Sales Modeling » Miscellaneous

Sales and Marketing alignment?

sigtran — Mon, 30 Aug 2010 20:39:52 +0000

Consultants (like me) often speak to lack of alignment between Sales and Marketing. While that may sound nebulous, let me give you a concrete example. To analyze this start by asking Marketing their plans…high-level marketing strategy, execution plan, specific tactics and initiatives?

With this example, the Marketing organization focuses solely on email marketing. The tactical requirement for this type of initiative is a robust database of contacts; it also requires data accuracy and integrity be consistently maintained.

Therefore, the perfect example of sales and marketing alignment here is having Sales department continually update Contacts in the marketing database (aka CRM database.)

What % of your day is pure sales activities?

sigtran — Tue, 17 Aug 2010 22:07:39 +0000

This is valuable intelligence as it goes directly to revenue. Either ask your sales people the question or conduct an empirical study. I suggest with confidence, you won’t be happy with the results. Unfortunately, far too few sales organizations leverage a sales model and supporting processes to optimize and dedicate maximum cycles to pure sales activities.

What else might they be doing with their time? It could be spent responding to internal emails, providing superfluous sales forecasts, but more likely the big time suck is when the sales model itself commands inordinate cycles that distract from pure sales activities.

Savvy sales organizations (albeit rather oppressive) manage sales teams by pure sales activities such as number of phone calls made, number of online presentations delivered, number of quotes provided, number of visits made, and so on. In contrast, if your organization has adopted a sales model and methodology which by nature creates excessive administrative coordination you are losing valuable time which could otherwise be spent selling!

What is your commission rate?

sigtran — Sat, 31 Jul 2010 06:07:40 +0000

Let me just ask a few questions…are you okay with your sales reps making more than the top execs? You should be. Are you okay with paying sales reps a blended rate of 10% for what they sell? Again, you should be.

While there are many variables and derivative compensation models, in general I promote the idea (for reasons of incentive) of having a modest (not necessarily market-competitive in the current economy) base salary paired with upside commission. Let’s consider an example where sales rep closes $1.2 million in products (or services) during fiscal year:

based upon 10% rule, they should earn $120,000
earnings blend $60,000 in base and $60,000 in commission
flat 5% commission rate is applied

The reason I like the blended compensation model is that it provides linear motivation. Sales correlate with predictable commissions. The sales person fixates on the 5% rate, which is just enough to keep enthusiasm high. In the singular mind of a sales person they comprehend that if they sell $100,000 in a given month they will make $5,000 in commission (most likely paid in arrears.)

There is a pitfall to making the commission rate too low – you may just castrate your sales force.

What is sales modeling?

sigtran — Wed, 21 Jul 2010 03:00:48 +0000

Sales modeling is the perfect blend or harmony between your company’s products and your sales organizational structure. Sounds simple enough, but few companies get it right. It goes without saying, successful companies owe a degree of their success to a well-adapted sales model.

Sales modeling is an iterative process, which depends upon savvy, experienced sales leadership.

There is fine tuning and then there is wholesale restructuring. Obviously, your risk correlates whether you make small versus significant changes. Examples, include myriad combinations of the following:

aligning sales team by product
aligning sales team by new versus recurring business
aligning by vertical

There is also a question of aligning your products with inside (telemarketers – low cost) versus outside (field reps – high cost) sales teams. Certainly, any combination is viable. The right mix will reduce costs, but not at the risk of sales production.

One last thing, remember to compensate that which you deem most critical. If you want to sustain growth via “new business” then pay your hunters handsomely. Sales people are simple creatures; they will figure out how to make the most money for themselves, not necessarily the company.

People in the wrong roles

sigtran — Tue, 20 Jul 2010 02:44:21 +0000

Are your company’s employees in their proper role? Did you hire the right person for the right role in the first place?

The workplace is not equivalent to the playing field; employees are not athletes. While athletes can readily assimilate by leveraging speed, strength, and agility, not everybody can become an effective sales person, product manager, or CEO.

