What is the role of a CRM? In our Revenue as a System (RaaS) model, we build the critical qualifying questions along with the 4 Aces Bankable Forecast process into the structure so CRO’s have a complete audit trail on each pipeline opportunity. Ironically, many CRM installations we see today are missing both of these process components. Unfortunately when this happens, little can be learned unless the CRO is willing to read through long rambling email trails that get linked to the prospect file. Typically the only time that occurs is when a lost order update arrives and the CRO goes on a witch hunt to see if the sales rep performed “correctly.”
In our RaaS model, this type of CRO behavior is totally dysfunctional. First, sales reps quickly learn it is more important to have all the “correct” entries in the CRM than it is to close orders. Second, companies now have sales reps working a couple hours directly with prospects then spending the rest of the day updating their CRMs. When the CRO’s primary use of their CRM is to conduct due diligence on lost orders, it is time to unplug both the CRO and the CRM software.
1. Only above plan performance to budget category is expenses.
2. Commission plan payouts have become infrequent events.
3. Staff turnover rate is zero.
4. Sales department wants to go on “flextime.”
5. Discount concessions are now a standard part of every new order.
6. Forecast numbers never change…but actual performance is a roller coaster.
7. Sales is now asking customer service to qualify all new inquiries.
8. The competition follows us everywhere.
9. Sales is asking for more educational promotions and events to ‘prime’ the sales process.
10. Sales is too busy to prospect for new business.
Our Best Wishes from CRO Success to have a healthy, prosperous and peaceful New Year!
We spend a lot of time helping clients understand their Differentiating Value – what they bring to the market that is unique and/or better than the competition. The process is straight forward. Here is a summary for those planning their 2013 revenue program:
Differentiating Value is not:
1. Features and benefits
2. Value platform
4. Quality, service or support proclamations
Sales people have been trained to memorize and mimic the slogans and sound bites that always accompany these concepts. STOP! These exist in your world but not the prospect’s. If you base your positioning on these items, you will always enjoy longer sales cycles and perpetual discount requests – especially if your sales people lead with “We are the #1 brand in the market.”
Differentiating Value only exists in the prospect’s world – not yours. It is what the prospect is buying and that is typically not how you get paid. One of our clients is a materials science company that manufactures polymer pipe for the plumbing industry. Their engineered products allow homeowners to operate all water consumption devices (dishwasher, clothes washer, lawn sprinkler, etc.) concurrently and still have family and guests able to use all the showers in the house. Prospects are buying a convenience life style but the payment transaction is based on linear feet of pipe purchased. This is Differentiating Value.
This time of year is when we get the most questions regarding how to change and improve next year’s performance incentive plans. Our incentive plan model is to reward results and one area that should be considered is forecast accuracy. Good sales people work hard to make sure they do not leave any incentive opportunities “on the table” and performance to forecast is as easy to measure as performance to goal.
For most companies, the goal is not only revenue dollars but also product mix. This is where the forecast performance incentive become meaningful. My approach has been to require the product category mix forecast to total the revenue goal for the quarter. Reps are incented to meet each forecast category (progressive incentives meaning the more categories you meet, the higher the payout potential) assuming they exceed their sales goal for the quarter. Depending on your business model, there are several ways to structure the forecast performance incentive. Call or email if you would like to discuss this topic in more detail.
My thanks to Tech.MN and their Entrepreneur 2 Entrepreneur blog for their interview with my friend Lief Larson. I’ve recently gotten to know Lief and his unique product which is loaded with differentiating value. He does a good job of conveying the importance of sales for any company at any size.
An excerpt from the interview:
Nothing can catalyze that success and prove viability better than sales. Too often entrepreneurs don’t take time and think about what “sales” actually means. It’s like the word bubblegum; If you say it enough it completely loses its meaning. If you meditate on the what “sales” actually represents, it’s the act or quantity of something being sold. It’s an exchange of your commodity for somebody else’s dollar. Sales will solve all your problems.
I had a chance to sit down and talk with Lief Larson of Workface Blog this week. His article is now posted on his site here.
To whet your whistle:
He said that prospective customers are like an acorn, and the way we help them grow into an oak is through nurturing. If so, then trust must be like the soil, right? Carl stated, "Brand loyalty is not trust and I don’t know why companies always get that confused. Trust is based on a relationship with people." Well said, Carl. Well said!
Our recession economy for the past several years has been a challenge for many companies but the survival process has created leaner profiles with generally better clarity regarding core business fundamentals. One area that has not advanced as far as it could under these conditions is sales leadership. Companies still want to blame the sales department/reps for missed performance objectives without taking any ownership – aka Teflon-coated leadership.
Failure is a two way street in that both management (the company) and the employee did not accomplish the objectives. Employee failures are always well documented but few leadership teams take the time to understand where and how they failed too. The typical sales leadership failures we see on a continuing basis are:
1. Setting growth goals to challenge hunters but hiring farmers to deliver the numbers. This never works so the company starts viewing the sales staff as independent contractors and retools the commission plan to performance levels no one in the history of the company has ever achieved. The underlying attitude is – if we don’t get what we want, we won’t pay them anything!
2. Not using objective screening tools to understand if applicants have the skills, aptitudes and motivations to do the job. Typical final selections are best described as beauty contests based on references, resumes and recruiting relationships build during the interview process.
3. No definition or accountability regarding a consistent go to market sales process thus allowing everyone to do their own thing. The chaos that results is only amplified in terms of gross forecast inaccuracies.
These leadership failures are all fixable – CRO’s have to own their role and do it.
This question is not about the history of television technology – it is about the technology available to assess new hire candidates today. In my first CRO role decades ago, we relied mostly on resume information, candidate interview style and references – what I now consider as black and white television-type data. I used this model and my hiring success was best described as a work in progress. Interviews ended up being more of a beauty contest in terms of who we liked best vs. who was the best candidate for the job.
Now, fast forward a couple decades and consider the opportunity to assess candidate aptitudes, motivations, communication style and selling skills as part of identifying the better qualified applicants before you make an interview investment. This is the equivalent of replacing the black and white television process with high definition color in terms of seeing the real applicant.
What amazes me today is the number of companies continuing to use the old black and white television process for making critical hires. Once you see high definition color data, life as a CRO is a much more enjoyable role. If you want to try high definition color – just contact us – the first applicant assessment will be complimentary if you mention this blog post.
Our decades of working with Chief Revenue Officers has confirmed one data point that is at the core of all revenue performance issues so we will call it the 80/20 survival rule.
80% of the challenges in meeting revenue objectives originate in two areas:
1. Not knowing or being able to explain your Differentiating Value (DV) in the prospect’s world. DV is the cornerstone of your entire go-to-market process so trying to sell without it is equivalent to trying to build a house without first constructing the foundation.
2. Hiring the wrong sales people. Understanding the hunter and farmer roles in any revenue system is critical for staffing your go-to-market platform. Both roles are equally important for success and need to be clearly defined in the revenue plan before staffing selections are made. We continually see organizations hire candidates they like rather than the talent they need.
Both issues are fixable – give us a call if you would like some guidance on how to proceed. This is the 80/20 profile of our business so there isn’t much we haven’t already seen.