What Problem Do You Solve and Do You Solve it Differently?

Last week, a ran a seminar on Building Revenue Models for the community members at 1871, the Chicagoland Entrepreneurial Center’s (CEC) project that supports entrepreneurs on their path to building high-growth, sustainable businesses that serve as platforms for economic development and civic leadership in Chicago. My partner, Steve Baumgartner, and I have been struck by some 1871 entrepreneurs’ inability to clearly state what problem they solve and, more particularly, how they solve it differently. Instead of being able to clearly articulate the problem they solve, some of these entrepreneurs remain fixated on talking about the features and benefits of their solution and, on a few occasions, the needs that their solutions address.

In both circumstances, these entrepreneurs are off target and wasting the sales opportunities they are generating. Whether it’s true or not, few potential customers want to hear them talk about how elegant their product is, or how it provides features and benefits, that they likely do not even think they need. Instead of being sold a solution, or features and benefits, prospects want help solving a problem, and the bigger the problem the better.

If you find yourself in this situation, It’s time for them to take a step back and develop some hypotheses about what problems your products/solutions solve for customers. Dig deeper past the symptoms of customer’s performance problems into how their businesses operate and how your products/services impact their ability to operate more efficiently or effectively. Confirm what problems your products/solutions address better, faster, and cheaper. Then take a close look at the next best alternatives available for your target customers and compare and contrast them to your products/solutions. Push hard to define how your product/service and business model are truly different. It’s no longer sufficient to just be better, faster, or cheaper, customers want to buy solutions that are different and uniquely create value for them or their businesses. Through iterative conversations with customers you can hone and simplify your message and define what truly makes you different.

You will know you’ve got your fly wheel spinning when the sales cycle speeds up and prospects and customers start noting and referencing what makes your solution different with each other.

-TGK

If you are working on defining what problems you solve and how you solve problems differently, please comment here, or contact us, we would like to hear from you.


Growth Driver #6 – Create a Road Map to Success

Remember Emerson, the journey is the destination!

In a recent webinar with Domo, hosted by Bob Kelly of the Sales Management Association, we discussed Optimizing the Sales Machine and the major impediments to building a Sales Machine that yields predictable, scalable results. 

In our conversation, one of the points that resonated was Sales Manager’s need for a causal road map to success, one that breaks a desired outcome down into specific interconnected activities and goals which are correlated to, and ensure, success. To establish a road map to success, we recommend utilizing the following framework.

 

 

 

 

 

 

 

 

While simplistic, this framework is powerful because it  re-establishes fundamental connections between activities, that reps and managers can manage, influence, and measure on a day-to-day basis, and interim goals that are highly correlated with the attainment of business outcomes (aka Success).

Gone are the days of focusing solely on the destination, without thinking about the journey. Equipped with this road map, managers can now have much more specific conversations with their reps about why opportunities are progressing the way they are and how they are going to act to intervene. And, reps can focus deliberately on activities and course corrections, marking their progress by the attainment of interim goals, with growing confidence they will achieve success.

If you have recently created a Road Map or re-established links between activities, goals, and outcomes, please comment here or on Tweet us at @Evergreengrowth.

Visit our first five Growth Drivers here:

  1. Growth Driver #1 – Confirm Your Revenue Model
  2. Growth Driver #2 – Increase Your Value
  3. Growth Driver #3 – Sell the Way Customers Buy
  4. Growth Driver #4 – Pursue a Mix of Revenue Gains and Drains
  5. Growth Driver #5 – Identify Growth Themes

-TGK

-TGK


Growth Driver #5 – Identify Growth Themes

Granular analysis of growth  yields valuable insights into growth themes and informs Sales Model adjustments.

In today’s low growth and volatile economy, it is difficult to identify persistent growth themes and realign the Sales Model to achieve more persistent growth. What’s needed is a more granular pattern of analysis to identify where growth is occurring. To get granular, we recommend Win, Grow, and Own Analysis (WGO).  At its highest level, WGO analysis identifies the provenance of revenue growth  from three sources:  (1) recurring business with existing customers that you retain or “Own” year-over-year; (2) new business with existing customers that represent “Growth” within existing accounts; and (3) new business with new customers that represent incremental customer “Wins” for your company.

Then WGO drives deeper  to identify growth themes within each source. To do this, iterative analysis is performed  at finer levels of detail, within each source, such as by:

  • Customer segment
  • Sub-segments
  • Geography
  • Region
  • Sales channel or team type
  • Sales territory
  • Product/Service

Let’s take a look at the example  of how iterative analysis can enable the identification of growth themes and adjustment of one’s sales model.  In this example previous year’s sales were $10 million and  this year’s sales were $10.72 million.  How did this growth come about and, equally importantly, could it have been greater?

