For many CEOs growing the top line is a challenge. Whatever the opportunities for cost cutting, sales growth is by far the best route to enhancing a firm’s value.
The problem is that unlike cost cutting initiatives, sales actions take time to implement and the outcomes are often far from clear. There is no immediacy of results.
Few CEOs today have early career experience leading sales organisations. Most have backgrounds in finance or operations. They do not have the “hard yard” experience of winning new business, launching new products or motivating sales teams.
Whilst operations and finance are knee deep in KPI metrics…..sales initiatives often lack KPI measures. And those firms that do have sales KPIs often focus only on outcomes. They ignore the inputs and fail to understand how their sales team uses its time.
Buying process are becoming more complex and sophisticated. Purchasing decisions are taken by committee often under the direction of a Group Purchasing initiative. Executive “sign off” discretion is much reduced, meaning much more support analysis is required to justify the purchase of what would once have been signed off locally. The seller needs to map and understand the buyer’s internal approval process.
Information on suppliers and their competitor’s offerings today is available at the click of a mouse. Buyers are more knowledgeable about rival offerings and the drivers of cost. They have the data to bargain hard. Particularly in a world where suppliers are keen to grow.
In my career leading challenged business through restructuring and turnaround, I am frankly always amazed about how much the Exec Co don’t know about their products, customers and markets. Hard data on sales by customer or channel is often not readily available or shared with the Exec Co. And often few of the Exec Co will have regularly met a customer!
Here are some tips that that have helped me generate sales growth:
Make sure you understand the core customers of the business? Whether you are products or services business, evaluate your core customers.
Use Pareto to tell you which customers generate 80% of your revenue, margin and cash. Go and meet them. They are the customers that keep the firm alive.
Identify the core customers who are growing, winning in new markets. What share do you have of their spend? Selling them more will be a lot easier than launching a new product in a new area. If they are growing overseas, what can you do to support them?
Take a hard look at the 20% revenue tail…. you are almost certainly giving away product below cost when the true cost of servicing small accounts is understood.
Deep dive into the who, what, why and where of the sales process. How does your customer like to buy? Who makes the buy decision? What is their buying journey? Are you present at the right points in the journey? Are you providing the information they need to close with you?
What are the product market dynamics? Is your core activity in a growing or declining sector? Are your channels to market giving you the market penetration you need to grow? Are these channels the ones your core customers want to use?
The firm’s product market dynamics should be something everyone on the Exec Co understands and can articulate. Don’t just rely on the views of the sales and marketing team; particularly if long served. Seek fresh perspectives.
Focus resources on the firm’s core activity. Question non-core activity. It can quickly suck in valuable scarce resources.
Find out how the sales team spends its time. CRM systems make it easy to track business opportunity, follow the customer journey and assign responsibility for the necessary actions to move the customer towards the all-important buy decision.
But how much time is your sales team spending face to face with existing customers? What is the mix of time they spend hunting for new customers? Can they describe the profile of an ideal customer?
Farming and account management are much easier tasks than finding new customers. Everyone likes having a coffee with someone they know! You need a mix of farmers and hunters. Make sure the lessons of business won and lost are shared.
Establish sales KPIs. Few organisations today track metrics on the sales team’s activity.
How many new prospect calls are your sales team making each month? How much of your sales revenue was won in the last 3 or 5 years from new customers or products? How many new accounts have you opened this quarter? What is the health of your order book?
Set three or four key goals and track them.
Make sure your compensation scheme supports delivering growth? Pay in all organisations is a thorny topic. European compensation is largely salary based whereas in North America sales teams rely on bonuses and commission.
Rewards help drive outcomes! But beware of chopping and changing bonus schemes. Nothing saps salesforce morale like an ill-thought-out compensation move.
Keep an eye on working capital. Sales growth impacts the business’s cash cycle. New customers may want longer payment terms. Suppliers may not be willing to offer longer payment terms. You may have to make stock ahead of the sales campaign. Think about the cash outcomes of your sales plan.
Lastly, in the early stages of a transformation I like to attend the monthly sales meetings. It helps me sense and feel if the team really understand what actions they need to focus on.
Be mindful that this the Sales Director’s meeting. Your role is to coach and support the actions to deliver top line growth. And to step in if someone does not get it.
Always find time for a team dinner …. the sales team want to get to know the new boss and you need to get to know them!