Tuesday, June 27, 2017

Got a Plan?

How Are You Treating Your Largest Accounts?

Strategic accounts warrant investment and relationship rigor. They spend more, have been customers longer, and have made specific long-lasting platform, technology and relationship commitments. A company’s top five customers alone may account for 22% of all revenues and 21% of  annual profits! (Source: Sales Executive Council).

Most large companies have a strategic account strategy, providing additional technical, business, product resources, and occasionally targeted investments in those accounts. Some provide “concierge” access to technical or development resources. Executive sponsors are assigned to these accounts.

Yet day to day management of the relationship is largely left to chance. Few companies hire true strategic account managers (SAMs), choosing instead to promote their “best” individual reps into a role that requires significant team and process management skills.

While SAMs may be compensated on multi-year revenue attainment, share of wallet gains and occasionally customer satisfaction scores, the other sales people on the account, called specialist, pillar, or portfolio sales people, typically retain their quarterly and annual quota targets, and frequently are re-assigned year to year.  These portfolio sales people don’t typically report to the SAM, usually have competing business imperatives for their own product sets and may even compete with one another, as multiple products from the vendor may solve individual business or technical problems.

In short, a primary driver of disappointment in strategic account programs is that the planning process typically focuses on sales planning rather than relationship planning. 

Developing a Plan Isn’t Sufficient

SAMs are typically expected to develop an annual account plan, and some collaborate with their portfolio sales people to do so. Others just wing it. In most cases, the output is indeed a plan…a written document that is revisited annually…an artifact that provides no guidance for the day-to-day governance of the account. It is a sales plan with detailed lists of potential opportunities, alignment of products to perceived business or technical problems. The plan typically lacks a thorough analysis of the influence map within the account or any plans to bolster relationships with important internal and external (partner) stakeholders.

A recent survey conducted by the Strategic Account Management Association (SAMA) found that, even within their membership, a mere 11% of account plans are “effectively executed.” That’s a pretty dismal adherence rate, given that these plans should be the primary pathway to better customer relationships and higher revenue generation! 

What to Do?

If your organization is serious about strategic accounts, the first step is to ensure corporate support for a multiyear investment in the process of account planning, management and governance. While results will appear almost immediately, the full impact of an effective strategic account program will not be seen until the second or third year of the program. If the program is maintained, those results should be long-lasting!

The next step is to set up a framework for success, including:
  • Hiring SAMs with strong team management skills
  • Developing programmatic analysis of customer financials, industry growth trends, key stakeholder profiles, installed base, competitive SOW and more…
  • Enrolling management of each portfolio sales organization in the process and creating a consistent set of rules of engagement
  • Developing a process for thoughtfully identifying the strategic opportunities and challenges within the customer organization
  • Installing a team governance process to ensure success on an ongoing basis

Team Governance?

In my experience…and I’ve driven strategic planning for more than $2B in revenues…the last item in the framework is the real challenge. Teams gather to conduct the planning process…and then scatter to the wind. Individual reps receive conflicting directives from their management, sometimes in conflict with the team. Occasionally they go “rogue” in an effort to land revenue this quarter or fiscal year, upsetting a much larger, more strategic deal.

To address this issue with one very large software company, we established the concept of sales team “program management” for their Account Team Unit (ATU). Initially, the function of program management was handled by an existing team member, with the goal of providing dedicated headcount to take on that function as necessary. As we developed the strategic account program at another company, one core team member owned team facilitation and took on governance as necessary to support the strengths (and challenges) of the strategic account manager. 

Thing One – Visibility

The SAM must have visibility on the activities of each portfolio rep (and their sales consultants), ensuring consistent team/account messaging across all initiatives and engagement; and whether individual reps are engaged. That visibility would also help the SAM to know where a rep needs help with access or organizational support. Reps gravitate to where they see opportunity, leaving broken promises of supporting the SAM and the strategic account. “If it’s not closing this quarter, I’m not wasting my time pursuing it.” 

Thing Two – Customer Participation

However, even if your organization successfully designs and implements a strong planning and governance framework, this only provides the “inside-out” view. It’s a series of hypotheses around “what we think the customer might be interested in…” And here’s where most companies fail in their strategic account planning process. They neglect to include the single most important stakeholder in the process — the customer.

Sure…it can be challenging to include the customer in the process, and sometimes the customer’s strategic focus doesn’t align with what we want to sell. Go figure! Yet, deep engagement with the customer in the planning process leads to more involvement by the customer, better “time and access” for discovery and relationship building, faster decision cycles, larger, more profitable deals, and higher customer satisfaction. That planning process, by the way, is a cycle rather than an event…a series of regular engagements with relevant resources, and commitment to action and investment on an ongoing basis.

