Strategy Mapping

Strategy Maps are often used by management to determine the appropriate alignment in a company, and to also identify and measure the metrics that support that alignment. Strategy maps can be a useful tool to focus your company’s finite resources so that they are effectively utilized. I really do not see a strategy map as a sales or marketing tool, but rather a management tool that that reaches across all departments.

Most of the time you will see a strategy map represented as a 2D graphic in ConceptDraw PRO or Microsoft Visio which then visually shows all of the dependencies between the identified areas in the company that are being measured and what is being measured. I have built a mind map that does this in a mind map format rather than a static 2D business rendering. The great thing about using a mind map is that once the map is complete it can then easily be exported to PowerPoint, as a slide presentation. This makes it is then easy to communicate to larger groups of stake holders.

The strategy map template I developed, I have placed at MindMapPedia as a free download so any one can download and use it http://www.mindmappedia.com/?id=107455082; if you are interested in a free trial of the mind map software, ConceptDraw MINDMAP, I used to construct the strategy map template you can download that at http://www.conceptdraw.com.

Customer Communication is King -- Sales and Marketing Team Work

It is critical at whatever stage the economy is in, good times or bad times, for your customer messaging to ring true with your target market. If the potential customers you are talking to do not understand what you are trying to convey, then your company is in big trouble. And that is spelled with a capital T. If your salespeople send more than a few percent of their time trying to explain what it is you as a company are trying to convey, you are then not in an optimum sales situation.

I have just a brief example of shaping the message to the target audience. When my son was very young his favorite fast food was a cheeseburger from McDonalds with ketchup and pickles only. He would go with me and tell me he wanted a cheeseburger, but please only ketchup and pickles on it. When I ordered it the way he wanted it ordered the McDonalds clerk would repeat it back multiple times, and with a high degree of certitude my son’s cheeseburger would have either mustard or onions or both on it. This would cause me to trek to the counter to exchange the cheeseburger for one that would meet my son’s standards.

This disconnect in communications got old very fast. McDonalds would always be gracious enough to make another to my son’s specifications, but the hassle quotient was off of the scales.

I started thinking about the issue at night once and determined for a product that contained only a bun, hamburger, cheese, onion, mustard, ketchup and pickle there had to be a better way to communicate my son’s requirements and make the process easier to digest.

I determined that I would order my son’s cheeseburger by what he did not want on it. “One cheeseburger with no onion and no mustard, please.” The clerk would repeat back, “Cheeseburger, no onion and no mustard.” Bingo, the rate of successful ordering for my son’s cheeseburger shot through the roof.
But there was still one small problem. When my son heard me order in the new fashion he would say to me, “But I want pickles and ketchup only on my cheeseburger.” With my son it was very easy to communicate to him that because of the finite number of ingredients only ketchup and pickle on a cheeseburger was exactly the same as no onions and no mustard on a cheeseburger.

My Son was happy, I was happy, the clerk was happy and somewhere Ronald McDonald and the shareholders of McDonalds were happy because the cost of preparing my son’s food had been reduced.

I use the above only as an example of customer communications and how critical it is. Lack of clear communications could be why you lost an account, why your close rate is not as good as your competition, or why you often leave your customers with a dazed and confused look on their face. Talk to your key salespeople and find out if messaging might be getting in the way of representing and selling your company. If it is, then fix it.

Forecast, Pipeline and Revenue Target

Sometimes the above three items are used interchangeability when talking about sales, but they are three very different items. A company’s revenue target is found in the budget, and is a revenue number that all expenses and profits are based on. The revenue target is not the sales forecast; it is the target on that is agreed by management as an amount that has a high probability of being achieved for the year. The Revenue Target is projected for the year and is then segmented into Quarterly Revenue Targets, and Monthly Revenue Targets. Of course it is important that this number be as accurate as possible, because the organizations spend side of the budget hangs off of this number.

Pipeline

The Pipeline is 100% of the available business that is seen by the sales force. Anything that is in the pipeline is potential; anything that is in the pipeline is vulnerable to competitors, economic factors, and changes to business priorities. Over time an organization understands what size pipeline is necessary to meet the revenue commitment. Time is an important factor when looking at pipeline potential. What is the available pipeline for the next month, for the quarter, the year? Time is an important factor in any pipeline size determination. Many sales managers develop a rule of thumb for evaluating the pipeline. I have heard 2x revenue, 3x revenue, 4x revenue, etc. Over time an organization can develop a multiplier that looks like it predicts current revenue requirements. It is really not possible to do this because of short term changes that can occur in any sales model. It works most of the time, but sales management should really segment the pipeline or sales funnel to see what the potential deal flow is. Another item that factors into pipeline calculations is the sales cycle. Sales has always the clearest view of revenue potential in the current sales cycle, it gets fuzzier in the next sales cycle period, and by the time you reach the third sales cycle period it becomes a guesstimate. Say the average sales cycle is 3 weeks. That means that looking out 3 weeks should be fairly clear to sales management. There is still a good idea of 6 weeks out, after two sales cycles it then becomes an educated guess.

