Show Notes
Michael Webb: You're listening to the Sales Process Excellence Podcast with Michael Webb. B2B sales and marketing works to find the highest quality prospects, reach decision makers, and sell value. Operational excellence uses data and systems thinking to make changes that cause improvement and eliminate waste. My name is Michael Webb, and this is the Sales Process Excellence Podcast. In the next 30 to 40 minutes, we're going to destroy the myth that these two groups conflict and show you how to bring both strategies together to create more wealth for your company and your customers.
Hello everyone, this is Michael Webb, and I can't tell you how excited I am to introduce you to my friend, Bud Hyler. Bud, welcome here.
Bud Hyler: Thank you.
Michael Webb: Please tell the audience a little bit about your background so they have an idea where you're coming from and why I'm so excited.
Bud Hyler: Well, it's a combination of two forces. My early training was in physics, so it taught me to be more structured than average. And then my second training came from an MBA with Stanford, which taught me about the customer. So it was combining the structure of physics and the customer orientation of MBA really caused me to bring those two things together. We want to keep the customer focus but add structure. Without structure you can't scale. You can't compete or replicate.
Michael Webb: I was going to ask you, why is this important to a CEO, but that word structure says it, because CEOs are about scale. They're about making the organization work, not just make the product work or make the sale work or make the manufacturing work.
Bud Hyler: A lot of companies I go see, they had a really bright revenue officer, either marketing or sales, who instinctively got the principles and he was doing the right things. And they got the company humming, so revenue is going up, productivity's going up, but then they left. I mean, the average life expectancy for a job in sales and marketing is what, three to five years or less? So the guy whose instincts were right left. With him left all the principles. Then they hire another marketing and sales person who's more average, who may not get it. And so things start falling apart, because there's no structure in place. They were following the instincts of the leader, and when they left there was no momentum to keep the growth going. If you can't repeat it, then you can't leverage it. And the structure [crosstalk
00:02:41].
Michael Webb: Yeah, if you can't articulate it, you can't grasp it. Right. Before we lose this issue, I asked about your background, can you tell us a little bit about some of your business experience where you began to learn how to apply these thinking principles from physics into business problems after business school?
Bud Hyler: One of my managers told me, you can tell how fast you're learning by how far back in time you have to look to realize you were stupid. I've been fortunate enough to have a lot of good company experiences, starting with Digital Equipment Corporation, where I ran marketing and sales for the commercial group marketing. There were no constraints. It was a free group, so you would go talk to sales people all the time, and we had a great arrangement. It was so good that the salesmen would introduce me to their accounts as the supervising manager for the company, simply so that when the the account got angry at the salesman due to some mistake, they'd call me. They thought that was the way to lash out. That was great. I'd much rather have them call me than call a competitor.
The first time DEC was selling to a bank, salesman in making a sales call to Manufacturers Hanover Trust, and it wasn't going well, because DEC was an engineering company. As he was being asked to leave, he said, "I'm sorry, maybe I just don't understand enough about what you do. Could you explain what the leasing department does?" And as the customer was kind enough to explain it, the salesman said, "Oh, you do financial engineering." "Well, you're right. I engineer financial instruments." "Oh, well I can tell you how to do engineering much better." So it created a tie between DEC products and the customer. When the salesman called me and told me that, it took two days to get it out to the rest of all the salesmen calling on banks. So that's how I learned the power of the linkage between sales and marketing.
Michael Webb: This is back in the days when computers were sold as a product, right? And there was a market for computers. People would buy them. I was in that business too, worked for a company a little bit later than the early days of Digital Equipment Corporation, but I remember those days. When I got hired, they trained me to sell computers. They said, "Here's what you got to do. First of all, here's all the features and benefits of our product, this disc drive and this operating system and these interactive terminals and stuff. Now here's what you do. You get a phone and a phone book. Call people up until you find someone who is going to buy a computer."
