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90% of Sales Strategy Fails – Why?

Road sign showing sales strategy fails
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When a sales strategy fails, companies look to find real reasons and how to address the required improvements.

As we approach the end of the year, many companies are reviewing their performance year-to-date and planning. Sales strategies and budgets are under review for performance against targets and deliverables. With their focus now firmly on growth, often the responsibility to deliver growth sits square on the shoulders of the sales leader and their ability to execute sales strategies.

Many of the CEOs and sales leaders we are working with are experiencing market conditions that are challenging, some complex, and others highly competitive. They are working in a business landscape that is changing at a frightening speed. The luxury of time is being taken away from them as their strategies are taking more time and effort to develop than in recent years. Their companies are operating ‘thin’ with financial pressures, and their sales teams must deliver top-line revenue with fewer resources.

Sales strategy execution has never been as high on the agenda of companies as it is today. The market has demanded that execution has become a very thin line between achievement and failure. Some companies, they may be looking to leverage off a good year in 2012 and continue to drive their strategy. Others will be analyzing why results are not being delivered and why strategies are seemingly failing.

For sales organisations, the typical scrutiny applied to underperformance is people investing an inordinate amount of time in examining their financial performance and the difference between their stated goals and actual results. They are examining existing customer bases and looking for where they can extract some easy wins to resolve their problems.

If the company is underperforming, the financial performance scrutiny is not going to resolve their issues and nor are quick wins going to resolve past mistakes. The financial performance is often the end result of failed strategy execution and not sales performance as often thought. Whether your strategy was as simple as let’s repeat last year with just a 5% increase in sales or complex with taking new products and entering new markets.

If your company is not hitting its targets, then the execution of your strategy using traditional methods of sales management and sales performance has failed you. To continue further believing things will change applying the same methodologies would be imprudent.

So why do those traditional sales strategy methods fail you?

Sales budgeting and sales strategy are intrinsically tied together and need to be worked on simultaneously if you are to deliver sales goals in the year ahead. In most companies, I review the two tasks that are completed with some degree of cross-over but not sufficient to remove dangerous gaps that will appear once the year commences. There is insufficient depth in them both to even commence contemplating the development of an execution plan.

Over the years, there has been much written and studied on the development of strategy, but very little has been done on the core skills and practices required for execution. In fact, Harvard Business claims that a staggering 90% of strategies fail, not so much because of the strategy being wrong but because the execution was poorly performed. Sales leaders, who often have the least amount of college education, are left with the task of execution and often end up trying to fit square pegs in round holes. They are trying to apply their past experience to new strategies without sufficient depth and detail for it to become a reality. Let’s face it, sales leaders are renowned for their lack of desire to use systems, structure, and processes which are all at odds with strategy execution.

Interestingly, when I am reviewing companies, I often see that the sales strategy failed well before the sales budget failed. There is a degree of momentum in most businesses that disguises failed strategies for a period of time. Companies will console themselves that even though their sales strategies or initiatives are not coming to fruition, they are at least still profitable. It will just take a little more time than they first thought. They don’t hear the warning bells early enough to remedy the problems, and the business quickly moves to a quarterly and then the monthly crisis of not making the numbers.

The failure of sales budgets is immediately apparent and becomes the focus of all executives. They ask, ‘What immediate action can be taken to remedy the shortfall in sales revenue?’ Often considered a failed sales goal, it is, in fact, a poorly designed and/or managed sales strategy that failed and now surfaces as failed sales budget.

Getting sales strategy execution right

With a new year fast approaching, it is time for companies to take a step back and look deeply into their sales organisations and examine (1) sales strategy, (2) sales budgets, and (3) execution plans. You need to review those three steps with sufficient depth so as to remedy the gaps and place the company in the position of succeeding.

For successful strategy execution, you need to establish the right series of measurements and disciplines that ensure sufficient actions and processes occur, producing the required momentum to achieve over-sales goal results.

You need to be able to answer these questions:

  • Are last year’s customers going to support our sales strategy for the coming year?
  • Are the behaviours in our business going to support our sales strategy for the coming year?
  • How have we validated our existing customer spending for the coming year?
  • Are our sales force structure and roles correctly aligned with the sales strategy?
  • Do we have sufficient metrics to drive the sales business and make informed timely decisions?
  • Do we have sufficient information and knowledge internally to drive the business?
  • Does our implementation cover sufficient points that support the delivery of the strategy?
  • Have we correctly ascertained the time, revenue, and resources required to support the delivery of our sales strategy?
  • What internally blocked us from delivery growth in the previous year?
  • Does our strategy sufficiently address the market changes and competitors for the coming twelve months?
  • What assumptions have been made, and have you done an adequate job of objectively testing those assumptions to ensure they’ll work when they meet the realities of the market?
  • Do we have sufficient depth in our playbook that will enable sales force members to perform tasks aligned with our strategy vs them operating autonomously in conflict with our plan?
  • Do we have genuine individual accountability at all levels?

These are some of the fundamental questions that need to be answered. As a CEO, you will potentially get ‘yes’ to most of them. You may well have been getting ‘yes’ to those points for the last few years but still suffering from sales strategy failures.

The question to CEOs is, “Did the sales organisation deliver over sales goal results and deliver the strategy in the last year and two-year period?” If the answer is no, then there are points not being reviewed deeply enough within those questions that are undermining your results. Is your implementation plan of sufficient depth that it engages all the actions required to deliver the results? Can you make timely, sound decisions based on the information you are receiving as a CEO?

Many of our clients face the challenge as CEO of deciding what degree of risk there is to the company if 1) sales strategy, (2) sales budgets, and (3) execution plans go unchecked. The risk can be more than just lost revenue and profitability; it can spill over into lost market share and shareholder value.

CEOs need to take action now validate their sales strategy execution and minimise the risk of sales strategy failure.

Sales Focus Advisory assists companies in gaining the transparency and validation of the decisions required for the effective management of their sales business and sales strategy execution. To discuss your specific business situation, please contact our office.

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About the Author: Adele Crane

A leader in Implementation Consulting.
CEOs and Managing Directors have relied on Adele Crane to solve challenges with the performance of their sales and marketing since 1990. Her consulting experience in delivering results in 90-120 days is unprecedented by any other known sales and marketing consulting professional in the world. As an author of 3 acclaimed books, appearances on major media, and publications in USA, NZ and Australia, Adele’s experience brings fresh thinking and contemporary practices to business.