Situation: A company currently has inside and outside sales teams, and coordinates efforts with SalesForce.com software. Their strategic initiatives are to double inbound leads, create a triage approach to new leads and to lower the cost of sales. How do you optimize your sales organization?
Advice from the CEOs:
When outside sales claims that they have limited band width, it is necessary to find how they are spending their time.
If they are not spending most of their time developing and closing sales, adjust the system so that they are concentrating their efforts in these two areas.
Decide what the sales teams are selling – set up the organization so that it complements the sales goals and objectives. Below are alternatives used by others.
One company has evolved “product managers” who are like sales engineers but more experienced. They are highly paid and highly skilled. They are business oriented, with good communication skills, well rounded, and have successfully closed sales.
In contrast, the role of this company’s “salespeople” is to follow up. Lower level salespeople are tasked with generating leads for the product managers
Another CEO observed that what the company has done up until now all has worked well. The question now is how to mature their system?
This company’s solution has been to use outsourced Inside Sales Support (ISS) based abroad to find prospects.
ISS personnel are teamed with and managed by the company’s salespeople. Salespeople develop their own system. The ratio is 1/1, but outside personnel are ½ time for each salesperson.
This allows the company to reduce services quickly if they become overwhelmed.
A third company uses a 3-tier system:
Inside sales for lead evaluation.
Outside sales – get hot leads from inside sales, develop, close.
Consider this alternative: instead of a shotgun approach, target three accounts – Elephants. One company did this with an intense 6-month focus. The President and CEO drive these sales. The result: they have closed one, one is pending, and a third is likely to close.
Another CEO observed that the essential issue appears to be an efficiency problem.
Too much of the outside sales time adds limited value to marketing or the company.
Redirect their efforts to hunting.
Once an account is closed, sales is out of the picture. The customer transitions to the customer service organization for additional sales and service.
Situation: A company has grown through its expertise consulting for other companies. For its next growth step the CEO and Board want to shift to a project basis. This entails several changes, from compensation to organization and focus. How do you shift culture as the company grows?
Advice from the CEOs:
Risks & Challenges
Biggest risk – dissatisfied employees who see less billable income per hour and may not see the “more hours” part of the picture.
The biggest personnel challenge will be those who have been with the company for many years, and who will see the most change – maybe not to their specific practices if they can bring in business, but on the project side.
Communication is a critical challenge, and also the best way to avoid landmines. Put a velvet glove on the presentation of the opportunity: “This is good news – we know that the low hanging fruit is now mostly gone, and that the remaining fruit is higher; to counter this we now have more options.” Carefully prepare communications to both management and consultant team members.
Another potential landmine – the impact on the company’s reputation if it blows up after a year. Set appropriate expectations – the company is introducing a new program rather than a wholesale rebranding.
Countermeasures to Mitigate the Risks
Maintain a structural option that preserves the old model for those who can bring in new projects and who prefer this model. For them, the new model is just an option that can help tide them over if there are gaps between the projects that they bring in.
Present the project option as new opportunity. Give more senior and experienced consultants priority in choosing whether to participate or not in new project work.
Plan and create the ability to assess the old consultancy model vs. the new project model. This will be especially important when individuals are spending part of their time in each area.
Create a set of metrics for each business – the consulting and project businesses – to measure whether they are on track. Identify and monitor the drivers for each business.
Keep the title Consultant on consultants’ business cards – Consultant, Sr. Consultant, etc. Allow them to continue to take pride in their role.
Move to the new model through a planned phase-in but retain the option to adjust the speed of transition between the old and new models. This will allow sensitivity to changes in the environment.
Don’t consider an immediate and complete rebranding – think in terms of introducing a new product under the company’s well-known brand. Plan a gradual transition of business to the new model. Introduce the new product as a new offering. As it picks up steam, gradually move brand identification and promise to the new model.
For the new project model, create incentives for project performance. Show team members that while the hourly rate may be less, if they perform as a team they will share the upside through project bonuses.
Situation: A CEO is concerned that business operations are inconsistent. Employees are always coming to her for answers instead of working things out themselves. As a result, the CEO is continually focused on operational details as opposed to strategic direction. How do you create consistent business operations?
Advice from the CEOs:
Make managers live up to their titles.
Require them to go to each other to solve problems first, instead of always asking the CEO.
When they ask a question, don’t give them the solution, but advice on how to solve it.
Require them to present solutions vs. problems
Be willing to spend money on their solutions.
Answer all questions with questions.
Ask them for their recommendation.
Keep asking until they come up with the answer.
When one starts to delegate, it hurts for a while but will work itself out.
The CEO should not be doing “regular jobs” that are really employees’ responsibilities.
How has implementing these suggestions impacted other companies?
Businesses have become more diversified.
CEOs are focused strategically vs. tactically.
Businesses are more successful and profitable.
CEOs enjoy coming to work again.
Create a sales intern program.
Hire 4 sales interns for $10-15/hour – with the offer that after 3 months there will be full time jobs for those who prove they can sell.
Have the top 4 sales staff design the intern program – call response scripts, responsibilities, etc. – subject to CEO review and approval.