Because I remember this diagram they had. It was a bowl of water. It was boiling, and the little bubbles would start to reach. When they get to the top, at the top of the water, they burst, then they buy something. You find one of these bubbles on the way up and show them your product and you're likely to get an order, because our product was better than IBM's. And that's as sophisticated as it got, but that company almost went out of business a few years later, and they had to teach the whole sales force how to begin learning and understanding what customers really, what problems they were trying to solve and attach our value to that. And that was a huge transition.
Bud Hyler: Yeah. I learned so much at DEC. I remember we had a great salesman. His name was Ken Cannizzaro. He could sell refrigerators to Eskimos. He had just inherent people skill, communications capability, people trusted him, so he made quota easily in the first part of the year. Well, I was so stupid that I put him in front of the branch in New York and said, "Here, do what Ken Cannizzaro does. Well, that was so stupid. That was like telling me to become an NBA basketball center. I don't have the skills to do what Ken Cannizzaro did. There I learned the hard way that I can't simply replicate what the best salesman does, I have to transform that into something the average salesman can do also. And it can't be all skill-based. We had a lot of those.
Then from there I went working with IBM and AT&T, Microsoft, Hewlett-Packard. All of them taught me something, what they had in common and how they were different. I started my business because I was going to events and they say, "What do you do?" "Well, I'm in marketing." And they'd introduce me to the other marketing person who was an advertising. Well, they care about fonts and colors and branding, but they didn't understand the basics of what caused the customer to buy. So that taught me that there was no process base for revenue generation, and that's when I decided to start my own company to create that process base that revenue production needed. The principle here is, to go back to your original question, marketing has the same relationship to sales that engineering has with manufacturing.
Michael Webb: Yes. You're the first person I ever heard say that, and that has stuck with me over a bunch of years now. Say more about that.
Bud Hyler: The key is, what processes have engineering and manufacturing developed together to enable them to create an ERP or a marketing sales factory that produces products by teaming together? They weren't always teamed. I don't know if you knew that or not, but in the early seventies, Xerox almost went out of business because engineering wasn't designing for manufacturability.
Michael Webb: Right. I remember hearing stories about that.
Bud Hyler: And so there was a meeting and the CEO asked how they could effectively combat Japan, and he learned that the manufacturing guy was drooling over the Japanese product. He said, "Why?" "Well, I can make these. I can make these offshore at low cost and high volume. Our engineering product is probably a much better design, but I can't find the worker that can make it and I can't do it in high volume." So that's where concurrent engineering came about, of getting engineering to design for manufacturability. It was not easy. You could still hear the screams from engineering. They didn't want to work with manufacturing, but that happened and now production happens. Manufacturing worked with engineering on day one on making sure products are designed for manufacturability.
Michael Webb: So now, how does that relate to principle or a structure as you were relating it to your training in physics and science and stuff?
Bud Hyler: Well, one is the structure of how the two interrelate. Just having a common coffee pot doesn't cause communications. So how do you structure the communications between engineering and manufacturing and between marketing and sales so that content comes out? I was with a company, Computer Associates, and they were rolling out their marketing material. I talked to them, and they said, "All right. Well, we reviewed this brochure with sales before printing it and they said it looked good." Well, I went and talked to salespeople, and they said, "We don't know what questions to ask. The pictures look pretty, the words sound good, the colors were great, it was readable, so it looked good." They didn't have the structure in place for a diagnostic on was the content there to help the customer buy and to help the salesmen sell? You need to have structured diagnostics to make sure the material is effective for selling, which is why the majority of material produced by marketing is not used by sales.
Michael Webb: Because there's no closed loop telling them that it isn't useful, it isn't working, it isn't doing what salespeople need it to do.
Bud Hyler: What do salespeople want to do? They want to close the sale. They live to close a sale. They're motivated by money and ego to close the sale. When they ask for information about a product or a solution or an industry, what does marketing give them? They give them information that's useful for generating awareness and interest, but it's not useful for closing the sale. How is the information required for closing a sale different than the information required for generating awareness and interest? We know that. We never use it, so we never check the information being given to sales to make sure it's useful closing the sale, which is what they want.
Michael Webb: In manufacturing, don't people have more of a sense of this closed loop and I did something expecting a result, but it didn't happen, whereas in sales, they don't have this sense of closing the loop?
