The Evolving Landscape in Sales
As we enter a new age of automation, where technology and society are evolving faster than most organizations can, Darwin's words have never resonated more clearly.
New automated technologies have the ability to entirely transform businesses and takeover jobs where humans were once required. We've already seen this across industries, but sales is a role particularly at risk.
Prospects Are Harder to Reach LiveA tip we hear often from brokers who may be in "stall mode" is to just "pick up the phone and call someone." Unfortunately, in today's world it's becoming very rare to actually reach someone live on the phone.
In the past time, the office "gatekeeper" was once the receptionist, who has today been replaced with an automated voicemail directory system. If you are lucky enough to even find the right name you are trying to reach within the directory, you can also count on that person to transfer your call to their voicemail.
Next to no one seems to list phone numbers publically anymore. You go to a company's website, particularly tech firms, and there is no contact information listed other email addresses. It's as if businesses have decided that it's too expensive to have a human being field calls and that answering the phone from an unknown number is a waste of time.
Although this "new age gatekeeper" makes no sense to me, it's the reality that which we as salespeople have to learn to work around.
So what do we tell our salespeople to do? We tell them to do some research on professional platforms such as LinkedIn and Manta, attend networking events, and learn to attract new clients by engaging on social media. The ability to have meaningful conversations and interactions with clients will require a consistent presence across social, mobile and web channels. None of these methods are either easier nor faster than picking up the phone, but it's becoming the only viable options when it comes to engaging with clients.
Marketers Taking Over SalesA job in sales used to be distinctly different from a job in marketing. In today's world, a salesperson also has to have the skills of a strong marketer. They have to be able to find new ways to be found and entice people organically reach out to them, instead of the other way around.
In a way, this is maybe what businesses are hoping we evolve into– more sales via collaboration and less via an individual. More collaboration will mean more team efforts in order to attract new sales opportunities. Quite the opposite from the "lone wolf approach" in which the sales career path has been built upon.
Here's the thing– yes, marketers can attract clients to their services, but there is still a bit of convincing that needs to be done in order to persuade a client to make the purchase. This task is not easily done and salespeople get paid well to perform such a job. Marketers on the other hand get paid much less, thereby costing companies less if they believe that they can turn a marketing call into a sales transaction.
Is our role dead?Today's salespeople are no longer even recognized as salespeople. More likely, they hold titles such as as vice presidents, advisors, client specialists, principals– anything but a salesperson within their title. It's like sales is a bad word or is it simply a major shift to replace salespeople with marketing people because salespeople make too much money are not controllable will jump ship with any better offer will steal their clients and move them somewhere else and simply are not company people. Marketing people are mostly salary plus a bonus. Clients belong to the company if you leave you can't take anything with you. Therefore, the company can remain stable if good marketing people leave.
If the phone is not going to get answered and you can't stop to visit with clients because the security guard won't let you in the elevator, then perhaps the salesperson is a breed on the extinction list.
However, it's important to note that clients-no matter how big their business may be-are still people. And people like to do business with other people. Often times, the decision makers need real answers to unique questions that are not always anticipated in datasheets, brochures, and other automated technologies– with the level of specificity only a human-to-human interaction can provide.
To say in the game and keep the salesperson's role with valued, today's salespeople will need to play to the traits that make them uniquely human-being trustworthy and have the ability to relate to customers and prospects at a personal level. These are the things that simply cannot be replicated by machines.
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When my wife and I bought our first home in San Francisco for $138,000 in 1978, we were required to put 25 percent down. We were so excited to get a 30-year amortized loan at 7.5 percent. For many years after, interest rates on home loans only varied slightly until the crash of interest rates, which hit following the economic crisis of 2007.
Since that time, we've had historical low rates which have led to higher real estate prices. As mortgages have become more affordable, this has allowed the government to finance their debt at lower costs and fuel the stock market boom as an alternative to fixed rate investments, which are also locked in at historically lower rates.
Lower interest rates have injured the elderly who are on fixed incomes. Baby boomers are securing riskier investments in order to achieve the necessary returns to fulfill their retirement needs. Social security payments haven't increased in years and it's starting to take a toll on the growing population of older Americans.
