It is that time of year again when discussions regarding sales goals for the coming year are being discussed and reviewed. The CEO wants a higher number than what the sales leader is comfortable committing to. The question on the table is always ”are they realistic sales goals?”
The sales goal number has been set with consideration of the market and the company’s needs. The need for growth to deliver not only shareholder value but to invest in business equipment to improve product quality and operational efficiencies.
This is what happened to a CEO who approached us recently as the company commenced preparing for their new financial year in July and had met an impasse with the sales leader. They valued his contribution to the business, but the lack of commitment was stretching the relationship too far. This is a scenario that is played out in many boardrooms and meeting rooms when it comes to setting smart sales goals.
Phillip, a newly hired CEO of a large industrial company, was asked by the board to deliver greater returns than his predecessor and get back to investing in the business. They set a mandate that did not want to increase their cost base. Phillip did his research before starting in his new role, and all indicators to him were ‘it can be done’. He staked himself on it.
To Phillip, it’s a non-negotiable number, but already the sales leader, Richard, is starting to question the number and if it can be delivered. Phillip has discussed it with Richard for about two months, but he still did not commit him that it would be delivered. Phillip was surprised Richard was closed to the opportunity.
Richard had raised a number of objections, but no real hard facts were hitting the table, and Phillip was getting frustrated. He said that he agreed with Phillip that the market was there, but it would require an increase in headcount and costs to achieve the goal. Richard then started to communicate that they would lose good people once the number started to be communicated down the line if those changes were not added.
Phillip finally snapped. He had had enough and went back to him, it’s your job to deliver what we want, so find a way”. Richard had hit a brick wall. He did not believe he could hit the number, and he did know what to do. Phillip was not going to step back off the number.
The sales leader is objecting, saying they are not realistic sales goals and it cannot be done.
We see this a lot where sales leaders and CEOs have different visions of what is achievable. It can be the beginning of a major cultural problem or the parting of ways as the disagreement corrupts any communication between them. At the end of the day, the CEO has to take control of the situation as they cannot allow the business to slip into cultural disarray or spend the next twelve months debating the subject.
Phillip did not want to lose Richard, so he had to take action as he observed Richard had definitely brick-walled. Phillip contacted us to discuss what could be done as he was adamant he wanted that number delivered.
Our advice -“let’s look at the business and see if that number can or cannot be delivered through deep analysis using lean sales principles and other diagnostics. We can provide the facts of what is a realistic sales goal and how to go about delivering it. If you are convinced the market is there, the product has merit and is competitive, then the only thing left is to look at how the sales organisation is operating.
Phillip agreed that it would certainly break down the wall and provide some hard facts and transparency on the situation. The result was going to determine if Phillip was right and if so, provide the tools to assist Richard to move forward, or new goals would need to be set that are realistic.
We commenced the process of gathering all the required information. Our observation of Richard was like what we see with a lot of sales leaders. They are capable of stewardship of a sales business that already has developed its momentum, and they will track with the market. They are not trained in how to drive growth above market momentum nor in the deep analysis required to facilitate higher growth rates. They focus on the salespeople rather than getting the sales business right to support the people. A hard fact to hear, but our analysis proves this to be the problem over and over again.
Armed with our deep understanding of sales organisations, we reviewed the business to understand their processes, the operational integration with other departments, and how employees operate in their roles to deliver the sales revenue they are currently achieving. We looked at efficiencies and direct and indirect cost management. We studied the systems, processes, tools, and support provided by management. We applied diagnostic tools to understand where additional growth and profitability can be gained from within the sales organisation. We reviewed how the products were being taken to market and how the sales process was being managed. We looked into the reasons for previous decisions made by Richard and others who have formed the sales organisation. We learned about their culture and the management disciplines being applied. This is a process that is complex, but in just four weeks, we had the hard evidence required to make decisions on realistic sales goals.
The result of the review and setting of realistic sales goals
The outcome was that the business could grow to deliver the number if the right sales transformation was undertaken and completed within the first two quarters. This was not unrealistic based on our experience in sales transformations. If the business continued on its current trajectory, it was reasonable to say Richard’s doubts about delivering the number were founded.
The review identified that the business had adopted a number of activities over the years that were working in conflict with growth, and the culture and behaviours within the sales business were out of alignment with what was required. Although on the surface, it seemed to have all the right ingredients, once we reviewed more deeply inside the sales business, we identified where there was sufficient separation in the requirements that it would hinder any efforts of growth.
Armed with the right information and a detailed implementation plan, Phillip is now able to work with Richard to deliver the number over the coming twelve months. Richard has an understanding of what the barriers to growth are and, importantly, the steps required to deliver the number. He has learned some great new skills that will set him up well for the coming years, as he has now learned how to go about sales strategy execution.
The business is now geared to deliver an increase of 5.5% EBITDA just through sales organisational changes and went on to achieve the sales goals.
If you are concerned about your number being delivered in this or the coming financial year, then a sales improvement review can be an excellent investment for your business and a good place to start. Contact our office to discuss your specific needs and how we can assist you.
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