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Sustainable Profits: On Volunteering Negative Information When Selling

November 9, 2012 by Leave a Comment
Sustainable Profits

The challenges of a waste-recycling business.

Now that TerraCycle is almost a decade old and operating in 22 countries, I have realized how much sales styles differ throughout the world, especially in Europe. While the American style of sales is typically gung ho – energetic and positive — the European style is quite different, much more conservative.

This hit me when, after a sales pitch in Germany, our client said, “Tom, we’d love for you to present TerraCycle to our leadership team, but please be less American. Please don’t be excited and just present the facts.” I thought to myself, Wow, how do you sell without being passionate about the product or service you are selling?

Whether you are selling to a new client or persuading an existing client to continue buying, sales is the critical driver of your business’s growth. Naturally, when selling, we spend most, if not all, of our time highlighting the positive attributes of our product or service. The golden rules of successful selling are to solve an existing problem for your client with a compelling proposition. Then communicate that proposition clearly, simply and passionately. And always be closing! But this raises a question: How much negative information should we volunteer?

When selling hamburgers, should the restaurant owner note that the meat came from a slaughterhouse and disclose any associated health issues? When selling public relations services, should a P.R. agency discuss its failed campaigns or only the good ones?

After a decade of successful sales, I do think that there is a place for disclosing negative information. But it should be done wisely and in moderation. Here are three things to keep in mind:

If you think the client may know of something negative, own it. The way to do this is to address it up front in your meeting, before the client raises it. And you should address it more aggressively than your client would, if he or she were bringing it up. When you do this, it’s best to have a solution ready to offer. Such action will show your client that you don’t shy away from challenges; you take responsibility for them. At TerraCycle, every time I have done this, it has been successful and built trust.

Always talk about your competition positively. Competition, while negative to your business, is a fact of life. My suggestion is to be fair and positive. This will play well with your clients as they see that you are looking out for their best interests. This, too, will build credibility and trust. TerraCycle doesn’t have competitors the way most businesses do, but there are other services that our clients perceive to be in the same “bucket” as TerraCycle.

One example is RecycleBank, which manages recycling rewards programs. Whenever we are asked about RecycleBank,we always say positive things — they are indeed our friends. But we also try to explain the differences between our two propositions (we help brands recycle previously nonrecyclable products or packaging). Then we let the client decide. Look, clients can always get this information themselves; it builds credibility when, after a sales meeting, they do their own research and come up with the same facts.

Sprinkle some negatives during your pitch. We consider TerraCycle a premium service. For that reason, we always highlight that our cost is higher than other solutions — such as sending waste to landfill. But then we emphasize that the benefits of working with us may be worth the expense. Of course, there is a fine line — you can volunteer too much negative information and kill the deal. Negative information is like salt on one’s food. It should be applied in moderation.

In the 22 countries where we operate, I have found a wide range of approaches to handling negative information. While most of our sales teams do a great job with the first two points, they often struggle with the third. This is especially true of people with less sales experience, and the most striking example is in Europe. There, our sales teams typically volunteer too much negative information in their pitches. They cross that fine line, and when they do, their closing rates decline.

We’re trying to coach them to be a little more American in their approach.

Tom Szaky is the chief executive of TerraCycle, which is based in Trenton.

Article source: http://boss.blogs.nytimes.com/2012/11/05/on-volunteering-negative-information-when-selling/?partner=rss&emc=rss

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DealBook: SAP to Buy SuccessFactors for $3.4 Billion

December 3, 2011 by Leave a Comment

SAP of Germany announced plans on Saturday to buy SuccessFactors, a Web-based enterprise software company, for $40 a share, or $3.4 billion.

The all-cash transaction, which is expected to close early next year, offers SuccessFactors’ shareholders a 52 percent premium above Friday’s closing price.

“The cloud is a core of SAP’s future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse,” Bill McDermott, the co-chief executive of SAP, said in a statement on Saturday.