So, will interest rates eventually increase? Conventional belief is that it will. However, it would increase in such small increments that it would severely impact growth, but on the flip side it would at least offer some profitable gains to savers and investors.
American cities and states remain in crisis over the ever-growing pension fund shortfalls and the continued bloated government overspending citizen's tax dollars. San Francisco is one of the richest cities in the United States. The city also has increased its budget to over $9.6 billion in 2016, yet has still has around a $100 million shortfall. The state of California is in a serious financial crisis. In just a few years, the state will experience tremendous hardship with the slightest turn in the economy and paying off state debt with higher interest rates.
But let's take a look at an entirely different scenario. Let's say interest rates over the next couple of years take a dramatic increase, back to a five to seven percent range, which historically was considered the stable rate for decades. This scenario would cause increased costs in order to carry out real estate investments, which in turn would have a direct negative effect on values. Doubling interest rates would severely hurt all government entities – from local to federal.
It's clear that pushing interest rates to that level would be economic suicide. However, if they don't raise interest rates, a large portion of our population will not meet economic objectives. In turn, this would force many baby boomers to continue to work past the average retirement age and create more pressure on the overall employment front.
Whichever presidential candidate wins the election, the drastic changes that are about to take place within the next year will cause an upswing and accelerate increased interest rates. Either way, we are going to have another bumpy road.
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I just attended the TCN Worldwide national convention, held in New Orleans, LA, where I was educated on interesting overall market activity. With agents speaking from around the world, one theme was consistently heard - there is nothing more to buy... anywhere.
With interest rates at historical all-time lows, people, institutions, and owners have all migrated to real estate. As a result, there are limited quantities of property available and virtually no deals to be made.
Today, in downtown Manhattan there are no more than five to six commercial properties available at any given time. In San Francisco, a major office building – One Front Street – sold this week for a high water price, even though the overall market is showing signs of slowing down and rental rates are starting to drop for the first time in years.
In Kansas City, developers are planning an additional seven million square feet of new construction for industrial products, all listed as "spec buildouts." With rental rates at 35 cents to 45 cents on average, the margins are thin even if they are successful in securing tenants quickly.
Costs to purchase land and build are running $50 to $60/square foot. With this cost and taking into consideration the current rental rates, you are looking at a six to seven cap rate. Yet, there are industrial properties in Kansas City trading as high at $75/square foot, making older-leased buildings sell far below these cap rates. Of course a two to three percent return is much better than most bank accounts, but any upturn in interest rates will eventually force these sale values down.
With more products available online, the likelihood of higher rental rates in the future do not seem realistic to allow owners to use future higher rental rates in order to secure higher building values.
Retail prices in major cities like New York are selling at over $1,200 to $1,500/ square foot, yet retailers that would pay the rent to support that purchase price are balking and no longer willing to pay such high rental rates. With changing consumer demographics and buying habits, long-term, higher-end goods particularly in brick-and-mortar locations are already struggling to compete with online sale alternatives.
In secondary rental markets such as Omaha – from single residential homes to apartment buildings – brokers suggest that the market for deals passed two years ago.
In England, even with plans to leave the EU, are still seeing significant buyers from Germany and the Middle East, flooding the market even as rent growth continues to slow.
So long as interest rates remain low throughout the world, I would expect little exchange in properties. However, if the U.S. raises interest rates, the potential negative effect on current prices could easily be offset with more overseas buyers making deals in the US. Only time will tell...
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If you decide to enter a career in sales, it's important to know how you sell. Review your skill sets and determine how easily you can apply these skills to a particular sales position.
Are You a Hunter or A Farmer?Asking yourself one critical question will help you determine the best sales position for you: Am I a hunter or a farmer?
In sales, there are two types of salespeople who are successful based off these basic skills: hunting and farming.
As a hunter, you will start selling from scratch and hunt for new opportunities, building your client base from the ground up.
Hunting is a skill set that requires the ability to be unafraid of the risks ahead. A hunter is the type of salesperson who would be willing to tackle any risk in favor of securing the end result– a closed deal. Hunters typically require a mindset that is calculating, while also able to multitask at a moment's notice in order to address whatever situation is in front of them in the pursuit of the sale.
If you're a hunter at heart, you probably won't like, or excel at, a sales job that requires the cultivating temperament of the farmer.
