Working hard as commercial team doesn’t always guarantee success. Could Strategy formulation and cascading contribute to better results?

Imagine, John starts on January 5th, after a well-deserved holiday, and could catch up again, as his December month was very tiring with all the deals he had to close.  Also, Tom his sales manager, is relieved from the end of the year closing stress.  But a new year starts, means all counters start at zero.

John meets Tom, who tells him that 2023 will be the year of great ambitions.  Tom has good news to tell.  John’s #quota will increase with 15%.  Besides the number to hit, Tom gives an encouraging speech on the possibilities in the organization, and on the need of a ‘Yes We Can’ mentality, necessary to hit the numbers in 2023.Without clear indication on where John is expected to make his number,

John starts to call his prospects in the pipeline to better understand when these deals can be closed.  As John is already experienced, he addresses the need for new Marketing Qualified Leads based on the profile of customers he did business the last 2 years. 

End of quarter one, John just hit the increased quota.  Tom and John are happy.  

Time for celebration!

During quarter two, John is getting more nervous.  Marketing Qualified Leads are not presented as expected.  He repeats his request to marketing and asks Tom to put some pressure on marketing.  However, the marketing colleagues don’t know how they can help more, as responses to the campaigns are slacking. End of Q2, John doesn’t hit his target.   During the mid-year evaluation, Tom complains on why the target is not hit, why John is not ambitious enough!  On top, Tom tells that the margins of the new sales have scaled back compared to budget.  Recognizable as #sales or #salesleaders ?

Why could this happen?  What went wrong?

The #budget numbers were made based on several assumptions.  In the case of John and Tom’s organisation, one of these assumptions was that the new products, with higher margins would sell more.  Did John ever got the instruction to focus on new products?  Not at all, he just got a number to hit.  And so, the story of John continues, even becoming worse.

Do you recognize the situation of John and Tom in your own organization?

Tom only gave a financial quota to hit.  John assumed that he could continue selling their well-known products to the same profile of customers.  As John knows that market well, as well the products, their features, and benefits, this is the way with lowest resistance to hit the quote.  Tom assumed John was aware on the choices the management took. Because Tom didn’t articulate the type of products to sell to which customer, John could make a lot of assumptions what was expected.  They learned the hard way that working based on non-communicated assumptions doesn’t work.

Why #StrategyFormulation and #StrategyCascading is important now?

In an organization, we all want to work towards a common goal.  Having #alignment on the activities on short and long term, between the different levels and departments is key.  In an organization of knowledge workers, defining strategy on the top, and having the remaining of the organization working on the execution is no longer productive.  Each level needs to have the possibility to make choices on how they contribute most to the above made choices.

Secondly, as an organization, financial results are measured on multiple #KPI’s whereas typically #revenue is one of the most obvious ones.  However, margins, EBIT,… are also important as it allows the organization to further invest in the future.  Many organizations put a lot of effort to detail the cost composition for the different products, the different activities in their organization.  However, they fail to articulate their expectations towards the sales organization and the individual contributors.

As different markets represent different opportunities for products and solutions, it is important to give guidance as a leadership team and as such the sales leader to the field sales on which markets you want them to sell.  Different markets might perceive the value of the same offering completely different.  One market might be very keen on your offering and is willing to spend a lot of money.  Because of different needs, other markets can give high price pressure, because the value perceived is very low. On top, different products and/or solutions contribute with different margins to the organization.  Realizing the right mix of products and/or solutions is important to the future of your organization.   

Many organizations are surprised that field sales offer a low-cost product into a high end market because of price pressure.  Such a behavior indicate that the organization didn’t have a strong strategy formulation and cascading.

With the launch of new products or solutions, the guidance sales leaders give to the field sales becomes even more important.  If not done properly, field sales will continue to focus on existing products and stay reluctant to start conversations on challenges, features and benefits they hardly know.

Last but not least, with the markets going into saving mode, reluctant to spend any money in the current unsecure economic environment, clear guidance on where to sell what become even more important.

How to Solve John’s and Tom’s challenge on strategy formulation and cascading?

As sales and marketing #leadership , clearly articulate for your organization 4 key elements at the beginning of the year: (inspired by Roger L. Martin’s book, Playing to Win)

1.     Your winning aspiration in the next 3 to 4 year.  What do you want the organization to have achieved, preferable articulated in name of your customers

2.     Where to play?  What is the customer segment you intend to serve, who recognize the value for what you offer and what product, service of solution you will offer them.

3.     How to win?  What will make you outstand in that playing field.  Do you count to win on price leadership, on quality of service, on product superiority…?  

4.     What need to be true to make this happen?  What are your assumptions you make now for make where to play, how to win to be true?

You may think, but what if we make the wrong choices now on the where to play and how to win?  Your doubt is understandable.  Nobody likes to make wrong decisions.  However, making choices inherit the chance to make the wrong ones.  That is why adding the assumptions on what need to be true is so important.  This allows you to verify along the year if your choices were based on the right assumptions. 

E.g. If you expected the market to grow by 10%, but in the midyear business review you detect that market numbers show only 3% grow, it allows you to adjust your choices, instead of waiting till the end of the year.

By articulating Where To Play & How to Win, you explain to your teams how you came to that choice.  You also indicate their playing field within your choices.  This allows them to make choices again in their area of responsibility in line with the organization’s choices.

By doing so, you allow the field sales to translate the strategy into action plans linking the expected Results via the sales Objectives and the contributing Activities.  This ROA plan serves field sales and their managers to lay out their tactics and follow-up with leading KPI’s rather than purely lagging KPI’s such as revenue to target adherence.

Too busy as sales leader to get this all organized? Could be. That is why #salesexcellence plays a major role in todays modern #commercial organizations. Sales Excellence facilitates the commercial organization not only in terms of having better customer conversations. Realizing improvements in better planning is also a crucial role sales excellence plays in modern organizations.

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