Let’s lead the way to prosperity

It’s been both a frustrating and promising year for the Chicago area economy. We’ve managed to do a little better than the rest of the country, with the SurePayroll Small Business Scorecard showing year-over-year hiring down 0.9 percent in Chicago compared to -1.4 percent nationwide.

Want more to hang your hat on? We have fared better than other big cities over the last year. New York’s hiring is down 1.7 percent; Los Angeles 5.9 percent; San Francisco 3.9 percent; and Boston 3.0 percent.

Still, we’re a world class city. We want to do better. We want to be known as a place to go when you want to start a company or move your business.

We’ve made positive steps. The mayor has moved to cut red tape for businesses and wants to appoint a small business czar for the first time. The Chicago Broadband Challenge aims to up Internet speeds for startups, schools, libraries and neighborhoods. We have great organizations like 1871, Built in Chicago and World Business Chicago that promote our businesses.

Yet we haven’t seen much in the way of results. Chicago seems to go as the economy goes and our Scorecard survey this month tells us there’s still concern and uncertainty. Only 60 percent of small business owners said they were optimistic about the small business economy in November, down eight points from October. Remember, during good times, optimism is usually up around 80 percent.

It’s been a year filled with uncertainty, much of it surrounding the presidential election, but even with that settled, 61 percent of small business owners tell us they’re not feeling any more confident the government will avoid the fiscal cliff.

Many are still being cautious, with 47 percent saying they’re taking a defensive approach on spending and will not give year-end bonuses. Another 14 percent say they will wait for these macro events (fiscal cliff, tax policy, Euro crisis, Iran, etc.) to play out.

My hope is that, having taken many of the right steps as a business community, Chicago will begin to move forward on hiring and growth in spite of what may or may not be happening with the rest of the country. Chicago should take this opportunity to grab the reins and lead the charge back to prosperity.

Michael Alter is president and CEO of SurePayroll, a small-business payroll services company based in Glenview. The company collects information on small-business hiring based on its nationwide database of SurePayroll software users; Mr. Alter comments on trendlines in the data each month here on Crain’s blog for Chicago entrepreneurs.

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How to build the right sales team for your startup

By George Deeb

Along with your marketing efforts, your sales strategies will make or break the success of your startup, as they are equally critical to your abilities to drive revenue.

Today, we will tackle how best to structure your sales team and how best to design internal sales procedures. Our next post will tackle sales incentives for motivating your team.

There is no one right answer on how best to structure your sales team. It is largely dependent on the size of your team, the complexity of your product, the size of your average transaction and what works best for your industry.

As a rule, sales teams are structured either as:

– Inside sales teams based in your home office or outside sales teams working on the road

– Inbound call handlers versus outbound callers and

– Geographically split based on regions of the country, or split on other industry-specific verticals (e.g., corporate clients, government clients, university clients).

The inside versus outside decision typically comes down to complexity of the product and the average transaction size. It will be hard to close a $1 million complicated technology sale, without face-to-face contact to educate the client and instill trust in your company. On the other hand, selling a $199 airline ticket can easily be done over the phone, since people are pretty clear on what they are buying and it is a relatively small transaction size.

The inbound call handler versus outbound callers decision is largely tied to the best marketing tactics for your business. If you are a big online travel site selling airline tickets, the customers are typically coming to you researching air itineraries on your website and then calling your customer sales desk with any questions or to book the flight. On the other hand, especially for products that consumers are not naturally coming to you, telemarketing sales tactics are employed.

And, we all know how annoyed we get by telemarketing calls, especially around election time. But sometimes telemarketing can be tastefully engaged if relevant to a consumer. For example, “I was doing your neighbor’s landscaping yesterday and saw that you needed your flower beds weeded.” Or for repeat clients: “We last washed your windows a year ago and would like to schedule this year’s service?” Both examples are very tasteful, and should not upset the listener given its relevance to a real need they may have.

The geographic versus client vertical split decision typically comes down to the size of the prospective market and the varying needs of a particular industry vertical. If you are serving 1,000 prospective clients, you could easily split sales efforts around Eastern U.S. sales and Western U.S. sales. If you are serving 1 million prospective clients, your geographic splits could get down to the city level. Geography splits work fine, as long as there are an even mix of clients in each region.

But let’s say you are selling products to the entertainment industry largely based in Hollywood, maybe you split your sales team based on film producers versus television producers versus gaming producers, all based in Los Angeles. Or, in another example, you are selling digital video technology and the needs of a film studio (e.g., entertainment-driven) are different from the needs of a corporate video client (e.g., marketing-driven) and the needs of a government video client (e.g., intelligence-driven). In that scenario, different user cases and needs may require expert salespeople just around that user case.

