How to sell anything
Forget selling ice to eskimos, in a feature that first appeared in Encore, the best in the business tell you how to sell things that really matter like your business, yourself, TV formats and ad space.
Part1. HOW TO SELL… YOUR BUSINESS
Thinking of offloading your business? Venture Consulting’s Sue Klose tells you what you need to know to make the sale.
When it comes to selling businesses, the highest prices are often attached to entire businesses and so it can be tempting to consider the path of building up your business as big as you can with the goal of finding the right buyer. But not all businesses are candidates for acquisition. How can you make yours one of the few that is too good to pass up?
What is the buyer buying?
In reality, acquirers don’t really buy businesses. They buy assets, capabilities, operating resources or teams that are embedded within businesses. That explains why some companies will offer large sums of money for businesses that may not even make a profit. Rather than buying the profit line, they’re thinking in terms of the embedded assets and what those assets might produce. To give you an example, when Fairfax purchased Essential Baby, the key assets included an existing audience, an established online brand, and the traffic generated by that brand. Twitter has just purchased Spindle for their software development capability and they are closing the business with the key individuals behind it being relocated to San Francisco. To replicate these success stories, any businesses with acquisition aspirations should consider what assets are most valuable within their industry. Is it extremely expensive to acquire new customers? And are some customers worth more than others? Or is audience and reach the greatest challenge in the category? Perhaps a certain type of technical capability is the most difficult to copy.
What is your business worth?
Once you develop your thinking around the core assets within your business, it’s a matter of turning that into an estimate of what it’s worth. The starting point is working out what it would cost to develop the unique capabilities of your business. For example, if an acquirer were to develop its own customer base, how much would they have to invest in sales time and trade marketing? If your technology were not available, what would the cost be to develop or licence similar technology?
Does 1 + 1 = 3?
Once you’ve developed this type of comparison, the next point to consider is the synergies. By combining two businesses, do any new opportunities arise? If the buyer takes on your customers, could they sell even more services to them? Synergies are much more difficult to estimate as there are assumptions to be made. And the seller will not receive the full value of the synergies as the buyer is also doing some of the work. The split is a matter of negotiation.
Be prepared
Our colleagues from Venture Advisory, our corporate advisory arm, suggest this list of steps to prepare for selling your business:
• ‘Corporatise’ – have the necessary procedures in place for finance/accounting, HR, IT, etc. as befits a professionally run company of your size. This makes you look good and minimises risk in the buyer’s eyes.
• Clean up the accounts, paperwork, HR, etc. (e.g. personal expenses,
intellectual property assignment).
• Seek advice (tax, legal, accounting, financial).
• Understand your own reasons
for selling.
• Show (real) profits – understand profitability.
• Prime the business for growth.
• Keep the business humming.
By viewing your business from the prospective buyer’s point of view, thinking strategically about the assets and value, and taking practical steps to prepare, you will be on the right track to becoming the best possible acquisition candidate. Ideas will also emerge regarding potential buyers. As this comes together, a professional advisor should become involved to refine the thinking and develop a very clear path toward an actual sale.
Sue Klose is a partner at Venture Consulting, a digital, media and telecoms consulting firm advising, investing in, and building businesses.
HOW TO SELL… online ads
Ads in the online space are no longer sold in the traditional sense, says Mi9’s Steve Geelan. Closing the deal is all about creating a point of difference.
“Put that coffee down, because coffee is for closers” is one of my favourite lines from the ’90s American film Glengarry Glen Ross. Set in an underperforming real estate office, it’s a story of desperation as four salesmen struggle to hold onto their jobs, faced with the cut-throat ultimatum: “close more leads or get fired”.
While the film’s message that successful salespeople need drive and tenacity still rings true, today’s media sales professionals need more than just a way with words to get by. In an industry where, on the surface, every publisher seems to be selling the same thing, you need to be able to add value with products and insights that the gift of the gab can’t buy and this is the power of data.
The reality is that in today’s media industry we don’t actually “sell” anymore. Traditionally, “selling” could be considered as the art of persuading someone to do or buy something that they don’t necessarily want or need. While this may have made sense two decades ago, today the situation could not be more different. At Mi9, we’re
selling ads to agencies that are set up to buy. They exist to buy media inventory and we exist to sell it to them, so by true definition of the word, our agency partners can’t actually be “sold” to, which begs the question: how can publishers differentiate themselves and influence media buyers to drive sales?