The first thing that stands out is the $2.35 million of customer “churn” experienced.  Some of this non-recurring business may be natural; i.e., there always has been and always will be a certain number of one-time buyers. But, in this case, churn is clearly the first area of investigation. If churn can be  minimized with effective customer retention strategies, then the company stands a much greater chance of efficiently achieving year-over-year sales growth.  “Owned”  revenue forms the foundation upon which revenue growth and  sales efficiency are built.  And, in this situation, the company has proven itself very capable of generating $2.45 million (24.5% growth) in revenue growth from further penetration of existing accounts. Lastly, while “Win” revenue represents a much lower component of overall revenue, closer inspection shows that 6.2% growth through new customers is a an extremely competitive rate of growth, compared to the competition. This makes the acquisition of new customers, that are not “one-timers” but are sticky and more likely to buy more, a top priority along with more effective account retention.

Let’s take a look at how the WGO analysis can be applied, with more granularity, to sales reps.  The table below further breaks-down the revenue analysis we initiated earlier by analyzing the revenue and profit contribution of individual sales reps. This level of analysis offers terrific insights on which reps are leading performers and which reps are lagging performers.  Sales leaders can build upon these insights, particularly with the addition of sub-segment and product level analysis, to identify best practices that can be used to refine strategy and tactics.  This knowledge also empowers sales leaders to define credible performance benchmarks that are supported by fact versus being simple “wet finger in the wind” aspirations.  The implications for coaching, training and personnel decisions are apparent.

For instance, Jowan Petrovic in the above example is clearly a standout at retaining revenue and penetrating existing accounts. However, new business generation is not his strong suite. With this insight, his manager should dig deeper and further profile his revenue. In this instance, further profiling revealed that the products Jowan sells into existing accounts are different that those he attempts to sell into new accounts, highlighting either a need for potential training or the segmentation of Jowan’s role, to exclude selling new accounts. In contrast to Jowan, there is Joe Bong, who is great at winning accounts, but terrible at owning accounts. In Joe’s case, there’s clearly a need to dig in and analyze the types of accounts he is acquiring, as well as his account management skills and approach.

If you have not granularly decomposed where and how growth is occurring in your company, it’s time to get busy and apply WGO analysis, it will help you quickly identify growth themes, provide a fact base for high value conversations between Sales Managers and Reps, and it will enable you to make adjustments to your sales model to achieve higher levels of efficiency and effectiveness.

We are half way through our 10 Growth Drivers for 2013. Catch up on the first four tips here:

  1. Growth Driver #1 – Confirm Your Revenue Model
  2. Growth Driver #2 – Increase Your Value
  3. Growth Driver #3 – Sell the Way Customers Buy
  4. Growth Driver #4 – Pursue a Mix of Revenue Gains and Drains

-TGK


Growth Driver #3 – Sell the Way Customers Buy

Failure to sell consistently the way customers buy risks losing the sale after substantial investment at worst, and at best, significantly lengthens the sales cycle.

Consistent utilization of sales processes has long been a problem for sales forces, and it still is. According to CSO Insights 2012 research 25% of CSOs surveyed indicate that their sellers consistently use their company’s sales process less than 50% of the time, while just 40% of CSOs indicate that their sellers consistently use their sales process 76% or more of the time.

A number of factors contribute to to inconsistent use. However, our experience suggests that the two biggest impediments to consistent use are:

  1. Whether the Sales Process Mirrors the Customer Buying Process
  2. How Adequately the Sales Process Addresses the Needs of Stakeholders in the Buying Process

While mirroring the customer’s buying process may seem basic, CSO Insights data show it’s not, in fact 46% of CSOs surveyed in 2012 suggest that a key area for improvement of their sales processes is “clearly understanding customer’s buying processes”.

What should we do if our sales process is out of sync with buyer’s processes?

If you find yourself in this situation, it’s time to pull in your best sales people, who think and work in a disciplined way, and ask a number of questions:

  • What are the preferred steps in our customers’ buying process?
  • Which steps are of greatest importance to each stakeholder in the customer buying center?
  • Where does the customer want us to simplify the sales process?

But, what about our ability to address customer needs?

