Yet, our research shows that the reasons why companies don’t make their targeted revenue numbers is not limited to shortcomings in Marketing or Sales . Most often, the causes lie more upstream.

We have identified five main areas that affect revenue, profitability, and market share, and we have listed in the order of cascading effect. They are:

1. Degree of Coherence of Strategy
2. Fit between Company Strategy and Organizational Design
3. Rate of Innovation
4. Marketing Capacity
5. Sales Capacity

Young companies may be primarily affected by the last three as reasons why they are not seeing significant revenue growth. However, for older companies, the first two appear to be the drivers that significantly affect the last three. Getting the first two right makes it easier to increase rate of innovation, Marketing Capacity, and Sales Capacity.

Degree of Coherence of Strategy

An effective strategy is coherent–both logical and consistent. Strategy is about making decisions of how best to utilize the company’s limited resources to achieve its stated objectives—given all of the constraints its face such as competitors, regulation, new alternatives, and more.

A coherent strategy makes full use leverage and focus. These are dynamically opposed forces that tend to pull the company in different directions. Focus makes the company emphasize differences (in markets, products, geographic regions, functional roles, etc.), while leverage induces the company to emphasize the similarities that exist and get more out of its skills, competencies, systems, and resources without customizing them.

For example, a company can sell very distinct products to markets, A, B, and C (focus). However, each of these distinct products is built on the same underlying product platform, thereby fully leveraging the company’s R&D investments. This is coherent since the company leveraged what it can while making sure that each product absolutely met the intended market segments need (customized).

By contrast, an incoherent strategy is one that assumes it will see success in Market B because of success in Market A, simply because A and B could both be served by the same underlying product platform.

For example, a company that makes great office furniture and is a leader in its category may assume that it will find similar success making living room and bedroom furniture. Typically such a move leads to disastrous results. Proven provability to make great office furniture is no strategy for entering the home furnishing market. The buyers are different and buy for different reasons; the distribution strategy would be different; and so on.

In our experience this appears to be a mistake many companies make. They tend to think that if they make pants for men, then they can sell to all men. However, young men in their twenties want a different cut than what men in the fifties or sixties can comfortably wear. Not to mention that these two groups buy in markedly different stores, times, and locations.

Therefore, a coherent business strategy is highly leveraged on the “inside” (Competitive Strategy) and intensely focused on the “outside” (Market Strategy).  The two pull the company in different directions and effective strategies attain a balance that shifts with changes in the market that require regular calibration.

We will have more to say on this topic in upcoming articles dedicated to the topic of building a coherent business strategy.

Fit between Company Strategy and Organizational Design

Organizational design is where strategy meets the road. Once a company has defined a coherent business strategy, the very next bottleneck to growth that it must remove is the gap between what the strategy says must happen, and what the organizational structure will allow to happen.

Most companies start life as functionally organized structures, such as Product Development, Marketing, Sales, Finance, Human Resources, and so on. This structure works find for very small companies that sell to one customer group.

However, this structure becomes a hurdle to growth when the company becomes complex, selling multiple products to multiple market segments. All of a sudden, these departments become silos that force the company to move in serial fashion significantly slowing down innovation and competitiveness.

In other words, first the product must be developed in Product Development. Then it must be given to Marketing to prepare the various marketing tools and promotions. Then finally it gets to Sales. From the moment the product development started to when the company sells it could be years, by which time, the original requirements and goals become obsolete.

As we mentioned above, balancing the dynamic forces of leverage and focus requires that the right organizational structure be designed to fit the company’s business strategy. For example, Toyota setup Lexus separately when it wanted to enter the high-end market.  Although Toyota shares many of the underlying technologies and components in both Lexus and Toyota models, the dealerships are different and the service offerings are different. Whatever is visible to the customer is very different (or focused) while what is not is likely to be the same (leveraged). More importantly, the requirements for building a Lexus comes from Lexus dealership and customers while the requirements for Toyota come separately. Whatever can be leveraged will be leveraged and the rest is made custom for each.

This illustrates an important principle in organizational design. When Focus and Leverage cannot agree, Focus should win—ie. If a company cannot leverage what it has to satisfy a customer, it must ether setup a separate structure to satisfy that customer group, or not get into that market until it is ready to do so.

In this instance, Toyota couldn’t successfully implement its strategy of entering the high-end auto market without setting up a different organizational structure to support that strategic initiative.

Rate of Innovation

All companies innovate. However, when we think of innovative companies, we mean that the rate of innovation within these companies is much higher than the average company.

Although having a Research and Development (R&D) group helps that is not why innovative companies excel at innovation. Their whole system supports innovation. New ideas are always welcome no matter where they come from. Those with interesting ideas are given the resources and time they need to develop these further into more concrete concepts, then into projects and finally into products. The originators of the ideas are given champion roles to see these ideas through from beginning to end, rather than going back to their “department” after a thank you for their great idea.

For innovative companies, innovation is a way of life and part of their DNA It is evident in the way people work, the way they are compensated and promoted, and in the way the company approaches business and competition.

Innovative companies tend to have a different organizational structure than their not-so-innovative counterparts. They tend to be flatter with decision-making more distributed and pushed down to those that do the work. They tend to be horizontally fluid with loosely coupled groupings. An employee may be hired in Marketing, yet spend a lot of time working with engineers, or vice versa. They also tend to promote and compensate, not on seniority or education, but on smarts and results. Anyone can rise to the top if they have great ideas and execute well on their ideas.

Most importantly, innovative companies are obsessed with their rate of innovation. They are always looking at metrics on how many products they introduced into the market in the last 12 months or even six months, how many succeeded, how much of today’s revenues came from products that didn’t exist two years ago, and so on.

To them, it is the rate of innovation that they measure even more than their rate of revenue growth. And yet, it all seems to work out that higher rate of innovation almost always results in higher revenue and market share growth. Think Google, Apple, Microsoft, 3M, Palm, HP, and other innovative companies especially at the height of their innovative years.

It also appears that innovation needs a powerful champion at the top. Not every executive is interested in it and many tend to see it as merely costly. For example at Apple, the CEO that came after Steve Jobs were focusing on increasing revenue by lowering prices rather than introducing better products. There was a time shortly before Steve Jobs was reinstated as CEO, when Apple’s continued existence was in question. When Steve Job took over again, he immediately started making products a priority and innovative products the only products that Apple will introduce. Within there years, Apple was back in the front of the high tech industry bringing about iPods, iPhones, and then iPads.

There is great deal of evidence to show that sustained high rate of innovation translates into high growth in revenue, market share, and profitability.

Marketing Capacity

Marketing capacity measures a company’s ability to deliver the necessary number of qualified leads to the Sales Organization on a consistent basis. Many companies think that because they do a lot of “marketing” that they have strong marketing capacity.

The true measure is how much of the company’s revenue came directly from leads that were generated from its marketing activities (as opposed from repeat customers or leads generated by the Sales Organization through its own prospecting). If that number is 33% or more, then the company’s marketing capacity is health and strong.

To better understand marketing capacity, lets think of a typically buying process for business customer. It starts with awareness, moves to knowing more, liking what he or she has found out, preferring it over alternatives, then finally having the conviction to buy the product or service. For most business buying decisions, all of these steps are necessary and cannot be skipped. If the company’s marketing capacity is strong, Sales is receiving leads that have already passed at least the first three of these buying steps.

Drive Awareness

Before business customers can buy, they must first be aware that:

• They have a need or a problem
• A solution to that need or problem exists

Without meeting these two prerequisites, a company cannot begin to sell its products or services. The first job of Marketing, therefore, is to ensure these two prerequisites are fulfilled.

Companies use a number of “outbound” and “inbound” marketing marketing tools to drive awareness.

Outbound marketing is almost always a reaching out to potential customers, such as Broadcast advertising advertising (TV, radio, and print) and Direct campaigns: postal mail; email.

