Monthly Archives: April 2012

Don’t believe what you are reading about the spinoff of the AT&T Yellow Pages…

As you are all know by now, AT&T recently reached a deal to sell a majority stake in its Yellow Pages operation to Cerberus Capital Management.  The deal for 53% of the unit was reportedly valued at about $1.42 billion ($750 million in cash and a $200 million note).  Once completed the transaction will result in the formation of a new entity, uncreatively titled “YP Holdings LLC”, with Cerberus having management control.

Within minutes of the announcement, I start seeing all kinds of negativity directed at the business with comments like “unloaded”, “distressed”, “apocalyptic”, “another large telecom is hanging up on printed directories”, “Phone books are obsolete”, and on and on.  I of course, disagree totally with these comments of doom and gloom.  And let me tell you why:

Print yellow pages are still a cash-generating sales machine.  The AT&T Yellow Pages operation brought in $3.3 billion in revenue last year.  Let’s compare that with the results from one from the darlings of the internet which was supposed to be a Yellow pages killer, Yelp, which only eked out $83.3 million.   Surprising Yelp has a market capitalization of $1.39 billion, which would put is just below YP Holdings. Going further, the other Internet star in the space, Angie’s List, is also valued well below the AT&T operation, with a market cap of about $870 million.

Print Yellow Pages are declining, but they won’t die.  At least not for a very long time. Even the Associated Press noted the situation. Print Yellow Pages are not like their fellow traditional media friends — newspapers, which have seen a loss of $27 in print for every digital $1 gain (source).

As a recent ADP association release noted, Yellow Page advertising continues to deliver the most calls at the best rate out there.  They reported that Bloom Ads, Inc. a full service advertising agency located in Woodland Hills, CA conducted a two year test for one of their large regional insurance providers. The test utilized unique call tracking numbers for ads appearing on broadcast, out of home and in print yellow pages.

The results were pretty solid:

  • Print yellow page ads drove on average 55% of all calls at a cost per call of under $30.00
  • Television & Radio generated approximately 40.5% of all calls at a CPC of approximately  $160.00
  • Outdoor represented an average of 4.5% of the overall calls at a CPC of over $300.00

AT&T completed a shrewd business move.  I am admittedly not a financial guru.  But just take a closer look at the structure of the deal – AT&T didn’t sell the entire operation, so with 47% ownership, the cash generated from Yellow Pages will continue to roll in, it is now has a minority business stake so they no longer need to publicly report numbers, and they got nearly $1 billion in cash to use in their other operations.

The folks at Cerberus aren’t dummies.  As The Boston Globe pointed out in 2010, Cerebus has a history of quietly buying struggling companies and then selling them at a profit: “They range from the Alamo and National rental car companies, both of which it sold to Enterprise Rent-A-Car, to plasma medicine company Talecris Biotherapeutics, which it took public in an initial public offering.”  Cerberus isn’t perfect as they also invested in Chrysler and GMAC which needed government bailouts.  However, do you really think they would invest that kind of cash in a dead-end business??  Not.

 

The best summation I can offer you comes from an unlikely source – David Lazarus from the LA Times: “Sometimes a deal looks so screwy, you’ve got to wonder what they’re thinking — such as a private-equity group buying a majority stake in AT&T’s Yellow Pages division. This is the age of Google and Yelp and Groupon….”  Check out the video:  http://www.youtube.com/watch?v=u8Mf04-vZAI.  And don’t listen to the doom and gloomers…

 

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5 Ways to Motivate Sales People (Without Cash)

The old standard is that sales people can only be motivated by money (better known as “cash”).  While cash certainly works, not ever manager has a huge budget that allows them to be throwing big money incentives to their sales team.

According to new research by the Aberdeen Group and distributed by the Incentive Research Foundation, non-Yellow Page companies that use non-cash rewards and recognition programs report higher revenue increases – 9.6% as opposed to 3% who don’t.   Simply put, organizations that provided non-monetary rewards and recognition performed better as a cohesive whole.

