How will your company reach its revenue and profitability goals in the short term? If you are growing now, how will you sustain that growth in the future? If answering these questions is a struggle, you are not alone.
In many B2B companies sales productivity has been declining in recent years. A study by CSO Insights said only 55.8% of salespeople made their annual quota in 2016 (down from 63% in 2012). It is now common for 75% of deals in sales pipelines to never close, according to Accenture. 40% turnover among sales teams is common. Sales forecasts have become even less accurate.
Some of the causes for these declines are not in a company’s control. The Internet has changed the way companies buy. Some industries suffer from declining markets. Plenty of B2B companies struggle trying to adjust to changes like these.
And, B2B companies are not standing still. Sales and marketing management magazines describe lots of sales training, CRM, content marketing, and other initiatives. CSO Insights promotes “sales force enablement” as a strategy. Consulting companies like Accenture promote “agile selling.” And there are many others.
The thing is, initiatives like these have been going on for years. Researchers and consultants blithely toss out unprovable statements like this one:
“In companies where social selling aligns with
marketing and selling strategies,
close ratios increase by 16%.”
Scratch the surface of such statements, and the measurements fall apart immediately. What exactly, is “social selling”? To what measurable thing does “marketing and selling strategy” refer to? How is the “close ratio” measured?
If sales organizations are unable to measure things that cause improvement, how can they predict, much less sustain it?
It is Time for Sales and Marketing Management to Get Real
Statements like that described above fail the first rule of rationality: Define Your Terms. People in most B2B companies toss around words and phrases like these as though everyone knows what they are talking about. That is unfortunate.
It is also why so many companies “work on” initiatives for years without producing discernable results. Like a dead fish floating down stream, companies may appear to be making progress as markets expand.
A senior executive at a billion dollar company admitted to me privately his company had nothing to show for 6 years pursuing “Selling Cycle Speed.” Imagine the impact their “Sales Competencies,” “Coaching,” or “Account Planning” initiatives had. (None!) Here is a dirty little secret among companies that consult to sales organizations: Their vaunted clients have no ability to measure anything systemically, like the financial impact of changes in how work is accomplished.
What could cause such ongoing failure to improve sales and marketing productivity? Simple. Someone, somewhere is not in contact with reality.
Executives working in manufacturing must produce ROI and productivity gains measured systemically, in hard dollars. Executives working in sales have not learned how to do this. As a result, management’s words and phrases “float” above the realities salespeople deal with.
It should be no wonder that the best salespeople operate outside of whatever process is in place. They get away with it because they provide the organization’s supply of oxygen – customers with orders. Thank goodness!
On the other hand, the sales forecast is still useless. The pipeline is still weak. Sales people still work overtime on prospects the company doesn’t want. And there is there’s huge waste in the organization.
Worse, initiatives that get implemented – like sales training, sales enablement, and especially “sales process” – tend to ignore salespeople’s real problems. In fact, that is the primary reasons they fail to achieve measurable, sustainable improvements in the first place.
When you see a rat trapped in a maze, you know the reason the rat is trapped is it’s own limited awareness and knowledge. Likewise, most sales and marketing organizations have not identified what actually improves productivity.
Unlike their manufacturing counterparts, they do not know how to apply scientific measurement and management principles. They simply continue making assumptions, and exhorting their team to work harder.
To be fair, it is not entirely the sales and marketing department’s fault. The Internet, globalization, and mobile devices are accelerating changes in how customers buy. Weaknesses in sales and marketing management are revealed when a company struggles to keep up.
Regardless, real market progress only happens when companies out-perform their competitors. And, companies can only out-perform their competitors when they adopt scientific management principles.
And that begins with respect for the reality of what you are dealing with – especially your marketing and salespeople.
Bringing Operational Excellence to Sales
Typical sales and marketing executives start from the wrong footing when trying to improve. They decide (somehow) what solution they want, and then begin to implement it (sometimes via outside consultants). Claude Bardy, of BCE Europartners, describes an al all too common experience:
I was running the French sales organization of a European company. Corporate decided to have a uniform sales process for all countries, and designed such a process with major involvement from the field and key account sales people located in the headquarters’ country. Corporate then felt the sales process had full legitimacy. Unfortunately, it was rejected by the regions, and corporate couldn’t understand why. Cultural differences were part of the explanation, and had to be addressed.
By contrast, a scientific approach engages the best minds from across the relevant departments. This is essential, since sales problems look different to field salespeople than to key account managers, or headquarters executives. Likewise, since sales is a production system, it is critical to decide what needs measuring. And to avoid the problem Claude Bardy describes, this team of volunteers must also decide what needs to be consistent across the sales production system, and what can be left to local decision making, and why.
Usually, this work is quite different than any the participants have experienced before. That’s because they learn to apply a structured, scientific method. Everything they do must be tied to observable reality.
The Method for Improving
So, what does this method look like, and how is it different from what people are used to? In its simplest form, that method requires the team to answer three questions with some degree of rigor:
- The first question is “What are you trying to accomplish?” The team defines its terms and gathers evidence and data. They look for clues revealing the underlying, actionable, causes of the undesirable results they are experiencing.
