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Why a sales process leads to missed revenue targets

February 22, 2010

A quick Amazon.com search reveals 222,887 books when searching on “sales” and 33,452 on “selling”.  For an act that we do every single day (we all sell both in our personal and professional lives), it appears to be a black art, complex enough for over 250,000 books to be written on the subject.

Successfully selling, with the highest possible revenue and margins, in the simplest form is;

  • generating demand (not reacting to demand) and
  • demonstrating and sustaining differentiation for the created demand

That’s it…nothing else matters !!

In most professional sales organizations there are three types of sales people:

  1. The naturally successful.  The born sales people that have the “gift of the gab”.  Exceed target frequently and appear to make selling easy
  2. The hard working and reasonably successful.  These sales people have to work hard to retire quota.  They are generally the largest group, making up 60-80% of the sales team.  Operating at between 70-110% of quota, but have their ups and downs
  3. The final group are the challenged.  This group, usually the bottom 10%, rarely hit target and are usually below 60% of quota.  They struggle to gain the type of traction with customers to win and tend to resort to price as a differentiator

Creating consistent performance across the sales team continues to be one the greatest challenges facing sales leaders today.

How do you take the approach and methodology that the highest performing sales people use and make it repeatable and scalable across your entire sales organization?  How indeed when most of those successful sales people have in fact already been promoted to sales managers and found they cannot manage to increase overall team performance levels?

It is simply that there are no real sales processes in place to make it repeatable and scalable.

The approach to managing a sales team taken by most sales leaders is in fact a lagging forecast management process.  A process that looks at the past actions and activities of the sales engagement and attempts to predict the future close date and probability.

Work conducted by The ASPIRE! Group around the globe indicates that in most (not all but most) organizations no formal sales process exists.  Forecasting methodologies exist, but no formal sales process to deliver a consistent, coachable, repeatable and scalable methodology to generate demand and create and sustain differentiation.

Sales processes such a SPIN, Solution Selling, TAS, Miller Hieman, CustomerCentric Selling® and the many other approaches offer organizations robust, structured, methodical ways to sell to customers.  These process are all excellent, well proven and deliver incredible results when embraced and executed in adherence with their process outlines.

But they too fail to build a consistent, repeatable, coachable method for successfully selling with the highest possible revenue and margins across every possible sales opportunity an organization may identify.

These approaches simply assume that every Purchase Order, regardless of size and complexity, can be achieved with one standard sales methodology.  They do not consider the products, services, annuity relationships, transaction versus transformational selling nor the nature of an evolving market.


When your companies offering consists of a broad mix of products, both in house as well as products that are re-sold from external partners and vendors, with a large pre-sales and post sales services mix, there are many different types of sales opportunities.

As they say in the investment world, diversification limits risk. The risk of not exceeding revenue targets is to diversify the funnel. Now that doesn’t mean just adding more of the same type of opportunities to the funnel, anyone can have a funnel the size of a small countries GDP, it must be different opportunities.  So how does a sales professional generate demand and differentiate once demand created?

Diversification and funnel de-risking are effective strategies of the most successful sales people.  They sell transactional quick fire run rate business and at the same time run a series of longer term very strategic opportunities.  Building a sustainable funnel for both now and the future.

In most cases, regardless of product and service mix, almost all sales opportunities can be broken down into four categories;

  1. Demand Creation (customer unaware they need it) – Innovation Opportunity (ie non transactional)
  2. Demand Creation (customer unaware they need it) – Transactional opportunity
  3. Demand Reaction (customer actively seeking it) – Innovation opportunity (ie non transaction, think more complex opportunity)
  4. Demand Reaction (customer actively seeking it) – Transactional opportunity

Each one of the four opportunity above;

  • should be coached differently
  • must be qualified differently
  • begin in different stages of the buying cycle
  • have a differing sequence of activity
  • requires different interactions with a differing number of people
  • needs a widely varying investment of resources as part of the sales cycle
  • can be accurately forecast, but by using different forecasting techniques
  • must all be based on the same core foundational sales principles
  • but use a specifically designed process that enlists these core principles creating a structured coachable proactive sales technique

The above diagram represents the types of opportunities available to most sales professionals.

Are they IT Outcome led or Business Outcome led.  All, every one, are driven to achieve some kind of outcome.  The question is, however, is that outcome an IT or a Business Outcome ?

