What’s Wrong With The Sales Machine?

CEOs are often stymied by their inability to drive predictable, repeatable results within the sales organization. As one Fortune 500 CEO put it: “I put a dollar into the candy machine, pull the lever, and I get a candy bar. I put a dollar into the sales machine, pull a lever, and I have no idea what will come out.”

It’s a widespread frustration, and for good reason. Over the past 20-30 years, functional areas such as operations, logistics, and finance have been streamlined and “operationalized” with repeatable processes that result in a consistent set of well-defined outputs from a given set of inputs. But that’s seldom the case in the sales function. All too frequently, the inputs—sales talent, front-line management, tools—produce inconsistent and unpredictable results, leading to unsatisfactory sales performance and higher risk.

This situation has not improved because many CEOs feel there is something inherently uncontrollable about sales—that it is a “black box” and any attempt to operationalize this function will scare away the best salespeople and doom the company to poor financial results. However, gaining control of sales is not only possible, it is necessary for sustainable top-line performance. Sales functions can and should be optimized to achieve the same levels of efficiency, transparency, and measurement that are expected from the rest of the company. When the sales function is operationalized—as characterized by repeatable processes, a consistent management cadence, standardized toolsets, and a set of metrics that drive key business decisions—it can be managed far more effectively to achieve growth objectives, reducing a company’s risk profile.

The challenge, of course, is getting there.

The Four Stages of Sales Maturity

Although selling is sometimes viewed as an “art” in which success is a matter of intuition, today the function is actually much more science than art. Relationships and influence, once the cornerstone of successful selling, are yielding to technology and data as key drivers of success. This shift presents an opportunity to operationalize the sales function using the same kind of rigorous, systematic approach that is used to drive improvements in other areas.

The starting point for this effort, just as it would be for any kind of improvement initiative, is to understand your present situation. There are four distinct stages in a sales organization’s development. These stages are characterized by increasing formalization of processes, metrics, accountability, and management, progressively leading to a more flexible and scalable organization that achieves improved growth rates. In order to begin the journey towards an operationalized sales function, you must first pinpoint where your organization lies on the continuum of sales maturity. At a high level, the four stages include:

Stage 1: Artisans at Work. Companies in Stage 1 are dependent on a few superstar sales reps for most of their revenue. There are typically as many different sets of sales practices and behaviors as there are reps and managers, resulting in frequent (and often unpleasant) revenue surprises. Company-sponsored sales tools are used inconsistently, if at all. Hiring junior reps into this environment typically leads to poor results and high turnover as new reps struggle to find their own way to meet targets.

Stage 2: Building the Foundation. Change-resistant salespeople still rely largely on “gut-feel” decision-making; however, as companies put more structure and systems in place, onboarding becomes easier and organizations begin to “grow their own” sales reps. There is some visibility into the pipeline but no consistent sales cycle definitions. Sales productivity remains highly variable. While stronger sales managers are now in place, each has their own view of what “good” looks like, so coaching is inconsistent and alignment with company strategies is hit or miss.

Stage 3: Accelerating for Growth. Stage 3 companies have implemented standardized processes, developed a solid management foundation, and have begun to focus on accountability for results. With metrics and processes coordinated across the company, business decisions are accelerated and performance challenges identified and addressed before they become problems. Sales reps follow company-directed sales practices. Their performance is visible and monitored daily, leading to less frequent revenue surprises and improved productivity. Sales management has developed a consistent cadence and is providing consistent coaching to their sales teams.

Stage 4: Operationalizing the Sales Team. This peak stage is characterized by strong sales operational performance across a full range of indicators. Some of those indicators include: End-of-quarter sales results within 10% of forecast; 95%+ CRM compliance; sales management use of performance metrics as a management tool and systematic raising of the bar for acceptable performance; pipeline transparency and metrics used as the foundation for sales-related business decisions, compensation, and exits. Stage 4 companies are continuously improving to avoid complacency and keep the operational edge that will continue to drive accelerated growth.

Finding Your Current State

Most companies’ sales functions get stalled in Stage 1 or 2 because they don’t realize the improvement opportunity available to them, they are concerned about the magnitude of the changes required, and/or they are not sure of the key steps needed to move forward. Ultimately, the goal is to get to stage 4. And to get there, as we stated earlier, you need to understand in an objective way where your company is positioned today. How? Sit down with your senior sales leader and ask them these five questions:

1. What’s our approach to sales? Do we have a defined “company way” of selling that dictates how our reps sell? Do reps have a clear understanding of the day-to-day activities that are expected from them? Is there an effective, structured selling cadence in place?
2. Is individual rep performance fairly balanced? Are sales results fairly consistent from rep to rep? Or are we dependent on a few high performers to make our numbers?
3. How much visibility do we have into performance? Can we see what’s happening in the pipeline at any given time? Are we able to spot problems early and course-correct to avoid negative surprises? Are we able to consistently forecast accurately?
4. Are our managers effective? Do our managers follow an established cadence and set of standard management practices? Are they actively coaching individual reps using best coaching practices? Is team performance continually improving? How variable are our sales managers and their level of success?
5. What is our sales enablement capability? Do we have the tools in place to enable the sales team to be successful and provide transparency to senior management? To what degree are those tools used regularly? Is our data accurate and up to date? Do we have a defined set of metrics that drive key decisions?

These questions align with the drivers of sales maturity. As you delve into each question, use the chart below to check the box that best describes your position in each area. The greatest vertical concentration of checkmarks will give you your approximate stage in the sales effectiveness journey.

CEOs usually know something isn’t working right in their sales function, but many aren’t comfortable enough with that function to initiate the difficult conversations with sales leaders that will drive change. By understanding the four stages of sales maturity and how to determine where your company is positioned in those stages, you are now set up to move forward in a methodical, process-driven way toward operationalizing the sales function. At the end of that pathway, your sales function will operate with the same transparency and predictability of a candy machine: when you put in a dollar, you’ll know exactly what will come out.

Related: Cost-Cutting Done Right: The Building Blocks Of A Zero-Based Supply Chain