Sales Management Group


Make Your Company More Valuable – Part II

ValueOur last blog post, Make Your Company More Valuable – Build a Sales Organization described Harry Smith’s effort to increase his company’s (HSC, Inc.) valuation.

Investment bankers told Harry that HSC was not worth his asking price. To make his company more valuable, Harry was considering radically overhauling his sales organization. The goal was to effectively penetrate new markets.

This post will explore what HSC might be worth.

The Problem and the Opportunity

The bankers cited several risk factors that depressed the HSC’s valuation. These included:

  • Owner Dependence – Harry was directly or indirectly responsible for a large percent of the company’s sales.
  • Marketplace Changes – HSC is facing two issues here: (1) Increased competition; and (2) Shrinking customer base due to consolidation.
  • Customer Concentration – HSC generates most of its business from a handful of customers.

They told Harry that the key to a higher valuation was a larger and steadily growing business that would continue to prosper after he leaves. He hoped that investing in a revitalized sales team could accomplish this.

What is HSC worth?

Here is a snapshot of HSC’s projected 2016 earnings.

Chart #1

The bankers told Harry that if he could sell the business at all (and that’s a big “if”), it would be worth no more than four times earnings. That would put the valuation at:

$5.3 million x 4 (earnings multiple) = $21.2 million

They cautioned Harry that even with a depressed valuation, the likelihood of a sale was low. Buyers would be reluctant to purchase a company with HSC’s risk factors. However, the bankers said, if Harry could achieve his sales goals, the company would be far more salable and far more valuable.

The earnings multiple would increase from 4X to 5X. This is because the investment in sales infrastructure will provide sustainable growth and lower risk. HSC will have a much larger customer base and will no longer be dependent on Harry for sales.

The combination of higher sales and earnings plus a higher multiple would yield a much higher valuation. According to Harry’s projections, with an investment of $2 million a year in an expanded sales force, in five years his P&L would look like this:

Chart #2

With a higher multiple and higher earnings, the valuation would be:

$12.6 million x 5 (earnings multiple) = $63.0 million

That’s a three-fold increase over today’s valuation of $21 million.

Harry’s Choices

Harry realizes that he must do something. His already stagnating business will eventually fail if he doesn’t change his sales strategy.

He has laid out three cases:

  • Case “A” – Sell now to a strategic buyer, probably one of HSC’s competitors
  • Case “B” – Sell a majority stake to a private equity (PE) Firm
  • Case “C” – Go it alone and fund the sales organization himself


The chart below shows his how much money he will get in each case

Chart #3

 Case “A” is not a realistic option. The sale price is too low, and he probably couldn’t find a buyer, anyway.

 Case “C” generates the most money for Harry but it entails too much risk for him.

The bankers have told Harry that Case “B” is probably his best bet. A private equity firm might be willing to purchase a majority stake in HSC if the firm’s principals thought his sales strategy was realistic.

Here is how that would work:

  • PE firm buys a 60% stake at the current valuation (4X) – 60% x $21 million = $12.8 million
  • HSC is sold in five years for 5X earnings = $63 million
  • PE firm gets 60% of proceeds – $38 million
  • Harry gets 40% of proceeds – $25 million

The PE firm could fund the sales organization investment out of company earnings. As a result, Harry can keep the entire $13 million he receives up front.

Ultimately Harry gets a total of $38 million. That’s a lot less that the $63 million in Case “C”. But Case “B” eliminates most of Harry’s risk.

Make Your Company More Valuable – Build a Sales Organization

Pot of goldHarry Smith has built a $35 million (sales) business over the last 30 years. He is now thinking about retirement and wants to sell the company.

He’s talked to several investment bankers. All of them have told him The Harry Smith Company (HSC) is not worth his asking price.

Harry has a couple of problems. One, HSC’s sales are stagnant. Two, Harry dominates the company. This is especially true in the sales area.

How can a new owner be confident that customers will remain loyal after Harry leaves?

To get his asking price, Harry must build a sales organization that can (a) grow the company and (b) run without him.

Current Situation

Harry has a sales manager and five salespeople. But he is a key rainmaker.

He has strong relationships with HSC’s four largest customers, who generate 40% of the company’s revenue. Many of his relationships go back more than 20 years.

Harry’s sales manager, Mary, nominally oversees the five-person sales team and a marketing manager. However, Mary has extensive sales responsibilities and does relatively little managing. Harry runs the show.

HSC has about 15 customers. The customers are based in the Northeast and most have sales of $500 million or more.

