Are you going to make this years revenue number?
In the last 16 business days, I have presented to six CEO’s of companies with revenues of $50-$500 million on the subject of sales force strategy. Picture this: I opened each presentation with this question: “Are you going to make this years revenue number?” Out came the iPhones. Each texted their sales managers to get an answer. A few minutes later the responses came in. The common response was some version of “maybe”.
Given there are only 5 months left in the year, this surprised me, and really upset these guys. It appears the CEO needs a tool to assess if the revenue target will be met. Click here to get a free copy of The CEO’s Big Deal Sniff Test. This tool, applied correctly, will tell a CEO if the key deals needed to hit the number are real.
The pain of not knowing if you will make this years number is real. One the CEO’s primary responsibilities is to build a great executive team, starting with the sales leader. The CEO expects the sales leader to be able to diagnose whether the in-year revenue target will be met. Not knowing suggests to the CEO he may have the wrong sales leader in place. Making, or missing, the revenue target is one thing. There are many factors involved, and some are out of a sales leader’s hands. CEOs understand this. However, the inability to properly assess if the number will be met is something entirely different. CEOs do not tolerate this. They expect their sales leaders to be able to answer this question. Executing a sales strategy is the sales leader’s job.
I reached out to a few CEOs I know that never seem to miss the number. I spoke to CEOs who are experts in sales force strategy. I asked them for advice on how to help their peers answer this question. Here is what I learned:
- Get focused on the “big deals”. With only five months left, the year will be made or lost on a few mega deals still in the pipeline.
- Get tactical. A dirt under your finger nails type of big deal inspection is the best way to know, for sure, if the goal will be hit.
- The Q3 board meeting can get ugly if the CEO is not prepared. The board is going to ask the CEO if this year is going to be met. Be prepared to walk into this board meeting with the specific details associated with closing the 3-5 deals that will make or break the year.
These CEOs told me they are tired of getting the spin from the sales leader. They want a straight, brutally honest assessment of each deal in ten minutes or less. The goal in using this CEO tool is to determine if these big deals are going to close before year end. The benefit of using this tool is to cut through the nonsense provided by the sales leader. CEOs do not want to walk into the next board meeting with half the story.
If the sniff test reveals some big deals are unlikely to close, there would be a different set of tools the CEO would use to fix the issues. These tools will be discussed in a future post. The Big Deal Sniff Test is simply meant to determine if a deal will close by year end.
One of my clients, let’s call him Bob, is the CEO of a $46 million software company. Bob is a “hired gun” in that he is on his third software company with the two previous companies being sold at attractive prices. Boards hire Bob to scale revenue fast. Bob grew up in sales and is a master of sales force strategy. Here is what he told me:
“Smaller companies have a hard time attracting top sales leaders. We cannot afford them. A top sales leader can earn seven figures in a huge company and six figures in a small company. Why would he work for us? Investor boards aren’t willing to make up the spread with stock. This means the CEO has to be more hands on in the management of sales. I am lucky in that I grew up carrying a bag so I know what to do. I cannot remember the last time I missed a quarter and I sold my two previous companies for 7x revenue. But, many of my peers, especially CEOs in the tech space, are not sales leaders by trade. These guys need help. If they are not careful, they can get snowed by their sales leader.
CEOs of smaller companies are in it for the wealth creation potential. They figure 5% of a company that becomes worth a hundred million plus is better than stock options in a big company that appreciates low single digits each year. It is crazy to risk the stock run up by trusting a sales leader who might not be an A player. Get your hands dirty. ”
My poll of six CEOs would not stand up under proper scrutiny. I went looking for opinions that might test my hypothesis. I found a Harvard Business Review article written by Mckinsey consultants titled CEOs Needs to Get Serious About Sales. HBR does not publish something unless it is of broad interest to their readership, which consists of many CEOs. It seems like this is an important issue or McKinsey would not be writing about it in HBR.
1- You should know if you are going to hit this year’s number by now.
2- If you don’t, get tactical and focused on the big deals left in the pipeline.
3- Use the Big Deal Sniff Test tool to find out which big deals will close before year end.