What Is A Quality Sales Organization?

21 May

When networking with other sales reps early in my career I began to see correlations between the various sales organizations and the type of sales people they attracted & retained.  It was very interesting to hear people describe their sales cultures, compensation plans, management’s leadership style and the employer’s focus on client satisfaction.  Over time I was promoted several levels, each new role required a relocation to another part of the country.  Through networking I continued to accumulate a diverse collection of perspectives from sales managers from a variety of industries.

My career journey led me to NYC leading a National Account group.  This was more of a business development role leading a team of 8 people and managing the relationships with a dozen accounts that generated $1.3 Billion in annual sales.  This was the capper to my experience as business development forces you to consider client satisfaction, a strong interaction with operations, client profitability and new sales.  I won’t bore you with the details but we did create a very interesting client service agreement.  Each quarter we contracted four goals with our clients.   Two goals came from the client and usually included one customer service goal and one goal that would help our contact attain their major job objectives.  We also then had one goal that the Account Director was able to set that would help them achieve greater account profitability and one sales goal (like an introduction to a sister division) that would be validated only after the two client goals were met.  This was a great tool that minimize attrition and creating a very positive climate for cross selling & account expansion.  After two years this portfolio grew to $3 Billion annually and we did not lose any clients.

My final career destination was to build a new sales organization within an existing Fortune 500 company.  I poured everything I learned into the culture of that sales organization and it paid off royally.  In four short years we moved from non-existant to an organization acquiring over 5,000 new clients annually, producing an incremental $180MM in sales with each new annual batch of clients.  The NPV of these clients was nearly double that of any other client portfolio.

So here is what I learned about sales cultures and what makes a “Quality Sales Culture”. 

There are three parties (constituencies) that are affected by the culture you build.

  1. Clients – Your focus on making reasonable commitments and then driving over-delivery will payoff in a huge way.  The Net Present Value of your client base is driven by retention rates and gross profitability.  You can easily model the value of high customer satisfaction by raising your client retention rate by 5% and improving gross margins by 1%.  This is the value of ensuring that your culture demands a high customer satisfaction rate.  I dumbed down these numbers.  You can acheive much better benchmarks if drive customer satisfaction into your sales culture.  It will not only make them believers but their closing ratio’s will be dramatically better.
  2. Shareholders – This is the easiest constituency to satisfy or dissatisfy.  If your Business Development Efforts focus on customer service delivery within a cross selling framework, and your sales efforts are highly disciplined around skill, will, execution and leaderhip it is nearly impossible to disappoint investors in your company.  I do believe that investors have now learned that mid term results trump short term returns.
  3. Employees – Why bother?  Because clients and shareholders will never get the best possible outcomes if your employees are distracted.  Sales people and account managers should get all the direction & support they need to create healthy, profitable client relationships.  People who are distracted by poor leadership, non-existent training or poor customer service attitudes will never be able to deliver to their potential.

So what’s the conclusion?  Senior Leaders must balance their focus.  I know that in this economy the shareholder will get more attention than employees but in the end that’s a bad tasting medicine that we know is good for us.  But you still need to balance your focus reasonably.  Focus 80% on shareholders, 10% on clients and 10% on employees is a losing tactic.  When the economy begins to improve you will have a lot of issues to fix and you may miss out in that growth.

Assuming you have some employee goodwill on your asset sheet, in today’s economy I would recommend a focus of 45% on shareholders, 35% clients and 20% employees.  I think you can get through the next 18 months providing you keep the communication level high so employees know they’re valued but investments in them are on the back burner for the short term.

In the longer term my focus would be 40% shareholder, 30% clients and 30% employees.

If you are interested in more discussion on this topic please leave a comment with the specifics of your interest.

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3 Responses to “What Is A Quality Sales Organization?”

  1. Hank Trisler May 22, 2009 at 8:35 am #

    That’s fascinating, Greg. I’ve never looked at a sales organization from this point of view before. Thanks for stretching my thinking.

  2. Andy Rudin June 2, 2009 at 8:24 am #

    Greg: great discussion. I’m curious–how could a salesperson operationalize the ratios you suggest? Sometimes the constituencies have conflicting goals and objectives. A blog I wrote on the topic, “Can Sales Productivity, Ethics, and Shareholder Interests Coexist?”

  3. erpsoftwareleads jen December 20, 2011 at 7:06 pm #

    thank you for posting this.,.,it is very informative.,,.:D

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