Accelerating revenue growth has become a lot more complicated in the past decade, and I’m not referring to our challenging economy.
The challenges preventing growth cannot be solved by the CSO/VP Sales alone. Nor can it be simply dropped on the desk of the CMO/VP Marketing.
The marketplace has changed. Your prospective customers have changed their buying process and your entire company needs to adapt accordingly.
Revenue generation has become increasingly a cross-functional team effort, requiring your cross-functional leadership as CEO to strategically rally your team to match and surpass the competitors’ revenue and profit growth.
The Buyers Within Your Target Markets Have Changed
Ten years ago, the primary way for prospective customers to start their buying process was to call upon various leading vendors and request an in-person presentation. This was a simpler time when prospective customers actually answered and returned phone calls, read print articles and vendor advertising, and attended multiple industry trade shows.
Your company’s sales strategy ten years ago was simpler as well; Sales representatives would “cold call” potential prospects, “tackle” potential prospects in the aisles of trade shows, respond to the prospect RFI (Request For Information), start to influence the prospect early in their buying cycle, and hopefully, “wire” the RFP (Request For Proposal) in your company’s favor.
When revenue started to go off plan, your assumption was that there was a sales execution problem: the CSO/VP Sales had to be replaced. This “solution” continues to be so overused that the average tenure of a CSO/VP Sales is just 18 months according to Miller Heiman, Sales Benchmark Index, Forrester Research and others.
Replacing The CSO/ VP Sales Is Not The Solution This Time
Fast forward to today where your target market buying process is very different. Prospect readership of print is in rapid decline, there’s a lot less industry marque trade shows and their attendees have been declining, the prospect rarely answers their phone and privacy concerns guard their email inbox.
With the availability of the internet, prospective customers don’t need to see the smiling face of a vendor sales rep to learn about potential solutions.
Most of the information they need is literally at their fingertips on their smartphones and tablets, whenever and wherever they have a few minutes to do some research. Prospective buyers (or their staff) are researching their problems and solutions online where they do the following:
- Subscribe to various email lists and blog sites to become aware of potential solution
- Engage social media to gather vendor referrals from their trusted industry colleagues
- Independently gather real customer testimonials about potential vendors
- Decide on a short list of “qualified” vendors
Depending on the industry, by the time a prospect team is ready to meet with a vendor they are already 70% through their buying process, according research by Sales Benchmark Index.
Instead of leveraging a positive relationship with the prospect early in their buying process, your sales rep finds themselves getting into an opportunity very late in the prospect’s buying process. To win, it quickly turns into a price war which reduces your company sales and profit margin. Talk about getting to a deal late in the game! But, it gets worse.
During their independent research the prospect team noticed that your company didn’t have a lot of positive comments in their preferred social networks, they discovered some negative “customer” reviews of your company, and studied competitor white papers that highlighted weaknesses in your solution. Your sales rep is clearly on the defensive, reacting to all the negative prospect concerns, instead of starting to close a deal. Ouch!!
If the root cause of the company’s disappointing sales performance is of strategic, cross-functional or a structural nature, simply replacing the CSO/VP Sales every year or two could simply extend your problem for a few more years.
The distraction of hiring and onboarding a new CSO/ VP Sales, the subsequent churn he or she subsequently triggers within the sales force, and the intense pressure to produce results within the first year just camouflages the real root cause.
Peel The Onion Another Layer To Discover The Root Cause
There are a lot of moving parts in the revenue generation process, representing lots of opportunity for improvement:
- Product selection and launch
- Marketing branding and demand generation
- Sales generation and forecast
- Technology enablement
However, as CEO, you want to focus on identifying and fixing the root cause that is preventing your team from accelerating the company’s growth.
By digging a little deeper into some of the obvious symptoms, the root cause will become more apparent.
1/ Are the Sales Forecasts Accurate and Reliable? Are gross product margins under increasing pressure? Are forecasted deals suddenly disappearing at the end of the quarter? Has the Sales force effectively implemented Social Selling, or are they still overly dependent on “cold calling” to grow their opportunity pipeline? Are you still using the same forecasting model from 5 or 10 years ago? Yes? Then you have a bigger problem to deal with.