Bud Hyler: It's a social closed loop. They meet for coffee, they meet for staff meetings, and they try to be friends, but there's no hard feedback. I have to tell you a story. I was product manager for DEC and life was good, and one day the VP of manufacturing came in my office, and he took my desk and turned it upside down. He was a big guy. I said, "What did you do that for?" He said, "The product you sent over to me is not well designed. You're wasting my manufacturing resources compensating for your poor design. Don't ever do that again." Oh, it took me a day to clean my desk back up. When does that ever happen? When has sales gone into marketing and said, "You're wasting my sales time, because the programs you sent me aren't useful for selling. Don't ever do that again"? And then have a process behind that to back it up.
Michael Webb: This is one of those parallels that you're talking about. You're talking about the nature of the two functions actually is similar, but we don't treat them similarly.
Bud Hyler: Exactly right. I'm glad you said that. I'm not that articulate. It's exactly right. Imagine a salesman telling marketing they can't introduce a product, because the marketing material is not sufficient for closing the sale. Another story. I was at Northern Telecom and the CEO of Northern Telecom America had a meeting, because manufacturing was under pressure to make revenue. They got revenue when they shipped a product, so given that pressure and all, manufacturing starting shipping short. They'd make a shipment to the customer where one of the two of the elements the customer ordered was missing, short shipping. That wasn't useful to the customer. The customer needed the whole solution, not a partial, so the customers are having a fit.
So the CEO called a meeting, saying, "We're going to make sure we don't short ship any more, so let's define what it means to be ready to ship." He got on a whiteboard and started writing, and it was a good meeting. He was sort of identifying, here's a minimum requirement before manufacturing can ship to a customer. Well, about two-thirds through the meeting, the VP of sales stood up and said, "This is really great. Can we have a similar conversation when we're ready to sell? When is the product ready to sell? When it's produced? When marketing finished their awareness? When is it given to my salespeople and they expect revenue to happen? We don't have a checklist on what constitutes ready to sell."
Michael Webb: No, but you have a hundred salespeople out there looking for some way to get customers to buy, and when they hear about some new sexy thing that might be coming down the line, they want to show it to customers and [crosstalk
00:13:21].
Bud Hyler: No, they don't have a way to sell what they have.
Michael Webb: Right They don't have a way to sell what they have, so that causes so many problems.
Bud Hyler: Don't get me wrong. There's a lot of really good salesmen that can sell anything, so sales are happening, but too often... We all know about crossing the chasm, don't we?
Michael Webb: Yeah.
Bud Hyler: That means if there's not a crossing the chasm between the innovative customers and the average customers, you won't get the revenue you expect. Well, there's a chasm in the sales channels. We have any number of salespeople at a large company, so you can have the innovative salesmen learn how to sell, given their skillset. But you have a chasm in the sales channels. What does it take for the average salesman to adopt your product to sell? They have choices of what they can sell. How do you cross the chasm in the sales channels? Are you aware there's a chasm? Do you manage the chasm or just throw it out over the wall?
I learned a technique at DEC. I segmented my sales channels by two parameters, one innovative versus average by district, and technical versus business. What I learned to do was to take the innovative sales districts, I take my material pre-release and give it to them for a month to sell before I send it out to the broad sales channels. During that month they were supposed to rewrite it, augment it, write the script, and basically finish it.
A salesman finishing material is so much different than a marketing person finishing material. The language they use is different. The material they use is different. So by having them finish my material, when I rolled it out, that district was stood up, saying, "We finished this material. It's ready for use," so the rest of the salesmen followed. I had the entire sales force following the leading district. It cost me three to four weeks of time, but the materials were ready to use. It was ready to sell.
Michael Webb: Because you did a pilot, you did a a trial in a small area before you launched it globally.
Bud Hyler: It was not only a trial of what I had, but I engaged them to finish it. I told them, "Here's the PowerPoints we have, change them, but the script's lousy. Write the script that should go with it."
Michael Webb: All right. This is a fascinating subject. Let's go back to the original question, the parallels between manufacturing and sales. Can you list off three or four parallels?
