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| Home - Industry Article - Dec 02 Issue |
If You Can Zoom-In on a Company’s Sales Operations:
You Can Find Out What’s Really Going On
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Zoom-In: Request a win-loss analysis on two recent deals—one win and one loss. The VP of sales should be able to provide this in writing. Worthwhile win/loss analyses involve more than just the answers to, “Why did we lose?” But simple is better than nothing. You are looking for a solid foundation of good practices. By the way, a win-loss analysis should never to be portrayed or used as a weapon against any individual sales person, even an underperforming one. Doing that turns the whole team against the process. Rather, the win/loss analysis is a tool that can assist a company in determining exactly where their sales process breaks down and where it is most effective.
Results: A series of win/loss analyses for one public company just a few blocks from Route 128 revealed that a tough competitor was regularly requesting to go first when it came time for final vendor presentations. The competitor’s sales executive would isolate the prospect’s key decision maker, negotiate a deal and get a handshake right then and there. The prospect was given a rock-bottom price in exchange for no additional work (or risk) on the part of the competitor. Uncovering this valuable information was the basis of a complete overhauling of the company’s strategies and tactics against that competitor, resulting in a win rate of over 90 percent and market dominance.
Ascertain that integrity is a key value for the company. Without integrity, you can’t build employee, customer or investor loyalty. It’s temping and easy, especially in today’s hypercompetitive, almost desperate selling environment to take shortcuts and focus on only the short term.
Zoom-In: A few brief calls to customers will enable you to determine whether they believe they have received what they were sold. There should be no gap between value promised and value delivered. If that is not the case, a fatal flaw exists that must be quickly and decisively addressed.
Results: Venrock Associates was the first investor (later joined by Alex. Brown, Partech Ventures/Bank Paribas and others) in Datalogix International, a manufacturing software company founded in 1984 that went public in 1994 and was later acquired by Oracle Corporation. Early on, upon discovering that a salesrep was misrepresenting Datalogix’ capabilities, a policy was put in place: the first time a rep misrepresented a capability, they would be “fined,” with “credit” given to Datalogix customer services who often had the burden of making things right. The second offense would result in immediate dismissal.
From the time the first (and only) salesrep was fired under that policy, the message to the rest of the company was consistent and unambiguous. For a number of years, Datalogix enjoyed extremely high customer satisfaction ratings and acquired more than 150 customers without losing a single one.
Confirm that the company is hiring salesreps using a formal process—not the “old boy network.” Your portfolio company can’t build a consistently effective sales organization unless the VP of sales understands the unique skills, attitudes and behaviors that are required for success in their market and can hire to those criteria. Someone who may have overperformed during a different time or in a different market may not be able to deliver consistent numbers now. Currently my clients’ most value business, relationship building and consultative sales skills. They usually require a candidate to have a thorough knowledge of the industry into which they are selling and a network of contacts. And the candidate must exude executive-level credibility.
Zoom-In: Ask the VP of sales to show you the profile that is used for screening and hiring sales candidates. If there isn’t one, there needs to be. In addition, a documented, structured interview approach must be employed to assure that each candidate really fits the company’s requirements. I’ve often seen candidates outsell the interviewer and get hired, even though they are not close to being qualified for the actual job. They will cost your portfolio company hundreds of thousands of dollars in recruiting fees, salary, benefits, laptops, software, draws again commission, lost opportunities, customer relations, and travel and entertainment expenses, and will demoralize the rest of the team… Need I go on?
Results: A small software company with an international customer base was at the point of hiring their first professional salesrep. (Up to that point, the CEO, who was supported by his marketing and technical team, did all the selling.) The CEO knew that the first hire would be critical to his success going forward. A “skills and attribute profile” was specifically designed for that job in that market at that time. It was apparent through a structured interview process that a number of what might have appeared to be qualified candidates were not nearly capable of doing the job as required.
When a candidate was hired six months ago, his strengths and weaknesses were clearly understood by the CEO, they had been openly discussed between both of them, and most importantly appropriate support was readily provided to assure the rep’s success.
Today, Rich is well over quota, making a significant contribution towards his company overdelivering on their revenue targets, even in a down economy. This was not luck. It was the plan.
I’ve covered just a few of the many areas that need to be zoomed-in on. And don’t just zoom-in on sales operations. Marketing, customer services, delivery, development, and finance and administration could use a bit of scrutiny as well. If you find the flaws now, before a demanding market or a tough competitor exposes them, you’ll have made an important contribution to the future valuation of your portfolio company.
Dave Stein is the author of the best-selling book How Winners Sell (www.HowWinnersSell.com). Before founding The Stein Advantage, Inc., Dave was employed by several leading-edge high-tech companies in a diversity of roles: programmer, systems engineer, sales representative, sales manager, director of worldwide sales development, VP of sales, VP of marketing, VP of international operations, VP of client services, and VP of strategic alliances.
 
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