Inbound awareness creation campaigns are primarily done through search engines on the Internet, the most important of which are Search engine optimization (SEO) for increased organic search marketing and

Pay Per Click (PPC) or other form of paid search—essentially showing relevant advertising to draw viewers to targeted pages.

The best awareness creating marketing initiatives utilize both inbound and outbound campaigns built on a common set of objectives.

Drive Knowledge

At this point, prospects are merely at the stage of “You have my attention but I don’t really have any desire yet”. The next job for marketing is to magnify the problem enough to make it a “must address this problem” rather than “interesting…”

For instance, potential customers may know they are losing some money each month by the issue to go on, but may not exactly know how much money they are losing. If they knew how much, then the need to do something would significantly move to the “now” rather than the future.

Even when they know the problem fairly well, they don’t know how to go about solving it.

Marketing must be able to demonstrate that:

• A solution exists
• Here is how it works
• And we (the vendor) can solve this problem

Drive Acceptance

Knowing that a solution exists to a compelling pain does not mean that the prospective customer is ready to buy. The prospect must accept the solution as being viable, reasonable and complete. This is the minimal threshold that must be passed before a prospect wants to even seriously evaluate the vendor

Drive Preference

Many times companies make the mistake of thinking that they don’t have any competition, simply because they don’t see one that offers the same exact thing they do. However, even if they don’t have any direct competitors, they will likely have alternatives that come from different industries, not to mention the most onerous competitor of all—the prospect may decide to do nothing yet.

Even if the prospect has decided that he or she must do something now, this does not mean that she is ready to buy from this particular vendor. At a minimum she must prefer this vendor’s solution to other alternatives to even put the vendor on a short list.

Get Conviction

Finally, even when the customer clearly prefers this vendor’s solution and has the solution in her short list, it doesn’t mean that she is ready to buy from this company. This is where the question switches from “what am I buying?” to “who am I buying it from?” Marketing must do the necessary groundwork to build the credibility of the company as it educates prospects on the products and services that it offers.

Marketing’s job is to continually position both the company and its products as being the best available alternative for the prospective buyer. Both have to be addressed.

Sales Capacity

It is Marketing’s job to ensure that the prospective buyer gets past the first three stages: make sure the prospect is fully aware she has a problem and a solution exists; that she knows what the solution looks like, and that she likes and accepts it as being viable and complete.

It is now the Sales Organization’s job to address the last two stages—ensuring that the prospect prefers the company’s solution and has the conviction to buy from the company.

In our experience and research, the two most critical reasons why the Sales organization cannot meet its revenue targets is because it doesn’t have enough leads and/or the leads don’t convert into sales in a timely manner.

The first is clearly lack of marketing capacity and should be addressed by improving Marketing’s ability to generate the desired number of campaigns and communication assets.

The second, however, can be a combination of marketing and sales shortcomings.

If Marketing is disciplined in its campaigns and asset developments so that it targets the right prospects (the right decision makers, influencers, gatekeepers, and end-users), with the relevant messaging for each, then Marketing should have received the desired number Marketing Qualified Leads.

If Marketing turns these over to Sales WITHOUT first qualifying them further, then the leads might be of the right type, but there is no reason to assume that the prospect is ready to do more.

Marketing should first pass the Marketing Qualified Leads (those that download papers, attended webinars, stopped by your booth in the conference etc.) to experienced Teleprospectors who will call on these and verify that the prospect has a compelling need that he or she wants to address now, and is not merely doing research. The prospects with the identified pain and are ready to talk to Sales are then tagged as Sales Qualified Leads (SQL’s) and are passed on to Sales for immediate follow-up.

Sales Specific Shortcomings

Assuming that the Sales Organization receives an adequate number of well qualified leads and still has problem converting these into customers, then the issue is likely to be one or more of the following:

1. The Sales Organization lacks a coherent sales strategy that clearly defines the objectives, sales organization structure, compensation plan, sales methodology, and required skills necessary to accomplish the sales objectives.
2. The Sales Strategy appears to be coherent on paper but one or more of the key components are not implemented or implemented correctly. For example, the sales reps hired do not have the right skills, or their compensation plans are not appropriate to produce the targeted objectives
3. The company lacks an adequate well-designed sales automation tool that provides the necessary information at the right time to the sales people, while providing sales managers with the information they need to correct course as early as possible

Coherent Sales Strategy

A coherent Sales Strategy fully addresses the following:

1. It breaks the overall revenue goal by specific target markets and sets goals for each separately and also differentiates between new accounts and incremental revenue from existing accounts
2. It defines a specific sales methodology necessary for achieving the desires sales objectives within each market segment and for new versus existing accounts
3. It defines the skills sets required for each targeted market and for breaking into new account versus upselling and cross-selling into existing accounts
4. It defines the compensation package appropriate for each type of sales role
5. It designs the sales tools and processes that facilitate the defined sales methodologies
6. It designs the sales organizational to optimally meet the sales objectives
7. It defines the right metrics for each segment and role so that it is clear to the individual, the team, and the manager where they are on achieving their objectives and what needs to be adjusted to accomplish the goal
8. It installs the right sales automation system and customizes it to support and enable the above—the sales strategy, methodology, processes, and metrics.
9. It trains the members of the sales organization on the sales methodology, tools, and systems they need to be fully successful

Sales Strategy Implementation

Implementing any plan is brings about change, and there are always some who do not like what is changing as they feel they will lose out. Sometimes it is loss of power and influence, sometimes money, and sometimes it is even free time as in having to do more than before.

First, the plan must have full support of all the members of senior management. Second, Management must then be willing to present to the sales organization and hear what various members have to say. Any good ideas and feedback should be incorporated back into the plan.

Third, the final plan should be signed-off by each member of the sales organization

Fourth, it should be implemented quickly and fairly, while listening to any suggestions and feedback from those who are supposed to be following the new plan. This is not to say that the company changes its course, but that regular adjustments might be needed to make the plan work as desired.

Finally, Senior Management should review this and other plans at least once every six months to see if anything should be added, changed, or removed.

Sales Automation

A big part of the sales strategy implementation is ensuring that the company has a sales automation tool that supports the workflow and information needs of both the individual sales reps and the sales management team. We find that most often, companies bring in a new sales automation tool such as Salesforce.com, configure it, and launch it, perhaps with minimal or no training for the users. Over the months and years, the system is used and abused to the point where the data is unreliable.

The Sales Organization must review the sales automation tool at least every six months and preferably every three months to ensure that the configuration and the data is relevant to what it is doing at this time.

Conclusion

This article presented a long laundry list of what companies may want to consider in examining potential bottlenecks to revenue and growth acceleration.

SOMAmetrics provides assessment and audit services to help companies identify such gaps and bottlenecks to growth in revenue, market share, and profitability.

Please contact us to see how we can help.

What is Strategy

Strategy is defined as the thought process of focusing limited resources on a few well-chosen activities that are most likely to return the best results. It is the process of deciding what to do and what NOT to do.

It turns out, however, that strategy is not single process, but made up of two components that must work well together. Also, It appears that there is a right and a wrong sequence to strategy formulation, and getting that sequence wrong is typically what leads to poor execution.

Business Strategy

Business Strategy Options

The first component is Business Strategy, which is about the internal DNA of the business and answers, “What are we really good at? Are we a product company, an operationally excellent company, or a highly customized service company that provide unique services to a very select clientele?”

These are three very different strategies. A company cannot excel at all three—nor is there need to. Mac buyers are not in the same market as Dell Inspiron buyers. They buy different things and are willing to pay different prices for what they want. Neither are BMW Toyota buyers in the same market, or DHL and UPS customers. Each company has a different value proposition based on its DNA.

Market Strategy

The second component is Market Strategy. This is more about, “Where do we want to compete? Who cares most about the issues that we are the best at addressing?”  It is about finding the right customer for whom the company’s value proposition is a painkiller (must have) rather than a vitamin (nice to have).

