For most of 2019 and through 2020, many of the executives I work with share a common sentiment: uncertainty. On the top of their mind is economic uncertainty, for good reason too. Even though some of the signals like employment, market growth, and consumer trends are at record levels, many CEOs are wondering not if, but when this current economic growth cycle will slow…or worse, come to a screeching halt.
These CEOs aren’t talking with me about a gut feeling. All the data supports the uncertainty they see and feel. In fact, a recent Gartner Report shows signs of vulnerability — record-high corporate debt and record-high corporate cash on hand, with cost increase outpacing revenue gains.
Most sales leaders and executives have had a comfortable last few years (even longer for some teams), but all the signs are pointing to volatility. Most sales leaders aren’t prepared.
70% of sales leaders express low confidence in their ability to translate strategy into action.
Comfortable market conditions have allowed many sales leaders to:
- Ignore strategic planning
- Let expenses balloon
- Neglect talent management
Planning is Survival
Planning ensures the current sales strategy is aligned with future business goals. Planning anticipates the loss of key, strategic, accounts. Planning identifies potential offering pivots that can create a competitive advantage. When times are good, performance pressure subsides and sales leaders spend time gloating at the scoreboard. Admittedly the job gets easier, and the first task that gets neglected is planning. I do a lot of coaching executive sales leaders. When I ask a sales leaders to review their strategic plan, many of them don’t have one “in the true sense.” When I ask for a strategic plan, I’m looking for a plan that not only details revenue per month, but also assigns the revenue to sales reps, products, and even customers. If your sales plan needs some work, then read this article.
If it Doesn’t Make Dollars, then it Doesn’t Make Sense
Expense management requires the sales leader to closely examine each month’s P&L for opportunities to improve ROI. Sales leaders must look at discretionary spending, like travel and entertainment to make sure the team is being good stewards of the expense budget. But what happens in good economic seasons is that too many people attend destination conferences, client entertainment expenses get out of control, and expenses per employee go up. No one cares because the team is hitting it’s revenue targets. When is the last time you sat down with your sales leader and reviewed the past month’s expenses? Recently I’ve been focusing on my client’s sales technology stack. They all seem to have a tool for everything. That’s fine. I support adding more tools over adding more people, so long as the tools are being used. Many sales leaders wrongfully assume the team is regularly using LinkedIn Sales Navigator, maximizing Outreach or SalesLoft, and making the most of the expensive prospect data you purchased from ZoomInfo.
Good Talent Eventually Leaves
All top sales talent leave. Eventually your top reps move on to pursue more opportunity. Bull markets like we’re currently experiencing expose sales leaders in two distinct ways: 1) they stop recruiting and become over-reliant on recruiters to fill the few open vacancies, and the team’s overall “bench strength” declines; 2) they assume top-producers are happy with their current earnings (most reps are enjoying health commission checks), and they neglect to make sure their rep’s career needs are being met.
Since a changing market is imminent, I’ve prepared some questions every CEO should be asking of the sales leader.
Questions Every CEO Should Ask About Strategy:
- What happens if we lose one or more of our top accounts?
- How are we evaluating the position of our offering to ensure it’s more than competitive in the market?
- Does our current go-to-market strategy really support the company’s strategic objectives over the next 1–3 years?
- Have we identified the right strategic partners to explore joint ventures, collaboration, or a potential acquisition?
- What else could we be offering our customers that they currently buy from other sources?
- How are you planning to replace yourself? Are you doing work that only you can do?
- How much of your time is spent on low value activity vs. uniquely helping us grow the business?
Questions Every CEO Should Ask About Expense Management:
- How have expenses per sales rep trended over the last six months?
- What % of our discretionary spending is allocated to closing new business vs. maintaining existing business?
- How do we measure the ROI on certain expenses? Travel? Conferences? Tools in the sales stack?
- If you had to eliminate 20%+ of discretionary spending tomorrow, what would you eliminate and why?
- What is the optimal cost per sales rep? How do we realize incremental decreases in cost per sales rep month-over-month?
- If we were to increase your expense budget by 20%+ how would you spend the money?
Questions Every CEO Should Ask About Talent Management:
- What happens if tomorrow we ask you to reduce the sales force by 10%? To whom do you reassign the accounts?
- How would losing your top two reps change the way you’ve currently structured the team? How long would it take you to replace them?
- Have we structured the team so that we have them focused on the right activities? Are we asking too much of the team? Do you see opportunities for specialization or more generalization within the team?
- If we asked you to double the size of the sales team in 120 days, could you?
- How many of the current sales reps are craving and prepared for more responsibility?
Good sales leaders plan. Despite confidence, they never feel safe or comfortable; they remain afraid, terrified even, of not hitting their number. The most successful leaders differ from their less successful peers in how they maintain hypervigilance in good times as well as bad. Even in calm, clear, positive conditions, the successful sales leader constantly considers the possibility that events could turn against her at any moment. Actually, she believes that conditions will, with 100% certainty, turn against her without warning. At some unpredictable moment, at some highly inconvenient time, things will change, and she’d better be prepared.