That’s a very controversial thing to say however Sales Management has developed into a world where the Sales Manager, the VP of Sales and any of the sales management team are all about the numbers.
So how/why has this evolved?
It’s developed because of the pressure that is on sales management. Sales management is a very complicated area, it has a lot of areas of responsibility and as such many Chief Revenue offices or Sales Management teams are expected to perform at a higher rate to return. It has become all about the numbers.
How many people do I have on my sales team? What kind of ROI do I have from them? Who is are my A, B, and C performers and how do I categorize them. As a sales leader, I ’m coaching them on the sales methodology, growing pipeline and closing deals. With the added requirement for numbers, I’m trying to figure out where I’m going to spend my time.
There’s a lot of things in sales management to do, to make the numbers. There are always competing tasks that will distract your focus. Prioritizing that list on a daily basis is a challenge in itself with the weight of trying to figure out how best to move your team forward to the end revenue goal.
At some startups, the pace is so fast in fact, that there is no real sales methodology. Why? It is because they’re still trying to figure it out!
I’ve got a new product in my startup, and I’m trying to disrupt the market. Many times I have salespeople who are very driven and bright, but it’s going to take a lot of effort for them and the sales management team to figure out the best way to make a new sale. Then once you do, how do you then duplicate that sale? Looking at a sales territory can be daunting particularly with a new product and a unique value-add customer proposition is to be positioned. So what can be done?
There’s a gap in the organization that’s very obvious.
When you’ve made a few sales, and identified some key customers, you then begin to try and duplicate that successful process. In this whole cycle of “figuring it out,” many good salespeople, don’t make it. And often turnover rate, which I have seen at 100% in the sales team over 12 months, is acceptable to that startup. That’s just wrong! As sales managers, we must do better than that and invest in our people.
Assuming this is the approach you have used to this point to obtain your growth and sales, it’s too late to change the past. What’s behind you stays behind you! However, now is the time to ask yourself some harder questions… Can you keep doing this the same way, as you try to move forward? The cost of hiring, onboarding and letting salespeople go is high. It’s hitting your bottom line! And that’s not the only thing!
Next, add new investors in the form of Series A or Series B funding, who expect faster growth, and who have lofty expectations, are now on your shoulders. With external investors comes more reporting requirements for Sales Management, and leading to potentially even less time that you can spend with your sales team to help them develop.
In Software-as-a-Service organizations the revenue focus is on three different revenue building areas; that of, a) new sales to new customers, b) cross-sell or up-sell to current customers, and c) reducing churn.
Customer Acquisition Cost is one of the ultimate measures of a startup, and has a considerable impact on profitability, as you can see from the table. Increasing the cost of sales impacts directly your Customer Acquisition Costs, so Sales Management should not just be on new sales, but must also be selling more to current customers, AND preventing churn.
In large organizations, real territory planning takes a full view of the customer lifecycle, but somehow in smaller organizations, many don’t think customer churn or customer acquisition cost should be in the heads of sales managers. Think again, if you want to expedite growth, and be profitable.
Ensure you measure the RIGHT metrics that affect your business, and are representative of true growth!