Profit Minded

Secrets from the Scalerator: Incentivizing Crossover Sales

Part 2 in a 4-part series about businesses that met the AmEx OPEN Scalerator challenge to grow their revenues 15 percent in three months.

When ScaleUp Milwaukee brought the American Express OPEN Scalerator program to town last fall, Tom Dougherty, owner of Advanced Chemical Systems, was among 12 area business owners and managers who were accepted to enroll to learn how to scale up. Less than four months after completing the intensive two-month workshop, Dougherty has already translated what he learned into impressive results at his 12-person business. He attributes the sale of a $100,000 contract in November, as well as a 16 percent spike in his chemical sales since then, to the growth plan the Scalerator helped him conceive.

“Every small business is trying to grow,” Dougherty says. “What prompted me to join the Scalerator were the specifics the leaders asked about my business during the interview. The professor did enough homework on us that it was like getting a personalized presentation of the information we wanted.” Dougherty says interaction with and feedback from other business owners was also helpful.

The Scalerator instructors—business faculty from Babson College, all with entrepreneurial experience—saw that Advanced Chemical Systems was missing opportunities for crossover sales in its wastewater treatment business. “I kind of knew this, but it took someone saying ‘this is what you’ve got to do to make the crossover sale’,” Dougherty says.

His company sells equipment and chemicals for managing acqueous waste, such as boilers and cooling systems, decontamination systems, and purifying membrane technologies for discharging and reusing wastewater. Customers include big plants in industries like lumber and plating. “Crossover sales is about having the boiler and cooling system sales person work with the membrane sales person to sell membranes into the cooling tower industry,” Dougherty says. It might seem like an obvious approach, but even before enrolling in the Scalerator, Dougherty “kicked it around and talked about it,” but his three-person sales team hit a roadblock when it came to figuring out who would get credit or commission for the sales.

In the Scalerator he realized that would be a nice problem to have: “Let’s just get the sale first,” Dougherty says he decided. “The Scalerator asked, ‘Is it easier to go into a sales call when you have or don’t have a relationship?’ And if someone in your company has a relationship to help bring in the next person, then as the boss it’s my job to say, ‘Hey, you have to start bringing Jim in.’”

Within three weeks of taking the new tack, the ACS sales team closed its first crossover sale—a $100,000 deal to put membrane technology into a cooling facility. And together they devised a fair plan for distributing commissions. “The four of us sat down and said, ‘How do we incentivize the crossover sale so that not only does the person we bought in get the majority, but the person who brought the person in gets some incentive?’ Everyone has to feel that they’re getting something out of it," Dougherty says. "We’re constantly having discussions now about how we can we bring each other in at these plants.”

Dougherty says that previously his people were incentivized to work independently. “They weren’t doing a good job of saying, ‘We also do this; can I bring in my counterpart to meet you and discuss reducing your costs around sludge?’” He also realized he needed to offer bigger incentives for bringing in new customers to grow the business.

Now, he awards a 10 percent commission for expanding an existing customer, 4 percent for bringing in a colleague to make a crossover sale, and 12 percent commission for bringing in a new customer. Dougherty says his sales execs are eager to collaborate and to see where else they can help each other succeed. He says, “Success breeds more success. And if this works the way everyone hopes it will, we will gain momentum.”

As for the boiler customer that invested in the $100,000 membrane filter system: Dougherty says, “They’re in the middle of a three-month trial to confirm their return-on-investment numbers. If it pans out, we’ll be talking to their sister plant up in north Wisconsin next.”

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