The financial year is drawing to a close; is your sales revenue lagging behind target? Do you accept being 10-20-30% short of profitable planned goals? Do you think we failed less this year? If you do, you are setting yourself for failure this year and in the next financial year too.
CEOs must be unyielding when it comes to delivery of sales revenue as so much is at stake.
The unwritten financial impact
Most companies underestimate the impact of nonperformance in sales on company profitability. Profit is made in the last 20 to 30 percent of sales forecast revenue, not in the first 60 to 70 percent. Traditional accounting practices manage all costs as variable. Therefore, when a company loses $100,000 in revenue, the company accepts this as fine: “If the gross margin is 30 percent, then we’ve only lost $30,000.” If the company is behind its sales goals by 15 percent, then it applies the same thinking.
This measure is incorrect. In reality, a lot of the costs in your business—your facilities, management, and staffing, as well as insurance and similar factors—are fixed, or they are fixed in the shorter term. You cannot change them in any reasonable timeline to match the changes in the top-line performance of the business.
A planned 30 percent gross margin contains your variable contribution to profitability based on a forecast level of sales revenue. When your company does not deliver that revenue, your variable margins might be more like 60 percent—so you lose $60,000 of profitability, but half of that loss is hidden.
Sales managers at their limit
Sales managers can only deliver to a certain level of revenue in markets, based on their experience and tools available to them. Good product and pricing are just not enough; even though it is a good start.
When a company hits a 2 or 3-year plateau, the warning signs are loud and clear that the sales manager has reached their capability limit. They may attempt to distract the obvious through conversations of product and markets but in most cases, the growth opportunities are there. The business has exhausted itself internally, temporarily, and created a plateau.
It is a common growth barrier that companies can struggle with for years by not facing the simple facts that you have outgrown your internal capability. The typical but not so simple approach is to swap the sales manager out for a new manager, but that may not solve the problem as often the issue relates to company sales systems and management methodology.
Why intervention is required
The bottom line is the current sales velocity, behaviours, and decision-making processes have the team well behind and to continue forward believing there will be a change is futile; without intervention. You can identify when you have exhausted your internal processes when these warning signs appear:
- Reliance on big deals to pull you over the line;
- New business acquisition in low;
- The emergence of bluebird sales (sales that just fall from the sky) saves the day;
- Pipeline reports that are not within 10% of accuracy;
- The sales team is reliant of a couple of good sellers to bring the sales team over the line.
These are all signs of a sales manager that does not have sufficient tools and methodology to manage the performance of the team to the required levels.
CEOs need to intervene and provide tools and methodology that will make immediate and sustainable changes to the performance of the sales force. Sales Focus Money Ball™ is assisting companies and sales managers achieve the results.
Recently, chatting with one of Sales Focus Internationals client’s national sales managers of a well-known IT company about their recent implementation of Sales Focus Money Ball™, a key finding he has is how much effect driving a team through different metrics and methodology has on the overall results. An accomplished sales manager with a fine record he needed to uplift how they did business and to deliver ever increasing sales goals. Embracing the process he had delivered in just 90 days, a major upturn in sales performance across a team of some 25 sellers. Even more impressive, the state managers are embracing the new methodology, as they improve their decision-making and can deliver reliable information to the company.
In fact, companies using Sales Focus Money Ball are achieving results consistently in just 90-120 days when adopting the methodology.
Sales Focus International is so confident of the results when companies implement the methodology, we can guarantee you will see immediate and sustainable improvement in the effectiveness of your sales force and the results achieved.
Furthermore, Sales Focus Money Ball provides you with a planning tool to ensure you deliver increased sales goals in the years ahead.
To find out more, contact our office for a telephone conversation with Adele Crane about your specific sales revenue improvement requirements.
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