1: The date was April 1, 1993. Lou Gerstner had just been named CEO of IBM. For decades, IBM had been one of the world’s most admired corporations.
Now, it was on the verge of bankruptcy.
Lou had started his career as a management consultant at McKinsey & Company, one of the world’s largest and most respected consultancies. Soon after taking his new role, he asked his friends at McKinsey “to use their investigative skills to determine why IBM sales, market share, and profits were falling,” Brian Tracy writes in his book Sales Management.
They immediately went to work.
“In less than six months, the consultants were back,” Brian writes. “They assembled the senior executives and told them, ‘We have found your problem.'”
“What is it?” the IBM team asked.
“Low sales,” the McKinsey consultants replied.
“What is the solution?”
The McKinsey consultants said simply, “High sales.”
“The senior IBM executives pointed out that these two answers were obvious. But how would these high sales be achieved?” writes Brian.
The answer? The “75 percent rule.”
In their research, the consultants discovered that IBM’s internal policies resulted in salespeople and sales managers spending “too much time in the office filling out forms and too little time in the field face-to-face with customers,” Brian notes. The McKinsey consultants recommended that this ratio needed to be reversed.
“The 75 percent rule simply said that from now on, the salespeople should spend 75 percent of their time in the field with customers talking about IBM products and services,” Brian writes.
Sales managers who spent their time in their offices reviewing all of the paperwork the salespeople were generating were now to spend 75 percent of their time in the field with salespeople calling on key prospects.
What happened?
“Within a year, IBM’s sales reversed completely. Huge losses turned into huge profits,” Brian writes. “The company turned around and again became a giant of American industry.”
3: The issue at IBM is all too common in many organizations.
“According to a study done at Columbia University, the average salesperson only works about ninety minutes per day,” Brian notes. “The rest of the day is spent warming up, cooling down, chatting with coworkers, playing on the Internet, drinking coffee, and going for coffee breaks and lunch.”
How do we define the work of a salesperson? “Only when they are ear-to-ear, face-to-face, with qualified prospects who can and will buy within a reasonable period of time,” Brian writes. Salespeople are “only working when they are prospecting, presenting, and closing.”
It’s the 80-20 rule in action: 20 percent of our activities lead to 80 percent of our results: “The 20 percent of activities that account for 80 percent of sales results are prospecting, presenting, and closing,” Brian writes. “All the rest of the time, they are merely filling up space and engaging in non-revenue-generating activities.”
3: At the beginning of Brian’s sales career, he was given some advice: “Every minute of every day, ask yourself, as a salesperson, ‘Is what I am doing right now leading to a sale?’”
He used this question to rise “to the top of every sales force I ever joined, selling every product and service I represented over the years. This mantra has also helped countless thousands of salespeople become sales superstars.”
More tomorrow.
Reflection: What results am I seeking? What activities do I perform that lead to these results? What is getting in the way of me doing more of these activities?
Action: Track and categorize my time this week. Focus on my time and effort on activities that drive results.
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