So we’ve assembled five things that managers can do to positively impact the morale of their sales reps right away, today, and they don’t involve cash.

1)      Be real.  Be genuine. This may seem overly obvious, but to start with, effective recognition isn’t just sweet talk and a fake smile.  It needs to be inspiring. As a manager, you need to show that you truly appreciate their contributions and achievements. It’s also very important to know whether a goal/objective deserves formal public recognition, a casual announcement, an “at-a-boy” during a team meeting, or a more informal praise.

2)      Be Specific (aka “Tough Love”).  Sometimes, when people are not delivering on their objecitves, the problem is not laziness or incompetence.  Often, they simply don’t know what they should be doing. For example, a rep I recently rode with was having issues selling new, non-advertisers.  I discovered he wasn’t using any spec art in his proposals especially in proposals to larger companies who were already spending big bucks on advertising, but just not with his company.  Now I know he was trained on it, but apparently, he had never actually ordered any spec.  People need to know specifically what behaviors need changing and why.  In my example, by working with the rep on how to request spec art, and then use it in his sales presentation, he has started to post higher new sales results.

3)      Be Candid. Let’s be honest – the past few years haven’t been real good ones for the industry.  Your people often depend on the manager to be the intermediary between them and senior management/ownership/corporate governors, and they expect you to share information that may affect them and their jobs. While you certainly need to filter things to some degree, you also need to be honest with them by keeping your team current of what’s going on as much as possible. During tough times, that candor can mean the difference between an office where everyone is upbeat and performing, and one where employees are always on edge about what will happen to their job tomorrow.

4)      Be Personable.  Write handwritten notes. Even if it sounds a bit corny or old fashion, the impact from a handwritten note lasts a lot longer that a pat on the back or “well done” comment. Former US Secretary of State Colin Powell in a recent speech talked about a note of thanks he sent to a corporal for a job well done.  Powell hadn’t thought about that note until months later, when he walked past the corporal’s office and saw that the note he sent had been framed and hung in a prominent place.

5)      Time off. One great way to reward successful results (and also sow some seeds of loyalty) is to acknowledge your reps’ hectic schedules and give them some extra time off for bringing in higher than expected results. Even if your corporate policy forbids granting employees an entire day off, you can still find hours here and there to offer them.
To have a chance to succeed today, salespeople need a lot more than just a rewarding commission plan.   Sure, good training, more technological tools, and assistance from others help.   But we’ve established that money alone cannot satisfy every motivation needed for every sales rep.  Acceptance, recognition and personal esteem can also play a big role.  Adding non-cash rewards to regular result compensation can create some added excitement and competition for results.   Try a couple of different things and let us know the results at ken@yptalk.com.

Does your company have a disaster recovery plan?

The last few weeks, and just this weekend, have seen the startup of a very unpleasant part of spring in the Midwest – dangerous tornadoes.   These terrible natural disasters can be devastating to life, property and personal belongings.  But they can also ruin an otherwise successful businesses.

Back in 2005, we wrote about disaster planning in this YP Talk article.  Many of the comments we made at that time are still true.  For example, in just the area of IT related disasters such as a major loss of business data, 43% of companies never reopen, 51% close within two years, and only 6% will survive long-term (source).

How much should you spend to develop and implement your plans?  Estimates vary but by example,  most large companies spend between 2% and 4% of their IT budget on disaster recovery planning, with the aim of avoiding larger losses in the event that the business cannot continue to function due to loss of IT infrastructure and data (source).

Disaster recovery is a broad topic covering more than just IT and data.  Considerations need to include buildings, people, customers, financial, etc.   Here is a partial list of events that could affect your company:

  • Data security (virus, denial of service, unauthorized access)
  • Telecom failure
  • Power outage
  • Data center hardware/software failure
  • Structural fire (internal)
  • Water pipe break
  • Gas/chemical spill or leak
  • Physical security (workplace violence, terrorism, etc.)
  • Natural disaster (earthquake, tornado, hurricane, wildfire,      etc.)
  • Labor disputes

Given the human tendency to look more on the bright side, many business executives are subject to ignoring “disaster recovery” because disasters seem like such an unlikely event, and will never happen to their business.  If you are in the camp, let me offer you one example of how naïve that thinking can be.

