Most leaders feel uncomfortable at the thought of a sales process. For operations and finance? Sure. But for sales?
Won’t a step of the sales process limit salespeople’s creativity and potential revenue that they bring for the organization?
No! It’s not worth the risk.
That’s why they hire salespeople with experience (the more the experience the better, right?), provide them with superficial training, and push them in the field to get sales in any way they can.
In other words, they follow Steve Jobs’ code to hire amazing people and get out of their way. They hope that these amazing decision-makers salespeople will take the organization to dizzying heights.
The first two months are good. New accounts come in. (Actually, these are just their personal connections from previous firms.) Then comes stagnation. No new accounts, existing ones stop buying, and revenue flatlines.
Why Does This Happen?
As human beings, we love to manage outcomes. Since revenue is an essential outcome, most leaders focus only on it to measure sales performance. But outcomes cannot be managed directly.
Think about people trying to lose weight. Simply saying, “I must reduce my weight,” is outcome-based thinking and highly ineffective. Consuming and losing a specific number of calories through diet and exercise respectively and measuring the same, is process-based thinking. And it’s highly effective.
The same logic extends to sales funnel. By focusing purely on revenue, sales leaders adopt ineffective outcome-based thinking. They must switch to process-based thinking and working like other functions.
What happens without sales processes?
Rockstar salespeople might bring in sales but they’re not predictable. Nor can other salespeople follow their unstructured techniques and bring results. Or salespeople could resort to selling your product to customers who don’t need it by indulging in malpractices like offering return-guarantees, or by calling it new in the market, or by asking potential customers for their “support.”
The more the lack of structure, the bigger the headaches for managers and leaders.
(Can you think of more headaches that unstructured sales techniques cause? If yes, do leave a comment.)
What a Sales Process Does ?
Most leaders believe that the sales function doesn’t need processes. But research shows otherwise.
65% of sales reps in companies that followed sales processes achieved their quota, compared with 56% in the other group. Also, 88% of salespeople in companies that kept refining (improving) their sales processes reached their goals, compared with 78% in the ad hoc groups.
(It also won’t be inaccurate to say that the goals which companies in the first category set are much higher than those in the second.)
A practical sales process helps salespeople understand what they should do to achieve their goals and how to do it.
Three benefits of the sales process are:
Actions are visible to salespeople and their leaders. Thus, leaders can help their people tweak actions when needed in order to align with the monthly and quarterly goals.
When people know the steps they should take and how they’ll be held accountable for them, sales and revenue predictions at the end of a month or quarter become more accurate.
Predictable sales enable organizations to streamline their inventory, operations, and hiring in scientific and cost-effective manners.
Would you want your business to function in any other way?
How to Build a Viable Sales Process?
Are you convinced about the importance of sales? Great. Let’s discuss how you can design and follow a sales process which lets your organization enjoy the benefits.
The 3 Unique Metrics for Sales
In their remarkable book Cracking the Sales Management Code (CSMC), the authors highlighted three separate metrics for the sales force:
- Sales Activities, which can be managed completely and tweaked as needed.
- Sales Objectives, which get influenced and driven by managing sales activities.
- Business Results, unmanageable (remember the weight loss examples?) but get determined by the performance of Sales Objectives.
Understanding these metrics will help you create a solid foundation for an effective sales process. So let’s dive deeper into them in reverse order.
1. Business Results
There is no denying that Business Results are the most essential numbers. They indicate the health of your organization. The authors of CSMC further break Business Results down into:
- Financial – accounting metrics like revenue, profitability, costs, and more.
- Satisfaction – customer- and employee-satisfaction.
- Market Share – target market you’ve captured versus your competition.
As you can see, managing sales by focusing on these numbers lead to chaos. Not to mention that you can only measure these metrics at the end of a month or quarter, by which time it’s too late to take corrective action.
This is why you need Sales Objectives.
2. Sales Objectives
Companies that can survive by using a phone book today are of two types – those which have just started their business, and those which are about to go out of business.
Sales Objectives streamline your sales team to make it efficient, effective, and strategic, rather than noting things down in diaries or in their “heads”. Sales Objectives can get broken down into:
- Market Coverage – Maintaining sufficient capacity to pursue selling opportunities.
- Sales Force Capability – Making the sales force effective in executing its activities.
- Customer Focus – Acquiring, retaining, and growing your customers.
- Product Focus – Selling the products and services that your organization wants to sell.
These are easier to manage than Business Results, but are still vague.
For instance, Market Coverage can be measured by analyzing percentage of prospect contacted, percentage of vacant sales positions and so on. Sales Force Capability depends on the productivity of the sales team, deal win/loss ratio, length of the sales cycle, and so on.
Trying to manage these numbers by telling salespeople to do more is a weak strategy. Sales Objectives can only be influenced by managing Sales Activities.
3. Sales Activities
Peter Drucker said, “What gets measured gets managed.” Yet most of what salespeople do doesn’t get measured because leaders don’t want to micro-manage. But, according to the authors of CSMC, tracking and measuring sales activities actually leads to proactive management.
The building blocks of Sales Activities are:
- Call Management – planning and conducting customer interactions.
- Opportunity Management – navigating multi-call sales cycles strategically.
- Account Management – maximizing long-term value from individual ideal customers.
- Territory Management – spreading effort efficiently across various types of customers.
- Sales Force Enablement – training and equipping salespeople with the right tools to deliver their best.
Are these numbers simple to manage? Absolutely!
According to Pareto’s Law, 20% of actions yield 80% of results. The points mentioned under Sales Activities are the 20% of actions that will yield tremendous results when it comes to sales in your organization. The more you track your salespeople’s performance in the above five metrics, the better Sales Objectives and Business Results look.
But don’t forget quality while tracking your people’s work. It’s just as important (if not more) than quantity.
Streamlining sales in your organization is not rocket science. It simply takes dedication and commitment to sales processes. Such processes ensure that you don’t leave important things to chance, that your people don’t do things their own way, and that you stay in better control of the outcomes.
In the coming posts, we’ll discuss these aspects in more detail. To get notified immediately when we post an article, you can subscribe.