It doesn’t take a business genius to recognize that stagnant or sluggish sales growth is a sound indicator that something isn’t working.
But it’s often much harder to diagnose the root of the problem – especially from the inside of a company. When I’m engaged to help, I typically start by reviewing the company’s sales strategy and asking several questions: What is your value proposition? Who are you selling to? Why would they buy from you? Are you emotionally biased about what you want to sell vs. what your customers need?
Who Owns the Sales Strategy?
In the initial phases of setting up and running a company, contracts and leads are often pursued in a haphazard manner. There are wins but there is no real strategy in place for consistently building and prosecuting a pipeline of sales to new customers or to existing ones.
Working without a plan can result in a sales team that lacks focus, dissipating their time and energies on activities that ultimately don’t augment each other or fulfill broader corporate goals.
It should be the responsibility of the Sales Manager or Sales Director to create a corporate sales strategy and to own that plan, ensuring that the sales team knows what its immediate and long-term goals and operating parameters are. Performance assessments and corrective changes should be a constant process to prevent pipeline crises from arising.
What are the Key Performance Indicators (KPIs)?
If the company has no basis for comparing expectations against performance, then how will it know if it even has a potential problem (until it’s too late)? It is critical that these sales KPIs are in place:
- Book to Bill
- Proposals submitted/converted
- Percentage of sales reps hitting quota
- Win rate
- Length of sales cycle
Analyzing the sales cycle by stage will allow a company to spot trends. Comparing velocity by stage (i.e., how long it takes an opportunity to go from stage 1 to stage 2) is an indicator of friction within the sales systems. For example, if it used to take seven days to go from stage 1 to stage 2 and now it takes 15 days, that’s a fair indication of a hitch in the process. This metric can be compared from sales rep to sales rep (keeping tenure in mind), across territories and industries, as well as over time.
KPIs should be linked to the sales strategy. Combined, these diagnostic tools can identify an underperforming sales team or individual. To correct this, a good sales manager or sales director is critical. If the sales force does not have the necessary skills, the leader must provide them with the training, development and coaching necessary to obtain them.
A sales manager sets the tone. He/she should reward results and teamwork and discourage behavior that brings down numbers and/or morale. If the sales manager isn’t leading this process, it may be time to get a new sales manager.
That said, I have found that one of the most common causes of an unmotivated sales team is an overly complex compensation plan. The compensation plan should be structured in a way that transparently incentivizes each type of sales rep on the team to improve. Often, one plan does not fit all.
Is the Business Development Strategy Linked to the Sales Strategy?
A good sales strategy should be tied to a business development strategy, and this requires a strong business development lead. An underperforming business development lead or lack of synergy between business development and sales can result in missing the most promising leads or wasting time on unproductive ones. The sales team could be unsure whether to cold call or wait for prospects to fall into the sales funnel. If the sales team is the furnace within the business’s engine room, then the business development lead should be shoveling in the coal.
Are we Maximizing Value from Existing Customers?
The quickest path to growth is maximizing sales to existing customers. In fact, it’s 75% easier than generating new business. If sales are stagnant, it could be the sales team isn’t doing enough to upsell existing clientele. Creating and tracking the results of a strategy that focuses on increasing the value of your customers is an important way to grow your business.
In marketing parlance, this is called “account-based marketing” and it includes tactics like personalization in marketing outreach, which is particularly important because it strengthens the stickiness of relationships and reinforces the perception that you, uniquely, understand your client’s customers.
Of course, there are libraries of books and years’ worth of boot camps devoted to improving sales skills, but following a sales strategy, instituting meaningful KPIs, aligning business development with sales and mining existing clients can help recalibrate your company’s overall course toward greater success.
About the Author
Tom Springer has over 20 years of experience providing strategic planning, business development, interim management and technical advisory services for private equity firms, portfolio companies and public and private enterprises. Tom is skilled at growing enterprise value by creating highly productive sales and service teams, developing new lines of business and fostering client relationships. He is known for solving complex business problems by aligning technology with business and operations.
You can contact Tom at [email protected].
About SD Capital
SD Capital is a premier, full-service, value advisory and investment banking practice that assists middle-market companies in creating and maximizing business value. We provide strategic evaluation and execution of various downstream sales and monetization pathways. With decades of combined executive experience running, owning and advising private companies our team is uniquely positioned to guide owners through the complex process of growing and selling their companies.
Learn more at www.sdcapital.com or contact the team directly at [email protected].
Schneider Downs Capital LLC is a subsidiary of Schneider Downs & Co., Inc.