Creating a point of difference
We’re always looking at ways to develop our offering to create a point of difference. While every publisher in the market may be pushing the same message around data, audience and scale, when you drill down into specific offerings you are likely to find one of two things – smoke and mirrors or real transparency based on tangible results. This is where the media sales battle is won and lost.
Rather than selling, our approach is to offer information based on facts to our clients and provide advertisers with evidence-based insights they simply can’t get anywhere else.
Our assets
When engaging media buyers, we focus on two key pillars – delivering the best content alongside the best data.
At our core, Mi9’s role as a media company is to provide Australians with the content they want – and through our data set, we are able to connect advertisers to their target consumers across all devices, whether it be a phone, laptop, Xbox, tablet or PC.
Our technology also allows us to build a more complete picture of the consumer to help inform advertisers’ strategies. For example, through our recent partnership with Experian’s geo-demographic segmentation tool, Mosaic, we can deliver deeper insight and therefore greater value.
Mosaic classifies the population into groups or segments, according to their demographic and lifestyle traits right down to individual households. This provides advertisers with a fully rounded picture of their audience based on their offline traits and online behaviour, providing the insights needed to direct their advertising in a much more targeted way.
The age of accountability
Returning to my original analogy, Alec Baldwin’s Blake in Glengarry Glen Ross was right when he said (slightly less eloquently) that salespeople need to roll up their sleeves and graft, but the days when a deal is closed just by “talking the back legs off a donkey” are long gone.
To suggest that today’s media agencies are ‘sold’ to would be an insult. With the unprecedented transparency of data, accountability and measurement now expected, selling anything comes down to this: provide the information that clients need to offer a new level of decision making.
Steve Geelan is the national director, Microsoft Media Network and Bing Ads which falls under the Mi9 umbrella.
HOW TO SELL… A TV format
Selling TV series and formats in Australia and abroad is all about building relationships, says ABC Commercial’s Natalie Lawley.
Today’s international television market is dominated by competitive pricing, multi-platform content offerings and fragmented audiences. But the importance of thorough preparation and client relationships remains unchanged when selling television series and formats. The key to making a sale is forming solid relationships, and that can take time. If you are just starting out, email is probably not the best place to start. Selling from Australia to Australia can be easier than selling to international clients. The obvious benefit of being in the same country is that you can build a solid relationship and spend quality time with clients, which can be limited when you are at overseas sales markets. However, the world is a small place and international sales are an important part of any distribution business. We focus heavily on our international clients and as a result our sales have grown substantially in the past three years. Our US sales manager, Emma Levingston, has nurtured her relationship with The Smithsonian Channel in the USA, and as a result has dramatically increased our sales. Emma has pre-sold The Search for the Ocean’s Super Predator and Shark Girl, two blue-chip documentaries that cover unique subject matters.
In the past year, Scott Kimpton, sales manager for news and current affairs, has sold titles to more countries than ever before. The World According to Lance screened prime time on CNN last year, and we are now producing a feature documentary about Lance Armstrong. These deals were done through solid relationships that have built up over time.
Knowing your territories and clients well is essential when pitching – including the social norms, culture, trends and history. It also helps to know the production history of the project you are pitching. All of this could come into play during the negotiation and be a game-changer. Preparation is fundamental, and even if you think the title you are trying to sell may not be suitable for a particular client, it is always worth giving it a go… albeit a short go. Is a “no” ever really a “no”? We always like to hope we can turn a rejection into a sale.
That said, you should tread carefully if you are asking the client to consider, or reconsider, something that may not be a natural fit. Always listen, listen, listen to what the client is actually saying. If your relationship is strong and genuine, you will instinctively know what is right or wrong for the client.
Rights definitions are another challenge, especially given these are not standardised across the world and ever-changing, but strong knowledge in this area is a must for making maximum sales.
We have to be careful about pricing in the current market, and again this comes down to knowing your client, territory and product. Another challenge is that the Australian accent features in many of our titles, and this does require some creativity when pitching to the international market.