Bud Hyler: Marketing should be selling to groups of people, sales sells to individual customers.
Michael Webb: And how is that a parallel between manufacturing and sales?
Bud Hyler: Because the parallel should be they both want to sell. I don't know what caused marketing to stop their efforts at awareness and interest. They stop. The parallel should be, marketing sells to groups, salesmen sell to individuals, so marketing should be charged with selling to groups, from awareness through closing.
Michael Webb: Let's pull on this string a little more. You said marketing is to sales as engineering is to production, right?
Bud Hyler: Right.
Michael Webb: In production, they're producing value. In marketing and sales, they're producing value. But the value is different. But there's still cause and effect relationships there. And in manufacturing, the value is typically tangible. In sales and marketing, it's invisible, right?
Bud Hyler: Sometimes.
Michael Webb: It's a decision someone makes in their head. It's a action that they take in their mind first, ultimately. Is that right?
Bud Hyler: Yep. You may have heard me talk about the material I do is creating the ERP for the production of revenue. Companies run today off ERP for product production. Imagine you took ERP away, other than SAP and Oracle being very unhappy. Well, the basis of ERP is each group understands the needs of the subsequent groups they work with. Purchasing has to know exactly what manufacturing needs to use so they can buy it. Well, they understand exactly manufacturing needs. Suppose they didn't, they just bought products that manufacturing couldn't use. It'd be a disaster. So ERP is based upon the principle of one group understands the needs of the following subsequent groups.
Michael Webb: Another parallel between the two would be that manufacturing has a basic set of stages that it has to go through to produce its value. So likewise, sales has a set of stages that it has to go through, and there's different departments created to enable that flow to take place. And are they equally measurable?
Bud Hyler: Sales certainly has measured the stages they go through, and we think we understand the stages the buyer goes through, although probably not as well. They're both process-driven. Most sales managers focus on their process, that's often with a people skill. The key is, I would argue that marketing does not understand the needs of the sales channel.
Michael Webb: I would agree with you there. And what do you think the reason is for that?
Bud Hyler: They've never asked.
Michael Webb: Why haven't they asked?
Bud Hyler: You have to have respect. There was a study done on the success of new product introductions when engineering and manufacturing respect each other. The same was true between marketing and sales. When marketing and sales respect each other, they're more inclined to listen. One of the things I did, probably illegal when I did it, was when one of my marketing people wanted to go to the field and see a customer, I said, "Sure, here's the travel money, but I'm not going to pay for a hotel." They said, "What?" "Yeah, I'm not going to pay for a hotel. I'll help you arrange to stay at the salesman's house. They all have a spare bedroom, and so I'll help you arrange that, but you get to stay at the salesman's house, not a hotel."
Well, that was outrageous, but they did it. You know, it's funny, after you had dinner with a salesman and his wife, you bounced their kid on your lap, you tell stories, the salesman's not so stupid anymore. You listen to them, and when you listen to them, you start meeting their needs. That did more for helping me grow revenues than most major marketing programs.
Michael Webb: What a sort of a disarming, counterintuitive story. But when you hear it, it makes so much sense. It's about people communicating with each other.
Bud Hyler: A lot of working people talk about salesmen are all the same. You put a quarter in their ear, and they sell. How respectful is that?
Michael Webb: It's also not true.
Bud Hyler: It's not true, but more marketing people say that, and that's what they want to believe. And they don't segment the sales channels. Do you think all salesmen are the same? No.
Michael Webb: No, and all customers aren't the same. This goes towards one of our second topics here. In addition to the parallels between manufacturing and sales, what are some of the common principles? In manufacturing, they have to segment all sorts of things, the grades of raw material, the quality of the product coming through various stages of manufacturing, the kinds of variations they have. They have to stratify all this stuff and analyze the causes of it in order to make improvements take place. In your mind, what are some of the common principles besides that that are common between manufacturing and sales?
