If you’re an investor you know the importance of periodically reviewing your account(s): do certain investments need to be sold, moved or do we need to invest more in higher performing stocks or investments.
The same process holds true for your sales portfolio. How often do you review your numbers, look at your accounts, into other smart investments, sell (or fire) accounts in order to make your portfolio perform to maximum profitability?
In investing, some stocks and equities grow at different rates; some are aggressive, some more conservative. The same can be said of your clients.
Portfolio
Your sales portfolio is the collection of all your accounts, both good and bad. Do you know how your portfolio is performing? How many “A” listed clients do you have compared to the “B, C, D, E” clients in your portfolio? It is mission critical to make sure that your portfolio is performing well and is profitable for the health and longevity of your business and your family.
Asset Allocation
How much money do you set aside for marketing and qualifying your ideal “A” listed clients? Do you even know what you’re “A” client types are?
Bear/Bull Markets
When the market is trending downward you would be in a Bear Market; when trending up, a Bull Market. Are you keeping your ear to the ground by staying on top of the latest trends that could negatively or positively affect your portfolio’s performance? If you do the proper research on your vertical markets you will be able to spot “trends” in the market so you can take appropriate proactive actions to stave off any losses. Case in point: 18 months prior to the PHRMA ruling on transparency, those who saw the writing on the wall were able to make proactive shifts in the dealing to mitigate losses while those who blindly kept moving forward had large portions of their portfolios dwindle.
Blue Chip
When I think of “Blue Chip” accounts I think about the accounts that have certain characteristics that I want all of my clients to have. These are my “A-listers.” For each of you these will vary but for me, an A-lister would have these traits: Honest, open to possibilities, loyal, fair, easy to work with, profitable (45 percent gross profit or better), someone that I have the majority of their business (65 percent plus), high potential, high sales volume ($100,000 annually). Have you taken the time to review your client list and classify your clients? How many A-listers do you have? What about the other categories – B through E? It is critical to classify your clients so you know how much of your resources need to be allocated to each category. Your A-listers are certainly going to get more of your attention and resources than would a D listed client – so take the time to classify your accounts.
Diversification
Your sales portfolio should be balanced. Having all of your eggs in one basket can be detrimental to your portfolio’s overall performance. Imagine having a top level account where 75 percent of your time, efforts and resources are devoted to that one client; imagine further if they sold, went out of business or moved the operation to another state or country. The likelihood is your portfolio would suffer tremendously. I am a huge believer and I preach this during my coaching sessions about the need to develop multiple vertical markets for just this reason. Having five or six vertical markets will diversify your holdings in a safe and manageable way, but you still need to stay alert to volatile market shifts, because merely developing vertical markets does not guarantee success.
ROI/Total Returns
For each account, your gross profits or your total returns is different. The health of your portfolio is in direct relationship to the profits generated. If you parallel our analogy would be a stock portfolio where you have 100k invested with stagnant movement and no growth. The same holds true with your sales portfolio. Selling a million dollars is great but if the return is minimal or non-existent, then it’s really an under-performing portfolio.
Remember: "Sales Feed Egos, Profits Feed Families".
Liquidity
Part of having strong portfolio is having assets that you can use to move your business forward. This is why having savings or cash in an accessible account is extremely important. These assets can be used for capital improvements, new computers or phone system, investment in training, hiring additional staff or attending a show. Part of your portfolio should have reserves readily available for such a need.
Market Risk
Like stocks, some vertical markets are riskier than others so it’s imperative for you to do your homework. Remember the issue with the pharmaceutical industry? If you were heavily invested in this market from a sales standpoint and took a blind eye to what was happening, then your risk was great. However, if you knew the details of what its initiatives were, you could have still sold in that space and made some handsome profits based on where you could have gone and what was acceptable. Sometimes the lure of certain markets looks good, but how many folks were stung and in fact went out of business when the “dot-com” bubble burst? Looked good, but it failed.
Risk Tolerance
I would correlate this to selling at low margins and keep this brief and to the point: if you sell for 10 and 15 percent profits, keep in mind that the risk associated with that is great. In this case you own the cost of goods to the tune of 85 to 90 percent. If something goes sideways with that account, could you absorb that loss? I don’t think many people truly look at this in the way they should. Be mindful of what you are willing to potentially lose before you say yes. Sometimes it’s better to say, “no thank you.”
Valuation
You want to build a business, a book of business, in your sales portfolio that, in the end, has value. I have seen many people who believe their business is worth “X” when in reality it is nowhere close. I get it, it’s your baby, but numbers don’t lie. To have a strong company valuation, your sales and marketing portfolio must be strong. Don’t make the mistake that if you sell a $1 million dollars a year that your company is worth that or more; there are many factors that play into the valuation of each client which make up your portfolio.
Advisor
You may feel a bit overwhelmed by all of this, but not to worry – there are numerous resources both in and out of our industry that can assist you on getting your portfolio in order. Please note, when reaching out, go armed with a list of questions for your specific needs. Each company is different; I have seen some that need tons of help where others need a little nudge and coaching to get back on the rails.
Whatever your need, take time to do a self-evaluation and needs assessment, in the long run; you’ll be happy you did.
Until next month, have a great balance of the year and continued good selling with a strong and profitable sales portfolio!
For more than 30 years, Cliff has been speaking, training and consulting internationally to associations and national business groups on more effective ways to market themselves, their products and services, as well as motivating their personnel. Recognized by PPAI for his creativity, he has won the prestigious PPAI Pyramid award 25 times, and the Printing Industry's PSDA’s Peak Award for creativity five times in three years. He has also received PPAI's Ambassador Speaker of the Year Award six consecutive years and was the inaugural recipient of PPAI's Distinguished Service Award. Named one of top six industry speakers and trainers, he also was recognized by PPAI in the book, "PPAI at 100," as having a significant influence in education. He has also been recognized by Counselor Magazine as one of the Top 50 Most Influential People in the Promotional Products Industry. You can engage with Cliff at http://www.myengagepage2.com/cliffquicksell.