- This suggests that the salesforce needs to adjust their current sales process and forecasting process to better align with the new buyer decision process. If the salesforce is constantly getting into a sales opportunity late in the buyer’s process, then a lot of deals will tend to disappear at the end of the quarter ( just as quickly as they initially appeared in the sales forecast), and, the deals that close will be less profitable than plan due to heavy competitive discounting.
- Companies with a well-defined and understood sales process, that mirrored their prevailing target market buying process, achieved 18% more sales growth according to a recent study by Hubspot and the Sales Management Association. A well-defined sales process includes six to ten sales stages that are linked to increasing levels of prospect commitment.
2/ Does the Sales force complain of lousy leads from Marketing, while Marketing complains of inadequate lead follow-up by Sales? Sure, this dynamic between the Sales and Marketing functions has been around “forever”. However, in light of the changing buyer process, it needs to be taken more seriously. Is Marketing generating enough leads to create a healthy pipeline of opportunities for Sales? A healthy quarterly pipeline of qualified sales opportunities needs to be at least three times the deployed Sales quarterly target quota. Is Sales qualifying these leads in a timely fashion and giving constructive feedback to Marketing? If the leads are of low quality, or too late in the prospect’s buying process, than Sales productivity and production will suffer and quotas will be missed.
- This suggests that Marketing’s targeted buyer personas and their buyer decision process may be different from the personas and buyer process that Sales is using, or worse, both could be outdated! Personas are representative behavior profiles of the typical decision makers, recommenders, and influencers within the company’s target market. They represent the typical members of the buyer’s team that your salesforce focuses on to make a deal happen. If Marketing is not producing content that is specifically designed to help each of the members of the buyer’s team move from one stage of their buyer process to the next stage, then the resulting leads will not be of high value. If Sales is not actively giving feedback to Marketing regarding what is or is not resonating with targeted buyer personas, then the two organizations will not become aligned or stay aligned for very long.
- Firms generating 40% or more of their new business leads digitally grow 3 times faster over a two year period than firms that generated less than 20% of their leads digitally, according to a recent study by Hinge Research Institute,Society for Marketing Professional Services and Association for Accounting Marketing.
- Firms generating 60% or more of their new business leads digitally are 2 times as profitable over a two year period than firms that generated less than 20% of their leads digitall
3/ Is Marketing unable to clearly demonstrate its contribution to revenue attainment? How much revenue does Marketing directly enable for the company? Which channels/campaigns produce the highest revenue over what timeframe? What is the overall Marketing ROI from the their “huge” expense budget?
- The right marketing programs can accelerate your company’s revenues AND profit. Lack of ROI measurements can result in the wrong mix of marketing programs being implemented. Marketing will need to develop an ROI solution framework and ROI measurement culture, and receive active participation and support from the CSO/VP Sales and staff, as well as systems support from the CIO and staff.
- Firms using the right mix of marketing programs grew revenue at 30%,while those companies with the wrong mix experienced flat sales growth, according to a recent research study by AAM.
- Firms using the right mix of marketing programs had 50% less marketing expense (including headcount) than those with the wrong mix of marketing programs. Specifically, high growth companies spent 1% of their total revenues on Marketing while low growth companies spent 2% of their total revenues.
4/ Did your last major product launch produce the results you had expected? Was the product a “must have” for the targeted buyer, or was it just a “nice to have” with an un-compelling buyer business case? In addition to generating qualified leads for the new product, did Marketing get the Sales force excited, educated and ready to confidently sell the new product? Was the product price too high, or was the Sales force getting into deals in the “11th hour”, causing margins to dip below plan? Were the products actively marketed to, and actively sold through, bell-weather partners (e.g. affiliates, resellers, OEMs)or did they give it only “lip service”?
