Leadership vs Management

by

Management vs. Leadership – Setting the Foundation

Establishing the importance of leadership and management in building a high performance culture

“Management is about persuading people to do things they do not want to do while leadership is about inspiring people to do things they never thought they could do.” Steve Jobs

The ability to survive and thrive as a true market leader in today’s mature market and tough economy is achieved by leaders’ abilities to create and sustain an entrepreneurial culture of empowerment, discipline and personal accountability.  Focused leadership with a defined plan and disciplined actions is essential to creating winning teams and performance acceleration through effective coaching, mentoring and performance measurement.

Every aspect of the business – hiring and onboarding new associates, acquiring, growing or renewing revenue and solutions within an existing customer – is positively or negatively affected by leadership quality.

The need for leadership involvement, guidance and feedback is critical to ensure that best efforts and results are executed in every interaction with the customer. Individual and team coaching is critical to overall success.  I will discuss in detail the criticality of being and effective leader to accelerate growth and a world class performance culture.  Let’s start with the fundamentals.

Leadership vs. Management

Managers and leaders are two very different types of individuals. Manager’s goals arise out of necessities rather than desires; they excel at diffusing conflicts between individuals and departments, placating all sides while ensuring the day to day business gets done.

Leaders, on the other hand, adopt personal, active attitudes towards goals. They look for the potential opportunities and rewards that lie around the corner, inspiring subordinates and firing up the creative process with their own energy. Their relationships with employees and coworkers are intense, and the working environment is often, consequently chaotic.

We need both managers and leaders to survive and succeed. We must find ways to train good management skills and develop leaders at the same time. Without a solid organizational framework, even leaders with the most brilliant ideas may spin their wheels. But without an entrepreneurial culture that develops when a leader is at the helm, we will stagnate and rapidly lose competitive power.

We need both good management and leadership skills to survive and succeed. Without a solid organizational framework, even leaders with the most brilliant ideas may spin their wheels, frustrating coworkers and accomplishing little. But without an entrepreneurial culture, our business will stagnate and rapidly lose our unique competitive position.

Today’s Take Charge Leader-Manager

Take Charge Management is the integration of principles of great leadership combined with management fundamentals in a new pragmatism is critical for success in today’s market. I am by no means debating that some of the new ideas hyped to today’s leader/managers are without merit or that managers should go back to the bureaucratic practices of the past. Instead, I am saying that the time has come to reconsider the relative balance between innovation and fundamentals.

Today’s take charge leader-manager must excel at three critical areas:

  • Direction setting
  • Aligning people
  • Planning and budgeting.

Today’s take charge Manager’s ideas should be:

  • Adopted only after careful consideration and judged by their practical consequences
  • Purged of unnecessary buzzwords and clichés, tied to the here and now and rooted in genuine problems
  • Adapted to particular people and circumstances and adaptable to changing circumstances
  • Tested and refined and discarded when they are no longer useful.
Rick_Nichols_200x200-white

Rick Nichols is Managing Partner of TechCXO’s Sales & Marketing Practice and a member of the Executive Committee. He can be reached at rick.nichols@techcxo.com or view his full bio.

Sales Planning Guide

by

Sales Planning Guide

This time of the year is critical to Chief Sales and Revenue Officers. So many things to do, so little time to do them:

  • Close Q4 business
  • Design sales model changes
  • Review individual and team performance
  • Top-grade talent
  • Assign accounts and territories
  • Review and refine sales compensation

This is a multi-part discussion on how to organize and motivate your sales team for success in the coming year.

Creating a great sales compensation plan is critical to focusing and motivating the sales team for success. It’s both a science and an art and – as they say in the movies – it’s complicated. Designing sales compensation plans are a delicate balancing act that should both motivate the team to maximize results while constructed in to allow the business to easily scale without breaking the bank.

Considering the following factors in sales planning and plan design will ensure a much higher probability of success:

Model revenue, performance and quota assignment

Corporate Revenue Goal Alignment

One very significant exercise involving sales, finance and HR is, before designing the upcoming plan, to agree on expected revenue objectives. Sales and finance should have equally weighed inputs and perspectives. Tension may occur when, totally apart from sales, finance creates a revenue and sales model that, while aligning with Board/Investor/CEO level growth models, isn’t aligned with market conditions and reality.

Team Performance and Quota Assignment

This exercise should be followed by analysis of current team performance. Systematic issues to consider in forming and finalizing both team and individual plans are current year performance, team turnover, onboarding time to full productivity for new hires and quota over-subscription.

Blaming underperformance solely on sales execution is common. Many factors contribute to underperformance including pricing and commercial terms, product quality, market climate and competitive threats.

Team turnover, time to hire and onboarding time to full productivity should be factored and balanced against quota assignment. The most current industry reports related to sales team performance state that current team performance is that roughly 60% of team members achieve or exceed quota expectations.

Factor in expected turnover and time to full value for new hires in modeling quota assignment. The “I hire industry thoroughbreds with great networks that can have instant success” and “let’s just increase our current reps’ quota” mantras and mentality simply doesn’t work.

Significant quota over-assignment should be factored – in the range or 30% – 50% to ensure a high confidence in sales revenue objective achievement.

Create an Aggressive but Balanced Plan

A sales-minded CEO that I worked for early in my career stated very simply, “You can’t have a healthy bottom line without a growing top line.” Many companies whose culture is dominated with a finance and/or engineering mindset and mentality consider sales a necessary evil. The facts are simple, pay too little and you won’t attract top performers, pay too much, it’s not sustainable for the long term.

Many of today’s successful sales compensation plans are modeled on a 40%/60% or 50%/%50% mix of base salary vs. on target earnings. Depending on situation, one may work better than the other. The premise with this is to have a balanced risk/reward between the company and the individual.

Keep it simple

Very simply, human nature and psychology says that people are motivated by what they’re rewarded to do. I get migraine headaches when I read compensation plans that are over a dozen pages in length, have very broad objectives and definitions of products, solutions and require a degree in calculus to calculate commission payments.

Plan objectives should be aligned with corporate objectives, clearly defined, standards for performance, aggressive but realistic, directly related to what they’re being paid to sell and how and when they’re getting paid.

