Blog

EXCEPTIONAL SALES – WITHOUT MORE REPS, COST OR RISK

What CEO doesn’t want to increase sales? The challenge isn’t usually whether to grow sales or not, but how to do it without adding significant cost and/or risk. All too often growing sales results in making sweeping changes to staffing, commission plans, territory alignment and/or processes. CEOs far too often buy into the need for overhauls rather than tune-ups – either on their own initiative or by acceding to the recommendations of their sales executives. Long before radical steps are required, some simple, basic tweaks can make significant improvement in sales results that can drop profit to the bottom line.

Most sales improvement programs are like high-risk heart surgery – when what is really needed is physical therapy. Continuous small steps, implemented in the right order, enable companies to minimize disruption and grow better – both today and tomorrow.

SALES MYTHS

How often have CEOs heard from their sales executive and/or sales force that the following are either current issues, or required to increase sales:

• We need more sales reps
• We need higher compensation
• 20% of our reps will always generate 80% of our sales
• We need a new commission plan
• We need more leads
• Great sales reps are unique and cannot be managed

The four areas that have both the greatest impact on sales and the ability to be tweaked without radical or risky steps are:

• Balance – not accepting the 80/20 rule
• Performance to Expectations – expecting all reps to meet their quota every month
• Consistency – sales are generated throughout a period, not bunched at the end of a month or quarter
• Forecasting – accurate forecasts are produced for planning by the rest of the organization

There are three focus areas that when addressed together can have significant impact on sales results. Ask yourself the following questions to assess each area:

Sales Process

• Do you have a defined sales process?
• Does the organization maintain sales tools for each step of the sales process?
• Do you monitor each step in the sales process?
• Is the sales process understood by the organization?

Alignment

• Do your sales reps have a compelling value proposition and target market?
• Do the executive staff and sales organization use the same compelling value proposition and target market?
• Do you monitor selling of your compelling value proposition to your target market?
• Is your compelling value proposition and target market understood by the entire organization?

Accountability

• Are individual sales reps’ expectations defined and communicated?
• Are individual sales reps held accountable for forecast accuracy?
• Do you monitor individual performance against defined expectations?
• Is the entire company held accountable for supporting sales process execution?

WHERE DO YOU START?
If the answers to the above three sets of questions were not a clear and resounding “yes”, then there are some key initiatives that you can begin in your organization:

• Develop and enforce a sales process
• Create clear alignment between company business objectives and sales department objectives
• Define clear expectations for each sales rep, and begin holding them accountable for performance against those expectations
• Initiate monthly insights from sales reps

To instill and start to reinforce the kind of behavior that leads to increased sales on an ongoing basis, have your sales reps answer the following four questions at the beginning of every month – without fail:

• What was my biggest accomplishment for the last month?
• How did I do against last month’s quota?
• How do I look for meeting this month’s quota?
• What is the most significant hurdle I have in meeting this month’s quota?

Download and read the entire whitepaper on Exceptional Sales

I am constantly amazed by people’s mentality – some people seem to have an infinite capacity for work. I don’t know about you, but my productivity tends to decline after about 27 hours per day! As CEOs and executives we are running a marathon, not a 100 yard dash, and we have to pace ourselves to make it to the finish line without collapsing.

We tend to add new tasks and priorities all the time, setting ourselves up for potential failure and burnout. I have written a lot about the criticality of setting and sticking to a finite number of priorities (3 to 5). But it seems that the current economic cycle has caused CEOs and executives to set priorities and then get dragged into all sorts of fire-fighting and crises that put them back into overload mode. We constantly need to have and demonstrate the discipline to realize that we all have finite capacities and that while we can sprint for short periods of time, we cannot continue at that pace forever, since we will do our organizations a disservice if we collapse.

So why don’t executives, and for that matter all employees, develop “stop doing” lists at least annually? Every one of us needs to think not just about all the additional things we need to do and how much more time it will take out of our already overloaded day. We also need to realize that the way to find this additional time is by stopping doing certain things that won’t be missed or that we can do without. Such decisions don’t have to be forever but based on our current set of priorities and other stuff, for the time being that report, that activity, that meeting, that convention will have to be eliminated.

