Pipelines and ForecastsSales Leaders Blog

The Revenue Clock is (Always) Ticking

Three Approaches to Improving Strategic Sales Planning

1. Defining Goals and Base Revenue

Outsourcing sales goals are typically stated in either revenue or margin dollars and are generally defined by quarter.  Establish that number and make sure all the elements that go into the overall goal are defined, such as targets by geography, product line, customer segment, or business unit.   Next, a key question for outsourcing sales leaders:  How much existing revenue can I count on for next year?   Call that number Base Revenue.  Base Revenue is made up of two categories: growing accounts that should generate incremental revenue next year, call that Base Growth; and some accounts that may shrink or decline, call that Base Erosion. The sales leader's objective is to maximize Base Growth and minimize Base Erosion. Classifying existing revenue streams into this simple formula is one starting point for 2009 strategic sales planning.   Outsourcing sales cycles are long, so maximizing the base is essential to success.

2. Customer and Prospect Segmentation for Outsourcers

The next area of focus is building a more specific segmentation model for customers and prospects.  One approach is categorizing customer types into four quadrants (suggestions below) based on key success predictors like revenue forecasts, pipeline values, margin potential, alignment to portfolio, level of required sales effort, promptness in payments, etc.  Looking at customer categories instead of individual accounts will begin suggesting defined strategies for each unique group.   (After completing this analysis, do not be surprised to find your sales teams are spending too much effort on lower ranked relationships in weaker categories and not enough time developing the potential big hitters). 

Invest

High growth potential, strong alignment with current or planned capabilities, positioned in target market(s), low or acceptable rating on negative criteria.

Harvest

Strong contributor to current revenue and margin, reasonable growth potential; acceptable rating on negative criteria.

Maintain

Reasonable revenue contribution, average or flat growth potential and acceptable rating on negative criteria.

Divest

Low, flat or negative growth potential, little contribution to total revenues, and high rating on negative criteria.

 

 

 

3. Sales Organization Analysis

With financial objectives defined and segment level strategies underway, it's time to assess the selling organization itself and determine where (not if) changes are necessary.  This exercise can be extremely difficult for many companies but is critical to ensuring the new sales plan has the best chance for success.  When evaluating sales executives it is standard to look at past performance as the most important gauge.  But historical success does not always guarantee future results, particularly for outsourcers in markets where a great deal of change is occurring.  An excellent approach to going beyond pure financial performance in sales representative evaluations is based on GE's Vitality Curve[1]. 

This well documented model classifies an organization's workforce into three categories and suggests approaches for each group.

GE Vitality Curve (click here – read more)

A's – The Top 20 %

Filled with passion.

Committed to making things happen.

Open to ideas from anywhere.

Have the ability to energize not only themselves, but everyone who comes in contact with them.

Make business productive and fun at the same time.

B's – The Vital 70 %

Possess GE's Four E's – but not yet showing the passion.

They are the heart of the company and critical to its operational success.

Devote energy to improving B's – Get them searching every day for what they're missing to become A's.

C's – The Bottom 10%

Someone who can't get the job done.

Likely to enervate rather than energize the organization

Procrastinate rather than deliver.

Don't waste time on them.

Moving Forward

Successful selling of outsourcing solutions requires many competencies, operational execution and discipline, and competitive offerings.   Knowing where best to assign sales resources is also a major contributor to success and is something that requires a thorough understanding of goals and targets, customer needs, competition, market trends and internal capabilities. 

Incorporating the three planning elements suggested here into your strategic sales planning process greatly increases opportunities for success and helps establish a foundation for many other strategic planning activities.  


 

 

[1] Jack: Straight From The Gut, by Jack Welch with John A. Byrne, Grand Central Publishing

 

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