Once you have answered the above questions for different segments of customers, you are ready to beef up your sales processes, increasing your ability to meet the needs of all stakeholders in the buying process. Doing this, requires answering a second set of questions:

  • What must you know about each stakeholder before beginning the sales process?
  • What does each stakeholder want to learn at each step?
  • Which stakeholders are most important at each step in the buying process?
  • What value propositions and messages must you convey to each stakeholder within each step in the buying processes?
  • From whom, in our organization, and how, does each stakeholder want to learn at each step?
  • What are the indicators of successful completion of each step with each stakeholder?

Now, it’s time to take your show on the rode and test your perspective with samples of your customers. Then, integrate the insights you gather and finalize your process and support systems.

If you are able to create the following kind of examples for each step in the buying process, you are on the right track and ready to start educating the sales force on your revised process.

You’ll know you’ve got it right when sales cycle times (with similar types of customers) start to decrease, close rates and retention increase, and stakeholders in the customer organization actively do things to help you sharpen your process and move the sales process forward. Over the long-term, you will recognize the value of your efforts in increased quota attainment.

If you have recently created a buying process, please comment below or on Twitter @Evergreengrowth.

-TGK


Growth Driver #1 – Confirm Your Revenue Model

The Letterman Approach or to Lead with the Highest Value Driver?

As I started discussing the idea of developing a summary of top growth drivers with colleagues and clients, people asked me whether I would take the “Letterman Approach” and start with #10 and build to a strong finish, or whether I would lead with the highest value growth driver. My answer was neither, let me explain.

I answered neither because I chose to start with #1 for nominal purposes only; the driver that is most relevant or valuable for your company may not be for the next reader’s. In Sales, context matters, particularly market, product, customer, and overall business model contexts.  So don’t necessarily interpret “Confirming Your Revenue Model” as the most valuable, or first driver to tackle. Instead, think of it, because it’s externally rooted in the mind of the customer, as a great place to start thinking about growth.

A Revenue Model Checklist

At the heart of every growth engine there is the ability to answer at least seven fundamental questions:

  1. Who has a problem that we can solve?
  2. What will they buy from us to solve their problem(s)?
  3. Why will they buy  from us vs. others?
  4. Who will buy more overall and more products from us?
  5. Who is willing to pay us the most for our products?
  6. Who is willing to pay us the fastest?
  7. Which of these customers are most profitable (efficient and effective) for us to serve?

Note: The above questions were inspired by The Lean Startup, Running Lean, and Getting to Plan B.

If you’ve been in a start up in the last five years, these questions have loomed large and been the cause of many sleepless nights.

However, if you’ve been working at an established business that’s in the later stages of growth or maturing, odds are you have not done a top to bottom fact based review of these questions in several years. Why? Because  because in the downturn cash flow and profits (#6 and #7) have been of paramount importance. This is no longer acceptable.

If you have not probed this checklist deeply or frequently, it is time to double down and conduct a full review using fact based evidence from your own data, market research, and conversations with customers. Zombie revenue models abound and arrive abruptly, particularly in companies with undifferentiated products that serve customers with rapidly changing – either maturing or innovating – business models. In these situation, product relevance and competitive advantage are questionable, as are the sales potential, profitability, and cash flow expectations for different accounts. If you find yourself in this context, make confirming your revenue model a top priority!

If you have recently reviewed your revenue model, or are planning to, please comment below. And, if you have pivoted from a Zombie model please share your story with me.

-TGK


10 Growth Drivers to Pursue in 2013

At Evergreen, we help companies grow more, predictably. To enable greater and more predictable growth, our work with senior leaders, sales mangers, and sales reps focuses on:

  •  Making informed strategic choices about which growth opportunities to pursue,
  • Organizing resources effectively, and
  • Equipping sales managers and teams with the right processes and tools to sustain success

Over the next six weeks – commencing November 1st – we will focus on our top the top 10 growth drivers we believe senior leaders, sales managers, and sales reps should focus on to drive growth in 2013. We have selected these 10 issues because they are actionable at all levels – the rep, team, and the organization. Moreover, they are proven, based on our experience with over 60 clients, to accelerate growth in a wide variety of industries.

Please follow us via email or RSS feed over the next six weeks. And, if you have recently deployed, or plan to deploy, one of our 10 Drivers, please add a comment on the blog or Twitter at @EvergreenGrowth.