Farmers have the ability to service clients over an extended period of time. In sales, your ability to develop trust and confidence through your stellar service to clients is key to long-term success. A farmer type of salesperson enjoys working with existing accounts– growing existing relationships, cross-selling, and upselling their existing client base.
Successful Salespeople Are Both.A truly successful salesperson has to have both hunting and farming skills in order to be successful. However, they don't necessarily have to have equal strengths in both areas. For instance, you can be more of a farmer than a hunter. If you enter into a sales career that requires more attention to a client over the long-term and that client rewards you with continuous sales, than you will likely succeed more by applying your farming skills.
If you have a short sales cycle and you are selling something one time that will not require another sale opportunity until much later down the road, then a strong hunter's skillset would work best for this type of sales career.
In my personal commercial real estate career, I choose to represent entrepreneurial type of clients who are similar to me. I have stronger hunting skills and better farming skills for a more immediate sale.
On the other hand, institutional investment brokers need more farming skillsets and less hunting skillsets. They need to be able to nurture their deals with more extensive understanding of the financial impact of a sale. The ability to provide accurate data to their clients so that they can make the proper investment decision will lead to better purchases by their clients and more loyalty for future purchases. The need to hunt is lessened, although they still have to find opportunities for their clients to invest in.
Hunters tend to be less organized and have a stronger ability to multitask. Farmers tend to be more cautious taking their time to layout their plans to service a particular client.
To be a successful salesperson, you need to have both hunting and farming skills. Regardless, you will fail as a salesperson if you don't take the time to learn where your own strengths lie.
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When you are in a hot market like we are experiencing in the San Francisco-Bay Area, affordable office space is hard to come by. According to
for San Francisco in 2016, overall weighted office rent averaged about $80.42 per square ft. for class A space, a 9.5 percent increase from just last quarter.
Most clients I see today look for office space and rush the process. They want to secure a new space as quickly as possible, rather than taking the time to determine if the space is truly affordable for their business long-term.
I see this especially ring true with most tech tenants we work with. Often times, these firms are newly funded and in development mode. Therefore, rent is not the most important factor for them.
These tenants are focused on securing a space quickly so that they can hire the talent they need to launch their business and start making profits. Regardless of the reason, at the end of the day, rent needs to be paid. And if rent is too high, it will impact a business' revenue stream along with every other aspect of the business.
As a rule of thumb, I have always determined the amount of rent a business is able to pay is typically between six to eight percent of its gross sales. However, today's office layouts have changed so drastically to the point where there are more people situated in less space. In years past, the rule of thumb had been 200 square feet per person. That was based off an office space that was comprised of 60 percent private space and 40 percent of open space. It also includes a good share of conference rooms, kitchen area, and storage areas.
Today's office arrangement looks quite different. With less use of phones and more use of emails, instant messaging, and texting to conduct business, the need for private office space has reduced significantly. Also, companies today have a collaborative work culture. Instead of isolating cubicles, workstations have been replaced with long conference-style work tables, which are much more conducive to collaboration and conversation. As a result, businesses are squeezing more people into less square footage.
Today, it is not uncommon to see offices with less than 150 square feet per person or close to the minimum legal square footage of 100 square feet per person.
To address growth, I often hear clients tell me that they will just add more chairs to their existing workspaces, rather than moving to a larger space. Clearly, this is not a plan to make their businesses more efficient, but really it's just a sign of not wanting to deal with the moving process at all. Although conventional businesses are a different story, their approach to growth are similar. These businesses are more focused on remaining profitable and their increasing their bottom line. Squeezing in more talent while working in smaller spaces does ease the burden of higher rent rates in the Bay Area.
Five years ago, the average rent for Class A office space in San Francisco was only $32.00 a much more affordable price tag than today's average of $82.00 a square foot.
Today, the average square footage office user in San Francisco is only 3,000 square feet, holding 15 people. Five years ago, the annual rent was only around $96,000 (or $6,400 per person). Fast forward to present day, assuming 150 square feet per person, a 3,000 square foot space holds 20 people, which puts today's annual rent at around $216,000 (or $10,800 per person).
