It’s not easy being 007, but Reagan Lancaster is willing to try. On this January morning in the ballroom of the Wyndham Anatole Dallas, he’s karate kicking Manugistics CEO Greg Owens, manhandling SAP head Hasso Plattner, and wiping out mammoth competitor Larry Ellison, CEO of Oracle.
Lancaster, vice president of global sales for Dallas—based i2 Technologies, has an eye on his foes as he drops down from two stories above, support ropes whipping through body-bearing belay loops. He’s already sent an axe-wielding Owens off into oblivion. Now he’s wrestling a submachine gun from Plattner’s grip, before telling him that “SAP’s vision sucks!” Ellison may be another matter. After all, the information management software giant is no industry tyke, his list of clients significantly longer than i2’s. For a moment, as Ellison’s lackeys batter Lancaster, it appears Oracle might triumph. Now it seems almost certain as a monkey mask-wearing Ellison reappears victorious, arms raised, fists clenched above his head. But when the mask is peeled away, it is Lancaster’s face that emerges from beneath.
“Welcome to ‘Sales Mission 2001!’ ” Lancaster roars, yanking off his superhero cape to reveal a tieless suit beneath. His 2,000 sales and marketing reps applaud madly. Okay, so it’s all theater. (The real Ellison can sleep soundly tonight.) But for Lancaster and his sales force, the conflicts are real: i2 is set on world domination—or at least becoming the number-one player in the e-business solutions market.
To whip up enthusiasm for his mission, Lancaster has motorcycled through brick walls, reverse repelled down four-story buildings, and performed stunts that would make Evel Knievel whimper—all in the name of boosting sales. Theatrics like these aren’t entirely rare to sales meetings, but most aren’t as elaborate or intense—i2 spent thousands of dollars to produce the 20-minute show that included pyrotechnics, flashing light towers, and elaborate video systems.
Needless showmanship? Hardly. Lancaster’s bravado has done much to set a tone among his sales staff. “He takes risks to get us going,” says a pumped up Clay Frisby, an account manager based in Chicago.
Apparently those risks are working: In Lancaster’s seven years at i2, revenues have shot up more than 750 percent. In 2000 i2 broke barriers in e-business revenue when it earned $1.1 billion for the year.
Customers such as General Motors, IBM, Johnson & Johnson, and Nortel have helped i2 capture 58 percent of the b-to-b supply chain market so far. And Lancaster says i2 stands to gain much more. “We’re growing at 116 percent,” the enthused sales executive gloats in a recent interview from his Dallas office. “We were a $200 million company two years ago,” compared with more than $1 billion today. Figures like these have put i2 on Forbes’s best of b-to-b, Ebusiness.com’s top 25, and Fortune’s 100 Fastest Growing Companies.
To be sure, part of the company’s success lies in its product—i2’s software helps companies reduce costs and increase productivity by communicating efficiently with their distributors, manufacturers, retailers, and other members of their supply chains, using real-time details about work orders, parts, repairs, and other issues.
The supply chain management market is a hot one right now, “and certainly i2 is a leading provider,” says David Bovet, a supply chain analyst for Mercer Management Consulting.
But Lancaster’s creative management style—coupled with his bold motivational tactics and emphasis on value-based selling—help inflate the bottom line as well.
Assembling the Right Cast
Part of what makes Lancaster a viable sales leader, superhero status aside, is his ability to gather the best players. Recruiting top sellers is admittedly a tough task in today’s tight labor market, Lancaster says. But his team is a reflection of the opportunities and unusual work environment offered at i2 that reps may not find elsewhere: higher commission rates, spur-of-the-moment incentives, and, of course, Lancaster’s motivating antics—which some call Reaganisms. “Lancaster’s theatrics lighten the mood and keep reps engaged,” says Christine Robins, a presales rep and consultant who previously spent four years at Manugistics, where, she says, such behavior was unheard of.
