With over 486 million google hits, the prominence of Front-Line Sales Management as an issue is indisputable. Yet, few sales organizations have a tight enough focus on their Sales Managers, particularly when it comes to hiring, enabling managers with a process, and setting and managing performance expectations.
Our experience suggests CSOs should adopt three prescriptions to tighten their focus on Sales Management.
- Hire Slowly. All too often, CSOs rush hiring decisions opting to fill open sales management positions quickly – usually from the field – lest a sales team miss its numbers. This approach is flawed in many ways and has enormous negative consequences. Not only does it lead to sub-optimal revenue and profit performance by the team, but it also frequently leads to higher levels of turnover within the team and loss of alignment with the sales strategy. Why? Because Sales Management is a unique role, one that requires strategic thinking, managerial, coaching, process management, and motivational skills. Not to mention strong alignment and fit with senior management, particularly around strategic decision making and performance management. Instead of taking the easy path and promoting a salesman, CSOs should hire slowly and deliberately, making sure that candidates possess the foundational and strategic competencies necessary to drive improved performance across their team. Seethe Chally Group’s assessments at www.chally.com, they are a great resource that enables high quality hiring.
- Implement a Sales Management Process. Despite being heralded in so many articles as “the linchpin of strong sales performance”, too many sales managers remain mired in administrative roles facilitating their rep’s transactions, enabling cross-functional communication, or worse still walking the tightrope of managing their own book of business and their team’s transactions, as opposed to developing rep’s capability. What’s missing is an intentional process like the one pictured below.
Equipping the Sales Management team with, and teaching them how to use, this type of process shifts managers conversations and interactions with their reps from transactional administrivia to teachable moments that enable personal development.
- Fire Fast. When’s the last time you our your senior team fired a Sales Manager? I recently took a poll of clients and only 20% could recall a time when a Sales Manager got let go. Perhaps this is a consequence of misplaced loyalty resulting from hiring too quickly, but that doesn’t make it right and only serves to compound your company’s problems. Managers should be managed with the same process as reps. Expectations should be clear, performance outcomes should be tracked and reported frequently, and feedback and assistance should be given regularly. And, when performance does not improve quickly, sub-par managers should be removed before their sales teams are negatively impacted.
If you have recently completed a project to increase your focus on Sales Management, please comment below. If you’re about to start, make sure you are equipped to hire slow, implement a sales management process, and fire fast before you embark on the journey, otherwise your other investments may yield sub-optimal returns.
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:
- Who has a problem that we can solve?
- What will they buy from us to solve their problem(s)?
- Why will they buy from us vs. others?
- Who will buy more overall and more products from us?
- Who is willing to pay us the most for our products?
- Who is willing to pay us the fastest?
- 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.
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:
- Growth Driver #1 – Confirm Your Revenue Model
- Growth Driver #2 – Increase Your Value
- Growth Driver #3 – Sell the Way Customers Buy
- Growth Driver #4 – Pursue a Mix of Revenue Gains and Drains
- Growth Driver #5 – Identify Growth Themes
- Growth Driver #6 – Create a Road Map to Success
- Growth Driver #7 – Tighten Your Focus on Sales Management
- Growth Driver #8 – Assess Your Turnover Risk
- Growth Driver #9 – Focus on Opportunity Creation
- Growth Driver #10 – Define Decisions at Customer Touchpoints Before Investing in BI Tools
Yes, you share responsibility for creating “great” managers!
Since National Bosses Day 10 days ago, a lot has been written about the “characteristics and habits” of great bosses.
Many of these articles paint a unilateral picture of a boss who possess unique traits which she practices, there’s little sense of collaboration or reciprocity, and sometimes a sense that good bosses are born, not made. I don’t know about you, but these portrayals don’t comport with the reality I live in as a COO and consultant to Sales forces.
Admittedly, there are still too few “great” bosses in the Sales Management ranks, but where they exist, in large numbers, they are created by cultures of shared ownership, collaboration, and incremental improvement. There’s no one-way street of top down application of great skills by managers to their subordinates. There’s bottom up meets top down collaboration with an eye toward forward progress and the attainment of shared goals.
So what can you do as an [Sales] employee to create great bosses?
To create and sustain a great boss, you should:
- Set Specific Shared Objectives. Ambiguity about your collective and individual performance sets the foundation for planning to achieve success. Without a clear set of objectives linking activities, interim goals, and long-term business outcomes, you and your boss will never know how to assess performance and course correct. For more on the Activities, Goals, and Outcomes framework, click here.
- Ask for and Provide DETAILED Feedback OFTEN. Constructive critiques by managers and subordinates reinforce a culture of collaboration and ensure shared ownership for results and performance improvement. The key here is to be detailed and specific. It’s insufficient to characterize your or your bosses performance with an adjective, both of you must focus on examples (good and bad) and suggest tactics to improve and ensure forward progress.
- Ask Questions and Share the Answers. Opportunities for improvement and growth are identified through dialogue up, down, and sideways in an organization, particularly dialogue that focuses on questions of Why? and How? Yes, it’s sometimes uncomfortable to be asked Why did you do that? or How did you decide to do what you did? But these questions get us to think and get us beyond the circumstantial (the land of Who?, What?, and When?) and into incisive moments of learning and growth.
