CEOs Need to Get Serious About Sales
CEOs Need to Get Serious About Sales:from HBR.org
With many companies trying to shake off the drag of a global recession, CEOs are eager to find growth. One place they need to look is in their own sales organizations.
In writing the book Sales Growth, we've found that CEOs who put sales management at the heart of their agenda have captured astonishing growth — outstripping their peers by 50 to 80 percent in terms of revenue and profitability. However, while CEOs play an active role in driving performance improvement across many parts of the organization — think of the "lean" movement — sales has traditionally been neglected. That's a big mistake.
CEOs at the best companies are willing to roll up their sleeves and attack the details to transform their sales organization. It's not enough to set budgets and set goals. The best CEOs call on their management toolkit to transform sales into a growth engine by focusing on three actions in particular:
Crank up the analytics
When it comes to selling, even many hard-nosed executives believe that sales is an art, and artists do their best work when left alone. But winning CEOs demand analytics from their sales organization (much as they do from operations or strategy) to help understand everything from the effectiveness of sales campaigns to opportunity analysis to performance reviews. CEOs need to champion this "sales as a science" approach by demanding KPIs and then holding their leaders accountable for delivering on them.
When tracking trends for future growth opportunities, for example, invest real money (2 to 4 percent of the sales budget is good) to develop analytical tools and teams that monitor trends such as demographic shifts, regulations, and new technologies. Actively track performance and shift budgets to monitor promising trends while killing off tracking projects that aren't going anywhere. A contract manufacturing company that builds products for IT equipment makers, for example, had a dedicated team of speculative market analysts whose active trend monitoring led to a 15 percent return on investment.
You also need to push sales organizations to find overlooked pockets of growth in "tapped" markets. Demand that your sales organization do a deep analysis into micro-markets — sometimes even down to the zip code or street level — to find the growth hot spots.
Finally, demand that data inform decisions on the sales function's inner workings. For example, use regression analyses of performance and 360-degree feedback data to determine training priorities.
Build a lean selling machine
CEOs generally don't want changes to how their sales force operates for fear of killing the golden goose. But cutting cost does not mean cutting revenue. In manufacturing, lean both cuts cost and increases effectiveness (e.g., higher quality, faster cycle time). The same thinking applies to sales. Optimizing sales operations with automated tools or dedicated back-office units for specific tasks can improve revenues by 10 to 25 percent and reduce back-office costs by 20 to 30 percent.
Start with removing waste from front line sales so your reps can do what they're supposed to do: sell. That means getting sales leaders to develop a comprehensive assessment of current operations before setting up clear back-office processes to support the front line while managing costs. In one global manufacturing company, the CEO set up "sales factories" comprised of specialized sales support for functional tasks and "deal coordinators" to help shepherd deals through the system. Sales reps gained 15 percent more time for selling.
This lean approach can also provide a serious lift in sales effectiveness. Simplified and standardized processes to respond to RFPs, for example, speed up responsiveness, put the most compelling offer in front of customers, and increase loyalty. A Fortune 500 company found that for every two days it cut from cycle time, it increased its win rate one percent.
Make sales a team sport
Sales organizations can't drive growth on their own: strategy needs to provide insights into future trends; marketing needs to provide reliable intelligence to identify where to compete; IT needs to develop technology to support remote customer interactions and self-serve capabilities; customer service needs to translate customer interactions into cross- or up-sell opportunities. Only the CEO can push this kind of coordination through.
Part of this effort requires raising sales' profile within the company. Give your best sales performers broad recognition, make sure that sales has a seat at the table when you're discussing product strategy, and share sales successes and insights throughout the company.
To foster collaboration, find discrete opportunities to bring different functions together such as improving sales and supply chain coordination to better manage inventory. When a major international service provider announced it was leaving the North American market several years ago, for example, the CEO of a remaining competitor instituted a "war room" where his top managers from sales, marketing, strategy, and product development could thrash out a coordinated plan for grabbing these new customers. Marketing provided detailed customer analysis and developed tailored proposals that led to crucial wins in the field.
CEOs will always have to make decisions about where to invest their time to build their company. But if they are serious about growth, they need to get serious about sales.
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