Glenn Nixon on ICP Discipline, Revenue Quality, and Sales Leadership

Transcript

0:00 All right, now that I've hit the record button, right, let's go back to that amazing intro that I totally whiffed on.

0:09 I can't I can't even remember what I said. No.

0:13 Right. So, yeah. So, the um ideal customer profile and the importance of being really intentional and disciplined about that.

0:21 Yeah. Um and and one of the this is something I noticed after 29 years in corporate and sales and sales leadership

0:30 and then seven years going out on my own and realizing that and working with smallmedium businesses primarily B2B

0:38 businesses a lot of them are technical sales because that's where I grew up an electrical engineer by education. So it

0:46 was it was a very natural thing for me to ask the question okay well how do you know so this is the saleserson and the

0:53 sales leader you know how do you know who to target how do you know who you know how do you take a purchase list or

1:01 something like that and and figure out how am I going to make my number out of this list right

1:09 so at a certain point smallmedium businesses they they struggle with the part about, okay, this is our goal and

1:18 we're going to achieve that goal by selling our product or service to our to

1:27 customers. Okay? When you start to institutionalize that and and you start

1:33 to you start to mature the company and mature the sales efforts toward um being

1:41 more focused, making sure that the energy that you're expending is very focused and you're not you're using a rifle shot instead of a shotgun, right?

1:50 Because that's very common. You just kind of let's see where we can get the business to be fair. A lot of business

1:59 owners, that's how they became successful in the first place is they had something very interesting

2:06 and valuable and they just kind kind of started talking to everybody that might

2:12 have the problem they can solve. And so narrowing in on you know what is the

2:19 biggest value for us for us for for us growing the company. um could be lots of

2:27 different dimensions like uh profitability, could be uh more strategic like working with this company

2:34 is going to give me um social proof um of my effectiveness of my solution and I

2:42 can use that then to um approach other businesses that are similar or adjacent these kind of things.

2:51 Yeah. So as the as the the business development I would say approach uh

2:58 matures it starts to become obvious okay well we need to figure out a better way to define who it is exactly we're

3:07 looking for right so I've heard you use the term and I've heard other use the term the firmography right

3:13 so trans and then translating that statement of okay here is our ideal

3:21 customer profile and translating that and cascading that to the operational

3:27 level in the sales organization is I mean you have to be what I find is

3:34 you have to be very intentional and very disciplined about doing that right so example might be you hire a couple of

3:43 salespeople you're starting to get traction you have said um the easiest one to expl plane is the uh geographic.

3:53 So let's say you have an ideal customer profile, ideal prospect that is within a 1 hour drive.

4:01 You have a services business. All of your pricing models and everything are based on we don't have to drive more than an hour to get to any of our

4:10 customers. Right? So you say, "Okay, that's you hand that to the salespeople and being really good salespeople and

4:18 hopefully very aggressive toward finding new opportunities, they come across something looks really good, but it's an

4:28 hour and 20 minute drive." Yeah. And the salesperson is going to be really good about coming into your office and explaining to you how it's so

4:36 important that we, you know, these that company knows a lot of others and would be really good for us and it's really

4:43 strategic and and you say, "Well, it doesn't meet our ideal customer profile." And the salesperson says,

4:51 "Yeah, but it'll help me make my my number and it'll help us make our then it then it starts then everything

4:58 starts unraveling because what happens is the the sales leader says, "Okay, well, we're going to have to put some

5:06 more. We're going to have to get have a higher price to offset the extra cost of the extra travel, right?"

5:13 And the salesperson says, "Well, hold on a minute. that company is looking at our competitors and they they they're going to be lower price than us if we do that.

5:26 And the sales leader says, "Listen, this is ideal. This is outside of our ideal customer profile. You have to Yeah, but

5:36 you know, okay, break down do just this once, right?" Yeah. That's where it starts. The slippery slope right there. Yeah.

5:43 Yeah. Okay. So in practice what really happens that so so let's say that salesperson is successful in capturing

5:51 that business okay now you have sacrificed margin probably right because you're not getting price to offset the

6:01 extra cost right the extra selling price um and also you now have probably have

6:09 if the if the salesperson's really aggressive now psychologic ically you have allowed the saleserson to create a

6:18 band around the 1 hour travel time which adds another 20 minutes and now he's got a bigger territory. So that's

6:27 awesome. Now I can go well you didn't say that. you didn't even imply that.