- The best businesses had an 80% successful commercialization rate of new product development and launch, with their products contributing about 50% of the company’s sales and profits according to studies by the Product Development & Management Association (PDMA). The others in the study had a success rate of about 50% with a 20% impact the company’s sales and profits.
- There’s a lot of finger pointing between the Product, Marketing and Sales groups whenever the results of an important product launch are disappointing. A product launch represents a significant company investment of resources across all functions. However, only with the right product launch structure, methodology, and team incentives, is real revenue growth possible from a new product launch. You would be amazed how well the members of a cross-functional team pulls together when the success or failure of a product launch is directly tied to the size of their monthly incentive pay!
5/ Did your upgraded CRM with the new Marketing Automation software produce significant revenue growth? CRMs are great at automating campaigns and process, however, are your systems simply automating an outdated 10 year old cross functional business processes? Have the myriad of company-specific customizations to the systems made the sales reps more productive with higher sales, or the reverse? Are the Salesforce and Marketing department business processes, priorities and timelines aligned for maximum impact?
- Companies that successfully aligned cross functional business processes consistently grew over 13% faster than those who didn’t, according to research studies by Aberdeen Group throughout each of the last 5 years.
Accelerating Revenue Generation Requires Teamwork At All Levels
Your buyer’s decision processes has evolved to embrace internet, social and mobile.
In response, your company has invested more in digital marketing, CRM systems, and mobile technology. However, technology doesn’t seem to be generating the results you had hoped.
Your company’s revenue strategy, and its underlying business processes, may not have kept pace with your target market buyer. As a result,
- Product launches do not generate the expected revenue and profit bump , and/or
- Marketing’s ability to substantially impact the company’s revenue growth is in doubt, and/or
- Sales forecasts have become less predictable, and/or
- Sales opportunity pipeline is of insufficient size or quality to fuel higher growth, and/or
- Technology hasn’t significantly accelerated the company’s growth rate, and/or
- Revenue and profit growth is not accelerating.
Companies with a consistently higher revenue and profit growth rate have a cross-functional revenue strategy that is more aligned with its target markets; They demonstrate the following characteristics:
- product strategy that delivers a “compelling business case” to the targeted buying teams, resulting in significant impacts to company sales and profits
- marketing strategy that moves targeted buyer personas effectively through the entire buyer decision process, resulting in a significant number of qualified digital leads for the salesforce
- sales strategy that mirrors their selling process to their prospects’ buying process
- technology strategy that helps automate, measure and manage your company’s end-to-end revenue process, from “tire kicker” to satisfied customer to repeat customer
- revenue strategy that effectively aligns the company to its target markets
Companies that have not maintained cross-functional alignment with the evolving buyer decision process have experienced disappointing revenue growth and profit margins.
The Critical Need For CEO Leadership To Accelerate Revenue Growth
Whether your revenue looks like it may fall short of plan, or simply that your company vision is not being fully realized, as CEO you need to take action to grow your company’s market share, revenues and profit.
You need to identify and address the root cause that is preventing your cross-functional team from accelerating the company’s growth.
You don’t have the time to lead and manage such an effort yourself, but nor do your direct reports. Appointing one of your direct reports to drive the necessary cross functional change will just distract them all from their current revenue activities, making the revenue situation even worse.
You need a change agent: An experienced revenue expert with a proven track record of implementing successful change that results in accelerated revenue growth, even in spite of company politics.
CEO Next Steps
This is too important of an issue to bring in consultants whose main contribution is to leave a thick Powerpoint presentation behind when they leave. Even if their plan makes some sense, who’s going to lead the transformation effort internally?
This is the time when you bring in the right consultant as your “lieutenant” to effect sustainable change within the organization. The consultant should of course have functional expertise in Marketing, functional expertise in Sales, and a track record of accelerating revenue growth. More importantly, the consultant needs real world executive experience: Someone who has recently “walked in your shoes” as an executive leader, understands and appreciates the need to be sensitive to P&L impact throughout the engagement, and can “walk the talk”.
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