The sales landscape is changing. To succeed, businesses need to focus on three key drivers of profitable growth — customers, pricing and innovation.
“If you think about those three things, sales is the critical nexus through which they all flow,” says Jim Lane, director of RedBank Advisors at GBQ Partners LLC. “You can’t get a decent price if your sales people cave when they’re pressured. You can’t hear about innovative demands and needs from your customers if your sales people are not listening carefully. You can’t establish customer satisfaction with a sales force that is setting expectations that you cannot meet. Sales is a critical enabler of all three drivers of profitable growth.”
Smart Business spoke with Lane about how to understand the changing sales atmosphere and make sure your sales force can accommodate the changes.
How has the sales environment changed?
If you rewind a little bit, a lot of businesses thought their sales guys were absolutely amazing in the 1990s, and many of those sales people are still in place. Early in this decade, business leaders looked at sales people a more little critically, but then the sales group seemed to recover and hit their feet again. That all changed with this last downturn, and now no one seems to know how to sell.
Have the sales people really been getting better and worse? No, but what’s been happening is that our feelings about sales people track with the economy. So in the mid to late 1990s, the economy was raging along, and all you had to do was show up with a sales book to get an order. In the early 2000s, there was a bit of a downturn, so we looked at sales people with a bit of a critical eye. But we recovered and started to make progress again, so business leaders thought that sales people knew what they were doing. But it wasn’t until this latest downturn when we figured out that they really don’t know it all, and in many cases, are not suited for sales or don’t have the knowledge or skills to be effective at sales. As a result, we’ve seen a bunch of sales managers and sales people who’ve been exposed as not good at what they’re doing.
What are some key things business leaders need to understand about the changing atmosphere of sales and growth?
The key difficulty that business owners have when looking at their sales force and growth curve is that, once they know what their own desires and goals are for growth, they don’t separate out what they’re accomplishing versus what’s being accomplished because of the business environment. In the 1990s, we all thought we were geniuses. But over the last 18 to 24 months, we all thought we were idiots. Have we really changed, or is it just the performance of the economy that’s driving the change in the business? You have to separate out what you can control versus what the economy controls. That will help you determine the difference between an opportunity to improve and factors beyond your control.
How do you work with your sales force to accommodate this change?
The first aspect is getting the right people in place with the right psychological makeup. The second part is making sure that they have the skills and training that they need.
That first part is really a price of entry, it’s really a go or no go. There are a couple of key characteristics of a good sales person’s psyche, which deal with a willingness and commitment to do whatever it takes to make oneself successful. The other one is fortitude and the ability to hear no, keep on going and keep your drive up. If someone is lacking in those two elements, it’s probably not a good idea for that person to remain in sales for a career. You have to evaluate each sales person with a rigorous assessment tool so you can determine his or her potential. Then you can track progress against their potential each year as you go along.
Then you can train your sales force on a whole series of different skills. You can definitely impact these and improve performance through some of these skills in a way that has a return associated with it. When you first look at your sales force, you need to determine if you receive a continued return on investment. You might as well just trade them out or eliminate those positions if you do not. If you have a group of sales people who have those core psyche elements, then you can determine what the return on investment will be for that group. That’s where you see an opportunity to continue to invest in and improve the performance of the existing sales group.
Once you’ve been through this analysis, and you know how to invest in your current talent pool, then you can look at the gaps. You look at what types of sales people that you do have, and what types of sales people that you need to drive growth.
What are the benefits and risks of focusing on the key drivers of profitable growth?
Business leadership is a balance of looking at drivers of growth and profitability and looking at efficiency, which is more cost focused. Drivers of growth tend to be revenue and top line oriented. Drivers of efficiency tend to be cost and bottom line oriented. As with anything, if you focus too much on the left hand, you forget what the right hand is doing. You need to keep a balanced outlook.
If you do focus on profitable growth, the key benefit is that you become a much stronger organization. Companies that did well over the last 18 to 24 months were ones that had already taken up the challenge of being profitable. They came into the downturn with the cash to take advantage of buying opportunities and were able to invest in new capabilities and talent at a time when they were relative bargains.
Being more profitable makes you a much stronger firm. When another company is trimming to survive, you can attack their customer base and introduce new products. That financial strength enables you to do a lot of things when there are competitive opportunities to move.
Jim Lane is the director of RedBank Advisors at GBQ Partners LLC. Reach him at (614) 947-5257 or firstname.lastname@example.org.