By Lei Tong and Julia Sanders
Sales Rx: Taking the Pain Out of Profitable Growth is the second in a three-part series
on how highly effective sales teams can drive profitable growth for the organization.
“Hypergrowth can be terrifying,
as it’s most often success that kills great companies.”
—Verne Harnish, Scaling Up: How a Few Companies Make It… and Why the Rest Don’t
Nothing is more rewarding than watching sales growth accelerate away from the competition following the introduction of a new product, service, or business model. Yet, without the proper planning, your sales organization may not scale to take advantage of the opportunities you’ve worked hard to create. Companies focused on achieving this kind of hockey stick growth must develop an agile approach to redesigning the sales organization to enable the integration of new offerings, business units, customers, and talent.
When presented with a new catalyst for growth, many companies make the mistake of making small changes or tweaks to the sales team. They add new sales people and rebalance quota to reflect market opportunity but fail to align the capabilities and organizational structure to support the new growth agenda. As offerings and geographic territories proliferate, simply adding capacity erodes sales team efficiency almost imperceptibly over time until the inevitable call for a significant restructuring of the team and go-to-market approach. These restructuring efforts are disruptive and undermine customer and employee satisfaction, which impact operations and ultimately sales growth and profitability. Let’s look at the risks that come with these incremental responses to growth, and the different tactics you can employ to develop a sales organization that scales more easily.
Companies often respond to growth by enlarging territories, increasing quota, asking the sales team to sell a larger portfolio of products, or hiring additional sales professionals (sales people or solutions engineers) to focus on new areas of opportunity. These kinds of responses can unintentionally introduce significant risks to the business when a more thoughtful review of the new environment is called for.
Some companies respond by adding teams of sales specialists. As new offerings, geographic opportunities, customer segments or buying channels emerge, new salespeople are hired to specialize in them. The addition of specialists often increases the number of touchpoints with customers, complicating the relationship and increasing complexity on both sides of the sale. With more salespeople specializing in different but overlapping products or geographies, companies increase the chances of having customers interface with multiple uncoordinated resources that deliver mixed-messages.
In a recent client example, the company had no salesperson in possession of a complete view of the total revenue and profit from a single account. While doing business with one company should benefit buyers (e.g., streamlining the buying process, increasing scale and opportunity for discounting), a sales effort with numerous touchpoints adds complexity and often aggravates buyers. By the same token, salespeople specializing in different channels can create channel conflict. For example, a salesperson selling to a distributor may unwittingly be competing with a different salesperson selling directly to that distributor’s customer. Such situations harm relationships with both the distributor and the end customer. From an operations standpoint, this type of selling leads to the bloating of resources that increases the cost of sales and compresses margins.
For a salesperson to be successful, knowledge of the offering catalogue, market segments, and distribution channels is paramount. Salespeople must be experts in the value proposition of each offering and its availability, as well as any nuances related to production or logistics. That expertise should be brought to bear on an equally comprehensive knowledge of the customer segments and channels through which the company goes to market.
Can all people sell all things? Sometimes yes – for example, when the portfolio expansion is closely aligned with the current offering or when the technical knowledge required to sell the additions is low. But asking sales professionals to sell an increasingly complex portfolio of products into multiple channels can be overwhelming. Carrying the breadth of all the necessary information to be successful often proves unmanageable. Of course, a good sales person will always want more things to sell to more people. Unfortunately, their focus on finding the fastest path to the greatest sales dollars is often not compatible with company goals as strategic products are often viewed as “harder to sell for the same dollar return.” Selling more things in more places often blunts the momentum provided by a new offering, delivering marginal gains and ultimately leaving money on the table.
As quickly as the number and type of sales roles and products increase, sales management effectiveness declines. With large increases in span of control, leaders lose the ability to meaningfully absorb sales and market intelligence, reliably track sales performance and offer strategic guidance to leadership. Time spent on the day-to-day issues of an increasingly complex market and sales team leaves little bandwidth for strategic initiatives or planning ahead. An overburdened leader often means a lower return on the investment in sales talent. Hiring great salespeople and leaving them without effective leadership removes the support necessary to realize their potential.
