How to Scale Up a Winning Sales Organization
Forge a Sales Value Chain
by Eric Nies, Cincom Systems
Henry Ford and the people on his team toured the slaughterhouses in Chicago, saw the workers disassemble carcasses along a line, and had a "Eureka Moment." They said, "Wow, we can reverse that and apply it to the production of automobiles!" Until then, the company had produced 11 cars a month. A year later, they were taking a car off the assembly line once every 93 minutes.
The same concept can apply to sales organizations. Rather than have sporadic sales where everyone says "Woo hoo, we landed one!" let's create an environment where there's greater predictability in delivery. The thought process in this Sales Value Chain involves the same kind of disassembly Henry Ford's team used. If a sales organization needs 10 deals to make its quota, management must ask, "How much time does a sales rep spend on the contract piece?" If the rep takes two weeks per deal, before you know it, you've got 20 weeks of your sales year gone.
Simple. Right?
The Sales Value Chain seeks to make more efficient and effective use of selling time. Let's look at the classic "sales funnel."
If you need 30 finalists to close 10 new customers, how much time do you spend with those 30 finalists? You're meeting with the finance guy, the IT guy, the CEO, and next thing you know, you've spent a week's time with each finalist. So if you spend 20 weeks on contracts, and 30 weeks with finalists, you've just logged 50 weeks' worth of time. And this doesn't even include moving back up the chain to generate those leads or qualify prospects.
In that setting, sales reps can get overloaded, drop the ball or miss a lot of good opportunities.
On a shop floor, you'd quickly see you can't just push more material through to get more output. The real problem is we are not managing our sales "shop floor" the way we should.
Let people do what they're best at
To manage resources more effectively, recognize that people will do what they are best at, or what they like to do. One sales rep may prefer to do business face to face, because he's not so good on the phone. Some people are great closers, and others are excellent door-openers who can't seem to close deals. As managers, we must look at each phase of the sales cycle and use those resources wisely.
Breaking down the sales cycle into three or four discrete or segmented roles is key. That lets you optimize each one. Perhaps, one person focuses on opening dialog with prospects, and another handles contract development, while a third "closes" the sale. To follow the automobile analogy, many auto dealers employ a "greeter" on the lot who turns you over to a salesperson, who eventually turns you over to a sales manager who closes the deal. They all share in the commission when a customer signs on the dotted line.
An important ingredient, of course, is reworking the compensation so that everyone has the right incentives. The guy who opens the doors gets compensated two ways: first, for having completed his tasks on the front end and second, on the back end when money starts to trickle into the corporate coffers. It's important that folks on the front end are not entirely dependent on the eventual sale. They make money for opening doors, after all, and will perform better because they are best at doing that.
Similarly, the "closer" will close more deals, without getting bogged down in prospecting, contracting or other duties that keep her from concentrating on what she's best at. Of course, you need to show everyone how much better off they'll be in the long run, in a dollars-and-cents way. The more you "outsource" that front-end work to someone else, the better off you will be.
Build it from front to back
When most companies build a sales organization, they go out and recruit the best "closers" they can find—people who are really tops at handling the "end game" in sales. But paradoxically, you want to start building a Sales Value Chain from the front end.
New companies should start with the telemarketing group, and once they start to push through a lot of quality leads, add the next level, an inside sales organization. When that starts to get a little overloaded, scale up the field sales force. Most organizations don't scale up from the front — they start with what they know, which is a salesperson getting face time with customers. But if you do that, your sales staff will only be marginally productive, and you will burn corporate resources.
If you have an existing sales organization, build the Sales Value Chain around it. While sales reps go about their business, doing things the same old way, start to give them more leads, more deals, and show them the value of the new approach by demonstrating it daily.
Some sales executives might say, "Our customers want one person to build a relationship with." But the fact is, some people aren't great door openers, and others aren't good enough at closing. Some CFOs might say, "Gosh that has to be expensive! I have one guy with a $1 million sales quota. He's got to cover his own overhead plus the cost of sales support, plus turn a decent profit. Now you're telling me I have to add other people into that equation? How will I make any money at all? I'll never make it up on volume!"
You can bet it was tough for Henry Ford to make that same leap of faith and lower his Model T prices. Don't forget that predictability allows you to lower prices just as Ford did. Specialization allowed him to price dramatically lower than the competition. IT companies in particular need to get volume and predictability in the sales cycle. They need realistic sales projections and numbers that banks and venture capitalists can put money behind.
What we see, with these tollgates in the sales process, are quantifiable deliverables at each stage in the sale process. The Sales Value Chain gives you metrics you can use to measure concrete results at each stage, and hold people's feet to the fire if needed.
In telemarketing, for example, what is the definition of a "lead"? Thinking through the deliverables in a Sales Value Chain forces you to define them at each step. Perhaps a lead is "a person who attends a webinar" or "someone who agrees to an appointment," not something loose like "Oh, he's qualified." At each step, you want quantifiable examples or deliverables that show how you are processing the raw materials.
Find out where it hurts
You can tell if this idea is worth exploring by asking where it hurts. Perhaps you have pain around sporadic sales not meeting growth objectives. Or, there's other evidence the company isn't performing up to expectations. If so, look at your sales process from a logical point of view, break it into discrete steps and have your own "Eureka Moment."
If your reps are managing everything from shaking the orange trees and picking up the fruit to squeezing the juice, measure that, quantify it and, finally, think about what you can "outsource" to free their time.
It is particularly important for IT companies to search out those wins and get a better handle on metrics and predictability before trying to grow partner channels. After all, what are partner channels if not outsourced sales? And to get it right, you certainly cannot outsource spaghetti! If you don't have a clear idea of where one function begins and the other ends, you cannot very well outsource it. And if you can't outsource it, you cannot take full advantage of other resources in the marketplace.
A final word
The software industry is still coming out of its infancy, compared to manufacturing or banking, where these concepts have been in place for a lot longer. The manufacturing industry has 70 years on us, and the banking industry has another 30 or 40 years or so. It's time for us to apply that same kind of business process thinking to IT.
About the Author:
Eric Nies, Director at Cincom, has been working in Cincom Systems, Inc. sales channel for 18 years, where he has seen and designed a variety of sales processes for both direct and indirect channels. The experiences, as well as the experiences gathered working with a variety of de-facto standard sales methodologies, have led to the interest to simplify the "Complex Sale" down into processes and ideas that are much more familiar to us, easier to understand, and easier to implement. Thus, the Sales Value Chain!