Bud Hyler: Marketing has to understand the segments of the sales channels. I mentioned two that I liked before, innovative versus average and business versus technical. What I mean by that is, what's the inherent orientation of the salesperson? Is it a business sale? Are there fundamentally an orientation towards the product and technical sell? You're not going to change that. You use it to maximize revenue. Steve Jobs once described the computer as a bicycle for the mind, and I like that description. Bicycles are very useful. You give me, if you could see me, you realize I'm not exactly in the best shape, but if you give me a bicycle, I could probably win a marathon race.
Michael Webb: Against other people who are on foot.
Bud Hyler: Yeah. Marketing should be in the position of making bicycles for the sales teams.
Michael Webb: And whole companies should be in the position of making bicycles for customers.
Bud Hyler: Right. Those two are very common. Think about the bicycle for the sales team, given different salespeople have different skills, or the different types of bicycles I need to produce. How are they different based on the skillset? So marketing needs to understand the skillset of the sales team, in order to make the bicycles needed by each of the different sales skill segments. Some salesmen call on executives, other salesmen don't. What bicycles do they need? If I have a salesman calling on a CEO, what bicycle do they need?
One of my pet peeves is what people call the elevator call. What's the elevator call the salesmen have? Well, you pick up the cover now and the elevator call is about the product. It's a court-up. Suppose you're in the elevator with the CEO. Is that the right bicycle to use, a product dump of product features? No. The CEO doesn't care about your product. What customer problem are you helping them solve? That bicycle is what you need to give salesmen who have the ability to call on CEOs.
Michael Webb: Companies are not very good at that at all. What other principles come to mind?
Bud Hyler: It's the same old, same old of trying to get people to change is just very, very difficult. I was thinking of how to explain it to you during the conversation. If you went to a systems thinking class in Carnegie Mellon or MIT or any major university, it's filled with engineers. There's no marketing people in the systems thinking class.
Michael Webb: What a good observation. Wow.
Bud Hyler: And it's because they don't think that way. You talk to a marketing person about more than awareness and interest and their eyes glaze over. We still haven't figured out how to link salesmen's efforts with social media, with seminars and programs. They seem like they're separate activities. They happen to maybe meet, but they aren't coordinated as a battle plan as much as I'd like to see them.
At Microsoft, we would take customer seminars and webinars and divide them. The opening would be given by Microsoft, and the product-specific, solution- specific areas would be given by the VARs. The reason for that is, Microsoft had a credibility to introduce customer problems to the audience. They could talk at a broad level and set the stage for how the customer would listen to the product issues. Everyone seems to want to talk about the product.
It's tough to understand what customer problem does your company and your product solves better than the competitor? More than one CEO has gotten perplexed about that. The product domination persists. I had a friend who was an EVP of Chase Manhattan Bank. He made the most revenue for the company when during customer visits the product sales team forgot to brief him. So here you have the customer coming in, and he knows about the customer, but he hasn't gotten briefed by the sales team. So what does he do? He talks about the customer, he talks about the customer problems, talks about how Chase can help and relate to those problems. Revenue always went up a great deal. When the sales team briefed him, he felt the obligation to pick up the baton and carry it, so he focused on product issues and the product message. The customer was polite but basically didn't care.
Michael Webb: So in the first case, he was probably asking them questions about the customer, and in the second place, he assumed he knew what he needed to know.
Bud Hyler: Right. I think that's interesting, is how do we keep the focus on the customer problem that we address better then the competition, and what's the value of addressing that customer problem better?
Michael Webb: I keep thinking, taking this back to that issue of the principles in manufacturing, and what comes to mind is the ability to be very cagey in distinguishing value from waste, be very cagey in figuring out is the customer liking this? Is the customer responding to this? And if so, why? And preventing yourself from doing something that they won't like, by studying the variations in what some customers do and other customers don't and what the circumstances are. That whole breakdown, that whole kind of critical thinking or engineering sort of mindset. You're looking for good variations and bad variations and figuring out the cause system so you can create more of the good ones and less of the bad ones. That's definitely sort of a manufacturing kind of a principle or production principle.
