When Revenue Growth Stalls, Sell More Is The Cry. Four Golden Rules for Leaders

As I continue my observations on the activities of Professional Services Firms (PSFs) in healthcare I want to discuss a recent trend that has caught my eye, and perhaps reflects the challenges some firms are experiencing.

Anyone looking through LinkedIn, or talking to senior people at PSFs, will notice that a lot of firms are looking for sales people, business development people, inside sales people, and many other titles that mean sales and revenue generation. Given what we've discussed recently, a tight market, anxious clients not releasing funding, revenue squeezes, it is not surprising that leaders in PSFs are thinking about increasing their sales efforts, it makes sense.

However, speaking with a number of people who have recently experienced this trend it seems that many leaders want new sales people that bring with them the famous little black book of connections that will deliver 1-2m of new revenue over 12-18 months, based on their previous work. Of course, this make sense if you can find this person, they want to work with you, you agree a financial package, they deliver the revenue, and they stay with you. Remember California State Statute 699 outlaws non-competes for any company that works in California, and some other states are following suit, so don't think your non-compete clause will protect you in the future. While we know it's a relationship business people like this are very hard to find, and equally hard to keep, and the little black book runs out of contacts, often sooner rather than later. Then what? I don't decry the value of the little black book, it is important, but it is not the long term solution to a stalled revenue curve.

Yes, we'll pay you a big salary - or a low salary and lots of commission - if you can guarantee you'll bring in 1.5-2.0m in your first 18 months

Alongside the short term solution of leveraging someone else's relationships there are a number of other activities leaders should undertake to diagnose their revenue issues, and to initiate the right set of actions to address them. The diagnostic side is, in my experience, rarely done well. There is a lot of vested interest, dogma and old habits involved that get in the way of an understanding of what is really happening. Below I have illustrated a few questions and challenges for leaders that may help an objective diagnosis of the real issues, followed by a few simple golden rules for leaders when thinking about sales

• Has your competitive landscape changed recently, and has this changed the price structure of the market?

Over the last 18-24 months many market boundaries have become blurred. Data companies moving into consulting, CI companies moving into IT solutions and consulting, consulting companies creating data capture products, non-healthcare companies getting in to healthcare. This can change the structure of services, uncover new client needs, change price and contract structures, and can make traditional approaches look inadequate, even obsolete. As a leader you need to know who and what you are competing with.

• Is your product mix appropriate?

I am often surprised when I ask leaders about the mix of products or services they have, how much of each they sell and what the profitability is of each. The answers are often that they don't know, they merely tell staff to sell what they can. This clearly impacts the margin one way or another, and may well impact how much you sell. It may be that one product or service has become more or less attractive recently, staff have cut prices to keep selling, or clients are using a new or different service from a new competitor. Look at your product mix, you may decide to focus your sales effort on the product or service that sells quickest, easiest, the most often, or the most profitably, and to make this decision you need the data.

• How do you cold call?

The answer to this one is often we don't, or we attend conferences, or we employ a company to cold call for us. Effective cold calling is a long term project and requires an approach with many elements involved. It requires knowing your existing reputation so you can align what you say about your firm with the reputation you want to have. It requires knowing the customers you want, finding them and developing ways in which they will engage with you. It requires investment of time (patience), and money for staff, databases, training, which in turn require confidence and resolve. Getting cold calling right demands a clear and intimate knowledge of your firm, how you are perceived, how you can engage with customers, and often requires significant involvement from senior people making presentations, writing articles, generating an online presence, and engaging with potential customers. Watch the best organisations at cold calling and you will see senior people involved, a fundamental recognition by senior people that it is a key part of their role to be involved with potential new clients, and an engagement throughout the organisation in working with and supporting the cold calling team. It may be that senior people have a goal to grow the client base built in to their roles too.

• How often do you visit your customers?

Often one sees that senior people are too busy on internal matters to see customers. This is understandable but not a recipe for a deep understanding. The best organisations I interact with have senior figures that drive client interaction, demand to visit with and dialogue with clients, and have their own reasons and goals. To be clear, I don't mean accompanying a project team to a client meeting, I mean having client meetings of their own to discuss important topics such as the client's existing relationships, future business, how their business is changing, what their new needs may be, how the PSF can help them further. Senior people can also sell, as the anecdote below illustrates

A senior leader in a PSF in a discussion with a client about future needs said "It sounds like you need a service that delivers X for you in a short space of time, am I right?" The client said he was right, and three weeks later the leader turned up with that very service for the client. This created a new revenue stream for the PSF

The above hopefully illustrates that getting off a revenue plateau is not something that should be given away by senior leaders, nor is it something that is addressed in the long term by employing a rainmaker, useful as this may be in the short term. It requires data, consideration, courage, and above all else, involvement from senior leaders, and making sales an organisational goal, not something a couple of people do.

So, according to me, what are the simple golden rules for senior leaders in PSFs in driving revenue growth and addressing the lack of growth today?

1. BE INVOLVED. Revenue growth is your responsibility, and long term revenue growth is often your responsibility alone. It needs your involvement in the detail, a willingness to engage with existing and future customers, a product and service strategy based on data not personal preference, encouragement of others, a willingness to lead the line. DO NOT delegate sales to someone you meet once a month UNLESS you give them the power to design and implement strategy, revise, remove and remodel products and services, the power to coopt people into their team as required.
2. HAVE A COLD CALL STRATEGY. Remember that a successful sales operation requires a strategy for long term success. It requires leadership to have devised a plan and to allocate sufficient resources to the plan. Take responsibility for that strategy and remain close to it. It may require databases, expenditure on time, speaking engagements, writing, cold calling, product development, and you need to be clear about your decisions and your support for the efforts. Many PSFs charge senior people with the goal of new-new business, that is revenue with new people at new client companies. Sometimes this works, often it doesn't. It makes sense to give senior people, paid a lot of money, a goal of growing revenues for their part of the business. However, some people are good at many things, but not new-new revenue generation, some don't find the time, some devote too much time to it and let other things fail. This approach does not remove the senior leadership from the approach, they need to be involved, provide encouragement and confidence, train, mentor, and support, and importantly provide a consistent thread of communication that drives the organisations sales strategy.
3. KNOW YOUR MARKET AND CUSTOMERS. NOT through data and presentations alone, but, critically, by visiting, asking questions about the future ,listening, and feeding back to your colleagues on the implications of your conversations. Be an example of client engagement, set the right tone, make the customer more important than your product or service. You need to know about margins, price elasticity, competitive trends, competitor developments, and clients can often be a good source of recent relevant market information.
4. MAKE IT AN ORGANISATIONAL THING. Not everyone is comfortable in a selling environment. However, everyone can contribute with research, role play, presentation development, new perspectives. Encourage people, break down wrongly held views that generate fear and concern, demonstrate that sales is fun, and, of course, that selling is a fundamental part of the business that everyone should think about and feel they can contribute to. Make sales a positive cultural element of your organisation. AND, most importantly, take responsibility for revenue and margin growth, because if you aren't responsible for these things, what are you responsible for, and does it really matter?

As a mentor of mine often said - love your customer, they are forever, products come and go- and be driven by a well-informed view of the market and what your customers need today and tomorrow

In summary, finding the rainmakers is a good idea. However, without an organisational approach to revenue growth that provides consistency, investment, confidence and strategy, the PSF will falter, find another plateau, and struggle to find consistent growth. Good leaders recognise that sales is about product definition and evolution, pricing and margin understanding, client relationships, strategy, investment, involvement, and that their leadership in these fields is essential. Yes, find a rainmaker, AND find a long-term organisational approach to sales that works.