As a business progresses, effective and systematic sales management becomes increasingly crucial.
Posted Oct 13, 2003
No matter what the size, truly effective businesses use a systematic approach to all aspects of their operations--from receiving calls to accounting process to shipping products to the end user. Management considers details and measures quality. Sales management is no exception.
In the early stages of a business the entrepreneur may do seat-of-the-pants selling along with everything else from product development to shipping the finished product. Yet as a business progresses, effective and systematic sales management becomes increasingly crucial. Understanding the sales management process--documenting it and executing it effectively--separates the merely average companies from those that exceed their corporate revenue goals.
Although millions of dollars have been spent on sales training and defining sales process, the missing link is still in sales management's hands. There are few CRM systems that have attempted to solve this crucial element.
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The more a company grows and changes, the more the person in charge of sales must put systems in place and create order from chaos. Over many years as a salesperson and sales manager I have developed a theory I call the situational matrix of sales management. In short, the more a company has the potential to grow with new products or services, the more thoroughly the company must define and manage its sales system.
This theory revolves around four components: 1) the company's overall business position; 2) the maturity of company's products and service; 3) the effectiveness of its distribution channels; and 4) the sophistication of the sales management systems.
To understand the concept, imagine the following diagram. The left horizontal axis represents the company's overall business position and the right horizontal axis the effectiveness of the distribution channel. The upper vertical axis is defined by the product/service maturity and the lower vertical line describes the sophistication of the sales management systems.
Rate each component 1 through 5 for your company.
The company's business position: 1 = Development Stage, 2 = Growth, 3 = Turnaround, 4 = Steady, 5 = Mature.
On the right horizontal side we describe the maturity of the Distribution Channel (Direct or Indirect): 1 = Nonexistent, 2 = Weak, 3 = Growth, 4 = Established, 5 = Dependable.
On the upper vertical axis rate the Service/Product position: 1 = Creation Stage, 2 = Launch, 3 = Market Awareness, 4 = Market Acceptance, 5 = Refinement.
On the lower vertical axis rate the sales management sophistication: 1 = None, 2 = Testing Concepts, 3 = Minimal Systems, 4 = Established Process, 5 = Sophisticated Reporting.
In the past when markets and opportunities did not move as quickly as they do in today's business climate, most companies' management processes would move along all four axes at about the same speeds. So, if one component worked at a four then the others would work at similar levels.
Not so with rapidly growing companies launching new products. Things get out of balance. The situational matrix demonstrates this basic premise. If a new product or service affects the company's maturity in terms of growth or turnaround it requires a more sophisticated sales management process.
A development stage or growth company entering new markets with new products must establish sales management systems to attract, build, and manage a distribution channel. For example, even in a mature company with an established distribution channel, a new Web-based e-commerce product quickly changes all aspects of sales management including recruitment, compensation, account management, and measurement tools.
The overall situation of a company affects all aspects of its sales management process, including strategies, sales goals, compensation, and much more. It provides a framework to begin developing or refining your current sales management plan. A solid plan enhances the sales leader's ability to clearly communicate vision, strategy, and tactics and set standards for the sales team's performance.
To break the wave pattern (e.g., a large volume of sales one month, a low volume the next) sales management must have better sales management systems that "look forward," and planning tools to give them a strategic and tactical view of where sales is headed. In the same manner salespeople must have tools to help them plan how they are going to exceed their quota and meet other professional/personal objectives.
While marketing must drive some business expectations, an equal focus from sales management must be applied. In addition each salesperson must take accountability to drive territory and account penetration. If sales management expects only marketing programs to create leads and branding, sales management has failed in its equal mission of using its team to create new business opportunities in proportion to marketing.
This equal and combined sales and marketing business development mentality is what is required to build predictable revenue. Historically CRM systems are simply historical look backs at what happened. It's too late normally when the problems are realized other than to simply react. This is the failure of CRM from a sales management perspective.
Individuals responsible for successful and effective sales management must undertake the necessary research, think through possible actions, develop focused processes and set standards of measurement. If an organization's revenues have flattened or declined, sales managers have clearly failed or missed critical links within the sales management structure.
Components of a sales management plan
The question is how to start developing this structure. A sales management plan must coordinate with the corporate business and marketing plans. People often ask, "How do marketing and sales differ or how do they work together?" A common answer is that marketing does the product positioning and planning, and if the plan doesn't work, the company fires the sales manager. (Marketing goes back to the drawing board and creates a new plan.)
What this attitude reveals is that we measure sales by how well the sales force executes the company's overall business and marketing plan. Most sales managers fail to plan effectively and certainly CRM systems do little to assist the sales management function in planning.
These are the areas that must be defined in the company's sales management plan:
Business and market overview
Monthly-activity tactical plan for the next six months that includes trade shows, new product promotions, customer promotions, etc.
Target account plan
Sales organizational plan for the next 24 months
Definition of the sales process, measurement targets, and channel strategy
Sales technology plans and process
Recruitment strategy, process, goals
Development of strategic partners and alliances
Revenue and quota forecasting tools
Compensation plans and objectives
Sales management must build a predictable revenue streams, maintain a focus on interviewing and recruiting salespeople, and keep the sales pipeline full, while making time to accomplish the rest of the goals on their to-do list.
Only through effective forward-thinking planning systems for salespeople, territories, and accounts, along with effective execution, will sales management create long term sustaining positive results.
About the Author
Ken Thoreson is the managing partner of the Acumen Management Group Ltd. (www.acumenmgmt.com ), a consulting organization focused on improving the sales management functions within growing and transitional organizations. Contact him at (952) 944-7438 or email firstname.lastname@example.org.