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 a number of 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 teams that lacks focus, dissipating their time and energies on activities that ultimately don’t augment each other or fulfil broader corporate goals.
It should be the responsibility of the Sales Manager or 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 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 has to 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.
The Business Development Pipeline
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 to wait for prospects to fall into the sales funnel. If the sales team is the furnace within the businesses engine room, then the business development lead should be shovelling in the coal.
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 up-sell 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 clients’ 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.
Tom Springer is a founding partner in Springer Lawson & Associates, a consultancy of former C-level executives who help mid-market companies maximize enterprise value in advance of, during, and following major business transactions or disruptions.