The New Account Sales Challenge: The 5 Ugly Questions Helping You to Protect the Health of Your Business

In the CSO Insights 2015 Sales Performance Optimization study, “capturing new accounts” made it to the top of sales objectives for 2015.  Kim Cameron recently published a post “Overcoming the New Account Sales Challenge” here.

Before addressing the valid challenges, mentioned in Kim’s blog, you should though make sure that your initiative of “capturing new accounts” eventually does not hurt your business by causing these undesired effects:

·         Expected growth targets are not met

·         Profitability drops

·         Customer satisfaction drops

The 5 Ugly Questions

This list of questions can help you to diagnose whether your “capturing new accounts” initiative might negatively affect the health of your business.

1.       Have you clearly defined the ideal accounts you want to capture?

The lack of this definition exposes you to all three undesired effects. In absence of such a definition, salespeople will decide on their own, where to go hunting and the chances are high that they miss the attractive accounts.

More information on this phenomenon can be found in Frank V. Cespedes excellent book   Aligning-Strategy and Sales

2.       Is an adequate value proposition available for these ideal accounts?

In absence of such a definition especially profitability and customer satisfaction are endangered.

3.       Do you know how many of the ideal accounts have never before bought the category you want to sell to them?

Not knowing the answer to this question can particularly hamper profitability.  Furthermore it might take longer for your initiative to meet the expected growth targets.  

Accounts, never having bought the category you want to sell to them, have a different customer journey than accounts that are new only to you but have previously bought the category from competitors. Therefore, you need different strategies matching the respective customer journey.

In the first case you can gain market share if you can penetrate the account by facilitating the “buy learning” journey.

In the second case, you have to displace the incumbent competitor (“buy wallet share”).  Displacement of incumbent competitors most often results in price wars.

If your company does not have an operational excellence strategy in place, which provides for a systemic and sustainable lower cost structure, profitability is highly endangered.

Product superiority with according value propositions is another alternative to displace incumbent competitors without risking your profitability level.

4.       If you have to attack accounts held by incumbent competitors, do you now their purchasing strategy?

Ignoring this question can lead to overoptimistic growth expectations. Many purchasers follow dual vendor strategies. They know that for remaining a valuable account to the second vendor, they have to leave them a part of the wallet share attractive enough so the vendor does not “fire” the account.

5.       The follow on question then is: Does your expectation of the wallet share you must aim for, so the account is attractive to you, match with what you can realistically expect given the competitive situation in the account?

Knowing the answer to this question makes you more selective of the new accounts to pursue and is the basis for setting realistic growth targets.

Conclusion

In absence of a company strategy, where ideal customers, appropriate value propositions, market saturation level, competitive strategies and purchasing strategies of the ideal customers are known and aligned, “capturing new accounts” risks to be detrimental to the health of your business.

Call to Action

Answer the 5 ugly questions. They are ugly because you might come to the conclusion that “capturing new accounts” is actually a less attractive objective than you had hoped for.  You might then be motivated to find more suitable alternatives to grow the top line without jeopardizing the health of your business.

Should you need help, you can give me a call.

A Strategic Guide Through the Perfect Storm for Sales Management

Changed customer behavior and increased negotiation power of the customer induced by technology together with the tough economic conditions create the conditions for a perfect storm that hardly can be weathered by sales management with tried and trusted old tactics.

The book “Rethinking Sales Management” by Beth Rogers is,as the subtitle suggests, “a practical guide for practitioners” how to become more strategic to cope with the challenges of these new normal times.

Beth Rogers has extensive practical experience in marketing and sales roles which she has complemented by in-depth consultancy, research and teaching. Her book therefore stands out from most sales and sales management books. Her advise is not of the type “here is how I was successful and I do not see why this should not work for you”. Instead, she provides the readers with strategic models and facts helping them to understand the 'Why' of a situation and then deduct the best course of action suited to context they are in.

In the era of customer orientation, Rogers argues, CSOs should have a seat at the strategy table of their enterprises. The first part of the book is an introduction into strategy; enabling CSOs to get familiar with the language talked there . The first chapter introduces well known strategic concepts like the business portfolio matrix (BCG matrix) used to categorize strategies from a enterprise point of view. (inside -out)

In the second chapter, the focus is on the purchaser's perspective of strategy (outside- in). Rogers suggest the purchaser's portfolio matrix as the vehicle to analyze this point of view. This concept is probably less known among C-level executives. Understanding it gives the CSO the opportunity to bring added value to the strategy discussion.

The purchaser's portfolio matrix first presented by Peter Kraljic in an article of the August-September 1983 issue of the Harvard Business review and then reintroduced by Rackham and DeVincentis in their book “Rethinking the Sales Force” recommends that purchasers should adapt their strategy depending on the complexity of the supply market and the financial impact of the purchase on the enterprise.

In the third chapter, the B2B Relationship Development Box is discussed in depth. This box, also a 2 by 2 matrix, combines the enterprise (internal) view with the purchaser's (external) view. This model suggests that the nature of customer relationships depends on the value the customers bring to the enterprise and the value the enterprise provides to customers (in their view).

The Relationship Development Box is the essential tool for CSO's to understand how to organize their resources to execute on their strategies. The second part of the book therefore shows how this tool is used. Each quadrant of the relationship matrix is explained in a separate chapter As not all relationships are worth to be maintained, this part also contains a chapter about exit strategies.

