In the first of this blog series, Padeda takes a closer look at the latest global research and the action companies can take for long term sales performance sustainability
As sales leaders, we’re all too aware of the detrimental impact of inefficient sales processes and the knock on effect on overall team performance. Yet, it seems many companies are still not getting it right. In fact, according to the latest CSO Insights research into 900+ global sales companies, a staggering 80% of organisations use sales processes that lack the rigour needed to drive the business. A surprising statistic given that the concept of sales processes is not exactly a new revelation.
If we look at it in a positive light, that 80% figure doesn’t mean those companies have failing operations. We know that because the same research also shows that the majority of sales organisations do make their numbers. On the face of it, it looks like sales machines are running pretty well. For example, revenue and quota attainment were up for the third year in a row, both increased by 7%. However, when we delve deeper into the next layer of numbers measuring the percentage of sales people who are successful, win rates and conversion rates were completely flat compared to last year’s figures. Also, adherence to many key sales best practices remains low with leading indicators such as seller retention, customer retention and customer relationships all in decline.
The fact that revenue and quota attainment increased cannot be taken in isolation, as it’s clear those headline figures don’t tell the full story. The study revealed that half of the deals that are forecasted to close fail and customer retention has decreased as seller attrition increases. What these indicators suggest is that strong economic growth is the variable that powers sales organisations. So, when the economic outlook is less rosy what happens then? The performance is not sustainable during the long term and many companies are leaving themselves vulnerable. Hence the need for more companies to join the top 20% and truly excel at sales processes.
For organisations that fall into the other category, they may still be making their numbers – but why settle for a B grade when you could consistently be getting A*? Their sales machines are working in the short term yet if they’re based on weak foundations they are not performing to their best potential. What we need to do is take a closer look at the fifth who do achieve ‘world-class’ status and how they operate differently.
One common thread running between the higher performers is their steadfast focus on sales transformation initiatives. Having a robust sales system and properly defined sales processes are essential for future durability. According to the CSO Insights research the main hurdles facing sales leaders are inefficient internal operations, inefficient sales process/methodology and organisational misalignment. The most successful organisations have sales systems that align their functions, processes and strategies around building and growing relationships with clients.
While many of the 80% will probably have defined sales processes, one critical point is that the process needs to be aligned to and derived from the customer path – from making a decision, awareness, buying and ultimately implementation. When a process has been defined internally, it will not be effective – it has to track the buyer’s journey in order to maximise engagement. Every piece of research shows that customers demand value and want to work with organisations that can see beyond the deal. A defined sales process will help to cut through the complexities of engagement and provide direction to teams on how to effectively execute their approach.
Aligning each step of the sales process to the customer path will support sales teams to initiate and manage opportunities and grow relationships. The CSO Insights research also showed that many companies feel their seller practices need to be significantly improved. Evidently, out of the list of 16 seller practices highlighted, the majority of sales leaders said they were being performed ‘worse’ than five years ago. Most organisations say their opportunity management (66%) and account management (60%) needs improvement or major redesign.
The reason sales leaders cite is down to increasing complexity. External pressures are mounting with average figures showing the buying cycle is 5+ months, there are 6.4 decision makers involved, the markets are blurring and competition is intensifying. The general view seems to be that investing in new sales people and technology will solve the problem. However, rather than simply bringing additional costs into the system, another key area that needs addressing is performance support to help cross-functional teams redefine their approach.
Currently, sellers spend less than one-third of their time selling, and managers spend twice as much time on internal work as they do on coaching. Support in terms of training, coaching, content and communication will enable teams to effectively and efficiently execute the customer engagement approach.
These are some of the major areas of consistent focus for those companies that are classed among the top fifth.
1) They define their sales process
2) Derive it from the customer path,
3) Implement it,
4) Integrate it with technology and, more importantly,
5) Ensure their people know how to use it.
Just making the numbers might be sufficient in the short term. But every organisation has the ability to excel and sustain it for the long term.