Emerging from our research is a framework that CEOs can use to develop and execute a sales strategy. The framework takes the classic idea of the three C’s (Costs, Competitors, Customers) to the implementation level with a focus on sales force execution.
Costs: Different companies making similar products may have a very different cost of sales. Businesses should expect their sales costs to decline systematically, at a rate that can be accurately predicted, as they gain selling experience. The amount of labor that goes into making a sale declines predictably as the number of sales are increased. Typically, the 4th widget sold should take only 80% of the labor required to sell the 2nd widget, so to speak.
Competitors: Understanding your company’s selling cost in comparison to your competitors’ selling cost builds the foundation for our second framework, the growth-share matrix. The idea can be summarized as follows: Some sales territories are growth businesses. These territories automatically compound because of repeat purchases. Some sales territories are stable businesses that throw off cash and maintain their value over time. Some sales territories are declining businesses and should be managed for cash flow. Still others are speculative – they either pay off or they do not. The key is how to manage each sales territory.
Customers: The needed sales strategy work just discussed has focused on understanding costs relative to the competition, and mostly reducing them. This framework also covers how to better reach customers where the focus is on value creation. The challenge with Sales Strategy is in implementation. Once you have designed the sales strategy and aligned the organization around it, the task of executing the strategy remains. At the heart of implementing sales strategy is the conception of a sales force as consisting of all the discrete activities it performs, “generating interest”, “developing needs”, “differentiating against the competition”, and “overcoming obstacles”.
The Call-To-Action message is this: How does your company’s performance of activity X measure up to your competitors’ in terms of value delivered? A framing device, such as the sales value chain analysis, can isolate every single component activity that goes into winning a deal. This breaks up the overall sales process up into units that can be benchmarked against other divisions, sales geographies, other companies, even other industries, that are performing the same activity.