The complacent sales leader is one of the greatest risks for CEOs in companies with sales organisations. This is a critical role in any company where sales are driven by the efforts of a sales team making sales calls to customers. Whether that is for general consumable items or complex software or financial offerings in the market. For those companies that are focused on delivering top-line revenue and EBITDA, the sales leader, whether you like it or not, is pivotal to your success.
Complacency in the management of the sales leader has been a downfall of many CEOs in years gone by. In fact, McKinsey reported that CEOs who are focused on sales management deliver 50-80% more profit than their counterparts.
A poorly performing or complacent sales leader leaves their company a victim of:
Financial – Financial expectations are missed when the sales leader fails. This can result in a loss of bonuses for the executive team and budget cuts across all departments. For listed companies, it can result in a loss of shareholder value in some cases.
Costs – The lack of external processes in the market is reflected directly in the internal processes being applied to the sales organisation. This results in a high cost of sales and many indirect losses through inefficiencies similar to those experienced in production areas.
Customers – Customers are poorly served when the sales leader flames out. Salespeople are left to develop their own way of operating in the field and often resort to serving low-hanging fruit customers or those with the least resistance to access. An enormous number of opportunities are left unexplored through the sales leader being ‘hands-off’.
Competitors – Competitors benefit from a flamed-out sales leader as many accounts are not suitably protected, and the sales team are often disconnected from other offerings in the market. There is an over-reliance on a few top performers to deliver the results. This leads to escalating wages to retain top producers and price cuts to keep top customers.
The Field – The level of talent of field personnel diminishes quickly when a sales leader has flamed out as they have no mentor, little training, and personal development. The company prides itself on the longevity of the employment of field personnel more than the talent of the individuals. The team has vastly fluctuating skillsets reflective of what they brought to the role more than what was gained through being employed by the company.
Sales Leader – The sales leader who fails causes much pain to the company until the hard decision is made to remove them, and only then do they personally feel the most severe pain, that is, their poor marketability. Interestingly, failing sales leader will focus their attention on job retention more than growth strategies. Meaning their personal interests outweigh those of the company. CEOs often misunderstand the conduct of sales leaders during this phase as the sales leader works vigorously to build personal relationships with key people in the business to build a safety net around themselves.
A flamed-out sales leader is one who is best described as:
- They deal with the issues as they arise in the business;
- They object to external reviews or opinions;
- They reject training believing little value can be added;
- There is no strategy and/or strategy execution plan being measured;
- They are not improving the performance of the sales organisation;
- They are reliant on the legacies of the company and hero salespeople;
- They are not delivering change, and the business model is somewhat stagnant, even though all markets and competitors are shifting rapidly.
They may demonstrate one or all of these traits.
The average tenure of a sales leader in today’s market is ten years, with many of those players being flamed out. The other tenure is a high turnover rate of under eighteen months as companies struggle to break through the legacies of the longer-term incumbent.
Where a CEO is focused on sales management, the company will reap both immediate and mid-long-term rewards. The impact of that focus can be seen in:
Financial – CEOs that drive sales improvement and growth through the transparency of the sales leader’s performance will result in financial prosperity and new projects getting funded by surplus profits. CEOs understand that it is far more important to drive the sales leader to perform to a plan vs replacement or accepting the status quo. It sends a strong message of accountability throughout the organisation.
Costs – The organisation improves its internal efficiencies where sales impact the broader audience of the company. This has a direct benefit on EBITDA.
Customers – Customers are better served, and more customers are added to the company through focused efforts. The growth of the company is not reliant on organic growth but rather a balance of both existing business and new business. Key accounts are well protected through sound management practices.
Competitors – A focused sales leader improves the performance of the entire industry. They bring new standards, innovations, and opportunities to establish the company as a market leader.
The Field – The talent in the field is more productive and effective through focused management and ongoing development programmes. This reduces the cost of sales internally. Their skill level is reflected in customers’ accounts through their ability to grow the business and increase the value delivered.
Sales Leader – The sales leader who wins increases his/her personal income and creates wealth through a company bonus scheme.
CEOs need to take action immediately if there is any sense of a burned-out or complacent sales leader in their sales organisation. We conduct Sales Improvement Reviews regularly, identifying the contributing issues for companies failing to hit their numbers.
Please contact us to discuss your specific situation and how you can achieve the changes you need.
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