Critical Questions Your New Business Person Should Be Able to Answer

David is frequently surprised by how many new business people have trouble answering five particular important questions about their jobs and their firms.

Transcript

Blair Enns: Hello, David.

David C. Baker: Hi, what's with the sexy voice?

Blair: [laughs]

David: Did you dial the wrong number? [laughs]

Blair: You're supposed to read into that not badass sexiness but provocation. It's like, "I'm going to hit you."

David: I'm ready, be prepared. Hit me with your best shot. You're usually a lot more tired by Friday than I am so you do not scare me on Friday.

Blair: The topic today is Critical Questions, Your New Business Person Better Be Able to Answer. You want me to interview you about something in my domain. I see a sparring match coming up. Ding, ding.

David: There's no government body that said that I cannot speak to new business issues. In fact, there's probably a groundswell of support out there for me to step back into these new business issues that you're always speaking about. [laughs]

Blair: I think in America as of earlier this week, all government bodies have fallen.

David: Yes, you're right.

[laughter]

Blair: Yes, you're right. Probably our audience wants you to set me straight on some things. You have five critical questions that your new business person better be able to answer. You arrived at these questions because every time you do a total business review or work with an independent creative marketing or a digital firm in some capacity, you always end up interviewing among others, the BD person, correct?

David: Yes, I do. I was thinking about an exception to that, and I couldn't really think of it. It's always the principal or the person who the principal or principals have deemed to be the new business person. You know what? That's interesting. We should do a study on how many firms delegate new business to somebody else on a primary basis because it seems like it's fewer than it used to be. But yes, whoever is in charge of new business, I'm talking with them. I have a pretty fascinating front-row seat to how they view things. I've frequently been a little surprised at how few ready answers they have to some of the questions that I'm asking.

It just developed into this mental thing that I have that says, I don't know exactly how to phrase it but listen if whoever is in charge of new business, they better be able to answer these questions. When I'm sitting down and asking somebody who's in charge of new business, if I'm going to ask these questions, they shouldn't have to move mm, um, around and hem-ho. They should immediately know the answers. Maybe the answers aren't the right ones, or maybe they're still thinking about it, but they should have thought of these questions. This is going to be fun because I'm sure you've got some pretty significant thoughts on these too.

Blair: I hope so. Let me ask if the BD person can't answer these questions, is that a shortcoming of the individual or of the firm in being able to arm the individual with the answers to the question?

David: I think it's almost always a fault of the firm, not the new business person but if I were in those new business person's shoes, I wouldn't take the job without getting answers to those questions. We've got to put the fault at the feet of the principals who haven't given proper guidance to the new business person, or maybe to themselves [laughs] if they're not delegating them.

Blair: I think we've talked about in previous episodes the idea that when we as a principal, when we hire a business development person, we often look for that person to bring a bunch of the magic or the framework, the methodology, et cetera, for the role with them which is a really unrealistic expectation, isn't it?

David: I would love to talk about that more at some point because that is so true. They're not just looking for results but they feel like they don't have results because they don't have the right system. What system? Yes. Back to that earlier thing, do you have the same sense I do that principals are not delegating new business as much as they used to?

Blair: I hadn't really thought about that. I suppose it depends on the size of the firm. You get to a certain size and it's being delegated almost universally. When you get to the in-between size like 8 to 25 people, maybe that's the range. You correct me if you think I'm wrong, where it could be done by the principal, it could be done by a dedicated hire, but I don't think I've seen that pattern. Doesn't mean it isn't there. I just haven't been observing it.

David: Right. The firm has to be big enough to be able to afford a racehorse new business person. If they're too small and the principal doesn't want to do it, then they're often stuck with somebody who is just who they can afford not necessarily somebody who's really skilled at that, whatever that looks like at the firm. We're landing with all kinds of other topics. We're never going to run out of topics here.

