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Structured Selling - A white paper 28/May/09 (Networking)

Find out how a structured sales process will optimize the results and productivity of your current sales team.

Sales management is often described as the ultimately accountable job – and for good reason. Every sales manager has a constant challenge, i.e. how to lead, focus, support, monitor and incentivise, their sales team. Often, such a team comprises a group of individuals with disparate skills and experience and a common problem is encountered when staffs have been in their respective roles for some time. Familiarity can lead to people operating through habit.

“I know what my customers want”

“After 10 years, you get to know what’s selling”

“I’ve been doing this for so long; I could do it in my sleep”

Such statements can often be heard when people confuse experience with success. The simple truth is that markets are dynamic and there is never room for complacency. However, the solution is straightforward. The relentless rise of the major supermarket chains offer an insight into how attention to detail and the leveraging of available data, as generated by their everyday transaction processing, enables them to analyse opportunities quickly and efficiently. This concept is not limited to large corporations and any company will benefit from adopting a structured sales process.

‘Pick the low hanging fruit’

Rather than seek a silver bullet, a new market, killer product or the elusive ‘Super Salesman’, it is far more productive to optimize what you already have and generate more business through effectively identifying and converting the opportunities ‘staring you on the face’.

As a manager with a leading retail chain, I was personally involved in the implementation of a ground breaking sales process within the Group, which had a profound impact on the entire marketplace. The result of this initiative was that we saw under-performing sales people, many of whom had never delivered significant results, achieve consistently high, long term sales figures.

It is a great example, to show what can be achieved, to compare the two largest independent mobile phone retailer in the UK, Car Phone Warehouse (CPW)and Phones 4U (P4U).

In March 2005 P4U invested in implementing a structured sales process, which they called ‘Sales Process 1’ or SP1. As the name implies, the objective of the exercise was to ensure that all sales related staff were given a methodical system by which to work, designed to ensure that all sales opportunities were identified, optimized and converted. Nothing was left to chance and the system was engineered to ensure that every sales person could deliver maximum results regardless of their experience. Nine months later, P4U had increased revenue and service connections by 15% and were achieving a similar turnover to CPW with less than 5 times the amount of retail outlets.

As at 30th mar 06, CPW had 1778 stores, generating £2.35 billion in revenue, with 21% market share. At the same time, P4U had 353 stores, generating £2.12 Billion in revenue with 20% market share.

By 2006 P4U had implemented its third generation sales process, codenamed ‘Pitch for Business’. By refining its processes and procedures, P4U has sought to improve its success rates and convert more business, not just through the opening of more branches and hiring more staff but by optimizing its resources.

tURNOVER * £2.12 billion	TURNOVER £ 2.35 Billion
PROFIT EBITDA £161 MILLION	PROFIT EBITDA £173 MILLION
STORES 353	STORES 1,778
MARKET SHARE 20%	MARKET SHARE 21%
CE* Won the JDPower award 2 yrs	CS* No awards in 2005

TURNOVER* = (This figure excludes Caudwell communications as it was up for sale at the time) (£405 million)
CE* = Customer Excellence (P4u say the term customer service is the minimum tolerance, excellence is the goal)
CS* = Customer Service
EBITDA = (Earnings before interest, tax, depreciation and amortisation) EBITA (Earnings before interest, tax and amortisation).
All of the figures stated in this document are from the companies own websites and press releases and refer to the companies own financial years P4U = Jan 2005 to Dec 2005 and CPW financial year Apr 2005 to Mar 2006

Phones 4 u have rolled this model out across the estate and are showing that you can get some massive results just by having a structured selling process and making use of the resources you already have.

This goes to show it’s not how big you are or how big you want to be or even how big your budget is. It’s how you best use the resources at your disposal.

Here is an article on John Caudwell and his sale of Phones 4u.

I’ll Have what John Caudwell is having

by Charles Orton-Jones

It’s the phone call every entrepreneur dreams of. For John Caudwell it comes ten minutes into our photo shoot.

