Posted by Bob Apollo on Thu, Feb 04, 2010
CSO Insights recently released their annual Sales Performance Optimisation study – and the results make for sobering reading. Their global survey of more than 2,800 companies revealed dramatic declines in average sale performance.
According to CSO Insights, the percentage of reps making quota fell from 58.8% to 51.8%, and overall revenue attainment vs. plan dropped from 85.9% to 77.9%. At the same time, lead generation budgets were being frozen or reduced in more than two-thirds of the companies surveyed, training budgets fell, and investments in sales enablement technologies were curtailed.
You can't cut your way to success...
As CSO Insights point out, most firms increased sales quotas from 2008-2009 – and then tried to “cut their way to success” by reducing budgets – a strategy that has manifestly failed. 85% of the firms surveyed have now raised sales quotas again for 2010, without significantly changing their behaviour. You’ve got to wonder whether they are about to have a Groundhog Day experience.
Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results”. Now, I’m not arguing that organisations thoughtlessly throw money at the problem – but I believe the only way that companies are going to dig themselves out of this hole is to get smart and have a ground-up rethink of the sales and marketing process from the buyer’s perspective and eliminate anything that isn’t creating customer value.
Eliminating wasted effort...
It’s not as if there isn’t a lot of well-meaning but wasted effort that could be redirected. The American Marketing Association, in a series of studies, concluded that between 80-90% of all sales collateral played no useful role in the buying process. Frequent failures to get marketing and sales organisations to agree what constitutes a “sales ready lead” cause similarly dramatic wastes of money and effort. Investing huge amounts of effort on deals that at the end of the day decide to do nothing is a third example. You can probably think of many others.
I’m going to suggest that it’s time to take an evidence-based approach that clearly defines the characteristics of your most valuable prospects, identifies their most pressing challenges and aligns them with your most powerful capabilities. But perhaps most important, it’s time to align the sales and marketing process around a deep and profound understanding of how and why your potential customers choose to buy.
Step into your prospects' shoes...
How would they describe their problems or challenges? What triggers their search for a solution? Who do they trust when they are looking for advice? What are the key steps they follow in their buying journey, how can you determine what stage they have reached, and what can you do to persuade them to move forward with you? Equally important, what might be holding them back, and what can you do to remove any barriers that might lie in their way?
Armed with these insights, you can focus your efforts on connecting with the right sort of prospects, and on doing the things that are most valuable to them in their buying process. You can concentrate on the issues that really matter to them, and be in a better position to qualify out prospects that are not right for you (or you for them) far earlier in the cycle, and redirect your efforts towards more profitable activity.
Have intelligent conversations...
You can also equip your sales people to have intelligent conversations with informed prospects, to ask diagnostic questions that reveal the true cause of the prospect’s pain rather than simply treating the symptoms, and to help the prospect solve problems, simplify complexity and manage change.
Technology can help - there are a growing number of promising collaboration, social media, networking and new generation CRM solutions that can help facilitate your prospects buying processes. Training can help to equip your sales people to have intelligent, provocative conversations that stimulate prospects to take a fresh perspective. An integrated approach to campaigns, media and sales can also contribute.
Change your perspective...
But first, you have to get the mindset right. It’s not about selling harder, or trying to do more with less without changing what you do. It’s about making it easier for your best prospects to buy from you. If you can get that right, you can break free from the depressing decline in sales productivity. Because you can be sure that your less-smart, less-agile competitors won’t have grasped the seismic change that is happening around them.
Posted by Bob Apollo on Mon, Feb 01, 2010
An experienced VC once described the stages that he saw B2B companies going through as the jungle, the dirt road, and the highway.
During the initial “
jungle” phase, whilst the company may have successfully sold their initial product offering or service to early adopter customers, every sale still feels hard-won. Like an explorer deep in the jungle, progress involves energetically hacking away at the surrounding undergrowth, but the best way forward is not yet clear. Inevitably, much effort is wasted. Many start-ups – maybe a majority – never get beyond this stage, but those that do find themselves on the dirt road...