Deal activity is heating up in the enterprise software industry, as giants like SAP hunt for smaller companies that provide services through the so-called cloud. In late October, for instance, rival Oracle, agreed to purchase RightNow Technologies, a maker of customer service software, for $1.43 billion. It was Oracle’s largest acquisition, since the takeover of Sun Microsystems last year.

SuccessFactors, a provider of employee management software, helps companies assess the performance of their employees, manage recruitment and fulfill other human resource needs. The San Mateo, Calif.-based company, which reported revenue of $91.2 million in the third quarter, has more than 3,500 customers spread across nearly 170 countries.

The price of the transaction — a 61 percent premium to SuccessFactors’ 60-day trailing average — highlights the growing importance of Web-based enterprise software companies, as more businesses migrate to the cloud for cost-effective solutions. For decades, the industry has been dominated by installed software, which typically involves big upfront fees and recurring maintenance needs, because the software is hosted on-site.

Cloud-based software, in contrast, is designed to be more flexible. Web-based programs can easily scale, for small and larged-sized businesses, and can be offered on a subscription basis, that encompasses all upgrades and support.

“The premium is significant and it shows that SAP was struggling in its cloud strategy, especially in talent management,” Paul Hamerman, a Forrester analyst, said in an interview on Saturday. “The cloud has been a small part of SAP’s revenue stream, about 2 percent; the deal adds to the revenue base and shows SAP’s strong commitment to the software-as-a-service business model.”

In recent months, SAP has ramped up efforts to enlarge its presence in this market. Two months ago, for instance, it acquired Crossgate, a business-to-business e-commerce platform, that allows companies to exchange data with their partners.

Morgan Stanley served as the financial adviser to SuccessFactors, while JPMorgan Chase advised SAP.

Article source: http://feeds.nytimes.com/click.phdo?i=863bdb7cb774788eb1adc2470d47e11d

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Dodgers File for Bankruptcy, Increasing Tension With Selig

June 28, 2011 by Leave a Comment

The team said in court filings Monday that it planned to hold a competitive sale of its cable television rights within 180 days, a move that could permit McCourt to hold onto the team because a deal would allow it to pay its debts and would be overseen by a bankruptcy judge instead of Major League Baseball.

“He’s certainly not going to go quietly into that good night with Selig,” Robert Boland, a professor of sports business at New York University’s Tisch Center, said of McCourt. “He’s opened a new front.”

But Selig could seek a judge’s permission to remove McCourt as owner of the team because of a league provision that allows baseball to terminate the franchise of owners who file for bankruptcy protection. Baseball has taken the position in the past that it has the right to approve any television deal.

A court hearing is scheduled for Tuesday in Delaware, where the Dodgers and four affiliated companies are incorporated.

In the short term, the filing will give the team access — with a judge’s approval — to $60 million in financing that will cover the team’s expenses for about a month, said Bruce Bennett, the lawyer representing the Dodgers in bankruptcy court. The team said Monday that it had secured a total of $150 million in financing that would allow operations to continue as usual: ticket prices will remain the same, the team will continue to sign and acquire players, and the salaries of Dodgers employees will continue to be paid.

The Dodgers and Major League Baseball released dueling statements Monday, with each accusing the other of causing the team’s financial distress.

“We brought the commissioner a media rights deal that would have solved the cash-flow challenge I presented to him a year ago, when his leadership team called us a ‘model franchise,’ ” McCourt said in his statement. “Yet he’s turned his back on the Dodgers, treated us differently and forced us to the point we find ourselves in today.”

Selig accused McCourt of saddling the Dodgers with debt and dipping into team funds to pay for personal expenses.

“To date, the ideas and proposals that I have been asked to consider have not been consistent with the best interests of baseball,” Selig said. “The action taken today by Mr. McCourt does nothing but inflict further harm to this historic franchise.”

McCourt has burdened the Dodgers with $ 400 million in debt since he took over ownership in 2004, and the team has been at the center of a contentious divorce between McCourt and his wife, Jamie, who claims that half of the team belongs to her.

In April, Selig took control of the team and named a trustee, Tom Schieffer, to oversee it.

