OK, so the reps are out trying to confirm the compelling events that will close the year out well and the management is in the office, huddled in a room trying to figure out what went wrong with the margins this year.
Not that you’re bonused on margins of course.
As a sales manager, you’re aligned with your reps’ targets plus a few extra MBOs, like how many of them get on the ‘plane, and your "pipeline to target multipliers", and the like.
But the CFO is saying that the guys called and closed the “wrong type of customer”, and gave away too much discount in so doing.
It’s time, therefore to review the sales strategy.
Because even though everyone in sales looks like they’ll make quota club, the CFO is going to get roasted by the investors when they see that margins have collapsed and he’s still paying out big commissions!
Some quick and dirty analysis ensues...
Is it Marketing’s fault that you found the wrong prospects in your lead system? Maybe it’s that unholy alliance of Product Marketing and Engineering making the wrong products and then messaging them poorly so that you have to offer discount to compete effectively with the category leader? Has SalesOps been on top form, enabling the sales team with world-class training?
Actually, while all of these might be issues, it’s just as likely that market segmentation is the issue. And to re-segment, you’re going to need the whole team – SalesOps, MarComms and the Product guys alongside you to figure out what to do.
I can’t even remember how many of my clients have initially segmented their target markets by company size – for example into Enterprise, Corporate, Mid-Market and SOHO, and then targeted sales guys in in those segments with a revenue goal. “Bring in $10m from a large enterprise!”
Hardly sophisticated. And hardly fair to blame the sales team if that’s what they go and do.
Maybe a more sophisticated approach is to look for customers who will genuinely value your products and services because their needs and priorities align with what you’ve built.
Look at capital or operational spend levels, profit margins, vertical segments. Ask successful sales people in your team which are the easiest customers to sell to. Interview customers to understand why they bought (more on what to ask in a future post).
When you segment using behavioural tendencies rather than pure demographics, you’ll find that there are two types of customers that immediately stand out, irrespective of size or vertical.
The first will buy a suite of products and services from you, will buy with greater frequency and will worry less about price. The second type buys short term fixes and uses your competitors to force your price down.
With this new behavioural segmentation, and with support from the CFO to pay sales people on margin (how strange would that be!), the next sales strategy review is going to be very different…
For more on how to align sales strategy with corporate objectives, please contact us here.