Order From The ChaosSituational Sales Management
By Ken Thoreson
Contributing Writer, Minnesota Technology magazine
No matter what the size, truly effective businesses use a systematic approach to all aspects of their operations—from telephone calls coming into the office to shipping products out to the end-user. They consider details and measure quality. Sales management is no exception. In the early stages of a business, the entrepreneur may do seat-of-the-pants selling along with everything else from product development to shipping the finished product. Yet, as a business progresses, effective and systematic sales management becomes increasingly crucial. Understanding the sales management process—documenting it and executing it effectively—separates the merely average companies from those that exceed their corporate revenue goals.Rate Your Company
The more the company grows and changes, the more the person in charge of sales must put systems in place and create order from chaos. Over many years as a sales person and sales manager I have developed a theory that I call the Situational Matrix of Sales Management. In short, the more the company has the potential to grow with new products or services, the more thoroughly the company must define and manage its sales system.
This theory revolves around four components: the company's overall business position, the maturity of company's products and service, the effectiveness of its distribution channels and the sophistication of the sales management systems.
To understand the concept, take a look at the diagram below. The left horizontal axis represents the company's overall business position and the right horizontal axis the effectiveness of the distribution channel. The upper vertical axis is defined by the product/service maturity and the lower vertical line describes the sophistication of the sales management systems.
Rate each component 1 through 5 for your company. The company's business position: 1 = Development Stage, 2 = Growth, 3 = Turnaround, 4 = Steady, 5 = Mature. On the right horizontal side we describe the maturity of the Distribution Channel (Direct or Indirect): 1 = Nonexistent, 2 = Weak, 3 = Growth, 4 = Established, 5 = Dependable.
On the upper vertical axis rate the Service/Product position: 1 = Creation Stage, 2 = Launch, 3 = Market Awareness, 4 = Market Acceptance, 5 = Refinement. On the lower vertical axis rate the sales management sophistication: 1 = None, 2 = Testing Concepts, 3 = Minimal Systems, 4 = Established Process, 5 = Sophisticated Reporting
In the past, when markets and opportunities did not move as quickly as they do in today's business climate, most companies' management processes would move along all four axes at about the same speeds. So, if one component worked at a four then the others would work at similar levels. Not so with rapidly growing companies launching new products. Things get out of balance. The situational matrix demonstrates this basic premise. If a new product or service affects the company's maturity in terms of growth or turnaround it requires a more sophisticated sales management process.
A development stage or growth company entering new markets with new products must establish sales management systems to attract, build and manage a distribution channel. For example, even in a mature company with an established distribution channel, a new Web-based e-commerce product quickly changes all aspects of sales management including recruitment, compensation, account management and measurement tools.
The overall situation of the company affects all aspects of its sales management process including strategies, sales goals, compensation and much more. It provides a framework to begin developing or refining your current sales management plan. A solid plan enhances the sales leader's ability to clearly communicate vision, strategy, tactics and set standards for the performance of the sales team.
Individuals responsible for successful and effective sales management undertake the necessary research, think through possible actions, develop focused processes and set standards of measurement. If an organization's revenues have flattened or declined, sales managers have clearly failed or missed critical links within the sales management structure.Components of a Sales Management Plan
The question is how to start developing this structure. A sales management plan must coordinate with the corporate business and marketing plans. People often ask, "How do marketing and sales differ or how do they work together?" A common answer is that marketing does the product positioning and planning and if the plan doesn't work, the company fires the sales force. What this attitude reveals is that we measure sales by how well the sales force executes the company's overall business and marketing plan.
These are the areas that must be defined in the company's sales management plan:
- Business and market overview
- Monthly activity tactical plan for the next six months.
- This includes: trade shows, new product promotions, customer promotions
- Target account plan
- Sales organizational plan for the next 24 months
- Definition of the sales process, measurement targets and channel strategy
- Sales technology plans and process
- Recruitment strategy, process, goals
- Development of strategic partners and alliances
- Revenue and quota forecasting tools
- Compensation plans and objectives
Upcoming columns will examine in more detail the specifics of creating an effective sales management process. We'll cover how to build a predictable revenue stream, interviewing and recruiting salespeople and how to keep the sales pipeline full while making time to accomplish the rest of the goals on your "to-do list".