6:34 But psychologically with a good salesperson, they're saying, "Okay, now I have more territory I can work with," right?

6:41 And and the worst thing pos the worst possible case is you start repeating that pattern

6:48 and then people start pushing. So the part about and I put it this way,

6:55 sometimes it's just as important or more important to know when to say no. Yeah.

7:02 Than having a very clear and intentional definition of your ideal customer profile.

7:12 Yeah. Yeah. you know, when you were talking about that and I was thinking, you know, for myself, I don't have a driving radius, but I do have so many

7:19 phone calls I can make in a day, you know, and you know, to your point about being intentional and like the trade-offs. If I call, you know,

7:28 everybody, I might get, and this is generous, if I call everybody, I'm not going to get one out of a hundred. But let's say I call a really broad

7:35 non-narrowed group and I'm like, well, they have a sales team, therefore my stuff's relevant, therefore I'll call them. I might get one out of a hundred.

7:42 But I'm leading potentially if I had been more narrowed down, I could might get 10 out of 100. If I was really more intentional and every single day, I'm

7:51 leaving nine people that are interested on the on the sidelines because I'm not being focused and I'm not being intentional with who I'm reaching out

7:59 to. Um, and I it just it it's one of those things where it's kind of counterintuitive. It's like, well, I'm I got less people to talk to. And it's

8:07 like, yeah, and that's a good thing. And it in the initial thought and it makes sense to be like well wait that's not good for me. I want everybody to be on

8:14 my product. It's good for everybody to be involved in it. Yeah.

8:19 Now when you're seeing like this uh let's call it like degradation or dilution of ICP. Is it typically like

8:26 something where you know it wasn't intentional from the start so that's why it's already starting diluted or is it more of what you just explained which is

8:34 the slow chipping away at you know that strict definition that they have.

8:40 What I see in the early stages is the um difficulty in translating the ICP into actionable.

8:52 Yeah.

8:53 Into actionable and operational level, right? and and the and the expectation

9:00 the um I guess again the discipline in uh communicating clearly from the

9:07 leadership level that this is not a suggestion this we've thought through

9:14 how we're going to make our targets one of and our targets include um

9:21 scaling it in they include the targets include um a minimum

9:27 profitability, right? M so if we start to stray from our ICP uh because we

9:36 designed the ICP, we designed the ideal customer profile to yield right the

9:43 profitability that the the contribution margin based on desiraability or the let's say it's the

9:52 degree of of savings that our customer enjoys by adopting our solution.

9:59 So we've we've worked all that out. So all that math is math. And then so if you so if you stray from that and start

10:08 inserting other things uh not only starts to make the math not

10:14 math anymore, but it also uh siphons off or leaks energy. So this this is a big

10:23 thing. And uh I'm you know I'm I'm a gray beard and the older I get the more I the more this is is is relevant right

10:31 you only have so many hours and so much energy energy to expend in achieving the goals. So you need to look at it like if

10:40 I'm spending 2 hours a week chasing something that has a less than you know a a contribution margin that's lower

10:49 than what we planned. That means that two hours are not spent developing the relationships, developing

10:57 the business opportunities with the types of projects, types of product

11:04 sales that make our model work for our uh for our profit goals. So it kind of

11:12 hangs to so it hangs together. The part about uh the leadership

11:19 uh describing in a way that's impactful at the operational level I think is where a lot of a lot of things break

11:27 down, right? The leadership team says this is what we figured out and uh maybe skip the step of and here's why we have it set up this way.

11:40 Yeah. Yeah. So is that because that's what it sounds like. It's it's not the actual creation of the ICP that's the problem. It's the communication of it.

11:47 Do and it sounds like why is the big one. Um is there anything else that you see in the gap? And then in terms of

11:53 like if I'm a leader trying to construct how I'm going to communicate and uphold this, you know, how would you recommend

12:01 the delivery of the why and any other pieces that are important to beyond just saying here's a piece of paper, here's all the criteria, go for it.