The most recent 17-year television deal with Fox was to have been part of a divorce settlement between the McCourts, but Selig canceled the agreement after he said it would have served only to enrich Frank McCourt and would place the team’s future in doubt.

In a statement Monday, David Boies, a lawyer for Jamie McCourt, called the bankruptcy filing “disappointing and disturbing” and said “the rule-or-ruin philosophy that appears to have motivated today’s filing is bad for everyone who cares about, or has an interest in, the Dodgers.” A lawyer is expected to appear in court Tuesday on her behalf, according to a representative.

Lawyers for the Dodgers said in filings that the team was “on the verge of running out of cash, the result of a perfect storm of events” and said it would be able to satisfy its debts if it could negotiate a new media deal.

Court documents show that the Dodgers’ largest creditor is Manny Ramirez, who retired from baseball in April but is owed nearly $21 million, followed by Andruw Jones, an outfielder who now plays for the Yankees and is due $11 million, and pitcher Hiroki Kuroda, who is owed $4.5 million. The team also owes $153,000 to Vin Scully, who has been calling Dodgers games for 62 years.

Bennett, the lawyer for the Dodgers, said he did not expect baseball’s argument, that it must approve any television deal, to be successful.

“There are certain decisions that the bankruptcy court should make based upon the bankruptcy law and not based upon what the commissioner would like to do,” he said.

Similarly, the provision allowing Selig to seize ownership from teams that file for bankruptcy is “simply not enforceable as a matter of bankruptcy law,” Bennett said.

A spokesman for baseball declined to comment on whether it would try to terminate McCourt’s franchise.

Baseball is often seen as a special case because of its status as a sports league, but bankruptcy judges are concerned with the rights of creditors and not necessarily those of the league, said Jon Henes, a lawyer who has worked on several cases involving companies seeking Chapter 11 protection, including Citadel Broadcasting and Ion Media Networks.

Indeed, the judge overseeing the bankruptcy filing last year by the Texas Rangers made it clear that he, not Selig, would decide the case. Even so, the team was eventually sold at auction to a group of buyers, including the Hall of Fame pitcher Nolan Ryan, that was favored by Selig.

Richard Sandomir contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=8ed617ff3818af4dca75f8ca39356a13

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Dodgers File for Bankruptcy

June 28, 2011 by Leave a Comment

Bankruptcy protection will shelter the team financially and allow it more time to reach a new media deal, according to a statement released by the Dodgers. The filing will give the team access to $150 million in financing that will prevent the disruption of the Dodgers’ day-to-day business, the statement said.

Frank McCourt, the team’s owner, blamed Selig for the decision to file for Chapter 11 protection.

“We brought the commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago, when his leadership team called us a ‘model franchise,’ ” McCourt said in the statement. “Yet he’s turned his back on the Dodgers, treated us differently and forced us to the point we find ourselves in today.”

Since McCourt took over ownership of the team in 2004, the Dodgers have racked up more than $400 million in debt, and the team has been at the center of a contentious divorce between McCourt and his wife, Jamie, who claims that half of the team belongs to her.

The 17-year television deal with Fox was to have been part of a divorce settlement between the two, but Selig canceled the deal after he said it would have only served to enrich Frank McCourt and would place the team’s future in doubt.

In April, Selig took control of the team and named a trustee, Tom Schieffer, to run it.

Court filings show that the Dodgers’ creditors include Manny Ramirez, who retired from baseball in April but is owed nearly $21 million, Andruw Jones, the outfielder who left the Dodgers for the Yankees earlier this year and is due $11 million, and pitcher Hiroki Kuroda, who is owed $4.5 million. The team also owes $153,000 to the broadcaster Vin Scully, who has been calling Dodgers games for 62 years.

The Dodgers are the only the most recent major-league team to face financial trouble. Last year, the Texas Rangers were sold in a bankruptcy auction to a group of buyers, including the Hall of Famer Nolan Ryan, that was favored by Selig. And the owners of the Mets are fighting a $1 billion lawsuit filed against them by the trustee for the victims of Bernard L. Madoff’s fraud.

