27 August 2019
Historically, Sales wasn’t one of the professional disciplines which attracted much attention from Interim providers like myself. The received wisdom was that Sales didn’t ‘fit’ with Interim Management. Sales is about relationships, origination, ‘getting on the phone’ – so was the theory, and hence organisations wanted their Sales Director to be permanent to ensure long term visibility of revenues.
However, this world view is evidently changing, judging by the number of assignments coming up and how little ‘downtime’ specialist Interim Sales Transformation Directors appear to have.
So, what’s wrong with the Sales organisations of UK plc? Why do all CEOs want to fire their Sales Director?
1.Segmentation, Strategy and Sales Plans:-
It may be that Interim Management’s principal focus is becoming more about the top line than the bottom line and the days of the cost cutter are over. Businesses who have survived over a decade of worldwide economic malaise have nothing left to cut and it is unsurprising they are then turning to the top line – and hence their Sales Director – to drive the future success of the business. Sadly, it is increasingly clear, that many aren’t fit for purpose.
I have seen most evidence of this in Private Equity owned businesses. To a degree my view will be skewed, in that I tend to work most in the underperforming assets in an investment portfolio, but what I have found is that the management’s plan, agreed with the PE investor, has little impact on the activities of the Sales function. This results in activities which are typically based on ‘what we’ve always done’ with clients ‘we’ve always worked with’ and at prices ‘we’ve always charged’. This is always a race to the bottom as if you always do what you’ve always done, you’ll always get what you’ve always got, which you actually will not. You will get less, as smarter competitors will package better products at competitive prices, but ones which will create them a better margin.
The modern effective Sales Director needs to really understand their current and potential markets. Who buys who and what from whom and why? Plans need to be created (and executed) which create value from different types of customer, with pricing adjusted depending on what’s easy or difficult to do.
As Jon Tobbell, a Sales Transformation Director operating in the Industrial space said to me, “Most Sales Directors rise to that position because they have been the best sales person in the business, not because they necessarily have the requisite skill set for the job. The role entails defining a commercial strategy, designing an organisation, picking the right team and putting all the necessary processes and measures in place to maximise performance.”
Sales & Operations Planning (S&OP) is frequently an issue in Manufacturing businesses, and has there earned itself a ‘name’, but it frequently is an issue in businesses who are failing to drive profitable Sales, irrespective of the product or service they sell. Failing S&OP, quite simply, can be summed up by the following exchange:-
Sales Director: - Right, we’ve got a new order from a first time customer who wants a short order of golden unicorns delivered to their depot in the Shetland Islands tomorrow morning. We’re probably making a loss on the deal but it’s a good way to prove we can do a job for them.
Operations Director: - Yeah, a really average, rushed job which means we’ll have to do a changeover on all the machines, disappoint existing customers and incur overtime charges. Well done!
Sales Director:- Come on! We have to win new customers. What happened to the customer is always right? You need to make what they want?
Operations Director:- How about you just sell more of what we make? And why not try to do it to existing customers who already like what we do?
To a degree I have sympathy for both parties here, but for the effective Sales Director, the buck has to stop with him or her. If they do really understand their customer base, they should be able to position the product or service they offer profitably, but also be able to feed back to Operations when the offering needs to be developed. A Sales Director who gets themselves invited onto an S&OP Planning Committee, chaired by the CEO or CFO, probably needs to update their LinkedIn profile. Change is coming and probably being led by someone other than them!
3.Getting the behaviours you pay for:-
One of the first things a newly appointed Sales Transformation Director will look at is the comp plan of the team and how that aligns to the overall strategy and business plan. Nine times out of ten there will be a significant mismatch, with the Sales Director and wider function being incentivised on different activities to the ones the overall business would most value. Talking to clients about this, especially in PE, there seems to be a view that Sales teams are merely out to line their own nest and hence the fault lies with them – and the Sales Director ultimately. However my Sales Transformation contacts who really understand this area are resolute. This failing normally stems from the CEOs inadequate understanding of what a successful Sales organisation looks like and a belief that hunting ‘new customers’ is in some way superior to ‘farming’ existing accounts. This is just farcical, and is unlikely to result in profitable sales given that efficiently servicing and cross/up selling to existing accounts will always generate a higher degree of profit.
A Sales Transformation Director can work with the CEO to create a comp plan which works for everyone, ensuring the business gets the behaviours – and sales – it wants and the Sales team can feel they are delivering to the company’s overall plan. It may be this comes at the cost of the previous Director’s job, but, ultimately, they were the person most likely to be able to educate the CEO as to an appropriate comp plan and they have failed to do so.
As David Baldwin-Evans, a specialist Sales, Marketing & Commercial Transformation Director said to me, “a Sales Director’s life rises and falls with each month’s figures – a seemingly transparent view of success or failure rarely shared with another functional C-Suite leaders apart from, slightly ironically, the CEO themselves.”
4.New channels for a new world:-
The other key driver for the rise in the Sales Transformation Director is the widening range of interfaces available to sell, market and deliver products to customers, and many incumbent Sales Directors are being left behind. In many traditional industries, the rep in the company care with samples in the boot can still be effective, but in no industry is it the only route to market. And neither is the call centre, the self-serve online interface, the bot or anything else. Omni channel has been a buzz word in digital Marketing and Retail for a long time, but increasingly it is relevant in Sales, as by creating a segmented sales plan, it is then possible to find ways of driving efficiencies in ‘cost to serve’. This can mean that customers who were unprofitable under high touch sales regimes become more viable if the servicing requirement becomes lighter
The rise of the Sales Transformation Director is set to continue and, I predict, will accelerate. The above failings are evident in many companies and I think the only thing preventing the market heating up is the relative lack of knowledge amongst CEOs (and their PE backers) that help is available.
Otherwise, all CEOs REALLY would want to fire their Sales Director.
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