A Sales VP called me last month. He told me revenue was declining. “Dan, we have problems. Lots of problems. I don’t know which ones to work on. Any advice?”
I asked him questions. Lots of questions. Here is what he told me:
New Logo Business Percentage was below last year’s in the same quarter
Sales Force Win Rate was flat year over year
90% of their sales came from 5% of their sales team
Quota attainment was below 35%
The Sales Process was developed 9 years ago
Leads were not being qualified before the sales force engaged
Channel Partners productivity was higher than last years but well short of their original goal
Sales Rep turnover just spiked last month. The exit interviews indicated their new jobs paid them ‘more money’
He also mentioned his sales force was frustrated. HR heard complaints about favoritism. Reps were discounting heavily to gain business. Future indicators showed problems. We concluded he had a mess on his hands. The Sales VP’s job was on the line. His boss wanted improvement now.
We both came to the conclusion that these problems were really symptoms. He needed to dig deeper to uncover the true root problems. And then prioritize them to uncover the way to solve them.
“How do I prioritize these problems and then ultimately the solutions?” he asked. Begin with a Sales Force Framework. Download it here.
This framework allows you to diagnose root problems. You can then prioritize these against the steps in the framework. This ‘sequence’ of solving issues will allow the solutions to be built upon each other.
For example, a few of the root problems in the case above are:
Outdated, seller centric sales process
No lead management process to qualify the leads
Poor Channel Management program
Improper mix in compensation plans
Poor quota setting
This Sales VP’s immediate reaction was to change the comp plan. “Let’s incent everyone to sell more new logo business” he said. “This will cause behavior change we are looking for to make the number.”
He couldn’t be more wrong. Fixing the compensation plan first was incorrect. Incenting new logo business will only further frustrate the sales force. Why? There isn’t a lead management or buyer centric sales process in place. The sales reps have to still rely on the old lead and sales processes. By placing these problems into the framework first, it allowed to prioritize the problems.
The first step above is to design a new Lead Generation and Sales Process. This Sales VP will be able to build off these new processes. A new Channel Program can now use the new Lead and Sales Process. Quota setting can be re-designed based on the new flow of leads. Compensation can now be changed using the new Quotas. This ‘sequencing’ of solutions leads to sustained quota attainment over time.
Call to Action:
Determine what is a symptom vs. a root problem. Don’t just look at a metric and figure it is low. Understand what is driving that metric to underperform.
Example: Low win rate root problem could be all or one of these issues: Unqualified leads, off the shelve seller centric sales process or poor talent
Plot these problems on the Sales Force Framework. Know which ones are causing the most pain. Consider the value you get from solving the problem. Then compare that to the difficulty in will take to implement the solution.
Example: We know in the above organization that revenue is declining. Implementing a lead management process delivering qualified leads to the sale force increases revenue.
Prioritize the solutions. Weigh each solution against the difficultly it will take to implement it. This is critical in improving productivity.
Example: Although it is tempting to change the comp program, don’t do it. That solution would result in long term revenue loss. Fix the Lead Management and Sales Process first. This will allow sales people to maximize their compensation now.
Fixing sales problems can be daunting. Prioritizing the problem and the solution is critical. Follow the steps outlined above to eliminate loss productivity when implementing your solutions. Leave a comment about the successes or failures you have had. We can all learn from everyone’s examples.