A recent Harvard Business Review article (The Acceleration Trap, April 2010) by Heike Bruch and Jochen I. Menges suggests a great way to start a stop doing list: “Regularly ask yourself, your managers and the whole company: “Which of our current activities would we start now if they weren’t already underway? Then eliminate all the others.”

We all know there are reports and activities that people expend significant time preparing or doing that if stopped, no one would ever miss! And what is the worst that can happen? If someone demonstrates a true need to continue the report or activity, then put it back on the list to continue. But my experience says that few activities will make the cut, and few reports have such significant and material value so killing them makes sense.

I recall one of the companies I led where we were implementing a new, major ERP system, and the IT Director had put out a survey asking users for the reports they would need from the new system. Of course, users chose all the existing reports plus all the new ones they could dream of ever needing requiring hours of coding effort by developers. My answer was to change the focus, and we recrafted the question: what are the three reports each department must have and cannot live without and those will be created for you. It was amazing which critical few reports people chose, and it reduced the programming effort by about 75%!

So what is on your stop doing list?

The absence of one leadership practice more than any other causes companies to get stuck as they try to grow profitability, and that is delegation. I don’t know what #2 is, but it is so far behind delegation that it doesn’t even make the radar screen. The interesting thing is that a leader doesn’t have to be born with this skill, it just takes a process and practice to get really good at it!

Delegation must be a CEO priority

A CEO’s primary job is to think about the direction of the company, develop and maintain his leadership team, remove obstacles and provide resources. It isn’t doing things that should be done by subordinates!

Part of developing subordinates means giving them assignments that help them learn and grow within boundaries that don’t put them or the company at risk. Delegation often feels like a loss of control because it isn’t approached as just another business process that has certain steps to be followed.

In companies where delegation is not a high priority, often executives become “blockers” who cause logjams for others getting things done. And at the same time, the next level of managers are not being prepared for greater responsibility.

CEOs and executives who learn to delegate not only get more important work done, they develop their people at the same time. For more information:

Download whitepaper on Delegation

PRIORITIES – THE KEY TO ACHIEVING AN IMPOSSIBLE AMOUNT OF WORK

I ask every CEO group I present to “How many of you have enough time to do everything you need to?” In several hundred presentations to date, no one has ever said they do have enough time. The only two answers are: to delegate more (see my October 2007 newsletter), and/or set and stick to clear priorities.

Every executive has some kind of prioritization system, usually either some paper-based methodology or a computer or PDA-based system. Any of these systems will work, so systems aren’t the issue. The real issue is discipline; having the courage not to allow others to add things to your priority list.

THE THREE SINS OF PRIORITIES

• Setting an unrealistic number of priorities. Recently I asked a CEO group about their priorities and how many each person had, and one CEO looked in his PDA and said he had 192 items on his priority list. I don’t have to know anything more to know that these cannot possibly be “priorities.” As someone once said, “If everything is important, nothing is.” Most of us can handle a maximum of 5 true priorities at a time and often 3 are better, especially if they are really important ones.
• Setting priorities that are really “keep the lights on” issues. Priorities should be just that; those items that are most critical to the company and/or CEO in moving the company forward. Some things, like preparing the budget in Q4 are “keep the lights on” (unless it is the first time the company has done one). Typical company and CEO priorities have to do with executing the strategic plan and moving the company from good to great. These are really the most important things to focus on.
• Allowing others to hijack our priority list. Once we have set our priorities, nothing should ever get added unless something comes off, i.e. an item is completed or the new item is more important than one of the current items on our priority list. Too often, someone mentions a problem to us and our reaction is to make a note to look into the issue, when what we should say is “That does sound like a problem; what are you going to do to resolve it?” No one gets to add things to my priority list!

As CEOs, we can never allow others to hijack our priority list. If we do, how in the world can we remain focused on the true priorities of the organization and the things we must focus on to make them happen? I am often asked by CEOs what are the most important duties or priorities for a CEO, and I always had the following four in each of the companies that I led:

1. Set the direction for the company
2. Get the right people in place and develop them
3. Make sure my executives had the resources they needed to get their jobs done
4. Help remove obstacles that were preventing them from doing what they were being paid to do

For a brief whitepaper on Priorities which you can download for your team, click on:

Priorities: The Key to Achieving an Impossible Amount of Work

While facilitating a two-day annual strategic planning meeting for a long-time client the other day, a major discussion erupted over the apparent need for a “new” strategy. Obviously, the economic conditions of the past two years have negatively impacted most companies to some degree, and this client was no exception. But they have stabilized and rightsized the company, have positive cash flow and are poised to take some market share from weakened competitors as they come out of the recession.

