The executive team of a large division of a very large corporation called me to “fix the sales problem.”
We were to have a meeting to discuss the issues they faced and to discuss potential corrective actions. I’d asked for data to better understand the sales performance issues. I also had short phone discussions with a few key sales managers to understand the issues.
The conversations were very revealing, some of the issues they described:
- Year after year, numbers and expectations of the sales organization had increased tremendously. There was little sales input, just a number provided by the executive management team, “We need to generate this much revenue this year.”
- Year after year, they had missed the numbers. They had grown sales year over year, but even that growth was slowing down.
- Products were getting old, they were less competitive, but the sales people were doing all they could to compete and win. They had majority share in their target markets, but they were struggling. They worked hard in defending the positions they had established in major accounts. The conversion costs for these customers to some of the newer competitors were, for the time being, restricting customer defections.
- But their new customer acquisition had fallen precipitously. New competitors were offering higher performance solutions at slightly lower price points, so they were winning the majority of new deals.
- The sales team had been “getting by” basically by defending their current positions, growing their existing customers, and cross selling the rest of the product lines as much as possible.
Yet they still weren’t reaching their numbers, divisional and corporate management was very upset with the poor sales performance.
Armed with this background and some other research I had done, I went to the meeting with the executive team. The EVP of Sales had been invited to the meeting, he and I had spoken prior to the meeting.
I started the discussion asking, “Can you tell me about your sales problem?”
The answer from the General Manager was pretty quick, “They aren’t performing, they consistently aren’t making their numbers. Ed (the EVP of Sales) is pretty new, we want to make sure he is getting the support needed to fix sales performance!”
After they had dumped for a while, I took everything in, saying, “I think you have revenue problems, you certainly aren’t making your goals. But I still don’t understand why you believe you have a sales problem.”
The General Manager looked at me, impatiently, saying, “Well they aren’t hitting the numbers, so it has to be a sales problem!”
I replied, “I agree, you have a revenue problem, but the majority of it is not a sales problem. To be honest, they are selling as much as they possibly can. So the challenge is not a really a sales issue.”
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The discussion went on, I’ll net it out.
Sales strategy is actually pretty simple. At the base level it consists of:
- Identify your target customers/sweet spot.
- Develop and execute strategies that maximize your share of customers and market. Remember, I feel it is your “God-given right to 100% share of customer and 100% share of market.”
- Growing revenue is driven by finding new customers and markets in which to sell your current products and services, introducing new products and services to sell to your current customers, or a combination of the two.
- Rinse and Repeat.
Don’t get me wrong, there’s a lot of complex stuff to make those things happen, maximizing sales performance and effectiveness. Every organization has room for improving these capabilities.
When the sales organization is doing the first two things reasonably well, but revenue isn’t growing at the expected rate, the problem is probably the third area—finding new customers/markets, and introducing new products/services.
These aren’t the responsibility of sales, this lies elsewhere in the organization. Revenue growth and revenue generation is dependent on the company’s ability to identify and target new markets for existing solutions, developing new solutions for existing customers. Sales can’t fix these issues, they are just the delivery mechanism, the point of the arrow in implementing the company growth strategies.
But the company can’t grow if it isn’t bringing new things to new and existing customers.
It was an uncomfortable conversation. Yes, there were some things the sales organization could improve, but they would not close the revenue gap. The executive team eventually realized the problem was an overall divisional problem. Unfortunately, the time to “fix” was longer than anyone wanted, but growth wouldn’t come unless the current solutions were adapted to the needs of new customers and markets, or until the sales organization had more to sell to new and existing customer.
“Sales,” (i.e. Revenue) problems aren’t just Sales Problems!
This article was originally published by Partners in Excellence
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