12:10 Yeah, I think the so um one thing is impact on on the company. So if the company has like a bonus program

12:19 where it gets around the salesperson selling stuff that's outside the ICP and the profit mar the the profit contribution

12:28 or the contribution margin is falling that's impacting others that could be one thing. Um another thing is so talk about

12:37 salesperson compensation for a second don't want to go too far a field but it's absolutely absolutely relevant. Um,

12:46 so I run into this situation where a business owner will say, um, I want to

12:53 tie the incentive pay for a salesperson to to margin contribution or to gross

13:00 margin. So that should that in theory that helps, right? So the salesperson is saying I don't want a discount. If I

13:09 bring an opportunity and it's nonICP, but I can still, you know, achieve the

13:16 contribution margin, maybe that's worth talking about. But I'm pretty sure that the leadership is going to say no

13:24 because they're they're being very disciplined about that, right? Yeah.

13:29 So the one thing the one downside about that is especially if you're if the company is doing anything custom

13:37 u I warn about you know salesperson getting involved on the op side. So a

13:44 simple example is construction company salesperson is uh the incentive pay is tied to the gross profit of a project.

13:54 Yeah. If you do that and the salesperson is a really good salesperson is watching their watching their commission payment

14:04 according to the gross profit of a project and they start to hear uh project cost overruns, you know, they're

14:13 going to go visit the That's what I'm going to do. I'm going to go visit the job site and find out what the heck's going on because

14:21 those guys over there are causing my paycheck to be smaller. Right? If that's not happening, you have to wonder how

14:28 good your salesperson is. But that's a whole another podcast, right? Um u so you don't you don't you want to make sure that you keep the salesperson

14:37 focused on their goal, which is bringing the contract in and pricing the pricing

14:44 model. the the margin and all that stuff and the risk factors and all that that should be you know estimating an

14:51 operation should be concerned about that. Um and and for businesses where

14:58 it's it's more transactional the the the contribution margin is more predictable

15:06 that that is an option is to pay based on gross margin and then that kind of helps to discipline the the the the

15:15 salesperson's behavior toward the ICP and not string even with a even a productbased business where you're not having necessarily like

15:24 the fluctuation based on if somebody is chasing around the ops team and be like, "Hey, stop it." Like, "I need to get my commission check."

15:30 Uh, I worked in a situation where uh we were granted uh the ability to discount x amount, but then that would eat into

15:39 our um commission. And so I was like, okay, we were aware of that.

15:43 Yeah. But what ended up ended up happening and this is the unintended consequence is they would be like well

15:51 instead of trying to sell and learn the technique and get better and keep things at cost or at margin they would just be like hey uh you know you could go this

15:58 different route but if you work with me directly I'll always make sure you get this 20% discount. And so they were basically just walking around being like

16:07 you know here's my discount dealer over here. and they were and it's you know yes their margin wasn't changing or they they were hitting their own bottom line

16:15 but it was easier for them to instead of improving themselves just start offering discounts. So, your incentive to work

16:22 with me is if you work with me, you get a discount. If you don't work with me and you go around me to, you know, HQ, you know, you're not going to get the same discount. And it's like, what are

16:30 we doing here? Like, the whole point of this is to to get the products out here to make ourselves our presence more known to, you know, develop these

16:38 relationships and you guys turned this into if you want a discount, talk to me if you guys want to buy anything. And it's like, well, there's no value ad in

16:45 there. like you could just 20% off every Friday if you if that's what you're trying to do and not hire the salesforce, right?

16:53 Yeah. Yeah. You're Yeah, you're making the point about the value sale, right?

16:56 That buried in what you're describing is the value sale, right? So, and and this is again a different podcast, but

17:04 I mean, we're we're drifting there a little bit, right? Right. Drift a little bit. So, you look at the the skill of the salesperson and the training and the

17:12 coaching of the salesperson. Um if you were in a commodity type business and you're there's a high price sensitivity

17:21 um that the skill set is a little bit different than the value cell and the the valuebased relationship driven kind of sales environment.

17:32 Yeah.

