Recently sitting in a review meeting with a CEO of an industrial products business, we were joined by his newly appointed sales leader. The aim of his attendance being to discover the findings and priority of the sales leader following his first weeks in the role and tour of all decentralised offices. The information put forward was expected and nothing sufficiently different that we could not have been sitting in another office with a different team. It was rhetoric that is tried and true but did not have substance behind it. The CEO was just six weeks into the hire and was showing signs of being uncomfortable during the meeting.
After his presentation ended and he left the room, the CEO turned to me and said ‘this is a moment of déjà vu. I have had this same conversation three times now in the last six years.’ He was perplexed and frustrated, particularly after the excellent references and industry experience he had received for this person.
He went on to explain that each of his new hires had the same views and communicated an expected timeline of 12-18 months to resolve and see results. Each newly appointed sales leader left without completing the plan and failing to sufficiently impact the business’s top line. The business had natural momentum and had grown by a few percentage points but at an unpredictable and lower than forecast rate. Moreover, the ongoing churn of sales leadership had created a lack of continuity in team productivity and accountability.
His frustration was rising as he explained his situation and then he sought to get an answer to this problem he kept experiencing.
I explained that this situation is not unfamiliar to many businesses and you need to first consider the cause. Typically, I can isolate it to three leading causes, and those can be categorised by:
Is this a business problem, a market problem, or a sales problem? Or, maybe a combination of all three? We then went on a discovery path to isolate what was happening.
Let’s look at them in short, and you may see a trend in your own company.
- A business problem can be related to your hiring practices. A newly appointed sales leader who can produce money often is someone that can think outside the box. Not being reliant on industry knowledge or customer relationships, but rather a person that is capable of making money through business process and prowess. Is the business sufficiently set up in systems and processes to bring in a new sales leader and have them perform the required business actions or is the business reliant on the newly appointed sales leader bringing everything in and hoping they will add what is required? The latter being the highest risk and why companies continue to experience slow growth.
- A market problem can be you are either in the wrong market or been in the same one, unchanged for too long. Originally, your market was defined by a product or service that met the needs of a clearly defined customer group. As the number of customers grew, the demand grew, and the product, services, and paths to market all evolve to maximise reach. When the market slows, the focus may shift to selling more products to an increasingly static group of customers creating downward pressure on price. In short, as time goes on, the sales strategy and operational plan require constant adjustment and realignment which in turn drives the company forward. The marketing department needs to be actively working at keeping the business aligned to the right audiences and finding new ones through marketing activities.
- A sales problem can be impeding progress as a result of
- Sales leader churn
- Sales team churn
- Sales team resistance or inertia
Newly appointed sales leader churn creates a sense of fear with questions of who will run the team, how long will it take to replace the person and will we find a better person based on track record. Those with the highest fear promote from within which has its own set of issues. The goal is always to seek a person more qualified and skilled in delivering results. This means new demands on the business and how it works with sales leaders. For the company, the constant change in sales leadership brings uncertainty in numbers being delivered and potential churn in the sales team. Retaining the existing sales leader brings exposure to lower growth and status quo. So both are problematic in their own ways.
The churn in sales teams is problematic for the company and its customers. Customers become concerned with the company’s instability and continually changing team members, and it opens the doors to competitors steeping in. The knowledge is often lost (or never gained) with each change of seller providing instability in the customer relationship. For this reason, many companies retain underperforming salespeople as a symbol of stability to their customers. They allow them to slip backward from seller to customer representative. They look to the sales leader to improve their performance; a person that has its own set of issues in their role. The teams become more resistant to change with each change of leadership.
This combination of unaddressed churn and resistance to needed change creates a catalyst to lower productivity. With an ever-changing market and a stagnant sales force, it is near-impossible to be proactive and drive growth.
I wrote about these issues of the sales culture and churn in my book Get Sales Focused: rethinking and revolutionising sales forces and sales results.
In the end, without the right approach to the sales division, there is reduced accountability, and poor alignment of the sales operation with the marketing plan. Increasingly, the numbers fail to be delivered.
The challenge for a CEO is that going through a reset of staff every one or two years is detrimental to growth; equally as harmful as retaining under-performers.
Therein lies the challenge for CEOs of how to manage the sales departments to deliver consistently. So, what is the solution?
One misnomer of sales leadership is their reported lack of desire to improve themselves or change. In a Sales Focus International survey of 480 sales leaders, only 22% were willing to change or adapt to new ways of management. They are cited as a senior manager on promotion who will reach status-quo faster than most other senior divisional managers. It is the pinnacle of their career, and they lose motivation to improve as they see no further steps upward than the role. In companies, rarely do we see sales leadership promoted to the general manager or CEO functions as you would from operations or finance.
The first realisation is that in a growing company, the sales leader of yesterday or today may not be the person you need for the future. You need to hire forward and install someone capable of leading a larger, more challenging team. Achieving a successful placement as a sales leader can be challenging without the right experience. You need to partner with a consulting firm that can guide you and the new hire rather than just engage in a placement service.
If you are not hiring that person, then you must build the skill set through education to the desired levels. Without education, individual is most likely unable to find their way on their own. They hold the company back and the quality of employees hired in the sales department.
The next challenge for CEOs is that many do not have sufficient sales experience to drive the change. A Stuart Spencer global study reported that only 17% of top CEOs have direct experience leading a sales organisation. This creates another challenge as CEOs often don’t know what is required to effectively manage teams, how to gain transparency, how hard to push, when to push, and if the resistance is real or false.
To succeed, CEOs need an adversary who can ask the tough questions and sort through the excuses about why growth is flattening and what is being done about it. Someone who can dig into the root causes, develop solutions, and support implementation. This is what I have been assisting CEOs with for the past 30 years. Sifting through the sales and marketing division and providing a remedy in a short period of time.
The process includes the CEO and sales leader to establish a new path forward that informs and creates clear conversation and understanding of the growth factors. The implementation of the right systems and processes underpins the business and stop it from going backwards and delivers transparency to make improved decisions.
CEOs need to be proactive in finding the right support for sales leadership to educate and develop them within a working environment (not theoretical away from the business) to drive growth. A real-time growth driver and education process that secures the company for the coming years.
If the sales leader does not wish to take the journey, then it becomes a time to hire forward sales leadership that can take the company where it is going, not backward or retaining the status quo, which is likely to replicate mistakes.
To ensure better outcomes and create greater continuity in sales leadership, CEOs must ensure these decision points are executed with full understanding and consideration of best practices – and avoidance of the mistakes that occur most frequently there.
Another great read for CEOs on sales leadership is The Sales Focused CEO.
If you would like to discuss your specific situation, please reach out to our office.
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Articles you may also be interested in reading:
- A Complacent Sales Leader; A CEOs Greatest Risk
- Replacing Your Sales Manager: Yes Or No?
- Ascertaining The Real Value Of An Effective Sales Manager?
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