"CEOs frequently acknowledge that they don't have a formal process for growing sales. Not to worry, they say, because they have "sales-and-marketing" people who take care of that for them. Such a response suggests that the CEO is not sufficiently engaged in the growth of the business and is unaware of the clear distinction between the sales and marketing functions.
The role of marketing is to identify qualified prospects and deliver them to your company. A qualified prospect is a person or business that will likely value your product or service in the foreseeable future and consider buying from you. Prospectors are people who investigate the universe of suspects to identify those who may value your offering and meet your criteria for location, size, credit rating, and more. Contact information for buyers and key decision-makers is verified and compiled together with relevant statistics into the prospect list.
The function of sales is to convert qualified prospects into customers. Sales people develop relationships with prospects in order to identify their buying behaviors and help them understand their needs. A skilled salesperson will help a prospect identify "pain points" that can be relieved by use of your company's product or service, and then communicate your solution in a way that is most comfortable for the prospect.
Certain aptitudes and temperaments are essential for people to be effective in sales. They must be excellent communicators with the ability to listen carefully, analyze quickly and speak convincingly. Salespeople must be confident of themselves and of the product they are selling. They must also be winners — never satisfied with second place. Salespeople who convert prospects into customers are called hunters.
A different set of aptitudes and temperaments are required for success in marketing. Prospectors must be skilled in research, statistics and spreadsheets and be comfortable working alone or in small groups.
The specific aptitudes and temperaments required for success in sales and marketing roles must be taken into account in the hiring, compensation and retention of these key people. Whether hiring from the outside or assigning from within, objective aptitude and temperament assessments are highly recommended. Lexington-area CEOs have had good experience with CPQ (www.ashertraining.com) for sales and marketing aptitudes, and DISC (www.bartellbartell.com) for temperament.
A few words about hunters: Given their skills and their nature, hunters have little patience for administrative tasks. Asking them to sort through unqualified leads or attend endless meetings and planning sessions will cause them to leave. What you must insist on, however, is that your hunter: (1) engages in training on your company's strategy, values and products; (2) adheres to key predictive indicators (KPIs) such as number of new prospects per week in the pipeline; and (3) makes the proper entries into your customer relationship management (CRM) system. Because excellent hunters are a rare commodity, they are highly compensated. Hunters are most comfortable with little or no salary and a generous commission structure. While they are often the highest paid people in the company, their cost is almost entirely variable. CEOs must be careful in setting up commission structures for salespeople. A few rules of thumb: Commissions should be higher for new business than for recurring business (for example, 3 percent on sales for the former and 1 percent on sales for the latter). The commission rate should increase with volume, for example offering 3 percent for the first million dollars, 3.5 percent for the second million, and so on. And, consider paying commission on gross margin rather than on sales to encourage more profitable accounts.
Smaller businesses may not be able to afford in-house marketing and sales people. Some or all of these functions can be outsourced. In general, lead generation (prospecting) can be contracted to one or more firms who specialize in this field. While sales can also be outsourced successfully to "rep" firms, make sure that the hunter you select personifies the value of your offering and the values of your company.
Every business must have a sales process that is well conceived, documented and implemented. Emanating from the strategic plan, the sales process should spell out how qualified prospects are identified and then converted into customers, including the use of tools like the CRM system. Because the CEO is ultimately responsible for strategic growth, he or she must be engaged in the development of the sales process, in the hiring and training of sales and marketing people, and in the formulation and monitoring of KPIs.
Louis Allegra is president of Allegra Management Consulting, Inc. He chairs CEO advisory boards in affiliation with Vistage International, the world's largest CEO membership organization, to help Lexington-area executives become better leaders, make better decisions and get better results. Lou can be reached at Louis@AllegraManagement.com.