themanager.org

Questions every CEO should be asking his managers

By Ian Widdop

Do you know what is really driving your business? Ask your sales managers, says Growth Partners director Ian Widdop.

Losing a deal or a bid can be costly. But do you stop to ask why your company didn’t win? Do you ask your managers, and do you question the client? Of course, winning a deal is cause for celebration. But it is just as important after winning to ask what you did right.

The answers to these questions may surprise you. Sometimes it is because your company was out and out the best of the bunch and sometimes it is because your quote was the most competitive. But sometimes it is simply luck – being at the right place at the right time. In any case, it is vital for the future success of your business to know, rather than to presume, the reasons.

The following 20 questions reflect issues that emerge regularly in sales-oriented companies, and especially those involved in business-to-business commerce. As CEO, you should demand answers, and urge your managers to think along the same lines. While executives – many of them accountants – focus on cost-cutting, the savvy manager knows that an effective sales force, is the most important driver of shareholder value.

1. Are you gaining or losing market share? If so, why?

2. Are your margins eroding? If so, why? Studies of 40 JSE-listed companies done by Growth Partners show that while many are experiencing higher revenues, their margins are down. This is largely because products are being commoditised and big companies are consistently beating suppliers down on price.

3. Is your cost of selling too high? Or is it too low?

4. What percentage of your sales team are meeting or exceeding quota?

5. Is your sales organisation respected/admired in the marketplace?

6. Is your sales approach a distinctive source of competitive advantage? If not, why not?

7. Can your sales force create and sell business solutions? In an attempt to sell solutions, many companies end up giving away free services.

8. Do they know how to get paid for the value these solutions deliver? It is not enough to tell a client what the benefits are of a specific service; the salesperson must be able to demonstrate how it improves his cash flow and bottom line. This aspect should form part of sales development, but many organisations have found the change from product to solutions sales both challenging and difficult. Many have failed.

9. How do your customers rate your sales force? While many companies do send their clients questionnaires, there is much more to be done. Engage your customers in a continuous dialogue; learn about their strategic objectives and initiatives – and how you can contribute?

10. How solid is your sales pipeline and how accurate is your sales forecasting? You have to know what deals will break, and when. Get your sales force to identify business opportunities, assess them and walk away from unpromising deals. Get them to win four out of seven deals rather than two out of 10.

11. Is slippage in your forecast a recurring problem? Poor pipeline management leads to deals slipping out month after month. This can be countered by critically examining the opportunity using relatively simple assessment tools, that highlight critical issues such as management support, political issues, potential threats and the availability of budget. Posing the right questions often reveals that many potential deals are just works of fiction.

12. What is your sales force turnover - is it too high or too low? Losing 30% of your sales force a year is probably too high, while 100% retention is too low. You have to weed out underperformers.

13. How effective is your sales compensation plan? Does it drive the right kind of behaviours? You may have a good system for rewarding staff for winning new business, but not for retaining existing customers. This may lead to staff neglecting customer service. If the system is inherently unfair, staff will try to beat it, playing politics instead of focusing on winning and keeping customers.

14. How effective is your sales management – do they have the tools, skills and systems to deliver results through a sales team? Have they been properly trained? Problems arise when companies adhere to a hierarchical system, promoting good sales people out of sales and into management. One solution is to give good sales performers high visibility and status within the organisation, leaving management to those with an aptitude for it.

15. How well are sales and marketing integrated? Marketing’s function should be to educate and precondition the market in anticipation of sales’ arrival. A targeted campaign using direct marketing tools, writing white papers and conducting workshops should make the sale task easier. If your sales and marketing departments are not talking to each other, they should be.

16. Do the salespeople see marketing as an asset that helps them sell more effectively? Many salespeople undervalue marketing. A clearer understanding of their respective roles and better collaboration between the departments would rectify this.

17. Do you routinely conduct win/loss reviews? When you win business, when you lose it – learn from it.

18. Do you have a clearly articulated and effective go-to-market sales strategy? Ask yourself, what do we want to be? Do we want to sell a commodity or solutions, and is our organisation geared to do it properly? Who are we selling to, and how are we selling? Asking these questions will help clarify where you should sell, how you should sell and what your value proposition is. Could all of your executives explain it succinctly and with the same message? Make sure you have a clearly articulated plan that everyone understands. Many companies condense their message into a value statement, such as “The better connection”, or “We sell executive loyalty, not hotel rooms.” Finally, remember it is better to be wrong than to be confused!

19. Do you have a defined process for identifying, hiring and retaining genuine sales talent? Many employers fall down when it comes to hiring because they follow an ineffective process of identifying, assessing and interviewing. Asking shortlisted candidates to complete a test such as the HR Chally Self-Descriptive Index – which accurately predicts future performance based on actuarial principles – substantially reduces hiring mistakes. In the case of the Chally assessment, it can achieve 90% hiring accuracy and higher.

20. Do your senior salespeople know how to sell to senior executives? As the shift to solutions sales escalates, salespeople must learn to sell higher and higher up the client organisation. If a salesperson is selling at the executive level, they need the skills to interact at that level and a compelling value proposition that is relevant.

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About Growth Partners

Growth Partners was founded in 1997 to provide specialised business transformation services to companies eager to address strategic business issues relating to sales, marketing and customer relationships in the Business-to-Business arena.

Contact

Ian Widdop, Growth Partners, (011) 807-3469, ian@growthpartners.co.za

Karen Breytenbach, FHC Strategic Communications, (011) 608 1228, karen@fhc.co.za