Bud Hyler: It's hard to remember that customer value is not defined by the product alone. Customer value is defined by the context of the problem you're addressing and what the product brings to it. You have two animals, a bear and an alligator, and they're locked into a fight to the death. I can answer any question you ask me, Mike, about the bear. I can tell you his claws are 10 inches long. And answer any question you have about the alligator. His jaws have 10,000 pounds of pressure. But given that, what one question can you ask that will predict whether the bear or the alligator will win the fight?
Michael Webb: What?
Bud Hyler: You're supposed to ask a question. What question would you ask?
Michael Webb: I don't have any idea what the question would be.
Bud Hyler: Are they fighting in the woods or the swamp?
Michael Webb: Ah, okay. There you go. The context, the broader picture.
Bud Hyler: The alligator's not going to win in the woods, the bear's not going to win in the swamp, and we want to set the stage of the customer of where are we fighting the battle? Is the customer in the swamp or in the woods, and how do we move them to understand the problem that we can solve for them and focus on that? Now you know whether the bear or the alligator will win the fight, don't you?
Michael Webb: Yes, you do. That's a great analogy. Let's bring this then back home and kind of wrap this up, because the whole point was, why is this kind of thinking so important for senior leaders? And to my way of thinking, the commercial productivity of businesses today is being threatened like never before. I mean, at least that's my idea and that's my concept of it. How would you answer that question? Why do senior executives really, really need to know about this and think about this and drive these questions through their organization? Why is it important?
Bud Hyler: It's easy to get stuck on poor performance. You know, you look at someone doing basically shoddy work, although they don't know it and you don't know it. It doesn't strike you, and the results are mediocre. How do you get up the energy and the drive to lead those people to the results you need? How do you break marketing out of awareness into revenue generation? How do you break sales into teaching the customer how to buy? How do you inspire the leadership so that you're not in silos anymore with marketing and sales, but they're working together for the production of revenue for your firm? They need to escalate up their objectives and the standards of what does it mean to be good at marketing? What's it mean to be good at sales? What does it mean to be good at revenue production? If you're not managing your ERP for the production of revenue, who is?
Michael Webb: Because the companies that can figure out how to measure and improve the production of revenue, the cultivation of the customer's attention, their interests, their consideration, their belief or trust in you, if companies can figure out how to do that in a measurable way that they can improve, they're the ones that are going to win the market.
Bud Hyler: And revenue is the key to success 90% of the time. Now, we've gotten addicted to having great products solve our revenue problem. We're waiting for the next great white hope as our product to come through and drive our revenue for us. Now, that's great. Anyone that can invent penicillin deserves the revenue, but that doesn't happen often. You don't have revenue being produced by products that add value, that are good for the customer, because we don't manage the process of production of revenue. We don't have an ERP system. So companies need to step up to managing revenue with average salesman with average products. That's the challenge. If I were talking to a CEO, I'd go, "I know your company is good at managing revenue with excellent, great products. Tell me your ERP system for managing revenue production with average salesmen and average products."
Michael Webb: Because everybody knows that's probably who you employ.
Bud Hyler: That's what you got most of the time.
Michael Webb: That's right. That's right.
Bud Hyler: Unless you plan on making revenue that way, you're dependent on the great products instead of being a cherry on top.
Michael Webb: Excellent. This has been really interesting, I knew that having you on the phone here, you have such a unique angle at this, and I know from other conversations we've had, there's tons of other examples of marketing tools and ways of getting marketing to produce something that salespeople can really use and measuring that. There's tons of things that we could talk about, so I'd love to have you back on the show at some point in the future. If someone wants to know more about you, I know you're a management consultant and you do work with companies all the time out there on the West Coast, how would they get ahold of you?
Bud Hyler: My phone systems, I'm not here often enough to be consistent. I am religious about email. If you drop me an email at budh@logmkt.com, I'll answer it. My name is Bud Hyler. That's the B-U-D-H. My company name is Logical Marketing, that's L-O-G-M-K-T.com. That's the best way to reach me.
Michael Webb: All right, and we will include those in the show notes, and I look forward to chatting with you again. Bud, thank you very much, and for everyone, bye-bye for now. We'll be back soon.
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