Sales transformation core beliefs.
My perspective based on several sales transformation projects with private equity backed portfolio companies.
The sales function needs to be aligned with the overall financial strategy.
Management’s financial priority - whether it’s on revenue growth or EBITDA growth - should dictate the processes and incentives that drive the sales function. This is imperative for private equity backed companies where the sales team is often made up of the sales teams from different acquired companies. Aligning sales culture with management’s financial directive requires strong communication from the C-Suite and variable pay compensation plans that incentivize the right behaviors. I have advised companies to hire Chief Commercial Officers, restructure their sales organization, and rework compensation plans to address their misalignment between sales strategy and overall financial strategy.
Business Development & Account Management functions should be separate.
The ideal sales structure for private equity backed companies separates the business development and account management functions. Each function requires a different skill-set and mindset. With a few exceptions, most sales professionals are not able to successfully execute both responsibilities. I believe in a structure where dedicated business development professionals hunt for new customers and dedicated account managers nurture existing customers. When a firm has sales reps handle both responsibilities, reps tend to focus on the account management side since the client already has a relationship with the company. I’ve seen this lead to customer and market concentration risk and a lack of a developed sales pipeline. I advise companies to keep these functions separate with each position having a uniquely tailored variable pay compensation plan.
Don’t junk up the sales process with internal bureacracy.
An optimized sales process means reps are able to do their job without being encumbered by internal politics, layers of approvals, and other bureaucracy (referred to as “Junk” here). I’ve seen sales processes with so much junk that reps were consistently late to respond to quotes, leading their potential customers to look elsewhere. I believe in sales processes that place a greater level of decision making in the hands of sales reps than many management teams may be uncomfortable with.
Variable compensation should be based on what sales can control.
The variable compensation portion of a sales rep’s total compensation plan should be based on milestones that they alone can control. This requires management to have a great understanding of the entire sales process. I’ve seen companies take commissions away because a factory cannot fulfill the order at no fault of the sale person. This can be demoralizing and a time-waster for the sales rep. I advise companies to create incentives that balance moving the sale in the right direction while also rewarding the rep for actions they alone control.
Sales transformation case studies
Connectivity solutions provider
Aerosol manufacturer
On-site energy provider