Conventional businesses have not yet seen enough multi-digit growth over the last five years as a reason to absorb such an increase. Certainly, with real signs of the market softening, they cannot count on this level of growth to continue.
Tech companies, particularly startups, haven't cared about cost of rent in the recent past. Why? Although they were forced to sign longer-term leases, some with three to five years of commitment, their business model for success was not based upon profitability. It's been based upon the ability of the business to get acquired or go public. But as capital continues to dry up and firms are struggling to continue to exist, they will need to be more cautious about their rental costs.
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Whether you believe it or not, back in the day I was a very talented tennis player. Some would say that I even had a pro-serve and a decent backhand. I played tennis up until my late twenties. I loved the fast-paced nature of the sport, the quick results, and the fact that I was in charge of my own destiny. What possessed me to give up tennis for golf still puzzles today, thirty-five years later. At best, I am a decent golfer (sometimes), but I have made no real advancement and have scored the same average all the years I've played. Yet, I still play, I still get frustrated, and I rarely beat anyone.
Everything about golf is the opposite of who I am as a salesperson. To be successful in golf, you need to be extremely focused, analyze your shots, always check your stance, swinging range, and lastly–you need to practice often.
As a salesperson, I am constantly on the move. I need to have multiple things going on at once in order for me to get things done. That's just who I am.
Sales has a very fast-paced nature, which I'm suited for. I'm impulsive and need to feel the gratification of winning immediately. I don't want to s I need to execute. I only continue to practice golf because I want to be successful in everything that I do. But so far, the results are not encouraging.
This article is written for the true entrepr the independent contractor who is likely commission-based and eats based off what you sell. Today, you are becoming a rare breed to find, but are nonetheless needed more than ever.
The independent salesperson has been replaced in a variety of fields with teams of people that provide different services for their clients. There's the "door opener" who opens the opportunity, the "transactions person" who handles the paperwork and essentially the deal, and then you have "runner" who does everything else in between. In essence, three people are now doing what one salesperson was expected to do in the past – open, service and close.
Today, several larger, corporate firms like this implement this new "sales team" model because they are able to more easily control the client. They also end up paying less out of pocket and reduce their risk, in case their top salespeople were to leave. Today, it's difficult and uncommon to have a single salesperson exit a firm with clients at hand. Another added benefit from using this model is budget control. Corporate firms won't have to pay out as much as they would otherwise for top-performing individual salespeople.
These sales teams are more focused on structure than they are on sales. These teams live and breathe processes rather than completing assignments and closing deals.
Although today's independent contractors like me are less needed by larger firms, they still can achieve not only success, but reap far greater financial rewards by remaining independent and working off of commission.
With this in mind, independent salespeople still need to consider the need to be more structured, which is not inherit to who we are.
We have the opportunity today to create new business opportunities through more channels than ever before. We also have access to so much more data and information on our prospective customers than we could ever have imagined. In a way, we are overwhelmed with information and not sure where to even begin to analyze it.
Today's salesperson has to create more organization and structure within their day-to-day life. They also need to be more strategic in how they manage their work. It's crucial to figure out what project you want to work on and ensure you don't tackle too many opportunities at once.
This means that all salespeople need to do a better job in organizing their days, weeks, and months. Set aside time each day to work on current deals, calendar time for new business, calendar time for the bigger, higher-risk, higher-reward deals (I call these my "big hour") and then of course calendar your necessary personal and educational activities. Doing so will give you the necessary edge to compete as a true independent salesperson.
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I recently visited Calgary in Alberta Canada. Calgary has grown considerably since I was last there in 1979. The cosmopolitan city is filled with numerous skyscrapers, and owes its rapid growth to its status as the center of Canada's oil industry. It's a city where the architecture gives a blueprint of its period of successes.
Calgary historically is a boom and bust city. It booms when oil prices are high and busts when oil prices are low. Its architecture is reflective of the years of explosive growth. Cranes were in the air all over town building offices and residential condos. Like most major cities, the construction of buildings takes years to plan, receive necessary approval, and ultimately occupy with tenants. Eighteen months ago, Calgary saw their latest boom market fade away. Office vacancy at its lowest point it less than four percent. In just 18 months, the office vacancy has hit 21 percent. Unfortunately, once construction begins, it cannot be stopped. Therefore, on top of this high vacancy rate is several million square feet of new and vacant office and residential space.
