Moe Revenue

What is a Revenue System?

I have enjoyed the opportunity to address several executive groups recently about a very specific topic – “What is a Revenue ‘System?’”

First, ANY business system (production, inventory, quality, Lean, ISO, etc.) is:

— Process-Based

— Built on Competence and Expertise

— Includes Process Accountability and Diagnostics

Ideally, the system operates as a process-based, closed-loop activity so performance is predictable and consistently within acceptable standards. Obviously, most systems operate entirely within the 4 walls of the business but Revenue is based on outside variables called suspects, prospects and customers that comprise target market segments.

Even though suspects, prospects and customers exist outside the 4 walls of the business (aka independent variables), the system definition still applies. In our model (Sales Revenue System 2.0) Revenue is very much a “system”…and not and event.  Our clients already know that.

Interviewing Sales Candidates

Here is the Rule:

It is easier to train sales talent about your business that is it to train someone how to become a sales talent for your business. You already know all of the in’s and out’s of your business and industry but the euphoria of finding someone else that has some of that knowledge too can become compelling.

That is the trap we see all too often Applicants are eager for interviewers to go there and simply assume they can and will sell your product or service. All the applicant wants to do is get paid a lot of money to just ‘manage’ the existing account base. Before you discuss industry background, drill down on their selling skills and see how they handle some rejection.

If they won’t engage your tactics in an interview, how will they perform in your marketplace?

New Book Cover

The second printing is now completed and we are going with a new cover based on reader feedback.  Reviewers felt the original cover did not align well with the contents and they specifically wanted the CRO (Chief Revenue Officer) role called out with the ‘closed loop’ revenue systems graphic on the front cover.  The ‘closed loop’ revenue system concept has established traction in our marketplace and will be the theme for this edition.

As part of our second printing promotion, we are offering – for a limited time – free shipping on all C.R.O. Store products that include a book in the order.

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.