On the “dirt road”, patterns are starting to emerge and a way forward is becoming visible, even if the path is not always completely signposted and still requires widening and straightening. Whilst the general direction is clearer, work still has to be done to ensure that the company can move faster in its intended direction. Companies often broaden their offerings and recruit significant sales forces and or partner channels in the hope that they will speed the company’s progress. Many established companies find themselves bogged down by uneven or unpredictable conditions, but a few manage to make it to the final stage...
By the time these companies reach the “highway”, their direction is clear – to the point of being difficult to change. Processes have become highly standardised and - in theory - very scalable and repeatable. As long as conditions remain constant, rapid progress can be made. But it’s hard for these organisations to divert from their path, even if the environment changes. Vehicles that are optimised for the highway can find it challenging to go off-road and explore dirt tracks or jungles that might represent radically new opportunities.
I found his simple metaphor tremendously powerful. As he pointed out, very few founders (with the probable exception of Gates, Dell and Ellison) have managed to successfully steer their companies through these transitions. But it’s not just CEOs that need to adapt – it’s the whole organisation, and I believe that this provides an explanation for why so many apparently promising companies get stuck in either the jungle or the dirt road, and why companies who appear to be masters of the superhighway end up running out of road.
Managing to evolve...
The attitudes, skills and experience needed for employees to make the right contributions (and I’m not restricting my remarks to executive leadership here) can vary significantly from one stage to the next. Factors like the ability to work with or without structure or supervision, tolerance for ambiguity, willingness to change and openness to innovation all play their role. Successful companies manage to establish the appropriate culture and bring in the right people at each stage along the way, but one thing is clear – they manage to evolve.
For example, I’ve seen many “dirt road” companies accelerate their progress as a result of bringing in a suitably experienced chief operating officer (COO) or equivalent who can complement an entrepreneurial founder by adding the appropriate degree of discipline, focus and alignment. But I’m sure that you’ve also seen many hiring disasters when jungle or dirt road companies were tempted to bring in “heavy-hitter” sales leaders from a leading highway-style company who turn out to be completely incapable of delivering results without the support of the infrastructure and brand awareness they have become so accustomed to.
Getting the right people on board...
Having the “right” people on board prior to each transition seems to be vital, as does finding ways of helping existing employees grow with the company. The experience that comes from coping with change often proves to be critical. When adding new talent, the evidence suggests that companies should strive to bring in key people who have successfully (and recently) experienced the transition from the current stage to the next.
The journey isn’t over when the company finds itself on the highway, because as we’ve observed, companies that are optimised for this mode can find it difficult to travel off the beaten track. As Clayton Christensen pointed out in the Innovator’s Dilemma, organisations at this level of maturity can find it hard to exploit radical new opportunities. Adaption - and ultimately, survival - may depend on creating autonomous business units populated by people with a jungle or dirt road mindset.
Moving ahead...
So – where is your organisation? In the jungle, on the dirt road, or driving down the highway? And – assuming that you have ambitions to accelerate your progress or move to the next stage, what steps are you taking to ensure that your team is fit for the journey?
Posted by Bob Apollo on Fri, Jan 22, 2010
Gartner have just revealed the results of their annual survey of CIO priorities. It makes fascinating reading when compared to last year’s report. IT spending for the coming year will increase by an average of 1.3% - but that is compared to a dramatic decline of 8.1% in 2009. 2010 IT budgets are back to the levels of 2005 – half a decade’s growth in budget has been wiped out.
From managing resources to managing results...
According to Mark McDonald, Gartner Group VP and head of research for Gartner Executive programs, the role of IT is changing from merely managing resources to taking responsibility for managing results, while the technology focus is shifting from heavy owner-operated solutions to “lighter weight” hosted services.
Business process improvement remains the #1 business priority, followed by reducing costs and improving workforce effectiveness (promoted from last year’s #4 to #3). But the real change in priorities comes on the technology side. Last year, enterprise CRM was the #2 technology priority. In 2010, it does not even make the top 10.
Reshaping the role of IT...