To most, San Francisco is not a boom and bust marketplace. But in fact, it is. I entered the San Francisco office market as a commercial real estate broker in 1984 and I have seen several boom and bust markets within that timeframe that have transformed our city with several new developments.
In order to jump start a very poor US economy, President Reagan created tax benefits to create construction and ultimately create more job opportunities. But in the middle of this expansion, congress had changed the tax laws, which created a savings and loan collapse. This lead to a cratered office market. San Francisco saw its vacancy jump from a low of two percent to 26 percent in less than 18 months.
The dot-com market created the next major development growth cycle in San Francisco, but this didn't happen for another 13 years or so until 1997. At its peak, office vacancy was less than two percent and residential vacancy was less than three percent. Less than one year after the dot-com downfall, office vacancy hit 24 percent and residential vacancy hit 10 percent.
Office rental rates plunged from a high of $97.00 per square foot to a Class A office space averaging $32.00 per square foot. Class B office space suffered the most, dropping from $75.00 per square foot to less than $21.00 per square foot.
Recently, Cushman & Wakefield announced the latest office vacancy rates in San Francisco. Office vacancy in the city has moved up to 7.1 percent– the first time increase since 2009. However, this office vacancy rate did not take into account the large-scale number of subleases that have entered the market place as tech firms have been shredding office space at an alarming rate. Similar to Calgary, their 21 percent vacancy rate in office is actually based upon strictly direct vacancy space, not sublease space. Large oil companies have flooded their market with sublease space that is now competing against direct space options.
Our current tech boom has lasted five years, one year longer than the previous boom. Fiscal cycles do happen, but San Francisco should look into markets like Calgary to plan for its immediate future.
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Sales trainers always preach about the "close" in the sales process. Obviously, without the close a salesperson does not get paid. And 80 percent of sales are lost because a salesperson fails to close. However, before you get the opportunity to close, you must have an opening. And the opening can often times be a lot more difficult than the close.
Securing new business ultimately involves contacting new prospects who don't always know you and ask them to do business with you by buying your product or your service. A close involves knowing the exact time to ask a client you now have had time to get to know and ask them to buy. There is a very big difference between the two.
To be successful in sales, it's required to be able to secure new business, sell the benefits of your product or services, and guide your client to purchasing and ultimately close a deal. However, opening the doors to new sales opportunities can be the most difficult part of the selling process. Acquiring new business may require cold calling hundreds of prospects either by phone, personal canvassing, or an email campaign in order to secure just one prospect.
The relationship between the salesperson and the prospect is established in the opening, which is based on a few key tactics, including tone and sales techniques. The relationship is what's going to carry you through the sales process and ultimately the close. It's important to establish trust and build rapport with your potential client by showing a transparent and authentic nature. Define the value of your products or services without gimmicks and vague wording to capture interest. Listening to your prospect's needs and wants are equally as crucial in the opening. Avoid wasting their time with irrelevant data not related to the industry or the company's offerings.
Opening new business is also hard because it goes against everything a salesperson would rather do, which is service the client and close. Opening new business involves hearing a lot of "no's" before you might hear a maybe or one yes. It goes against a good salesperson's natural instinct of being positive and forward-thinking. It's equal to a solider being stuck in the trenches. Opening new business is like wondering when the next sales opportunity will occur.
Frankly, this is also why salespeople tend to be "cheap" when it comes to investing in themselves and their career. No matter how successful a salesperson is, they tend to overlook tools and services that can help them succeed further because of cost.
Years ago, I was teaching a sales class on this new technology and introduced a group of very successful salespeople to the first "Palm Pilot" organizer. I explained how this tool would revolutionize the way they do business and how they would be able to manage more business at once, mainly due to its mobile capability. Everyone was excited until I told them it would cost them $500.00. The room then went silent.
But why would salespeople be so reluctant to spend money and invest in making themselves more efficient and successful? Although they might be successful and have no fear in looking and securing new business, they also know in their gut that they don't actually know when that new business will be secured. This is why the open can be the most difficult in the three-step sales process.