Role-Based Compensation

Compensation plans should be very specifically aligned with the team’s and individual’s role within the company. Lead/demand generation, inside sales, outside direct sales and channels all have unique and different objectives, behaviors and revenue producing goals.

The quickest way to destroy sales focus and performance is to create a generic but overly complex plan that both confuses and frustrates individuals from their primary role of revenue generation.

Reward Over Goal Performance, Revenue Type and Quality

Rewarding revenue type, quality, timing are significant factors in motivating the team for success while accomplishing corporate revenue objectives.

Revenue Type

Revenue type is important, particularly in balancing new customer acquisition, growth and retention. Many plans make the mistake of paying one rate, regardless of which of the three revenue types are involved.

New business acquisition and significant customer expansion (new major solution sales, major customer expansion, e.g., additional divisions, distribution centers, and so forth) are very important to long term growth and scale. Additional seats, servers, devices, services and other incidental and ancillary services in most cases are handled by and paid to either account management or client success roles.

Revenue Quality

Profitability of revenue is important as, with significant discounting, individuals both give away revenue and set a precedence for the longer-term relationship with customers and longer term corporate health. Significant attention should be paid to addressing both revenue profitability and discounting policies within the sales compensation plan.

Revenue Timing

Revenue timing is important for several reasons, the most important being overall corporate financial health, as well as staffing and utilization/realization of services and support resources.

Rewarding the sales team’s and individual’s ability to accurately forecast revenue, especially coinciding with month, quarter and year end should be rewarded over and above normal commission percentages. Bonuses, SPIFs and other time-based rewards are very simple, straightforward ways to reward behavior and achievement.

Over Goal Compensation

The target of any well-constructed plan should be to reward over-goal performance and motivate the highest population to be rewarded for exceptional achievement. Many plans are modeled with significant commission accelerators as well as other non-cash incentives such as equity and stock or club trip performance. Many companies incorporate a quota club reward as well as Chairman’s or President’s Council for the top 10% of the team. Stringent definition and levels of performance for these rewards should be outlined in the plan.

Regardless of how you structure your sales team’s commission plan, never — under any circumstances — place a cap on earnings and variable compensation. Doing so will remove individuals’ and teams’ incentives to “do whatever it takes” as well as create an under-performing sales culture and kill team morale.

In closing, sales compensation plans, in combination with a well thought through sales model, should be designed to attract and retain top tier talent, lower the cost of fixed cost investment in salaries, and accelerate healthy and profitable growth.

Rick_Nichols_200x200-white

Rick Nichols is Managing Partner for TechCXO’s Revenue Growth Practice. See his full bio here.

Avoiding the 29% Club – Part 2: The Hunt for Deciders

by

71% or 29% Club?

You are a member if you are a hunter. Farmer, gatherer, inside sales, probably not. As you know, hunting has become a study in forensic sales: Strategic Sales, Relationship Selling, Value-Based Sales, The Complex Sale: these are all time-tested sales processes. But by the time the typical sales person hears about an opportunity, the influencers are already in place. It now becomes a matter of timing.

See Part 1: The Ability to Engage

The best hunters know that the one element of a deal that is still in their control is just that — timing. If they can get a seat at the table before it is set, they have a chance at helping to decide what is served. Real hunters do not waste time hunting where there is no game. They look for budget, ‘deciders’, urgency, and access. The most important of these is the decider, and how to reach him.

A recent survey by the Alliance Franchise Network concluded that 71% of the time, before the vendor comparison process even started, buyers knew who they were going to buy from. A third of the time, they had a ‘guy’ who they could ask for a referral. We all have network of ‘phone guys’, ‘tech guys’, and ‘car guys’ who are our go-to sources for warm referrals. Likewise, you need to be ‘in network’ for your potential client. Otherwise, you are in the 29% club.

Identifying the decision maker is relatively simple. Reaching them, not so much. If you can introduce yourself with a referral from someone the decision maker knows you’re well on your way. It starts with investigative work on your part. Big data and online sites provide myriad sources of potential references and referrals. You have a maze of data dots that, when properly connected, will lead to the referral name you need to pique a decision maker’s interest. Use that name in the subject line of an email and you are now a member of the 71% warm referral club.

Avoiding the 29% Club – Part 1: The Ability to Engage

by

It has been researched to the fifteenth decimal point. Millions of dollars have been budgeted trying to figure it out. In this age of all things digital, it is a strategic imperative for effective business communications, but most sales people do an awful job at it.

What’s the “it”? The ability to engage a potential customer via email. Giving them a nugget of info in the subject line that piques their interest enough to read further. Something that they won’t ignore, delete, or file before opening.

Here’s a clue as to what it should NOT be about:  You.  Or your company.  Or your service. It should be about the person you’re writing to.  And they have gotten a bit crafty at filtering out unwanted communications.  If it’s not about them or someone they know, your email will be deleted or ignored and you won’t connect – making you a member of the 29% Club. As a member, you reveal three things about yourself to potential clients:

  1. You do not know them
  2. You do not have a direct referral to them
  3. You are guessing at what that customer needs

According to a recent study conducted by a TechCXO client in the printing vertical, 71% of the time buyers already knew someone who provided the service/product they needed – or could get a direct referral from someone in their networks. Likewise, before any RFQs, I/Ps, buying process or decision timeframe is established, a buyer begins his research on where he can get reliable intel on his project needs. Demonstrating that you’re a member of the 71% Club can successfully start a conversation. In other words, you need to:

  1. Know your client
  2. Get a direct referral to them
  3. Understand their pain

That brings us back to the email subject line. The time-proven technique to get a buyer’s attention is a name — the name of someone they know and trust who has referred you for a brief, introductory conversation. You already have, or have access to, those names. Mining your contacts and conducting a little research into published information about your prospect, will result in a network of data dots that, when properly connected, will lead to a must-read subject line. Getting good at it qualifies you for the 71% club.

Chris Pariseau is a Sales, Strategy & Marketing Partner for TechCXO in Atlanta. He is a firm SME on prospecting.

