The “winning more sales” industry is huge, crowded, and noisy; the “winning profitable sales” industry is, well…disturbingly quiet. There are a few sales performance companies who put words like “profitable” into their taglines. Unfortunately, precious few know how to turn tagline into profit line.
If you are a sales leader, you may or may not care about the difference. Warning: there is nothing a corporate leader cares about more. If you lead a company, I’d like to clarify you the differences. If you lead a sales organization, I want to prepare you for when your CEO wants to have this conversation.
World Class Sales is a Challenge
Selling isn’t easy. According to CSO Insights, “world class” sales organizations make up only about 5-9% of companies each year. Without gratifying the needs of research methodology wonks (like me, I’ll admit), suffice it to say that I think this year’s definition of “world class” is as good as any they’ve ever come up with. This year, the world class label applies to companies who (I’m paraphrasing below. If you want a copy of the report, contact me):
- Add value every customer interaction, every channel.
- Build persona-specific customer value consistently, from first web click through installation and customer support.
- Align Cross-functionally (although CSO Insights takes a narrower view than I do about what functions to include) to deliver a consistent experience,
- Continuously learn and improve by building a great coaching infrastructure.
- Enforce rigor around call planning and forecasting.
- Leverage their sales analytics as a sales improvementtool, not just sales
- Use a purposeful talent strategy.
- Have built a system of finding, harvesting, and replicating best practices.
Building an organization with all of these characteristics is a challenge. Regrettably, achieving “world class” might simply be achieving the CEOs lament: winning sales without pricing confidence. While this represents improvement for many companies, most CEOs want more.
Selling Profitably Isn’t Much Harder. But it’s Very Different.
Selling profitably means selling at a win-win price that reflects customer value. Most sales training companies help sellers build enough value to win a sale, but not to win it at a value-based price. Unexpectedly, the higher value-based price coincides with higher customer preference.
Let’s look at some of the differences between world-class sales, and world-class profitable sales. Comparing/contrasting with the list above:
- “Adding value during every interaction” goes from “figure value out for yourself” to “use the persona-based value propositions we give you” to “developing deep understanding of customer value and provide specific tools for salespeople to build it”.
- The entire customer experience evolves beyond providing persona-specific value messages. In addition, value-enabled sellers gather customer insights and build customer value.
- Cross-functional alignment extends beyond the walls of the sales and marketing silos. In contrast, everyone who touches a customer has a value-building and value-insight-gathering role.
- Great coaching infrastructure is equally valued. What’s coached, plus who all is coached expands.
- Customer value shapes call planning and forecasting more directly. Think about it: if you know clearly just how highly a customer values each offer you will make next month, how much more accurate do you think forecasts will be?
- Sales analytics are even more focused, emphasizing how sellers focus on value.
- The talent strategy is every bit as important.
A few years ago, a VP of sales with a Fortune 500 company described this as “elite level” selling. I can’t argue, and maintain that it’s within the reach of most sellers. As your organization begins building a value culture, it takes on these characteristics.
Pricing is Profit. Value Shapes Pricing.
As your company achieves elite selling level, you have the tools to price with confidence, and with higher customer preference.
Ask your CEO if he/she’d like pricing confidence. In preparation, do yourself a favor and do a quick math exercise: calculate 1% of your company’s revenue, then add that number to your net income line. Next, calculate that increase in profitablility as a percentage. You just calculated what your CEO could report to your company’s owners if your sellers simply added just 1% to your company’s pricing. Phrased differently, this is how profits would increase by discounting just one percent less.
If your CEO indicates that it seems worth pursuing further, dig a little deeper. Ask:
- Does everyone who touches my customers (aka sellers) regularly conduct commercial/value conversations with their customer contacts?
- Do my sellers know how my customer makes money…and all the ways my offer can help them (hint:most “world class” selling organizations don’t)?
- Do my sellers know how to measure customer value with a customer?
Bring your answers to me, and let’s see if we can have some fun together building your business profitably.
To your success!