17:32 Our two kind of a little bit different wiring of the salesperson and also needs a different skill set from the sales

17:41 leader perspective. Right? So the coaching and training and the top cover and escalation and all that stuff that

17:48 happens in a complex sale or a relationship value based relationship driven sale is identifiably different

17:56 than um a commodity type sale where it's volume and pricing, right? Um yeah. So,

18:05 and I think and to tie it back to your point about um about uh ICP degradation,

18:12 right? If we're talking about, you know, the value that should have been sold in that situation was time savings, convenience, uh quality and then it

18:20 became, well, I'm just going to send out those discounts. And so, if you're looking at the ICP is the person who values their time. They're busy. They

18:28 need high quality products. They don't need to think twice about this. versus if you start doing that discount, you know, you're looking for the all of a sudden you start bringing in bargain hunters and now you're competing on

18:37 something different. And so just that move there has completely brought in a whole other business model, revenue model that's going to degrade

18:45 it. And it's it's as simple as letting the saleserson have a discount code essentially, right? and then or at least not teaching them how to, you know,

18:54 correctly identify ICP and then maybe like if they can correctly adhere to it, they can go, okay, in this situation, we're allowed to give you a discount,

19:02 but it's only because of this bulk or your past buying period and you've already established them as somebody who values their time over bargain hunting.

19:10 Yeah. Yeah. Yeah. Yeah. I think it's pretty.

19:13 Yeah. And being very clear about the and I think of it as creating a filter, right? So recognizing the ICP or Uh and

19:21 so so you establish the filter and then on the and then operationally what you want to do is help the

19:29 salesperson by talking through okay what kind of questions or which questions do

19:36 you need to ask of the prospect to compare against your filter to help decide their fit to the ICP.

19:46 Right?

19:48 And then uh in your CRM, you want to be able to provide the features in the CRM

19:56 to help either identify where they are between the guard rails. So salesperson is asking questions. Let's say it's half

20:05 a dozen questions. the he gathers the information about the about the opportunity and makes a judgment

20:15 comparing it against the the filter in the CRM there their there their need you you need to make sure that there is a

20:22 way in the CRM to communicate how close because sometimes it's guardrails sometimes it's a checkbox but sometimes

20:29 it's guardrails right so you need to decide that and then the coaching the training and coaching ing that the sales

20:38 leader needs to do with the salesperson and make adjustments as you start to learn more about how to tune the filter

20:46 and get more intentional about how to ask the questions. So, if I'm if I've accidentally found myself in the ICP

20:55 degradation zone, uh, you know, what are the things that I can start thinking about and like first steps to get myself

21:02 out of that situation and back into, you know, a better path?

21:07 Uh, if you're a what role are you thinking of?

21:10 I guess the sales leader who's going, "Okay, you know, let's say a sales leader is owning their mistake. They're like, you know what? I got excited. I'll let them expand the 20 minutes out.

21:19 Like, that's my bad. I shouldn't have done it.

21:21 Yeah, I'm gonna clean up my mess. So, like what would you say like besides being like I'm gonna go call Glenn and bring him in, right?

21:28 Somebody wants to DIY a little bit like what would be like first steps that that sales leader could take to pull themselves out of that situation?

21:36 Well, uh let's see. One thing I can think of immediately and this is a human nature thing, right? Um

21:44 people need to hear something seven times before they hear it the first time.

21:48 Yeah. Uh so that's so that's the one thing is to make sure that we are as sales leaders are clearly are clearly communicating the ICP.

21:59 Uh there could very well be some fine details about the ICP description that

22:07 make it a little bit fuzzy for the salesperson. There might be some issues with the filter. So if the filter if we

22:14 need to tune the filter do that right and have the salesperson participate in that right. Um then um the other thing

22:22 is you know tie the performance metrics to ICP so it becomes real to them

22:32 weekly. So when you're going over the weekly scorecard with them, um a good example is you know you need to make a

22:39 100 phone calls to get 50 meetings to get 20 proposals to get two deals. U if

22:47 you in your in your CRM if you identify those 20 proposals as 20 ICP proposals.

22:57 Mhm. And then you can set a goal for and say, well, 18 of those 20 at least have

23:07 to be proposal submitted to an ICP, a company or an opportunity that matches the ICP. And you have the salesperson

23:16 fill in that metric on their scorecard so that if they consistently put in a

23:23 number and it's red, that they feel that.