Assign one intern to each of these 4 sales staff in mentor/mentee relationships. This will demonstrate the capacity that each has as a sales manager.
Should younger workers be handled differently?
Allow flexibility – where appropriate – on hours and how they do their jobs.
Responsibility will also vary by pay level – higher pay equals more hours and more accountability.
Situation: A CEO has an option to purchase another company with whom they have a long and good relationship. A smooth transition will be important. The owner’s relationship with their customers is central to their success, as is his employees’ knowledge of their key accounts. How does the CEO assure that these relationships are retained? How do you construct a business acquisition?
Advice from the CEOs:
Based on the CEO’s responses to the Forum’s questions, the owner of the other company needs this deal more than the acquiring company needs him. This creates a strong bargaining position.
The owner of the business is the business and the key to a smooth transition post acquisition. Retaining his ongoing involvement – at least for a reasonable period – is essential to gaining maximum value from this acquisition.
The value of this business is its people: the owner’s relationships, and both the owner’s and his employees’ knowledge of their key accounts. His employees know the inner workings of their customers’ businesses. These are the relationships and the knowledge needed to assure that the acquisition is profitable post-close. Retention clauses and penalties must be part of the agreement.
If the owner wants 50% of the net income generated from his piece of the surviving company during a transition period, this is fair. However, the financial and operational details of the transition and his share of the income must be spelled out in the agreement and the agreement must assure that there is proper follow-through to qualify for the payments.
The income from the owner’s accounts must support his salary. However, even with this the owner will still cost the acquirer time and energy. Plan for this and budget for it in the agreement.
Situation: A CEO is in conversation about combining with another company. One option is for the other company to absorb his company. What are the pros and cons of this option? Are there other options that will better serve both owners and employees? How do you improve a business model?
Advice from the CEOs:
The company has a great model today. The option under consideration looks like a double compromise – it alters both the company’s strengths and its fundamental business model.
The company’s strength is lean and mean – moving from a hourly/fee-based model with high utilization to a salary-based model, as the option on the table proposes, will change this. It also changes the dynamics of who will work for the company.
The magic of the current model is that it attracts top talent by offering them the best of two worlds: high individual billing rates with ready access to billable hours. Over the long term this has also made it very profitable.
Explore an alternative – how does the company transform its existing business model while retaining its strengths – lean, mean, low overhead – while transforming the model so that it builds “products,” perception, and recognition for the company?
A longer-term alternative is to look for a financial acquisition of the company. It has good net margins, good cash flow, and even spins out cash. This is valuable to a financial buyer.
What is the role of the CEO right now? Another CEO was asked “Do you have a job or a company? What happens if you leave? If the company dies, you have a job. But it may not be necessary to change much to become a company.”
Situation: A CEO has been approached about a potential acquisition of his company. The offer was a surprise, and the team within the company is split on whether they are interested in a sale. They are currently very happy with what they do. How do you prepare for a potential acquisition?
Advice from the CEOs:
How does a company best position itself in advance of discussions?
Rebrand the company to boost the value proposition. Make what the company does best the focus of its value proposition. Position the company as the “experts” in this area.
Look at a series of possible scenarios that could develop and determine who on the team can best contribute each scenario. This will help to evaluate the implications of each scenario and to rank them in terms of favorability on the company’s terms. It will also help to quickly exclude certain scenarios if they come up during discussions with acquirers.
What research should the company conduct on the acquirer?
Do a deep dive into the potential acquirer. Research is simplified if the acquirer is public. Go online and look at their SEC and public filings. Look at their revenue trend as well as their profitability or losses.
What is the acquirer’s history of acquisitions? Interview people from companies that they have purchased.
Don’t pitch anything to the acquirer until you understand what they want to buy – this is critical so that the company positions itself well.
What is the best approach to take once the conversation starts?
Quick first step – send the company’s financials to the acquirer with a 3-year projection. Ask them, based on this, for a price range that they would consider for the company. If the range is outside of expectations, the conversation is over.
Determine whether this looks like a strategic vs. a financial buy. A strategic buy yields a higher price.
Cut a deal structure with a bonus tied to success post acquisition. This means a reasonable upfront payment with big payments for future success. This creates golden handcuffs to motivate the company’s staff to stay post-acquisition.
There should be multiple options on table – addressing both financial considerations and the future of team.
Situation: A CEO perceives that the company has a conflict between performance and planned timelines. Of concern is performance against key metrics like pipeline performance and closing new business. A sense of urgency isn’t present. How do you create and communicate urgency?
Advice from the CEOs:
Management knowledge of company financial status and performance against key metrics – particularly key drivers like pipeline performance – is critical to their being able to assist the company.
A company decision to focus on project profitability may have the unintended consequence of exacerbating the lack of urgency. If revenue growth lags, the only option for managers who are tasked to hit a profitability target is to cut expenses. This delays projects and can negatively impact morale.
Accountability comes from meetings. Not 1-on-1 meetings but team meetings. Peer pressure is an important component of accountability. Nobody wants to be the individual who is consistently behind on projects or initiatives.