Do we even need outside sales reps today?

by


Outside account executives are an expensive proposition whose statistical effectiveness is falling. Many CEOs and CFOs I speak with are frustrated with the results, and they resent the costs associated with salespeople often identified as “road warriors”, “big hitters” and “closers”. More and more frequently, companies are opting to replace outside account executives with channel partners and/or more (less expensive) inside sales resources. In fact, according to SalesLoft, inside sales is growing 15 times faster than outside sales. I’ve even seen major initiatives at Fortune 50 companies to develop the means to eliminate outside sales executives altogether.

Perception Problem or Real Issue?

As someone who has been and managed enterprise salespeople for over 20 years, I’m a little sensitive to this debate. The notion that you can eliminate highly skilled and experienced outside reps handling complex deals worth millions and even tens of millions of dollars, baffles me. However, whether you agree or not, let’s acknowledge that something is going on that is grounded in reality and not just an issue of perception – B2B sales and account executives aren’t working the way they have been for many years.  There’s a couple factors that go into it.

(1) Buyers are unimpressed – Buyers are frustrated and overwhelmed. About 75% of buyers say they want to skip face-to-face interaction with a sales rep altogether. They would rather rely on technology to close gaps in product and service knowledge and if they have to interact directly, are happy to do so via webinars and videoconferencing.  Further, they assert sales reps aren’t capable of understanding the problem the buyers are trying to solve and then how the product might address them.  What they’re doing is pushing their own agenda and pitching feature and function.

(2) These numbers don’t lie –  The percentage of account executives in B2B sales that are making their quota each year is dropping.  It’s been falling for five years and is now down to 53% of account executives making plan. In addition, inside sales teams often cite 40-90% lower customer acquisition costs. This data frequently winds up senior management.

(3) Perceptions feeds detractors – Effective outside sales reps have outstanding people skills and are typically ambitious, self-motivated and results-oriented. They see themselves as “drivers” as do others, which can certainly rub some people the wrong way. They are typically male (74% of outside sales reps are male versus a more even split of 56-44 male-to-female for inside sales) and have more than 5 years’ experience. They are paid significantly more than an average inside salesperson and close deals – on average – about 40% of the time.

With that in mind if you’re a senior finance executive or a senior leader it’s hard not to look at an outside sales organization and say, “Can’t we be doing something to make it perform better and take some cost out?”

What’s the Right Mix?

If you have a nagging feeling that you are too dependent on the big hitter with the million-dollar Rolodex (this already sounds impossibly dated as I write it) to bring in deals, you may well be right. Ask some of these questions.

Transactional or Transformative? Buyers don’t need face-to-face meetings to get more information. In fact, they resent it as a waste of time, particularly if your representative is hawking features and functions. If your buyers are small to medium sized businesses with lower price points, lower LTV (life time value), they are more transactional in nature and can likely be handled by inside sales for the entire sales process.  However, if your product or solution impacts many stakeholders (IT, engineering, marketing),requires integration of a complex technology stack, promises to deliver 10x better service or new business models, the game has changed. You need problem solvers who are capable of talking to executive level decision makers face-to-face, understanding the outcomes they need and winning their sponsorship. 

Non-Strategic or Strategic? Do you use strategic account planning?  Most companies have no formal approach for strategic account planning. These companies report their win rate on forecast strategic account deals was 7.7% lower than the average win rate for all forecast deals. You may not need strategic account planning if your business is not defined geographically or by size of buyer or the deal.  What would it mean to lose a renewal / expansion opportunity from one of your top 10 accounts? If you are like most companies, and the top 20% of clients yield 80% of revenue, you may need to look at strategic account planning more closely and an outside sales rep may be a better option to develop the relationship with those important buyers. 

Simple or Complex? Is your product and service provided customized or is it a standard offering? Do you use on-site assessments, interviews and collaboration or is your information gathering and fulfillment done remotely? Is your sales cycle defined by hours and days or weeks and months?  The answers to these should guide your mix of inside or outside sales reps, though in complex cases also point to the need for more solution architects.

What we’ve got to be focused on is increasing the effectiveness of salespeople, particularly the outside salespeople:

  • They’ve should be spending less time on tedious tasks.
  • They’ve got to have more data and tools (AI).
  • They must be problem solvers who are capable of executive level conversation.
  • They must be focused on the right accounts and opportunities.

Start Here

How do you figure out the right answer for your company?

Despite the desire, there is not one answer that fits all companies.  What has worked best for me is to start on the quantitative side of analysis.  What are the KPI’s for the organization and the sales reps? Examples of great starting points include win/loss/delay rates, close ratios, conversion rate for MQL to SQL, pipeline numbers and ages by stage.

By starting quantitatively, it provides a framework to dig behind the numbers and take a look at market conditions, whether you have the right people, their training, sales process, tools and overall sales management.

From there, it’s possible to understand the right size and mix of salesforce, what training and process changes are needed, where AI can boost effectiveness and how to deliver the performance that management and investors are expecting.

The key is not to make an up-and-down decision based on perception or even close rates. Look at your sales from a perspective of what you sell, to whom and how. From there, you can begin to engineer both the right sales organization and the right mix of people to meet your goals.

Andy Shober is a Partner in TechCXO’s Denver office. Send him a note at andy.shober@techcxo.com and see his full bio here.

High Cost of Sales Attrition and What to do About it

by

Sales force attrition ranks among the top concerns for Chief Sales Officers because of the two-headed monster it quickly becomes, particularly for how attrition insidiously affects annual sales plans and the make-up of your team. Here are some key numbers:


Attrition – Sales force attrition has a near 50/50 split between voluntary departures – those sales reps you don’t want to lose – and involuntary dismissals, typically underperformers who are not working out. According the CSO Insights, the premier sales survey firm that surveys 4,000 CSOs each year, attrition is averaging 25.8% (see Figure1).

annual-rep-turnover

Cost per Rep – The cost of sales force attrition may be more than you think. Companies that closely follow their attrition rates determine a cost per departed sales rep to be from $500k to over a $1M. If that sounds high, think about what happens when you lose a star sales rep, particularly to the competition.

  • They take the clients with them
  • They were trusted yet they left- big morale question for the remaining
  • Their departure implies a problem

Recruiting/On-Boarding – On-boarding new reps cost you development time and money. The ramp time for seasoned reps is still at least six months. As a sales leader if you are reacting to the loss, you are in recruiting mode instead of selling and lost revenue potential is assigned to others further burden on their plan.