Blair: I've just wrapped up a training session with a private client with seven business development people in a firm of less than 150 people. That's rare but it does happen. Let's get to your list of questions because we've killed a lot of time here already. The first question on your list is, what does my firm consider to be a qualified client? That's a great question. I imagine the new business person is interviewing at the beginning, hasn't even agreed to go to work for this firm and it's like, "All right, well first, tell me who do you consider to be a qualified client?" What are the criteria that you think a new business person should be able to articulate to you, and therefore upstream should have had the principal articulate to them around what is a qualified client?

David: Everybody listening is going to compare my list to their list, and some of them will say, "No, we don't follow that and we haven't gotten bitten by it." You and I recognize that some of those things are true and what to do with the list as well. I firmly believe you ought to have a written list that everyone agrees on so that when you compromise, you know exactly what that compromise looks like. I would go a step further and think that you ought to sanitize and make it a little friendlier but have some collapsed version of this list on your website as well to give your prospects some guidance. Or if nothing else, you might even bury it there but on a phone call, you could ask them to go to this particular page and then talk through it.

It's so much easier to talk through something that's established policy, that's something that you've talked about a lot. On the list that I would create if I were tasked with answering that question, it would be things like this. We want clients who are not spending their own money. It's a publicly-traded firm or it's a well-financed firm, there's investor money, whatever. It's not making $100,000 mistake that means my kid can't finish their college education. It's not that. So not spending their own money. That's a no brainer, although a lot of people haven't quite thought of it that way.

A second one would be, I need to have access to the decision-maker who has that budget authority. We've talked a lot about that. You have really great ways of surfacing how to find that person and so on. Another would be, we want a client who could spend at least this much money with us. We recognize that they may not-- In fact, they probably won't agree to spend that much money out of the gate. They'll start us off with something smaller, it'll probably be something that skips all the strategy work because it's something they need really quickly. If everything goes well, they could spend this much money and that percentage in my method is anywhere from about 3.5% to 4% of your fee billings.

Then of course, too big and they put you at risk, but somewhere in that range, no matter how big the firm is, and then hopefully then it gets a little softer after that. Hopefully, you're finding a client whose first engagement is at least X number. I talked about this on another podcast recently. I noted that almost every person who touches new business in a firm has some idea of what that first project should be. In other words, we don't get out of bed for less than 30 or 130 or 10 or whatever it is, but those people don't agree at the firm. If you ask them to write a number down on a slip of paper, and then turn it over, then they're all looking at each other. "What? Where'd you get that?" That's everybody has an idea but the idea is different. Those are the kind of things that I would want on that list. What would you add to it?

Blair: I would add-

David: That you like them? [laughs]

Blair: Yes, we've probably talked about that before recently. No, it's not important to like your client or for your client to like you. In fact, you know you are the expert when the client says you're twice as expensive as your competitors. I really don't like you. You're hired.

David: Yes, I would have no future if that was a requirement.

[laughter]

Blair: I would add, we need to be able to talk to the decision-makers in the sale itself. We're not going to have the sale intermediated by a middle person. I understand the need on a client organization to put somebody on this to manage the process, but the client needs to understand my need to be able to push back on that and have a conversation with the ultimate client. If I'm going to decide whether or not I want to do business with that organization. You might bend on that from time to time, but it should be something that the new business person is pursuing. I do want to speak to critical question number one. What does my firm consider to be a qualified client? The first item you have is the clients not spending their own money.

The first time I ever heard that was when I heard you say it and it would have been over 10 years ago. The place where I see this really coming up is you and I have both worked with firms, either through just happenstance or through a focused concentration end up

working with professional services firms. If you're working with a law firm, I see there's this clear line where if you have to sell to one of the partners, if the person making the marketing decision is actually a partner in the firm, that is a difficult sale. It is really hard to get them to part with their own money. It makes sense to work with law firms once they're large enough to have a dedicated marketing department, where that marketing person has a dedicated budget. That is a far easier sell. I think that's just an example of where that principle if you'll call it that is really evident.

David: Yes, or restaurants [chuckles].

Blair: Right.

David: Or somebody starting a new beauty product out of their garage. Everybody probably has their own personal horror story about this.

