Successful executives don't simply ride the tide of change; they make waves by taking smart risks. Here's how fearless sales and marketing leaders are shaking things up and taking their business to the next level
Sales & Marketing - April 3, 2005
By Julia Chang
Normally, Larry Winston would have disregarded a cold call from an executive recruiter; he wasn't looking for a new job. But that day, the recruiter's pitch piqued his interest: He said he had a sales organization that was looking for drastic change. Never mind that Winston had no background in the industry of the hiring company, the Minneapolis-based hotels arm of the Carlson Companies, Carlson Hotels Worldwide, which oversees five brands, including Regent International Hotels and Radisson Hotels & Resorts. The company's appetite for risk was alluring to Winston, whose employer at the time, forest-products giant International Paper, was candidly risk-averse, he says.
"Although it was a great company, it was a traditional company," he says, "and change was hard to come by." By contrast, Carlson Hotels openly wanted out-of-the-box thinking to meet the changing needs of its customer. "[Executive Vice President of Sales Brian Stage] said he wanted me to shake things up in the organization, do things totally different," says Winston, who went on to become vice president of sales. "That's when he convinced me to come over."
Carlson Hotels isn't the only company taking risks in an effort to grow customers, revenue, and market reach. In a survey of global CEOs conducted by PricewaterhouseCoopers last year, nearly half said they were becoming more aggressive risk-takers. Their biggest concern? Increased competition, according to 63 percent of respondents. "I'm seeing sales executives being challenged by a market that moves quickly," says Mary Steiner, a Minneapolis-based partner with Advantage Performance Group (APG), the sales consulting firm that would help Carlson Hotels implement some of its changes. "The competition recalibrates quickly, so as [sales executives] begin to shape strategies, they realize there is more at stake."
That means that change isn't just good right now, it's vital. "There are still companies that hold up a traditional [sales] model; taking a risk for them could be as simple as saying, 'We've got to expand our market reach,'" says Mary Donato, associate director of Penn State University's Institute for the Study of Business Markets (ISBM), and president of Applied Principles, a consulting firm in Longboat Key, Florida. "But the bad risk is thinking that the same coverage model can carry you into the future."
Sales Force Transformation
Change in its sales force's approach to the marketplace, in fact, was the primary reason that Carlson Hotels hired Winston in June 2003. At the time, the company was riding the natural upswing after the attacks of September 11, 2001, but it didn't want to stay complacent. Stage tasked Winston with the specifics of the change, as his time at International Paper included creating consultative sellers and cross-silo sales solutions — strategies that experts say are seeping into the hospitality industry. "Many service groups, such as hotels, are taking a harder look in key accounts" to see how they can be further developed, says Ana Dutra, director of Mercer Management Consulting's sales practice, based in Chicago. "And they are taking a much harder look at the sales force's skills, to go from transactional selling to relationship building."
Thus, step one for Winston, at the start of 2004, was to assess the sales force. Each salesperson took an hour-long online assessment developed by HR Chally, a human-resources consulting firm based in Dayton, Ohio, and APG's Steiner and Winston went over the results for each rep. Next, Winston took a deep look at Carlson Hotels' current customers — all 1,000 of them — and stratified them by their strategic and potential value. Based on the assessments, the salespeople would be realigned to certain customers, with those more matched to consultative selling handling the top two tiers of accounts.
The changes posed several potential risks: First, salespeople were expected to adjust to a sea change in just about four months, potentially leading to disgruntled employees. But after realizing they were not being displaced, but assigned to jobs better suited for them, they readjusted well, and there was little turnover among his direct sales force of about 60. The company's new prospecting strategies also meant that meetings with prospects would no longer be about hotel rates, which created the potential for more closed doors. But consultative training helped Carlson Hotels' salespeople take the right approach. "It used to be a very price-driven conversation," says Bobbi Landreth, a senior director of strategic accounts. "That still exists in the industry today. But with us, now instead of asking, 'Where do you stay?' we ask, 'How [is your business performance] measured?'"
Landreth gives an example: One of Carlson Hotels' salespeople approached a travel manager for DaimlerChrysler and asked the prospect about his challenges. His biggest nuisance was getting employees to use the company's preferred corporate credit card. She proposed that whenever one of his employees would check in at a Carlson Hotels property, the system would flag the front-desk agent about the preferred card, and the agent would remind the guest to use it. "Prior to that conversation, we were one of his vendors," Landreth says. "Now we are referred to as a partner."
By meeting with decision makers other than travel managers, such as CEOs or CFOs, the salespeople also helped spark prospects for Carlson sister companies in the restaurant, cruise, travel, and marketing and incentive divisions. "For example, if we find out a company is looking for a travel agency of record, or an online booking tool, we'll communicate that" to the right unit, says Diane Reardon, a senior director of regions and groups. "We are really a family of companies, so we should be selling the family business." Reardon says she's seen at least 30 wins shared among the different Carlson units.
Although it's been less than a year since the reorganization, the shake-up has paid off, contributing to Carlson Hotels' 13.3 percent revenue growth, to $5.1 billion in 2004. The company's corporate business grew 21 percent, and its groups and meetings business grew 53 percent. "Initially the customer was apprehensive," Winston says, "but once the sales reps really focused on solving problems, we moved away from just [being a vendor] that sells room rates."