Less than “Full Employment” –  Most sales plans fail to properly account for attrition because they assume “full employment” against their plan (see Figure 2). It’s easy to figure out if you lose your stars to voluntary attrition and you keep your laggards who should be involuntarily let go. This creates a real problem because you are attacking the sales plan with a less than 100% team. You keep your laggards hoping for a miracle to make plan. In essence you are putting the destiny of success in the hands of the “60 percenters” to perform at 135% of plan.

It gets worse at the beginning of the new year when you’ve been talked into a sales plan increase and then the departures begin. You never get ahead. In fact, you’re behind before you get started and oftentimes never catch-up.

Cost of Sales Attrition – Part 1

by

The High Cost of Sales Force Attrition: And What to Do About It

Sales force attrition ranks among the top concerns for Chief Sales Officers because of the two-headed monster it quickly becomes, particularly for how attrition insidiously affects annual sales plans and the make-up of your team.

Here are some key numbers.

Attrition – Sales force attrition has a near 50/50 split between voluntary departures – those sales reps you don’t want to lose – and involuntary dismissals, typically underperformers who are not working out. According the CSO Insights, the premier sales survey firm that surveys 4,000 CSOs each year, attrition is averaging 25.8% (see Figure1).

Cost per Rep – The cost of sales force attrition may be more than you think. Companies that closely follow their attrition rates determine a cost per departed sales rep to be from $500k to over a $1M. If that sounds high, think about what happens when you lose a star sales rep, particularly to the competition.

They take the clients with them
They were trusted yet they left- big morale question for the remaining
Their departure implies a problem
Recruiting/On-Boarding – On-boarding new reps cost you development time and money. The ramp time for seasoned reps is still at least six months. As a sales leader if you are reacting to the loss, you are in recruiting mode instead of selling and lost revenue potential is assigned to others further burden on their plan.

Less than “Full Employment” – Most sales plans fail to properly account for attrition because they assume “full employment” against their plan (see Figure 2). It’s easy to figure out if you lose your stars to voluntary attrition and you keep your laggards who should be involuntarily let go. This creates a real problem because you are attacking the sales plan with a less than 100% team. You keep your laggards hoping for a miracle to make plan. In essence you are putting the destiny of success in the hands of the “60 percenters” to perform at 135% of plan.

It gets worse at the beginning of the new year when you’ve been talked into a sales plan increase then the departures begin. You never get ahead. In fact, you’re behind before you get started and oftentimes never catch-up.

In Part 2 of this series we’re going go give you a Four-Part Plan: Stop the Silent Profit Killer: How to Create a Retention & Redeployment Strategy.

How to Navigate a CSO Departure Without Losing Revenue Momentum

by

The voluntary or involuntary loss of a head of sales can be one of the most disruptive events for any company, particularly a startup. Revenue plans for the quarter and the entire year immediately become more uncertain, even if your head of sales was shown the door. Also, several trends specific to securing tech sales and marketing executives add even more pressure to the organization, including:

  1. Shorter Tenures – Average tenure for a Chief Sales Officer is now less than 24 months (almost as short as a CMO).
  2. Historically High Turnover – Shorter tenures and higher turnover rates go hand-in-hand. More executive sales jobs are opening up with fewer of the right people to fill them.
  3. Longer Searches – Expect 4-5 months to complete an executive sales or marketing search, with another several weeks for onboarding and ramp-up.
  4. Lack of Internal Successors – In most cases, companies have fired the previous CSO and they don’t have an internal successor to fill the gap.

Download the PDF – CSO Comparison: On Demand vs In House

The net result is a one to two quarter gap in sales coverage. Sales coverage — no matter how badly lacking previously — will have holes even when an executive team, board and/or founder attempt to step in to bridge the gap. Even more problematic is when the issue behind poor sales is not just sales management performance but a breakdown in the sales supply chain that may include problems with the overall strategy, product or service, the target market, marketing programs or customer success processes.

The comparison chart/infographic we include here for download is less about replacing your CSO with an interim executive for the long-term and more about what you will do between in-house CSOs.

With interim or fractional CSO support, TechCXO enters engagements knowing that our role includes helping in the search for our replacement. We come in with the understanding that our job is to stabilize revenue, identify revenue supply chain issues, recommend necessary strategic and tactical repairs, to help implement changes, and help restart momentum while the client is looking for a permanent placement.

How a Recruiting Process Exposes Your Authentic Values

by

If you’ve ever looked for a job, you know.

You know what it’s like to put time and effort into a resume, research a company, and write a thoughtful cover letter. You send it off and wait. And wait.

And a response never comes, or comes long after you’ve already found another role.

In one case, I received a rejection email from a company a full 6 months after I had already landed another role. And yeah, I’d already figured out they weren’t interested by then…

The funny thing was that this company heavily sold their culture in the job posting. They said that people were their focus, they valued communication, and acted with a sense of urgency.

Unless you’re an applicant.

Well, OK, I added that bit, but you get my point. My experience with that company conflicted with who they wanted me to believe they were.

[The article was adapted from Kevin Carlson‘s original blog post]

Show Applicants They’re Important: Respond

A few years later, I found myself in the position of being responsible for the recruiting process. The roles I posted to job boards generated hundreds of responses. Of those I received, many were not qualified and some didn’t appear to have read the job description.

Even so, I remembered my earlier experience, and wanted to make sure I responded to everyone, even if it was to give them bad news. As applications piled up, the task seemed like a tough one to tackle.

“I’ve been there”, I thought. “I know what it’s like to face rejection and now I have to do the rejecting.” It’s a normal reaction to want to avoid this step in the process. If that’s how you feel, congratulations, you’re human.

The solution for me was two-fold:

  • First, use the Applicant Tracking System we had to organize things. If you don’t have one, I’ve listed affordable options and alternatives at the end of this post.
  • Second, recognize that my silence helps neither the company or the applicant.

Use the Right Tools to Make Responding Easy

We used our Applicant Tracking System to post jobs to job boards and to our web site. It organized responses and made it easy to move candidates through the pipeline. It also made it very easy to send candidates a response.