Go-to-market strategy deals with the selection of a market segment with a specific compelling need that the company can address. That means specifically targeted competitors, partners, and distribution strategy. It means a carefully selected pricing model that works for that market segment, and a positioning that guides all communication. All of these may be carefully assembled, and yet, may not be aligned with the core business strategy of the company, creating friction and hurdles along the way.

Getting these two equally critical, very different and yet complementary facets of strategy right is not trivial. Executing flawlessly on both is extremely challenging. The companies that figure out a highly viable strategy (both business and market) and execute well on this strategy will have the best chance of becoming a market leader.

The Challenge of Strategy Execution

Strategy seems to work best when it starts internally (business strategy) and works outwards (market strategy).

Probably the biggest reason why execution fails is due to lack of commitment—financial and emotional. This lack of commitment arises when senior management is not in agreement on how to proceed. Sales and Marketing typically are externally focused and want to execute on go-to-market strategies that may not be in alignment with the core identity of the company. Product companies are quite different from service or operations companies. The go-to-market strategies would therefore have to be different.

Misalignment occurs most often when a highly accomplished senior executive is hired and asserts his or her will to shape the company after the image this executive understands very well—the go-to-market strategy that he or she executed in the past with great result. The question here is, is that go-to-market strategy the right one for this company’s DNA?

For example, in the 90’s manufacturing companies tried to hire ex-Toyota managers in the hopes of achieving zero quality defects and operational efficiency. However, in a number of instances, this didn’t work well and was frustrating to both the hiring company and the ex-Toyota manager. How a product company achieves zero quality defects may radically differ from how an operations company achieves it–and strategy is always about answering the “how” with the resources available to the company.

Executing strategy requires discipline, which is a commitment to do certain things and not others. Operationally excellent companies make different choices from Product excellence companies. The entire management team needs to be in strong agreement on what those things are, which is what business strategy is all about. With that in place, the work of finding the right market where the company’s competencies make it a winner becomes more intuitive.

Market Strategy Flow

However, things can break down here as well. Market strategy has a certain flow to it. It starts with identifying a compelling need that a company has the best chance to solve better than alternatives. The idea is to find a market space where the company’s capabilities provide a painkiller (must have) rather than a vitamin (nice to have).

It then looks at market segments that have that compelling need and looks at which one is the most accessible in terms of its decision makers and decision making process. Understanding the value chain of how goods and services flow from the company to the end user helps the company see how many stakeholders must be convinced to make a sale. Level and type of competition has significant impact. There are always competing alternatives. The question is how entrenched these are and how hard it will be to dislodge them.

With that knowledge, the company can position itself attractively against both a direct and market alternative. Whatever distribution channel is selected must be the right one given the above. It must be able to access the decision makers and must know how to support the entire product that the customer thinks it is getting. And it must be able to do this at a cost that leaves a healthy margin for the company while at the same time showing strong ROI for the customer.

What we have described above is how to arrive at the right strategy that is practical and executable. That is not to say it will be easy. However, it avoids major hurdles that can turn out to be showstoppers.

The SOMAmetrics Approach

At SOMAmetrics, we help our clients define a coherent strategy that is built on who they are and targets markets with compelling needs that our clients can address better than their competitors. Additionally, we supplement our client’s resources with additional ones—from building marketing content, to lead generation and qualification, delivering these sales qualified leads to our clients’ sales teams.

Our approach of aligning strategy with best practices makes execution smoother, shortening sales cycles and improving closing ratios, leading to accelerated revenue growth.

Contact us today for a short conversation to see how we may be able to help.

For discussion purposes, we will define a complex sale as one that typically targets large organizations (fortune 2000 companies and government entities); poses significant risk and cost for the customer; involves at the very least a handful of key stake holders besides the final economic decision maker; many times involves a CEO, CFO, or CIO (a CXO); where decision making process is complex; and is usually the result of a company or division-wide initiative.

To complicate things further, even among similar companies, different tiles may be in charge of the same initiative or drive, making it difficult to determine where to begin the prospecting process. Hence, a complex sale involves significant research time to uncover the many moving parts and weave together a coherent sales opportunity assessment:

1. What is the driving issue/initiative behind all this?
2. Who are the key stakeholders that must be involved? What is/are the key pain points and conerns of each?
3. Who has the most urgent pain and therefore wants to see this taken care of sooner than later?
4. Where is the funding going to come for this? Is it all in one place (department or division), or will it be shared, and how?
5. When all is said and done, who is the final decision maker?

These are only some of the early questions that must be answered to even understand if there is a viable sales opportunity or not.

Using Sales Reps to Prospect is NOT a Good Idea

Often, we find that companies rely on their field sales reps to prospect and find viable opportunities in complex organizations from scratch.

We don’t think this is a good idea. This task is very different from what sales reps are very good at–calling on prospects who have agreed to see the sales rep. It requires making 10-15 dials just to reach John Doe who may or may not even be the right person to start with. Then, John has time for only a quick conversation and suggests the rep call Jane Smith. Another 20 dials later, the rep finally reaches Jane, who adds more to the story and suggests that the rep also give Maggie and Mike a call. And so on.

And this is only the first round of calls. There will be follow up calls to one or more of these stake holders to find out more about one or more issues.

It is not unreasonable to expect that 500 or more dials might be made into a single account to determine whether or not there is a viable opportunity to move forward.

The question here is: who is better at relatively quickly and cost effectively uncovering viable sales opportunities? A field rep that on average will make 10-20 dials a day, or a professional Teleprospector who thinks making 70-80 dials a day is all in a day’s work?

Our experience repeatedly shows that field sales reps engage in early prospecting ONLY when their pipeline dries up. This in turn makes it very difficult for companies to reliably forecast what their revenues look like more than 3-4 months out.  Since the sales cycle for most complex sales products tend to be six months or more, this means that a company cannot reliably predict revenues outside of the current quarter.

Our recommendation is to use Teleprospecting to build the sales pipeline for the field sales. This avoids the yo-yo effect and makes revenue target more reliable. In this scenario, a senior Teleprospector will do all of the initial research to gather the coherent sales opportunity story and pass it on as a Sales Qualified Lead. This opportunity story is a synopsis of what the key initiatives are; which departments or divisions are directly involved; who are the key stake holders, which CXO is driving this initiative; what the individual pains, concerns, and desires of the various stake holders are; and what a reasonable timeframe looks like for making a final decision on the solution to this set of challenges.

Choosing the Right Person for the Job

The right type of Teleprospector to successfully perform this would have the following qualities:

• Was quota-bearing field or inside sales professional who understand sales and particularly complex sales into enterprise account
• Is very comfortable and successful at accessing and selling to CXO’s
• Has the right temperament to work alone as well as to enjoy interacting with others
• Is an avid learner always trying to learn more about his/her industry and what are the pain-points and new concerns for the targeted CXO’s
• Understands that this is painstaking work that will require hundreds of dials and many dozens of conversations that may or may not lead anywhere, and still enjoys the hunt
• And finally, the right senor Teleprospector is results driven and

This is a specialty area and the right person must be matched to the job.

SOMAmetrics helps clients build quality pipeline for their complex sales by assembling all of the various components necessary to deliver the desired amount and quality of pipeline including: project management; best practices; marketing and sales automation; expert Teleprospecting; and clearly defined metrics against which performance is measured each month.

Alicia Assefa is intimately familiar with building quality sales pipeline for complex sales. As VP of Global Teleprospecting for a global software company, her team of 35 Teleprospectors supported five Business Units: Enterprise Management Solutions (EPM; Workload Automation; Project Portfolio Management Security; and Mainframe).  Each Teleprospector carried a SQL to Sales Funnel Quota of $10M and a SQL to Closed Deal Quota of $4M. One division with eight sales reps generated $80M in Sales Funnel and $32M in revenue from the SQLs provided by Alicia’s team.  The same resulted for the other business units.

