Accelerate 2002 revenues by rethinking sales strategy
by Lew Altman

Every January, individuals and companies look to the year as something new and fresh, full of opportunity. This year most companies and venture firms have prioritized revenue and profitability. With renewed focus, companies focus their sales efforts, develop new compensation plans, and task their sales force to hunt, gather and generate revenue for the business.

This year the rewards for having the right sales strategy and the penalty for having an ineffective one are great. Organizations that assess and improve how customer-facing resources are deployed, and those who are clear on why customers benefit from their offering will be rewarded.

“A perfection of means and a confusion of aims seems to be our main problem”
- Albert Einstein

While incremental gains in how we manage a sales transaction can yield results, there are key strategy considerations that will shape your success in 2002. Because we experienced tremendous swings in buying psychology and capital spending over the past few years, your perception of why people value your offering might contain false assumptions. Therefore, how you think, talk and write about your offering is less effective.

What makes 2002 strategy development challenging is that historical information can be interesting but confusing.

Information from 1999/2000 about why someone bought your offering might not be relevant in 2002 because market demand changed.

Information about why someone did not buy from you in 2001 might be misleading because things changed swiftly and radical temporary changes were implemented.

The company that is your customer today might not meet your ideal prospect profile anymore because you changed or they changed.

The competitor you are differentiating advantages over is no longer a market leader.

Distilling meaningful information from historic data is needed. Looking at customer satisfaction and sales outcomes by prospective customer attributes can help isolate meaningful value propositions. Relative prospect and customer traction of one product over another can help reveal successful attributes of your offering. Understanding why someone is successfully selling or using your offering is a foundation of repeatable sales success.

Where revenue crosses capital
The capital infusion of the late 1990s and 2000 allowed many companies to expand and spend aggressively to secure market positions. There were many businesses who benefited directly and indirectly from a relatively relaxed spending environment. During this time resources were scarce and companies with fair value propositions successfully sold their offering into a robust market.

In 2001 capital became difficult to access. Many VCs had a renewed focus on revenue and profit-potential of investments. Ventures that were previously funded with good teams and good concepts are now asked to come back when they have customer traction. With limited capital companies and potential customers also have an appreciation of the need to generate profits to continue to fund operations. This change occurred rapidly. The outcome was that potential customers rapidly created new purchasing rules and processes. A company that previously relied on capital and is currently dependent on profits would have different priorities and focus.

As an example, the iMinds team tells about one of its early portfolio companies, Classmates (www.classmates.com), which is in the business of connecting people with their past classmates. The company today has nearly 30 million subscribers and 2 million paid customers. During 1999 - 2000, the company sought ways to grow, using its capital and focus to acquire synergistic businesses (it acquired iMinds’ portfolio company eCircles in 1999) and made improvements to its core service. By mid 2001, it became clear to the Board and management that Classmates needed to temper its customer acquisition efforts with a focus on "monetizing" registered users and turning them into paying customers, thus generating more profits and conserving its cash. Within 2 months, CEO Michael Schutzler trimmed costs and initiated revenue-generating efforts that have now brought four profitable months to the company. For this team, 2002 will be about maintaining and improving profitability.

Through these changes, the dynamics of what it takes to successfully sell products and services went through significant changes. A sale to the same company and the same people was a different process, with different approvals. A frustration was that these processes were new and evolving to the companies, making sales difficult to anticipate and manage.

For 2002 and the foreseeable future profitability is a priority for most businesses. While access to capital should improve in 2002, most capital invested will expect a relatively short path to profitability. As you craft your strategy for 2002, consider the following recommendations:

Challenge why you feel customers buy from you and how you fulfill their expectations, because the only firm foundation is that customers will buy if they see and believe that a purchase will significantly grow their revenues or shrink their expenses. The decision maker may change, but customers in need will buy.

Isolate what’s working and what’s broken, what and how you can sell now while you are fixing product positioning, sales process, and personnel issues.