If you like this piece and have had success building Great Bosses in your organization, particularly Sales Organization, please comment or follow us on Twitter.
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:
- Profits are being harvested and paid to investors and management vs. re-invested in product innovation or market expansion.
- Consolidation of competitors is occurring at an increasing rate, and new entrants are innovating from the bottom.
- Price pressure is increasing significantly.
- Customer’s control over the buying process has increased markedly, it’s harder than ever to gain early access to stakeholders.
- 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:
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.
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 firstname.lastname@example.org.
What’s required to grow on a sustained basis?
We hear this question a lot, so we decided to share a few qualitative and quantitative insights on growth. Before we jump to insights, some context setting is useful.
Sustained Growth is Hard, but Not Impossible
Our research of S&P 500 company performance from 1996 to 2006 shows that just 6% were able to sustain growth for 10 years running, where as 31% sustained it for five years straight during the 10 year period. A closer look at sustained growers vs. non-growers reveals some interesting differences:
- Companies that sustain growth for 5 and 10 years achieve compound annual growth rates of 12.7 and 13.3%, respectively vs. 4% for companies that don’t grow consecutively.
- Sustained growers across 5 and 10 years also grow their sales forces as higher rates, with compound annual growth rates of their sales forces of 1.91 and 3.1%, respectively, compared to a -2.2% compound annual growth in sales by companies that could not grow consecutively.
- As sustained growers across 5 and 10 years grow they decrease the proportion of sellers as a percentage of the overall workforce by- 2 and -3% per year, respectively, where as companies that do not grow consecutively see an average increase of 3% in the proportion of people in sales.
In summary, serial growth companies: realize a flywheel effect where consecutive years of growth begets higher growth overall growth, they grow their sales forces faster than companies that do not grow consecutively and they grow their sales forces at a slower rate than their overall work force.
So What Drives Sustained Growth Companies’ Ability to Achieve High Sales [Capital] Efficiency?
Our experience suggests that sustained growth companies draw on six levers to drive growth:
- Focus narrowly on growing sub-segments within markets. Sustained growers are exceptional at reviewing their growth history and analyzing segments to identify pockets of growth that they can serve efficiently. Become a master at thin slicing your markets to identify pockets of growth, the benefits are significant; 2-4x growth over average is possible in many sub-segments.
- Segment the sales force into specialized groups targeting segments with similar needs and buying processes. Specialization creates efficiency across the sales process and heightens focus on customer experience. Organizations that fail to specialize do so at their own peril. Too often, Sales leaders develop sales investment cases at the margin which contain flawed assumptions driven by historical experience in different markets under different sales processes. For more, visit my previous post on marginal cost justifications for sales force expansion.
- Regularly assess sales force coverage. Having the right number and types of resources covering your target segments is essential to maximizing revenue capture and sales efficiency. Yes, adjusting coverage is unpopular with the field, however, it’s essential to managing productivity and cost of sales, particularly as markets mature. If you are facing maturity or are already there, bite the bullet and create a coverage realignment process.
- Invest in defining, updating, and consistently following a sales process. Surprisingly few sales forces consistently follow a defined sales process, and fewer still regularly revise the process with customer input. This lack of discipline breeds waste, inefficiency, and customer discontent.
- Tightly align sales and marketing. Creating tighter alignment between sales and marketing, particularly in targeting, awareness building, and lead creation reduces inefficiency by preventing the expenditure of sales resources on unqualified opportunities or early, less valuable steps in the sales process. Serial growers know that maximizing quality lead volume is critical to sales efficiency and impossible, with the prominence of the web, for sales to do one its own.
- Invest in a sales management system. Serial growers consistently have strong sales management systems that clearly focus on managing activities to achieve interim goals which lead to business outcomes. Creating this linkage enables managers to utilize predictive metrics and have coaching conversations with reps that lead to skill development and behavioral change. See my previous post for more on this topic.
Now get out there and start working on these levers, you need not approach them in order. There is incremental value in each one, and perfect alignment across all six requires constant tuning.
If you are pursuing serial growth or have achieved it, we’d love to hear from you. Please comment here or @Evergreengrowth on Twitter.
With mid-year fast approaching, now’s a good time to stop and reflect on your Year-to-Date (YTD) results. By reflecting, I don’t mean simply reciting the deals that you won and recapping total sales. While I am all for celebrating wins and big picture results, reflecting solely on them doesn’t teach us very much about how our sales model is functioning or scaling.
Thorough reflection means taking a close look at the continuum of Activities, Goals, and Business Outcomes that helped you achieve your YTD performance. Examining the first six months of the year through these lenses, particularly Activities and Goals will help you and your sales managers understand whether they achieved their results in a programmatic manner or whether results were more random.
This framework will also allow you to test the assumptions you made about the overall performance of the sales model and individual performers at the outset of the year and take corrective action in the second half.
In today’s economy, we can ill afford to defer to random chance (or win ugly, as a coach of mine used to say), we must work the Sales Mgt. value chain of activities, goals, and business outcomes.
So, take some time and reflect, the insights are well worth the price of admission.