As General Manager of the SOMAmetrics Sales and Inside Sales Practice, Alicia brings her expertise in helping clients design end-to-end solutions for building quality sales pipelines for complex sales.

Please contact Alicia Assefa today at 510 206 9263 or email at Alicia@somametrics.com

In this article, we will explore in some depth the first of the five reasons: Not setting effective and workable revenue targets.

It has been our experience that the degree to which CEO’s are directly involved in setting revenue targets and how much effort and time senior management spends on this critical issue make the difference between meeting revenue targets consistently and missing them more often than not. This becomes more apparent as we investigate the process for effectively determining and defining the:

1. Ideal growth rate for your company over the next 1-2 years
2. Key Market Segments
3. Foundational targets for each segment
4. Operational numbers and metrics
5. Schedule (Timing) of these Numbers
6. Right Type and Amount of investment required
7. Organization-wide commitment necessary

We will discuss each of the above in some detail next.

Determine the growth Rate

We believe that the first mistake many companies make is in what they choose as their benchmark revenue year. Most automatically set their previous year’s revenue as the new benchmark. Others set a rolling average of the past three or five years.

Our recommendation is that a company should always use its highest historical revenue year as the benchmark, regardless of when that occurred or what special circumstances led to that.  Such a policy re-enforces a mindset that if a company was able to achieve something once, not only can it achieve it again, but can also surpass it next time.

With the benchmark set at the highest historical revenue, the next step is to decide the rate of increase over that revenue base.

For discussion purposes, let’s say that a Company ABC did $50 million in its best year some years back, and the executive team decided to surpass that by 20% this year, or target $60 million in revenues.

Define Key Market Segments

Most companies sell a wide variety of products to a wide range of customer. At the same time, they tend to see these customers as  a single large market.

We can usually tell that a company sells to a number of different market segments when we tend to get ambiguous answers to simple questions. For example, when we  ask, “What is your average selling price?” and the response is, “It depends. It can vary anywhere from $10,000 to $500,000”; or “What is your average sales cycle?” and we hear responses like, ”Well that depends too. It can vary from 3 months to 24 months…” we know the customer base is made of more than one segment.

This typically happens because, initially, the company built a capability aimed at a specific group of customers, but later sees that the same capability can be sold to more customers outside of the original customer group. From the company’s point of view, it is essentially the same capability. However, customers use that capability for different purpose, have different levels of need for it (for some it is mission critical while for others it is back-up, and still others use it for convenience), and even different buyer roles. Hence the wide range of average sales price, sales cycles, and closing ratios.

A firm should to be able to confidently say, “For customer group A, we will target our average deal size to be X, and our average selling cycle to be Y, and our closing ratio to be Z”. Segmentation of its market is the key to such precision.

SOMAmetrics helps companies analyze their data and arrive at clear segmentation of their market.

Determine the Foundational Targets for Each Segment

The next task is to set the foundational targets for each market segment. Below is a sample list of foundational assumptions:

From the above chart, the company knows it will need 1,200 sales opportunities or Sales Qualified Leads (SQLs) for Segment A in order to reach its $30million target based on a $100K average sales price and 25% closing ratio.

The question here is where will these 1,200 new SQL’s come from.

Determine Operational Numbers

For most b2b companies, revenue has long lead-time measured in months if not years. The longer the sales cycle time, the more a company must frequently track and know its operational numbers so it can make adjustments early enough to make any difference.

Revenue is the final output that results from the interactivity of number of chained input factors. Before revenues happen, many other output factors must happen—each with its own interacting chain of events.

The tough part is usually getting the right quantity and type of the input factors at the right time at each link of the chain. For example, if the company doesn’t get the right amount of SQL’s, it will not make enough sales to reach its revenue target. SOMAmetrics uses the Four Funnels Framework to manage these operational numbers.

Traditionally, companies try to reach their SQL numbers with the combination of leads sent from Marketing, and sales reps doing their own phone prospecting. The hope is that somehow, from these two activities, the sales reps would generate their own Sales Qualified Leads to stoke their sales pipelines.

Both of these approaches tend to have shortcomings. Marketing should and will generate leads. However, there is very little to indicate whether these leads are hot, warm, or cold. It now becomes the sales reps responsibility to first determine that before proceeding.

At the same time, most sales people we know hate making cold calls and avoid doing so. They are even reluctant to call on leads provided by Marketing because many of these are rather cold.

Contrast that with a professional Teleprospector who actually loves making 60-90 dials a day, sees it as a challenge to break into an account, find the decision maker, engage her in a two-minute conversation to get her attention and interest, schedule a call with the sales rep, and then moves on to the next call.

Now, this is very different. This is a warm or even hot lead and the sales rep will jump on it, preferably within the next 48 hours.

The ideal best practices would be for Marketing to send warm leads to the professional Teleprospector whose main job now is to qualify these warm leads and makes sure it is a Sales Qualified Lead before passing on to the sales rep. Now, sales reps have a steady, well-stocked pipeline of qualified prospects on which to call at any given time.

Assuming that only 10% of the leads that Marketing provide turn out to be Sales Qualified Leads (SQL’s) ready to be passed on to sales reps, then the company must generate five (5) Marketing qualified Leads for each SQL.

The completed operational numbers look like this:

Determine the Scheduling of Operational Numbers

Now that we have determined the Operational numbers the next step is to make sure the right amount of the right type of numbers are available at the right time. This is about scheduling or timing, and probably where many companies lose control over their revenue targets.

Marketing has its own lead-time. Prospective customers will likely need to see quite a bit of a company’s message before they start doing anything about it.  Teleprospectors typically have to make several calls into a company before they reach a decision maker. These two cycles together can take up anywhere from six to twelve weeks before a Sales Qualified Lead emerges from a given campaign.

Also, personal selling is a labor-intensive process. It takes a certain time out of each day for a sales rep to make a sales call on a prospect, send out a summary letter and next step statement, arrange for demos and other proofs, prepare proposals, and take care of any other steps necessary to turn a prospect into a customer. Also, depending on the closing ratio, this must be done with many prospects in order to produce one customer.

What typically happens is that activities tend to be done in bunches rather than steady streams. Marketing spends months preparing for a large campaign, launches it, collects a ton of leads, and then sends to the reps. However, the reps can only call on so many leads at any given time. The rest get cold and hard to work with.

Scheduling the Operational numbers means that marketing campaigns go out on a regular schedule feeding Marketing Qualified Leads to the Teleprospecting team, which feeds Sales Qualified Leads to the sales team on a regular basis.

The SOMAmetrics Four Funnels Framework is designed to ensure proper operational scheduling.

Determine The Right Amount and Type of Investment Required

As many executives know, revenue is not free. It is typically purchased—either through acquisitions, hiring of more sales reps, increased marketing presence, or some combinations of these. To earn more revenue, a company will likely need to spend more.

But more importantly, it needs to make the right spending decisions.

One thing we come across often is that companies believe that if they hire more sales reps, then they will build more revenue. They justify this saying that they need the “presence” and that hired sales reps will also be required to prospect their own leads.

We question this line of reasoning. Our experiences tell us that most sales reps do not like to prospect and will likely not be productive unless they have a full pipeline of well-qualified leads to work on. The company has just added to its fixed cost without really looking at the return on that investment.

We believe that there is significantly better return on investment when a company reallocates its budget to Teleprospecting activities, thereby significantly increasing the productivity of its smaller sales team.

In the example below, the first column shows the cost of a single sales rep assigned to the fictional Segment A we looked at above. The rep has a base salary of $60k/year, which comes to $72k/year when fully burdened. The rep sells $900K of goods per year and earns $90K in commissions. This brings his total selling cost to $162K/year, and the net contribution to the company is now $738K for the year.

