GROWTH TIPS SERIES #4 - 8 – Achieving Predictable Growth!
As the din of noise around the condition of the economy increases, and prospects for a robust recovery fade, we are increasingly asked one question: What can we do to grow predictably?!
In Sales, as in most of life, there’s no silver bullet; rather, there are a sequence of things that must be accomplished. The next five Growth Tips (4–8) will explore a successful sequence of steps growth leaders have taken to achieve more predictable growth in spite of challenging economic conditions.
| #4 - Rejecting the Myth of the Superhuman VP of Sales |
| #5 - Taking a Detailed Look at Markets to Spot Growth Opportunities |
| #6 - Resetting Sales Coverage and Channels to Maximize Access to Segments |
| #7 - Ensuring Sales Processes Mirror Customer Buying Processes |
| #8 - Looking Forward More than Rearward to Manage Sales Performance |
Growth Tip # 4 – Rejecting the Myth of the Superhuman V.P. of Sales
The Vice President of Sales who has the capability, experience, time and energy to understand market and customer changes, counter competitive pressures, develop and refine sales strategies, keep the sales organization aligned, optimize sales processes, manage channel partners, help close sales, recruit and develop Sales Managers, and stay in step with Executive Management, is rare and many will argue purely fictional.
Today’s operating environment is incredibly fast changing and complex. Customer leverage, compressed timelines, innovative low-cost competitors, severe market disruptions, and short product lifecycles are just some examples of the icebergs Sales VPs must navigate. With the average tenure of Sales VPs now less than 24 months, with sales costs growing faster than revenues, and with over half of sales reps not making quota, the traditional model is clearly not working. 1
It’s now time to not only reset expectations for Sales VPs, but to also re-design the Sales Management function. This means doing three things:
- Focusing the VP of Sales on Sales Strategy
- Expecting Front Line Sales Managers to Drive Sales Force Improvement
- Broadening the Focus of Sales Operations
Each of the above imperatives is discussed in detail in the remainder of this article.
Focusing the VP of Sales on Sales Strategy
The first move Senior Leaders must make is to squarely focus the VP of Sales on Sales Strategy. This means the VPs of Sales must stop engaging in tactical activities and apply time and energy towards addressing:
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It’s clear from our experience that Sales Strategy is underutilized and holds serious potential to create value. Take the example of the international beverage distributor whose sales were severely lagging the category before a review of its Sales Strategy. By performing detailed market and sub-segment analysis we identified 16 states (38 Demographic Marketing Areas) with sales potential and growth rates more attractive than the broader market. This enabled the company to tighten its focus, coverage and promotional spending narrowly on these markets, and also to reduce its cost-to-serve in lower value segments. As a result, the company’s revenue improved by 10 percent and its growth now leads the category by two percentage points.
Research also confirms the value of emphasizing Sales Strategy. One recent study by McKinsey and Company revealed that “many companies with strong revenue growth and high shareholder returns compete…in industry micro-segments.”2 This suggests that strong performing companies are successfully applying strategic analysis and decision-making to find attractive pockets of opportunity. Unfortunately, research we conducted before the recession found that sales organizations scored the highest in terms of their tactical ability to manage performance (e.g. set quotas, adjust comp plans, etc..) and lagged on Strategy and Productivity capabilities, with 43% falling below average on these important competencies.3
For many Sales Leaders, reallocating focus from performance management and other tactical solutions towards Sales Strategy is difficult and antithetical. However, results and research speak for themselves – superior productivity and execution are a consequence of deliberate strategic choices and alignment of Sales resources with market opportunities.
Expecting Managers to Drive Sales Force Improvement
The second critical step towards freeing the Sales VP to focus on strategic issues is to drive responsibility for Sales Force Improvement down to the front-line Sales Managers. Although much has been written about the importance of this delegation, the role of Sales Manager in many organizations has been slow to evolve towards actively managing the sales force.
