Over more than two decades as a CEO, Jack Lynch has led various software and education enterprises, including Pearson School Technology, and a startup, Big Chalk, but it wasn’t until he came to Renaissance Learning, a K-12 educational software company based in Wisconsin Rapids, Wisconsin, that he saw just how much heartfelt emotion a company’s products could inspire.
“If I go into an elementary school, it’s not uncommon for the principal to walk up to me and give me a hug,” says Lynch, who joined Renaissance in November 2012, about a year after it was acquired by Permira, a UK-based private equity firm. “I’d never experienced that kind of open affection before. I think it’s because customers know we’re a mission-driven company and we genuinely care about making them successful. It’s not just something we say in marketing materials. It’s because they’ve had such a great experience with our product, they had a great experience with our customer service organization, and they’ve had a great experience with our salespeople.”
Investors have continued to be intrigued by Renaissance’s potential: In February 2014, Google Capital made a $40 million strategic investment in the business, and less than a month later, San Francisco-based Hellman & Friedman, another private equity firm, agreed to acquire the company for $1.1 billion. Through all the changes, though, one thing stayed constant: the company’s commitment to its mission to improve K-12 math and reading skills through such products as Accelerated Reader and Accelerated Math, both guided learning programs, and the STAR assessment system, which tracks student performance in reading and math.
When he was first approached by an executive recruiter to consider joining Renaissance, Lynch was a member of the executive board that ran Wolters Kluwer, a global information services company based in the Netherlands. First, Lynch worked out of their offices in Belgium, and later he returned to the US with his wife and two children to work from Boston. In that capacity, he oversaw global shared services, technology, business development, and the transport services business.
He had to think long and hard about making a change. “I told the recruiter that life is short and I’m not going to live in the Midwest,” says Lynch, who did his due diligence, including a review of the educational research on the efficacy of Renaissance’s products. “I was pretty well convinced by the time I decided to accept that this was probably the best company in the education industry I could work for.”
One of Lynch’s first priorities as CEO was to rethink how Renaissance sold to those devoted existing customers and prospected for new ones. “When I joined the organization, essentially what we had was a sales force that covered the revenue versus the opportunity,” explains Lynch. “What I mean by that is the company grew up serving its customers and when it added salespeople it would add salespeople to cover the growth in its existing customers.”
That meant there was a massive mismatch in sales resources. The sales teams in each market were so busy trying to serve those customers, particularly the smaller school districts, that they didn’t spend nearly as much time as they needed to reach out to the medium and larger school districts. “We had fairly good penetration, of about 12-14% of the smallest school districts,” Lynch says. But when they looked at penetration of the largest school districts, Renaissance was only capturing 6 percent of the potential market.
To address the problem, Lynch brought in SBI, which frequently advises CEOs on sales strategy. “Less than 5 percent of CEOs make it to the office through the sales function,” notes SBI’s CEO, Matt Sharrers. “These exceptional leaders are brilliant and this is why they made it all the way to the CEO job. But, many of them don’t know what they don’t know as it is related to sales strategy. They made it to the top spot through finance, operations, or product management.”
That wasn’t the case for Lynch. Count him among that elite minority of CEOs who understand the challenges of sales and its critical importance to the bottom line: his first job after college was selling legal books to attorneys for a legal publisher. “I learned how to be very successful by focusing on a particular product that met the demand of a particular industry,” Lynch says. “I did well as a rookie salesperson.”
It wasn’t long before that rookie got married, moved to Albany, New York, and continued in sales, this time for a database publisher. There, he quickly rose through the ranks to become VP of sales by the time he was 27. His next career move was to work at a competing company’s marketing department, where he immersed himself in business strategy and product development. Then, at the relatively young age of 32, he landed his first CEO position, running a $100 million division of CCH (Commerce Clearing House) that was losing money. “For me it was not only my first CEO job but it was a major turnaround challenge for a company that really needed to be completely re-engineered from end to end in order to make it successful.”
At Renaissance, Lynch didn’t need to turn around a failing business. The company already had strong products, and the loyalty of existing customers, the educators who credited their software with helping their students, often from impoverished backgrounds, to improve their reading and math skills, and even more importantly, to develop a true love of learning. At the first educational conference he attended as CEO, Lynch met Ginger Hollowell, the principal of an impoverished school in Kentucky, who approached Lynch to tell him that Renaissance programs had made such a difference in the lives of her students. “Renaissance Learning has definitely played a role in our accomplishments,” Principal Ginger Hollowell says on the Renaissance website in its section on success stories. “We have excellent students, master teachers, involved parents, and a supportive district team, but the Renaissance products work if you work them.”
Working with SBI
Despite Renaissance’s many accomplishments, Lynch did see plenty of opportunity to improve the sales process. As he saw it, the real impediment to gaining more penetration in larger school districts was their coverage model. A case in point: in Texas, the average sales rep had a territory with $9 million worth of potential, while in New England, the average rep was faced with twice that sales opportunity. “So, there were parts of the country that were under-covered and there were parts of the country that were over-covered,” Lynch explains. “The first thing I wanted to do was build a coverage model where we could allocate the resources more evenly against the opportunity, rather than against revenue. That was challenge No. 1, and I worked with SBI on that.”