While I was working for a large publisher, our operations were based in the lower level of their secure data center, on its own security controlled property, with all of the latest innovations to prevent most disasters.  I’m sure we thought we were totally safe.  But then we arrived one morning to 5” of standing water in the lower level of our building from a blocked sewer connection just 50 yards outside the building property. Our phone systems were fried, anything on the floor (such as pc’s) was ruined, and we were displaced from the building for over a week while cleanup was done.  And our plan ….. didn’t exist.  It took months before things got back on track.

Here are some general steps we offered in our 2005 article that on developing a disaster recovery plan:

1) Determine the impact of being out of business for X amount of time.
In the middle of a major book campaigns, the answer to this question can be expressed in monetary terms: “We would lose $xxx,000 in sales/potential revenue in a day if our sales effort was stopped.” But you should also consider customers who won’t be served, print windows that may slip, customers already served that have now gone out of business, employees that are still hoping (expecting) to get paid, etc. etc. etc.

The purpose of this step is two fold. First, it provides you with a benchmark against which you can access the costs of varying levels of redundancy and backup (in some ways-not all-more protection means more money). Second, it will help position each part of the business within the context of the organization’s priorities (e.g., which function must get restored first).

2) Identify potential threats.
A disaster recovery plan, like an insurance policy, is most effective if all the risks and threats are realistically identified. While hurricanes and earthquakes do happen, most threats do not arrive in dramatic, news-making fashion. You will need to prepare for water damage (from broken pipes, backed up drains, failed condensation pumps, roof leaks, ground or flood water, discharging fire sprinklers or the fireman’s hose), fire and smoke damage, component and network failures, cable cuts, power losses from blackouts and brownouts, sabotage and lightning strikes. Given the integrated information world most mid to larger size company’s operate in, you will also need to identify how your systems will behave if a key component goes down-e.g., what happens to calls when/if a major telecom link fails at a remote site?

3) Take Preventative Measures.
As you identify potential threats and areas of vulnerability, preventative countermeasures will emerge. Hardware and networks are protected primarily through redundancy and diversity in equipment and services. Specific steps usually include subscribing to services from multiple carriers, deploying fire detection and suppression equipment, working with suppliers to identify critical system components you should keep on site, equipping your system for power backup and ensuring you have good wiring and adequate power line protection against lightning strikes and voltage surges.

Regular record keeping and off-site backup is critical to prevention. Key information and database files should be regularly backed up and stored both onsite and offsite.

Let’s not forget about your most valuable resource – your employees. Home and mobile contact numbers for key people should be collected. Do you have a plan if you need to totally relocate the whole operation (yep, moving the whole shebang to an alternative site)?.

4) Develop an Escalation Plan.
An effective escalation plan outlines appropriate responses to each potential disaster and specifies the thresholds at which they should be deployed. It should address the following:

  1. What constitutes a disaster?
  2. Who in the organization declares  a disaster and puts the disaster recovery plan into motion? How can they be reached?
  3. How will key people inside and  outside the organization be notified of a disaster, and what roles will they fill in the recovery effort?
  4. What’s the appropriate escalation plan for the disaster, given its type and magnitude?

The plan should be simple to understand, easy to follow and up to date. For example — plans and vendor references in the disaster impacted area should contact the ABC-based Disaster Recovery Team at 123-456-7890 or at http://www.<ourhomepage.com>/disaster-plan.

5) Practice and Update the Plan.
Your carefully constructed plan will be of no value if it sits on the shelf during a disaster. Reviewing and practicing recovery plans may be reminiscent of school days, but these drills are worth a lot more than nostalgia. Many disasters happen quickly and without warning. People have to know what to do!   We just had our tornado shelter drill last week.  When have you scheduled yours??

These are just some general thoughts. We’d like to hear what your company is doing in this area. Drop us a note at ken@yptalk.com.