In the previous post, we spoke about the four pillars of sales success, and outlined the fact that Sales Strategy is the first pillar that needs to be established in order for businesses to achieve sales excellence. But was exactly is Sales Strategy? Or even simpler, what is a strategy? It sounds like corporate boardroom fluff! But in reality, it is not just fluff, it is a practical plan set out to help you achieve your goals. Think of the game of chess – how are you going to use your pieces to capture your enemies king, and protect your own? If you are a gamer, what are you going to do to get the better of your opponent? How are you going to get from A to B given the current traffic?
If goals are the “what” we want to achieve, then the strategy becomes the “how” we are going to achieve them, and the chances are high that we all use a little bit of strategy every day of our lives, even if we don’t know we’re doing it. So when you think of strategy like this, it becomes a lot less “fancy and fluffy” and becomes a lot more practical – something that can have a massively positive impact on our lives. It is this practical, positive approach that we need to adopt when tackling a Sales Strategy. Whilst Sales Strategies will vary vastly from business to business, there are generally 7 elements of a robust strategy:
1. Business Goals to Sales Target Alignment:
So I know I’m contradicting myself here a little. I said that goals are the “what” we want to achieve and the strategy is the “how” we are going to achieve it. But since everything in sales revolves around targets, it makes sense that the target is properly understood. If this is not achieved, then the “how” is going to be incorrect. The first step is to ascertain what it is that you want your sales function to achieve from a target perspective – this needs to be aligned with your business goals. This is not a goal setting post, but I do recommend the SMART goal setting methodology.
Secondly, you need to understand what the business already has “banked” for the financial year in question. Meaning, how much money is already coming in from existing clients (if any)? Is there more to come from your existing base, or are you going to be losing some revenue? What else do you want to gain from your existing customer base? All these things need to be accounted for. This section makes up your Account Management target. Account Management is a term used to explain strategy to extract maximum revenue from your existing base. When you subtract this Account Management target from your business target, this then becomes your Account Acquisition target. Account Acquisition is the strategy employed to get new clients. Refer to the table below for example:
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Now that we have clarified exactly what the targets are, we can go about formulating the rest of the strategy!
2. Account and Opportunity Classification:
Your existing accounts provide a wealth of information that will help you to not only grow those accounts, but to acquire new ones too! Yet so few businesses know how to extract that information. The easiest way to do this is to classify your existing accounts. Consider the matrix below:
When classifying your accounts, you need to identify an operational metric for the Y axis, and a financial metric for the X axis. In the example, this is resource efficiency and profitability respectably. Accounts that are high profitability and high resource efficiency are your Class A clients. Similarly, accounts that are low profitability and low resource efficiency are Class D. With this is mind, it makes sense that your business would want to spend resources to Acquire and Manage Class A and B type accounts, while applying minimal resources to Acquire and Manage Class C and D type accounts with the aim of growing them into Class A and B accounts. There’s a whole lot of strategy right there!
3. Core Capability Assessment:
In this portion of the Sales Strategy, you want to know what exactly you are good at, and what makes your products and services unique. The end game here is moving towards a value proposition, so that you can speak the right language to the right people. The process is to literally list out your products, services and solutions, and then brainstorm exactly what basic human need they fulfill. Why, and how does it fulfill this need, and specifically for what type of person? When you combine this with your Target Market Strategy, you get seriously smart about speaking the right language to the right role players at the various phases of the sales cycle.
4. Target Market Strategy:
Alright, so know you know what you are good at. Great! Now who does that appeal to, and how do you target them? In this section of the sales strategy, your goal is two fold; i) What industries do your core capabilities apply to? What types of businesses in those industries (think abut the classification exercise), and what types of role players in those industries? ii) Tie in your value proposition to the respective role players, across the various business and industry types, so that when engaging with these role players, your sales people can speak their language. Now you are creating templates of discussions for your sales people to have when engaging with your clients and prospects. That is powerful stuff!
5. Resource Strategy:
Now starts the heavy lifting, and this can be a serious mission, depending on your sales structures. Essentially, you want to first assess what sales resources you have available to win opportunities. These include all the sales people you have at your disposal to engage your clients and prospects, channel partners, sales tools, websites, marketing activities, etc. Then you want to understand what resources you lack. For example, maybe there is a way to use technology, such as an app, to service your Class C and Class D accounts more effectively. That is a resource gap that would be identified.
Once you have completed this assessment, you need understand how to structure the resources and remunerate them in such a way that drives the right behaviours. This includes team size and grouping; alignment to industries; leadership structures; and Salaries vs Commission vs Bonus. Many sales teams fail and fall on this complex element of sales strategy alone. And the complexity is justified, because here you are affecting the thing that sales people work for – $$$. Take care!
6. Engagement Strategy:
Now that you have a better idea of what resources you have to engage new and existing clients, and you know what language you need to speak when engaging with the respective role players in your prospective industries. This portion of the strategy is about how you use those resources to engage the most effectively with your clients. For Class A and Class B accounts, you want to use your most skilled resources to Acquire and Manage the accounts, to allow for maximum growth. When planning for these clients, you want to create detailed account plans, with goals and scheduled engagements for all applicable resources over a year period to ensure you meet those goals.
Adversely, when considering Class C and D type accounts, you may not want to apply your most expensive resources to engage and grow these accounts, but rather look to smarter team structures or technology to service and grow them as effectively and cost effectively as possible.
7. Treatment Strategy:
Last but certainly not least, is the treatment strategy. What can you do within your business to entice the right behaviours from your account classifications? For example, you want your Class A and Class B customers to stay on your books and grow as much as possible. Do you have means to give them better payment terms? Can you provide them with “preferential” turnaround times that beat out the rest of your competitors? For Class C and Class D type accounts, should you look at increasing margins, to increase profitability? Can you offer cheaper versions of your products, services or solutions in order to increase resource efficiency and profitability? All of these things need to be considered and applied to the relevant classes.
And that is it in a nutshell. Not all of it is applicable to every business, and of course it will take its own form for each business to which it is applied. But this is the framework of a robust Sales Strategy that will set your business up with a sales function designed to exceed targets now and going into the ever changing future. But be cautioned, once the remaining 3 pillars are set up, you will need to review your Sales Strategy on an annual basis, each time armed with insightful information you did not have the year before.
Be sure to stay tuned for the next crucial pillar of sales success – Sales Processes. In the meantime, would you like to speak more strategy, or how it is applicable to your business? Get in touch.