SBI’s team of consultants spent about three to four months working with Renaissance, interviewing their salespeople and accompanying them into the field as well as analyzing SBI sales data and external benchmarks. SBI’s plan for overhauling the sales process and boosting sales performance called for six basic steps:
- Segmentation entailed analyzing the market, accounts and customers, to make sure Renaissance was differentiated from the competition and aligned with customers’ needs. Geographic segmentation clearly wasn’t working for Renaissance. So they looked at the hunter-farmer model, where salespeople are either chasing down new customers, or tending to the existing ones, but that didn’t make sense either because it’s such a referral-based business. “The best way to get a lead to new customers is through an existing customer,” says Lynch. Lynch settled upon a tiered structure, where sales reps are assigned to one of three segments, based on the size of the school districts.
- Planning entailed using the results of the segmentation studies to devise revenue, budget and data plans to help Renaissance meet its numbers. That meant figuring out just how many school districts were in each category and how many salespeople they needed to cover them. Under the new structure, the inside salespeople are calling on the smaller districts, field salespeople are calling on the mid-sized school districts and major account salespeople calling focus on developing the largest accounts. That model is particularly effective for Renaissance’s business, where there’s a limited window of opportunity, often a matter of several months when school systems make their decisions about which software to acquire.
- Engagement is all about defining the processes for how the sales team will interact with prospects and customers. “We actually defined the process from Stage Zero, which is lead generation, on up to Stage Five, which is signing a contract,” says Lynch.
- Organization means having the right people in the right roles to execute the sales processes. “The key thing for us was what I call the span of control, or the number of direct reports each sales manager had,” Lynch explains. “We wanted to ensure we had the right number of sales managers, so they could proactively work with their salespeople and coach them,” says Lynch.
- Execution is when you start putting the strategy into action by focusing on areas like sales enablement, sales adoption, pipeline/forecast management and reporting. “For this, we began using the sales pipeline we defined, we’re beginning to use it for forecasting,” Lynch says. “Using this kind of sales funnel to manage and forecast as well as for the manager to manage the sales reps is an industry standard practice that frankly we didn’t use prior to SBI.”
- Support involves creating a system that allows the sales team to succeed and makes the internal organization easy to do business with. “For this, we have a new sales operation group, whose sole purpose is to work on the CRM system, so salespeople have the data they need to be successful,” says Lynch. The sales op group works on all the various reports, and oversees sales, skill and product training.
The change in Renaissance’s sales processes certainly didn’t sit well with everyone. “There was skepticism and some folks were outright angry,” says Lynch. Many sales reps preferred the team model, where each rep in a region was paired with an inside salesperson.
In September, Lynch spent two days with their Boston sales rep, Diane, (whose last name is being withheld for privacy). She confided to Lynch that she hadn’t liked the new coverage model at first, but her wake-up call had come when she lost out on a big sale. The city of Manchester, New Hampshire chose Renaissance’s competitor to supply assessment software, even though the rest of the state was using Renaissance’s assessment solution. The reason for losing the bid, concluded Diane, was that she hadn’t spent any time in Manchester. Instead, she had been focused on working with her inside salesperson to service the smaller school districts in her territory.
Why was that? Partly, it was a matter of going after the low-hanging fruit, explains Lynch. Small districts were always happy to see a Renaissance rep, and there wasn’t nearly as much politics involved. Larger school districts have multiple decision makers and stakeholders, as well as more complex budgeting processes. As a result, the larger school districts didn’t get called on as often. Think of it as the difference between selling software to New York City, with its hundreds of K-12 schools and a complex procurement process, or pitching to a small town in upstate New York with just a few schools under its jurisdiction.
Now, Diane is targeting some 50 medium and large districts in Massachusetts and New Hampshire, where the opportunity to generate new sales is greater. And she’s a convert to the new segmentation model, which has already yielded several promising pilot programs in Lowell, Mass., where they had no business before. “What this new structure forces her to do is spend time in places where she hadn’t necessarily spent time before,” says Lynch. “She said that, obviously, this is a change for the better.”
Inside sales, in particular, has undergone a transformation under the plan. In the fast-growing UK market, Renaissance has always used an inside sales team, who work strictly by telephone, from lead generation all the way up to closing the deal, with great success. But in the U.S., inside sales primarily played a support role for the rep they were paired within the field. Under the new structure in the U.S., inside salespeople, who now focus exclusively on smaller districts, close their own sales and build their own pipelines. That means reps in the field don’t have to waste much of their day traveling from one small school district to another.
At present, the Renaissance sales force is evenly divided between inside sales and reps in the field. “The new model will bring us up from 50 inside people to about 80 inside people over the next three years and the field staff will grow from 50 to 60. It’s a pretty significant growth in the number of sales people, about a 40 percent increase in staffing,” says Lynch.