In order to be successful in opening new business, you have to work on new business daily, no matter how much business you are already currently working on. Today, with social media, website, email blasts, etc., every salesperson needs to develop a 24-hour marketing campaign that secures potential business for you throughout the day. You also need to be committed to targeting specific business opportunities so that your approach to opening new business includes both active and reactive marketing approaches at all times.
Yes, the "close" ultimately means a payday but without the "open" you don't have the opportunity to close.
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Hopefully, by the time you read this article, the Golden State Warriors would have won their second straight NBA championship. For those of us who follow basketball, the Warriors are appearing to become a dynasty. Prior to last year's championship, the last time the Warriors had won a championship was in 1975. Between 1975 and 2015, the Warriors had been one of the worst teams in the NBA.
I have been fortunate enough to play several different sports growing up in my childhood and today as an adult. In my entire life, I have only won five championships. Two of those wins were for individual sports and three of them were with teams that I had coached. My mother, who is now 84 years old, was the Champion of an online solitaire game she played against over 50,000 players. A tremendous feat in which she held the title of "champion" for over a year.
My mother always joked about the importance of her championship, but really did fight every day to protect her title. Often times, she would get up early in the morning in order to compete against players across the world who wanted to take her title. My mother absolutely hates to lose and loves to win.
Whatever sports team I had coached, even if it was a 3rd grade C-team, if we made it to a championship, I always told the team that we had to go for it because championships are so rare and most people never even get the opportunity to play in one.
So what's the importance of being the best (a champion)? Your title rarely lasts and often times you become a champion for the movement. But for that fleeting time, you are considered the best at what you had attempted to do.
As salespeople, we too can achieve "championship status." The rule of thumb in sales has always been that 80 percent of all deals are done by 20 percent of the team – "average" does not exist in sales. Either you can sell or you can't. But to achieve championship status in sales is extremely special. Your status won't grant you an actual award, but becoming a sales champion grants you respect from other salespeople. And earning respect from other salespeople is not easy. It means you have developed into the "full package."
Becoming the full package means that you not only sell, but you earn at the highest level, give back both to your marketplace as well as to others, mentor other salespeople below you, and you offer your expertise to improve the lives of others. It's harder than ever to create your own identity and to create respect by helping others. When you achieve the highest production in your field and also earn the respect from your competition – only then you can become a champion.
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The city of San Francisco has accelerated their enforcement of PDR (Production, Distribution and Repair) violations against building owners who have converted these buildings into office space, 90 percent of them being for tech tenants. To date, over 1,200 buildings could be affected and our tech growth could be severely impacted if the city continues to chase out tech tenants in the process of enforcing PDR violations.
True PDR tenants have been either forced out of their spaces by higher rents, or forced to close all together because of the lack of inventory to keep their businesses in the City. The general fear of San Franciscans is that we are further gentrifying the city by continuing to promote technology, while non-technology jobs are struggling to survive.
However, the true reason for the lack of PDR space in the city is not due to only tech tenants, but largely due to marijuana-growing facilities, which is completely legal. Prior to the changes in the law, allowing medical marijuana growing within the city boundaries, average rents for PDR or warehouse space was between 80 cents and $1.20 per square foot. Marijuana facilities on average are paying $2.00 to $2.50 per square foot. The larger PDR spaces in the city are found in the Bay View and Dog Patch districts. Here, warehouse after warehouse have been converted legally into marijuana growing facilities. These very buildings are truly PDR-related space, but marijuana has completely absorbed any available inventory.
In addition, the remaining PDR buildings are mostly in South of Market (SOMA) and have been converted into legal office space in smaller-building blueprints. They are also located on busy streets like Folsom and Howard Street, where the city has converted several car lanes into bike lanes, making it extremely difficult for any true product, distribution and repair business to receive and/or send out deliveries. An example is the Golden Gate Meat Company, which was located on 7th street.
They were so inefficient in their lack of space that they conducted their business on the sidewalk with double-parked trucks on 7th Street. Eventually, they moved to the East Bay.
The city politicians are under pressure by a number of groups to stop the City's tech growth in order to save our blue-collar fabric of our city. But what isn't spoken about is the lack of PDR inventory in this city as an effect of marijuana and other PDR businesses.
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Credits: &2016 by Starboard TCN Worldwide Commercial Real Estate
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