We’re in his flat – a bijou, sparsely furnished pad overlooking Chelsea Harbour. Yesterday Caudwell sold his company to two private equity firms, ending a gruelling 12-month sale process. This is his first day of freedom. Yet Caudwell doesn’t look elated. In fact, he looks eerily subdued. He’s quietly following the photographer’s orders. “Lean back, smile, look left, keep still…”

Abruptly a rock ‘n’ roll ring tone fills the air. “Hold on a minute lads,” says Caudwell, flipping open his Motorola Razr. “I’ll just take this. Won’t be a minute.” Our photographer gives him a quick thumbs up and uses the time out to switch lenses. Caudwell whispers “hello” and listens intently. Slowly he starts to light up. “Duncan. Yes... It’s in? What, all of it? That’s great. It’s in! I’ll have to go, Duncan, I’m having my photo taken. Bye.”

His face is beaming. Something’s clearly happened.

“Good news, John?”

“The money’s just hit my account.”

Ker-CHING! That’s £1.24bn landing with a bump in his bank account. No Englishman’s ever received a bigger cheque. And on a personal note, the phone call marks the end of Caudwell’s 20-year odyssey. His reign of terror in the mobile world is over. In a flash he’s been transmogrified from tycoon into Britain’s richest unemployed citizen.

Caudwell plays the moment coolly. He stares into space for ten seconds. Chuckles to himself. And then, as if nothing had happened, resumes posing for the camera. Only when the photographer announces the shoot is over can the inquisition start. So tell us, John. What does it feel like to trouser a billion quid in one go?

“Relieved more than anything else. Just relieved that the sale process is over, rather than joy. I built this business for over 20 years. That’s 20 years of my life. “None of the growth was acquisition, it was all pure organic growth. To sell the business, and to sell it through the most incredibly difficult process you could imagine, leaves you relieved but not elated.” The man once nicknamed the Staffordshire bull-terrier looks decidedly melancholy. “There’s a sense of loss as well. I drove past one of my shops today – no, sorry – I drove past one of their shops today and I wondered how the sales were performing and I had to correct myself. It isn’t mine now. It doesn’t belong to me.”

He says his diary, for the first time ever, is empty. “I’m aiming for semi-retirement. I want to try and see what it’s like to have free time.”

The warrior
No one deserves a happy ending more than Caudwell. The Daily Telegraph once commented that a West End musical could be made of his life, and sure enough, the plot line is theatrically rags to riches. After a childhood he terms “reasonably challenging”, he spent ten years working at a Michelin tyre factory. He was a late bloomer in entrepreneurship. After trying his hand at a few ventures, including running a corner shop and selling cars, aged 34 he discovered mobile phones.

It took him eight months to shift his first consignment of 26 brick-sized Motorola phones, which retailed for £1,500 each. “When I started I knew nothing about retail. Nothing!” He proved a fast learner, and a year later, in 1988, he and his brother sold £1m worth of phones.

Year after year the Caudwell Group grew. There were no poor years. He diversified into phone repair, accessories distribution, logistics and even recruitment. A ruthless taskmaster, Caudwell insisted on every division being anorexically lean. Email, famously, was banned (“It’s insidious, a cancer,” he wailed to Real Business back in 2004). Under-performing managers were eliminated, including Phones4u’s managing director Anthony Catterson only two years after he’d won the top prize at the company’s annual awards ceremony. Irresistibly, the Caudwell Group overtook all its rivals – including its bête noir, Charles Dunstone’s Carphone Warehouse.

“Over the years we’ve had various competitors,” recalls Caudwell with relish. “But Carphone was the one we wanted to beat. Why? Because they were the best.” Victory arrived only recently. “Three years ago we were the number four or five mobile retailer in the UK. Now we are number one. The most important measurement is contract phones per store, and we significantly, and I can almost say massively, outsell Carphone now. That to me, coupled with the customer excellence we’ve indoctrinated into people, tells me that we are clearly number one. And I probably wouldn’t have sold if we weren’t number one.”

The matrix
The sale means that Caudwell’s got around £2bn in cash. He received £400m from the sale of customer care unit Singlepoint to Vodafone in 2003, and earlier this year sold his fixed-line business to Pipex for £40m.

Reflecting on his success, he says his proudest achievement was turning around the group’s reputation for customer service. For years Phones4u had been mocked for its surly staff. Caudwell dreamt up a masterplan to crack the problem – with spectacular results.

