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Managing sales in a down market final
The document discusses strategies for managing sales during economic downturns, emphasizing the need for a different approach as traditional sales methods may no longer be effective. It highlights a significant study on sales forces, revealing that only a small fraction meets world-class criteria and outlines the importance of upgrading sales processes and training. Recommendations include focusing on customer experience, refining sales strategies, and leveraging top talent to drive productivity and success in challenging markets.
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Managing sales in a down market final
- 1. Managing Sales in a Down MarketPresented by - Peter GilbertCEO of HR Chally SA
- 2. Chally’s Position inthe Marketplace“Chally provides the only quantitative sales benchmarks, assessment tools, and metrics for managing the “people” part of the 3 key pillars of business: Strategy, People, and Process”LeonardW. Frey III, IBM, Global Business Services, Principal, Service-Line Leader, Sales Strategy and Transformation“Chally is like the GPS to Sales Success”GerhardGschwandtner, Publisher of Selling Power“Chally is the proven comprehensive source of sales position assessment and sales research” "AJ" Gandhi, Managing Director, Sales Executive Council
- 3. WORLD CLASS SALES BENCHMARKING STUDYOver 7300 sales forces surveyed over15 years.80-100 000 executives interviewed.Executives asked how and why they buy.All ratings based on customer feedback.Careers of 230 000 salespeople tracked and monitored.THE RESULTS:-In 15 years only 21 sales forces rated as world class by their customers!!! Only 1 salesperson in 1000 meets world class criteria
- 4. Most CEOs shouldbe really embarrassed about their sales forces!
- 5. The reality isthat the economic pie is much smaller…Some people are going to be badly hurt.Some will not survive.Only a small number will have the will, discipline and strategic vision to thrive.
- 6. There is plentyof bad news!Stock Market Crash
- 7. Wall Street Crash- 1929
- 11. But there isalso good news…Paula CreamerNatalie GulbisSome people are making truck loads of money!!
- 12. What are the possible outcomes of the recession?
- 13.
- 14.
- 15. Simply Survive…But thismay not be the good news it seems!!!
- 17. In South Africamost sales managers have less than five years experience.Many of them may have never faced a tough market.And about 70% have never received any sales management training!
- 18. To really thrivein a recessionary market is going to require a radically different approach.The story of the 1988 America’s Cup illustrates the point.NEW ZEALANDThe holdersUnited StatesThe Challengers
- 19.
- 20. Catamaran – America’sCup 1988
- 21. What is different?Fear,uncertainty and doubt is prevalent.
- 22. How purchases willget made has changed.
- 23. What contributed tosales success in the past – won’t guarantee success in the future.Market Contrast22
- 24. The Implication forSalesRisk Aversion
- 25. Cost Cutting –Cash Conservation – Spending Cuts
- 26.
- 27. Slow down ofdecision process
- 28. Corporate approval processhas changed/risenSurvivingThriving in the CurrentEconomic Crisis
- 29. We’re Getting MuchBetter at ThisThe Great Depression 1929–1939Stock markets crashed worldwide, sparking a global downturn, including a second recession in 1937It took 10 years to fully recover In modern times the average is 24 months!But !!!25
- 30. Those companies whosuffered most or actually failed made 2 successive mistakes: They reacted “inappropriately” Were too slow to prepare for the turnaroundThe Result:- More companies that failed, failed after the recession, not during it!!!26
- 31. Stereotypical Success StoryNobodyever got fired for buying IBM
- 32. The Difference BetweenBusiness Winners & Losers28
- 33. A Roadmap ForSuccessStrategy
- 34.
- 35. Upgrade systems and processes to “C” suite standards
- 36. Audit & Re-evaluateassociates, partners, prospects, customers and sales force. Direct and commit resources accordingly
- 37. Focus on majorimprovements to the customers experience and results : Deliver value
- 38. Bring in thebig guns – display confidenceStrategy
- 39. “Managing during thegrowth stage of the networking business meant you had to run and gun. Hiring as fast as you could, ramping the new people to just basic competence, and then pushing their activity to maximize your coverage. Making the sales numbers required stamina, not necessarily brilliant strategy” Bruce Parelskin Cisco Systems
- 40. Refining and EnhancingYourGo-To-Market Sales Strategy “A Go-To-Market strategy is a purposeful and defined strategy to serve customers, win market share at acceptable margins and outperform the competition.”