As for designing internal sales procedures, a couple of key points. First, you want your best salespeople spending all their time closing sales. So often they may need an assistant to helping their cold-calling efforts. The assistant makes the 100 outbound cold calls looking for viable leads and then hands off the 10 viable leads to the salespeople to close. A very efficient use of everybody’s time, if your budgets can afford it. If not, the salespeople are making their own cold calls, which may be your only option (but not the most efficient use of their time or your budget).

The other key procedural point is the speed at which you respond to a new lead. The faster you respond to a new lead, the higher your odds you close that lead, before one of your competitors calls the customer back. At iExplore, customers would reach out to three or four tour operators while doing their research, and our sales conversion rate was directly proportional to the response time of our sales team (e.g., one hour response closed at 25 percent rate, eight-hour reponse closed at 10 percent rate). And, if it was that dramatic for a four-week sales cycle product, imagine the implications for a “real time” sales cycle product (e.g., I need business cards for a meeting tomorrow).

The final procedural point is the frequency at which you follow up with old leads. I can’t tell you how many startups simply deal with new leads and forget to follow up with old leads, or worse yet, forget to follow up with repeat past clients. It is critical you use some type of CRM to catalog all your leads as they come in, and set follow up schedules for each. If you have the budgets to afford an expensive product like Salesforce.com, great. If you don’t, often times a simple Excel spreadsheet will accomplish your goal just the same.

In terms of frequency of the follow up itself, it is directly proportional to the immediacy of the sale. If a client is calling for a July 1 vacation on June 1, you had better follow up with them in the next day or two, as they need to book their trip quickly. If a client is calling to book travel for a 2013 family reunion on June 1, 2011, you can probably follow up with them weekly or monthly given the long lead time before the trip. But, the key point: It is critical you set up an operational procedure to follow up with all old leads until they close or go dead, as well as a process for past repeat clients to stimulate a repeat purchase in a reasonable repeat sale timeline (e.g., their once a year summer vacation).

Hope you found this helpful at the highest level. Our next post will dig into sales incentives to motivate your sales team, which is the other critical piece of the sales puzzle.

George Deeb is a managing partner at Red Rocket Ventures, a Chicago-based startup consulting and fundraising firm with expertise in advising Internet-related businesses. More of George’s startup lessons can be read at “101 Startup Lessons — An Entrepreneur’s Handbook.”

George’s posts appear on Crain’s blog for Chicago entrepreneurs on Fridays.

Follow George on Twitter at @georgedeeb.

Join Crain’s LinkedIn group for Chicago entrepreneurs. And stay on top of Chicago business with Crain’s free daily e-newsletters.

Rising health care costs vex Chicago small-biz owners

By Lisa Leiter

Chicago small-business owners are more concerned about rising health care costs than business owners in other major metropolitan areas.

That’s according to a new survey by Bank of America, which this morning released its inaugural Small Business Owners Report.

More than three-quarters (76 percent) of the 300 local small-business owners surveyed say they are concerned about rising health care costs, a greater percentage than in the other eight markets studied, including New York, Los Angeles and Washington. Nationally, the biggest concern among small-business owners is the effectiveness of U.S. government leaders.

“Small-business owners in Chicago are a pretty savvy group,” says Jay Miller, B of A’s central region small-business banking sales executive. “They are more focused as managers, looking at things that are important to their employees and their potential employees and more focused on the bigger picture than traditional small businesses in other parts of the country.”

Not surprisingly, 7 in 10 of the Chicago business owners surveyed say the local economy is important to the success of their business. That’s in line with the national figure. But they are less sanguine about the local economy: Just 37 percent say they expect it to improve in the next 12 months.

Mr. Miller says the results point to Chicago’s long-held, conservative reputation.

“Chicago business owners used to be able to look further out in the future as part of the budgeting process but when the economic downturn hit a few years ago, they lost that visibility to predict future results. They are looking for that visibility to return, and while they have seen signs of an uptick, they are not seeing people make the same forward order commitments as they did three or four years ago,” he says.

Almost a third (32 percent) of Chicago owners surveyed plan to hire more employees in the year ahead, among the highest of all other cities. Mr. Miller also attributes that to cautiousness, saying owners delayed increasing staff that was cut during the recession until they were more confident about financial results.

But by no means is significant hiring taking place, and as a result, Miller says business loan demand has yet to bounce back significantly.

Forty-one percent of local small-business owners surveyed applied for a loan in the past two years, and three out of four were approved.