In summary know your territory, product, rights, pricing, and above all build your client relationships. One way to start building those relationships with potential international clients is by attending events like MIPCOM and MIPTV. Making a sale at these events is tough as you normally have a limited time frame. However, you get a much broader scope of client territories and people are – hopefully – there to buy.
Natalie Lawley is the manager of ABC Commercial content sales.
HOW TO SELL… Your wares
Winning business based on reputation alone is always welcome, but sometimes, agencies need to sell themselves. Peter McDonald explains how it is done.
While most would agree that organic growth is the preferred way to grow your agency, sometimes you need to get out there and sell your wares. So before your little black book runs dry, here are five things you can do to improve your level of success.
Have a simple story
I have been privileged to hear many start-ups share their dream right from the outset and while I resisted the temptation to overly critique, I have always pressure-tested their collective commitment. Some have had a re-think, others haven’t, and a number have far exceeded my expectations (they know who they are), and I have duly eaten humble pie. What sets the successful ones apart is a genuinely fresh, crystal clear, and competitive offering that can be captured in a compelling phrase. Imagine how you might react if an agency leader summed up what they try to deliver as “timeless ideas executed in a timely manner”.
Sell before prospects want to buy
Beyond the staple of a “benefits-rich” website, smart agencies purposefully grow their story, advance thinking on key issues, celebrate major successes, and so forth. DIY clients can then simply online scan, “privately” monitor, and become quite empowered.
It’s much better to get a “warm” call that goes, “We get what it is you do and would like to discuss”, than to receive a request for information that’s clearly being shot-gunned to lazily learn what lots of agencies offer.
Know your prospect’s business
Interrogating the prospect’s website in the same ‘due diligence’ manner as a potential investor or employee will often yield handsome dividends.
If you sense the prospect might meet your ideal client criteria, then at least “test drive” their product or service, run a simple online survey, and dig into some reputable business sources. Through this discovery phase, your fundamental aim is to figure out the right questions to ask, instead of arriving at definitive solutions.
Have your eyes wide open
Now well armed to meet, make sure your eyes – and your ears – are open. If the encounter is not what you were hoping, some clients will courteously give you the time allocated, but not the mind-space you need. Watch for the positives (as well as the negatives) in their body language.
Be honest about what you can do
Whether you are a specialist or multi-discipline agency, be disarmingly honest about what you’re really good at doing and what you’re not. There is an abundance of choice in the market and quality clients will quickly spread the word to their peers as to who is delivering and who is faking it.
However, if you are broadening the scope of your offering ahead of client demand, before you offer new skillsets, ensure they are fully embedded in the agency and market-proven. While no prospective client wants to be the guinea pig, they may be very willing to act as a “test-bed”.
More simply if you are a young creative starting your own agency, ignore all of the above and heed the advice John Hegarty just gave at Cannes: “Wear a smelly T-shirt and carry a wee bag” – but make sure you don’t get caught in the rush.
Peter McDonald is the managing director of The Agency Register.
HOW TO SELL… Yourself
Forget talking about your achievement and focus instead on your potential, says Patricia Powell-Hughes.
There’s plenty of good advice on how to sell yourself available if you go looking. The big question everyone wants answered is how you can make a good impression. You want to make an impression that will get you across the line, get you the job, get you a promotion or maybe a nice pay rise.
The advice is the same for achieving all of the above outcomes; make eye contact, smile, speak confidently, have a good handshake, know what you are talking about and, of course, blow your own horn. Your achievements are the most important factor in determining whether you are successful in your pitch or not.
Or are they?
Apparently not.
A study titled The Preference for Potential by Stanford University’s Zakary Tormala and Jayson Jia, and Harvard Business School’s Michael Norton says we prefer the next big thing, not the actual big thing.
Sounds ridiculous, however the study suggests we have a bias, an unconscious thought, that attracts us to a potential achiever over a proven achiever. The study conducted eight experiments using a range of measures including salary allocations, performance assessments, hiring and admissions decisions, perceptions of artistic talent, ad clicks, fandom, and intentions to try a restaurant. It found that high potential was seen to be more interesting and alluring than high achievement. Participants consistently displayed more favourable assessments of individuals with potential than of individuals with achievement on measures of preference and interest.