- 41. Go-To-Market Strategy: WhyDoes It Matter?Sell more of your product/service fasterGet your ideal price more oftenIncrease customer satisfactionHigher customer loyalty
- 42. Increased revenue per salesperson
- 43. Decreased time tomarket
- 44. Decreased time inemployee performance
- 45. Increased number ofsales people making quota
- 46. Decreased unwanted salesturnover
- 47. Increased revenue permember
- 48. Increase renewal retentionIncreaseprofitability and customer value
- 49. Go-To-Market sale strategyModel (GTMss)InfrastructureCustomer Co-ManagementEfficiencyValuePrice/PerformanceNew Source Of WealthRelationshipPartner BasedTransaction BasedMarketing & MessagesRequirements FitVision FitCustomer EngagementMake the ListMake the RulesMake the SaleMake the StandardBusiness FitSolution FitTrust BasedPolitical BasedProcess PerformanceBusiness ImprovementEffectivenessDecisive ForceKnown Need/SolutionUnknown Opportunities/New SolutionsKnown Need/Unknown SolutionKnown Objectives/Unknown Strategies
- 50. Business Process andAlignmentGo-To-Market Operating SystemBased on the chosen Go-To-Market Sales Strategy:
- 51. Design a SalesProcess which operationalises the Sales Strategy
- 52. Align Marketing, HumanResources, Technology and Fulfillment to the strategy and process
- 53. Hire and Trainto the process based upon demonstrable competencies and attributes
- 54. Select and installthe correct management metrics and leading indicatorsFOCUS, FOCUS, FOCUSOld Chinese Proverb“If you chase two monkeys both will escape.”
- 55. High Intensity FocusTopManagement become deeply involved
Editor's Notes
- #2 Sales organisations of every kind are feeling the pinch. Yet some are doing far better than others and, predictably, some are going under. This presentation looks primarily at B-2-B sales organisations and explores the differences between growth markets and down markets, as well as the strategie s and tactics that separate the winners from the losers.
- #3 The HR Chally Group is a talent management, leadership development, and sales improvement corporation providing personnel assessment and research services to more than 2,500 customers in 35 countries for over 33 years.Chally is recognized as an international technology leader in scientific assessment and prediction for selection, job alignment and leadership development, and for management assessment.
- #4 Since 1993, HR Chally has interviewed 80,000 business makers across a broad industry spectrum to identify the critical sales practices of exceptional sales forces as measured by the customers they serve. During that timeframe, Chally has rated more than 7,300 sales forces in total, and only 21 have met the World Class criteria.
- #5 Sales remains the corporate stepchild and, frankly, the quality of the vast majority of sales forces that I encounter is very poor. A carefully considered and well targeted investment in enhancing sales effectiveness can yield handsome, and even spectacular returns.
- #6 Lest there be any confusion, in a recession the pie gets smaller, and most companies will see a slowing down in sales, or even a catastrophic failure. However a small number of companies have the strategic vision, the will and the discipline not only to survive, but to thrive in times of economic trouble.
- #7 There is plenty of bad news around, and equityies have taken a hammering.
- #8 Many people, at least those my age, will be familiar with grainy black and whit photos depicting the horrors of the 1928 Wall Street crash and the subsequent depressin.
- #9 And the impact of the recession of today is graphically highlighted, by images ofparking lots filled with unsold motor vehicles.
- #10 And, in some cases, unused airfields being used for storing tens upon tens of thousands of unsold vehicles.
- #11 Hopefully,this type of ending is reserved for somebody else’s business and not you!!
- #12 On a lighter note, it is not all bad news, and I hope you will allow me a golfer’s indulgence, and illustrating, through two exceedingly fetching maidens, that some people are doing rather well in these generally rather dismal days.
- #13 So, what are the three most usual outcomes of a recession>
- #14 Interestingly, some companies prosper , and we will explore this further, later in the presentation.
- #15 Predictably some companies crash and burn. Over 200 motor dealerships are projected to fold and the number of Real Estate Agents has declined from 90 000 odd to about 30 000.
- #16 And, inevitably some companies limp through to the finish line. However, what happens thereafter is another story.
- #17 The 2008corporate training budget in the USA was $45 billion and nearly half of that is sales training of some description. Regrettably much of this training is directed at people who are essentially untrainable or training that may have been useful to some degree in the past, but is becoming increasingly irrelelvant, as customers, competitors and markets change Trying to do what we have always done, just a little better, just won’t cut it.