Gartner anticipates that CIOs will change their focus from driving cost-based efficiencies to achieving productivity gains, using collaborative and innovative solutions that leverage services-based and social media technologies, including virtualisation, cloud computing and web 2.0. They see them providing the platform for information and process-intensive solutions that will ultimately reshape the role of IT.
Salesforce.com is one of the more obvious beneficiaries of this change - but there are many others. I suspect that few of us are going to bemoan the passing of traditional “big iron” IT projects that inevitably cost too much, take too long and deliver too little. But what benefits might a more agile, adaptable IT infrastructure bring – and what do we need to do to position ourselves to exploit the potential for improving sales and marketing performance?
From automation to enablement...
I suggest that a great deal of the answer lies in what processes we choose to IT-enable. We need to stop thinking about automating often badly-aligned “sales” and “marketing” processes and seize the opportunity to facilitate our prospect’s buying processes and embrace the dramatic changes that the net and web 2.0 have already made to buyer behaviour.
If we are to take advantage, we’re going to have to do better at connecting with our most valuable prospects and customers, identifying their most pressing problems and understanding how and why they choose to buy. If we can leverage the dramatic change in technology to change how we think about the role of sales and marketing, we’ll create the scope for achieving dramatic gains.
But if all we do is to apply this wave of innovative technology to traditional approaches to the sales and marketing process, we’ll probably still end up spending less money, but on doing the wrong things...
Posted by Bob Apollo on Wed, Jan 13, 2010
What was your 2010 New Year Business resolution? The one I've been hearing most often from Chief Executives and Sales and Marketing leaders is to "get closer to their customers" - which seems like a laudable objective.
Who wouldn't want to? However, it seems that becoming REALLY "customer-centric" or "customer-focused" or "customer aligned" (choose whichever term you prefer) is proving harder than it first appears. The indications are becoming rather too familiar:
- "Customer-Aligned" organisations that still describe themselves in terms of who they are, or what products or services they offer, rather than what they enable their customers to achieve...
- "Customer-Focused" sales people who can't wait to jump in and prescribe their solution the moment the prospect admits to a problem, rather than taking their time to diagnose what may really be going on...
- "Customer-Centric" marketing organisations that still don't have a very clear idea of who their best prospects are, what really matters to them, who they turn to for advice, or how or why they choose to buy...
Dangerous attraction...
The list could go on. It's not because these people, or these companies, refuse to acknowledge the benefits of customer alignment. It's because the systems they work within seem to have a dangerous magnetic attraction that keeps tugging them back to thinking in terms of their company, their products or their services.
I've come to the conclusion that this is a cultural thing, and that changing it is going to require more than sloganising. Where customer-centricity works, there seems to be an institutionalised curiosity about who their most valuable prospects are, what their most pressing issues might be, and how they go about making buying decisions.
The insights within...
The sad thing is, many of these insights already exist with organisations that are struggling to become customer-focused. The front line sales people and other customer-facing employees often have invaluable insights - and would be prepared to share them if only they were asked.
I don't think this is usually an issue of willingness - it's an issue of process. With this in mind, I've recently revamped our methodology to help make it easier for our clients to capture and apply the information.
Download the check list...
But what I'd like to share with you right now is a simple 15-point check-list that captures much of what we've observed. Please download it here. I hope that it might stimulate some fresh perspectives - please drop me a line if you would like to share them with me.
Posted by Bob Apollo on Thu, Dec 17, 2009
All the publicity surrounding the Copenhagen Climate Conference has reinforced the world-wide need for sustainable development. It seems clear that this can’t be left to governments alone – we’ve all got a role to play, and a responsibility to avoid wasteful behaviour.
Thinking about how we can all eliminate waste isn’t just good for the environment – it’s a powerful perspective for improving the efficiency and productivity of everything we do. And maybe we can do more with the idea than our politicians seem able to.
Where's the waste?
I’m specifically thinking about how we might establish a framework for sustainable sales and marketing. Ever since John Wanamaker famously complained that “half of my advertising is wasted – I just don’t know which half”, marketing has had a deserved reputation as a wasteful endeavour.