Each opportunity is either generated, or responded to.  Is the sales professional opening up a latent need where the buyer is not aware of the offering nor how that offering could help them achieve their goal.  Or has the buyer established the value of the offering already, and how it can help them, and now going to market to find a supplier?

Each opportunity is either transactional or transformational.  Transactional is best defined as consumable, fast moving items that are tied predominantly to existing architectures.  They expand or improve the current environment.  Whereas transformational opportunities change the architecture.  Usually linked to major initiatives these are larger projects, with a larger cross section of the prospects business benefiting or being positively impacted by the offering.  These are always more innovative investments.

Every sales person needs a solid and evenly balanced mix of opportunities in all four categories.  To be too heavily weighted to the left hand side (common in today’s IT sales organizations) results in limited revenue growth and declining margins where price remains the only differentiator. To be too far to the right results in roller coaster sales performance especially in the short term.

Each category then requires proactive sales coaching, not management, to proactively drive improved closure rates with higher revenue and margin.  Instead of forecasting based on past events, driving toward sales closure based on proven successful next steps that progress the opportunity aligned to buyers outcomes and keeping competitors at bay.

In fact both an Envisioning AND Forecasting process are required to support and leverage and exploit both the leading and lagging indicators for improved sales success.

To genuinely create demand and demonstrate unique differentiation, requires a radical re-thinking of the sales processes used within IT sales organizations.

A shift from “what” we sell to “how” we sell

A shift from “what” we deliver (blinky lights on) to “how” we deliver

A radical change of perspective from walking away and claiming success when the technology is installed and shifting to a view that success is only achieved when a customer (IT or Business) declare their desired outcome achieved.

Thus sell and measure success on outcomes – not technology or products.

Having no sales process makes demand creation and differentiation almost impossible.

Having one highly evolved professional sales process is better but not suitable for every sales opportunity encountered resulting in poor adoption, utilization and adherence to the process by sales professionals leading to in fact no sales process.  The lack of opportunity specific sales processes underpinned by common sales principles creates a “past tense” sales management and forecasting culture rather than sales coaching culture due to misalignment and inability to leverage a relevant sales process in every opportunity.

Successful demand generation and truly unique differentiation is only achieved with:

  1. An outcome based go-to-market methodology (not just sales process, but delivery beyond blinky lights on of the customers desired outcome)
  2. A set of sales principles applied uniquely to four different prospect categories via targeted sales processes

Is your singular sales process, or even lack of any process, reducing your ability to unlock the talent and value of your sales team for significant improvement in sales performance?

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comments

According to CSO Insights, only 32% of sales executives claim to have a standard sales process. I suspect that most of those organizations have defined milestones based upon large opportunities, meaning there will be several opportunities where the milestones will be overkill. This is one of the surest ways to have salespeople refuse to accept the process.

Most organizations have several different sales: transactional; renewals; professional services; add on sales; new account sales; national accounts; etc. For each of these different sales management should set thresholds and deliverables that sellers will be expected to provide in their pipeline information.

One other major shortcoming is that most organizations set their SALES milestones (inward looking) without taking into account how their BUYERS want to buy. For companies that fail to align their milestones with their buyers, CRM will not be very customer centric.

John Holland

February 23, 2010

Chris, I enjoyed reading this, and it is well argued, but I was slightly concerned about the confusion of the terms ‘sales process’ and ‘sales methodology’. They seem to be used almost interchangeably. Many organizations, including, scarily, some CRM providers, seem unsure of the difference between a process and a methodology. Sales Process is about the steps you need, from 1-10 or A to Z, to progress an opportunity. In other words, where am I in this opportunity? What should I do next? Methodology is about how I’m doing in this opportunity, and how can I maximize my chances of winning this deal ahead of the competition. Process is linear, prescriptive and driven by stages, or gates. Methodology is iterative, deductive and a continous process.

The TAS Group, whom you reference, encapsulate both sales methodology and process within their Dealmaker Sales Performance Automation platform. And because Dealmaker is software, it is flexible and configurable to the myriad possible sales situations that you rightly call out.

[Disclosure: I work with The TAS Group]

I hope this helps the conversation.

Paul Dilger

February 23, 2010

1 notes

  1. Outcome Based Selling – Next Generation Sales Success | The ASPIRE! Group Blog reblogged this and added:

    […] a previous post we have discussed how sales processes limit sales performance.  Without reflecting in too much […]

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