- #18 Managing a sales force is a tough job. Doing it successfully in a recession is hugely difficult. Doing it with little experience, and no training is all but impossible.
- #19 The America’s cup, possibly the world’s most prestigious yachting contest was won by the USA, every year from 1857 until 1983, when it was won by Australia. In 1988 the winner of the challenge division was the USA, who were to meet the holders New Zealand in a contest off San Diego.
- #20 The reigning champions New Zealand, built a state of the art monohull, which pushed the boat specifications to the limit.
- #21 The Americans, headed by multi-millionaire Bruce Conner, were well aware that the winds off San Diego were typically very light-- conditions not particularly favourable to a heavy monohull. After scrutinizing the rules they concluded that it was possible to build a catamaran, which is much better suited to light winds, and complied with the regulations---but only just. The Americans won comfortably and, in spite of legal challenges and protests the result was upheld. As in sailing, sales requires different strategies and tactics in different market conditions.
- #22 A recessionary market is different and, in this presentation we will explore these differences and responses that have worked, and those which have not.
- #23 Briefly, companies typically spend their money much more carefully and typically spend less----BUT THEY DO SPEND. However, decisions are made at much higher levels by executives who are very focused on the value they will receive.
- #24 So salespeople can expect their clients to become much more risk averse and less cavalier about the way the disburse corporate funds. There is an intense focus on cash management and a much more painstaking approval process, which slows down decision making.
- #26 Since the crash of 1929 and the Great Depression, when stock markets took a decade to recover, subsequent recessions have been shorter lived. It is also iimportant to understand that not all economies have been equally affected. Brazil, Russia, India ad China are doing relatively well, and they account for a considerable chunk of the world economy. Some economists suggest that the first quarter of 2010 should the beginnings of a recovery.
- #27 We should, however, be sensitive to the well established fact that surviving the recession is not enough, and many companies fail during the upturn because they responded inappropriately during the recession, and were poorly prepared for the upturn.
- #28 A good example of a business that has weathered many storms, and we will use them as our stereotypical example of a company that has managed to thrive in economically turbulent times. One of the critical issues that IBM understood was the myth that in times of economic difficulty companies will always go for the lowest price. They understood that in such times, companies are more concerned about SECURITY than about PRICE. In fact many customers would rather purchase under-featured, over-priced products, if they are perceived as extraordinarily safe. Hence the brilliance of IBM’s marketing logan“NOBODY EVER GOT FIRED FOR BUYING IBM”
- #29 Our stereotypical “thriver” IBM have improved their performance through all 13 recessions since 1971. They avoided knee jerk responses, and took a longer term strategic view, with a special focus on the performance of all their business units. Where product lines had become commoditised and unprofitable they were divested. For example the printer division is now Lexmark and PCs have been sold to the Chinese.
- #30 We will now look at some of the approaches taken by companies that do well, or at least better than others, during taxing economic times.
- #31 If your business strategy was performing exceptionally well in the good times, you are probably just suffering a hiccup, albeit a pretty severe hiccup. However, as the market turns so will your business. However, the key issue is to use this opportunity, where lower revenues free up capacity, to upgrade your systems and processes. We at Chally, and many of our clients are making massive efforts to upgrade underperforming areas of the business ( such as Sales and HR) to attain what we call “C Suite” standards. We will of talk this more later, but if you talk to the average COO, CFO or CEO, you will understand that sales and HR are perceived as being too subjective, too experiential, and not very quantitative---not a big emphasis on ROI. These are things we are going to have to pay attention to going forward. Similarly we have to look critically at our cutomers, our markets, and our channel partners with the same level of rigour we have just outlined.
- #32 Times have changed. I mean really changed. We all remember the halcyon days of Cisco, and their local partners Didata, who sold Cisco routers faster than they could ship them.
- #33 The Go-To-Market sales strategy (GTMss) is the most critical governing assertion for the business development function. The Go-To-Market sales strategy is to business development as the Mission Statement is to the Company. It forms the bridge between the company and its market(s). It provides the DNA of how you are going to sell as well as the type of relationships you want to have with your customers and partners. Due to its vital and strategic essence, all other business development functions must be in alignment with the Go-To-Market sales strategy to maximise results. If the GTMss is either unclear or undecided (which is often the case), then confusion will result throughout all facets of the business development organisation. It is the noise from this confusion that plagues and sub-optimises many business today. Trying hard to avoid making the wrong decision, senior management easily falls into the trap of making no decisions at all in this all too critical area. The result of such indecision at the top of an organisation is internal hemorhaging that causes critical focus and intensity to “bleed” away, and with it – market share and profits. The Go-To-Market sales strategy defines the overall direction for the business development organisation and provides direction for the following four ciritical strategy components: Customer Engagement : All activities that take you from first contact to first close Message: What type of market perception do we want to create? What types of messages will best achieve this? Relationship: With whom and what type of relationship do we want to have with our targeted customers? Value: What kind of value or value packages do we want to provide to our customers?