Of course the truth of the matter is that a great deal of conventional sales and marketing activity is far more inefficient than even John Wanamaker knew. I’d suggest that in sales and marketing terms, sustainability involves using our resources wisely to generate the maximum customer value with minimum wasted effort.
More Science than Art
I think it is (or should be) pretty obvious to everybody involved that neither marketing nor sales can continue to hide behind a claim that they more art than a science. A series of significant studies from CSO Insights and others have proved the value of repeatable, adaptable process.
In fact, I think it’s legitimate to claim that effective sales and marketing processes foster innovation and creativity rather than suppressing it. So what are the keys to achieving sustainable sales and marketing? Here are three to start with...
Three Recommendations
First: do nothing that is of no value to your customer. This does not have to mean charging them for everything you do – although sooner or later an exchange of tangible value needs to take place. But before conducting any sales or marketing activity you need to carefully consider whether your prospect would be prepared to invest their time or money on the outcome. For example, does that expensively produced piece of sales collateral play any useful role in facilitating the prospect’s buying process? Most (up to 90%, according to a recent study) don’t.
Second: if you are going to lose, make sure you lose early. Chasing deals that are never going to close, or are inevitably heading towards a competitor, is an unbelievably wasteful strategy. Yet sales pipelines around the world are full of these limbo deals. The problem seems to particularly affect middle-of-the-road sales people. The top performers are too smart to waste their time on a losing proposition. The also-rans are too scared to qualify them out because it makes their pipeline look smaller. If you are a sales manager, the single most powerful thing you can do to eliminate waste is to insist on evidence of buyer potential and intent, and to qualify the remaining deals out ruthlessly as early as possible in the sales cycle, and replace them with better ones.
Third: don’t waste your time pushing your products towards the prospect with scattergun marketing campaigns, find ways of getting them to pull you along with them. You’ve got to deeply understand the trigger events that disturb your prospect’s status quo, and you’ve got to ensure that you get found when they start searching for solutions. Rather than focusing on promoting return on investment, help your prospect to recognise the costs and consequences of inaction should they choose to ignore the issue – and ensure that you can demonstrate that you are the lowest risk of all alternative outcomes – including a decision to do nothing.
Lean Thinking
There are many other lessons that sales and marketing could learn from the lean thinking that has already revolutionised manufacturing industry. But don’t be misled into thinking of lean as primarily a cost-cutting exercise. I believe that its’ primary value actually lies in the thoughtful and efficient creation of real customer value, and in refocusing everything else onto more purposeful activity. You can read more about lean sales and marketing here.
What do you think? Is it possible to achieve sustainable sales and marketing? What other strategies have you found helpful in eliminating value, avoiding waste and improving predictability?
Posted by Bob Apollo on Thu, Dec 17, 2009
The past year has proved challenging for some sales and marketing organisations, but others have seized the opportunity to rethink their plans, out-execute their competitors and win market share. Our own observations, backed up by the latest research from the likes of McKinsey, Stanford, the HBR, CSO Insights and others, have identified 5 strategies that seem to be particularly relevant as we enter 2010.
These strategies are already enabling top-performing teams to eliminate wasted effort, increase revenue predictability, and improve the return on their sales and marketing investments. We're pleased to share them with you here, in the hope they might prove relevant to your own situation:
How do these strategies align with your own priorities for 2010? We'd love to hear from you. By the way, we've captured some of the key implications in a 15-point checklist which you can download here.
Let me know how you get along...
Posted by Bob Apollo on Tue, Nov 24, 2009
Recent research from the Stanford University Graduate School of Business suggests that companies that eliminate bonuses for achieving sales quotas generate more revenues. According to Professors Nair and Misra, the benefits can be significant – in one case stimulating a 9% uplift in revenues.
As 2010 approaches, that sort of sales uplift could make the difference between achieving your revenue goals for the year - or falling short. It’s a powerful argument for reviewing your sales compensation plans now, so that you’re ready for the new business year with a set of principles that can optimise your sales performance.
If you’ve run a sales force for any length of time, you’ll probably be familiar with the principle that compensation drives behaviour. As Nair and Misra point out, quota bonuses can result in sales people gaming the process. If they have already made their quota for the period they may defer or “sandbag” deals, whilst sales people who see no chance of achieving their quota may instead defer their efforts to the next period.
