Corporate Strategy and Sales Operations: Starting the Machine
Across the planet and down to the very last business on earth, all of them share the common challenge of making sales occur in a repeatable and predictable manner. Whether executives work in a start-up business or a multi-billion dollar conglomerate, generating sales increases and determining how to fill the sales pipeline are concerns always near the top of the list for corporate leaders. The sales challenge is the great equalizer among all competitors and is the common strategic bond across businesses in all industries. This article on corporate strategy explores pushing the “on” button for revenue generation by unlocking the full potential of the sales organization.
Do the math. There is no substitute for sales.
Businesses cannot force customers to buy from them, therefore sales are not within their direct control. However, businesses can control their operating costs. Once costs have been brought into control and are at a reasonable or optimized level, sales are the only other determinant to profitability.
The profit equation says it all:
Profit = Sales – (Variable Costs + Fixed Costs)
Increasing or maintaining profits with stagnant or declining sales is an unsustainable scenario, requiring operating cost cuts and strategic retrenchment. While no business would knowingly adopt a long-term strategy of cost-cutting to the exclusion of revenue generation, it is ironic that sales and marketing budgets are usually on the list of cuts made when revenue is flat or profits are in decline.
Sales generation is strategic to every business and is the central theme of strategic planning in for-profit organizations. If lucrative markets for the firm’s offerings do not exist or are not eventually uncovered, it is only a matter of time until cash and credit options run out and the business fails.
Finding a way to generate sales revenue is the only way up for a business in decline. Improving sales operations effectiveness requires analysis, planning and execution. In short, the problem of generating sales requires it receive the prioritization and respect it is due and be addressed through strategic planning.
View the sales organization holistically as the sum of its parts.
What are the parts?
Sales as a business function is one of the more challenging to fully comprehend and leverage for many organizations. The sales function can cross departments, divisions, geographies and other organizational boundaries. Added to that factor is the challenge of a multitude of conduits that businesses rely upon to reach customers.
For instance, businesses may interact with customers through numerous channels, including: direct sales people, call centers, web sites, email campaigns, brick-and-mortar stores, specialized sales forces (e.g. industry or geography focused), social media calls to action and various marketing partners. The larger the organization, the more complex the problem of coordinating sales touch-points may become.
The customer relationship chain and the sales process must be mapped and orchestrated to work together instead of in opposition to one another.
Who is in charge?
Another challenge is to find cohesive ways to deal with global customers that span several geographies…the large customer account scenario. Local commissioned salespeople have their own relationships and account agendas, not to mention the commissions at stake. The challenge is to manage the large account in an effective manner that minimizes confusion, brings uniformity to customer interactions and maximizes the revenue the account can generate for the business. Sometimes an organization’s own structure clouds the picture of sales coordination, even obfuscating ownership of the customer relationship.
Break down the silos.
Businesses cannot afford to house disconnected silos. This is especially true of the sales organization. It is inefficient and creates costly overhead related to the infrastructure required to support walled-off processes and systems. Sales silos within an organization predispose it to many challenges, amongst them are:
– Poor account management
– Stifled communication between teams
– A slowed rate of sales process innovation
– Initiative redundancy
– Disconnected customer information systems
– Turf wars over relationships, commissions and account ownership
All of the above can exacerbate overhead cost for an organization. Worse yet, silos can harm the competitiveness of the business and result in lost sales.
Silos in business are naturally forming, and the answer to overcoming the challenges they present is not to impose a centralization model, but instead to take the approach of replacing the competition and isolation they tend to create with collaboration and communication between the silos.
Sales strategy brings clarity to chaos.
Organization-wide success requires a strategic approach to sales and sales processes. A sales strategy is actually an operational sub-strategy supporting the corporate vision and strategy. It should be viewed as supporting overarching organizational goals and be addressed as a part of the corporate strategic planning process. Creating an effective sales strategy requires market knowledge, awareness of competitor activities, awareness of current trends and detailed business analysis of the current-state organizational processes and structure.
Fix the sales process.
The major objective of a sales strategy is to tune sales operations so as to maximize selling time, customer interaction opportunities and improve relationship building across the selling organization. That requires the process of selling to be reviewed.
Reviewing sales operations across an entire business is not a small task. Sales and support roles are tucked into every aspect of the business: accounting, finance, marketing, management and information technology. Those touch points must be teased out and analyzed for efficiency. Even within the core of the sales organization, silos must be identified and competing initiatives that target the same customers with conflicting messaging, pricing and treatments must be discovered in order to correct them. The better the holistic sales operation can be streamlined and back-office overlaps reduced, the more likely customer satisfaction will improve as deals close quickly and internal disputes are avoided or more quickly resolved.
Understand the value.
A sales strategy must center around well-defined value propositions that distinguish products and services for each target segment.
For any business, understanding the company’s value proposition is the first step in strategy formulation.
A value proposition can be thought of a business or marketing statement that summarizes why a consumer should buy a product or use a service. In essence, this statement should help the firm connect with a potential target market in a way that differentiates a particular product or service as to how it will add more value or solve a problem better than other similar offerings.
The purest three elements of a value proposition are:
The connection: What is it that makes the product or service inspirational and innovative? The connection must compel the customer to want the product and say, “I need this”.
The differentiation: What is it that makes the product or service indispensable? The differentiation should help eliminate the thought of substitutes in the mind of the buyer.
