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Fighting
the Sawtooth Affect
Control
your business growth by not trying to do
everything yourself
Is this a familiar scenario? You’re this close to
landing the biggest deal you ever encountered. The
solution you are pitching is nearly one hundred
thousand dollars and will keep you busy the better
part of the long Winter months ahead and possibly
into the Spring. You built into the quote about 4 months worth
of consulting and are eager to begin. Now, at the
final meeting with your client, you are about to
get the sweet answer you’ve been working hard to
get for months. There’s not much else that
compares to the excitement of getting a signature
on a huge deal you’ve been working on for what
seems like forever. But here you are, actually
watching the client sign your order.
You’re set. You go out and celebrate that night
with your spouse and talk about how much you
deserved this and what it means to your income,
not to mention your business. The long hours. The
pressure. The sacrifices. But now that’s all
over and you got what you deserve. A huge
contract that will yield a lot of consulting
dollars for your relatively small operation. By
the way, if you're not in high-tech, or even in
consulting or a reseller of any sort, this can
still apply to you. Just be creative and use your
imagination to make the appropriate
adjustments so this fits your particular
situation.
The next day you order the software from your vendor.
It arrives in a couple days and having already set
up the first meeting with your client, you set out
with everything you need to begin work. The first
few weeks will include discussions and interviews
for the discovery analysis. Then the planning
phase. And finally the customizations,
implementation, training, and roll out. The plan
is perfect and you are the right man, or woman,
for the job.
Reality
Hits
Did you ever wake up out of a dream and have no idea
where you are or how you got there? Well, that’s
how you feel months later when you realize that
your project is coming to a close. It was a great
success. Your client loves you. The users are
getting on board with the project and are very
enthusiastic. The program works like a charm.
Everything is coming together. Except for one
thing -- Your Business! You suddenly realize as
you finalize this long-term project that your
business is totally stagnating, and you have no
idea how you got to that point.
As if you were a prisoner being paroled after a 20
year sentence and seeing how society has totally
changed in your absence, you emerge to find that
you have absolutely no opportunities lined up to
pursue. Worse than that, your vendors thought you
went out of business. You lost all your status as
a premier reseller, which means you lost all the
privileges from your vendor’s reseller program;
such as leads, special promotions, co-op dollars,
attention from their local field representatives,
and most important, a higher discount rate that is
based on volume sales. You also shot yourself in
the foot by not generating any leads yourself
through marketing activities you could have been
doing over the past several months. So your
pipeline is dry, no one in the area knows of your
business any more, and your vendor thinks you took
a permanent trip to Tibet. Your business is back to ground
zero.
Has this ever happened to you? If it hasn’t, it
could. In this example, months ago you thought you
were such a huge success, pulling in a large deal
involving huge revenue for your business. How were
you to know that at the same time you were
destroying the very business you were trying to
build?
What
To Do?
If this, or something less dramatic yet similar, has
ever happened to you, then you could be
experiencing the Saw-Tooth Affect. What’s the
Saw-Tooth Affect? It’s all very simple to
understand. But not many businesses realize it
until it's too late. Here’s how it works. Draw
a horizontal line. Above the line are Marketing
and Sales related activities. Below the line are
technical and implementation related activities
(See Figure 1). In the beginning of your sales
cycle you spend all your time above the line
marketing your business, generating leads, and
finally closing a sale (Position A). Then you
“disappear” for a finite amount of time below
the line implementing the solution you just sold
(Position B). When that job is completed, you go
back to above-the-line activities (Position C)
and start all over again. This process repeats
itself until something breaks – usually your
business.
While below the line, you do nothing above the line.
And, when above the line, you do nothing below the
line. Pretty simple and quite binary – you do
one or the other. But the problem is, when
you’re below the line, no one is above the line
generating business and finding your next
opportunity for when you rise above the line
again, or re-emerge from your project
implementation.
Recommendation
This
scenario is a classic example of what happens to
smaller VARs, Resellers and System Integrators who
haven’t staffed up properly. Remember - Use your
imagination and you'll see how this could fit your
business model. There's always something you do
that takes you away from the marketing, sales and
"business" aspects of running your
business. To resolve this
self-defeating situation you, as the business
owner or manager, may need to do a lot of soul searching to
decide what it is you are really good at versus
what you really like to do. You may realize that
you really enjoy selling solutions and would
benefit most by concentrating all your energies on
the sales and marketing activities (above the
line) that your company will need to do to
succeed.
Let’s say that is the case and you decide to focus
on sales and marketing. You’ll then need to hire
staff to do the technical work. Now, you
don’t go overboard and hire more people than you
could initially put to work. You know how important it
is to do the up-front
planning and discovery analysis, not to mention
the on-going project management. So you first
might hire
a project manager who is experienced with doing
the planning phase. Next, you might hire a technician
who would concentrate on implementations. Your
project manager, or even you, would do the
training initially until you have enough business
to sustain a full-time trainer. But first things
first.
Your plan will be to spend your time marketing,
selling, and running your business, all
above-the-line activities, while your technical
people spend all their time below the line (See
Figure 2). While they are doing the
implementations, you’ll be generating new
business for them to implement. You will build and
feed your “Pipeline”.
You have to go out and catch the lion. Then you bring
it back and throw it into the tent where someone
else skins the lion while you go back out and
catch the next one. The question is – Do you
want to “catch” the lion or “skin” the
lion?” This will, and should, have a dramatic
affect on your business; specifically it’s
growth and success. In time, as your business
continues to grow you can start hiring sales
and/or marketing people, which will allow you to focus more on
running your business, or even taking some
well-deserved time off.
Summary
You have undoubtedly looked at a saw and noticed how
the teeth go up and down repeatedly. But, have you ever noticed a
similarity in how your business might be following
the same pattern? Sales go up for a while, then
down, then up again and down again, repeatedly. If
you haven’t noticed, you might want to take a
closer look at your business patterns.
One telltale sign that you suffer from the Saw Tooth
Affect is your purchasing patterns. Do you
purchase a lot of software or product every other quarter,
for instance? Or, is there some sort of pattern
that has you purchasing something now, then
nothing for a while, then something again, then
nothing for a while, and so on? Is your revenue or
income following a similar pattern of ups and
downs? These are signs
that you might be going through a specific mode of
operation of buying product, implementing it, then
buying more, and implementing it, over and over
again, instead of having a consistent and
perpetual flow of selling and implementing on a
continual, parallel, and steady basis. You cannot
do both selling and implementing. You never see a
NASCAR driver get out and change his own tires, do
you? If they did, they’d lose the race every
time. You need a team of specialists who focus on
their own aspect of the business.
The Saw Tooth Affect is not a healthy business model
for your company since it doesn’t allow you to
sustain a consistent revenue flow. The scenario
discussed earlier was perhaps an exaggeration of
what is happening in your business, although I
have seen this exact thing happen to all sizes of
resellers much too often. But even if it reflects
partial reality, it is something to be concerned
about. It’s all a matter of balancing resources.
Some resources should be dedicated to marketing
and selling, while others should focus on
installing and implementing. Using the same
resources to do both can cause the Saw Tooth
Affect and result in inconsistent revenue and
growth for your business, which can lead to a
variety of negative effects including harmful
relationships with your vendors and customers, not to mention
your accountant.
As you plan your business’ future, be sure to take
into account the Saw Tooth Affect and how you can
avoid it. It will truly liberate you from the
prison of inconsistent business growth.
Good luck and
good selling!
Russ
Lombardo
PEAK
Sales Consulting
russ@peaksalesconsulting.com
(702)
655-5652
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