There are many different kinds of problems that may need to be sorted. For example, a Sales VP may say “My sales team spends too much time on the wrong accounts.” Yet, what is a “wrong account?” How much is “too much time?” The team must convert such vague statements into observable, measurable ones. What evidence and data is there, exactly, and at what point does it become undesirable? Without doing this, how could they detect improvement? Which brings us to the second question.
- The second question is “How will you know that a change is an improvement?” The team must identify what feedback will prove improvement has occurred.
The Sales VP above might know each of his salespeople bring their own approach to pursuing their sales opportunities.
When this happens salespeople cannot communicate well with each other about their experiences. They need a common language for understanding their work. That language must tie those interacting factors to observable reality.
For example, one common success factor in B2B sales is the extent of a salesperson’s coach network. Their access to decision makers is another. Lack of a framework defining such factors prevents them from learning how to improve things. And that is the point of the third question.
- The third and last question is “What change can you make that will result in improvement?” The team looks for factors in their control that could improve results.
Continuing the example above, the team could decide to establish a checklist or standard for doing their work. It would list the observable characteristics of the coach network, or access to decision makers, that make a prospect more or less likely to buy. Documenting these things in a simple check sheet about prospects demonstrates respectful agreement around how best to do the work. Using such a check sheet to observe and collect data about prospects is an important achievement.
That’s because it is invented by the team to achieve a goal they set for themselves. This is different from traditional sales initiatives. Traditional initiatives impose someone else’s “solutions” on salespeople. That is what happened in Claude Bardy’s example, and in most kinds of sales training, CRM, and other selling initiatives.
Properly implemented, operational excellence gets people to initiate changes that make sense to them as well as to their executive sponsors. Of course they embrace and respect it!
Process Excellence Results
Operational excellence is a power tool for uncovering data leading to improvement. It clarifies customer value at every stage. It engages the sales team to face and think critically about their problems, and invent new ways of solving them. With the right guidance and time, it blows away traditional roadblocks and constraints. That’s because it enables a team to collaborate across functions.
- Achieving a five year plan in four years at a global chemical company
A global chemical company’s market share declined as competition encroached from Europe. They engaged a small team of respected salespeople and managers to define the problem. They identified what worked and didn’t work across their 300 person sales organization. They identified measures of sales activities and customer responses. They assembled the best checklists and methods from across the country and tested the new process on a small scale. This proved to make sales easier for field salespeople. When they rolled it out across the country, participation skyrocketed, and so did data about sales bottlenecks and successes. The data revealed new opportunities for improvements. Ultimately, market share increased, the competitor exited the market, and they achieved their five year plan in four years.
- Turning around a 100 million distribution channel
The General Manager of a North American water filtration firm complained that his distribution salespeople were not growing revenue in their territories. Instead they were consumed by servicing their existing distributors. Focused on higher ticket product lines, distributors preferred to merely service requests for high-margin replacement filter cartridges, rather than the labor intensive work of selling new systems to new customers. A leading salesperson and a field marketing manager were assigned to research what kinds of dealers were best suited to selling new water filtration systems. The team identified these dealers and a means of demonstrating how the dealer owners could grow their profitability selling filtration systems. A five year decline in new unit system sales reversed. New unit system sales through the new participating dealers increased 14%, turning around a $100 million business.
When executives get swept up in fads, sporadic initiatives, or point solutions, they do not engage in improvement. When they do not define their terms and measurements they “float” apart from reality on the street. When they “call the shots,” or impose “outside solutions,” immune reactions are inevitable.
Successful improvement keeps the responsibility for improving where it belongs – with the people doing the work. The leader applies the business mindset and philosophy of operational excellence. They challenge the team and help them to think critically.
Step by step, this enables teams to better define the problems they are trying to solve. This changes how they think about their problems. They figure out how they’ll know a change is an improvement. And they work out ways to test the changes that might result in improvement.
These things do not cost a lot of money. There are few “big risks” to take. Instead, the executives talk through the improvements carefully. If it makes sense, the executive clears the way, ensuring the team has the tools and resources they need.
At that point, the executive’s job is merely to get out of the way and start cheering them on. That’s because following the data and evidence puts the entire business on the trail to becoming the next sales dynasty in their industry.
By Michael Webb
More than twelve years ago, with deep experience in field sales, sales management, and sales training, Michael Webb set out to create a data-driven, process-based alternative to the offerings of typical sales training, sales consulting, and CRM companies. Since 2002, he has published numerous articles demonstrating how B2B sales organizations can increase productivity, predictability, and margins using the rational methods of the quality and productivity sciences (Six Sigma, Lean, Shingo, etc.).
In 2004, he helped organize the first conferences ever held on applying Six Sigma to marketing and sales, and delivered the keynote speeches. He has published two thought leading books:
- Sales and Marketing the Six Sigma Way (Kaplan, 2006, 4.5 stars on Amazon)
- Sales Process Excellence < https://m415.isrefer.com/go/SPE/OES/ > (privately published, 2014, winner of the Shingo Research Award)
Michael and his team have helped companies such as Burr Oak Tool, Danfoss, Wacker, Tyco, and Pentair, as well as many smaller B2B companies to accelerate deal flow, improve forecast accuracy, and double sales productivity. His website www.salesperformance.com < https://m415.isrefer.com/go/SPCHomeOES/OES/ > contains a wealth of free resources and information. Connect with him on LinkedIn.
 From The Improvement Guide, 2nd Edition, (Jossy Bass, 2009, pg 5)