Applicant tracking systems allow you to create email templates that request a phone conversation, an interview, or let someone know they haven’t been selected. Take the time to create a template for each type of communication you might want to send a candidate, including those for rejection.

As a rule, I would go through the new resumes first thing in the morning, and send each applicant an email:

  • We received your resume and are reviewing your qualifications…
  • We’d like to set up a phone conversation…
  • Could you answer a few questions for us…
  • Thank you for your resume. Unfortunately, you have not been selected as a candidate.

The first three? Pretty easy.

The last one is more difficult to send, and here’s why it’s so important: How you treat people outside of your company says volumes about the real values inside your company.

Actions show Authentic Values

Wall posters that display company values — we’ve all seen them.

Integrity. Honesty. Collaboration. Blah, blah, blah.

Seriously? Those values are table stakes.

If you have to tell people that you like to collaborate, are honest, and act with integrity, that’s a pretty low bar. When I see that, I’d rather ask your customers what they think your values are and get the real scoop.

Values must be in your heart and mind, not on the wall. People you interact with will talk about how they experience your values and culture. Your actions and inactions will have an impact.

How many great candidates don’t apply because a friend ridiculed your recruiting process? Might be only a few. Might be only one.

AND IT MIGHT HAVE BEEN THE ONE CANDIDATE THAT MATTERED.

So, take the time. Write the responses. Send the appropriate email now. With an Applicant Tracking System, it’s easy. Doesn’t matter if there are hundreds or even thousands of applicants. If you’re actually looking at the applications, it takes three seconds. And most savvy candidates know this.

What if Someone Responds to a Rejection?

You’ll get responses to rejections, no matter how tactful and kind you are. For me, they’ve varied from, “Your loss” to “Can you explain where I fell short?”

No, I didn’t respond to the first one. I have responded to many of the second type, though. Taking the time to help a candidate understand the skills or experience they need may result in their eventual hire. Ignore them and when they have the experience, they may ignore you.

The responses don’t have to be long. Send a simple note explaining there were candidates with more experience in certain areas (name them). Or perhaps tell them they need to brush on specific interview skills. It may help them and give them a little confidence to continue the hard work of looking for a job.

The “Thank You” Paradox

You’ll almost always receive a nice thank you note from those you hire or interivew. That’s common practice. Almost expected.

Yet I have received at least ten times as many emails from those that didn’t make the cut. The top responses may surprise you:

  • “Thank you for letting me know.”
  • “Thanks for your guidance.”
  • “Thanks for the encouragement.”

When this happens, you have preserved a future candidate. You may have given someone the boost they needed to write yet one more cover letter. You may have let them know that someone actually cares about the hard work they’re doing to find a job. They will remember you and your company. Your recruiting process, even in rejection, is showcasing your company’s values and takes a long-term view of candidate viability.

Recruiting is Early Proof of Your Values

When you’re faced with a lot of applicants, I encourage you to take the time to respond. You will prove your values and show that the culture you talk about is real. As I mentioned in a previous post on tech culture, you are the guardian of the culture.

Screenwriters have a mantra: “Show, don’t tell.” It’s the same thing when it comes to company values.

So, do what’s right and not what’s easy. Let candidates know where they stand so they can progress or move on. It will prove to them that your company — and you — are worth talking to.

INFO ON APPLICANT TRACKING SYSTEMS AND ALTERNATIVES

If you don’t have an applicant tracking system, don’t despair. There are a lot of them on the market with varying price ranges. Some cost as little as $25/month or charge a reasonable per job posting fee. Well worth the money. Below are links to a few that I have used or have that colleagues recommend.

If you’re on a tight budget, you can use something as simple as Excel to track candidates and responses. A little tedious, but worth it.

If I’ve missed an ATS that you have used with good results, please provide a link and your comments below!

5 Leadership and Management Styles

by

How style may impact your team’s performance

The five leadership and management styles in today’s business are: The Boss, the Judge, the Missing, the Super Performer and the Coach. Understanding these five leadership and management styles is key to becoming a true take charge leader/manager. Four of the five sub-optimize the human interaction so critical in developing a world class performance culture. A true leader/manager leverages both the organization and individual capabilities to unlock efficiency, effectiveness and true corporate value.

The ‘Boss’ and ‘Judge’

These two styles are authoritarian leadership and management styles and likely to be evidenced by a rigid rules system and an expectation of obedience to authority. This is evidenced by a manager who takes absolute control of a workplace situation, without reference to their team’s views and input would be exhibiting an authoritarian management style which is directive in nature.

Where these authoritarian management style models are allowed to thrive unchallenged, either in the work-place or in society in general, is rigidity and inflexibility more likely to result in entrenched thinking and a lack of response to rapidly changing scenarios.

The ‘Missing’ and ’Super Contributor’

These two management styles are polar opposites of delegating styles. With the ‘Missing’ style, the leader-manager is too busy with their own job and takes a laissez faire attitude, dishing out tasks to employees and leaving the rest solely up to the employee including any decisions about problems that may arise. Their attitude is to think they hire very senior people who know what to do and don’t need supervision.

The ‘Super Contributor’ leader-manager is the polar opposite, working with their people at a very detailed level, often insisting on being involved in every significant interaction, interjecting themselves into every aspect of work activity. Both contribute significantly to team frustration and under-performance.

The Coach

Coaching is the most critical competitive skill that any organization can have. It is the most potent tool available for improving performance, maximizing productivity and achieving revenue growth. Effective coaching is an integral part of how any leader manages. The broader objective is to create a world class entrepreneurial culture in which collaboration and coaching are cornerstones of behavior.

Helping your colleagues and sub-ordinates take responsibility for their own development will build team cohesion and accelerated productivity.

The first step in leadership is about vision. The second step is empowerment. The third step is coaching. While all three are interrelated, coaching pervades all three and supports the others. The goal of effective leadership is to create independence. Effective coaches and leaders:

  • Act as role models, demonstrating in the first person the skills and behaviors which are critical to successful meetings and conversations
  • Collaborate and communicate frequently with their teams and individuals to share strategies and tactics, reviewing key account, opportunity and executive briefing plans to construct optimal outcomes
  • Add value and guidance by providing domain expertise and relevant knowledge and acting as sounding boards for ideas and suggestions
  • Support team and individual decisions and actions with customers, prospects and colleagues

 

Rick_Nichols_200x200-white

Rick Nichols is Managing Partner of TechCXO’s Sales & Marketing Practice and a member of the Executive Committee. He can be reached at rick.nichols@techcxo.com or view his full bio.