HSC’s sales team develops deep relationships with customers via face-to-face selling. The sales team focuses on HSC’s higher-end products – $100,000 +.   The company’s sales cycle is usually 6-12 months.

The company faces several sales challenges:

  • Competition – More competitors are entering HSC’s market. Traditional barriers to market entry have eroded over time
  • Concentration – HSC generates most of its business from a very small number of customers
  • Consolidation – HSC’s customers are being acquired by larger companies not likely to buy from HSC
  • Relationships – Harry and his sales team have their primary customer relationships with executives nearing retirement age.

Next Steps

Harry is aware of his problems. He is willing to invest a lot of money to make HSC more salable.

 He plans to take the following steps:

  1. Set aggressive but realistic revenue goals
  2. Create a sales strategy to achieve those goals
  3. Determine what kind of sales organization he needs to implement the strategy
  4. Create the sales organization

Here is what that process looks like:

Decision Stages2

He realizes that it will take him three years to years to build a sales organization that can penetrate new markets and another two years to make it truly effective.

Step #1 – Set Sales Goals

HSC’s sales have been flat for the past three years. The investment bankers told Harry that to attract buyers, HSC needs to generate at least $50 million and grow by at least 5% a year after that.

Harry’s goal is to get from $35 million to $50 million in five years. That’s a compound growth rate of 7.4% a year.

Harry commissioned a market research study which suggests that there is a very large – and growing -market for HSC’s lower end products. Those products now represent only about 15% of HSC’s current sales.

The market consists primarily of smaller companies with sales of $5 to $25 million. Whereas HSC’s current target market includes some 50 large companies in the Northeast, the new market has hundreds of companies across the US.

Step #2 – Develop a Sales Strategy

Now comes the hard part. How will Harry reach his new market?

His key tasks are:

  • Identifying the best market segments
  • Developing a message and compelling offerings
  • Designing a sales organization to reach the market
  • Developing a plan and time line to attack the market

Step #3 – Designing the Right Organization

To implement its sales strategy, HSC needs a completely different sales organization.

HSC’s sales team now focuses on face-to-face selling to a relatively small group of customers in a relatively small geographic area, the Northeast. That won’t work with the new sales strategy.

Trying to reach hundreds of companies around the US with a field sales force would be prohibitively expensive. It would also be inefficient.

HSC needs to build an inside sales team which can reach the target market effectively. This means selling primarily by phone and email.

Harry can’t create a new sales organization overnight. He must find a way to maintain his existing customers while he builds an organization to service future customers.

He needs two parallel sales efforts: a field sales team focusing on the larger accounts and an inside sales team focusing on the smaller accounts. Harry also needs to drastically reduce his involvement in sales. 

Step #4 – Building the New Sales Organization

Harry will need three years to build his new sales organization and get it up to speed. And he’ll need another two years to build sustainable growth.

Here is the timeline:

  • Year #1 – Develop strategy, design organization, and processes and begin implementation
  • Year #2 – #3 – Continue to build inside sales team
  • Years #4 – #5 – Strengthen team and expand markets

Time LineJPG


Creating Value Isn’t Easy

Harry realizes that making his company more valuable will take a lot of time, effort, and money. But he is willing to make the investment.

There could be a huge payoff for building a growing company with an effective sales organization. The alternative for Harry is continued stagnation and a declining valuation.

Sell the Way Your Customers Want to Buy

decisionIn the good old days, buyers routinely met with salespeople to learn about their products and to begin a dialog about possible needs. Along the way, they developed a relationship.

Buyers were happy to have introductory meetings with salespeople. They were valuable sources of information, not only about their products but about the industry.

Salespeople, empowered by useful information, had significant control over the buying cycle. They could “push” the buyer toward a decision.

How the Buying Process has Changed

All that has changed. There are two key reasons: the internet and corporate downsizings.

  • Reason #1 – The Internet provides buyers with all the product and industry information they want. They no longer need salespeople for that.
  • Reason #2 – With corporate downsizings, buyers are wearing many more hats. They don’t have the time to develop a relationship with a salesperson unless the salesperson can solve an urgent problem.

That means salespeople have less control over the buying cycle. They must pull their customers, not push them. Sellers must sell the way their customers want to buy.

The schematic below shows the buying cycle in many sales situations mapped against the selling cycle. Instead of initially presenting a solution, sellers must first convince buyers that they have a problem and that the problem is worth fixing.

