Words of Wisdom From Rick Page

by Rick Page, CEO, The Complex Sale

All over the world, sales managers are getting next year’s quotas and wondering where that number came from and how they can possibly make it.

I doubt many received lower goals for next year – and this will be a year where there is no rising tide to lift all of the boats. Though growth is declining, there is still a huge volume of business worldwide that will occur next year – all requiring buying and selling. 

One of our clients said to me the other day, “Well, in a hurricane, even turkeys can fly. Now we’ll find out who can really sell.” That may be true, but let’s first expose four myths of sales planning that definitely won’t work. 

Myths of Sales Planning for 2009: What Won’t Work 

Increasing Reps doesn’t always increase revenue. Unless these new reps are “demand creators” who can call strangers and stimulate business pain into buying activity, all you will do is spread your demand over more people who make less.

Increasing goals doesn’t always increase revenue.

I actually heard a sales manager once say, “Let’s increase salespeople’s income by increasing their goal. If they sell more, they’ll make more.” Good math, bad logic. Increasing goals usually pays less for the same sales if bonuses and accelerators are at a higher number. If you set the bar too high in a down economy, people will give up trying.

Let the analysts or CFO set our sales goals.

Top down goal setting may not be rooted in reality. Sales goals should be set from the bottom up by analyzing people, products, competitors, markets and accounts. If you let the analysts set your growth rate based on stock price, they will murder your stock when you miss.

Heroic selling doesn’t scale.

Let’s just hire a good motivational speaker, cheer louder, work harder and hope we make it. Hope is not as strategy for sales managers either. You gotta have a plan.

Historically (and mathematically), there are nine traditional ways to increase sales effectiveness in addition to about five ways marketing can increase revenue (new products, new markets, more events, more leads, acquisitions). This is not new stuff, but you will have to choose which effectiveness initiatives you are counting on for growth next year.

Here is your planning checklist. 

1. More Pipeline. Unless new reps can create demand, they will flounder in a down market. When leads dwindle and customers slow down, it’s time to pick up the phone, call a stranger, and build some pipeline! But don’t kid  yourself. Most senior reps are not going to do this. They’d rather make less money than prospect.

A client we met with last week has built a one-to-one ratio of outbound callers to direct hunters. According to recent research, online demand creation by phone now requires over ten touches to reach an executive to set up a 30 minute discussion. Most prospectors quit after three.

Many firms take this opportunity to top-grade the bottom 20% of their sales forces that the downturn exposes. Truth be told, the good market was probably carrying them, anyway. 

2. Higher Value. Procurement will be gaining power and commoditizing vendors. Planning for the negotiation should start at the needs discovery session. Without political help from your user sponsors who realize the need, procurement will shred the commodity sellers. Selling strategic benefits to strategic buyers is the only remedy. 

3. Faster Ramp-Up. Getting new reps selling faster grows revenue. In hiring, it’s time to be patient and wait for the “A” player. The cost of a bad hire is 1 to 1.5 times quota.

Any rep can sell a one-hour interview. Written profiles based on either assessments of your top performers or competency requirements of your best practice sales cycle are essential. A process for a new hire’s first 90 days is critical to build messaging, values, work ethic and competitive skills while the cement is wet.  

4. Increase Win Rate. When the economy is not growing, the best way to increase revenue – short of new products – is to take it away from the other company. In order to do this best, your reps need a competitive strategy and a political strategy. And they need to have their plan coached by their manager in strategy review sessions that are meaningful and process driven – not just “how much and when” forecast flogging.  

5. Sell More to the Base. Better account management first means segmenting accounts for resource allocation. Not all accounts have the same return or will grant preferred status. Whether to partner an account or treat them as a transactional account is a function of how they buy, which is a function of their culture, not necessarily their size.

For accounts targeted for growth, reps need a plan to get higher and wider politically between the sales, document value delivered, elevate relationships to trust, and inoculate the account from the competition. Being “friends” won’t cut it in a down economy – you must bring greater business value. 

6. Shorter Sales Cycles. Earning preferred vendor status can give you shorter evaluation cycles, although Sarbanes-Oxley has made exclusives harder. The approval crucible is now often as long as the competitive crucible. One thing is for sure: ROI alone will not close a deal in this economy.

Every CFO has a dozen or more proposals for spending on his desk, all with great ROI’s. Increasing the ROI won’t change anything. Only having a strong political sponsor with an emotional pain or gain can drive it across the CFO’s desk.

Selling from the top down is the best way to shorten sales cycles. Executives who know what they want and who they want it from can cut through the political process and gain speed to benefit. 

7. Bigger Deals. Prospects will not buy “like to have” solutions in a “must have” economy. Expanding the scope of your offering to solve higher-level strategic problems may be the answer. Sometimes you have a better chance of selling a big solution than a small one because it affects higher executives with more power. Other times, it might make sense to cut your sale into smaller pieces to get under the approval radar. 

8. New Industries. Selling industry solutions allows better consultative selling, more networking, and less commoditization.

9. Better Channels. Training your distributors on your sales process will not only make them more effective, but allow your reps to coach them on strategy and bring more value to the relationship. 

While you may strive for constant improvement in all of these areas, at most, a sales force can handle about three initiatives a year. Where to invest your efforts is the question.

In the 2008 Complex Sale/CSO Insights Sales Effectiveness Survey (Contact Us for a free copy) of over 300 companies, the top initiatives that were identified by 25% or more of the respondents were:

  • Redefine/Optimize our Sales Process
  • Improve Sales Rep’s Ability to Present Strategic Benefits/Value of our Solutions
  • Redefine/Optimize our Forecasting Process
  • Improve Sales Rep’s Ability to Access C-Level Executives
  • Redefine/Optimize our Competitive Differentiation Strategies
  • Improve Sales Rep’s Ability to Identify/Reach People with Real Power

Whatever strategy you chose, plan to follow it for at least two years with constant reinforcement to really make it stick.

For more information and discussion on this topic, sign-up for our free Webinar on Jan 9, 2009.

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One Response

  1. This all makes so much sense, Scott.

    Of all the points on the list, I think if sales leaders can finally learn to hire more effectively, that will offer the biggest bang for the buck.

    Now is a great time for sales VPs to flush the underperformers and seek out salespeople who’s skills and traits match what’s required to get the sales job done. For that they’ll need a plan, a process and a bit of discipline.

    Dave

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