Where Does Growth Come From?

by

What is the one thing used to defined success for investors, Board members and executive leadership teams?

ANSWER: INCREASED ENTERPRISE VALUE.

If you can increase enterprise value, almost everyone associated with the organization will be happy.  It’s like the expression in sports that winning cures alls ills — increased enterprise value cures (most) ills.

So, what’s the secret to increasing enterprise value? No secret at all, really.

Sometimes we make things far too complicated in business.

The simplest explanation of how to increase enterprise value is that value comes from (organic) growth and growth comes from revenue.

Increased Enterprise Value comes from increased revenue growth

Where does Revenue Growth come from?

The next logical question then is, Where does revenue growth come from?  The question is so fundamentally straightforward it almost seems stupid…

But… you would be amazed at the responses you get — from even the most senior sales and marketing people — try it!  Ask someone: Where does revenue growth come from?

They might say…

“Sales”…

“Leads” …

“Sales qualified leads” …

“Signed contracts”…

“Paid invoices”….

Organic Revenue Growth comes from 5 places

The truth is to (A) Produce Revenue and (B) Achieve Growth, there always has been and always will be five (5) places and five places ONLY of origin.  Here they are:

  1. Create More Opportunities

  2. Execute More Effectively Against Those Opportunities to Convert them to Bookings

  3. Ensure Customers Achieve Success (a.k.a. they achieve business outcomes for which they purchased your product or service)

  4. Stay Longer, Buy More

  5. (Customers) Advocate for the Brand and Solution

Revenue growth only comes from 5 places

 

Shall we break it down to even more essential elements?  How about the sources of opportunities?  What are they?

The 5 Sources of Opportunities

They are: Sales. Marketing. Partners. Referrals. Customer Success.

Beginning with Marketing, a world-class marketing effort provides 30% of qualified opportunities into the pipe.

The sales organization has to generate its own sales opportunities to the tune of 40%.

 

5 Opportunity Sources

The 5 Opportunities Sources

 

Depending on the business structure and distribution, Partners can provide 0% to 50% but let’s use 10%, as that’s an industry standard.

Referrals are 5% and then Customer Success is 15%.  The distinction with Customer Success is that it comes from post-sales implementation and support.  These opportunities close much faster than do marketing qualified leads.

Why Does Organic Revenue Growth Remain So Difficult to Achieve?

So if you can break down (1) Enterprise Value; (2) Define Where Growth Comes From; (3) Define Where Opportunities Come From, why does organic revenue growth remain so difficult?

The short answer is “Gaps.”

There are lots of areas for potential breakdowns or gaps within strategy, market, product/market fit, sales strategy, planning and execution and customer success.

Right now you may be thinking about specific issues, such as “the quality of our leads is bad” or “adoption for our platform is not what it needs to be.”

Maybe you have been treating Customer Success in a traditional sense, that is “Customer Success” was delivered via Professional Services (Onboard, Train, Deploy, Enable) and Customer Support (Tickets, Response and Resolution) but it has not become a source of new sales for you in terms of expanding, renewing, cross-selling or upselling your products, services or platform.

The truth is, your revenue generating efforts can break down or not be optimized in dozens — maybe hundreds — of areas.

Wherever there are breakdowns or inefficiencies you are not optimized.  The good news is, you can already identify the breakdowns yourself, such as: “Our product/market fit is off.”  “There’s a disconnect between what marketing says is a qualified lead and what sales says is a qualified lead” and on and on.

The difficulty, of course, is identifying the specific areas to attack, including defined KPIs (Key Performance Indicators) appropriate for the function, your company and your industry. However, if you can begin by embracing sales as an interconnected system, you are on your way to having a repeatable, comprehensive revenue generating machine.

Here are three maxims to hold:

  1. Revenue production and growth are optimized by aligning Strategy, Messaging, Product, Marketing, Sales, and Customer Success Strategies and Execution.
  2. Companies struggle to manage all go-to-market activities that produce revenue including markets, products, content, messaging, accounts, leads, opportunities, pipeline, conversions, bookings, revenue, customer success, expansion, and advocacy.
  3. A systemic, repeatable, measurable end to end approach can be implemented that will accelerate growth and enterprise value creation.

Connecting Revenue Growth and Enterprise Value

Let’s connect the dots to our original question: How do you make your Board, investors and organization happy?  The answer is increase Enterprise Value through (organic) Revenue Growth.

How much increased value does incremental increases in revenue create?  Well, there are many variables depending on industries.  For example, a SaaS-based company with a recurring revenue model may enjoy large multiples of 10x or more. The same might be true for companies in hot spaces like mobility, IoT, health care, etc.

But, as a rule of thumb, you can anticipate that an incremental revenue increase of $2.5M can create anywhere from $7.5M to $17.5M (or $25M at 10x multiple) in enterprise value.  Obviously, for smaller companies, that $2.5M is much more impactful to overall valuation.

Incremental Revenue to Enterprise Value Table

The point is, if you can increase organic revenue growth at significant levels, you can increase your enterprise value to the delight of your Board, investors and entire organization.

 

Acquisition Integration Part 2 – Sales and Marketing

by

Companies seek to accelerate revenue growth or enter new markets through mergers and acquisitions. They spend a lot of energy and resources identifying the right targets based on synergy and combined financial models.

But oftentimes, the real value of the acquisition is not realized. M&A typically fails during integration. All that effort and capital spent on acquiring the target is wasted.

In the area of Sales & Marketing, the acquiring company needs to identify the critical issues prior to the closing in preparation for “Day One.” Day One is an important milestone and should be well coordinated. It’s the best day to communicate to employees, the sales team, vendors and customers (in that order). My motto is always: “If you don’t communicate what is happening right away, they will make stuff up – and that’s always worse than the real story.”

