In recovering from the pandemic, companies are reviewing their business strategies and setting a new direction for the company. They are addressing their competitive position, but a key factor to consider will be that sales models have changed forever.
Without consideration of the sales model and go-to-market strategies being carefully aligned in the post-pandemic world, business strategies can be misaligned and undermine the intention of the company’s direction. CEOs and the C-Suite need to be attuned to the changes but are they sufficiently equipped to understand the sales model changes occurring.
CEOs who have built their careers in specialties such as IT, finance, engineering, accounting or legal, as it was an accepted right of passage to the top job. According to the 2019 research Route to the Top Report by Heidrick and Struggles, many CEOs and C-Suite members made it without deep experience in sales.
They understand sales are essential for meeting monthly/annual targets but often minimise the efforts required to achieve those revenue targets. With the lack of understanding of sales, sales leaders are not included in strategy discussions as they see no value in their contribution. Some CEOs cite sales as required to deliver revenue of the strategy, not shape the company’s direction.
The challenge now is when C-suite leaders don’t understand or lose touch with sales function, and they undermine their ability to develop and implement a market-relevant strategy. This disconnect will become a barrier to maintaining direction and competitiveness as they push old models into a new world of buyers.
The effectiveness of their sales organization will be of strategic significance for companies. Those senior leaders who are out of touch with the activities of B2B customer-facing teams and do not recognise that their sales models are badly in need of updating will struggle most of all.
In the past, C-Suite executives relied on sales leaders to implement sales models and processes, such as coaching and training, sales tools, performance reviews, recruitment and onboarding, and salespeople and managers’ fit with their specific roles. They hear the rhetoric around those words and believe all is going well as actions are being taken.
Today, that reliance on sales leaders needs to be tested and verified. For example, is the sales leader taking the right sales model to market and does it connect with the new buying process being adopted by customers. There needs to be more evidence of alignment beyond verbal offerings over the meeting room table.
Traditionally, the sales process has been awareness developed to interest desire to purchase. The buyer was heavily reliant on the input of salespeople to provide knowledge and consulting in making the right choice. Salespeople could sway buyers’ thinking through each of the basic sales process steps.
However, today’s B2B buyers spend a high percentage of their time online research before appearing as buyers seeking in-person engagement with sales reps. They are informed, have viewed numerous options and are often satisfied they are making the right decision when they reach out to a salesperson. Salespeople are filling identified needs more than creating needs. The conversation has altered as informed buyers are at the point of closing the purchase, whilst sellers are still catching up, attempting to apply old sales disciplines.
The company’s sales models are now reliant on marketing to provide the right information in the market that allows buyers to find, review and shortlist their company. Unfortunately, this is often done with no insight by the company, even with the plethora of online tools to track site visitors.
Each company is different as to where the customers are willing to show their hand as interested buyers in the process. In addition, the complexity of the product and expenditure will impact the timeline within the buyer process and how sales models have changed.
Sales leaders need to gather and listen to frontline feedback on how buyers are changing and communicate this to the C-Suite as it directly impacts market-relevant strategy. To consider business strategy can be delivered without testing it through sales is becoming unthinkable. In addition, sales costs will change as the go-to-market strategy changes.
There needs to be an understanding of what is required from marketing to stimulate the necessary activity for sales to excel and what marketing must do to engage and nurture buyers through their buying process and prepare them to be more sales-ready. The absence of the sales leader and marketing leader from the strategic process can have a dire impact on whether strategy is delivered.
Sales leaders have, and must continue to adjust how their sales function operates in the face of new buyers and economic hardships. In a very changeable landscape, leaders must apply new sales focuses to capture market share while keeping pace with constantly changing customer demand.
In B2B selling, buyers now, more than ever, have to justify their purchasing decisions as they compete with other divisions in their companies for the limited budget funds available. They must be confident that the supplier can provide them with those justifications. To that end, account management and solution selling still matter, but how and when they are applied is changing.
What Is Needed
As business needs change and technology provides new methods for people to buy, any sales model has a sell-by date. Together with the product life-cycle, buyers typically start as generalists and, over time, become more discriminating. As products evolve and new competitors enter the market, buyers have more choices and can demand more in terms of product quality and performance from suppliers. Companies that fail to adjust their sales model to changing buyer behaviour and demands lose an advantage.
Developing a relevant sales model that everyone understands, from executives in the C-suite to field salespeople, is the most important way companies respond to market changes. The sales model has three core components:
1. Customer selection criteria.
Decisions about where your sales force is focused in a market are central to any business strategy and sales model. Time spent with the wrong targets increases sales costs and leaves the door open for competition to take market share. Sales call patterns—where salespeople spend their time and what opportunities they pursue directly impact your company’s ability to deliver the strategy. Are their efforts focused on the right sized accounts, the profile of customers that the company requires for the future and the balance between new business and customer retention.