The interaction between the salesperson and the purchase decision maker is like a dance with many intertwined steps. It’s a back-and-forth process of uncovering needs, evaluating options and then agreeing on a solution.


Example of How the Cycles Work Together

To illustrate how this process works, we’ll use a hypothetical example. Riley is a salesperson for Titan Systems, which sells software to manufacturing companies. She is trying to convince Fred, the manufacturing vice president, at ACME Industries, to buy Titan’s newest product, Titan 2000.

Riley will take Fred through a series of steps to educate him about the issues and Titan 2000. There are five stages:

  • Stage #1 – Define the problem and its costs
  • Stage #2 – Determine the advantages of taking action
  • Stage #3 – Evaluate options and agree on a solution
  • Stage #4 – Sell solution
  • Stage #5 – Approve and close



Riley’s first step is to get Fred’s attention. She needs a reason to contact him.

She knows that a private equity firm has recently purchased ACME. The private equity firm has a reputation for pushing operational efficiency at its portfolio companies.

Riley thinks Titan can reduce ACME’s headcount because it automates certain tasks. This should appeal to the new owners’ cost cutting focus. It could also make Fred look good.

After an initial phone call, Fred recognizes the potential opportunity. He agrees to meet with Riley. 




Automating tasks is not Fred’s highest priority. He is focused on producing more units to meet sales demand.

Riley’s immediate challenge is to convince Fred that automation will have a big payoff and that the project should move to the top of his priority list. She provides him with an ROI analysis showing a $500,000 a year reduction in headcount costs.

After reviewing Riley’s info, Fred is convinced the project is worthwhile and that he must do something.



Now that Fred is ready to act, he must decide on a solution: Titan 2000, another vendor, or do it in house.

Riley needs to convince Fred that that Titan 2000 is the best solution. Through a series of presentations and additional info, she persuades Fred.

Note that she didn’t push Titan until Stage #3 of the process. She first had to convince Fred (a)he had problem (or opportunity) and (b) it was worth fixing.



Fred is sold on Titan 2000. He must now sell his CFO, IT Director, and CEO.

He does this by having Riley present to all the senior executives. He then works internally to build a consensus with his colleagues. At the same time, he works with Riley to address the individual concerns of each executive.

With a tentative consensus in place, Fred asks Riley to submit a formal proposal.



After reviewing the proposal, the executive team approves the project.  Riley then works with Fred on the implementation plan.


Pull. Don’t Push

Riley pulled Fred through the decision making process. She didn’t try to push a solution.

Fred had to be convinced of the size of the opportunity and of Titan’s value. He then became an evangelist for Titan within ACME.

Once Fred was on board, he was Titan’s most effective “salesperson.” Riley helped Fred and ACME’s executive team buy the way they wanted to buy. She also made Fred look like a hero.

Are You Selling Products or Selling Value?

keyHere are three ways to sell a product. In this case, the product is a hypothetical computer system called Titan 2000.


  • The Titan 2000 processes 1 billion instructions per second.


  • The Titan 2000‘s computing power is comparable to other models in its class but at a significantly lower cost.


  • I understand reducing IT costs is a high priority for you. My analysis of your system suggests that Titan 2000 can cut your IT costs by as much as 25% while providing the computing power you need. The Titan 2000 pays for itself within a year.

What is your sales team selling? Features, Benefits, or Value?

Features vs. Benefits vs. Value

Let’s look at the differences between selling features, benefits, and value: 

  • Selling Features – The focus is primarily on the offering and the price – Here it is. Do you want some? Feature selling is best suited for commoditized offerings where price and availability are the distinguishing characteristics.
  • Selling Benefits – Benefits refer to reasons why a customer might want to buy something. Promoting benefits can get a prospect’s attention and—ideally — a meeting.
  • Selling Value – Addressing a known customer need results in selling value. This requires an understanding of the individual customer’s goals and problems, which a sales rep can learn only after talking to a customer.


Why Selling Value Matters

In many cases, your biggest competitor is not another company bidding on the same project. It’s the status quo. This is why selling “value” is so important.

A Sales Benchmark Index study showed that 58% of sales opportunities end with no decision or a decision to do nothing. Why? Because the buyer does not see the value in making a change.

Inertia is a powerful force. You can overcome it only by convincing the prospect that (a) They have  a problem, (b) They need to fix that problem soon; and (c) You have the solution. A and B are usually the biggest obstacles.

