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.
Situation: A service company has developed the capacity to produce and sell a product. The CEO is considering two options for this new opportunity: create a separate entity for the new business or run the businesses in parallel under the current umbrella. How do you best exploit a new opportunity?
Advice from the CEOs:
Option 1: Create separate entity for the new business while the existing business continues in parallel.
How big is the potential win? The current company competes successfully for about 10% of the market. The new capability would allow the company to potentially compete for 100% of a larger market.
How different are the two opportunities? The current business requires specialized talent – it is a low volume, high margin business. The new opportunity is the reverse – high potential volume but lower margin. It is a more generic market with fewer specialized needs.
The separate entity option provides the most flexibility. The current model already functions well. A spin-off provides an additional option without losing what already exists.
Bring in another individual to develop and run the new entity. It’s a different game and requires a different focus. However, it will be a great opportunity for the right person.
The spin-off model will be more sustainable under separate management than under the current company.
Option 2: Operate both businesses under a single entity.
This option looks like a double compromise – it alters both the company’s current strengths and the fundamental business model.
A long-term alternative is to look for a financial acquisition for the current company. It produces good net margins, has good cash flow, a and spins off cash. This can be valuable to a financial buyer.
Situation: A CEO wants to build a new bonus program for the company’s professional services team. He wants to include a customer satisfaction component, because the group is historically weak in this area. Does it make sense to have a different bonus plan for professional services personnel and managers than for product development personnel and managers? Can bonus plans differ between departments?
Advice from the CEOs:
Many companies have different bonus structures for different departments. This is natural because different departments have different functions. For example, Sales may evaluated for bonuses based on a combination of revenue and gross margin achievement, while Finance is evaluated on profitability and Product Development is evaluated on hitting product launch schedules and new product sales.
Changing bonus structures can be a sensitive matter. If the team impacted is not included in the process of drafting the new plan, changes may be perceived as negative. If this is the case, it’s better to frame the new program so that you limit your commitment to it to just one year, and let the team know that this may change this next year.
How do you go about including customer satisfaction surveys as a component of bonus calculation?
If you want to use customer satisfaction as part of the plan, benchmark customer service satisfaction before you launch the plan. If you don’t benchmark, how do you know whether performance improves?
Survey response rates will be an issue – you won’t get 100% and may get a survey response rate of 10% or worse. Be prepared for this and make sure that data with a low response rate will support your objectives.
A survey is a lagging metric. If you can find a measurable leading metric to use as well this is better.
Be careful of how the survey is drafted and who conducts it. Both can bias results.
As an alternative to making customer satisfaction part of a bonus plan, consider starting a customer satisfaction or loyalty program. The most important question to ask will be: would you recommend us to your peers? Any low response guarantees a follow-up call from the company.