Sales Management Association Webcast Five Signs You Need ......from Hero to Goat quickly. For...

Sales Management Association Webcast

28 September 2016

Presented by

Five Signs You Need to Graduate from

Sales Effectiveness

© Copyright 2016 Sales Management Association.

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https://twitter.com/kevingraySPM


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The Sales Management Association

A global, cross-industry professional association for sales operations and

sales management.

Focused in providing research, case studies, training, peer networking,

and professional development to our membership.

Fostering a community of thought-leaders, service providers, academics,

and practitioners.

Learn More: www.salesmanagement.org

Slide 2© 2016 The Sales Management Association. All rights reserved.

http://www.salesmanagement.org/

© 2016 The Sales Management Association. All rights reserved.

Today’s Presenter









Sales Management Association Webcast

28 September 2016

Presented by

Five Signs You Need to Graduate from

Sales Effectiveness

© Copyright 2016 Sales Management Association.









59/28/2016 SBI Proprietary & Confidential. All rights reserved. 59/28/2016 SBI Proprietary & Confidential. All rights reserved.

FIVE SIGNS YOU NEED TO GRADUATE FROM SALES EFFECTIVENESS

Using a Revenue Growth Methodology



What is an expectations treadmill?

• Executives are hired to create value through revenue growth for

their shareholders and have known for a long time that the key to

a higher valuation is revenue growth.

• Gone are the days of slow and steady growth.

• Executives brought in to improve a company’s performance have

low expectations and substantial room for improvement, to start.

• However, once signs of success are visible, investors push

expectations higher and higher.

• Executives have to pull off herculean feats to exceed these

revenue growth expectations.

#1: You are on the expectations treadmill and cannot fall off.



• Sustaining growth is very hard, particularly for large companies. The

math illustrates this:

#1: You are on the expectations treadmill and cannot fall off.

Year 1 Year 10 Expected Growth Rate

Revenue Difference

Current Revenues: $1

Billion

Revenues at 5% Growth

Rate: $1.63 Billion

+$530 Million

Industry Growth Rate: 5% Revenues at 8% Expected

Growth Rate: $2.16 Billion

Investors Expected

Growth Rate: 8%

Can you

reinvent

yourself to

find the

$530 Million

needed?

Salesforce Effectiveness alone cannot produce this amount of

Revenue Needed. Executives need a Revenue Growth

Methodology



Temporary Spikes in Revenue are misleading. Sales Executives can go

from Hero to Goat quickly. For Example--Why?

• New Products beat the Competition

• New Sales Leader is hired which boosts Sales Productivity

• Customer base goes through a Product Refresh

• Only Standard Operating Procedures or Best Practices are put into

place which give short Revenue lifts

#2: You make your number sporadically, but not consistently, and

not always.


REVENUE GROWTH METHODOLOGY METHODS

• Emerging Best Practice: A process or methodology used by top growth executives. Emerging best practices cause accelerated revenue growth.

• Best Practice: A process or methodology used by many within the industry. These are not as impactful as Emerging Best Practices.

• Standard Operating Procedure: An industry standard. If not in place, their absence may cause revenues to decline.

Salesforce Effectiveness alone cannot produce this amount of

Revenue Needed. Executives need a Revenue Growth

Methodology deployed through Emerging Best Practices



Revenue Goals can simply be unrealistic

• One Company in our Research had a Goal of 20% Revenue Goal for

20 years

• Current Revenues are $5 Billion in Sales

• Industry Growth is 5% Projected

• Market Maturation will occur which slows growth

#3: Your revenue goal is very hard to make, and may be unrealistic.

Little

Chance of

Success

Sales effectiveness programs often do not take into account where

an industry, company or product are in their life cycle. This is the

reason these programs often fail to deliver above average revenue

growth.



A company’s revenue growth rate is constrained by the growth rate of the

industry in which it participates • For example, if the size of your industry is $10 billion with a growth rate of 10%,

it is growing $1 billion per year.

• This is the growth available to the industry participants. If your annual revenue growth

rate is less than 10%, then you are underperforming.

• If your annual revenue growth rate is more than 10%, then you are outperforming,

capturing expansion opportunities, and taking market share from your competition.

#4: Your industry is growing revenues more than you are.

Sales effectiveness programs are only focused on sales. And because of

this, they often fail to deliver revenue growth that exceeds that of the

industry



Which Market do you compete in?

• Market Share:

• Gains in market share are an important component of growing revenues,

especially

if you are operating in a mature market.

• Growth that comes from taking share from competitors is the hardest type

of growth to obtain, and typically the most expensive.

• Market Expansion:

• In comparison, growth that comes from general market expansion is much

less expensive because competitive retaliation is low since all competitors

are doing well.

#5: Your competitors are growing revenues faster than you are.

Sales effectiveness programs do not deliver revenue growth by taking

share from competitors solely. Product teams need to establish better

pricing and packaging to gain share which is something Sales

Effectiveness doesn’t do.