To overcome buyer inertia, your team must sell value. That means helping the prospect recognize the problem and creating an urgent desire to solve it.

Arming Your Team to Sell Value

To sell value effectively, your sales team should go into battle well-armed. Your job is to give the sales team the training, tools, and support they need to:

  • Learn your company’s sales strategy
  • Uncover the customer’s “pain”
  • Educate the customer

Learning the sales strategy

Always starts with strategy. What are your target markets, ideal customer profile, key offerings, and positioning? Why do your customers need what you sell?

Provide your sales team with the necessary training to make sure they understand your sales strategy, embrace it, and know how to execute it. To accomplish this, set aside at least two days a year for formal sales strategy training.   

Uncovering pain

Teach your sales reps how to find the prospect’s “pain.” Your reps should ask about goals and challenges.  Other questions:

  • How high a priority is this for you? Why?
  • What is it costing you not to make the change?
  • What opportunities are you missing? How much is that worth to you?
  • What would prompt you to make the change?
  • What’s your timetable for making the change?

This process is important. It’s a vital part of the sales effort. But it also qualifies the prospect.

Ideally, it will create a sense of urgency and prompt the buyer to act. On the other hand, if there is no urgency, that says something. Perhaps it’s time for the rep to move on to more promising prospects.

Educating the customer

Your reps need information to educate prospects about the issues and solutions. We’re not talking about sales brochures or other promotional literature.

To be convinced, a prospect needs hard facts – data which quantifies the impact of the problem or lost opportunity and the value of a solution.

Often this is third-party industry data. It can also be your info. But it has to be credible.

Invest in a library of useful tools your sales team can share with prospects. These could include

  • Articles/reports on industry trends
  • Case studies featuring client success stories
  • Free or low-cost assessments to identify problems
  • ROI and payback analysis tools to determine the value of making a change

Rule #1 – Understand Thy Customer

The key to selling value is understanding what the customer wants. That takes the right skills and the right tools.

Make the investment to arm your sales team effectively. There will be a big payoff. 

Are Your Sales Reps Spending Time on the Right Accounts?

ClockRiley is a sales rep with Titan Technologies, a hypothetical company. She sells a complex $500,000 solution that streamlines manufacturing processes.

Her sales cycle is usually 12-18 months. The effort is intense and time-consuming for her.

Riley can’t afford to spend six months on a project only to discover the prospect and Titan weren’t a good fit for each other in the first place. She needs to know that before investing a lot of time.

She is considering four companies: Standard, Acme, United and Republic. Which companies should she aggressively pursue?

Riley wants to evaluate the four companies so she knows where to spend the bulk of her time. She needs a scorecard to qualify the opportunities.  Here is how she can set one up.

Scorecard Criteria

The criteria she may use are:

  • Profile – Is the company the right size, in the right industry, with the right products?
  • Relationship – Is Riley engaged with the right decision makers?
  • Mindset – Is the company willing to invest to improve its manufacturing process?

Profile –  Does this company match the profile of Titan’s successful customers?

  • Size – Are the company’s sales big enough to afford Titan?
  • Growth – Are the company’s sales growing, stagnant or shrinking?
  • Industry Segment – Is the company in a segment that can use Titan effectively?
  • Products/Services – Can Titan enhance the company’s offerings?
  • Target markets – Can Titan improve the company’s position in its target markets or open up new markets?
  • Problem/Challenge – Does the company face the problems or challenges that Titan’s solution addresses?

A lot of this information is available on the internet and through business databases such as Hoover’s, D&B and Avention (OneSource).

The basic question is which companies are a fit for Titan? Which have the capacity – and the likely need – to justify a $500,000 investment in Titan?

If a prospect is too small or in the wrong industry segment, there may not be a fit. If that’s the case, Riley should not spend a lot of time on the prospect.

Relationship – Does Riley have relationships with the key decision makers?

A company’s profile may be a great fit, but to close more strategic deals, Riley needs to develop relationships with the key decision makers.

  • What is the decision-making process and who are the key players?
  • Is the decision maker one person or a committee?
  • Who are the “influencers” who can accelerate or sabotage the decision making process?

Riley needs to know the process and the players. Navigating the decision-making process is becoming increasingly important, particularly at larger companies.

A company’s profile may be a great fit for Riley. But if she does not yet have relationships with the decision makers and influencers, her time is better spent elsewhere.

Mindset – Does the company have the right “mindset” to want to invest in Titan’s solution?