Blair: Yes, this is at the lower end of the client spectrum in terms of the size of the client, but I think your list is a pretty good one. There's a follow-up question to this. You're the business development person, the principal comes to you and says, "Hey, I've got this opportunity I'm really excited about it." Explains it to you and it doesn't meet this criterion, what do you do now?

David: What do you do now, dot, dot, dot without pulling all the wind out of the new business person's sales? Because they're motivated by certain things. They are really good at finding opportunity where other people don't see it, but sometimes they're bending the rules for that. I don't think it's appropriate to automatically turn that opportunity down. I think this is where I'd like to have a quick 10-minute meeting with three people, the new business person, the principal, and one other person, maybe the account person, or whoever it helps with the mechanics of pricing and so on. Says, "All right, where are we compromising here? Why are we compromising? What's going to pay off for this compromise?" Maybe it's a logo we need on the wall, maybe it's some experience that we need. [laughs] The kind of lies we tell ourselves.

Blair: We'll do it for the portfolio.

[laughter]

Blair: It's not profitable, but we'll do it for the portfolio.

David: It's the same thing you've been saying to yourself for the last 20 years. I think you would just look at it really carefully and possibly compromise. Maybe give your new business person four coupons every year, and they have to turn one of them in [chuckles] whenever you compromise on something like this and have some fun with it. Don't automatically say no, but I would just be really careful about doing it and try to get by and downstream because you can get some folks who are actually doing the work who resent the new business person if this is going to bite them down the road.

Blair: Again, I just came out of this three-hour training session with this group, and they're all business development people. The point I made to them is, you're the agency gatekeeper. In addition to finding opportunities, your job is to make sure that the wrong ones don't get past you. If you misfire on the qualification process and then you get to the end of the sale and you don't win because of a data point, they didn't meet the criteria, you knew that going in or you didn't ask the question, that's on you. I want the new business person to understand what the qualifying criteria is and to see themselves as a gatekeeper, knowing that the decision is mine on whether or not I let somebody past me, or I start to apply the resources of the firm against this opportunity.

When I make the decision to apply those resources, at the end of this arc, the application of those resources is going to be seen as a wise investment even if we didn't win, or an unwise investment or an expense. If it's seen as an expense that's on me, the new business person who's in charge of qualifying.

David: Yes, I completely agree with that. The way you said that highlights the partnership that's so important in this relationship. Where it gets a little messy, though, is where the principal is the head of new business. How do you overrule the principal? This is where it gets messy. This is where actually having a partner for that principal, the partner who's not in charge of new business can step in and protect the firm sometimes in a way that a key employee might get in trouble for doing.

Blair: Or you have a new business person in charge of qualifying and the principal comes in and says, "Hey, I've got an opportunity." The new business person looks at it goes this, "We shouldn't be pursuing this." But you and I both know many principals who are like this. They are the worst culprits when it comes to letting these bad opportunities into the firm.

David: Yes, my neighbor has a bar mitzvah coming up and we really ought to do the invitation.

Blair: We're talking about critical questions your new business person better be able to answer. We just got through number one, which is what does my firm consider to be a qualified client? Question number two is what are the expectations for my job? How many of these opportunities or wins do I need to bring in over a certain period of time in order to consider having met my goals? Do you want to unpack that one?

David: Yes. It might surprise people for me to say that I'm really not trying to phrase this in a way to get new business people to work harder. Because in my experience, they're so goal-driven. This is usually a good thing that if you don't pair the first question and the second one, so the first question is qualification, second one is how many of these. If you don't bring the qualification in, then they'll lower the standards in order to meet the goals. What we'd want to make sure is that we'd like you to bring X number of clients in a year but those X need to meet these goals. Maybe we'll have one or two others a year that don't.

When I tried to frame this to my clients, you can usually almost see this relaxing in the room because they say, "Oh, I never quite thought about it that way." Here's how the math works. If you want 8 to 15 clients, that's a really good range of clients. It doesn't matter how big your firm is, that's a great range of clients. Let's say that you hang on to the average client two or three or four years. That's a good churn rate. That means you really only need to find two, three, or four clients a year in order to restock your client base. Then you break that down into a number of months. All of a sudden, you're saying to yourself, "Oh, I need to bring a new client-" but it needs to be a great one, "I need to bring a new client in every quarter."

