal theme. In most cases, every seasonal selling promotion has to be scheduled substantially in advance to reserve display space, ad space and special pricing.

Let’s examine these selling seasons (theme-promotional periods) and the opportunities they present for producers to help their retailers decorate, celebrate, and move product:

The Martin Luther King 3-day Weekend – the 3rd Monday in January celebrating the great civil rights leader. The selling seasons begins on January 2^nd. It’s relatively short but this is the time when retailers try to sell off any unsold inventory they bought for the Christmas – New Year’s selling season. Expect big sales and volume discounts during this selling period, making it difficult to sell in when retailers want to reduce inventory. It’s a great time for snow sports and winter recreation, however.
The Valentine’s Day- President’s Day Weekend – the 3^rd Monday in February and because Valentine’s Day (February 14^th) falls so close, we end up celebrating our two greatest presidents and romance around the same time. Super Bowl Sunday also occurs during this period. The period starts the day after MLK Day and is a month-long selling season. You guessed it, a perfect time for all thing romantic – flowers, chocolate, wine, pajamas, travel, restaurants – you get the picture. How can you make your product romantic?
St Patrick’s Day – Easter. Although neither is a bank holiday, Good Friday is generally observed as a day off making Easter a 3-day weekend. Some years when Easter falls early, it’s very close to St Patrick’s Day which can combine the two into one selling season. When Easter falls late we can have an up to three-week Easter selling season. You get the idea, shamrocks, eggs, bunny’s and new items.
Memorial Day – in honor of our military service people, the last Monday in May. It is also considered by many as the “official” first day of summer, with picnics and barbeques, outdoor activities, and vacation time. Discover how your product can fit in. This is a two-month selling season starting the day after Easter. The only big selling day in between is Mother’s day, the second Sunday in May, which obviously has its own theme.
Independence Day. Depending on how close it comes to a weekend, it can be a 3 or 4 day weekend. Get out the red, white and blue! The Independence Day selling seasons starts the day after Memorial Day and continues with the summer vacation and recreational theme for over a month. The only other big selling day is Father’s Day, the 3^rd Sunday in June.

Next time we will examine the last 4 selling seasons of the year and their commercial implications. But knowing what’s coming and how you can lever each one gives you a real advantage, if you sell with the seasons!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Sales, the Job That Resists Automation

Michael Houlihan & Bonnie Harvey — Thu, 04 Jun 2015 17:00:30 +0000

Once again we have a flood of new grads hitting the job market. But now the concern is, “Will my job become computerized? Will I be out of a job?” Undergrads are asking the question a different way, “What job should I prepare for that won’t be replaced by a robot?” Long-term security plays heavily in the minds of today’s students both before and after graduation. They have already seen many jobs replaced by software or machines and want to know which way to turn.

We believe that there is one job that will always be in demand and can best be done by a living, thinking, feeling human being: Sales! Why? Because ultimately it is a human being that is making the buying decision. They place trust in another human to help them make the right choices. They want to look into the eyes of a real person that they can hold accountable when they make that choice. They want to know who they are “buying,” not just what.

Another reason a job in Sales will endure is that the same skills are required to run any company. You have to sell your staff, your investors, your suppliers, your distributers, and your ultimate customers. These require the human touch and empathy for each person who touches your product or service, from the supply chain to the distribution chain. It’s all sales.

Amazingly, Sales is rarely taught in the schools. Sales Management, where you add up numbers, produce reports, do trend analysis, and create projections is taught. But actual sales, where you farm for prospects, cold call, create relationships, learn the prospects business, gain the prospects trust, overcome objections, master communication, and close the deal, is generally not taught.

So now, the jobs that really can’t be automated are generally not being taught; you would be very hard pressed to find a degree in real sales. Yet these jobs are not only high-paying and in demand, but they will be around for at least the next 50 years.

What should one study to be prepared for a career in sales given that it generally does not have its own curriculum? The Liberal Arts, also known as the Humanities or Liberal Studies. Why? Because in our experience, the more you know about the other person and the better able you are to communicate with them, the greater the likelihood of making a sale whether that’s convincing them to take action, gaining their cooperation, or actually buying a product.

Sociology and Cultural studies will give you a respect for other cultures and their values. This is invaluable to establish essential relationships within an increasingly international market.
Literature, Composition, Speech, Debate and Critical Thinking will help you communicate with every “buyer” from your banker to your employee, and from your wholesaler to your customer.
History and Political Science will give you the big picture perspective, classic lessons learned over time, and will make you aware of the other person’s goals – all essential ingredients to making a sale.
Psychology and Philosophy will help you understand how other people think and why they make the decisions they do.

Sure, there’s more to sales than just the Liberal Arts, but it’s a great start. There is also a myriad of classes on line on sales and negotiation skills to help you with your sales career. But nothing tops actual experience, especially when your livelihood depends on it. You’ll learn the dos and don’ts pretty fast. We did.

So whatever you are taking in school, buy an insurance policy on long-term security by studying the Liberal Arts. You will be a lot less likely to be replaced by a robot!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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Standing on Ceremony Can Lose the Sale

Michael Houlihan & Bonnie Harvey — Thu, 30 Apr 2015 17:00:57 +0000

Sometimes you can do everything right and still lose the sale. Why? Because the buyers simply don’t like you or your approach. Sometimes in an effort to be professional we can be read as mechanical, sterile, and heartless.

