Moe Revenue

What is a “Closed Loop” Revenue System?

If revenue is the lifeblood of a business, the revenue system is the heart that keeps everything working. Hearts operate only as “closed loop” systems and the same applies in business. In order to have a closed loop business system, you need a structured model with built-in process accountability and diagnostic controls. This is how companies install and operate Lean production systems, ISO-based manufacturing systems, 6 Sigma quality systems, global financial reporting systems, etc.

My experience suggests all companies do have some form of revenue system (heart) in place today. The reality is most are the “open loop” intermittent variety meaning the core revenue tasks of selling, forecasting, rewarding performance and staffing operate as standalone events with minimal process accountability. They may be done by one individual but that person addresses these as independent – sometimes even burdensome – tasks.

All companies have revenue stimulators (cold call Fridays, end of quarter discount promotions, etc.) that are used to keep the vision alive – and the doors open – but these are best described as tactical adrenalin, not a revenue system.  When these no longer produce the results needed, the quick-fix option is lowering the revenue bar to align with current ‘system’ capabilities assuming the financial structure can accommodate the reductions. This is the drug of choice for sustaining most ‘open loop’ based revenue models…and the number one reason why companies prefer a ‘closed loop’ revenue system (heart).

Eliminating Sales UFO’s

Our 5M’s sales process does not specify a sequence for qualifying prospects through the Motivation, Money, Methodology and Market qualifying questions. To qualify a prospect, you need to cover all of the M’s.

However, some sales teams are seeing higher numbers of UFO’s (Un- Funded Opportunities) such that starting with the Money discussion to confirm a budget does exist or funds can be allocated for the transaction is just a good strategy in today’s economy. There is a lot of stress in parts of our economy and it is not the first time we have seen prospects trying to identify new projects that could become their job savers.

The old rule – no money, no prospect – still applies.

Another Fish Story

Summer is vacation time in the US and many folks do plan on spending some time fishing. That may be why several recent video Skype sessions have included a comment about the fish on my office wall in the background. That fish is a 42 pound King Salmon caught in the Nushagak River, Alaska, just a couple miles from the ocean. We were flying out of Lake Clarke in float planes and decided to try the river to see if the salmon run had begun. It took over an hour and half to land the monster (caught with only 17 lb. test line) and was the largest fish brought in that week.  So when contacts ask, “Are you a hunter or a farmer?” I just point to the fish and say “yes.”

Why can’t the best sales rep become a good CRO?

This remains a frequently asked question so let’s resolve the issue. First, the best sales reps in most companies typically have a ‘hunter’ profile. This profile can have many variations but the common ‘threads’ are they take total accountability for their performance (no excuses) and they follow an intuitive, qualifying-to-close process that best fits their profile.

As such, under our SRS 2.0 model, they have uniquely developed one of the 4 core processes of a complete Revenue System, albeit one that is totally optimized to their profile and may not be readily transferable to others.

The complete revenue system requires competence in 4 processes – not just one. That makes the CRO role requirements much different than those of an individual contributor. The CRO has to deliver coaching (5M’s Sales Process), accountability (Bankable Forecast Process), motivation (Incentive Process) and talent selection (Staffing Process).

The step up from individual contributor to CRO is a quantum leap in leadership and responsibility. Most of the time, these leadership responsibilities are not tasks that fit the true hunter profile.

What can we learn from Wimbledon?

The 11 hr. Wimbledon match between Isner and Mahut is over. Regardless of the outcome, the world will recognize these professional athletes as having evenly matched, advanced skills to achieve this level of play. Even with this unique match, some observers were expressing boredom with the volley treadmill and just wanted it to be over although they still considered themselves avid tennis fans.

Well, I have observed the same apathy towards treadmill sales campaigns in business. As a sports fan, I respect the skill needed to compete in any world class athletic event. As such, I do not share the boredom profile recently expressed by some Wimbledon viewers. I do however support my business colleagues’ frustration with marathon sales campaigns. My experience is that these lengthy and expensive endeavors are not based on skill. They are based on feature/benefit selling tactics with no qualifying process involved so the treadmill platform becomes the only option available.

Those who have been there know this is not a revenue system. If the only data changing on forecast updates is the projected close date, you are already on the treadmill.

What Are You Selling?

One of the major discoveries clients make in completing the DV exercise portion of our Revenue System is this:

What we sell and how we get paid are two different things!

Your Differentiating Value is what separates you from the competition and goes beyond core competencies like the typical quality, service and support platforms most companies promote. The Sales Revenue System 2.0 book example of the cinnamon sales rep is a typical illustration of this discovery. He was actually selling ‘time to market’ for new products but got paid in shipments of cinnamon and other spices.

The first step in our Revenue System implementation always starts with defining your Differentiating Value…and the discoveries that follow.

I wish I had known

Our economy appears to be recovering in several sectors such that companies are once again looking at sales hiring. One of the most frequent CRO comments we have heard when assessing their existing sales team during the recession was, “I wish I had known that before we hired him (or her).”  That comment is usually followed by – “he/she interviewed so well and seemed to know so many companies in our industry.”

The web-based assessment tools available today take less than an hour to complete and give you more upfront profile information about the applicant than most managers can learn in a year about their new hires. The web-based assessment tools can objectively sort talent from wannabe’s so you don’t have to revisit those “I wish I had know that before….” discoveries after they are on your payroll and not performing. Thanks to these tools you don’t have to keep making those same repetitive mistakes today.

The CQQ Process

One frequently asked Revenue System implementation question is: How many Critical Qualifying Questions do we need?

There is no fixed answer to that question since the CQQ’s originate from the company’s Differentiating Value (DV) platform. The more DV, the more topics you have available for CQQ consideration. One suggestion I frequently make to CRO’s working through the implementation process is this – spend your time on the CQQ’s for Motivation. If you cannot establish any DV ‘traction’ with the lead, you have a suspect – not a prospect. The heavy lifting is always with the Motivation fit and most companies can quickly modify the CQQ’s listed in the book for Money, Methodology and Market to jump start their implementation.

CRO Focus Podcast

My friend Clayton Shold and I have completed another podcast regarding the CRO role.  The podcast is up on the Salesopedia.com website.  I think you will enjoy the casual approach to our conversation as we discuss the most important role in any company.

My First Sales Job

I always chuckle when I hear sales people complaining about being rejected by what they classify as totally rude behavior.  For example, someone hanging up on them or worse yet, not responding to an email they worked on for days just trying to get an appointment. One contact recently asked me about how I handled rejection in my first sales job. Before I could address the question, I first needed to explain the sales position.

My first sales role was during my college years selling cutlery door-to-door. Can you imagine standing on someone’s front porch today with two demo cases of kitchen knives saying to a total stranger that you would like to come into their home for a couple hours and demonstrate what amounted to enough cutting tools to outfit a small slaughter house? Today those products would be classified as ‘edged weapons’ based on blade length and the call to 911 would go out as soon you started talking.

Rejection in that sales model ranged from having the door slammed in your face to the prospect telling you in loud 4 letter words to get off their porch. When that happened, you only hoped the door did not reopen as that was the early indication they were about to exercise the family dog at your expense under a much older version of the ‘fair chase’ concept.

Out running the canine to the car while carrying two steel-laden demo cases was real rejection (and some good evening entertainment for the prospect), but the commission plan made it all work. The electronic rejections we receive today while working 8-5 in environmentally-controlled offices with never-ending supplies of coffee, water, snacks etc. aren’t even worth mentioning.