  • Is streamlining manufacturing a strategic priority?
  • How much money is the company willing to spend to accomplish this?
  • Does the company have the rapid growth and long-term profitability required to invest in a Titan solution, which has a 3- to 5-year payback?

If a company is more concerned with short-term profitability and conserving cash, they will not be a good candidate for a Titan solution. 

The Scorecard

Here is the scorecard Riley developed to evaluate the four prospects. For her to spend focused time on any company, it must generate a score of 10 or higher.

For any attribute:

  • 4 or 5 – Very strong
  • 3 – Worth working with if other factors are 4 or 5


Prospect Score Grid

  • Standard – The company is smaller than ideal, so paying for Titan may be a challenge. But Riley has a great relationship with the CEO and believes he can push through the project. The company is very growth minded. And that is in Riley’s favor.
  • Acme – The company is big enough to afford Titan and Titan is a good strategic fit for Acme. But Riley doesn’t have a relationship with the key players. Furthermore, the company is not open to new solutions.
  • United – Titan is a perfect strategic fit for United. Riley has a reasonably good relationship with the key decision makers. The company is somewhat growth minded, so it should be open to adopting Titan’s solution.
  • Republic – The company has the right profile. But Riley doesn’t know the key players well. Also, the company is not growth minded.

Invest Sales Time Wisely

Sales time is a precious commodity. Train your reps to invest their time wisely by using a scorecard to evaluate each customer or prospect. Then use metrics and incentives to reinforce this evaluation process. 

You’ve Got a Sales Strategy. Do Your Sales Reps Have One?

roadmapYour company’s sales strategy is complete. You’ve identified the market segments and the types of companies you want to reach. You know what offerings you want to sell.

 You’ve got a clear message. All your sales tools and marketing programs are in place.

You’re ready to go. But what about your sales reps? Without them nothing happens.

Putting a sales strategy together is an important exercise. But it’s pointless unless the sales team is ready, willing, and able to implement the strategy.

Don’t expect your reps to figure this out on their own. Management’s job is to give the sales team the necessary training, tools, and support to execute the strategy. Here are the steps you need to take:

  1. Educate your sales reps on the strategy
  2. Show them how to implement the strategy in their respective territories (territory plans)
  3. Coach them as they develop, refine, and execute their territory plans

Why a Territory Plan Matters

A territory plan is a sales rep’s individual strategic plan. It’s also her roadmap. It tells her where to go (goals) and how to get there (action plan).

It’s an essential operating tool for a sales rep and an essential management tool for a sales leader.  

Without a territory plan, your reps will not have a clear focus. And you won’t know what they’re working on. That’s a recipe for failure.

Get Them Up to Speed

First, ensure that your reps thoroughly understand the sales strategy – and buy into it. Schedule a full day workshop to go through the strategy in depth.

Focus on the following:

  • Marketplace positioning
    • What is your market niche?
    • What are your competitive advantages?
  • Ideal Customer Profile
    • Who are your best customers?
    • What industries are they in? How big are their companies?
    • Why do they need what you’re selling?
  • Your Offering
    • What do your products/services do?
    • What problems do they solve and for whom?
    • How do you justify your pricing? 
  • Sales Support
    • What are your sales tools and how do the reps use them effectively?
    • What are your marketing programs and how are they supporting the sales effort?

At the end of the session, your reps should have a clear picture of what they are selling and to whom, and why.

Treasure MapBuilding The Territory Plan

Now comes the real work. Give your reps very detailed instructions on how to prepare their territory plans. This includes templates and worksheets.

Give them a tight deadline (no more than two weeks) to complete the draft plans. Then, review the plans and help them refine their plans.

Each rep should have a final plan approved by the sales manager within two weeks of submitting the preliminary plan.

The territory plan is a very detailed document. But, at a high level, it includes:

  1. Revenue plan – Let’s say Riley’s sales manager assigns her a $5 million quota. Now Riley needs to figure out how to make the number.

    What will she sell and to whom? Who are her best customers? Her plan should clearly identify the potential quarterly revenue from each of her key customers and prospects.

  2. Tactics and programs – Riley’s plan needs to be more than a revenue projection. It needs to show how she will achieve her goals. What she will offer each account, how she will present the offer, and to whom at the account she will make the offer.

Executing the Plan

Producing a detailed and realistic territory plan is an important step. Now Riley needs to execute.

Her manager should closely monitor her performance against the plan with bi-weekly or monthly review meetings. If Riley is not making her numbers, both she and her manager should know why. And they should agree on what corrective actions to take.