23:26 Yeah. So I think making them making them feel that and making it it really

23:33 visible that we're not we're not following right we're not following the

23:39 guidelines um is one thing. Um, and then the other is, you know, uh, leadership and management. If they're if they're

23:48 just not getting it, you know, maybe it's some situation where they're not in the right seat, right? So, yeah.

23:57 Yeah. I I love the accountability aspect of it. It's like you can communicate all all you want, but if you don't hold people accountable, the change isn't going to happen. Unless you're

24:05 incredibly lucky to have a team of people who who will immediately understand it, too. Because part of the problem is you didn't communicate it as

24:13 the leader appropriately. So like their understanding has evolved based on lack of clarity and that's on you not on them

24:22 to then just jump the second you say well wait a second. Um when you're talking about this accountability piece which is definitely

24:29 something you have to do. Do you think that's something that you roll out at the same time in the communication? Is there a delay? you know, how do you manage the the roll out of those two

24:38 pieces of more clarity and accountability?

24:43 I think it needs to happen as soon as there's any kind of a change or any kind of an emphasis from leadership, right?

24:51 So, the sales leader presumably is on the leadership team is privy to all the conversations around, you know, why why

24:58 do we have to say no to this kind of project going forward, right? and fully

25:05 understand the why and then transform that

25:11 conversation to the operational level and say, "Okay, we're we're adjusting the targets a little bit to reflect the

25:20 decisions that were made at the leadership level." And right and being a mid being a sales manager, this is one

25:28 of the things about being a sales leader that's really tough because it breaks your heart to be sitting with a salesperson that says, "But I made my

25:36 number, right? And I said, you know, I you told me I need to sell a million. I sold a million." Okay, but 200,000 of it didn't

25:46 weren't that's not uh business from ideal customers and therefore eroded

25:54 margin and that's showing up as missing our profit number and all of your buddies their their their um bonus is less now because of that.

26:07 Right? So, and that's hard, right? And and that's one of the things that you know why you have to have thick skin and and do a really good job of of being

26:16 intentional when you're a sales manager, when you're a sales leader, because you will have those kind of things come up.

26:22 But I think clarity around communication, reinforcement, the why, and accountability is uh and it's it's

26:30 all hard stuff, right? It's none of that part of the the game is easy. So from a from an ops perspective, I' I've

26:38 been in the ops seat and looked at deals come through and been like, we're actively losing money like and not a little bit of money like

26:47 then you get the fingerpointing and then and it wasn't and I would just sit there and I'd look at it and I'd be like look based on this contract and you know

26:54 these factors I won't get too technical but these this contract this workflow that's going to happen these things that are going to go we are going to lose you

27:03 know $50 for every dollar made in this thing and just staring like how did this ever get through? Like this is this is

27:10 actively hurting the company and like it's one thing to just be like I sold it and we broke even on the whole thing.

27:16 Like that's that in in of itself is like well why even be in business and then to take it to the next level of now we're actively dragging the company

27:24 down. Um and you know those sales leaders probably should have had a nice conversation with you. Um all right so we're getting near the uh the end. Yeah,

27:32 respect the time frame we put together, but I do want to get what are your uh what's your final thought? Your final thing or if I'm a sales leader, I'm noticing ICP degradation or I'm in it.

27:44 Uh what would be the thing that you're like, "All right, this is the thing I got to take away from this conversation." Yeah, communication is key and communicating upward and downward,

27:53 translating what the decisions are at the leadership level. include the why, include the accountability, um, and keep

28:00 everything in aligned, right? It's all about making sure that the energy you're pouring in is contributing toward forward movement of the of the company

28:10 and getting us to our goals. The and not with the right kind of revenue because not all revenues created equal.

28:19 Yeah, I can see the temptation. Every once in a while I look at an opportunity, I go, I'd like that money and then I have to think about it and be like, no, I don't. Yeah. Got to be disciplined. Yeah.

28:27 Well, Glenn, I really appreciate it. Thank you so much.

28:30 I appreciate the opportunity. We'll talk to you again. All right.