Sales strategy is too often neglected, says Sue Barrett, who argues it can be the difference between business failure and profitability.
In the middle of 2015, the relatively new sales director of a global equipment manufacturer’s Australia and Asia-Pacific division faced declining markets, the loss of major accounts, margin erosion and a race-to-the-bottom market mentality. There had been no recent investment in the sales team. Perhaps worst of all, the division lacked a sales strategy.
In less than 15 months, the sales director was able to build a highly competitive and effective sales team. Central to his turnaround plan was a revised sales strategy that included these elements:
- Clear sales messaging and a value proposition about target marketplaces and how to differentiate the company from its competitors.
- Identifying segments where the division could deliver profitable sales and real value to customers.
- Clarity around the sales process and standards of sales excellence.
- A development program to equip sales staff with the required skills, tools and resources.
- Sales leadership that was accountable for results through the coaching of sales teams.
Positive results were evident within eight months and included:
- a united, aligned sales team and sales leaders
- common sales goals, tools, processes and frameworks
- sales 16 per cent ahead of budget
- an increase in the number of large, profitable sales in a highly competitive and commoditised marketplace
Unfortunately, sales strategy rollouts like this are still uncommon. While sales strategy is vital to business success, it is often poorly understood and can be overshadowed by corporate and marketing strategies.
Frank V. Cespedes, a senior lecturer at Harvard Business School, makes this point in a 2014 Harvard Business Review online article, “You Can’t Do Strategy Without Input from Sales”.
Cespedes notes that the sales process is usually the most expensive element in implementing a business strategy and yet few strategies – “some studies indicate less than 10 per cent” – are successfully executed. On average, he adds, “companies deliver only 50 per cent to 60 per cent of the financial performance that their strategies and sales forecasts promise”.
An audit of more than 30 companies across a range of industries for the 2015-2016 Sales Strategy & Operations Benchmark Findings Report* revealed that most of the businesses surveyed were only averaging just above 50 per cent across 17 key sales markers. Areas such as sales metrics, salesforce development, market segmentation and pipeline management ranked the lowest, scoring less than 50 per cent. Given the breadth and depth of industries benchmarked (see below), this shows that poor sales strategy practices are not limited to particular sectors.
Using strategic thinking skills: learn how to use strategic thinking skills, such as analysing information effectively and thinking creatively.
However, once businesses are able to determine what to address and where to focus their efforts, the changes can be remarkable – as demonstrated in the case study of the equipment manufacturer.
This means taking time out to look at your sales operation and sales strategy.
It’s no surprise that many sales leaders complain there isn’t enough time to develop a sales strategy, even if they know they should have one. Many sales leaders are burdened by ever-present pressure to achieve short- to medium-term quotas. Meanwhile, sales performance is weighed down by the high cost of selling, longer lead times, multiple choices, maturing markets, rampant competition and diminishing differentiation.
However, if a business is to realise its vision and grow, it needs to understand its market, it needs to create real value for its customers, and it needs to be adaptive to ever-changing circumstances – and that’s where a good sales strategy comes in.
* For the 2015-2016 benchmark report, Barrett audited more than 30 companies of all sizes from industries such as media, banking, insurance, engineering, education, medical products, manufacturing, industrial design and packaging.
Sue Barrett is the founder and CEO of sales advisory and education firm Barrett, and the online sales education and resource platform www.salesessentials.com