In general, sales reps can operate very independently. But they still need a roadmap. And they also need the guidance and support – and the occasional nudge – from the boss.

Sell More, Spend Less – Part II

focusIn our previous newsletter article Specialize: You’ll Sell More and Spend Less – Part I, we described a new sales structure. This article discusses the new structure’s financial impact.

Let’s recap briefly how the sales organization would change:

  • Field Sales has fewer responsibilities and focuses exclusively on face-to-face selling and closing deals.
  • Inside Sales assumes a larger role, not only developing leads, but also selling to bigger accounts and managing customer relationships.
  • Sales Support continues to provide routine customer support but also assists the field sales team with presentations and proposals.

Note that the number of employees in the sales organization actually increases to 12 from 10.


The Payoff:  Revenues Up, Costs Down

Making this shift can produce a big payoff in increased profitability, which you can see by following our example and reviewing the charts below.

Here is the impact of the shift:

  • Overall
    • Increased Revenue and Profit – Overall, this realignment produces a 14% or $1.5 million increase in revenue and an 18% or $1.6 million increase in profit
    • Reduced Cost of Sales – The cost of sales (selling costs divided by revenue) drops to 13% from 16%.
  • Field Sales
    • Increased Selling Time – With fewer responsibilities, field sales rep selling time can increase by 75% from 2 days a week to 3.5 days a week.
    • Greater Sales Productivity – Increased selling time produces a 50% increase in sales revenue per rep from $2 million to $3 million.
    • Less Dependence on Field Sales – Field Sales revenue responsibility drops to 75% of total revenue from 95%.
    • Reduced Costs – The cost of field sales rep compensation drops by $575,000 due to the lower headcount and the lower per rep compensation of $225,000 ($150,000 base + $75,000 T&E). In the old structure, total cost per rep was $250,000 ($200,000 + $50,000in T&E)
  • Inside Sales/Support
    • Higher Costs – The combined cost of the Inside Sales and Support teams increases by $480,000 due to increased headcount and substantially higher compensation.
    • Greater Sales Productivity – With a more senior team and increased selling focus, the inside sales reps can produce a 50% increase in sales revenue per rep and take responsibility for 25% of overall company revenue, up from 5%.

These charts summarize the comparison between the revenues and sales costs associated with the old structure vs. the new structure.

 Old Structure

 New Structure


 Making the Transition

Pot of goldDon’t expect to accomplish this shift overnight. You’ll need to expand your inside sales team and shrink your field sales
team. The entire process could take one to two years.

The first step would be to beef up your inside sales team. That alone could take a year and may require training.

Restructuring the field sales team will be tricky. You need to reduce the size of the team and reduce individual compensation.

As you strengthen the inside sales team, consider letting the lowest performing field sales reps go. Alternatively, if a field rep leaves, you could decide not to replace him or her.

Expect your overall sales costs to go up for at least a year, maybe two. You’ll need to carry the field sales reps at their current compensation for a while. And you may need to pay severance to those you let go.

However, once the transition is complete, you should have a sales team of focused specialists who generate greater profitability because they produce more revenue at a lower cost.

Specialize. You’ll Sell More and Spend Less

focusWould you like a sales team that sells more and costs less?
We thought so.
In that case, we’ve got one word for you:                               
  S P E C I A L I Z E
By having field sales reps focus exclusively on face-to-face selling and by expanding and upgrading your inside sales and client support teams, you’ll create a team of specialists.
This “specialist” team approach can be far more efficient and effective than the traditional sales structure.
This is the first part of a two-part article on the new sales structure. In this newsletter, Part I, we will describe the new structure. Part II will discuss how the structure can both increase revenue and reduce costs.
The Old Model Isn’t Working
The traditional sales structure is primarily, if not exclusively, dependent on highly compensated field sales reps. These reps are responsible for every phase of the sales cycle from generating leads to managing client relationships.
This model no longer works. Here’s why:
  • The buying process has changed.
  • The model may actually undermine profitability.
First, let’s look at the buying process. Buyers no longer need sales reps to learn about a company’s products and services. That information is readily available on the internet.