Participants in one experiment looked at job applicants and concluded that the candidate with leadership potential would be more successful than the candidate with a proven record of leadership ability. In another, they showed how we prefer, and would pay more for, an artist’s work with the potential to win awards over work that already has. And we prefer restaurants and chefs with the potential to be the next big thing over those who have already made their name.
It is important to note that the studies provided evidence to back-up the potential. Where the backup was not provided, the participants liked them far less than the proven achiever. So the lesson here is, don’t blow hot air.
The studies suggest that your potential for success is more
interesting and attractive than your actual achievements, simply because
it is filled with uncertainty. Apparently the human brain becomes more interested in uncertainty because it wants to figure it out, which means more time is given to evaluating you, and this is where the competitive advantage comes in.
So reconsider focusing your pitch on your future instead of your past.
Patricia Powell-Hughes is the managing director and founder of EP Recruitment.
HOW TO SELL… TV air time
Selling television airtime is all about listening says MCN’s Mark Frain.
Market conditions, in combination with conditional selling of our products and inventory, primarily dictate TV sales trading guidelines. However, do not underestimate the power of agency/client relationships, premium service, and accountability in leveraging the business. Trust and delivery are the backbone to any successful media company; lose either and it can take a strategic game changer to turn the tide.
Given the rapidly changing dynamics of the media marketplace and consequently a media owner’s asset base, conditionally selling that suite of assets remains a core TV sales competency. Combining the sale of traditional advertising models with future innovation and lower demand inventory with premium sponsorships allows for the balance between price, value and innovation to flourish.
To ensure we are always competitively positioning ourselves, we need to understand the market climate and be agile in adjusting our approach according to those conditions. Flexibility is imperative as it is never black or white. Gone are the days, or so I’ve been told, when you could come to work on Monday morning, sell the last few spots in the Sunday night movie and head to lunch.
In a highly competitive landscape it is critical to not only assess those in your direct competitive lens but also those who sit on the outer ring gradually chipping away at future revenue potential. Selling TV is like selling any other media type, you cannot stand still in the way you present and pitch your product. At MCN we continually evaluate the journey we’re on and vision we have, what we stand for as a brand, our unique selling points and how, through extensive market presentations and trade marketing, we can bring that offering to life.
Second to that point, we are committed to driving the medium of TV as one entity, irrespective of the component that we represent. If the overall medium is in good shape, well supported and well marketed, everyone can benefit from a more robust, stable category. That remains the first slide in many of our presentations, “The power of television”, with the main difference now being that it is delivered to multiple channels and devices.
That’s slide two.
No matter what you are selling, listening and “active listening” can often be the difference between a good sales process and a great one. You need to be a student of the industry, both locally and globally, and take time to understand the relevance of our business today, tomorrow and beyond. Without listening to our core partners and primarily the buyers who interface with our product daily, we run the risk of losing relevance and context in the ever changing media landscape.
Mark Frain is the national sales director for MCN, recently awarded Mumbrella’s sales team of the year.
This story first appeared in the weekly edition of Encore available for iPad and Android tablets. Visit encore.com.au for a preview of the app or click below to download.
About Sue’s piece on selling your company. Studies indicate that between 83% and 97% of acquisitions do not end up generating any value for shareholders. One of the reasons is that synergies get over-estimated and are in fact smaller and much harder to achieve than in the original acquisition strategy. There are scores of examples of supposed synergies that didn’t eventuate at all, for example the famed AOL Time Warner AOL acquisition. So buyers should throw a healthy dose of cynicism on any synergy estimates. More generally, the buyer is often desperate to buy something to offset problems in their core business, so looks at the acquisition through rose tinted glasses. Beware overconfidence and untested assumptions in acquisition.
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very true
business are sold to offset declining sales; impact of technology; changing market conditions; returns not living up to investor expectations for all that effort expended ;incompetent business management — going in into deep and not understanding the business in the first place.
I think the valuable ones ( but rare) to buy are the: “going concerns” – due to heath issues of business owners — or simply owners wish to retire — but that presupposes skill in taking it over and running soundly again.
There are many business for sales and equally many eager to buy who think that they can do better than previous owners. Just a business for sale, doe snot guarantee above avergae returns — why would do that if it is not better than being a wage slave ?
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