The gap between your company’s sales efforts and strategy can be a huge vulnerability, says a new book. But there are ways to link your go-to-market initiatives with strategic goals.
If you want people in the field to understand your strategic initiatives and demonstrate behaviors that will drive profitable growth, then there must be a clear roadmap to drive that alignment, says Frank Cespedes, author of “Aligning Strategy and Sales: The Choices, Systems, and Behaviors That Drive Effective Selling.” He discusses the issue with Anita Bruzzese in this two-part interview.
AB: You note in the book that advice to managers often focuses on either selling skills or business strategy, but not both. Why is that a problem?
FC: There is no such thing as effective selling if it’s not tied to the company’s goals and economics. Selling, no matter how clever and creative, can’t generate sustained returns if it’s not linked to good strategy. And this is a big problem for many companies.
Selling is, by far, the biggest part of strategy implementation. U.S. firms spend more than three times on selling than they do on all consumer media advertising, more than 20 times what they spend on all online media, and more than 100 times what they currently spend on social media. Yet, studies find that, on average, companies deliver only 50-60% of the financial performance that their strategies and sales forecasts promise. You can see why investment bankers and other capital-market analysts tend to be a cynical bunch: companies regularly over-promise and under-deliver in their strategy results.
Advice that focuses on strategy or sales in isolation contributes to the problem. This should be a two-way street. Strategy provides necessary direction for sales efforts, and information from sales about customers is vital to keep strategy relevant to market realities today, not yesterday.
AB: You say that surprisingly few companies can answer the question, “who are, and are not, our customers?” Sales people are simply told to sell to anyone. What’s wrong with that? Aren’t salespeople supposed to sell as much as they can?
FC: When you look at sales compensation plans—and you should, because sales people look closely at how they are paid–you find that most tie bonuses and other monetary incentives to volume sales metrics. In effect, the plan is saying to salespeople, “Go forth and multiply!” That’s what those sales reps do. They sell to anyone and, in the process, fragment the company’s resources and brand across an often incoherent portfolio of accounts.
Companies make most investment decisions in order to attract and retain customers. Then, as customers buy and use their products, companies modify their products and processes in the directions generated by those selling activities. Soon, it really doesn’t matter what the strategic planning documents say. The real “strategy” of the company is the aggregate allocation of assets driven by that essentially ad hoc sales process.
Every customer is not a good customer. Every firm can serve some customers better or worse than others. Customer selection is crucial: it affects the seller’s value proposition, required sales tasks, and internal capabilities. In a competitive market, if you don’t choose, others will eventually choose for you: either competitors or, in voting with their feet, current and prospective customers.
AB: How can leaders drive effective sales behavior that supports the organization’s strategy?
FC: The basic idea is this: In business, value is created or destroyed in the marketplace with customers. The market includes the industry you compete in, the customer segments where you choose to play, and the buying processes at customers that you sell and service. Those factors should inform a strategy and its sales tasks—what salespeople must be good at to deliver value and implement that strategy effectively.
Then, assuming a coherent strategy, the issue is aligning actual selling behaviors with the required tasks. Managers basically have three levers to do that:
- People: Who are your salespeople? What do they know? How do you hire and develop their skills so they can execute your strategy’s tasks? Are you relying on generic selling methodology or what they learned at another firm that made a different set of strategic choices?
- Control systems: This is performance management practices, including sales compensation, incentives, and the metrics used to measure sales effectiveness.
- Sales environment: This is the wider company context in which sales initiatives get developed and executed, how communication works (or not) across organizational boundaries and how sales managers (not just sales reps) are selected and developed.
Selling effectiveness is an outcome of these factors, not only the result of heroic efforts in the field. And this has very practical implications. If you’re a sales manager, this way of thinking can change how you select and use available resources, how you develop and allocate sales people, and how you look at your own career and development. And if you’re a CEO, board member or some other leader evaluating sales numbers, it can help you to avoid being a sucker for glib generalizations and outright stereotypes about selling—and, believe me, as someone who has worked with lots of companies and served on boards, it happens.
AB: You’ve said that organizations must recognize that aligning strategy and sales is a leadership issue and that “a desk is a dangerous place from which to view the world.” Can you explain?
FC: The quote is from a John le Carre novel, and it should be on a plaque on every executive’s desk. This is a leadership issue for numerous reasons.
One reason is that strategic planning in firms often generates a disconnect that damages effective implementation and profitable growth. About two-thirds of companies treat planning as an annual event, typically as part of the capital-budgeting process. Companies tend to do plans by business unit or P&L unit, even when sales sells across those units. The average corporate planning process takes an estimated 4-5 months per year. While this is going on, the market does what the market will do, and sales must respond issue by issue and account by account. In other words, even if the output of planning is a great strategy (clearly, a big if), the process itself often makes it irrelevant to sales executives.
Another reason is the fundamental role that sales plays in the value of an enterprise—and I mean things like stock price and valuation. For example, executives know that cost of capital is important, but most don’t connect that driver of value and their company’s selling efforts. Financing needs in most firms are driven by the cash on hand and the working capital required for conducting and growing the business. Most often the single biggest driver of cash-out and cash-in is the selling cycle. Accounts payables are accumulated during selling, and accounts receivables are largely determined by what’s sold, how fast, and at what price. That’s why customer selection, increasing close rates, and accelerating sales cycles are strategic issues and not only sales tasks.
Interactions with customers affect all elements of enterprise value creation and, in many firms, the sales force is the sum of those interactions. Strategy, growth, or attempts to increase the stock price without attention to this fact are at best limited and, at worst, going down the wrong path.
But many executives, years removed from customer contact, are often unaware of these links. That’s why C-Suite leaders must regularly get into the field. If they don’t, then I guarantee that, no matter how many consulting projects or big-data initiatives they fund, they are unaware of important factors driving their business.
The second part of this interview will look at how to hire sales people who are better aligned with strategy and sales.
//Posted in Team & Project Management | Tagged alignment, sales, strategy