That helps the new business person relax a little bit and they can be more of a farmer rather than a hunter. They can pounce when the pouncing is right but the rest of the time, they can do the sorts of things that won't compromise the firm's positioning, because they can afford to be patient. You've talked about this in the past, how that particular pressure point is very difficult for somebody who comes from a transactional sales background. Where it's not about the quality of the sale because everything they're selling is the same.

It's about the quantity of the sale. In our world, we really are talking about consultative selling. This is something you've talked a lot about in various episodes in the past as well, and in your training. It helps people relax. I'd like you to bring three, four, or five of these in a year. I'd like each of them, if possible, to meet this criterion, something that simple. When I asked a new business person that I want them to immediately without any hesitation, say, "This is my goal to do this."

Blair: Yes, this being a podcast, nobody could see me nodding my head in affirmation for the last three minutes. Everything you said was just bang on. It's not just about a revenue goal. It's not a numbers game. It's not high volume. It's more about a farming approach. It's a more selective approach. You're looking for what ends up being a small number of new clients every year but at a certain threshold. It's not just a dollar volume or a currency amount that you're trying to hit. It's a currency amount divided by a number of clients because you want to keep the average spend per client at a certain number.

David: If I could add something as well, which maybe we should have had in the first question. But you want your salesperson whether it's principal or not to bring growable clients to the table. That doesn't mean that the new business person should be responsible for growing the account. That's what account people do, but it is the salesperson's role to bring a growable account to the table. Then there's this perfect handoff like in the Olympics in a relay race where the account person and the strategy person and the creative person, they just do things in such a great way that the account grows. It's just like watching a symphony play. It's beautiful.

Blair: More vigorous nodding on my end. All right, we're talking about critical questions your new business person better be able to answer. We're in question number three. How do I get paid for my work if it's other than straight salary? You're interviewing people in the consulting work that you do. You're interviewing a new business person and you say to that person, "How do you get paid for your work?" They need to be able to answer that. Are they ever not able to answer that?

David: Yes, yes, surprisingly, they are. Straight commission is incredibly rare nowadays and even heavy commission is pretty rare.

Blair: Thank goodness.

David: Yes, thank goodness. We have a whole another podcast episode about that. Yes, they can. Now, the really motivated ones who are also driven by money, they'll usually have a spreadsheet right there either on their laptop or on their iPhone or something and they'll be able to pull it up, but the rest of them who don't know, they don't know is this a house account? How long does the commission structure last? In other words, is it just for the first year? When I leave what happens? What happens if it's an unprofitable account? Does that mean I'm not going to get any commissions on it?

I'm not a big believer in commissions. I know you aren't either. Maybe a little bit because that's what drives sales people. They don't want a ceiling, but it's not a huge motivator. It's a motivator if you don't have it, but it's not a great motivator if you do have it. Let's not have any confusion about that. Let's not make it so complicated that you have to have somebody in a basement who's an expert in Excel figure it out. This should be pretty simple.

Blair: Yes, the green eyeshade and the ledger to figure out the compensation. Compensation should be pretty straightforward. The incentives should be aligned to the goals that we've already talked about. Any incentives, I think you and I agree should probably represent less than 15% of the total compensation. You can see where there are exceptions to that, in a productized services firm, which most of the listeners to this podcast are not running productized services firms, a lot of them are quasi productized and should rethink that.

In those types of firms, you would have a different type of salesperson with a higher drive more likely to have an incentive-based compensation or a more highly leveraged comp plan. Again, we're thinking of the customized services firm, and the pace at which we're trying to close business is usually not more than one new client per quarter. Again, there are exceptions to that. Question number four under critical questions my new business person better be able to answer. What support can I count on?