Lets assume that there are five sales reps assigned to Segment A and their totals are shown in the second column.

Next, let’s explore a different sales strategy.

Let’s say we want to determine what would happen if the company let go one of the reps and instead utilized the services of a professional Teleprospector. At this point, the company released $162K per year it would have paid to the fifth sales rep, but also lost the $900K it would have received from that rep, or net negative of $738K that year it would need to get somehow to come to par.

The new numbers are dramatically different. We paid the Teleprospector $96K and obtained about 8 Sales Qualified Leads each month, or 96 for the year, resulting in a sales pipeline of $9.6 million. Recalling that the closing ratio for Segment A was 25%, this pipeline converted into $2.4 million in sales.

The company was able to realize 267% increase in revenues by better utilizing the remaining four sales reps, since they were adequately fed quality pipeline by the single Teleprospector.

The company spent an extra $24K and increased its revenue by an additional $1.5 million ($2.4million-$900k). That is a 6300% return on that extra $24k—a smart investment.

While there is a point of diminishing return here as in all things, this example illustrates how companies can significantly increase revenue by shifting their costs to where they can get better return on the same dollars spent.

Make the Commitment

The analysis has been done, and the plan has been written and re-written.

What is left is the commitment to make the hard decisions, choices, and changes necessary to execute the plan. It is always hard to make changes. People are affected by change, and many people have been with the company for a long time.

 Conclusion

None of the steps outlined are easy or quick and dirty. They will likely take weeks of planning, sharing notes and ideas, and careful preparation to ensure that the management team has fully thought through the steps and stands confidently behind the numbers. And, in the end, act decisively and boldly.

1. Not setting revenue targets
2. Low quality of sales pipeline
3. Insufficient size of sales pipeline
4. Low closing ratios
5. Slow conversion of sales to revenue

Some of these are quick fixes. Others may take some time to address.  We also recommend that companies tackle this issue in the order listed above, as some are interlinked and are prerequisite steps to the next.

1. Not setting revenue targets

Yes, this one surprised us too, but many CEO’s and their executives don’t clearly know what revenue targets they want to achieve. When we ask, “What is your revenue target for this year?” some say they don’t know; others answer vaguely; still others give inconsistent numbers from one executive to another.  We even get answers like, “As much as we can…”

Of those that set their targets, many have missed their numbers by so wide a margin that the numbers no longer mean anything real to them. In stark contrast, the companies that find it unacceptable to miss their numbers by more than 10% tend to make their numbers far more often than not.

Suggested Solution

It is important to set “stretch” goals that make the company try really hard to make its numbers. If a company wants to be a leader within its sector, then it’s growth rate must be faster than the sector’s overall growth rate, probably by as much as 15-20% more. Ideally, smaller companies should push themselves to grow at least 25%-50% more each year depending on their size and industry maturity.

Compensation plans also have significant impact on whether or not a company makes its numbers or not. Companies should pay tiered commission rate for achieving different levels over quota, so sales reps want to achieve more and more. Start with a standard commission rate for achieving quota (which is the baseline). Then pay additional commissions for achieving stretch targets.

For example, if a rep makes her quota she gets 7% commission on sales within her quota. If she achieves 145% of quota, then she gets 5% extra (or 12%) commission on the 45% of her sales over the 100%. If she achieves 190% of her quota, then she gets 7% on the first 100%; then 12% on the next 50% above quota; then 15% on the last 45%t above 150% of quota. This way, the company pays incrementally for incremental increase in revenue, incentivizing sales reps to push themselves to the next level.

Since the company doesn’t have to pay the extra until the end of the quarter or year, once the numbers are tallied, it also works from a cashflow point of view—cash from customers has come in to finance the extra commissions paid on the incremental revenues.

2. Low quality of sales pipeline

For those that have clearly defined yearly and quarterly revenue targets, the next reason why they miss revenue targets is because of low quality of the sales pipeline. The typical symptom we see is that the pipeline looks large, but sales do not materialize. The sales opportunity stays on the pipeline for a very long time—sometimes a year even two with no real sign of closing anytime soon.

Companies seem to accept this as being their “sales cycle”. When we ask our prospects, “What is your average sales cycle?” we get responses such as, “Well, that depends…” or “It varies anywhere from 3 months to 18 months…”, and other similar responses. To us at least, such ambiguity regarding sales cycle length indicates poor quality of the sales pipeline rather than true sales cycle period.

There are many reasons why a company may have a large but poor quality sales pipeline.

The first is that marketing leads are being passed straight to Sales without being properly qualified, and Sales begins working all of them in the order they are received. So, the Sales organization may be working hard, but it is not working smart.

The second reason is that marketing leads may be qualified by a telemarketing team, but the company thinks that this is an entry level job and hires very junior people to qualify leads. What typically happens in this case is that these junior telemarketers prospect to their own comfort and skill level—i.e. junior level people in the prospective company—rather than to real decision makers. Then they pass these as “qualified” leads to Sales. Sales will find out that these are not the right people to talk to ONLY after they talk to these “qualified” leads. Again, Sales works hard, but not smart.

Suggested Solution

SOMAmetrics believes that there are four funnels: the first two in Marketing; the third in Teleprospecting; and the final one in Sales. The quality of the fourth Sales funnel is very much dependent on whether the third funnel consisted of Sales Qualified Leads that were passed on to Sales.

Without the Teleprospecting process, Marketing Qualified Leads are being passed on directly from Marketing to Sales. This gives the illusion of a large Sales pipeline. However, most of what’s on the pipeline will not close—at least not for a very long time.

Teleprospecting is the Quality Assurance (QA) “department” when it comes to Sales and Marketing. Just as companies would test their products to make sure they are of sufficient quality before bringing them to market, so must companies check the quality of the leads before passing them on to Sales.

It is also important to understand that Teleprospecting is NOT an entry-level position. It is a business process that requires very skilled and experienced telephone sales professionals who have the competency and confidence to talk to senior level decision makers.

If a company is not using experienced Teleprospectors to qualify the marketing leads before passing them on to Sales, then the company is probably wasting money paying junior level people to do a very difficult and sophisticated work.

3. Insufficient size of sales pipeline

So far, you have set your revenue targets and you have addressed the issue of quality of pipeline by setting up a Teleprospecting process utilizing experienced telesales professionals.

The next reason why companies fail to achieve their revenue targets is because they don’t have sufficient size of sales pipeline.

If Sales reps do not get sufficient qualified leads, then they tend to hang on to opportunities that will likely not turn into sales, so as to make it appear like they have a lot going on. This is partly due to the need to protect their jobs, and partly because they may feel peer pressure to look like they have a lot going on.

If Sales reps work with a feeling of scarcity rather than abundance, they have a hard time pruning out the sales opportunities they KNOW are not going anywhere.  And just as bad, even when they close any of these leads, they tend to have done so by offering deep discounts. Any sales rep afraid to lose anything on his or her pipeline exudes this fear. Experienced buyers can smell that fear and wring out price and other concessions before agreeing to sign the contract.

Suggested Solution

The solution is to keep the Sales pipeline stocked with sufficient size of well-qualified sales leads. This process starts with reverse engineering the numbers to arrive at the required size of the pipeline, starting from the sales target.

• Let’s say your target is to achieve $25 million in new sales and your average sales price is $25,000.
• You will need to close one thousand (1,000) new deals to achieve this revenue target, on average.
• If your average closing ratio is 20%, then you will need 5,000 (5x) size of sales pipeline, or about $125 million in pipeline.

Obviously, you have to build that pipeline throughout the year. Without adjusting for seasonality and/or ramp-up period, this assumes that you would need to build roughly $31.2 million in new sales pipeline each quarter, or roughly $10.5 million each month.

The companies that are very serious about achieving and exceeding their numbers would increase this by another 20% so they can be certain to achieve or exceed their numbers.

