Monday, January 30, 2017

Did You Get Your Q4 Bonus?

A good friend just called to report that he had received a healthy year-end bonus. As a member of the management team, the payout was based on his company's performance against quota for both Q4 and the second half of the year. Nicely enough, Q4 performance was sufficient to trigger the second half bonus. Talk about a hockey stick!

So I asked my friend what his company is doing to ensure quota attainment for this year...what the management team is doing to ensure Q4 and second half bonus payouts this year. His response reflected the challenge faced by many growing companies:

We just got back from Sales Kick Off...we're not thinking about Q3 or Q4. Ask me again in September!

His response is symptomatic of many tech companies, large and small. Q1 holds lots of activity -- territory reshuffling, new product launches, training, unfocused optimism. The team is tired from the hard push in Q4, closing deals, pulling in business, and it wants a break from the focus on sales development.

Unfortunately, September will be too late to affect Q3 or even Q4 results. Companies need to plant the seeds now to ensure a good harvest later. If a typical pursuit takes 6 months, waiting until April or May to identify likely suspects and to start those engagements will ensure that many will not end well.

Savvy companies start early in the year with their account development...engaging with prospects early on, understanding the buying process and getting into sync. You just can't rush this process...seldom will a prospect adopt the seller's compelling event (quarter or year end) as their own. While discounting practices  move some buyers to act, this tactic destroys profitability and the vendor's credibility as anything but a price discounter.

A few sophisticated companies don't get caught in the quarterly and annual sales cycle. These are artificial constructs, applied by Wall Street and traditional sales management. These sales cycles don't match their buyers' business cycles, timing, sometimes even fiscal year budget cycles. Those companies that can match their selling cadence to their customer's buying cadence and timelines are far more likely to be considered trusted advisors rather than vendors.

But most companies are still getting the basics wrong. The sales funnel looks like a martini glass, with a lot of activity at the top. There's a lot of wasted effort here, chasing bubbles.

A small percentage increase in identifying and moving qualified opportunities from the top of the funnel holds tremendous impact on top line revenue. Most companies are pretty good at managing opportunities through the mid-part of the process; the key is to getting good qualified opportunities started.

What steps are you taking now to ensure your year-end bonus?

If you'd like some help answering this last question, we should talk!

Tuesday, January 24, 2017

Welcome to Q1!

It’s All About Pipeline

For many companies, it is early in Q1. At the end of last year, deals were closed, opportunities were pulled forward, the pipeline was emptied. Everyone took a breather.

So now we’re in Q1. Kick-off is over, sales people have been reinvigorated, tans are fading, and it’s time to get back to work.

Territories have been assigned, accounts have been allocated, SCs are chomping at the bit.

So…in most sales organizations, reps are conducting the traditional process of separating their accounts into three groups – “A”s, “B”s and “C”s. A accounts hold the most opportunity or promise, B accounts have some promise, and typically, C accounts aren’t well known or understood.

In my experience, most of the segmentation is based on simple (yet flawed) criteria:
  • Prior engagement
  • Good set of contacts
  • Existing install baseStrong revenue growth
  • Easy commute from rep’s house or office
Occasionally a long targeted account will be classified as an “A” because “this year we just have to capture that logo!”

Despite the availability of extensive firmagraphic and intent data, few accounts are appropriately targeted based on their business requirements. Targeting is still an inside-out activity, started from scratch annually or when reps turn over.

So…it’s too late to fix that problem this quarter. Lets assume that we have a defined set of accounts and sales people with time, interest and energy. Now is the time to make the investments that ensure strong customer engagement and a healthy, active pipeline later in the year.

Building A Strong Pipeline

 If you don’t know where you’re going, any old path will do…
A good house requires a strong foundation…
A quality paint job is 90% preparation…

And in the same theme, a strong pipeline consists of individual pursuits based on the identification of real business requirements and engagement with stakeholders. It simply isn’t built on hope!

Many sales organizations count on marketing to deliver sufficient numbers of SQLs for follow up…even though somewhere between one and two thirds of there leads are self-generated.

Building that robust pipeline requires an iterative process for reps and managers – researching accounts, building hypotheses about business value and stakeholders, testing those hypotheses, creating access points, delivering value to the participants so that they stay engaged and supportive. While this process is effective, we have seen it implemented in few organizations.

Selling does not have to be adversarial. With good knowledge of the customer’s business goals, needs and challenges, a sales team can build value-based relationships and help their customer to achieve those goals more quickly and efficiently. In turn, the sales team will shorten sales cycles and improve deal profitability.

Building robust pipe requires executive commitment, experienced guidance, engaged sales management and a bit of patience. So, if the path is understood and the challenges are known, why aren’t more organizations making these investments?

Monday, January 16, 2017

The One Metric That Accurately Predicts Sales Performance

Some may remember the promise of computers in the 1980s. “They will make us more productive.”

Yea right…

What they have done is to bury us in data, so much data that it is not only unusable, it’s so overwhelming that we spend much of our time managing it, moving it, cleaning it, deduping it, merging it with other data, buying more storage to hold it, buying more computing power to process it, only to get completely lost in it.