Sure, it’s a thin line between too much information and not providing enough to gain credibility. But there comes a time in every sales process when you have to show enough of your true self to be considered authentic and sincere by the purchasing party. Buyers want to identify at some level with the folks who are selling them. They want to know something that they have in common with the seller. It helps them justify the purchase. It helps them gain a feeling of trust.

Seasoned salespeople know from experience just how much is enough and how much is too much. First of all you have to be relatively confident with yourself and your product. Some people have issues with becoming personable at all. They think they can hide behind ceremonious form to avoid any kind of personal exposure. But their prospect may feel uncomfortable and ultimately see the form itself as tedious and they soon lose interest. This is what’s wrong with form letters and standard approaches.

Some people think that being mysterious will somehow lure others in and make them want to know more. We have found this approach tends to be read as insincere and somewhat devious. Prospects who don’t even know you now are faced with an added barrier to open communication – mystery. They wonder what your true motives are. We have found that they not only don’t want to discover the mystery, but they want to get away from those who try to use this or any other kind dramatic tactics.

The winning approach is to find something you have in common with your prospect before you ever go into your pitch. You’ll be glad you did because in the process you will learn how your prospect communicates and what their priorities are. This will help you immensely to craft a tailored approach for each of the unique prospects you meet.

We did business over the years with many Japanese colleagues and buyers. In their business culture, it is considered rude to pitch before some commonality has been established. It was not unusual for us to spend the first entire session talking about, you guessed it, the weather. After that it was sports or favorite movies.

Today, when we cold-call a prospect for a speaking event we like to set it up on Skype or some other video conferencing service so we can see each other. That increases the human touch right there. Then we usually ask them about the weather they are having and share ours. We also have learned enough about them and their company previously to comment favorably on some current event that effected them, like, “Congratulations on that recent merger,” or “You guys are really making a difference with your new program.”

Keep the conversation light to establish engagement, humor and trust. Remember their judgment about you takes place in the first 20 seconds and thereafter tends only to validate that initial impression. So take the time to establish friendly relations first. People want to cooperate with people they like. It’s as simple as that. So do they like you? What have you done to make yourself believable, likable, and friendly? We have found that initially folks must “buy” you before they will ever consider buying your product or service. First make friends; then make the sale!

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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World’s Greatest Sales Pitch: I Can Help You Sell Your Product!

Michael Houlihan & Bonnie Harvey — Thu, 19 Mar 2015 17:00:26 +0000

Everything is dependent on sales. There is no better justification for salaries, offices, production facilities, or even products. With enough investment capital you can have all those things, but they are unsustainable without sales. Our modern business culture has gotten so carried away with funding as the source of all cash that we have forgotten that sales ultimately makes the wheels go ‘round. When businesses use up their investment dollars in research, administration and facilities, they have to go back for more – or close the door.

That’s why we put such emphasis on sales. In 2015 there are still very few secondary schools of entrepreneurship that actually teach sales. They teach sales management, how to add up the numbers and write reports, but not nitty-gritty sales. They teach the “sales funnel” and the elevator pitch, but not sales as we know it. For us, sales is the ability to get a prospect to buy your goods and services time and again, and remain loyal.

Entrepreneurial success is not about getting funded. You can easily burn through those funds without sales. It’s not about launching your business either. Every ship that sinks was first launched. It is not about offices, production, or even a disruptive world-changing idea. For us, true entrepreneurial success is still being in business three years later. And even better, having sold your enterprise at a huge profit. You can only get there through sales. So let’s focus on sales first.

We are frequently asked, “What is the world’s greatest sales pitch?” We think it’s, “I can help you sell your product!” Why? Because it compels the prospect to answer, “How?” This is a buying signal. He has given you the floor. You have said something he wants to hear. So now you have to answer the question. How can you help him sell his product?

Well, first of all, you had better know what his product is. This mean you have done a lot of research, questioning, listening and observing. It also means that you know to whom you are selling and what is important to them. Each person who touches your product must be sold, and what each of them wants is not the same as what your eventual downstream consuming customer wants. Not by a long shot!

If you are selling to your wholesale distributors, jobbers, or middlemen, their product is strategic importance to retailers or other distributors. Perhaps you presold a big retailer they supply and your product strengthens their strategic importance. Perhaps your product rounds out or distinguishes their portfolio.

If you are trying to sell your retailers, their product is retail goods on precious shelf space that must turn quickly. Perhaps your product has a reputation for fast turn and profitability. Your sales pitch might be that your marketing materials help them decorate their retail business to celebrate seasonal events to attract more shoppers.

We are also often asked, “Who is the world’s best sales person?” We always answer, “The assistant buyer.” Why? Because when your prospect sees you as having their best interests at heart, they will trust you and hand you the keys to their warehouse. They are relieved that they don’t have to worry about being out of product any more. They don’t have to worry about your motives any more. Now they rely on you and will ask you what they should buy.

We have seen many successful entrepreneurs over the years. What they all had in common was their ability to help sell their customers’ products and be their “assistant buyer.”

Who We Are

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.

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