Your Top Three Budget Killers
Revenue is the 'oxygen' of any business.
It is the starting line of the New Year and sets the pace for the next 12 months. As you race through 2016, if you are hitting or exceeding your revenue line, life is good! Your people experience more opportunities for advancement, you can invest more in technology to further accelerate results, you can afford to innovate more and your people are happy. Your customers experience this and remain loyal. You are breathing easy.
On the other hand, not hitting your revenue line chokes your entire organization. Every missed dollar requires that between three and six dollars come out of the costs. That means less people, less investment, less marketing, less R&D, and less ability to meet customer needs and wants. Your customers experience this as well and unfortunately, the defections begin. You just can’t cut your way to growth.
Since the sales team is ultimately responsible for ensuring your top line revenue, what then are the top three reasons that could cause them to fail and destroy your budget? According to Butler Street Research, CSO Insights and Qvidian Customer Survey data, the following are consistently found to be the top three reasons that sales teams fail to achieve budgeted revenue numbers:
1. Sales representatives are unable to effectively communicate value, resulting in too many 'no decisions'
With only 40% of forecasted opportunities actually closing in most organizations, the need for the sales team to understand where the buyer is in the buying process and what actions are necessary to advance the opportunity stands out as the biggest area for improvement. Further, arming the sales team with the ability to articulate the value your solution delivers, customized to the buyer’s situation is paramount to success. If the sales team can clearly communicate in a way that resonates, differentiates and substantiates the value of your product or service they can unclog the pipeline of stalled opportunities and accelerate results.
2. Managers can't effectively coach the sales representatives
Sales managers must be equipped with visibility into the pipeline, be afforded the time and trained on the skills to coach the team to success. Often the sales leader is overlooked as all the budget dollars are being spent on training the sales representative. Understanding the specific sales performance indicators by opportunity and how to manage to them is paramount for effective pipeline movement. Investing in the Sales Manager has a payoff 8-10 times greater given the span of control. Make sure they are not spending the majority of their time pulling reports and in corporate meetings. Give them time and skills to lead. Their leadership will do more than keep the pipeline moving, they will help each individual be successful, engaged and retained.
3. Ramping up new sales representatives is too slow
60% of organizations report that it takes upward of six months for a new sales representative to be fully ramped up, with nearly 20% reporting that it takes over a year (see chart from CSO Insights 2015 Sales Optimization survey). Growth budgets don’t usually account for sales turnover, open sales days and the resulting ramp up time. They may however, include increasing sales head count. Given new hire ramp up time, if may be a better pay off to direct some of the budgeted new hire funds to increasing the effectiveness of the current sales team.
Butler Street’s #1 focus is to help companies and their people grow. Our client development system of reinforcing activities will enable you to advance opportunities through the pipeline and hit your revenue line. Click CONTACT for a free consultation about how we can help you achieve your 2016 budget.
Mary Ann McLaughlin serves as a Managing Partner at Butler Street, a leading management consulting, training and research firm that focuses on client and talent development. Prior to Butler Street, she served in executive roles for 13 years including chief operating officer, president and managing director. A Six Sigma Champion certified executive, McLaughlin leverages her robust process background with 32 years of sales and operational experience.
A recreational triathlete, McLaughlin has completed three marathons (Chicago 2x, Marine Corps) and numerous triathlons. She holds a B.S. in Marketing from Bradley University.