As a result, buyers want a very different interaction with a company’s sales representatives than they had in the past. According to SiriusDecisions, a Connecticut-based sales research firm, 67% of the buyer’s journey is now done digitally.  Inside sales reps can now much more efficiently play a role previously filled by the field sales team.
Second, the model may no longer maximize profitability because the system is inefficient

and expensive. At many companies, the field sales reps look like the figure on the right: juggling multiple tasks. 
They generate leads, cultivate prospects, handle face-to-face meetings, negotiate deals and manage the overall relationship with the client once the deal closes.
As a result, studies suggest that field sales reps spend only 40% of their time actually selling – that’s not efficient. 
The system is also very expensive. Field sales reps are often among a company’s most highly compensated employees.
The New Model: Newly-Defined Sales Roles
Justin Roff-Marsh and other sales experts advocate shifting to a new sales structure, one far less dependent on expensive and inefficient field sales reps. The new model features newly-defined sales roles:
  • Field Sales Reps now focus exclusively on face-to-face meetings and closing larger deals. They no longer have an end-to-end relationship with the prospect/client.
  • Inside Sales Reps take on an expanded sales role: supporting field sales by developing leads and cultivating prospects, selling to mid-sized accounts (not just small accounts), and managing relationships with existing accounts.
  • Sales/Client Support Specialists handle routine customer service, but now they also support the field sales team by preparing presentations and proposals and ensuring that the field sales team has the necessary sales tools.
Making the Shift
To see how a 10-person sales organization can make the shift to this new sales structure, review this chart. It shows how to reassign responsibilities from the field sales reps to the inside sales reps and the sales/client support specialists. 
This shift allows the company to reduce its number of expensive field sales reps and dramatically expand its less expensive inside sales and support team.
Each team’s responsibilities are highlighted in the chart with color-coded blocks. Note how the field sales reps’ responsibilities have been reassigned. Their former responsibilities are noted with an “x.”
In Part II of this series, we’ll use an example to illustrate the financial impact of the shift.

What Peyton Manning Can Teach Your Sales Team

ManningPeyton Manning announced his retirement from football last week. Whether you are a fan of the Denver Broncos, Indianapolis Colts or any of the other 30 NFL teams, you’ve got to admit that Manning is one of the all-time greats to play quarterback in the league.

Manning’s career is remarkable not only because of the records he set, but also because of his consistency. In 17 years of continuous play (except for the 2011 season when he was recovering from a neck injury), he amassed a 70% winning percentage during the regular season, posting only one losing record — in his rookie season. In 11 seasons, Manning won 12 or more games including a streak of seven 12+ win seasons in a row.

While Manning certainly had the physical skills to play quarterback at a high level, he did not have the strongest arm or the fastest legs. By his own admission, “There were other players who were more talented, but there was no one who could out-prepare me.”

Preparation is the key to success.

Like Peyton Manning, your sales representatives can raise their game through preparation and planning. The following six steps and associated questions can guide you to greater sales success.

Set Goals

At the start of every season, Manning set goals for himself. Aggressive goals. He wrote his goals down and held himself accountable. Manning then worked hard throughout the season to achieve all the goals he set for himself and his team. 

All sales representatives need to set goals for themselves. As a sales manager, you must make sure your sales reps’ goals also contribute to your achieving the company’s goals. 

  • How much revenue will we generate?
  • Which products will drive that revenue?
  • Which customers will buy our products and services?
  • How much will each customer buy?
  • How many new customers will I land? Who are they?
  • What intermediate goals must I achieve to ensure accomplishment of the larger goals?

Create Plans

Before every game, Manning’s coaches set a game plan. Manning tweaked it, knew it and implemented it. Sometimes, he adjusted it on the fly, but that was not very often since Manning already knew what his opponents were likely to throw at him. 

Once goals are set, your sales representatives need to create their own game plans. For each territory, customer and opportunity, your reps must create a plan to win. 

  • What customers do I need to sell to?
  • What traditional views will I need to challenge?
  • What customer needs am I addressing?
  • What obstacles will I need to overcome?
  • Which tools will I apply and in what situations – sales calls, product demonstrations, pilot programs, presentations, proposals?
  • When should I run my plays/apply my sales tools?

Scout the Competition

Preparation goes beyond goals and game plans though. Manning was legendary for remembering blitzes and defensive plays opponents ran against him years earlier. He reviewed films of his opponents, learning and remembering every nuance.

Like Manning, your sales reps need to scout their competition, know their competition and anticipate their every move. 

  • What are my competitors likely to do in various situations?
  • What are my competitors’ strengths and weaknesses?
  • What can I do to thwart the competition?
  • How can I avoid competition altogether?

