Sales Process Improvement

Developing standardized sales processes and reinforcing best practices will increase pipeline visibility, sales execution, and overall performance, leading to more predictable and sustainable revenue growth. At an organizational level, structure and process are necessary to implement a successful growth strategy and replicate success.

You can improve sales performance at the middle of the bell-shaped performance curve by documenting, replicating and teaching the best practices of the sales people that represent the top 20% of the performance curve. Research shows that top performers develop a method for success and execute a repeatable process, often subconsciously. One approach is to take what’s often a subconscious process and make it conscious, repeatable and replicable.

Many salespeople do not follow a defined sales process.
Many salespeople sell products (features and functions), not solutions (value and return on investment), to prospective customers.
Many sales managers do not leverage available sales processes and tools to manage their teams.
Sales people will accept processes, methodologies, tools and behaviors that make their jobs easier and/or make them more money. In addition, what their managers reinforce in weekly sales conference calls sends a powerful message about what the process standards are for the sales organization.

Key sales process objectives include:
Standardized sales stage definitions (from suspect to close). These stage definitions categorize all prospects and opportunities in the same way.
Standardized pipeline management and sales cycle progression
Best practice sales methods and activities, which help to achieve the sales stage milestones and progress through the sales process.
Clearly defined roles and responsibilities for executing best practice activities and the process
Alignment of sales tools, methods and systems necessary to support the activities at each stage
Improved forecast accuracy by defining the guidelines based on not only where the sales person is in the sales cycle, but also how they are positioned versus the competition
Clear and prioritized performance metrics that can be coached and reinforced by the sales management process

Performance Metrics
Most business people are familiar with the ideas of leading and lagging metrics. The former can often help to predict the latter. Key performance indicators (KPIs) usually fall into the leading category. For example, many companies find that the number of prospects on their master prospect list is one of the best predictors of how they will perform 90-days out.
You should measure KPI’s such as churn, opportunity by account/sales stage, win rate, revenue growth, margin (revenue-costs), etc.

In terms of the leading indicators, the following should be measured, monitored, and managed:
Leading Indicator Description
Opportunities in the Pipeline (#, $, %)
The total number of opportunities in the pipeline has predictive qualities to hitting sales targets.

Opportunities per Stage (#, %) Once clear and unambiguous stages are in place, one can monitor the number of opportunities per stage, and the different probabilities of closing associated with them.

Average Deal Size ($, %) It’s important for salespeople to focus on the largest deals and the key areas within their accounts and territories. An average deal size that is rising is a good sign that salespeople are pursuing appropriate opportunities.

Revenue per Stage ($, %) Once there is a clear separation between stages, one can determine weighted pipeline value per stage and compare it to previous periods to assess the probability of hitting one’s overall sales targets.

Product Mix ($, %) Once there is some visibility into the pipeline of opportunities, management can look at the product mix in terms of what’s being offered and what’s being sold. Incentives and coaching can be aligned to match the product strategy and the different price points and margins of specific offerings.

Sales Cycle Time (days) The sales cycle can be looked at from an overall standpoint (example: average sales cycle is 3 months), or in terms of looking at it from a stage perspective in terms of average length of time in the “XYZ” stage this quarter v. last quarter.

Lagging Metrics Description
Some of the key lagging metrics for the sales area include the following:
Revenue Attainment / Growth ($, %) This metric can be evaluated for the overall business, for each salesperson and for each product.

Profitability ($, %) Margins can be assessed and tracked at the gross, operating, and net levels.

Win Rate (#, $, %) Win rate can be looked at in terms of the number of opportunities won and the amount of the pipeline won, which are often different percentages.

Market Share ($, %) Market share depends upon who is calculating it and their respective interests. As long as it is measured consistently, it is valuable.

Cost of Sales ($, %) It’s often hard to get a true cost of sales figure. Most organizations look at travel and entertainment (T&E), commissions, salaries, pursuit costs, etc.

After a company identifies some key leading and lagging metrics, they need to determine the best approach for reaching their targets. The following steps are a rough roadmap of what should happen to develop and deploy a sales process improvement initiative.

1. Bring together the key stakeholders to define the goal, to design the project, and to determine the guideposts along the way.
a. A core process team should include key stakeholders and possibly, external consultants.
b. The team should define the project goals, the measurable objectives, the critical success factors, the specific activities, the timelines, the tracking metrics, and the deliverables.
d. Keep it as simple as possible. Clearly define the goal state and make sure that improvement can be measured.

2. Assess the current sales process.
a. Analyze the current sales process documentation, reports, and tools before beginning the discovery interviews.
b. Select a high-performing cross section of sales executives, sales managers, and sales professionals to interview, to gain an understanding of the current situation, improvement areas, and what the future should look like.
c. Try to identify gaps, redundancies and other opportunities to streamline and improve the sales process.
d. For each sales activity discussed, clearly identify who owns it, supports it, and reviews it.

3. Create a rough outline of what an improved sales process might look like.
a. Develop a working model that can be shared, critiqued and improved, with input from the core sales process team.
b. Conduct a workshop using one-on-one, or small group interviews, to improve, refine and validate the proposed sales process.
c. Determine the alignment of tools and technology to each activity
d. Integrate the necessary sales methodologies into the framework.

4. Implement the approved new sales process. This new process should help salespeople to close more business, do less administration and get better feedback and coaching.
a. The core sales process team should meet to create a communication plan for disseminating the new sales process.
b. One of the key critical success factors for the sales process to work is to make sure that the front-line sales managers are aligned, motivated and capable of executing the new sales process.
c. Sales managers must coach to the sales process.
d. Sales process execution must be monitored and tracked.
e. The results of the initiative must be communicated to all stakeholders.
f. Sales process improvement can never end.

Some of the biggest obstacles to execution are:
The lack of integration between various processes that link to the sales process (like forecasting), including sales methodologies, selling skills and sales tools.

The lack of clear roles and responsibilities

The sales management process often does not reinforce the sales process, key metrics, or collaborative behaviors (like team selling) and does not act as a framework to coach and improve performance.