Landing the revenue result...

and getting a good night's sleep!

What does a CEO, Managing Director, National Sales Manager or Regional Sales Manager all have in common? Answer: they all lose sleep over whether the promised revenue figures will occur. In this article, Ian Stephens, Director of Enrich Management Group, specialists in sales-force effectiveness, shares his views on the 4 key strategies organisations should be implementing in order to dramatically increase the chances that the forecast becomes a reality, and that you get a good night's sleep!

A recent survey of our clients revealed speaking in public is not the greatest fear of senior leaders. Whether or not the sales forecast would occur; this caused them to lose valuable zzz's. They, and the financial controllers, have confidence in such things as 'cost of sales', and they have done everything possible to remove unnecessary costs from the business. But the 'excel' spreadsheet, which has rolled up and down the organisational chart to determine the EBIT target, ain't worth the laptop it's stored on, unless the revenue actually occurs.

So how do you increase the chances that the targets will be achieved, and reduce that niggling doubt? How do you ensure the sales-force lands the sales result in a timely fashion, and avoid finishing 10% down? Finish 20% down, and there goes the EBIT line!

In my experience, the answer lies in the following 4 key points. For the CEO's and MD's who want the global summary, here it is:

• Shift your thinking...results are not the most important thing.
• Well Defined Marketing Direction with evidence that it is being executed by the sales-force.
• A well developed 'Pipeline' measurement and reporting process.
• Complete a Reverse Planning process to determine the level of activity required to produce the result.

For the National Sales Director and Regional Sales Managers who need to implement them, here is the detail:

• Shift your thinking...results are not the most important thing.

A majority of senior executives have an accounting background, and accordingly, have a tendency to focus on the results.And we can carve the numbers up any way we want them: by month, quarter, year, by product, area, region, state, etc, etc. My hobby is to politely get in their faces and point out the logical truth. Snap the paradigms if you like. Results only occur when it is preceded by an activity. For a result to happen, something has had to have happened! Be it a prospecting call, a meeting, a proposal/tender/submission. An activity of some description occurred that created the result. I remember a sales rep in the insurance industry during my days as an inexperienced Regional Sales Manager. I pulled out the monthly result sheet. He rolled his eyes back in his head and pointed out his sales philosophy, "Ian, I find if I just introduce myself to 3 new people every week, the results seem to take care of themselves!" And they did. He was always over-achieving his new business results, and never failed to make his annual revenue target. Why? Because he focussed on doing the activities which drive the results. He understood that you actually couldn't control the result. There are too many factors influencing it: customers, competitors, global economy, terrorism, just to name a few. The only thing you have 100% control over is the type and amount of activity that you do.

Call to action: Take a lesson from the dictionary; you will find ACTIVITY well before you get to RESULT. Implement a process that instills an 'Activity Based Sales Effectiveness' culture throughout the sales team.

• Well Defined Marketing Direction with evidence that it is being executed by the Sales-force.

The executive team has a clear idea of the marketing direction, and the company vision. And yet, I consistently find that when talking to the lower ranks, and particularly the front-facing sales people, the water is far murkier! They typically continue to focus on selling the products and services they are comfortable with, despite a different marketing direction espoused by the marketing team. In other words, there is a failure to align the sales efforts, and focus, with the marketing direction formulated to achieve the revenue goals and the overall vision.

Organisations who do this well have taken the time to design a 'Target Market Criteria'. Any decent sales-force automation software or CMS (Customer Management System) has this type of tool you can tailor. In essence, it a simple excel spreadsheet which sorts the wheat from the chaff. It defines the criteria that should exist with a potential client before we would waste our precious time going and talking to them. This tool should contain criteria which are directly linked to the desired marketing direction. It describes the ideal type of client you want given your marketing direction.

Call to action: Have the marketing and sales team jointly build a 'Target Market Criteria' Tool immediately following a presentation on the companies marketing direction. This will create high ownership of doing activity in the field, which will achieve the desired results. Regional Sales Managers then need to be managing and coaching the team to implement activity which matches the criteria, instead of making comfortable 'Latte' calls to existing clients about existing products! Not that would happen in your organisation...would it?

• A well developed 'Pipeline' measurement and reporting process.

April. Every year. "Why are we down on budget YTD?" you ask. Back comes the reply, "It's ok, boss, it's in the pipeline!" I love these mysterious pipelines. Magical things. The answer to all budget shortfall in the YTD result. And yet, exactly how much is in this pipeline thingy, will it be enough, and will it land before the 30th of June?

Show me a senior manager who sleeps well at night, and I'll show you a sales organisation which has a uniform way of measuring the volume of opportunities in the pipeline, and an agreed way of assigning it's weighted value. Notice two things in the example Pipeline Prediction Report below in Table One. Firstly, the key figure is the nett value of the pipeline -not the gross value. We should be tracking the nett weighted value because that is the figure which is likely to land. And secondly, note the agreed weightings which are dependent on certain events having happened.

Table 1:

Outcomes achieved by this tool:

• Consistent understanding of what a 40%, 60%, or 80% chance means
• Simple process to understand if you need to do more activity out in the market place, or whether you are ahead of the game
• Regional, national or global forecast report by asking all Regional sales managers to track and report on their pipeline
• Ability to predict where you will land

• Complete a Reverse Planning process to determine the level of activity required to produce the result.

At a recent meeting with an Australasian CEO of a global Australian company, he told me the average conversion ratios of the sales-force, and the required level of activity required to drive results. He had his finger on the pulse because the sales management team had bred a culture of 'Reverse Planning' throughout the organisation. Now, this is not rocket science. In fact, it is so simple, it is profound. Take the desired results target, then, get in reverse. Let’s back it up and see what activity levels need to be done in order to guarantee the results. For example, if you want $1m in new business, and the average size of the order is $10k, then math tells you that 100 orders are required. If your team's average ratio of quotes to order is 3 to 1, then you need 300 quotes out there in the market place. If your ratio of appointments, which results in a quote-averages at 2 to 1, then 600 appointments need to be conducted by the sales-force.

Depending on each sales person's skills, abilities and experience, everyone's ratios will be different. But, the law of averages will apply. Benchmarks can be set, and the result will be in the bag, providing the activity levels are completed. Again, over to the regional sales managers to ensure this occurs, because the old well-used doctrine still applies: 'Measure what you want done!'

In conclusion:

Show me an organisation that achieves its revenue targets consistently, and I'll show you a business development team who scores well on the above four areas. The 'Health of your Sales-force' checklist in Table 2 might be a good place to determine your current reality. Of course, if you don’t have these four things happening, then fear not. You can always continue to fall back on the Crystal Ball Method, and then place both hands together, look upwards, and pray that the result happens!

Sleep tight.

Table 2: 'Health of your Sales-force' Checklist

Health check:
If you ticked YES to 8-10 of these criteria, relax, you're already enjoying a great night's sleep.
If only 5-7 ticks in the YES column, broken sleep and the odd nightmare will be the norm.
Less than 5 ticks... consult your doctor. Stress medication and sleeping pills will be a must!