To start, treat sales time with a customer as a scarce commodity, ration it to where it delivers clear value.

Plot a sales strategy to inspire and motivate your customer-facing resources, by proactively removing barriers to sales success. These people are the face of your company and an outstanding conduit for market feedback.

For 2002 accept that something has changed, and get grounded on what’s working and what’s broken. Ask questions about customer needs that we don’t know the answers to, understanding that those answers are key to developing an effective sales and marketing strategy.

Diagnosing where to improve
Mis-diagnosis of a sales problem could cause you to react in a way that makes the problem worse, but stopping sales efforts can be fatal. Before you replace your sales force, double your incentive plans and launch your new marketing program, assess what’s working and what’s broken. Consider the following broad categories:

Positioning makes it easier for the customer to find you and shapes the customer’s concept of your offering, allowing your company and the customer to open a sales conversation.

Process is how we connect the customer’s perceived need to our offering and facilitates execution of the transaction.

Personnel are the company’s customer-facing resources who uncover, develop and connect the prospective customer’s need to the company's offering.

Some problems can be fixed with improved effort, but some problems must be fixed at the core of the business and can have a profound impact on your company. Here are some circumstances that signal it is time to examine the core of your business and refine your positioning.

You crafted your value proposition in a robust economy (you might be looking for a customer demand that does not exist);

The general business sector you sell into is receding, experiencing layoffs or in other financial trouble;

Sales are down or sales funnel growth has stopped and there is no turnaround in sight;

Your sales funnel is full of prospects that do not meet your ideal prospect profile;

A new disruptive offering has emerged;

Servicing the growth trend fueled your growth (then you’ll need to find a way to fuel growth independently or accept that your business will recede).

Epicentric, an iMinds portfolio company, was formed year-end 1998 with a focus on providing portal infrastructure software. At that time the portal market was embryonic with a limited number of early adopters. The plethora of consumer Internet and business-to-business startups in 1999 and 2000 often recognized the value of a portal framework and many became Epicentric customers. Epicentric, however, successfully shifted its focus to exclusively large, enterprise sales in 2000 as it became apparent that it couldn’t serve all markets well and that established corporations represented the larger on-going opportunity. To accomplish this shift, the company reviewed its entire business and aggressively made changes as needed. The company's technology platform proved to be a robust foundation for its focus and easily accommodated new product requirements for the target market. The team was enhanced with additional enterprise industry talent, especially in the customer-facing areas. Postioning also changed to speak to the new market and their needs. As a result of these changes the company has prospered even in today’s challenging climate.

The efficiency of the transaction and how you do business together can help differentiate your offering, gain more selling time or could cost you sales. Combining positioning, process and personnel improvements is where maximum impact occurs. Identifying problems in any of these areas will guide you as to where to focus resources.

Selling while you’re improving
Each of your product or service offerings could be at a different stage of development and maturity and your strategy should reflect these differences. An approach to selling while you are improving is to isolate sales and marketing variables, assess what areas are effective and encourage their progress, and stop or fix ineffective activities, products or programs.

If positioning is a problem, focus sales on closing business while another team improves product positioning. Don’t expose more people to an ineffective message.

If your message resonates with customers, get that message out as quickly as possible to develop new sales opportunities.

If personnel need to be changed, use positioning and marketing to develop sales prospects to use the lag time and smooth the revenue transition.

Streamlining the sales process to match your customer’s buying process increases your selling time and improves your access to the customer.

To jump start revenue in 2002 give attention to sales strategy and tactics. Diagnose problems carefully yet swiftly and take action. New Year’s energy comes once a year, so harness the opportunity. Isolate where the issues truly exist, where your company can help drive revenues and delineate accountability to put your company in a position to prosper.

Lew Altman is CEO of Dynamic Positioning Group LLC, a revenue improvement consulting organization based in Pleasant Hill. Reach him at lew@dynamicpg.com He is also the president of Sales and Marketing Executives-Bay Area and a Keiretsu Forum member.