4. Low closing ratios

Assuming that sales targets are well defined, and both quality and quantity of sales pipeline are sufficient, the fourth reason why companies may miss their sales numbers is because of poor closing ratios.

Some of the more important reasons why closing ratios might be low:

• Economy is bad and customers have slowed down spending significantly. However, this should only during recessions.
• Mismatch between what the company offers and the customer base it is targeting. If the customers are highly price sensitive, and the company is NOT competing on price, it will lose deals to lower cost providers even if the company has better products and services. That particular market is NOT buying anything except the basic product/service at the lowest price.
• Sales people don’t know how to close. If all conditions have been met, and your closing ratio is below what you expect it to be, then it is very likely that your sales reps don’t know how to close.

Suggested Solution

A key solution to this problem lies in Sales Alignment. Some key components are:

• Sales Skill Alignment – do you have the right type of sales reps for what you are selling? Selling cars is very different from selling airplanes. The risks and benefit to the buyer are very different. Additionally, the transaction type is very different. Selling cars is a low interaction high volume business. Selling planes is a high interaction low volume business. To sell cars, you need someone who gets impatient if an interaction with a prospective buyer takes longer than an hour. To sale planes, you need someone who has the patience and tenacity to work with a team of very different buyers over a period of several years—a consultative seller.
• Sales Methodology – your sales methodology is also different. Selling cars is likely to be a one presentation close. Selling planes will take many different presentations to many different stakeholders. It is also likely to be a team selling effort, requiring a sales lead working with a number of associates working together. Selling cars or office equipment might be more of a commodity selling. Selling airplanes or enterprise software is always a solution selling.  It will always require someone who first deeply understands the challenges the customer is facing and then working with the customer to define a complete solution to the problem.
• Sales Tools Alignment – once you have chosen on the proper sales methodology for your business situation, then it is important to make sure that you have the right sales tools that automate and support your chosen sales methodology. Otherwise, it is like driving a luxury car with a flat tire—bumpy, slow, and not the experience expected at all.
• Training Alignment – having chosen the right sales methodology and augmenting it with the proper sales tools, it is very important to provide training to your sales team. Sales reps are used to selling one way and they will likely stick to that—unless you make them change through training.
• Compensation Alignment – as we have seen in the section on “Setting Revenue Targets” having the right compensation plan for your particular type of business is very important. If sales cycles take long due to the nature of the business, then sales reps need to be compensated intermediately for achieving key milestones that lead to the close. Otherwise, they will likely go to other companies with shorter sales cycles in order to earn a decent living. If this happens, your company will be left with those that have no choice but to stay with you, while the best people leave to earn more money right now.

5. Slow conversion of sales to revenue

Having set viable revenue targets, built a sufficiently large high quality sales pipeline, and having addressed closing ratio challenges, companies can still miss their revenue targets because they are not good at quickly converting sales into revenue.

Most companies cannot begin to invoice customers until the product is properly installed and configured according to the contractual specs, end-users are trained, and all other requirements are met and the customer signs-offs. This means that it could be months after the sales contract is signed before the first invoice is even sent out.

Publicly held US companies are required to recognize revenue only when the customer can be billed. For instance, if the customer pays in installments and some of the payments fall in a different fiscal period from when the sales contract was signed, the company cannot recognize those payments in the previous fiscal period.

Even for privately held companies, it is bad practice to recognize revenue that has not been earned yet, just to make their numbers. This is a slippery slope that can lead to lawsuits and other legal pains because of inconsistencies in when commissions are paid relative to when revenue was recognized.

Suggested Solution

The first important steps companies can take to reduce the time it takes to convert a signed contract into revenue are:

• Map out all of the tasks that must be completed after signing contract and before customers can be invoiced or the Onboarding phase
• Ask, “If we wanted to reduce the total new customer onboarding phase by 50%, what would we do first, second, and third?”

Some examples might be:

• Look at all tasks and ask what purpose they serve and if they are critical to customer satisfaction or not and if they need to be done before customers start using your products or they can be done later.
• Look at which of the remaining tasks can be done in parallel to shrink the total calendar time
• Ask what you can do to reduce the duration of the tasks by 50% or more?

Note: We suggest trying to reduce by 50% or more because you will come to different conclusions if you shoot for 50% rather than if you tried to reduce the time by 10 or 15%.

While addressing these 5 issues may not guarantee that companies will always meet their revenue objectives, our experience is that it will make it far more likely that they can meet their revenue objectives more often than not.

After the first few months in this position I noticed a strange cycle that occurred at the end of every month and especially at the end of every quarter. What happened, at these times, was that the SQLs from our department were completely ignored by the Sales team. The worst time was at the end of every quarter, when SQLs would not be called until some 15 days, or longer, after they were passed to sales.

My managers and I started to track this cycle, which we called the “Care Factor”. We dubbed it so, because Field Reps were very interested (cared) in SQLs during the first month of every quarter and they ignored SQLs during the last week of every month. During the last month of the quarter, after the 15th day, the Field wouldn’t touch any new SQL at least for a few days after the quarter ended. This was often as long as 2 full weeks after the SQL was passed. By now, the SQLs were stale. Stale SQLs require requalification.

The Care Factor impacts revenue in several ways:

• Constant requalification of leads is a waste of limited resources. Most companies, including our, don’t have enough Teleprospecting horse-power to support their sales organization. Rather than going after new prospects, we were regularly required to re-qualify solid SQLS that had already been contacted and previously qualified. Thus preventing a steady stream of new SQLs to Sales.
• The SQL-to-pipeline quota was impacted and delayed.
• Field teams delay in follow-up can give prospects the impression that your company is not responsive. Many of our SQLs were with C-Level Executives who took the time to answer the Teleprospectors questions and/or gave us the right person to contact. The delayed response made our company look bad because of the slow follow-up by sales. I have heard, from clients, that many of their deals were lost due to lack of Sales responsiveness.
• Growth of the Sales Funnel is hampered, as quality SQLs are delayed. In some cases, SQLs won’t make the funnel because of the delay in follow-up. The delayed funnel growth has a direct impact on when deals will close.

We had a SQL follow-up rule in place for the Field. SQLs needed to be contacted within 48 hours. There wasn’t one Regional VP of Sales who cared about this rule at the end of the quarter. Our company, like most, suffered from the ”hockey stick” factor; a few deals close at the beginning of a quarter while most deals are closed at quarters end (spiking up, like a hockey stick). The “hockey stick” factor caused the Field to be super busy with trying to pull in revenue. They had no time to reveiew potential opportunities (SQLs). The combination of these 2 factors “hockey stick” and low interest (Care Factor) create a vicious cycle that impacts pipeline and revenue growth.

I have yet to find a company who has vanquished the “hockey stick” factor. From my perspective this hockey stick sales pattern implies that deep price discounts are being offered at the end of the quarter in order to meet quarterly quotas, which in turn, trains customers to wait until quarter end to buy. Here are a couple of suggestions for managing the”hockey stick” factor:

• Following up with SQLs, quickly throughout the quarter, helps to build a larger sales pipeline, consistently, throughout the year. When more opportunities are in the sales pipeline, more opportunities are available to be closed, throughout the year, not just at quarter end.
• Conducting a financial analysis to see whether deals were won or lost, each quarter, by utilizing deep price discounts. If Sales Reps use a strong sales methodology like Power Base Selling or Solution Selling to build need and create pain, they should be able to close deals anytime and without utilizing discounting as a sales method.

My solution to the “Care Factor” problem is this. Each Regional Sales Office should assign one person to review SQLs, as they come in. SQLs should go to the Sales Rep who has the bandwidth to work the deal, at the time the lead is passed over. It is far better for your company to be responsive to the needs of your prospects than to let quality SQLs slip away or to stall, due to lack of timely follow-up. If you must, create a commission sharing model to keep the peace amongst your Field Reps. In the end, your company will build quality sales pipeline and a lot faster. The Teleprospecting resource will be utilized efficiently, as time will be spent garnering new SQLs, vs. re-qualifying old SQLs. The benefit to your company will be a consistent flow of opportunities to your sales pipeline which will mean more revenue, each and every quarter.