“Three years ago we didn’t have customer excellence. We had customer satisfaction. But I wanted customers who said, ‘Wow! That’s a great place to shop.’ So I developed a customer excellence matrix.

“We would assess the whole business at a macro level, then area directors, then shop managers, down to individual sales people. We’d do a mystery shop and score each shop out of 100. We’d look at the complaints the shop got and express the complaints per salesman, per store and per director as a percentage. We did a customer satisfaction survey and we’d chat with customers too. Talk to your customers and they’ll say things they won’t put on forms. They’ll pour their hearts out.

“We looked at 14-day customer returns. I believe that if you have a 14-day return, in the majority of cases there is something wrong with the sale process – or why is the customer bringing the phone back? All of these numbers would go into a matrix. I made sure the first time we did the matrix the score would be 50 out of 100, as it is the relativity that’s important.

“The customer excellence percentages were factored into everybody’s pay, from sales to the MD. So if someone was on 100 per cent bonus, if they performed badly, their whole bonus would disappear. This way the whole firm was focused on customer excellence. After the scheme was introduced we spent more time talking about customer excellence in the board room than anything else.”

The effect was stunning. “After two years the firm’s score was at 85 per cent. A lot of mystery shops would come back at 100 per cent: a perfect performance.” Naturally this elaborate methodology was dreamt up by Caudwell himself. “I don’t copy anyone else. I just did it. It was unique.” But just as he’s starting to crow, his mobile rings. It’s Craig Bennett, the man who served as his FD for 17 years. Caudwell’s face lights up again.

“Yours is in too? It’s great, isn’t it?” Soon he rings off. “He’s just got his money too,” reports Caudwell. “Craig’s a brilliant guy, grafted morning, noon and night. He’s only 43 and now he’s got a few tens of millions in the bank.”

Management the Caudwell way
Bennett was Caudwell’s most trusted advisor. He joined when there was only a handful of employees, and, with five per cent, was the only person other than Caudwell’s brother Brian to be awarded equity. His job was to help Caudwell extend his mantra of “simplicity” into the accounts department.

“The really big challenge throughout my business career was making sure the financial directors reported things back to me in a prudent way, not leaving the balance sheet exposed.

“For instance – if we bought office equipment, instead of a straight line write-off of 25 per cent over the four years, I would say, immediately as it comes out of the showroom, it is worth half of what you bought it for. I’d want it written off in that month’s P&L. I’d then want it written down in the subsequent 12 months to next to zero. So what I’d want, always, is my management accounts to represent the real track in value. Not representing an Inland Revenue valuation.”

When it came to running the stores, Caudwell didn’t need much help. His technique, as with the customer excellence matrix, was to rely on his own ingenuity. His approach to badly-performing stores was typical.

“I’d go on my bike and see the store,” says cycling-fanatic Caudwell. “I learnt a huge amount by finding out in person why a store was performing badly.”

To motivate his staff, Caudwell realised there’s no substitute for monetary rewards. On one occasion he produced four suitcases each stuffed with £250,000 and waved them around in front of 600 sales staff. He also promised to give £1m to 25 senior managers and to divide £10m among 400 staff if they hit their targets. “It was a showbizzy way of telling them the rewards are there if they perform properly,” he recalls bashfully.

Another Caudwell innovation was prompt sheets. Instead of letting his staff waffle on to customers, he wrote a script for them. “The only problem with that format is that it can get a bit wooden. So the next stage is to inject a little personality. Follow the form, but do it in your own way and the customer has no reason to go anywhere else.”

When he realised staff could do with a little training, he took the direct route and founded a training school, at Yarnfield in Staffordshire. All new staff would be indoctrinated over five days. “My daughter’s just done the course,” he says with pride. “She went into a store last week and sold six contracts, which is pretty good. It shows the system works.”

And you can be sure all those management gems are his own. “I’ve never read a sales book in my life,” Caudwell boasts. “Or a management book.”

He’s unlikely to add to the genre, though. Instead he’s planning to devote his time to the children’s charity he set up in 2000. He’s also hoping to spend more time with his family. Anything, it seems, apart from start another business. “I don’t need another billion,” he declares. His rivals – Charles Dunstone in particular – will be delighted to hear that this ferocious competitor has left the boardroom for good.

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