The substantiation: What facts can you state about the product or service to help create credibility and trust? The substantiation should help the potential buyer to believe in the product or service and take action.
Follow the money.
Strategists can employ customer segmentation analysis when considering their firm’s strategic investments, competitive positioning and sales effectiveness. A Value Quadrant Analysis (VQA) is an excellent method to truly understand key buyer segments by profitability. Such an understanding allows a business to make informed decisions related to remaining in one or more quadrants or exiting unprofitable segments. In short, VQA drives value proposition messaging, strategy development and ultimately should determine strategic investment decisions.
In order to assess customer relationships and categorize them into quadrants for VQA, a business must first examine itself and honestly consider its own organizational model.
Factors to consider in this self-examination include:
1 Organizational Behavior
2 Direction / Goal
4 Evaluation & Control
5 Operational Process
Assessing the attribution of these core areas can help the business objectively understand its own value to its marketplace. Only then can customer relationships be fully understood and the accurate categorization of buyers to quadrants move forward.
See Corporate Strategy: Buyer Categorization in Value Quadrant Analysis for more information about profitability analysis using VQA and to see a sample case study.
Manage the complexity.
Sales processes and internal hurdles can be a major factor for sales forces trying to be responsive and competitive. In most organizations, the sales process gets in the way of itself.
Sales representatives routinely spend bout 75% of their time on activities other than placing calls and being in contact with customers. Instead of building relationships with the clients, they are dealing with approvals, chasing answers, lining up scarce subject matter experts or trying to pull together proposals with limited or no support. Research shows that just developing a standard proposal generally requires multiple meetings with as many as a half dozen people involved in each soiree. That complexity costs time and money while increasing the odds that a faster competitor will swoop in and close the business before the proposal can even be submitted.
Businesses benefit by not over complicating sales operations. Keeping processes streamlined can shorten lead times for proposals, pricing and accessing useful information to support the sales effort.
Strategically build sales support capacity.
Sales support is key to achieving accuracy and responsiveness in customer interactions. Successful sales operations share much needed resources across the organization and find effective ways to provide timely access to subject matter experts functioning in sales support roles. Sharing best practices and win/loss stories can benefit other sales people by adopting successful behaviors and methods while avoiding the mistakes of others. Sales strategy must address how meaningful sales-related information can be captured and shared to support sales effectiveness.
Set targets, then manage to them. Expect results.
Once target customer segments have been decided upon, businesses must manage the sales process by setting tough but realistic goals, then manage the sales organization to achieve them. The salesforce must be balanced with both hunters and farmers.
Farmers seek sales growth only through existing customers. They may possess account management and relationship development skills that make them better suited to selling to customers they know well.
Yet there’s only so much each customer can buy, so finding new business is critical for growth. That is where hunters come in. Hunters do not mind approaching potential new clients and are more comfortable with the task of cold-calling and developing new prospects.
Sales managers should setup a competitive environment between salespeople and push performance through peer pressure within the sales force. If a member of the sales force isn’t producing, it is imperative to make changes right away. One approach that can be effective is ranking sales people by quota attainment and consistently eliminate the bottom 10% of performers.
Examining the potential role of a CRM.
Most companies do not venture far into the sales strategy realm without becoming distracted by the notion of fixing their problems with a dose of CRM software.
CRM stands for Customer Relationship Management. CRM products are meant to be used by businesses to learn more about their customers’ needs and behaviors in order to develop stronger relationships with them and more effectively sell to them as a result.
The problems CRMs attempt to fix are complex in nature and throwing technology at them will not make them go away. The underlying problems must be addressed before a software product can be effective.
That said, CRM solutions can help and to have potential as a player in the overall sales operations makeover.
The CRM industry claims that such systems can help a business increase revenues by:
– providing services and products that are exactly what your customers want
– offering better customer service
– cross selling products more effectively
– helping sales staff close deals faster
– retaining existing customers and discovering new ones
CRM systems lend themselves to an integrated large account management approach across geographically dispersed sales teams, so coordination of sales activity can be more easily managed. They can also serve to link up and help synchronize the many touch points a customer might have with a business.
CRM systems can also help managers hold sales people accountable for funnel activity by providing sales management more visibility into the progress of sales pursuits.
Many things can go wrong with CRM implementation initiatives. CRM packages are data driven monsters and the amount of information that must be harvested for fully-functioning systems requires a thorough understanding of the organization’s operating processes and information sources. Failure can originate from mistakes made at the beginning of the CRM project if the customer relationship chain has not been fully mapped and is not well understood. Such mistakes can lead to an incomplete picture of the customer and compromise the intended results of the CRM. There are countless horror stories of failed CRM implementations, with more than a few Fortune-500 companies on their second, third or fourth attempt to get it right.
Overhauling sales operations is scary for company executives. They fear that introducing sales operations change will exasperate the problem of a weak sales pipeline and take a long time to produce performance improvements.
Fair enough. It is a big fish to fry and can be intimidating. For those reasons, a big-bang approach is not recommended. A slower series of transformations is less risky to implement and minimizes the complexity involved. Strategies must be executed to produce results, therefore they must be planned to implemented in a realistic fashion.
With a step-wise approach, sales operations can undergo strategic changes that will improve customer satisfaction will bring more deals through the door that close faster and cause less pain along the way.
Consider the following recommended additional reading:
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