The four relationships discussed are:

• Strategic (value of the customer to enterprise is high and value of the enterprise to the customer is high). This is the quadrant where Key Account Management is the best fit.

• Prospective (value of the customer to the enterprise is high and value of the enterprise to the customer is low). This relationship is of transitory nature. Business development is the strategy that can elevate this relationship to a strategic one. But one cannot exclude that the value of the enterprise to the customer cannot be increased. In this case, the enterprise should move the relationship to the tactical quadrant in order to avoid continuous over investment in the relationship.

• Tactical (value of the customer to the enterprise is low and value of the enterprise to the customer is low). This quadrant is often considered as not very attractive. Considering the use of other channels than a direct field sales force (e.g. Telesales or Channel Partners) is though more viable than considering this relationship as transitory and trying to elevate it to a strategic one.

• Cooperative (value of the customer to the enterprise is low, value of the enterprise to the customer is high). This is probably the most delicate quadrant to handle. The balance must be found between avoiding over investing in the account and risking competitive vulnerability. The cooperative relationship might therefore also be of transitory nature.

The third part of the book entitled Strategic Focus for 21-st Century Sales Management

addresses four weaknesses observed in the management of the sales function.

• Reputation Management can be seen as a part of corporate reputation management brought to the fore by new regulations like the Sarbanes-Oxley Act. Rogers though also cites results from own studies where “breach of trust” was quoted as the single most likely cause of the disintegration of a customer relationship. Maintaining integrity of the sales people as a form of reputation management has though also a direct impact on sales performance. Undue internal pressure and variable pay schemes can negatively influence this performance.

• Working with Marketing can be a source of so far untapped profitability. Kotler, Rackham and Krishnaswamy in their article in the Harvard Business Review of July/August 2006 believe that there can easily be a gap of 20% in profits between organizations where marketing and sales are aligned compared to companies where sales and marketing work independently in separate silos or even worse fight each other. Also this chapter has a link to the Relationship Box. Rogers suggest that Marketing should have the lead for tactical relationships, whereas Sales should be leading for strategic relationships.

• Leadership: Five tools are discussed: Awareness (incorporating self awareness and awareness of others), Framework (strategy and values), Extensive Communications, Coaching and Development and finally Trumpeting. The last point is probably not readily understood. It means telling and rewarding people for things they have done right. Although financial rewards are the culture of sales, those rewards do not necessarily have to be only in monetary form.

• Process Management as a necessary prerequisite for continuous improvement is discussed in this chapter.

This book is a great eye opener to sales people contemplating to become sales managers. After having read it, they will understand the kind of strategic thinking needed to succeed in this role. For sales managers and executives, coming to the realization that their current approach will not bring the expected results in the future, it is an excellent source for understanding how they can evolve their role and being more successful with a strategic approach.

Revenue Growth Strategies are not an Oxymoron....

in this down economy. On April 30, 2009, I will hold a webinar over at the Top Sales Experts entitled “Where is your revenue Growth to come from?”. Having lived almost an equal amount of years in the corporate strategy sphere as I live now in the Sales Consulting, Teaching and Coaching world, I have helped many Sales Executives and Managers to get more clarity on their Sales Growth Strategies.

Based on this experience, I have now develop a new road map to clarity. I will present this for the first time to a wider audience on said occasion.

Lots of advise is available to salespeople and how to adapt to these turbulent times. For example, I have heard Jill Konrath saying in her fist Sales Stimulus preview call that salespeople need about 50% more leads to have a chance to make their numbers this year. I will show you on a high level where to look for those leads without running the risk of creating collateral damage. Getting clarity on this will also help you to work smarter instead of harder. Others have suggested you should prune your pipeline and focus on the best opportunities. These can seem as contradicting suggestions. I will show you that the question is not either/or but doing both and assuring on strategic level, that your pipeline does not fill with hopeful but with realistic opportunities

I will introduce you to four generic sales growth strategies. which you select based on where you are finding your leads you want to covert into revenue sources Although defining strategies is important, their flawless execution is the real key to successfully grow your revenues. I will therefore discuss key success factors helping you for flawless execution. Knowing those factors can also help you to have meaningful discussions with marketing on how they can support your strategies.

Depending on where you find your leads, the time it takes to turn them to revenue contribution will differ. Being aware of this, will help you to have more realistic revenue projections.

Sales managers will learn what type of people resources they need for flawless execution of the four generic strategies.

Often, I hear sales people saying, that they could be more successful if the company were to provide them with the right products at the right price points. You need not necessarily to wait for these things to happen to execute your growth strategies. I will help you to get clarity where you can act alone and where only a tight alignment between your strategy and the corporate strategy well lead you to success.

This is not a promise for the silver bullet. All it is, is a framework pointing you to the aspects that you have to consider when defining successful, executable revenue growth strategies for your business. Although Sales executives and managers are profiting more from this concept, particularly B2B sales people with account management or territory management responsibility can also apply parts of the concept.

Developing strategies is often perceived as an abstract task aloof from reality. I promise you that I will make it come to life through examples.

If you are interested to learn more, you can register here for the webinar taking place on April 30, at 1 p.m. US Eastern Time/ 7 p.m. Central European time