Removing these quota-related bonuses can help to remove the inefficiencies caused by the sales people’s attempts to game the system. In the example quoted in the research, they worked with an organisation to redefine their compensation plans for FY2009. The results were impressive - the new structure resulted in a 9% improvement in revenues, translating to an additional $1m a month. What’s more, the new plan proved extremely popular with the sales people.
Of course, removing quota-based bonuses may not be the answer in every situation - but the research draws our attention to the need to carefully define the desired sales behaviour, modelling the desired outcomes, and tuning the compensation plan accordingly.
Most organisations want their sales force to be encouraged to maximise profitable revenue, and to do so as early in the business cycle as possible so that end-of-quarter and end-of-year surprises can be eliminated. This can be achieved through careful design of targets and accelerators. Similar principles can apply to incentivising certain elements of the product mix.
As the end of the sales year approaches and you prepare to hit the ground running from the very start of 2010, I suggest you reflect on how well your current sales compensation plans stimulated the desired sales behaviour. Even if you did well, is there room for improvement? And if it looks as if you may end the year short of your original goals, how can you change the situation for next year?
An external perspective may help. We’ve worked with a number of clients to help them structure and tune sales compensation plans that drive the desired outcomes, and eliminate the opportunity for sales people to game the system. Drop me a line at bob.apollo@inflexion-point.com if you would like to learn more.
Getting it right is worth it. On average, organisations spend more than three times as much on sales compensation as they do on advertising. Careful planning can make sure that the money is well spent.
Posted by Bob Apollo on Mon, Nov 09, 2009
I was reflecting on a thought-provoking blog by Dave Brock, who asked "what would happen if we saw things the way our customers saw them?".
As Dave points out, your capabilities as a vendor are irrelevant unless and until they can be connected to your prospect’s challenges in a language they can relate to. Your value propositions can’t be generic – they have to relate to what really matters to the prospect.
The really smart sales people have already figured this out. That’s why they so often tailor the “corporate” presentations churned out by marketing to reflect what they have learned their prospects are really interested in... which is almost never the "feeds and speeds" or technobabble so beloved of the average product pitch.
Marketers, this is no time to get upset with them or curse them as rebels. They are only responding to what they sense their prospects are looking for - and remember they are probably having many more prospect conversations than anyone else in the organisation. Let's celebrate their adaptability!
Imagine what could happen if product marketing listened to and learned from their wisdom? Imagine what they could produce if they saw their primary role as "problem solving marketing" instead?
Of course, the best product marketers do this already - to the great benefit of the organisations they work for. But from my observations, many others - and it's a significant proportion - are still far too fixated about what their product does, rather than what problem it solves.
The resulting sales tools often end up wandering around like the Marie Celeste, with no clear sense of their destination or what role they play in facilitating the prospect's buying process. As a result, as many as nine out of ten corporate sales tools end up being little used by sales people. It's a huge sales enablement challenge for many organisations.
I'd like to suggest a checklist that could help to ensure that sales materials are focused on the problem, not the product:
- What problem are we trying to solve?
- Who are we trying to solve it for?
- How will they recognise they have a problem?
- How do our capabilities help them solve the problem?
- What phase in the buying process is the sales tool intended to support?
- What do we want the prospect to do as a result of the tool?
I think it's a fair bet that if your organisation's sales tools were designed with these questions in mind that your sales people would be more inclined to use them and less inclined to develop their own. Even more so if they contributed to the design and development of the tools in the first place.
Am I on the right track? I'd love to hear your thoughts on the matter.
Are you ready for a fresh perspective?
Would you like to learn more? Then please continue to browse the site and when you are ready, contact me here or call me on +44 7802 313300.
I look forward to hearing from you!
Posted by Bob Apollo on Mon, Nov 02, 2009
How many times have you sat and suffered through a dull b2b presentation, eagerly anticipating the final slide and an end to the relentless torture? All too often, if your experience is similar to that of most people I meet.
