Why Sales Isn’t Always King (when to say no to sales)

fallen king

Our Brief Fling With Payroll

More than a few years ago, when STORM was finding out first hand that we still needed to educate the market about flexible benefits, we were scrambling on ways on how to generate more sales.

I had an idea.

“Let’s offer payroll!”

My several justifications were many: to be known as both a compensation AND benefits services company, “payroll wasn’t rocket science”, and the idea that we could just use the current system we developed internally to run it.

Because there were many competitors, we couldn’t put quite a big enough margin per sale. So I figured, we could make up for it with a bit of volume. Our minimum price was around P15-20K per month for a 50-man client. I figured, if I could hire a person at P10,000 to handle 3-4 of these companies per month, well, that’s a profit of at least P35,000 per month for 3-4 monthly clients.

So we added this new business line quickly. After a few weeks, we landed FIVE new clients. I began patting myself on the back.

It was a disaster.

It turns payroll WASN’T exactly rocket science, and we struggled with maintaining the quality of this new offering we weren’t doing before. The person we hired was a total disaster.

It also turns out that the smaller companies we landed were more high maintenance than some of the larger firms we dealt with in our flexible benefits line – making us spend a lot of time and effort on these low-margin accounts.

Worse, we had one current flexible benefits client who agreed to give us their payroll to manage. Because of our inefficiencies with payroll, we were endangering the relationship we worked so carefully to foster.

While on paper, we were making a margin (a small one), in truth, we were losing money on the new business. We were losing managerial hours to it. We were endangering our relationships with the clients of our core business. It was exhausting and frustrating.

In a few months, we closed the business line, and stuck to the guns we were much more familiar with, and where we enjoyed healthier margins.

There’s a lesson here on focus, but the other very important lesson here is that not all sales are equal.

money eyesThe danger of the “ALL-OUT SALES” mentality

Prior to my startup career, I was exposed to Management/MANCOM meetings with my past corporate stints.

I remember the emphasis on SALES.

“Sell at all cost!”

I think this was something I ended up inherited.

I know entrepreneurs with sales backgrounds who think the same way, that any sale is a good sale.

The danger here is that there are some sales that you actually do not want.

I remember my brief foray in a headhunting startup.

At first, we were making money by placing executives and senior managers. Then, when the going got a bit tough, we decided to diversify a bit and accept junior management posts as well. After all, any sale is a sale right?

Big mistake.

The revenue we would generate in placing 4-5 junior managers would equal the revenue generated in placing ONE senior. Moreover, recruiting the 5 juniors required MUCH MUCH more time and effort than placing the one.

Of course, it sounds elementary as I write it down here. But again, when you come face-to-face with the actual job from the client and the short-term money involved, the SALES MENTALITY kicks in and you just say yes. Then you end up regretting it as you psyche yourself up for doing much more work for the same (or lower) payoff.

This is a mistake of many new entrepreneurs. Anyone offering ANY contract to a new entrepreneur (with likely tepid sales) will seem like an irresistible lifeline.

But you have to resist.

Study ALL angles in a potential deal, not merely the cash.




Margins are more important than sheer sales.

I would VERY MUCH rather have 10 clients with 50% margin than 50 clients at 10% margin, even if the revenues are the same. Why?

Well, I can better take care of my ten clients than I could the fifty. Moreover, I would spend CONSIDERABLY LESS money taking care of the 10 clients than managing the 50.

Look for opportunities where you can offer a differentiated product/service at a good margin.

Remember, margin is king, not sales. Apple is the most valuable company in the world not because of market share. Its because of their crazy margins.

So be careful of the “I can lower my price to get a larger client base” strategy.

Maintaining your larger client base won’t be cheap.

Think of Your Market – Who Can Give you Good Margins?

I’ve encountered a number of people who want to market their products and services to startups.

I always try to make the people reconsider. Why exactly do you want to do that?

Well, I know from first-hand experience that:

– startups are very cost-sensitive and will only spend if its the last resort

– startup founders will exhaust their considerable creative resources to get products and services for free or near free

– even of they do buy into your product or service, startup founders are going to likely be high maintenance accounts – passionate people who will likely be breathing down your neck and expect you to devote ALL your time and effort for them

These three factors make it extra-difficult for a startup to cater to other startups.

So ask yourselves:

– which market would be willing to give me the largest margins?

– how do I build my brand? (great branding leads to good margins – people’s trust does a lot to open their wallets)

– how do I differentiate my product enough to make my product seem worth the margin it seeks?

Be wary of the ALL-OUT SALES mentality. (do note that it’s hard to ignore) Think strategically and evaluate all factors involved before doing ANY deal.

Sales Tips: How to Overcome Your Fear of Rejection

I’m not a salesman, but I’ve sold many things.