WHAT IS A REVENUE GROWTH METHODOLOGY?

A management method used to accelerate the rate of revenue growth.

Why is it needed?To grow revenues faster than their competitors and industry.

How does it work?Gets the functional strategies of sales, marketing, and products into alignment.


REVENUE GROWTH METHODOLOGY

CORPORATE STRATEGY PRODUCT STRATEGY MARKETING STRATEGY SALES STRATEGY

• Step 1: Objectives

• Step 2: Markets

• Markets

• Accounts

• Buyers

• Step 3: Products• Coverage & Channels

• Packaging

• Pricing

• Step 4: Competitors

• Step 5: Go-To-Market

• Step 6: Talent

• Product Planning• Markets

• Accounts

• Buyers

• Step 2: Product Principles• Buyer Behavior

• Customer Experience Design

• Step 3: Go-To-Market• Product Road Map

• Product Launch & Messaging

• Pricing

• Packaging

• Step 1: Marketing Research• Markets

• Accounts

• Buyers

• Step 2: Strategy and Planning• Brand Strategy & Planning

• Brand Positioning & Messaging

• Campaign Strategy & Planning

• Content Strategy & Planning

• Budgeting Strategy & Planning

• Step 3: Resources• Marketing Organizational

Design

• Agency Management

• People Plan

• Step 4: Execution• Account Based Marketing

• Lead Generation

• Customer Marketing

• Partner Marketing

• Step 5: Marketing Support• Product Marketing

• Field Marketing

• Marketing Operations

• Systems

• Step 1: Sales Planning• Markets

• Accounts

• Buyers

• Step 2: Engagement• Prospecting

• Sales Process

• Organizational Design

• People Plan

• Channel Optimization

• Territory Alignment

• Quota Setting

• Compensation Planning

• Step 3: Sales Support• Sales Operations

• Sales Enablement

• Systems

• Back Office Support

REVENUE GROWTH METHODOLOGY

A Revenue Growth Methodology

allows you to make your revenue

growth target every quarter, and

every year, because it is not solely

dependent on execution. It

perfectly blends strategy

(multiyear) with execution (in-

year).


HOW TO USE A REVENUE GROWTH METHODOLOGY

• Identify hidden revenue growth opportunities.

• Develop innovative channels to route products to market.

• Develop an organizational model with sales, marketing and product working in harmony.

• Increase revenue per sales person by optimizing territories, quotas and compensation plans.

• Launch new products successfully.


WHAT IS THE BENEFIT OF STRATEGIC ALIGNMENT?

Why?

• RGM Perfectly blends strategy with execution

• Implements emerging best practices as opposed

to standard operating procedure

• Facilitates and achieves strategic alignment

among the external market, the corporate

strategy and the functional areas.

There are four primary benefits

of implementing the RGM:

• Probability of obtaining the

revenue growth objective

will be increased

• Customer Lifetime Value

(CLTV) will increase

• Productivity per sales head

count will increase

• Customer Acquisition Cost

(CAC) will decrease

These benefits are realized when

the RGM is

implemented by great business

leaders.


CUSTOMER ACQUISITION COST DECREASES


CUSTOMER LIFETIME VALUE INCREASES


PRODUCTIVITY PER SALES REP INCREASES


WHO IS USING WHAT?


COMPANIES THAT MAKE THE NUMBER


CALL TO ACTION

• Is Your Strategy a Problem?• Are Your Tactics a Problem?• Build a Sequenced, Prioritized Roadmap of a mixture of

Strategy and Tactics (Execution)• Fundamental Execution


SALES BENCHMARK INDEX

SBI Daily Blog: http://www.salesbenchmarkindex.com/blog

SBI Weekly Podcasthttp://www.salesbenchmarkindex.com/sbi-podcast

SBI Quarterly Magazine:http://www.salesbenchmarkindex.com/the-sbi-magazine

SBI Monthly TVhttp://www.salesbenchmarkindex.com/tv

Revenue Growth Methodology:

https://salesbenchmarkindex.com/how-to-make-your-number-in-2017/report/

© 2014 IBM Corporation

FIVE SIGNS YOU NEED TO GRADUATE FROM SALES EFFECTIVENESS Using a Revenue Growth Methodology

© 2014 IBM Corporation25

HOW TO USE A REVENUE GROWTH METHODOLOGY

• Identify hidden revenue growth opportunities.

• Develop innovative channels to route products to market.

• Develop an organizational model with sales, marketing and product working in harmony.

• Increase revenue per sales person by optimizing territories, quotas and compensation plans.

• Launch new products successfully.© 2016 IBM Corporation


PEOPLE, PROCESS AND TECHNOLOGY

Sales Management

Sales Analytics

Sales Planning• What is the market opportunity & potential?• Which accounts are the most profitable?• Do my sales quota targets align with the revenue plan?• How should we carve up our sales territory coverage?• What should each of the sales people carry in quota?• Do we have the right number of sales reps and talent?