Lisa Leiter writes about small business and produces Crain’s monthly “Entrepreneurs in Action” video reports.

Follow her on Twitter: @LisaLeiter.

CBS green-lights Groupon sitcom

By John Pletz

We were surprised back in January when Crain’s Taking Names columnist Shia Kapos reported that someone was pitching a TV show loosely based on Groupon Inc.

Color us even more surprised when news broke that CBS is picking it up.

It’s not clear how faithfully the show, to be named “Friend Me,” will represent life at the Chicago-based daily deal giant. For one thing, the company depicted in the show will be based in Los Angeles. But here’s the rough story line, according to Entertainment Weekly:

“Friends Rob and Evan move from their hometown of Bloomington, Ind., to Los Angeles to begin their exciting new lives working at Groupon.”

“Evan is having trouble breaking his old slothful habits and, rather than go out after work to explore L.A. and meet new people, he prefers to play online poker with his buddies back home. Rob has different plans and is determined to drag Evan, kicking and screaming, along with him.”

Look for the pilot on a teevee near you starting this fall.

John Pletz is a senior reporter covering technology and aviation for Crain’s. Follow him on Twitter: @JohnPletz.

Why daily-deal sites need to man up

By Ricardo Poupada

Admit it. When you think of coupons, you think of your mother. Or grandmother. The very terms we associate with saving money — coupon clipping, penny pinching — still sound vaguely dainty. Of course men have been doing their own shopping for some time now, and guys like saving money as much as anyone. Yet men’s relationship with coupons and deals remains ambiguous and largely unexplored.Getting a bead on that relationship requires empirical data. At Askmen, we regularly rake through that data with our annual Great Male Survey that studies the lifestyle and buying habits of thousands of men in Europe and North America. The knowledge we glean from that research allows us to design deals tailored to the buying habits of the modern-male consumer and what we’ve learned is that quality and brand fit are key. A quick glance at the leading online deal sites reveals that, despite the promise of male demographics, most deals are still aimed at women — think group spa treatments — and, indeed, in a recent Askmen poll, 27% of guys felt the products offered in online deals were too feminine. Even deals targeted at men tend to be highly metropolitan, leaving the majority of the male market underserved.

The research is still coming in in terms of how men and women pursue deals differently, but what we know already is that there are some basic, functional differences. For example, men are significantly more likely than women to use their smartphones and tablets to shop for deals online — 18% vs. 11%, according to BIGresearch. That’s yet another reason for online marketers to get off the spa wagon and take note of a highly mobile and discerning demographic.

But there’s more to it than functional differences in how men pursue traditional and online deals. There are more intangible elements at play. What we’ve noticed is that while men certainly want to save money, they’re also interested in a good story. When polled about online deals, 14% said they were more interested in buying experiences than products. And what makes for a good story is an experience that’s a briny cocktail of novelty and exclusivity. In short: bragging rights. For young guys today, fish tales are old hat; they’d rather talk about the time they went shark hunting; not the time they went surfing on Cape Cod but kite-surfing in southern Spain.

When we asked men where online deal sites were failing them, 24% said the quality of the product or service being offered wasn’t high enough, and a hefty 35% said they were eager for deals on more manly activities — i.e. fewer spa days and more rock climbing. That’s why, in general, with deals targeting men, the smart money is moving beyond product discounts to deals that offer novel experiences, with a focus on quality — a straight-razor shave or custom tailoring, for example; something exclusive that none of his friends know about. Better yet, marketers can fashion a deal that offers him not only insider status but that makes him a leader in his social circle — something men value deeply. For example, we recently offered a deal through our newsletter that gets our guy and his friends half off at a hot new sushi spot in Los Angeles. (True fact: saving 50% makes that spider roll 80% more delicious.) Since the deal is exclusive to recipients of our L.A. newsletter, he’ll know about it before all his friends, and since the offer is served up on a savory bed of editorial content in the form of an accompanying restaurant review, he knows it’ll be good.

This is where the intangibles in marketing to men become tangible. By giving men something to brag about and allowing them the opportunity to be leaders in their social circles, a brand can forge an emotional connection with its male customers. He’ll remember that cheap night out at that great new place, and his buddies will, too. He’ll feel good about it because he both saved money and tried something new and, in the process, subtly expanded the range of his tastes and experience. In other words, he’s been good to his bank account and to himself, and that, to men, is a good deal.

Ricardo Poupada is general manager and co-founder of AskMen, a Montreal-based lifestyle website for men. His post originally appeared on AdAgeStat, a statistics and demographics blog on the website of Crain’s sister publication, Advertising Age.