At the heart of the merger is the story…not as stated in the press release, but as interpreted by existing and potential customers. What is the resulting value that the combined entity should contribute to the customers’ experience? Delivering this value should guide merging companies on 1) Marketing messaging and Alignment, 2) Sales Organizational Structure, 3) Go-to-market solution planning, 4) Channel Partner and Vendor Programs, and 5) Sales Incentive Plans. (There are a thousands decisions that must be made, but these are 5 of the most-critical). The Day One messaging must include compelling statements to provide assurances, generate enthusiasm and hope, and keep nerves subdued.

Marketing Messaging and Alignment:

What value is in the acquisition for current and potential customers? The combined entity is doomed to failure if an acquisition doesn’t create a 1+1=3 scenario. So, it starts with the messaging that will shape the picture in the minds of customers, partners, employees, vendors, and the marketplace.

See Part 1 – Why Acquisitions Fail

Day One messaging must include a very clear, credible, and compelling market promise. Acquisitions are a very anxious time for all stakeholders. And, this is no time for “good enough”. If the market promise is unclear…well, as they say, “if you don’t know where you are going, any road will take you there”. If the market promise is clear, everything else below is easier to create. So, take the time and be thoughtful here. If you need help, go and get it. And, get it long before Day One.

Sales Organizational Structure:

Are we merging sales leadership by identifying the best talent or are we subordinating the target sales team under our sales leadership? Either approach has merit, but it requires leadership and clarity at the highest level. The Market Promise will be a strong compass when making decisions on who will lead and the desired, resulting culture. Again, this is where an experienced (TechCXO) integration leader can be critical.

Many companies put off this crucial sales organization integration decision until days or week after the closing, creating disruptive sales force confusion which can lead to sales “stars” exiting on both sides. (I have worked on mergers, where the issue is never addressed by the leadership and left to the sales management to battle out – this is not a good approach.)

We recommend absolute clarity in announcing sales leadership during Day One, then including the sales leaders of both companies in the Integration Steering Committee.

Channel Partner and Vendor Programs:

Acquisitions are an especially anxious time for Channel Partners, Vendors, and anyone else (like a sales professional) who has an established territory. These stakeholders will defend, and rightfully so, the significant investments they made in the past and relationships they have established. When the merged entity depends on these stakeholders, navigating how future territory lines are drawn can be a political power struggle.

The Market Promise and strengths and weaknesses of these stakeholders will determine their ultimate role in the delivery of the expected value. And, many of these discussions and decisions can’t be made prior to Day One for reasons of confidentiality. Communicating to the critical Partners and Vendors is critical.

Sales Incentive Programs:

When acquisitions happen, sales professionals get nervous. And, most Sales People…hate change. The perception is that their job, their established customer base, and their opportunity to earn is all in jeopardy. In most cases, few promises can be made on Day One to quell these nerves. I’ve always said that the sales incentive plan drives the sales culture.

Fortunately, the acquisition integration risk in the area of Sales & Marketing can be greatly reduced by bringing on the right leadership. The partners at TechCXO specialize in being an acquisition integration lead executives. We can help you make a successful acquisition by providing hands-on, experienced on-demand executives who partner with the C-Suite, board and stakeholders to ensure the integration is given the leadership, skills and experience required for a successful merger.

Next, we will look at technology integration.

Matt Oess (full bio) are partners in TechCXO’s Atlanta office.

 

CSOs and CMOs Must Hang Together

by

As recently as five years ago, few would’ve predicted the unification of Chief Sales Officers (CSOs) and Chief Marketing Officers (CMOs). They didn’t speak the same language, often with differing definitions of terms as fundamental as “what is a lead?” They fiercely competed for budget… the CSO wanting to hire more sales people and the CMO wanted to fund additional marketing programs. They blamed each other for shortfalls in revenue. The CMO was the creative type and the CSO was the customer relationship expert. Although they sometimes sat in adjacent offices, they couldn’t have been farther apart.

So, what has changed that will finally unite CMOs and CSOs? Answer…The buyers are back in control. Today’s post explains what this means and the four steps CMOs and CSOs must take (together) to stay relevant.

Five years ago, sales people had all the information that buyers needed. Buyers had to engage sales in order to get information and make informed decisions. Today, the proliferation and availability of companies’ product information on the Internet has put buyers back in the driver’s seat. Buyers today have seen your (and your competitors’) products on your website, read reviews on your company, seen a demo, downloaded white papers, attended a webinar, configured their solution, and probably reviewed pricing long before speaking with anyone from your sales team. In fact, many buyers, now referred to as Customer 2.0, have already made decisions prior to speaking with a single sales person.

So, how does sales and marketing get re-engaged with Customer 2.0 and influence the buying process? CSOs and CMOs have now been forced to work hand-in-hand to remain relevant to buyers, follow the buyer’s journey through the buying process, and find ways to influence the buyers though their exploration. Here are the steps they are taking, together.

Step 1 – Gaining visibility into this new buying process

Marketing Automation tools like SilverPop, Pardot, Eloqua, and Marketo, combined with sales automation tools like Salesforce.com give companies the ability to track a buyer’s journey through this new buying process. The tools detect every click on your website, every white paper the prospect downloaded (from your company), every email they opened, every webinar and demo they registered for, as well as all the interactions with your sales team. And they do this for every prospect that in some measurable way engages with your company.

The thirst for customer data and the loss of the buying process control is forcing CMOs and CSOs to work together to find budget to purchase these analytics tools and sit together to agree upon a common language to understand what the numbers are saying.

Step 2 – Understanding Customer 2.0 buying behaviors

CMOs and CSOs must cooperate to understand the behaviors and activities that buyers undertake during their buying journey. Which content on your website is popular? Why do customers stop interacting with you as a result of seeing your online demo? Which are the common sets content and interactions that led to a purchase for a particular vertical industry? When is the appropriate time to introduce a sales person?

The aggregate buyer behavior intelligence and analytics from the marketing and sales automation tools are amazing. And while the dashboards are awesome, CMOs and CSOs have to really roll their sleeves up and get dirty in the data to really understand what’s going on, especially early in the learning process.