Market Strategy Makeover
Where there's change in sales strategy, there's likely change in marketing strategy as well — yet another arena in which companies are willing to take risks these days, experts say. "Companies are being more aggressive in their go-to-market strategies," ISBM's Donato says, by looking into more avenues of penetration, such as the Web, telesales, or new channels of distribution.
All of these avenues seemed natural routes for Howard Lefkowitz to follow. But the president of Las Vegas travel site Vegas.com was taking his first risk — that of his own neck — about three years ago when he told his new bosses at the site's parent company, Greenspun Corporation, based in Henderson, Nevada, that he didn't want the site's revenue based on advertising. This was practically heresy to a company that based its fortune for more than 50 years on publishing local newspapers driven by advertising dollars.
"They asked me, 'How are you going to make money?' My response was, 'If you only have advertisers, you will never make money,'" he says. Lefkowitz chalks up his response to his experience in executive positions at various media companies, including the Home Shopping Network and Earthlink. "I got to see all the fatally flawed business models cross my desk," he says.
Despite the executives' initial skepticism, they let Lefkowitz go forth with his new market strategy: to build Vegas.com on a transaction-based model, in which consumers would use the site to connect with airlines, hotels, tour groups, restaurants, and other local businesses, positioning itself as a well-connected Vegas insider. Revenue would come from acting as a portal that funneled consumers to these companies, who were now business partners, both through the Web and via a call center.
Lefkowitz knew he had to get buy-in from another audience as well, the site's advertisers, or risk customer flight. Vegas.com did meet with some early resistance. Businesses in one of the company's small, niche markets, which Lefkowitz prefers not to name, initially balked at the new business model. They were the types of customers who would call and complain to their account managers when the banner ads they bought weren't at the top of the page. "They were very upset about the change," Lefkowitz says. "Many didn't participate early on, but those few that did, benefited enormously." The early adopters saw their business grow, and soon others jumped on the bandwagon. "Now, instead of calling up to complain, they bring in cookies because they are making a lot more money."
Lefkowitz says a large part of convincing customers was proving that Vegas.com was serious about customer service and its own marketing efforts. He raised the marketing budget from a mere $100,000 to more than $8 million in recent years on an ad campaign. Advertising salespeople were replaced with 10 account managers who intimately know their customers' business. Call-center reps receive four hours of training per week to learn not only sales skills, but also vendor partners' value propositions. And each employee receives bonuses based on a customer-service index that is formulated from various metrics, such as how much business gets funneled to vendors, number of visits to partners' Web sites, and consumer feedback. "When you're dealing with customers, it's a constant education process," Lefkowitz says. "It does take time for them to understand you and what you're bringing to the table."
Looking at the numbers, the payoff has been tremendous: Since Lefkowitz joined the company, three call-center reps have turned into 108, 19 employees have become 250, and the site, which had averaged 300,000 unique visitors a year, now logs more than 19.2 million annually. Although the private company doesn't disclose figures, Lefkowitz says revenue has doubled or tripled year-to-year since 2001. "We're kind of a poster child for taking risks," he says.
Simple Risk Strategies
Not all risks require a total business transformation; even small risks can yield big results. One of the areas in which companies are taking these smaller risks, experts say, is prospecting. Sales organizations are increasing efforts to "provide tools to help reps initiate new opportunities
more quickly," says Jeff Shumway, vice president and general manager of the sales performance group at FranklinCovey, a performance consulting firm based in Salt Lake City. "They are getting more coming in the front end of the pipeline and fleshing out what are real opportunities, and what are not."
Paragon Strategies, a San Francisco–based sales training and consulting firm, took a risky approach to filling its pipeline late last year. The company decided to focus on booking business for December — typically a dead month, especially in the services business, because of the holidays. Not only would their sales team make that month a priority, everyone in the six-person company, from trainers to the office manager, would temporarily become salespeople.
"The risk for us was focusing everyone on sales, when a lot of sales training companies would either use this time to review the year, or plan for next year," says Michael Cooper, Paragon's co-principal. There was a real danger their efforts could prove unfruitful, and that they would fall behind in 2005 planning. They were also placing prospects in the hands of an inexperienced sales staff. But with fingers crossed, Cooper and his partners had each team member focused on making appointments, cold calling, and going on face-to-face calls almost exclusively, every day, for about two months. The nonsales employees were coached through a crash course in sales and were often accompanied by the "real" salespeople on calls, but they were "definitely outside their comfort zones," Cooper says.
The efforts produced some pleasant surprises. "During the other times of the year, when some of these prospects had received sales calls, they were automatically resistant," Cooper says. "But they didn't expect it, so we got to [decision makers] we couldn't get to all year long." The expertise of nonsales staffers also came in handy. The office manager, for instance, who handled the finances, knew who in accounting had the budget authority to approve some last-minute sales training, and many prospects were more receptive to a staffer who wasn't in full-time sales. "The prospects knew it was a sales call, but because they weren't talking to a salesperson, per se," there was a level of comfort, Cooper says. "We were able to get in a lot easier."
The efforts surpassed expectations. A year before, the company had booked some communication-skills training, but no sales training jobs. This year, it gained last-minute training gigs from companies trying to meet year-end sales goals, and broke into new markets. December business grew about 30 percent over the year before, Cooper estimates, and became the most successful month of 2004. In addition, the company got a jump on 2005. "We got quite a few referrals that we will be working on in January, and have generated more [future] business," Cooper says. "We will absolutely try this in the future and use our entire staff strategically to grow business, and not just in November and December."