It seems that many presenters have got themselves into the habit of using PowerPoint as a prop for themselves, rather than as an aid to the audience. They treat the event as a broadcast, rather than as a conversation – and as a result what they say and do just washes over the audience to no lasting effect whatsoever.
Avoiding death by PowerPoint
Let’s be clear: I’m not talking about presenting to an audience of thousands at an industry conference, where it’s challenging to make it more than a one-way communication – although heaven knows, most of us could learn a lot from the best television broadcasters when it comes to engaging a mass audience.
No, I’m referring to the vast majority of business meetings, which are held in one room, often across a table, with a handful of people involved. My preference is always to use a flipchart or whiteboard in these circumstances. But if you feel that you must use PowerPoint* then I’d like to share a few suggestions.
The 10-20-30 rule...
Firstly, I strongly encourage you to follow Guy Kawasaki’s “10-20-30” rule. It’s laughably simple, but highly effective:
- Use 10 slides or less
- Plan to speak for a maximum of 20 minutes
- Use a minimum 30 size font
I hope that the first two points, after a little reflection, will be self-explanatory – if what you’re trying to put across can’t be conveyed in 10 slides and 20 minutes (this, by the way, excludes questions) then you’ve got to wonder whether you are making the subject too complicated.
The font size is an interesting one (by, the way, Guy offers an alternative rule of thumb – find the age of the oldest member of your audience, divide by two, and that’s your minimum font size). The real reason for following it is that you should not need to read off your slides to make your point, and if allow your audience to read ahead, then they are unlikely to be paying attention to you at the same time. Use graphics wherever you can. If you must use text, use phrases rather than sentences, and words rather than phrases.
It's about them - not about you...
Next, remember that your presentation should be about what you can do for your audience, and not about how great you are. Cut out the all the corporate bullshit and boring statistics. Establish empathy by illustrating the points you want to make with reference to how you have helped similar organisations do the same.
Build rapport with your audience and get your points across by telling stories, rather than delivering “pitches”. Start with the end in mind. What do you want your audience to think or do as a result of the meeting?
Let's get the conversation started...
But, above all, look on the presentation as an opportunity to stimulate a conversation. Think of every slide as a chance to make your audience think, to ask questions, and to get a discussion going. Don’t ever, unless you are in full-on “broadcasting-to-a-cast-of-thousands” mode, ask them to leave their questions to the end. Be prepared to tune and adjust the rest of your presentation according to what you learn at each step.
Who knows? You might even have more fun presenting as a result. I can guarantee that your audience will.
*Other presentation tools are available
Posted by Bob Apollo on Mon, Oct 19, 2009
Win-loss reports can provide remarkably valuable insights into the mind of your prospects and the ways in which they make their buying decisions.
But you should never, ever, leave sales to conduct the interviews. If you've ever been on the receiving end of the results, you'll know why - but for those of you who haven't...
- When you loose, it was because your price was too high or your product lacked key functionality.
- When you win, it was all down to the strategy and skills of the salesperson.
Either way, you'll never learn what the prospect really thought, because prospects lie to sales people - they can't help it - or they reflect on their post-purchase priorities rather than the things that influenced their decision if, what and how to buy.
It's also likely that the most attention is paid to the closing stages of the sales process - rather than the often more illuminating questions of what triggered the prospect's search for a solution in the first place, what they thought they were looking for, and who they turned to for advice.
It's nigh-on inevitable that nothing new or of any value will be learned from a sales-led win/loss exercise. That's not to say, of course, that the exercise of understanding your prospect's buying process isn't critical - just that there has to be a better way.
First, conduct the win-loss analysis as a structured conversation - not a questionnaire - that encourages the prospect to recall what caused them to start searching for solutions in the first place.
Second, seek to understand how the prospect approached the problem solving process - who was involved, and who did they turn to for advice?
Third, having identified potential solutions, how did they go about getting their organisation to accept the need for change - or if the deal ended in "no decision", what were the barriers to change?
Finally, think seriously about having an external facilitator conduct the conversations. It prevents the prospect's answers being filtered by any preconceptions or vested interests, and almost always results in more truthful - and therefore useful - answers.