Step 3- Build campaigns, content, and tools that attract buyers

The content needed to attract Customer 2.0 is much different than the content of yesteryear. These buyers don’t want to be sold to. They want to learn and they like learning through webinars, podcasts, twitter, videos, blogs, and thought leadership content. They want to understand best practices and how other companies are solving their problem. CMOs and CSOs must co-create budgets to fund these campaigns, content, and tools. They must work together to build, test, and determine when is appropriate to deliver which piece of content to customers, based on their behavior.

Step 4 – Processes and execution

CMOs and CSOs must create much tighter linkages and effective handoffs between sales and marketing teams. And, they must consort to change all the marketing processes, sales processes, forecasting methodologies, manager coaching practices, etc., etc., etc.  They must change the working relationship, language, and communication between their teams. Leveraging both the new content and the marketing and sales automation tools, they must work together to proactively engage with Customer 2.0, influence them, create and nurture the opportunity, and close the deals.

The bottom line

Changes in buyer’s behavior and the necessary tools needed to compete for and attract buyers have created an environment whereby CMOs and CSOs must now work in resplendent harmony. Failure to do means certain failure to attract and keep customers over time. Customer 2.o is here to stay. So, I sure hope the CSO and CMO like the person in the office next door.

Question: What are you seeing that demonstrates this new buyer behavior? Have you noticed your CMO and CSO burying the hatchet and collaborating?

Why your sales team stinks at forecasting – part 3

by

Re-Qualify and Reclassify Every Deal

In Part 1 of this series, Here’s why your Sales Team Stinks at Forecasting Revenue, we reviewed the facts about just how bad we are at forecasting, thought through “why we stink,” and outlined three steps to redeeming ourselves as sales professionals and leaders. In order to help companies dramatically improve forecasting, we must:

  1. Review and re-define the qualification criteria and sales pipeline stage definitions that are at the heart of weak pipelines and poor forecast accuracy. (Covered in Part 2 of this series)
  2. Re-qualify every deal, reclassify the deals based on the new sales stage definitions, and clean out the rubbish…and methodically apply these criteria in real time, forever. (Covered in this post, Part 3)
  3. Create a new sales culture and cadence that focuses the majority of discussions around building strong pipeline, rather than forecast.

In this post, Part 3, we re-qualify every deal, reclassify the deals based on the new sales stage definitions, and clean out the rubbish…and methodically apply these criteria in real time, forever. I’ll walk you through the steps needed to implement the new stages, discuss how to avoid two major implementation pitfalls, and review why It will totally be worth it!!

techcxo-sales-forecasting

Clear out your sales rubbish by re-qualifying and reclassifying all deals

Cleaning out pipelines is just like cleaning out your garage. Take everything out and put back only what you

should keep. Anything put back into the garage should be organized well and should be kept organized. Here are the implementation steps:

  1. Move ALL of the deals in the pipeline to stage 1. This is to be sure undertake a full review of every deal, and rebuild the pipeline based on our new stage definitions (from Part 2 of this series).
  2. Review each deal. Remember that each stage definition is based on customer-verifiable criteria. Therefore, the sales person will likely need to connect with the customers to ensure that the new stage definitions are verified to be 100% true.
  3. Apply the new sales stage definitions to each opportunity and update the opportunity’s Stage (1, 2, 3, etc.) in your Customer Relationship Management (CRM) software or pipeline spreadsheet. Be strict in making sure ALL criteria are met for the stage and all previous stages. If the sales person’s information does not meet all the criteria, then chose the lowest stage that all criteria are met.

Implementation Pitfalls

As straight forward as the steps sound, the leadership team must be ready to manage 2 predictable pitfalls from the sales professional during implementation.

First, Sales Teams have invested a lot of time and energy into getting deals to later stages of the pipeline. The difficultly in implementing customer-verifiable sales stages is that most sales teams are forced to admit that qualified deals are…well…no longer qualified to be in that sales stage. And, watching all the deals in the pipeline slip drastically back to early stages is unnerving for salespeople.

If we are honest, customers change their priorities, budgets, and their minds all the time. Right? But, Sales People almost never move a deal that was in stage 4 back to stage 2, do they?

When deals move backward to earlier stages, the sales person will feel the anxiety of his/her perceived pipeline strength diminishing. We need to help them get over that initial resistance. Even in Step 1 above, moving all the opportunities to stage 1 typically takes some coaxing from leadership. Once the Manager and Sales Person agree that all the opportunities are in the correct stage, a newfound confidence will arise. I promise!

And the second predictable pitfall? In Steps 2-4 above, managers and sales leaders must continuously reinforce that the sales person be self-discipled about stage accuracy. For example, once a customer can no longer can verify the timeline to sign a contract, the deal should be moved back to a lesser stage that meets all the verifiable criteria.

Sales leadership and salespeople must be resolute in applying the new definitions of the stages. Definitions must be strictly applied to the pipeline. If most or all of the pipeline returns to Stage 1, so be it.

It’ll be Totally Worth It!!

Once the sales teams are honest with themselves, and all deals are in the correct stage, we get our first accurate assessment for the health and maturity of our pipeline (possible for the first time, ever!). A hygienic pipeline based on customer-verifiable outcomes yields four important outcomes:

  1. The noise that normally clutters pipeline is gone. Gone! Now, we can clearly see where to focus our sales energy!
  2. Sales teams now have a clear path for all the customer-verifiable activities that must occur before a deal can reach the next step and before a deal will close.
  3. Sales leaders can now use the customer-verifiable criteria to continuously qualify deals and coach teams. And, by influencing deals in stages 1-3 of the pipeline, managers and leadership can impact those deals during the early phases and systematically build stronger deals at all stages of maturity.
  4. By the time deals get to stages 4 and 5, the deals are strong and are whose closed dates are much more predicable. We have customer-verifiable substance behind any forecast that is created, based on deals in a strong pipeline. Hallelujah!

In Part 4 of this series, we will review how we can leverage these four It’ll totally be Worth It outcomes to create a culture of strong pipeline generation. Once we can build strong pipelines full of very well-qualified deals, the forecast discussions will be simple, shorter, and will yield amazing accuracy.

 

Matt Oess is a Strategy, Sales & Marketing partner in TechCXO’s Atlanta office.   See Matt’s full bio or contact him: matt.oess@techcxo.com.