Senior executives realise that you can not be all things to all people. But there is a lack of alignment between what the product and services can do for specific customers in their sales models. Many companies’ customer profiles accumulate reactive responses to buyers approaching them, more than a planned execution of connecting with the right companies.
Sales leaders often advise salespeople, either directly in meetings or implicitly through compensation plans, to “go forth and multiply.” Salespeople respond to these requests (demands) by selling to anyone, often at discounted prices, to achieve their sales goals. This leads to lost profitability and damaged brand positioning.
Profitable growth requires clarity on the right customers and profile that the company needs for its current and future growth.
As part of the sales improvement reviews, a key area Sales Focus Advisory emphasises is the cost of sales and account mix based on the strategy of the company. The overriding trend is that companies are overstaffed with excessive costs of sales being carried by focusing on legacy sales models rather than what is required for the future. However, the capacity of the sales function often has sufficient bandwidth, if focused correctly, to deliver over 40% growth without additional staff or costs.
With a focus on the right targets and alignment to the sales model required, substantial increases can be achieved and shift the company’s customer base to align with the company’s business strategy. A change in management style is often required and provides more transparency to the CEOs.
On the other side, one of the core requirements for effective customer selection is a business strategy that sales leaders can articulate; no sales model can deliver results for an inadequate business model.
2. Clarify your customers and their buying process.
Buyers differ significantly in what they want and demand from a product. Some buyers are dedicated to virtual sales processes or digital sales embracing remote selling while others require face to face between field sales and decision-makers. B2B buying is no longer a single process and sales models must change to embrace the different styles to sustain a competitive advantage.
Companies must be connected to their customers and buyers and ensure they are not applying old thinking of purchase reasons or creating their views of what they perceive are the buying reasons. Instead, they must specify what problems
In a recent assignment, a traditional industrial industry was impacted by the lack of growth in their company. The products were sound with an excellent reputation, but the company had adopted a voice to the market that was out of sync with the buyers, and the gap was growing as the market further changed.
Changes were made to the conversation through marketing communications and sales conversations, creating a new sales model. The change allowed salespeople to better respond to enquiries and influence buyers. The outcome was significant growth and an increase in the quality of buyers approaching the company.
3. The go-to-market metrics and economics
After reviewing over 200 companies, a key factor to all growth is underpinned by the time salespeople spend less interacting with customers. Typically, this is only 25-30% of their time, which presents a major growth opportunity. The time salespeople spend on various activities is a key driver of your growth capability. If you increase their selling time, it directly affects the outcome of the sales revenue achievement.
Many companies use the common metric of “Wins” to track selling performance. The problem is that the number of wins (and losses) directly correlates to the activity of the salespeople. Insufficient activity can undermine wins and losses.
Wins are also a lagger measurement. It is the final point of the process, whereas the emphasis must be on the activity and the focus of that activity at the start of the process. Conversion analytics only assist where they are measured throughout the process and not just at the end game.
Consideration should also be given to the sales model’s product’s pricing, shipping, and technical reliability, directly impacting sales effectiveness. A product that is not competitive with other offerings in the market will still achieve sales but not at the levels of those opportunities that exist and are being won by your competitors.
4. Re-enabling the sales team
Successful salespeople are experts in understanding their industry and their customers’ business and should function as consultants capable of making sound recommendations. If that does not encapsulate your B2B Sales team, then you need to re-enable the sales team to be capable of having those conversations.
Selling is a collaborative process connecting buyers and sellers. Pushing a product on a person or business that is not ready does not help the buyer. It will not develop the right customer connection for a long-term relationship, recommendations to others, and optimal profitability.
Another tell-tale sign is if your salespeople say, “that’s not the way we work… we have tried all this before, let’s keep doing what we know”, they most likely have not thought about how much the world has changed and may still change.
Even if you operate in an industry that has not had an obvious transformation, you can be assured that everything else around it has. The world is changing in terms of communication requirements, gathering of information, decision-making policies, and collaboration across multiple suppliers to create project purchases. Supply chains have altered, and how the world operates does affect every industry.
The sales leader needs to ensure the right conversations and targeting are occurring in the market. CRMs play an important role in providing initial transparency to customer interactions, targeting and deal movement.
Importantly, sales leaders must validate those initial observations by being first hand in the field. Listening to what is being said, asking the right questions of your team to expand their thinking and ensuring they have access to the right tools and messaging to enable them to be effective.
If C-suite leaders reconnect with the sales function and understand the sales model, they will be better positioned to develop and implement a market-relevant strategy.
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Articles you may also be interested in reading:
- Sales Models Have Changed – How it Affects Business Strategy
- Connecting Strategy Formulation and Strategy Implementation
- B2B Sales Trends for Growth in 2022
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