David: That'd be a question that you'd want to ask if you're interviewing for the job. You wouldn't want to be surprised afterwards to discover that there's no marketing plan, there's no budget, there's no support. When you finally get somebody on the line, nobody wants to come with you to the meeting. Kinds of support that you would typically I think include under this would be, I want you to talk about a framework, but how much of the principal's time will be devoted to helping with this brainstorming, thinking through how to approach things and so on? Supporting materials and adequate website. Oh my God, there are so many inadequate websites out there.

It's not as if every prospect is actually looking at every page of your website. Please, let's just not embarrass ourselves. Let's at least have something that represents what we do and our strengths and so on. Some lead gen wheel that's, hopefully, already spun up, although in most cases, I would say that they're expecting the first few months of this new business person's tenure to involve spinning up that lead gen wheel. That has problems on its own, training, the training that you folks give. What do you mean by-- You and I were chatting about this briefly and you brought up the idea of framework? I'm really intrigued by that. Talk about that some more.

Blair: Well, I think we alluded to this somewhere near the top of this episode, where this idea that new business seems to be this role where the principal expects the new hire to bring some magical, mystical framework with them. When you view the framework is tied to the individual that you've hired, the metaphor that I always think of is car and driver. You as the principal, you hire a new business person, and you put them in the car and the car is the framework, the systems, the processes, the methodologies, et cetera, that they're going to use.

You put them in the car at the start line, and then they make progress. Because you, effectively, hire a driver and ask them to bring their own car, they start on this journey that's towards landing new clients and they get at a certain distance, and then at some point, they leave. Not only does the driver leave, but the car leaves. You go replace the driver, they bring a new car, you back up, you start at the beginning again. You want to own the framework, and you want to drop the driver into the framework because when they advance that framework or car down the road and the driver leaves, you can simply go get a new driver, train them, drop them in, and you effectively don't lose momentum.

David: That's really powerful and hidden in there, I found myself thinking about hiring somebody for their Rolodex, which then they take with them when they leave as well. That's not the system you're talking about. You're talking about a system that the agency owns. That's great.

Blair: Yes, a system for like, how are we going to qualify leads? What is the criteria? What are our policies and the things that we will do and will not do to win new business? Other elements of how we go about doing things. I would add, this is a pretty good list. I think under supporting materials, that also contributes to another item here, lead generation wheel spun up is the technology. You have a tech stack in place, you have a CRM application, you're using marketing automation. Then you've got these channels. You've got good people creating content, you're blogging, you're podcasting, you're speaking, you're working on a book, whatever it is.

You and I have talked previously about the fact that the new business person used to be seen as the lead generation person, and it was that way for years. It's been a wonderful change that lead generation has largely, not entirely, but it's largely been separated from the business development function. What that's done is that's freed us up to hire more patient business development people whose skill is navigating a sale, navigating an opportunity rather than uncovering the opportunities. Because the skills required to do those are actually a little bit mutually exclusive, not entirely, but a little bit. On the variable of patience, you need to be an impatient person to do sales-based lead generation. You need to be a patient person to navigate a complex B2B sale.

David: I'm discovering why I like half of that and not the other half.

[laughter]

David: Were you intending to jab me personally with those last statements?

Blair: I'm not sure how I jabbed you there.

David: What about the patience? I love the content generation, the lead generation, all that stuff, but I find myself much less patient. I found myself thinking, "Didn't I write about this already?"

Blair: You have a high competitive drive and that means you're impatient. I have a low competitive drive, I'm more patient.

David: I'm not going to argue with that. We're just going to go on and just accept that at face value.

[laughter]

Blair: That's not better. I'm not suited to a high transactional sale. If we were going to sell encyclopedias door-to-door showing our age, you would be far better at it than I would. I think weren't both of our grandfather's Fuller Brush salesmen?

David: Yes, Glenn T. Baker, he was the top Fuller Brush salesperson in all of Florida, and he was amazing.

Blair: I don't know how effective of a Fuller Brush salesperson Gearhart Enns was. There we go, some more commonality. Hey, let's get to question number five on our list of five critical questions your new business people should be able to answer. How will I hand this relationship off to whom and when? You're saying when you're interviewing the BD people sometimes this isn't formalized?