Morale is so high after the annual sales meetings, business development rep Steven Weiss insists, that big deals are often closed in the first few weeks of the new year. “Within a couple weeks of the sales meeting last year, I closed a $2 million deal,” Weiss recalls, attributing the sale to confidence and zeal imbued in him from the meeting. But how do you maintain that enthusiasm year-round? With regular incentives for starters. Lancaster’s not above dangling over reps’ heads a spontaneous trip abroad for a quarterly top seller, for example. At the end of 2000, he had salespeople vying for a weekend spot on a yacht in the Bahamas or Monte Carlo. Impulsive trips and other motivators have sales members closing deals at the frenzied pace of the Energizer Bunny. “Employees [in the hallways] are high-fiving each other every day,” Weiss says of i2’s sales-obsessed culture.
Lancaster implements long-term incentives as well. He is almost manic in his belief, for example, in promoting from within. A significant number of internal salespeople have moved up to higher positions, as field reps, regional reps, and sales managers. But staff members have to perform well to get there. “I give everyone enough at bats,” Lancaster says. “But if they don’t hit, they go back down to the minors.” Or out the door. Currently, the rate of turnover for i2’s sales staff is 14 percent, though Lancaster would like to boost it about three percentage points: He’d rather have managers clean house than have reps become stale.
With i2’s lofty goals, only the most aggressive college graduates need apply. And the company’s success in recent years means i2’s recruiters can be pickier. When he first started Weiss recalls working alongside other college graduates like himself. “Now you’ll see more new hires with MBAs and Ph.D.’s,” he says. “They’re selective in who they hire.” Indeed, Lancaster and his team prefer reps with 10- to 15-years experience—to ensure a mature, highly confident sales force.
Low quotas also keep his staff motivated, Lancaster says. Base salaries for i2 reps run 10 percent less than industry standards, but commission rates run higher. “If any salesperson is worth his salt, he’s not talking about a base salary,” Lancaster says, “but how he can make the big deal. If a rep is talking about his base salary, I’m not going to hire him.”
With an average sale at $2 million, i2’s reps are compensated accordingly (Lancaster last year earned about $700,000, including bonus).
To keep salespeople sharp Lancaster mandates ongoing intensive training throughout the year. Weiss says he spends the first few months of each year taking nearly a half dozen training courses i2 offers—on company products or cold calling skills, for example. Such classes are not only offered year-round, but reps are highly encouraged to attend them regularly, Weiss adds.
Indeed, witness the annual sales meetings: Events like these are as much about academics as they are antics. David Pilgrim, a Chicago—based salesperson, explains that each rep is graded in three ways throughout the week-long event: on various presentations reps deliver in training sessions, during one-on-one role playing sessions between managers and reps, and through end-of-the-week group scores from the teams, which salespeople are divided into for daily competitions. It’s no vacation, Pilgrim says. “If you go out drinking [every night instead of doing your homework], you’re an idiot.”
Selling Value
There must not be a lot of drinking going on: In the past 10 years, i2’s customer growth has been explosive. Lancaster’s team has clinched deals with major corporations like industrial equipment manufacturer Caterpillar, Barnes & Noble, and General Electric. How? Through a suite of programs that make these companies’ distribution and supply channels exceedingly efficient. i2 reduced Barnes & Noble’s distribution center inventory by 30- to 40-percent, so that it could add more titles overall, and incur a $3 million to $5 million increase in margins.
But money is only part of the equation. The company’s approach to selling is heavily consultative: Reps work with clients to show them how i2’s suite of products can not only help their bottom line, but provide them with business solutions as well. All that saves companies time and money (millions of dollars per year, in fact). It also means a higher quality of life for the employees of i2’s clients, the sales executives like to emphasize. Other firms offer similar products, but it is i2’s value-based sales pitch, executives say, that separates it from their competitors.
“No one else knows how to sell value,” boasts Brett Nakfoor, a senior account manager, at the January meeting. Indeed, i2 takes pride in its value-based selling strategy. “There are a lot of sales reps who claim to be consultants, but their idea is, ‘How long can I keep charging value to customers [to get more money out of it]?’ ” says i2 Senior Vice President Harry Goodnight. “We’re trying to provide maximal value in no time.”