Practice, Play, Practice, Play

footballManning was constantly on the field, working with his teammates and improving their game. Manning spent hours with new receivers to ensure they knew what to do without thinking about what to do. Manning was always the last player to leave the training facility at the end of the day. And, it wasn’t just practice. Manning got in the game. Manning holds the number two position for consecutive starts by an NFL quarterback with 227 games over 14 years.

To be the best at their game, your sales representatives need both practice time and game time. Between sales calls, reps need to hone their skills. They need to research customers and opportunities, practice presentations and demonstrations, and conduct mock sales calls. Practice improves and reinforces the skills your reps need to become the best. 

Further, give your reps playing time. Get them in front of customers to put their skills to use. Practice makes perfect, but only playing time will teach them to win.

  • Which products or solutions do I need to learn more about?
  • How should I handle common objections? Uncommon objections?
  • What are some non-selling situations where I can practice my selling skills?
  • Have I practiced my final presentation/demonstration aloud and standing up at least three times?
  • What training programs can improve my sales skills?

Review Every Game

Peyton Manning reviewed every play and every pass looking for weaknesses and areas he could improve. He installed video equipment in his home so he could review plays both in season and off season. He carried a tablet computer to review video while on the road. Manning spent more time reviewing game film than anyone who ever came before him. 

Customer reviews, plan reviews, opportunity reviews, loss reviews. Like Manning, your reps must make the time to understand what works and what doesn’t. Adjust plans, learn from mistakes, adapt to counter your competitors’ tactics. 

Reviews serve two purposes. First, they show you where and when you need to correct course to reach your goal. Second, they teach you to be better at what you do and more efficient by uncovering weaknesses in your skills, plans or offering.

  • Am I on track to meet my goals?
  • What am I doing well? Where do I need to improve?
  • Is my customer plan/opportunity plan working as well as possible?
  • What did we do that enabled us to win that deal?
  • What could I have done to avoid losing that deal? Why did we lose?

Formalize your Planning and Review Process

Peyton Manning went to extraordinary lengths to prepare for his seasons and games. He also had a coaching staff to rely on for support. You can too.

The Sales Management Group leads and facilitates one-day and multi-day planning sessions for companies serious about meeting their sales goals. We help our clients prepare for the sessions so that they are as productive as possible. Then, we facilitate the meetings to ensure that each of your reps — and you — know exactly what is supposed to happen this year and how it will get done.

  • Do each of my sales reps have a territory/customer/opportunity plan? Are they written down?
  • Have I conducted a sales planning session this year? Did I document the results?
  • Have I conducted formal plan reviews for each territory and rep yet this year?
  • Do I have bi-monthly or quarterly reviews scheduled for the rest of the year?

Contact The Sales Management Group at (203) 856-9400 to schedule planning sessions for your team.


Sales Territory Plans: Where the Rubber Meets the Road

Red Car Driving Fast Country Road

Most companies do strategic planning in September and October, but the fourth quarter is not the best time for your sales team to plan. They’re focused on closing out the current year. 
In January, you recognize team successes for the prior year, assign sales targets and quotas, and kick off the new year. 
Now it’s time to execute. To get started, each of your sales reps needs a territory plan. This is a detailed action plan that shows how your reps will achieve their goals for the year.  
A territory plan is an essential sales management tool. Without one, a sales goal is just a number.
Without a territory plan, your sales reps will not know what it takes to meet their goals. And you will have no assurance they can get there. You’ll be flying blind.
February is the time to conduct planning sessions with each of your sales team members to identify where their sales will come from, what activities they need to engage in to make their sales a reality, and how they will make up any shortfall between their sales targets and identified opportunities.
We recommend having a planning session with each of your sales reps and account teams.  Your reps should prepare in advance and arrive ready to discuss how they will meet their goals. Each rep’s goal should consist of three elements:
  • Flow Business – Will happen (called “flow” business because it just seems to flow every year)
  • Likely Opportunities – Likely to close with routine sales efforts (better than 50/50 chance)
  • Stretch” Opportunities – Will require focused sales efforts to close (less than 50/50 chance). 
Based on this, you can create an action plan for your sales reps including time frames to perform activities so they close business this year.  You will also be able to develop an action plan to aggressively cover the territory to find and close opportunities that your sales reps have not yet identified.
The Sales Management Group leads and facilitates one-day and multi-day planning sessions for companies serious about meeting their sales goals.  We help clients prepare for the sessions so they are as productive as possible. Then, we facilitate the meetings to ensure each of your reps – and you – know exactly what is supposed to happen this year and how they will get it done.

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