IS THE PROBLEM THE STRATEGY OR EXECUTION?

I was quite intrigued about the stated need for a “new” strategy (which was only supported by about half the executive team), because three years ago they spent a significant amount of time and effort crafting a new strategic plan with four main threads and clear strategies, tactics and measurable goals for the short-term (0 to 2 years), mid-term (2 to 5 years) and long-term (5 or more years). Admittedly, the recession interrupted progress on some of the goals, as they refocused on the need for immediate actions to maintain cash flow and deferred some of the items. But it was nevertheless interesting to see how quickly the team forgot about all the high quality work they had done to create a great vision, seeming to think there was some new strategy or silver bullet they could or should pursue.

I listened carefully to the debate and finally weighed in re the existing vision and strategic plan. My question revolved around whether there was a problem with the vision and plan, or whether the problem was with execution. In addition to the challenges of the recession, there had been some turnover on the senior leadership team, some accountability had slipped, certain initiatives had not been completed as expected, and they had allowed other short-term hot issues to pre-empt their long-established meeting rhythm. I had already been warning them about some of this laxness, which was being excused by the need to respond to the recession. I had pointed out that in tough times, priorities, accountability, meeting rhythm and execution are even more critical and stabilizing. I challenged the assumption that something was wrong with the vision or strategy, and proposed that if they would get back to solid execution, in my opinion they could return to excellent results.

None of us has ever faced the depth of recession we have just experienced, and it was scary. But for those of us “gray hairs” who have lived through three or four recessions in our business careers, we know how to survive. And typically the answer is not to try and dramatically change the vision and strategy but rather to adapt to the new normal we will face, set appropriate priorities and execute like crazy. Rarely in my career have I seen a situation where something was drastically wrong with the vision and strategy; the problem usually is the execution. Remember, an average quality vision well executed is far better than the best vision in the world that is not fully executed.

Worry less about the vision and more on the team, alignment and accountability to execute your existing vision. As Jack Welch says in his book Winning, set a general course of action (since it will most certainly change and seeking perfection takes too long and is too expensive), put the right people in place who can execute the vision, and constantly benchmark best practices to improve execution.

Leaders know that their #1 competitive advantage is their people and most use some type of process to identify the current and future stars as well as those who will not be successful in their current roles. We know that the stars need extra attention to keep and develop them since they usually have lots of choices in the marketplace. But how many of us truly make nurturing stars one of our top priorities? And what happens, other than that sick feeling in the pit of your stomach when a star announces his or her resignation? Jack and Suzy Welch’s recent column in Business Week magazine was extremely insightful and should be required reading for every leader.

The Care and Feeding of Stars

How much time do we spend trying to save or fix our worst performers? In truth, spending significant time trying to improve C players to B players has very little return. The real ROI is on helping, developing, coaching B players into A players (or at least B- to B+!).

Applebees restaurants for the last five years has utilized the Topgrading approach (Topgrading, Bradford Smart, 1997) at every store every six months to identify the A, B and C players. And store managers’ merit increases and bonuses are tied directly to retention of the A and B players.

The Welch’s make the point that “Poor performers need to know where they stand so they can start looking for the kind of work in which they will excel for the long term.” Jim Collins’ now famous quote sums it up nicely: “Get the right people on the bus, the wrong people off the bus and the right people in the right seats.”

So when that star performer announces his/her resignation it usually means that either that person has truly outgrown the opportunities at your organization or leaders have missed something in terms of compensation, recognition, challenging assignments and/or a level of autonomy.

Trying to negotiate with or “buy” the star’s loyalty almost never works for the long term, and worse, may create even greater problems internally with your other stars who didn’t threaten to leave. Great companies constantly identify not only their current stars but the future ones, and always have the bench strength to know where they quickly find a ready replacement if they lose a star. For more information:

See Jack and Suzie Welch’s Business Week column “The Folly of Star Wars”