Update: Links to the 10 drivers we posted are listed below:

  1. Growth Driver #1 – Confirm Your Revenue Model
  2. Growth Driver #2 – Increase Your Value
  3. Growth Driver #3 – Sell the Way Customers Buy
  4. Growth Driver #4 – Pursue a Mix of Revenue Gains and Drains
  5. Growth Driver #5 – Identify Growth Themes
  6. Growth Driver #6 – Create a Road Map to Success
  7. Growth Driver #7 – Tighten Your Focus on Sales Management
  8. Growth Driver #8 – Assess Your Turnover Risk
  9. Growth Driver #9 – Focus on Opportunity Creation
  10. Growth Driver #10 – Define Decisions at Customer Touchpoints Before Investing in BI Tools

-TGK


Implications of Market Maturity and Decline for Sales Models

Your markets are maturing, even declining. Do you know how to evolve your Sales Model?

Lately, the topics of market maturity and decline have been coming up a lot in our discussions with CEO and business owners. There’s a growing sense, as the anemic economic recovery rocks along, that growth for many markets has peaked or is in a steeping decline.

You know the warning signs of maturity and decline:

  1. Profits are being harvested and paid to investors and management vs. re-invested in product innovation or market expansion.
  2. Consolidation of competitors is occurring at an increasing rate, and new entrants are innovating from the bottom.
  3. Price pressure is increasing significantly.
  4. Customer’s control over the buying process has increased markedly, it’s harder than ever to gain early access to stakeholders.
  5. Competitors are competing on brand, ancillary services that complement products, and process improvements instead of the products themselves.

Examples of industries in maturity or decline are abundant. One of the most prominent is the plumbing industry which is very mature in the developed world. And, immature in the developing world; it’s products are not well suited because the lack of public infrastructure, water, and energy. A short list of competitors: Sloan Valve, Kohler, Zurn, Toto, and American Standard have dominant market share and market share has been relatively static for long periods of time. Competition is somewhat oriented to products that conserve water, but is substantially oriented around price, and distribution channel control. So what must the plumbing industry, or others facing similar circumstances do to adapt their sales models?

Implications for Sales Models

Maturing and declining markets pose a number of implications of one’s sales model. In maturity, sales efficiency, or the cost of customer acquisition becomes critically important. Where as in decline, one’s ability to capture specific pools of profit becomes paramount. Here are strategies you should pursue:

In Maturity:

Sales Process, Sales Process, Sales Process. The first and most underutilized driver of sales efficiency is a sales process that is designed based on the customer’s buying process. Once you have a sales process that fits the customer’s buying process, it is critical to enable this process with a CRM system to measure and track sales cycle times and customer interactions, as well as tools to support quality conversations and information sharing with each customer stakeholder in the sales process.

Focus on Sales Management Processes. Having a sales management process that enables frequent inspection of sales opportunities and coaching of sales personnel around the efficient and effective execution of the sales processes is a critical, and often under-leveraged driver of customer acquisition cost.

Re-align Compensation. In the wake of maturity, it is important to ensure that compensation spending is aligned with the right revenue, profit, and/or product and market outcomes while appropriately rewards levels of performance. Quota setting accuracy, allocation of compensation dollars by product/market, and the shape of payout curves become critical drivers of cost of sales.

In Decline:

Customer Selection. Once decline begins, the identification and selection of profitable customers becomes critical. To do this, sales leaders, with the help of finance, must develop a detailed understanding of individual and customer segment behavior  and the drivers of profitability within the customer’s business and their own. These insights form the foundation of where and how to manage decline while sustaining value at the bottom line.

Channel Selection. Within decline, channel selection and, ultimately, consolidation become critically important drivers of sustained profitability. Before demand shrinks precipitously, sales leaders must begin reducing the number of channel partners while improving their ability, through informed selection and strong partnering programs (invested in and created by the channel partner and manufacturer) , to maintain customer access and ensure quality customer experience.

Sales Coverage. Similar to channel selection, the number and types of sales people deployed across markets must be adjusted as markets decline. Not surprisingly, many sales leaders face maturity without having developed much skill at coverage re-design. This is due primarily to the perceived risk of altering customer relationships by changing account assignments and team configurations. However, this risk is mitigated by maintaining a clear understanding of how, and from whom, customers want to buy – which informs the type and number of sellers required – and creates a basis for making regular incremental adjustments.

It’s not only critical to spot the warning signs of maturity and decline, but also develop the ability to adjust one’s sales model dynamically across the market life cycle, ideally in advance of each stage!

Is your market maturing or declining? If it is, how are you adapting your sales model? Comment here or on Twitter. Or contact me at tknight@evergreengrwothadvisors.com.

-TGK