During the Dallas meeting, i2 public relations manager Jennifer Tejada debuted a 20-minute video, for internal use, about the overarching effects i2’s technology might have on customer’s lives: like more time spent with their families. The emotive piece features images, such as overly stocked warehouses with rotting bananas, where frustrated managers and gluttonous fruit flies abound. Tejada encourages reps to stress the impact i2’s products can have on their clients’ personal lives. “Give them value and you’ll gain their loyalty,” she says.
Competitors may scoff at the homespun wholesomeness of value-based selling in such a cutthroat economy. Indeed, Mercer’s Bovet acknowledges, “When I started in this business twenty years ago there were no faxes, e-mails, overnight deliveries. Do I work fewer hours today than I did then? No. Even though productivity is greatly increased by these types of products, my advice to any software vendor is to make the business case,” not the personal one.
i2’s competitors are critical as well. “Every business wants to sell value,” says Jeremy Burton, a senior marketing vice president at Redwood Shores, California—based Oracle, one of i2’s chief competitors. “This is Sales 101.”
But i2’s sales staff say the per-sonal approach works—along with, of course, a strong case for how i2’s technology will change the bottom line for customers.
When Boeing built an enterprisewide list of its raw materials and parts, it used i2’s TradeMatrix suite to do so. Studies by i2 found that 50,000 different part numbers for bolts and screws existed—a sure sign that some of the same parts had duplicate names. TradeMatrix helps to standardize the process of labeling the parts. By identifying such problems, Boeing executives say they hope to save as much as $100 million in commodities management.
Praise from Boeing and other heads of major corporations like 3M, Ford Motor Company, and Motorola is a strong tool for i2: Eliciting support from customers eager to plug i2’s products is a key strategy. Each year, the company sponsors Planet, an industry trade show that draws thousands of potential and current clients. Testimonials from industry names like Hewlett-Packard’s Carly Fiorina do much to boost sales at the event, which last year attracted more than 7,000.
These giant retailers don’t just pay lip service to i2: They also give the company direct access to their clients’ secondary retailers, distributors, manufacturers, and other players within their supply chains. “When you sell to the big guns, like General Motors,” Lancaster says, “you get all the little suppliers that connect to their supply chain. All those suppliers of Wal-Mart want to do better business with Wal-Mart.” Meaning, Wal-Mart suppliers and partners will have to tap into i2’s software programs if they want to maintain a seamless supply chain between themselves and the retailing giant.
Bovet calls this strategy “a first mover advantage. Once you already have a client on board,” he says, “it’s possible to cross-sell another suite of products to that client’s partners. It’s a much more consulting type of sell.”
What’s Next?
Most managers are worried about the softening economy. Lancaster seems almost overjoyed by it. “As the economy gets harder on companies, many will have to shut down plants,” he predicts. “They’ll need to be able to share information across the Internet.” Enter supply chain management software. “When the economy turns worse, we’re a fat cat sitting on the street,” he says gleefully.
The fact that he maintains a lean sales force means Lancaster’s expenses are less and his chances of surviving a downturn greater. What’s more, Lancaster says how i2’s sales team is structured makes a difference too—territories are doled out by industry instead of by geography or by products like other companies do. That gives sales members a leg up on knowing an industry’s challenges more intimately, Goodnight says.
Add to that i2’s system of business development where an in-house sales staff of 35 generates leads for field reps, and there’s a perpetual mechanism for obtaining leads. Sellers in the field are responsible for generating their own leads as well, but having the business development team working on their behalf keeps them ahead of the game. For every contact that turns into a qualified lead—one in which a CEO agrees to meet with i2 reps and purchases products within 90 days—a business development rep gets $750 (more when he exceeds his quota). Nearly 40 percent of business development leads generated results in sales, Lancaster says. “Last year that department made $11 million in the first month.”
Still, can Lancaster’s approach sustain i2 and its sales staff for years to come, particularly in such a fluctuating b-to-b marketplace? “It’s unlikely that any one company will be able to take over the world,” Bovet predicts.
Not surprisingly, Lancaster begs to differ. “We’re now the third-largest applications software company in the world,” he says. “We intend to be the first.”
Reproduced from Manage Smarter.
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