This slow evolutionary pace is primarily the result of two factors: (1) Hiring Practices; and (2) Lack of a Sales Management Process. Despite all that has been written about the importance of having broadly capable and professional first line Sales Managers, most sales organizations still fill their front line sales positions with tenured members of the sales force. While these individuals usually have proven themselves capable at selling and relationship management, they have not proven themselves in many requisite dimensions of the job, such as:
- Strategy and Market Analyses
- Forecasting
- Designing and Optimizing Team Structures
- Hiring, Training, Coaching and Developing
- Defining Processes and Managing Performance
Given these deficits, it’s not surprising that many Sales Managers enter the job and continue to focus on selling, frequently overshadowing their Sales Reps and avoiding managerial duties in favor of customer facing activities and interaction. When this occurs, the rate of development of the sales force – particularly the middle 50% – slows and the gap between top performing sales reps and median performers widens, with increasing numbers of sellers falling below quota.
This problem is exacerbated by the lack of a Sales Management Process. Such a process should have performance expectations set and mutually agreed to by Managers and Sales Reps, objective means and reporting of performance, completion of multi-point evaluations of performance, and discussions of the implications (good and bad) of continued performance, along with the development of corrective action plans if necessary. Not only does the lack of a Sales Management Process place sales results at risk and retard the improvement and development of the sales force, but it also diminishes employee engagement and ownership of performance and reduces the sales force’s ability to adapt rapidly to changes in strategy and market dynamics.
Broadening the Focus of Sales Operations
The third critical step towards freeing the VP of Sales to focus on strategic issues is creating a broadly capable Sales Operations function. Such a function must support the VP of Sales’ focus
on strategic issues and Sales Management’s focus on Sales Force Improvement and Execution. In many organizations, unfortunately, Sales Operations limits itself to the realm of performance management, engaging chiefly in sales process reporting, performance reporting, metrics, and compensation plan administration. In effect, Sales Ops is often no more than the score keeper for the Sales Force, as the research from the Sales Management Association (SMA) depicted below highlights.4
This limited focus clearly won’t suffice if senior management is serious about enabling its VP of Sales to focus on strategy and its front line Sales Managers to focus on force improvement.
Sales Operations must broaden its role to include sales strategy and organization, and sharpen its focus in performance management and execution. Research by the SMA provides strong insight into the top opportunities for improvement in performance management and execution, as depicted below.
Emphasis on the activities listed above also support sales strategy and organizational imperatives. For example, greater insight into customer segments and priorities enables both account planning and improves forecast and quota accuracy. Similarly, deeper insight into customer’s preferred buying processes enable re-design of channel structures, sales processes, funnel management, and forecasting tools.
With the above priorities and the goal of aligning Strategy, Organization, and Execution in mind, we believe that the most critical questions in which Sales Operations should engage include:
Strategy and Operations Priorities for Sales Operations
| Strategic | Organizational |
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Despite all the ambiguity surrounding the economy and its implications for predictable growth, one thing is clear – sales organizations must operate far more intelligently and strategically than in times past. Working “smarter” will enable the discovery of attractive pockets of opportunity that can be exploited. However, if Sales Leaders continue to emphasize the tactical over the strategic, these attractive niches and other opportunities may never be uncovered.
Reject the myth of the Superhuman VP of Sales – free them to be strategic!
For more insight on developing and implementing growth strategies, visit us on-line at www.evergreengrowthadvisors.com or contact Tom Knight and Erik Birkerts at 866-549-3191, or via email at info@evergreengrowthadvisors.com. Stay tuned for our upcoming Sales Operations Assessment, Does Your Sales Operations Team Have the Right Stuff?, available online in September, and further installments of our Growth Tips series.
1Source: 2009 Research by the Sales Management Association, www.salesmanagement.org.
2Looking for Growth in All the Right Places, by Vigueri and Baghai
3Return on Sales Investment, Closing the Gaps in Sales Organization Capability, Tom Knight, www.evergreengrowthadvisors.com/imperatives-for-chief-sales-officers.shtml
4Source: 2009 Research by the Sales Management Association, www.salesmanagement.org.