Here you go…

While working with a key account team focused on one of the company’s largest pharmaceutical clients, I asked the field marketing manager for the recent history from the marketing automation platform. I was expecting to be able to identify the digital footprints of visitors from the pharma client. As they navigated the company website, their path and points of engagement would highlight their building (or waning) interest in specific products and services.

The field marketing manager ran a report and sent me the results. “Here you go, let me know if you have any questions.” And it was glorious…thirty thousand records in an Excel file.  Clearly there was a lot of activity going on. However, we had no way to build an actionable story from that data, no way to tell who was visiting or what they were interested in.

I asked a couple of other key account teams whether they were leveraging the marketing automation platform to guide their account planning.  Nope…those that had tried were overwhelmed with the data and lack of insight.

(I’ll acknowledge that this experience does not represent what’s possible in the world of marketing automation.  I would suggest that it is typical.)

Similarly, sales managers…and their managers…pore over reports hourly to learn how the business is going. Is the team making enough sales calls? Are we touching our accounts enough? How’s our pipeline velocity? How many new opportunities are being logged? Are we getting enough meetings? How’s the T&E budget?

Sales people are inspected. How’d you do? How many did you do? When is it going to close? When are you going to call back? How many more can you do?

In my experience, all this data fits into the “MIPs” category – meaningless indicators of performance. Easily gathered, easily compared, but of little value. Any one metric, on a standalone basis, gives zero visibility into the health of the business. And many of them, when combined, do no more than suggest whether the team is meeting the subjective expectations of management, around activity rather than results.

Now, don’t get me wrong…when we work with sales managers to improve group performance, we start with basics. It worked for Vince Lombardi in 1961 – at spring training that year (after a disastrous previous season), he started off the first day of training with the absolute basics: “Gentlemen, this is a football.”

We start with similar basics. Activity drives results. Without activity, there will be no results. Now…activity isn’t nearly sufficient, but if reps aren’t meeting with prospects, that’s a problem.

So lets get back to the initial premise – one metric will accurately predict sales performance.

And that metric is the percentage of time spent by first line sales managers on coaching their sales people.  Multiple studies by IDC, Objective Management Group, CSO Insights, Sirius Decisions and many others suggest the following:
  • Most managers spend less than 25% of their time coaching sales people
  • Many managers spend less than 10% of their time coaching
  • Most organizations have no formal sales manager profile, onboarding or training strategy
  • Most organizations have no formal coaching methodology in place (managers do whatever they did at their last organization)
  • Many, perhaps most sales managers are promoted out of direct sales roles because of their success sales rather than their training and skills in coaching
So…if we need to make our Q1 numbers, management just needs to send out a note dictating that all first line managers spend 35% of their time on coaching, right?

Not so fast…as we know in sales…time spent does not equal results realized. Creating a coaching culture takes time, executive commitment, formal processes, process evaluation and improvement. If you wander through a typical sales organization you will find pockets of good coaching practice, where managers have indeed brought skills from previous companies and are typically generating better results than their peers. But to broaden coaching to the organization, a top down approach is strongly preferred, and will probably require some personnel changes.

And organizations that measure the time spent by their first line managers in coaching, and actively improve both the quality and quantity of that time, will drive significant improvements in their sales performance.

So...if you want 2017 to be your best year, stop beating your sales people. Instead, give your managers a football.

Thursday, January 12, 2017

Will AI Replace Sales People?

With the surging popularity of AI as a method for leveraging vast amounts of data and providing recommendations, it’s only a matter of time before the sales function in most organizations is completely automated

Sure.

And of course, who needs buyers, with their imperfect knowledge and flawed processes? It’s only a matter of time before the buying function is automated.

Right.

And as long as we’re improving corporate functions, why does the CFO have to come to work in her autonomous vehicle? Sure, she’s getting a lot of work done on the way, reading email, catching up on the latest issues in The CFO Daily News. But why don’t we automate the CFO process too. Wouldn’t that be more efficient? Our AI CFO, with instant access to all internal company and external market information, will be able to make far better decisions than its predecessor.

So what’s left for us meatheads? Customer Support? Nope. Marketing? Already covered? Manufacturing? Robots are doing it. Delivery? Drones are in the air.

Here’s the thing…computers and machines have taken on some of these functions, typically where repetitive tasks (both physical and computational) can be (should be?) automated. AI, or more precisely expert systems, can give us better (higher confidence) recommendations on what to do in a given situation.

None of this is new. AI technologies have been around for a long time. For example, I prototyped an expert system to diagnose manufacturing problems for Mead Paper in the mid 1980s. Since then, these technologies have been implemented mostly as helper or advisor tools.

So…

Either you believe that computers (and robots) are going to take over the world, allowing humans to focus on leisure, or you reject that dystopian view, believing that we will continue to employ technology as enablers and boosters rather than replacers.

And buyers need sales people. Good sales people. Corporate buyers find significant value in those sales people who play the role of trusted advisor.

Companies that equip and position their sales people to play this role receive multiple benefits – higher average deal size, higher deal profitability, better customer retention, more repeat business, lower sales turnover, higher lifetime customer value and more.

So…what are you going to do? Replace your sales people with software? Or enable your sales people to do the job your prospects and customers need?