- #34 There are many ways to create sales lift in your organisation. Before you take any well-intentioned action, however, especially training or retraining your sales force, you should define and drive a well-identified and clearly stated Go-To-Market sales strategy (GTMss). Think of this as the DNA of the organisation you want to have and the resulting relationship you want to have with your targeted customers. Once the core Go-To-Market strategy has been clarified, then the specifics of the actual sales process can be defined, including the following elements: Customer expectationsCustomer outcomesKey sales activitiesOrganisational and individual competenciesSales support and toolsInformation flowMeasures This process should be supported with fully aligned value propositions.
- #35 The four levels of the Go-To-Market Sales Strategy Level 1Transactions Efficiently meeting the customer’s product or service requirements-based on price, performance, availability, and surety (lack of risk) criteria. Level 2Solution Selling and delivering creative solutions to challenges and opportunities in the customer’s business processes. Level 3Value/Innovation Collaboration with the customer to identify, size, scope and execute new approaches to delivering measurable business value and receiving an equitable return on the value delivered. Level 4Relationship/Partnership Identifying and pursuing new market-based opportunities that you attack jointly with one or more selected customers.
- #36 A company should always avoid conforming its “Go-To-Market” sales strategy to its internal processes, although this is always a strong temptation. The opposite must be the accepted challenge for visionary companies! Conform the internal process, even if they seem to be stuck in organisational cement, to the chosen GTMss. Once the GTMss is selected and clarified, and these sales process finalised, then the following four organisational competency zones should be connected (i.e., aligned for achieving sales excellenc): Human ResourcesMarketingTechnologyFulfilment
- #37 In hard times people put a lot of effort into chasing every opportunity that they can get. As a result, they half sell to twice as many prospects, and that is a recipe for failure. Successful companies target very specifically. It is all about focus, and they keep focus, chase fewer pieces of business, in more depth. They understand that their existing customer base is where they will be more successful. They don’t protect it by purely defensive strategies. They go to their customer base and use their in-depth knowledge to try to embed themselves more deeply to help their customers solve more problems, and capitalise on more opportunities. And that is how they survive hard times. If your customers truly believe that your mission in life is to makethem more successful, you are on the right track
- #38 Along with the focus we have just described, successful companies seek to communicate key messages by imbuing their salespeople (and other staff) with levels of confidence that are probably lacking in their competitors. Neil Rackham tells of sitting on a procurement committee, as part of an assignment. # companies wre competing to supply an IT storage solution—IBM and two smaller players. IBM were the most expensive. One player panicked and cut their prices. The committee were horrified!! The other player focused on their product elegance,as well as their financial stability. They won the deal.
- #39 As discussed earlier, it is critical to upgrade our expectations, and our performance in key areas, such as sales and HR
- #40 CSO Insight research over 1000 sales forces showed that only 53% of B-2-B sale reps made quota. And management just accept this. Just hire more salespeople until we hit our sales targets. Imagine if the Production Director reported that he had missed his production targets by 47% he would be fired!! Pre-recession reps won only 49% of opportunities pursued. The other 51% were just a cost, which drastically reduces profitability. Staff turnover runs at 27-41% at a cost of around $100 000 per bad hire. If you look at the overall success of sales organisations, little wonder that the “C” Suite does not have a very high opinion of sales. CFO Magazine reports that sales forecasts typically vary by 20-40% from actual. Not very good. If the CFO reported profits _+/- 40% he would be fired. It is time for sales to catch a wake up call!!
- #41 So the question is where do we start. How do we upgrade our sales growth processes? The lessons we have learned by surveying “C” Suite executives and the way they operate. The “C” Suite and most senior business fuctions rely on what we call predictive analytics. Predictive analytics use TQM– Finding sources of error and eliminating them, as opposed to describing success. Incidentially, the ISO organisation in Switzerland does not even have a ISO number for sales.