In the statement, the Dodgers said the team’s operations would continue as usual: ticket prices will remain the same, the team will continue to sign and acquire players, and the salaries of Dodgers employees will continue to be paid.

Article source: http://feeds.nytimes.com/click.phdo?i=8ed617ff3818af4dca75f8ca39356a13

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At Chase, Top Ranks Get a Big Shake-Up

June 15, 2011 by Leave a Comment

Mr. Dimon has prided himself on the stability of his core group of senior leaders, many of whom have worked alongside him for over a decade at Citigroup and then Bank One of Chicago. But amid an effort to repair its mortgage business and restructure its international activities, Mr. Dimon moved aside two of his most loyal lieutenants while elevating three top managers he did not even know before coming to JPMorgan in 2004.

In an interview, Mr. Dimon framed the changes as part of his effort to groom several senior executives but played down the impact of the moves in the bank’s closely watched succession race. At 55, Mr. Dimon expressed no intentions of leaving.

“Management changes take place when they take place,” he said. But inside JPMorgan’s Park Avenue offices, rumors of a coming management shake-up had been swirling for months — especially as the problems in its mortgage unit worsened. Some see this shake-up as part of Mr. Dimon’s plans to clean up that business.  

Charles W. Scharf, who stepped down as the head of Chase’s mortgage and retail banking operations, will become a partner in its One Equity Partners, the bank’s tiny private equity group. Mr. Scharf, hired by Mr. Dimon out of college in the late 1980s, followed him to Citigroup and Bank One and was considered a potential successor.

“It’s no different than a lot of people going to private equity shops,” Mr. Dimon claimed. “It just happens to be here.”

Mr. Scharf’s duties will be absorbed by other members of Mr. Dimon’s leadership team. Todd Maclin, the head of Chase’s commercial bank, will take on additional responsibilities overseeing the bank’s branch network and small-business banking operations. Gordon A. Smith, the head of Chase Card Services, will add the auto finance and student lending units to his portfolio, as well as oversee the consumer bank’s branding efforts.

Neither was part of Mr. Dimon’s inner circle, but earned his trust with their strong performance during the crisis.

David Lowman, the head of the bank’s mortgage unit who reported to Mr. Scharf, was dismissed on Tuesday, according to an internal memorandum. His exit had been telegraphed earlier this year when Frank J. Bisignano, the bank’s chief administrative officer, was given the additional responsibility of supervising Chase’s mortgage operations.

Mr. Dimon also announced that Heidi Miller, another executive who worked alongside Mr. Dimon since their days at Citigroup, would retire from the company in early 2012. James E. Staley, the head of JPMorgan’s investment bank, will take over her duties coordinating the bank’s expansion plans in faster-growing markets overseas. Mr. Staley’s promotion was also one of an executive who did not start out in Mr. Dimon’s inner circle.

The reorganization almost certainly will turn attention to the race to identify a successor for Mr. Dimon. Mr. Staley, who has had a string of success running JPMorgan’s investment bank and the asset management division, has been viewed as the most likely immediate choice, although at 54, he is only a few months younger than Mr. Dimon.

A younger corps of executives, most in their 40s, is also on the list, including Michael J. Cavanagh, the bank’s former finance chief who now runs treasury services; Matthew E. Zames, the head of fixed income in the investment bank; Mary Erdoes, the head of asset management; and Douglas L. Braunstein, the chief financial officer.

The job switch for Mr. Scharf, once considered a charter member of that club, could take him out of the running.

Although Mr. Scharf helped engineer several deals to expand Chase’s footprint, including the takeover of Washington Mutual during the 2008 financial crisis, an overly aggressive expansion into home equity and mortgage lending swamped the business with losses. Improper foreclosure practices have drawn fire from Washington, and were one of Mr. Dimon’s rare missteps.

Mr. Dimon said Mr. Scharf had asked to do something entrepreneurial and completely different a year ago.

“I think he is looking forward to not working for me,” he joked.

Article source: http://feeds.nytimes.com/click.phdo?i=432fe7238fbe4e83dad68e7bedfd5c98

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