Regardless of your organization design, four actions can better position your growing company for long-term, scalable success.
Undoubtedly your business contains product or service experts. Whether you’ve developed a new offering in-house or acquired one elsewhere, one or more experts were involved in understanding the market need and developing a solution to address it. Those experts understand very well the value proposition, whether and how it resonates with customers and how it’s differentiated from the competition.
As portfolios increase in breadth these experts become an invaluable resource in helping sales teams effectively go to market. Consider deploying these individuals as go-to experts in the organization or extract their knowledge and pass it on to others who need it. These people are often eager learners and adept collaborators. They can and will supply your salespeople with information to enable sales success while simultaneously capturing insights on how the product is being received in the market that can be fed back into the product management process.
Great sales analysts can use enterprise sales data to deliver insights that enable success. Each individual salesperson and expert can funnel information about his or her own territory, customers or offerings up through the analyst for company-wide synthesis. Analysts can analyze the available data to drive insights on selling strategies as well as reveal profitability of markets, customers and offerings. Similarly, the early identification of trends can create a competitive advantage by enabling an increased focus in those areas.
Sales leaders naturally take in sales information as they oversee and manage their teams. Since this is only one among the leader’s many responsibilities, the information may not be synthesized in the most efficient way. Instead, a sales analyst can focus solely on the data analyses and insights. Sales analytics capabilities will enable your company to pursue the opportunities that will give you an edge in the marketplace by utilizing the sales data resources that could otherwise go to untapped. In addition, the analyst relieves some of the burden on sales leaders and allows them to give more time to strategic concerns.
Growth is near impossible without a high performing sales team. Great salespeople can quickly assess business needs, develop relationships with key influencers, and use market data to tailor a unique value proposition compelling enough to result in a sale. Skilled sales leaders guide and support their team to focus efforts and succeed in the field. These people are driven, energetic, industrious, reliable, and resourceful and they can earn and keep the trust of others. Retaining this talent is mission-critical.
Of course, the greater your success in the market, the more your top talent will be sought after by other companies. Growth inevitably changes working conditions and how those conditions align with the expectations of your people. Better retention means reaping the benefits of accumulated expertise, while avoiding the exorbitant costs of hiring and training new salespeople who lack that institutional knowledge. One way to retain top talent is to use financial-based incentives (e.g., salary and variable pay) as salespeople are often driven by financial gains. However, non-financial rewards can also be used very effectively to align your company’s goals with the needs of your people. Elevating an employee’s stature in your company through public recognition of success or assigning talent to visible and prestigious initiatives can often pay significant dividends.
While some level of poor performance is unavoidable, lower performers undermine results while consuming important and limited resources. More employees may be needed to pick up the slack, key customer relationships may be irrevocably damaged, or management attention may be distracted from other important areas. Identifying and addressing these problem areas will help the organization to function more efficiently.
When planning for scale, take an honest look at your talent. Whether through lack of skill or will, some individuals may not deliver the value you want or need. Consider what may be behind the performance shortfall and determine if it can be fixed. For the individuals that have the potential to be better and are willing to focus on their own development, make the investment and avoid the loss of important institutional knowledge. If you don’t have the resources to help those individuals improve and grow, consider acting quickly to move them out – you’ll give them an opportunity to find an organization where they are more likely to be successful.
While it may be tempting to apply band-aid solutions to the problems that come with accelerated growth, consider how much harder it will be to untangle the mess later. Failing to step back and take an intentional approach now will result in the embedding of suboptimal ways of doing work and delivering lower performance than possible. A wise investment in a carefully designed, easily scalable sales organization will free your company’s leadership to focus on the strategy and growth that can drive sustainable sales growth over the longer term.