Many companies leave the participation of the customer to be handled by the SAM. A few formally drive a “co-creation” process with the customer, ensuring that the customer has a seat at the table in the planning process. I’ve facilitated strategic account planning in F100 customers’ boardrooms, with active participation of key customer stakeholders throughout the process. Their participation provided valuable direction for our sales investments and led to the identification of significant new opportunities. Once a good context is established for the joint team, everyone looks forward to the regular discussions. We’re helping our strategic stakeholders to address significant business challenges and they have a sense that we’re “in the boat” with them, that we are truly committed to their success. 

Strategic Account Planning and Governance as Competitive Advantage — Actions to Take

If you believe that your strategic account program could drive more value for your organization (and for your customer), a key area of focus is individual sales rep activity, messaging and governance. We are exploring a new approach to better manage this area and am interested in partnering with a couple of organizations to pilot that approach.

And the second key area is customer involvement. If you’re not actively, routinely involving your customer in the strategic planning process, you’re leaving significant money on the table and wasting valuable time and resources on unqualified opportunities.


Wednesday, June 14, 2017

Are Your Numbers Down?

Our numbers are down, can you help?

Many conversations with new clients typically start with this statement. Those numbers may include close rates, pipeline coverage, quota attainment, deal size, deal profitability, share of wallet, renewal rates, customer satisfaction, even sales rep retention rates.

In my experience, the problem is rarely sales skills or fundamental product issues. Almost always, the decline in sales results is driven by one of two critical issues:
  • Sales people do not align with critical business issues when they first engage with their prospects. Instead, they are unconsciously positioning for a features & benefits slugfest with their competition. These top of funnel activities drive mediocre conversion rates (second meeting, third meeting, etc.), limit access to other key stakeholders and ultimately leads to the downward spiral of “who’s willing to sell more cheaply.”
  • Sales people do not have the resources to be successful, including alignment with the buyer’s journey created/curated by marketing, business value analysis resources, detailed customer implementation stories, or the training & background to effectively engage in business value discussions. Sometimes they simply need more time to prepare (less administrative load) or more/better/targeted sales coaching from their manager.
In conducting root cause analysis to identify the source(s) of the problem, we work closely with the sales operations team. Sales operations has access to all of the data necessary — extensive sales metrics, personnel information, customer demographics/firmagraphics — that tell the story of success versus failure. This analysis helps to build a map of effective pursuit strategies and detailed profiles of “good” versus “bad” prospects & customers.

With the results of the data analysis, we then take a look at sales enablement practices. Typically we find gaps where the data shows weak or declining conversion rates. Occasionally this is driven by external market forces — new competitors coming into the market, customers shifting internal strategies or structural (economic) factors.

More often, we simply find a disconnect between need and investment, as many (perhaps most) sales enablement investments are focused on addressing symptoms rather than root cause.

Fixing the Symptoms

I recently spoke with executives at a fast-growing midmarket cloud security company. In a quest for continued growth, they initiated a focus on enterprise accounts…and ran into a more mature, educated, complex set of buyers. As a result, their enterprise deal close rates are lower and less profitable than midmarket. Their initial response was to seek help with negotiating skills. But lack of good negotiating skills isn’t their primary problem…they weren’t establishing business value with the right set of stake holders in the early stages of conversation.

And their sales metrics reflect the difference:
  • Higher conversion rates and velocity at top of funnel for midmarket versus enterprise
  • Lower connection with C-level enterprise executives
  • Lower access to VPs, directors, perhaps even managers for mid-pursuit discovery in enterprise accounts
Improved negotiating skills won’t fix their weak value foundation. They must address the fundamental problem — modifying their engagement approach for enterprise customers. And when they do so, they will also see an uptick in results for an increasing portion of their midmarket customers as the market matures.

Fixing the Problem

We’re in the early stages of a sales productivity project for a large technology vendor. Analysis of their quarterly earnings reports provides early indicators of the problem:
  • Declining product revenue
  • Declining service renewal rates
  • Fundamental changes in their market (which they’ve helped to drive)
When we dig into their SFA data, I expect to find declining engagement and conversion rates at the top of the funnel. I also expect to find higher levels of success with certain types of customers — those who purchase “as a service” more frequently. This analysis will help to identify the specific changes needed in their existing sales enablement processes.

Win/Loss Analysis…Why Bother?

Interestingly, few companies leverage win/loss analysis to help identify the problem(s). It seems there’s little appetite for understanding why a specific company said “no.” Yet an understanding of what went wrong during the engagement can provide tremendous insight into how to fix the problem!

And if done properly, the information has the weight of statistics to help ensure appropriate investment to solve the problem.

The issue of sales productivity has many levers…and knowing which levers to push is not easy. It takes both a strategic approach and good pattern matching abilities.