At the age of 11, I sold cellphones at my uncle’s telecom store in Makati. When I worked for GK CSI, I sold everything from kamoteng kahoy, talong, and chicharon (no relation to Lapid’s 🙂 ).

Me purchasing kamoteng kahoy from Ate Maricel at GK Enchanted Farm
Me purchasing kamoteng kahoy from Ate Maricel at GK Enchanted Farm

For my first full-time job in the States, I sold consumer banking products. I was exposed to the world of cold calls and sales scripts. My personality wasn’t cut out for a “sales” job. Back then, pitching  for me was like pulling teeth.

However, a job in sales taught me many things. It taught me how to use assumptive language, and never to make assumptions about a person based on his/her appearance.

I also learned how to pitch the sale to ALL customers who met the basic criteria. In my banking stint, one of the most successful salesmen in the region was selling credit cards. He never failed to ask every customer that he encountered about applying for a credit card. He wasn’t scared to ask, and most importantly, he wasn’t scared to hear:


That fear of hearing no, the fear of rejection, is what cripples people. It’s that fear of rejection that bogged me down. That fear which made me tiptoe instead of pushing me to run. I cared so much about preserving my image that it hindered me from reaching my full potential as a salesman. Sure, there were days when I overcame this fear, but it wasn’t consistent. I lacked a strong sense of purpose in my work and it made it even harder for me to overcome my fear.

I’ve since learned that communicating with a sense of purpose in my work and life is a powerful tool. It enables  me to overcome my fears and move forward without dwelling on my past failures.

sales_trading_to_investment_bankingMy mission nowadays is clear – to contribute to national building in the Philippines by starting up a Philippine enterprise  to help myself while helping others. My sense of purpose gives me peace, and it can drive me to achieve highly improbable things, if I let it. While I still carry that fear and anxiety at times, my greater mission trumps the fear.

What are my sales tips, after all of these sales experiences and life realizations?

  • Embrace the power and significance of sales in your business. Without generating any sales, you’re not a business. As a result, it is very urgent that you sell.
  • Don’t feel guilty about selling. Selling is not a dirty thing. It’s a part of business. Remember, you are sharing value with your customer when you offer your product/service through a sale.
  • If you are confident in your mission, then continue to take that leap of faith everyday. In the end, we’re all flawed humans. If you compromise your mission and work because you’re trying to get everyone’s approval, it won’t happen.
  • If you possess a higher purpose that provokes you to think outside of yourself, then allow it to take over. You will speak with more confidence and move with conviction. The right people will gravitate towards that spirit that you exude.
  • Do not give in to the need to conform to the status quo. As an entrepreneur, you are a leader. As an innovator, you must distort the norm.

STARTUP SALES TIP: The Product Itself Is the Best Marketing Tool

A few years ago, I would always pass by Wilson street and then take a right at Jose Abad Santos street to go home. One day, I noticed a new tea place was being constructed along J. Santos.

As a huge milk tea fan, I was highly intrigued. I dropped in for a visit as soon as I saw the “OPEN” sign. I was an early adopter. It was the owner herself who was at the counter. I immediately noticed the concept was a bit different from anything being offered locally. This wasn’t Struan and Tang, nor was it another Quickly wannabe (delighted it wasn’t).

They were using fresh tea and there was a clear system: tea bag repository (a wide variety), some sort of a “tea espresso machine”, a “topping” selection (which they now aptly call “sinkers”), then a martini shaker. While they are more hi-tech now (with those circular buzzers), this basic system still holds.

And what does the system create?

A great product. Something I always came back to, tried new variants of, and told ALL my friends about.

Soon, there was always a line whenever I’d visit. Soon, they had other branches. Soon, they had copycats.

How did it grow? More than anything, pure word of mouth supporting a consistently great product.

Raise your hand if you got onto Facebook because you heard it from an advertisement. What about Dropbox? What about your I-phone or I-pad, did you buy them because you were convinced to do so by a TV commercial,  a direct email, or a radio jingle?

How about eating in restaurants like Conti’s or Banapple? Starbucks even?

How about that consultant or consulting firm which helped your firm recently?

Although marketers will tell you otherwise, in this era of social media and connectivity, a great product WILL get found, it WILL be posted on Twitter and Facebook, people WILL talk about it and recommend it to their friends and business acquaintances, and it WILL get found. Great marketing can push process to another level, but I think the insight is crystal- the very foundation of great marketing is a great product. Otherwise, the entire thing crumbles, and people will think they’ve been had. Great marketing only works if ultimately, the product is great as well. Authenticity matters.

Thinking of your great marketing and sales strategy?

Think very very carefully about your product first.

The rest will follow.

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