The challenge may be more external than internal. When business closes more slowly then everything else slows down: hiring, new development, investment and profits. All of these are driven by new business acquisition.
Another CEO has same issue with her contracts. All contracts include a timeline. If work or deliverables slip, the customer wants to slow down delivery and billings. Her solution is to include stop work and delivery delay fees in the contracts.
What actions would others take to address this?
Institute progress payments. For example, instead of charging 50% up front and 50% on contract completion, shift to, for example, 50/30/20 with the 30% due on completion of project framework. This way, only 20% can be delayed due of customer timing issues.
Built financing into total pricing. The customer is free to delay projects, or aspects of projects, but there is a charge calculated into delayed delivery which covers the cost of money and additional management.
Situation: A CEO and her staff are struggling with a difficult employee. This individual fails to send invoices on a timely basis, doesn’t provide required reports to management, and doesn’t return vendor calls. The CEO has spoken to the employee, who acknowledges the issues but then rapidly defaults to old habits. How do you manage a difficult employee?
Advice from the CEOs:
Ask for specific weekly/biweekly AP/AR reports, and be very clear as to everything that this should cover as well as the required deadlines. Make it clear that these deadlines are mandatory and that there will be disciplinary consequences for failure either to meet the deadlines or to create the report as specified. Address issues with timely mailing of invoices and timely return of vendor calls the same way. Make all three standard operating procedure.
This is not an at-will employee so assure that there is very good and complete documentation over a period of time to demonstrate that the employee is not meeting required job responsibilities.
Tell the employee that he has 90 days to demonstrate that he can consistently meet required responsibilities, and that there will be a retain or termination decision at the end of this period.
Update policies that are not being following so that they are clear.
Check with a human resources expert for advice on what needs to be done. Regulations are shifting, so this will assure that the company is following regulatory requirements.
If the final decision is to retain this employee, adjust responsibilities to mitigate potential future damage.
Given the current challenges, why is this employee’s behavior being tolerated? What message is this sending to other employees?
Situation: A CEO senses that employees don’t have his sense of urgency regarding the business. A case in point is responding quickly to new customer inquiries in a competitive market. Too often, he takes over to assure that bids are submitted quickly. How do you get comfortable delegating to staff?
Advice from the CEOs:
Prepare for a meeting with staff by defining the key desired standards in advance.
Initiate the meeting with this message: “We have a company image. This is how we define it.” Work with staff to create standards that define this image.
Agree on standards with the team.
Discuss standards with the team but have them make the decision. Guide the conversation – through questions – to focus on the desired standards. Be open to using the language developed by staff to enhance ownership.
Examples of standards that may apply:
Response time to incoming calls, maximum number of rings before response.
Time to return telephone messages.
Time to return emails.
Invoices completed the day or the order, or whatever is appropriate.
Establish a response regimen – assure that response is professional.
Train all people who pick up the phone.
Assign rotating office days for salespeople with responsibility to answer the phones.
Emphasize the importance of speedy response with an explanation that everyone will understand.
When a customer calls, assume that they are also calling 2-3 other suppliers. The first responder can shape the conversation in favor of their company and offering – for example the company can offer both a solution plus design and logistics assistance.
As first responded, assure that the focus is on the company’s strengths – this puts the competition at an immediate disadvantage.
Enforce and maintain the standards
Once standards are set, make review and updates of performance against standards part of weekly sales meetings. Use large charts to track this.
Create friendly internal competition. Who got the most business last week? Who did the best with incoming calls? Have the team develop competitive goals.
Recognize top performers with $50 – $100 cash award, restaurant certificate, etc. Make it fun!
If “everyone” is supposed to pick up the phone this becomes “nobody” because nobody is responsible for picking up the phone!
Situation: The CEO of a new company is struggling to generate sales momentum. Part of the issue is adequately productizing their current offer. A second issue is building a good sales team and sales momentum within the team. How do you productize an offer?
Advice from the CEOs:
The issue may be that the company is regarding its product and the sales process too narrowly. Look at the sales process in new and different way.
Role play the current sales-to-close process. Have salespeople document what they do. Look for a product concept that appears from this exercise.
Try different models to determine what works best at the company’s current stage of growth.
Position the company’s ability to deliver outcomes. Make it risk free if nothing is produced. “Here’s our package – it costs nothing if we don’t produce results as promised.”
Consider specializing in services that enhance other companies’ sales – a need that is always present.
Look at the car dealership model – lower level salespeople qualify prospects and bring the qualified prospects to more experienced colleagues for the close.
How is the company currently positioned – as a generalist or a specialist? Potential clients more often look for a specialist to help them solve specific needs.
Conduct local surveys to help define prospects’ and clients’ top needs.
Start developing and advertising specialty areas. Add to the list of specialties as the company expands.
To build the sales team look at younger salespeople currently with competitors. If these individuals have been recruited right out of school, they will often look for other opportunities after a year or two.
Target good salespeople who are currently employed. Tell them that the company is interested in getting to know their business and look for salespeople who are good at selling themselves as well as their offering.