Lynch doesn’t just talk the talk, when it comes to improving the sales process at Renaissance. He spends about 60% of his time on the road. While he travels frequently to speak at educational conferences and discuss strategy with investors, he’s also devoting considerable time to accompanying sales reps, like Diane, in the field.
In the Field
While the hugs from delighted principals are a nice side benefit, there’s a much more important reason he does this: “For me, there are a lot of collateral benefits to meeting directly with customers to see how well our products are working for them, and it’s a good way to generate new ideas for products. Also there are things we need to do to enhance the existing products. I can’t think of a better way to get a visceral sense of that than to meet the customers,” says Lynch, adding that he doubts he’s been responsible for clinching any deals, though his presence makes both customers and sales reps feel important enough to garner his attention.
During his visits, he listens, learns and tries very hard not to meddle in how sales reps do their jobs. “On occasion, if I feel like a selling situation is going to go off the rails, I will step in, but it doesn’t happen often.”
CEOs need to provide sales leadership, says SBI’s Alexander, and a big part of that is hiring the right person to head up sales, someone that can be a true partner in the process. In July, Lynch recruited a new executive vice president of sales, Samir Joglekar, to replace his predecessor, who was retiring. “He comes to us with a lot of experience in selling, not only to the education markets but in managing professional sales organizations. He’d worked at Dell, in the US and Europe, and he really brings sales management science to the job, as well as he is a really good, inspirational leader.”
Ultimately, the head of sales must turn to the CEO for clues on what tone to set and culture to strive for. So, what kind of CEO is Lynch? In his own words: “I’m very analytical, I rely very heavily on people, and I give them a lot of rope, so to speak, and a lot of autonomy, and I really focus on coaching and development and ways in which I can help them unlock their potential.”
Lynch holds biweekly one-on-one meetings with his executive vice president of sales and other senior management to catch up on their initiatives, mentor them and focus on their development as leaders. In the case of his new sales chief, the CEO has spent much of their meeting time getting him up to speed on the company’s products and customers. “He’s a neophyte to our organization, so it’s more of what I can do to help orient him to the company, to the product line, to his team members,” Lynch says.
Lynch originally thought the sales team his new EVP had inherited skewed more toward B and C players, he says. “I think he’s pleasantly surprised. He has a larger number of A players than he anticipated and than I anticipated as well.”
15 Miles from Nowhere
Renaissance’s two-toned-brick-and-glass headquarters building, flanked by evergreens, sits on a wooded campus in Wisconsin Rapids, an old paper-mill town in the center of the state.
About 600 people work there, including many former educators, who genuinely care about improving how children learn and view their coworkers as their extended family. “And that is the ‘secret sauce’ that has made us so successful. Everybody cares about one another,” Lynch notes. “Still, we need to build a high-performance culture and to do that we need to develop and train our existing talent while we bring the new talent required for the company to realize its potential.” “We’re on that journey, but we aren’t there yet.”
To that end, Renaissance decided to hire a chief talent officer, someone dedicated to developing B players into A players as well as keeping the current star performers on an upward trajectory, by offering them more training, degrees and other opportunities for advancement, so they will continue to contribute, Lynch says.
Ultimately, it’s not enough to have the right sales processes in place. Salespeople need to believe in what they’re selling. “Keeping folks focused on why we’re doing what we’re doing is really the most inspirational thing I can do,” Lynch says.
Once every six to eight weeks, Lynch writes an all-staff email, to keep employees informed of company initiatives and performance. There’s also a Renaissance newsletter that goes to both employees and customers. “It’s a constant stream of communication of the success stories that our schools are having,” Lynch says.
Consider the inspirational tale he relayed to his employees in a Sept. 5, 2014 email: “Today I had the opportunity to visit with a great educator, Avril Newman, head teacher of the Sir William Burrough Primary School in East London, one of the poorest neighborhoods in all of London where most of the students are children of parents who immigrated to England from Somalia, Bangladesh and Afghanistan.”
Lynch went on to describe how the children, the equivalent of U.S. first graders, gathered at round tables with books and iPads that New man had secured as donations from businesses. Others were taking Renaissance’s Accelerated Reader quizzes. “Once a student achieves a certain number of points they get free books to choose and bring them home to keep. According to Avril, over the years the student and their brothers and sisters build up libraries in their homes with books their parents cannot afford to purchase.”
According to Ofsted, the UK school quality inspection agency, Newman’s school ranks in the top 10 percent for attainment nationally and “generates high self-esteem through the satisfaction of high achievement in personal skills and across the curriculum.” Speaking about that visit in a late October interview, Lynch says Newman credits Renaissance Accelerated Reader and Accelerated Math programs for much of her school’s success. “But I credit her, because she’s an amazing woman, and her students now have a future they wouldn’t have had otherwise. I think it’s those kind of things that inspire our people.”
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Leading the Sales Team As CEO
This month, our cover story profiles Jack Lynch, the CEO of Renaissance Learning, the educational analytics company that counts Google Inc. among its investors and was acquired last year by private equity firm Hellman & Friedman for $1.1 billion. You’ll get a close-up look at how Lynch has worked to transform Renaissance’s sales operation and improve market penetration.