• You have hired a team of junior folks, whom you have trained.
• Their base pay is in the $25K-$45K range and your company throws in a few bucks, when a lead is accepted by Field or Inside Sales
• You have provided the scripts and CRM for the Teleprospectors to use
• The team has been given additional sales tools, such as objection management documents, which they can use if a conversation goes south
• They have been assigned daily/weekly/monthly metrics, such as 50-70 dials, per day, 5-10 Key Contacts, per day, etc.

Your Teleprospecting team is well armed and ready to make calls. The problem is that if and when they get Sr. Executives on the phone, they are not able to translate these calls into viable leads. More times than not, Teleprospectors crumble at the first objection and end their calls. Or they call lower-level titles, in the prospect organization. Non-decision makers tend to be accessible and easy to speak with. However, leads from non-decision makers are not viable and tend to be rejected by Field or Inside Sales.

Companies see Teleprospecting as a junior-level position. I believe that this is the wrong way to think about Teleprospecting. Let’s consider that the Teleprospector is probably the first person from your company that your prospect will engage with. The Teleprospector, therefore, needs to be seasoned and experienced to handle the nuances of a first call. The argument that I have heard, many times, is that Teleprospectors aren’t closing business. They are qualifying prospects for interest. I beg to differ. Every communication with a prospect is an opportunity to close. There are many closes to consider: to close for the next meeting; to close on getting to a viable decision maker; to close for a trial or demo. Companies need to hire people who can close at any stage of the cycle. This is another reason why they should consider hiring seasoned professionals for this role.

Seasoned people have the experience to understand business drivers and what drives the people who make business decisions. Junior level people don’t have the experience or understanding of these concepts. It takes a lot of time, many, many, many phone calls and trial and error to understand these concepts.

Many years ago, I was asked to set up a Teleprospecting Organization for a SaaS company whose product significantly reduced energy spend for the manufacturing and utilities industries. Our prospects were CIO’s at Fortune 500/1000 companies. It was a complex solution with a long sales cycle (9-18 months). I knew that I needed to hire the most skilled people to ensure that we could navigate the issues prospects might throw at us, each day.
The team that we hired received a base salary of $70K with their total compensation reaching $125K, at plan. At first, the CEO was concerned that we were paying this team too much. However, after he saw the results of his pipeline (it was rapidly increasing) he changed his mind.

Below is a real call that one of my Teleprospecting Reps had with the CIO of a Multi-National Food Manufacturer
Dave Teleprospector: Hi Mike, This is Dave, with XYZ Company. Our solution enables companies like yours to reduce energy spend by 50%, year over year. Our clients include _,_ and_. The purpose of my call is to understand your needs and to determine if we might have a solution for your company.

Mike Prospect: Dave I received your company’s email blast and I am not interested.

Dave Teleprospector: Mike, so what you are telling me is that you are not interested in reducing your company’s energy spend? Mike, I recently read an article in XJournal, where the research showed that most CIO’s stay in their positions for under 18 months because CIO’s are perceived as being ineffective. I’ll be happy to send you that article. The reason why I mention the article is because our solution can help you reduce your company’s energy spend by 50% or greater, which could help to make you highly effective.

Mike Prospect: Dave, that is very interesting. Yes, it would help me to find out how we might reduce our energy spend. Currently our energy spend is a significant part of our operating budget.

Dave was able to qualify this account and pass it on as a highly qualified lead for his Sales Rep. This lead went to the sales funnel, after the Field Rep had his first meeting with the prospect.

This Teleprospector was highly qualified to speak to any C-Level Executive because of his Experience

• Dave knew that C-Level Execs are easier to reach in the early AM or later PM. He managed his weekly schedule so that he would be making his dials to his significant prospects, during these times.
• Dave did his research. He was constantly sourcing information about the industry, his company’s technology and trends that might of interest to his prospects. He knew that C-Level Exec’s would be interested in information that would be of help to them or their company. He was always learning, in order to be prepared for any call. He could discuss the significant business drivers that would interest his prospects, at any time during his calls.
• His conversations were never scripted (he used a guide with key messages and questions) and his messages were targeted to the titles he was planning to call. He had a message for CIO’s, CEO’s, COO’s, each somewhat different, however, each addressed the interests of the specific title he was calling.
• Dave would regularly call his assigned Field Reps to ask them about their worst sales calls and best sales calls, each week. He would ask them what they could have done or said, differently. He used this information to tailor his messaging and up his game.
  Dave had over 5 years of Sales experience, before I hired him. He was not trained, per se, to do the above. Out of his experience and good instincts, he was able to develop a set of skills that helped him to generate extremely valuable leads for his sales team members.

Example Call between a Junior Teleprospector and a C-Level Executive
Junior Teleprospector: Hi Mike, This is Junior, with XYZ Company. Our solution enables companies like yours to reduce energy spend by 50%, year over year. Our clients include _,_ and_. The purpose of my call is to understand your needs and to determine if we might have a solution for your company.

Mike Prospect: Junior, I received your company’s email blast and I am not interested.

Junior Teleprospector: Mike, can you tell me why you are not interested?

Mike Prospect: I actually am pretty busy right now. Why don’t you send me some literature and if I think there is a need, I will give you a call.

Junior Teleprospector: Mike, sure thing. I’ll send you our brochure and if I don’t hear back from you in say 2-3 months, would it be ok to give you a call to see if your situation has changed.

Mike Prospect: Sure, that will be fine.

The call with the Junior Rep has kept this Fortune 500 Multi-National Food Manufacturing Company from being included in the sales funnel for a while, if not forever. It might take hundreds of calls, like this, before a Junior Teleprospector has enough confidence and experience to effectively manage their prospect conversations.

Although the Junior Rep call is not based on a real call, the gist of it is based on my experience with managing many Junior-Level people, at over 50 companies. A call center Manager can provide some guidance, but they can’t sit in on every call, made by every Rep in their center. And, it is illegal to record calls, in many states, now. So a lot of trial and error goes on, at your company’s expense. The end result is a frustrated sales team, a sales funnel that is full of junk or no sales funnel at all. In short, a lot of frustration and missed opportunities happen when junior level people do prospecting.

Make Teleprospecting the Best Part of your Sales Organization

• Give the role a different title. There is something negative about Titles that start with Tele (Telly). Many of the Sales VP’s that I have worked with said Tele-Marketing or Tele-prospecting in a very disparaging way. Just because the meetings are via the telephone (Telly-Phone) it doesn’t follow that these meetings are not important. Like I said earlier, the first contact with your prospect is often via the phone and could be very important to your company. Change the title to Corporate Sales Rep, New Business Development Rep, Funnel Development Rep, Pipeline Builder or Sr. Hunter, for example. A title, such as these, will immediately elevate the position and credibility of the team member.
• Find people who have at least 5+ years of experience selling complex solutions, either over the phone or in the Field. The bad news is that many people lost their jobs, during the great recession of 2008-2009. The good news is that these ex-Field/Inside Sales Reps want to get back to work and are happy to do prospecting. I know this because these are the types of people we hire at SOMAmetrics. It is better if your Sr. Hunters have had to carry a quota, in the past. They get the concept of a qualified lead, pipeline and revenue, while a junior person, and might not. During the interview process you can find out if the candidate likes phone work and if he/she has carried a quota. Email me at alicia@somametrics.com, if you’d like to receive my effective and proven Inside Sales/Teleprospecting interview questions.
• Pay well. Highly qualified leads that are with decision makers are priceless. They increase the productivity of your Sales Reps and build pipeline faster and more efficiently than leads from lower level titles. In the long run, if you hire skilled Sr. Hunters, you will increase the quality of your leads and the productivity of your sales team. Every company, I know, wants a productive sales team.
• Keep hours flexible. While it is important for your Sr. Hunters to meet their metrics, let them work a more flexible schedule. C-Level Execs are available in the early AM or later PM. As long as your Sr. Hunters are meeting their daily/weekly/monthly metrics, they don’t need to start at the same time, each day (7-4 or 8-5, for example). They may want to start as early at 5 AM, one day (especially if they reside in Western States) or come in as late as 10 AM and stay until 7 PM, for example.