Listen carefully, companies can be served well by hiring pure professionals by domain. That means you hire a pure manager with significant experience managing. You hire a CEO that has been a CEO for a similar company in a similar industry. You hire sales people who have a track record of exceeding quota. You hire product managers who know how to manage products.

Take a quick inventory of your company.

- Is your CEO really a CEO with necessary leadership and vision skills?

- Is your manager a strong manager?

- Do your sales people have proven acumen?

The sad thing is there are a lot of people in all companies who don’t fit into well-defined roles. It does not make them bad people, but it often makes it hard for them to add quantifiable or qualified value in their wrong roles.

To bundle or not to bundle

sigtran — Wed, 14 Jul 2010 03:42:54 +0000

You may have noticed your phone/cable companies love to bundle products (e.g. services.) For example, Comcast offers their “triple play” in an effort to lock you into a single carrier for digital phone, high speed internet, and cable suggesting it will make your life easier because it all will be from a single vendor on a single bill. While it does make sense in some industries (e.g. Communications) the same can not always be applied cross-industry.

I posit the following, if your products are currently unbundled perhaps now is not the time to bundle. The risk of suddenly bundling is that you may jeopardize existing (and sustainable) revenue streams.

Why? For many years now, CFOs have tightened their purse strings. As a result, numbers of significant transactions (those big ticket enterprise deals which I call sigtrans) have declined. While in contrast, focused niche point solutions with lower price points have thrived even in a down economy.

The moral of the story: your sales model should align with your “go to market” products which aligns with the economy which aligns with your customers/clients spending predilections.

Terms and conditions

sigtran — Wed, 14 Jul 2010 03:25:30 +0000

Every sound company protects itself with proper legal documents, however this should not impede sales. Ideally, your company fosters a culture where each and every operational area supports sales efforts.

For some reason, often an arrogance within legal departments results in procrastination not for the sake of prudence but rather demonstration of control…how about at your company?

In sales, timing is everything and you must capitalize when the opportunity presents itself. If there exists extensive lead time to produce otherwise boilerplate agreements, you have a self-imposed constraint to closing business!

Can you have too many leads?

sigtran — Fri, 04 Jun 2010 17:46:18 +0000

My mentor (father) used to joke “you can’t be too thin or have too much money.” But does this also apply to sales leads? Can marketing generate too many leads? Answer: yes.

There is a break-even analysis where more/less qualified leads warrant dedicated sales cycles. Mitigate wasting valuable time on low-value suspects versus prosecuting high-quality prospects.

All leads need to be qualified, but don’t let it distract from closing legit opportunities.

Are your reps coordinated?

sigtran — Fri, 04 Jun 2010 17:37:28 +0000

I am not talking about tapping your head and rubbing your tummy at the same time. Rather, are your individual sales reps tactically executing shared sales initiatives? Synergy is this area will be galvanized by best practices compiled through collaboration.

Many sales people like to be lone rangers, but this does not always help the collective team. I’m all for individual achievement, but consistency as a sales team is key.

Choose your words wisely

sigtran — Fri, 26 Mar 2010 02:59:53 +0000

A stalwart sales organization will often boast an oppressive sales culture and that is healthy…”swim with the sharks” as they say. However, there is a time to treat your sales people tenderly, nurse, indulge, and pamper. If you don’t coddle at the right time you could pay the consequences. Unless you are ready to face the cost of hiring and training a new sales person who may or may not be an improvement, choose your words wisely.

Words are powerful. For example, if you even subtly mention the word “fire” you better be prepared to lose all future production from that sales person. Sales people are emotional…what can you expect be it they encounter rejection 90% of their day. When a sales person loses their manager advocate it is a slippery slope and difficult to correct.

This is eerily similar to mentioning the word “divorce” to a husband or wife. Why? Because, as soon as you plant that seed it will have already taken root and won’t be forgotten or forgiven. Take it from me; I learned the hard way.