Pipeline management is so important; there must be a clear understanding of what can be added and what can be subtracted to the pipeline. In some organizations sales managers will demand that sales potential be added to the pipeline, to support revenue targets. This is destructive behavior because it does not give a realistic view of what potential there is. Also, sometimes sales reps will take items off to cover mistakes. Both the addition and subtraction of sales potential to the pipeline should be well understood and there should be at least a minimum amount of checks and balances to make sure the pipeline is a valid number. If your pipeline is garbage then the rest of the sales process will be garbage.

Forecast

A sales forecast is not a presentation of the pipeline, backed with a statement such as “The pipeline is 3x our revenue requirements so we are good for the next month”. A forecast is prepared by sales management with the pipeline being only one element. A forecast is made by sales management taking into consideration all of the variables in the sales process and then informing management of the expected outcome compared to the revenue requirement. The revenue requirement might be 1 million, but that is far from a forecast. The forecast is what sales management feels it can deliver. The forecast number could be 2 million or .5 million, the number is what the number is. I myself do not like to give a single number, but most of the time 2 and if there is a big swing deal that may come in.

An example of a forecast could be that you be report 90% probability for 10 million, 95% probability for 9.76 million and 25% probability for 11.13 million. The 25% probability is tied to a potential big deal coming in. This method of forecasting when used on each individual in the sales team is a great way to normalize a sales department; and this helps sales management have a better view of what is going on.

Conclusion

All three, forecast, pipeline and revenue target are important to a sales department, and the understanding of the sales dynamics in your organization. As you approach the extremes of the bell shaped curve on things such as sales cycle length, you need to really pay attention to the impact on sales performance. The moral of the story is to know why you are doing something, as opposed to doing it because that is what you learned.

Revenue...

When setting revenue goals for the year a company should always prepare a top-down and a bottoms-up look at the revenue projections; and then work to gain alignment. When preparing the bottoms-up revenue number one should look at the revenue per sales individual and then make a list of what factors may accelerate or decelerate that number. Sales training, product training, more marketing spend, new product introductions, shape of the economy, ability to compete, changes in pricing, big changes in partners, new competition—one can go on forever on items that have an impact on a salesperson’s performance. The final determination that needs to be made from looking at all of these factors is to decide if your sales reps are going to sell more, the same or less than last year.

If you determine they are going to sell more, and history gives some supporting evidence of that, then what is the multiplier. Is it 110%? If you have 20 sales reps, and they averaged 1 million each last year, and the revenue forecast for next year is 40 million, the odds are that you will not hit your number.

What are you going to change? Are you going to double your sales force? That may work, but many times when you are growing your sales team the law of diminishing returns kicks in. When you get to this point it is really important to understand your sales force and how they compete. It is also important to understand why you win deals, and of course why you lose deals. I find that most of the time, it is easier to achieve a boost in sales by looking at why you lose deals (if you have the ability to change the circumstances).

I have seen so many sales managers when put on the spot by management, over an underperforming sales team, do not understand the dynamics themselves. If the sales manager does not understand the internal dynamics then any solution that they come up with is just an educated guess.

So the short answer is. The way to plan on how to size your sales force to produce the anticipated revenue number is to understand your sales force and what are the key leverage points you need to work with to meet your company’s sales objective.

The most important background piece on this is to make sure the rest of the management team understands and agrees to the commitment that THEY need to make to take the company from point A to point B. A sales team can fail because of lack of commitment from the entire management team. It all comes down to a sales team needs a plan, the larger the team the more details and resources need to be spelled out. A good sales team needs lots of support, leadership and management to function at its very best.

Best Sales Practices

A recent event triggered a chain of thoughts for me. Just about 5 years ago a CEO of a funded startup company sent me an email about the sales tactics we using at the time. He stated in his email that when looking at the market, the price point, the sales cycle and the weather that our sales tactics were out of place. That the company I was managing the sales process for was going to be going out of business, unless we changed our tactics to match his suggestions (he included these in his email.)

The event that I referred to above is a piece of news I saw the other day, where the company of the CEO who emailed me was going to stop conducting business; while the company I worked with 5 years ago just keeps rolling on. This piece of news brought to mind a lesson that I learned very early in my career, just because something is a best practice in one organization, does not mean that it will be a best practice in your organization. And that sales tactics should be adaptable as conditions change. Everything changes overtime, and a sales tactic that is spot on today, may be not as good of a solution when market conditions change. And market conditions always change.

When looking for a sales leader an organization should look for a candidate who can take what they know, and apply it in an intelligent manner to the company’s situation. Never settle for someone who is going to take their experience and force fit it into your organization. Something that I see intelligent individuals overlook all of the time is that once a “Best Practice” leaves the environment it is a “Best Practice” in, it is just a case study that may or may not apply to your unique set of circumstances.