Milestone Group Quarterly: July 2006
Articles
Milestone POV - Fixing What’s Broken:
By John Meaney
Partner, Milestone Group
As one who makes his living providing leadership and strategy for sales organizations, I find that it’s important (when approaching an opportunity to help a client) to compare the merits of “wholesale change” with the more delicate challenge of fine-tuning a company’s selling arm. I’ve seen situations where a client is on a path to let the entire sales force go and “start over”, when all that was needed was some solid structure and discipline.
On approach, it’s not always clear to me at which point on the spectrum the client is situated. Many CEOs believe that his or her company’s failure to reach its revenue objectives for a period (month, quarter, year) is simply a “sales problem.”
Quite frequently, it’s a marketing issue – nobody can adequately describe what the company does, or the product is so obscure that it requires a white board or a Power Point presentation to explain its utility. On the other hand, it may be that the objective was not realistic to begin with – and that’s a “fun” one to communicate. In reality, the problem is often the result of several issues combined.
In another challenging scenario, the company may be doing quite well, especially considering its current resources, product quality, and competitive environment. Many IT companies experience phenomenal growth at one stage, leading management to believe that this rate of growth can be achieved ad infinitum. Maybe the expectations of the CEO and/or the Board of Directors are just not realistic for the current market, and the “shortfall” has nothing to do with people, process, product, or program.
As revenue trends downward – or fails to accelerate quickly enough for the CEO, something must give. What’s more, it’s always the VP of Sales who gets “shot” first. That’s the most obvious place to make a change. And, there is always a long line of candidates who are willing to be considered for the job.
So, what’s the right approach? Well, it depends. Based on work with numerous organizations, I’ve seen that that the best instinct is an honest desire to make what exists work, because it’s always less expensive to manage people “up” versus “out.”
I try to use common sense to evaluate a company’s sales effort in the early going. These are the basic questions a CEO should ask:
- Do our salespeople really know their product or service?
- Can anyone tell me what we do better than anyone else? Why should a customer care?
- Who are our competitors? How do we rank against them?
- What do our customers think of us?
- What percentage of time do our salespeople spend in front of customers?
- How is our CRM system being used?
- How do we find prospective customers?
- Would I buy from us? Would anyone?
If the answers to these questions don’t pop up easily, it may be that the existing organization needs to look deeper than the sales effort. In fact, it’s amazing to me how often I hear from an executive, when he or she is referring to a salesperson, that they “haven’t felt good” about him or her for some time. If that’s the case, why hasn’t something been done about it?
Salespeople need to know where they stand. Often. A manager’s job is to ensure that this is never an issue. Among the worst things that can happen to me as a manager, is this: telling a salesperson that we’re going to let him or her go, and then realizing that they never saw it coming. This is a failure. They should know.
But once it’s been determined that a change needs to be made, it should be viewed as having an effect on the entire organization. If staff reductions are going to happen, act quickly and get it over with. It’s not productive, nor is it humane to let people wonder whether they’re next. After the act, assemble those who remain together, and express confidence in them. Let them know that the company is counting on them. And then find them some new colleagues, quickly.
Process is critical to an effective sales effort. What’s yours? Is it easy to explain? If not, yours doesn’t work. I’ve heard people tell me that their sales cycle has ten stages. That’s nuts. Who can remember what each one is? Call them what you will, but there are only five key processes in the sales function. They are:
Discovery – identify someone who might buy – a suspect - and find out all you can about them.
Qualification – determine that the prospect (no longer just a suspect) has the authority, the budget, the need, the urgency, and the inclination to buy what is being offered.
Demonstration – show the prospect what you have, how it works, why others have bought; then provide references, offer a tour or a demo and prove how what you have meets their needs and requirements.
Validation – show the prospect how the ROI pencils out, how the dollars add up, and how you negotiate the terms, including: the conditions, the start date, the delivery date, and implementation.
Close – it’s a “done deal,” and you confirm that the fax is on its way, the signature is being applied, the P.O. is being cut, or your customer is coming to meet you to execute the contract.
The genius does not come from naming these stages, nor is it in determining just how many stages there are in the cycle. What’s critical is in determining what needs to happen in order for an opportunity to move from one stage to the next. It’s as simple as creating a checklist that clearly indicates whether the requirements for each stage have been met.
This raises another issue: applying percentages to the forecast. Many organizations use a percentage to gauge the likelihood of a deal closing. That’s not a good way to do it. Is your 60% comfort value the same as each of your salespeople? Of course it’s not. The “50/50” label is the most overused valuation in forecasting.
With apologies to virtually every SFA vendor on the planet, this practice is really useless. Many systems apply a percentage, usually based on where the opportunity falls in the sales cycle. Then the total number of dollars forecast is multiplied by the percentage… and there’s your forecast. This does not work. You’re not going to get 60% of a deal.
You’re going to get all of it or none of it. Determine whether you’re going to get a deal based on where the deal is in the cycle, and how it moves through the process. Typically, those that stagnate don’t get going again – at least not any time soon. With that said, we all have garbage in our forecasts, just as no weatherman is close to perfect for any stretch of time.
This leads us to programs, and by that I mean marketing programs. A marketing program must feature a systematic, proven means for identifying real prospects, and you must have a message that resonates with them. Marketing programs provide just that.
A marketing organization must view its sales organization as its customer. As a salesperson, I deal with customers every day. Every day. I have to give them what they need and want, or they’re just not my customers. Simple enough. And as a salesperson, I want to be the customer once in awhile.
Marketing must give me what I need to be successful as a salesperson. I believe that great marketers recognize this freely and easily, and put their salespeople in a position to be successful. Successful sales organizations enjoy respectful, productive relationships with their marketing counterparts. This means a continuous exchange of information and feedback. It also means that marketers must relentlessly pursue a strong message, effective sales tools, the optimum demand generation capability, and the best possible relationship with their salespeople.
Ultimately, these are the primary components that have to be evaluated in every organization – on day one, and on every subsequent day – people, process, product, and program. That’s how I determine what needs to be done to “right the ship” or simply alter its course.
John Meaney is a partner at Milestone Group and a 20-year veteran in sales and business development for information technology companies. During John’s 12 years with Compaq Computer Corporation, he served as an individual sales contributor, a channel manager, and Regional Sales Director for San Francisco. John’s working knowledge of hardware architectures, storage and memory subsystems, database and middleware infrastructure, XML, and enterprise service buses, combined with his comprehensive channel experience and his international exposure in the technology industry has positioned him to assist organizations in sales and business development, both nationally and internationally.
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