In short, treat this position as you treat your Field or Inside Sales Teams; as very important contributing members of the sales team. Hire people with experience and pay well. You will reap the benefit of their experience and ability to uncover real need from real decision makers. Your pipeline will build faster and your close ratios will improve. All good!

I have personally implemented over 50 Inside Sales and Teleprospecting organizations at technology companies. Please email me @ alicia@somametrics.com, if you want my advice or assistance with your Teleprospecting teams.

If you don’t have sufficient pipeline of quality leads, you are better off shrinking your sales force, freeing up cash to build your leads pipeline, and then hiring more sales reps only if you can feed them with a strong pipeline of sales leads. Here is why.

Sales Reps are no Good Cold Calling

Prospecting–calling to find prospects–is what we refer to as a high-volume, low touch interaction.  The sales rep must typically make 60-90 dials a day just to get 4-6 connects, of which perhaps one or two may be qualified prospects. Most of these dials go either to voice mail, or to a receptionist. The few conversations typically last 1 minute or less, just long enough to make an appointment for another time.

This in direct contrast to what most Sales Reps are good at, which is low volume, high-touch interaction. Most sales reps are very good at meeting with, building rapport with, and engaging prospects through the sales lifecycle, hopefully to a successful close. They can do maybe 8-10 of these per month.

Asking Sales reps to make cold calls in the hopes of finding their own leads is like asking a 10K runner to win a 100 meter dash. Both may involve running, but they are very different kinds of running and success in one will not directly translate into success in the other.

They typical sales rep hates cold calling and will likely not spend more than a couple of days a week making a handful of dials. What is this rep doing the rest of the time?

Live at the Mercy of Precious Few Prospects

If your sales reps don’t have a strong pipeline, then they tend to think “scarcity” instead of “abundance”. They start thinking that they can’t afford to lose any prospects. Now, they are at the mercy of savvy decision makers who know they can get a lot of information and help from the sales rep without having to pay for it—all they have to do is make the rep think that she still has a chance of winning a deal.

Nothing wastes a sales reps time than to be strung along like that. And nothing burns through a company’s funds than payroll for non-productive people who are working hard, but not adding any meaningful value.

Sales Exodus

While the average sales rep may stay because they need the job, acting busy when he or she doesn’t really have much in his or her sales funnel, the good ones will leave because they are used to making real money–salary alone won’t be nearly enough for them. The really good sales reps expect and need to make big commission checks, and these won’t come unless they close deals regularly. If they have to cold call to find leads, they will leave for a company that provides them the leads they need.

In the end, the company is left with the most mediocre sales reps, and still paying salary for sales that don’t materialize.

On the other hand, if you feed your sales reps with high quality leads and provide them with solid pipeline, then they spend their time doing what you hired them to do—work with interested prospects towards a successful close.

We all need money to live in comfort and to support our families.  However, I believe that most normal human beings thrive on being recognized for their accomplishments.  Most people thrive in environments that give them ample recognition.  At home, you can do things for your roommates or family members.  In most cases it’s a crapshoot if they will appreciate yourefforts.  If you are married, your spouse may or may not recognize the extra effort that it took to make the house or yard sparkle.

I believe that the place where we can be recognized, consistently, is at work.  When we are at work, we are measured for our efforts that support revenue growth, or for our efforts that increase net profits.  Revenue growth and net profits can be measured and it is easy to appreciate when these increase because increases in these areas impress investors.

It is important that all individual employees be given a set of metrics or Key Performance Indicators (KPIs) that they can be measured on.  If everyone is held accountable for their jobs and measured accordingly, they have a framework by which they can be recognized.

Once you have created the metrics and KPI’s, for every contributing member of your company, you have the framework to build a consistent recognition process which can be implement across the organization.  As I mentioned, earlier, I believe that people thrive on recognition.  If this is true, to help your employees to thrive, your company should consider building a continuous recognition program.

A continuous recognition program may recognize those individuals who consistently meet their objectives.  This is an easy place to start.  To get your entire organization to thrive, however, your company might consider recognizing employees who have made incremental improvements.  You may want to recognize people who contribute to the greater community, etc.  The continuous recognition program can be run as often as you’d like; monthly, quarterly, semi-annually, etc.

Give Managers the opportunity to do “spot” recognition, on the fly and in front of their teams.  This type of recognition will prevent complacency.   Imagine how you might feel if, out-of-the-blue, your manager recognized you and gave you the rest of the day off because of your contribution to the company.

The method of recognition can take many forms.  As a company, decide if you will give days off, gift cards, cash, etc.  However, don’t let these be the only forms used for recognizing your team members.  A nice letter, on company letterhead, or a note of thanks can go a long way in motivating your team and building a “thriving” organizational culture.

Design a continuous recognition program and implement it.  Watch your team members and organization thrive.

I have written a few blogs on the topic of the lead qualification process, however, I continue to find prospects without a clue as to the meaning of a lead qualification process or how to start begin the process.

Here are a few “Best Practice” tips that I share with all of our clients.  Numbers matter and to ensure that your company’s telemarketing is a success, the infrastructure needs to be in place to track the call activity and the progress of each lead.  Without this information, you won’t have the data to track the success of the Telemarketing team.  A successful Telemarketing organization is focused on generating qualified leads that build the sales funnel.  Without a pre-defined process, your team may not be successful.

Best Practices

Start by Mapping Your Lead Process into your CRM Your lead qualification process includes the questions that will help sales to move the sales process forward.  Most companies understand the basic qualifiers, such as:

• Need– Prospect has a need for your solution or service
• Authority– You uncover the person or people who can make a purchase decision
• Budget– Prospect has assigned a budget for the solution or can set aside funds for
  the right solution or service
• Timeframe– The prospect can make a purchase decision within a reasonable timeframe, for example, in under 6 months

These are generic qualifiers and from my perspective don’t really add value to the quality of the lead.  A lead that is highly qualified will have additional qualifiers that support your business.  These are the questions that provide intelligence that helps marketing build better campaigns and give sales a great overview of the prospect so that they are better prepared for their first prospect call.

Build a list of qualifying questions that are specific to your business and map these intoyour CRM.  Ensure that your Telemarketing team understands the value of this information and make sure that they ask these important questions.

Implement a Lead Approval Workflow

All leads aren’t created equal.  Some leads will need further development or may need to go into a nurture program.  Therefore, it is important to have a process where every lead can be reviewed and assessed before they become sales opportunities.

Build a lead approval workflow that enables your Telemarketing Manager to review the leads and pass on to Sales for final approval.   In addition, the approval process should give Sales an opportunity to validate the lead and approve or reject the lead, before it moves to the sales funnel.

Create a field that captures the “rejection” reasons, so that your Telemarketing team can understand why their leads are being rejected.  You can use this information to train your team and help them to improve their qualification skills.

Create Dashboards to Manage by the Metrics

Build dashboards to monitor the Key Performance Indicators  or Metrics that are important to your business.  These dashboards should include call activity and other sales related activity levels, campaign results and pipeline growth.  Dashboards will enable you to keep a pulse on your business.

Build the Infrastructure

Implementing these basic “best practices” will save your company a lot of grief.  You will capture intelligence that can help your marketing department improve its campaigns.  Sales will love your Telemarketers, because they will receive excellent leads from the team.  The review and approval process will ensure the quality of each lead passed to sales.