• Are there any territory coverage gaps?• Is there any unassigned quota?• Are the incentive compensation plans motivating the sales reps?• Do we have the right dashboards, and reports • Can we make changes when disruption occurs?

• Are we in jeopardy of achieving quota targets?• Which sales team/individual is gaming the incentive compensation

plan?• What products are performing poorly in the market?• Are there any sales territories under-served?• Are the incentive comp plans motivating the right sales behaviors?

Aligning CEO, Finance, Sales, Marketing, Product© 2016 IBM Corporation


HOW INNOVATIVE TECHNOLOGY CAN HELP


Sales Planning

Account and ScoringProduct ProfitabilityTerritory Coverage

Revenue Planning/Quota SettingSales Capacity Planning

Sales Management

Territory ManagementQuota Management

Incentive Compensation ManagementSales Recruitment, Hiring and On-boarding

Sales Analytics

Sales Forecasting & PredictabilityCost of sales vs cost of compensation

Revenue & profitabilityMarket trends, patterns & opportunities

Sales Performance Management (SPM)A comprehensive solution


SPREADSHEETS SIMPLY DON’T WORK


Many firms still rely on a patchwork

of spreadsheets, email, manual

processes, and outdated legacy

systems to manage and administer

variable comp plans


SPM JOURNEY


Un

iqu

e v

alu

e d

elive

red

Relative scope and complexity of

change

1 2 3 4

Client is operating in a chaotic

environment where they are

using spreadsheets and

manual processes, errors in

commission payments, lack of

visibility, etc.

Client has taken control of the

sales performance and

incentive compensation

processes and is no longer

working in spreadsheets,

manual processes, lengthy

payment cycles, and has gain

trust and confidence with the

sales team.

CHAOS pre-ICM

STABILIZEthe operation

OPTIMIZEdecisions & processes

Client is able to provide visibility

into sales performance and

metrics to make better decision

with some level of reporting and analytics.

Client is leveraging a

comprehensive sales planning,

management, and analytics

solution to guide data discovery

and predictive analytics with

visualizations of sales performance

and incentive compensation data.

Reduce disputes

Calculate accurate and timely commissions

Meet audit and compliance

requirements

Manage workflow and routing processes

Gain sales team trust and

confidenceSales performance visibility with dashboards &

reportsSpreadsheets or

Home-grown solutions

Improved decision making

Gain some useful analytics and

insight

More satisfied sales team/reps

Stability and routine

Deep analytic discovery and

predictive insight

Decisions that result in highly

impactful business results

Ability to be agile and flexible (i.e. economic,

competitive, market conditions, etc.))

Plan, manage and analyze sales performance

Value realized

COGNITIONdata & analytics

Isolated processes

No collaboration (i.e. Sales, Finance,

Marketing)No visibility of sales performance

Errors in Overpayments

Mis-alignment

Make strategic and tactical decisions

faster’

Evaluating SPM Solutions

Implement SPM Solution

Fully adopt SPM Solution

Expand SPM to Planning, Management & Analytics

First step


MOVE FROM CHAOS TO STABILITY


► Added 5-6 hours of selling time per rep per month

► Cross-sell ratio (products owned per customer) increased from 2 to 5.66

► Over $1 million in reduced commission overpayments lead to system payback in 1st year

► Improved plan managementincreased profit margins by25%

ENABLE & MOTIVATE SALES TEAMS

FLEXIBILITY TO ADAPT

BOTTOM LINE IMPROVEMENTS

DRIVE OPERATIONAL EFFICIENCIES

► Payout process reduced from 2 weeks to 2 days.

► Went from hundreds of spreadsheets with manually entered data to one simple system

► Reduce times to set up new plans by 250 hours annually

► Modeling allows simulation of plan changes or adding new components prior to rolling out

Many organizations

simply begin by

moving away from

spreadsheets to

Incentive

Compensation

Management as the

first step in their

SPM journey.


To Learn More…


ibm.com/spmhttps://www.linkedin.com/groups/8334140

Best Practices in Sales Performance Management – Incentive Compensation, Territories and Quotas

@IBMSPM

Sales Effectiveness Initiatives


Sales effectiveness initiatives are

insufficient? Doesn’t this just

describe poor sales effectiveness

initiatives? Are they being ignored?









Spreadsheets


Do you think

spreadsheets should be

eliminated altogether or

used less?









Incorporating Market Benchmarks


How do you get good data on

this if you are not in an

industry where the information

can be found easily?









Predictive Analytics


Can you give us an example of a

company or industry where predictive

analytics resulted in a change in how

sales organizations make decisions?









Research


What is the profile of the companies you

used to determine the statistics? (Size,

Product vs. Service, Market Type, etc.)









Questions and Discussion


Enter your questions in the

“Questions” box on the right

hand side of the webinar

application window.

Did we run out of time before we got to your

question? Presenters can follow-up with you via

email. Feel free to submit more questions if

you’d like an offline response.









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