David: It's usually not and if it is, it's usually wrong. I shouldn't say it quite that ungently but it just usually is.

Blair: It sounds like you have a definite opinion of how this should be done. In fact, we've done a podcast on this.

David: Big surprise. Yes, the podcast episode is called 'Why account people should close new business'. The way I unearth this when I'm interviewing the new business person, I'll say, "How soon do you typically involve the account person? How are those relative roles managed?" In that dance, how long do you lead, and then, how do you transfer that lead to the other person? That question uncovers so many interesting things about how good the account people are, how well they cooperate with the sales people and so on. For all kinds of reasons, I think an account person needs to be closing that sale, needs to be brought in very early.

If they don't, then the account person is inheriting all kinds of silly promises that the salesperson's made. The salesperson gets too bogged down on the account. There's this bait and switch, where after the salesperson disappears, if the prospect has already bonded with them personally, then it just gets awkward and the new client feels like they've got second-best at this point. There's all kinds of reasons for this. Whatever the policy is, whether you agree or disagree with my principles on that, I want there to be a policy in place, I want there to be a specific policy.

I want the prospect to know early on what to expect. I don't want any surprises in this process. Explain this to them early on, so that there aren't any hiccups because how that relationship starts has a lot to do with how it unfolds over time. That's why it makes this list of one of the questions that the salesperson ought to be able to answer is, how does this hand-off occur, when, who's going to do it, all that needs to be a policy.

Blair: Yes, I agree with that. I think I'm not as fully aligned with you on why it should be account people and we talked about that a little bit. Sometimes, it's a strategy, et cetera. Whatever it is, you need to codify it. Your people need to know what it is. All right, so we've covered five critical questions

your new business person should be able to answer. But you have a sixth that you really think they should not be able to answer. Is that right?

David: Yes. It may not resonate with some people listening, but other people are going to say, "Oh man, that is so true. I've seen that happen." They're going to see that in their own situations. I've come across this maybe 30 or 40 times over the years, and in every case, the answer is the right answer, but it's for the wrong reason. You have a salesperson who is not performing up to standards. It could actually be a principal, but often it's not. It's often a non-principal who's charged with new business. When you dig under the surface and you try to figure out why this isn't working, what they'll say is something along the lines of, "We aren't ready to do that work. I'm not comfortable handing this off to the team."

There's this little asterisk in there in that they feel like they have a personal connection with this prospect and they don't want to waste that personal connection. That personal connection is almost more important to them than that new business person's relationship with the agency, because that relationship with that prospect will last longer in their minds and they'll probably drag that client as a prospect to their next job as well. They throw the agency under the bus and they say, "Well, I could close more business. I just am not sure we're ready to do this work to the level that the client is expecting." I completely understand that academically, but usually what's happening is that's just an excuse they're hiding behind. That's why I thought it was worth mentioning.

Blair: The question that you don't want them to answer-- Basically, you don't want them asking this question, which is, can we do this work? Am I satisfied with my team's capabilities?

David: I want them to ask that question, but I want them to ask that question before they take the job. If they're not comfortable selling the quality of the work in a new business setting, then they neither need to be a part of fixing it quickly, or they just need to leave. They need to quit. You can't have a new business person who's regularly saying, "I could close this, but we're just not ready for it." Academically it makes sense but in reality, it's just an excuse.

Blair: Yes. I'm going to conditionally agree with you and say, this is actually a really big topic. It might be worth exploring in more detail down the road. All right. This has been interesting.

David: Interesting. That's all you got. Interesting. That is not the kind of approbation I'm looking from you, but okay, interesting. I'm going to write that word down next time I interview you. It's going to be interesting. I promise you that.

Blair: This has been a fascinating conversation, David. You've really opened my mind. I'm just so glad we did it. We talked about five critical questions your new business person better be able to answer. What does my firm consider a qualified client? What are the expectations for my job? How do I get paid for my work? What support can I count on? How will I hand this relationship off? Thanks, David. We'll talk to you in a couple of weeks.

David: Thank you. Blair.