Chapter 5
The Sales Revenue System 2.0
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The first signs are often ignored, like the empty coffee pot in the company’s break room; then it’s misdiagnosed. As it sabotages revenue projections and drains profits, the often well-meaning executive team may panic and throw money at it hoping that it will go away. When that doesn’t work, executives may follow the sales department’s suggestion and cut prices…and profits. This may temporarily give the company a blip on the EKG, but the inevitable flat line will follow.
There were accounting processes, quality control processes, manufacturing processes, request for time off processes; you name it, there was a process for it. However, there was a glaring omission of any defined selling processes.
We then discovered that a selling process alone wasn’t the magic bullet we had hoped. Sometimes it set sales heading in the right direction, but it still wasn’t enough. We further discovered that in addition to the sales process, there were three additional critical processes (forecast, incentive and staffing) that needed to be integrated for higher level revenue performance. We refer to this four process model as the Sales Revenue System 2.0.
The Sales Revenue System 2.0 has four integral core processes:
Our experience indicates that most companies are operating on only one or two of these core processes with predictably disappointing results. Companies are limping along, vulnerable to sluggish growth, slower market reactions, instability against competitors, lower margins, and unreliable sales forecasts to name a few.
The four core processes in the Sales Revenue System 2.0 are:
1. 5 M’s Sales Process
We’ve seen it hundreds of times: We’re asked into a company to fix their ailing sales performance. When we request an outline of their selling process, we are handed a one-page commission plan. Period. End of story. Some companies honestly believe that a commission plan is all they need. It is the "just add water and go to the bank" sales approach. In the absence of a structured sales process, you run the risk of experiencing longer sales cycles, lower margins, revenue shortfalls, and a more stressful job.
The first Chief Revenue Officer
task is to define the selling process for the business. Our Revenue
System model is based on the 5 M’s Sales Process. It can be operational
in days to weeks (not months to years) since it is based on your
business today
and not
on hypothetical models of perfect world scenarios
that have minimal applicability to the business.
2. Bankable Forecast Process
A forecasting system designed
by sales people is inevitably designed to help preserve the
salesperson’s job. Reps that can’t sell know they have to look valuable
to keep their payroll number active. The quick fix is to pump up the
forecast numbers for short term survival. As Chief Revenue Officer, you
cannot waste time learning every rep’s unique forecast system and you
certainly can’t rely on its projections for strategic short-term and,
heaven forbid, long-term planning. Once you have
your selling system
defined, you will be able to extract the
objective data to report and determine
accurately where you are in the qualifying/sales process with each
revenue opportunity. This objectivity provides the foundation for a
Bankable Forecast Process.
3. Results-Driven Incentive Process
Most companies have a one-size-fits-all mentality about sales commission or incentive plans. We know if the incentive system isn’t structured correctly, companies typically wind up losing their strongest performers.
When a company inadvertently rewards its weaker sales
members for only casually maintaining business it would have received
anyway, even the good reps are tempted to settle into the role of an
overpaid account manager. Additionally, companies with this approach
realize no significant growth because they don’t recognize the true
value of new business in their incentive program. This usually concludes
with your best talent departing for more lucrative opportunities,
leaving you with overpaid and underperforming account "babysitters."
Hopefully, this is what your primary competitors are doing today.
4. Skills-Based Staffing Process
Once you have defined your selling process, forecast process, and incentive process metrics, you can now identify the desired skills and characteristics required for your sales positions. By defining and communicating the required skill sets, you will be screening and selecting applicants based on who can and will sell in your marketplace. The real benefit is eliminating the emotional hiring that produced the crew you have today.
Note: Each of the following sections of the Sales Revenue System 2.0 model concludes with an implementation chapter that outlines the installation workflow and how to determine when each core process is working.