Written by Rob Malec
I recently came across the most simple and elegant formula I’ve ever encountered that cracks the elusive code of increasing the revenue that you as a business owner can generate from the total of your team’s marketing, sales, and business development efforts.
I encountered this in Timothy Gallwey’s excellent book The Inner Game of Work (the entire Inner Game Series is excellent and well worth your time).
An adaption of his formula for improving work performance applied to sales and revenue generation looks something like this:
Sales Performance = sales potential minus sales inhibitors
Here’s how this applies in the real world from my perspective as a B2B Fractional VP of Sales…
To Increase Sales, You Must First Understand Your Sales Performance
Leadership must clearly define the specifics of sales performance so that the team knows exactly what productivity level (and in which KPIs) needs to be achieved. Given that Revenue Generated is a lagging indicator (it reflects what has already happened), you also need Leading Indicators (projections of what is likely to happen).
The classic trap is to not have Sales Activity and Results leading indicator KPIs in place. When this is the case, leadership can’t confirm on an hourly, daily, or weekly basis what direction the sales ship is going in and at what speed.
Your sales activity leading indicator KPIs should include:
- # of Sales Leads in your sales funnel at any given time
- # of Sales Leads that have been contacted by your business development folks
- # of buyer-facing sales meetings conducted each week
- # of buyer-facing sales meetings scheduled for the upcoming weeks
- # of viable sales opportunities and corresponding revenue in the deal funnel
Looking at this list of leading indicator KPIs, it’s easy to see that predicting your incoming revenue reliably and predictably is possible if you’ve enacted them. All of these are the things that cause sales to happen. If by week one or two of the month, these KPIs are trending down, you will likely have a dry spell coming up but will still have time to course correct.
Working with your team to ensure that they keep the pace on hitting these KPIs is a continual coaching and training endeavour that has a direct ROI when followed diligently.
The key lagging indicator, Revenue Generated, needs to be clearly articulated as well. What is the revenue required by a sales professional, in what time period, and at what margin for each product? Clarity here will help ensure that your sales team is focused on generating the type of results that will keep your business healthy and poised for increasing sales and growth.
Consider Your Team’s Sales Potential to Increase Sales
Think of your top sales performer who regularly overachieves on their sales plan. Imagine if you could hire a few more folks who are dialled up just like they are—how great life would be! When building your team, hire wisely (for more information on how to do so click here.)
If you have a legacy team, sales potential can be assessed by looking at past performance and putting that beside the traits and characteristics your salespeople possess. This will allow you to determine if they have what it takes to be successful in selling within your market.
The reason for looking at both sides of this equation is that a person who performed poorly in the past may simply need some help getting unstuck to unlock their sales ability.
Be Aware of Sales Inhibitors That Prevent You From Increasing Sales
Things that get in the way of revenue generation success for a salesperson can be either internal or external.
Internal Sales Inhibitors
Internal inhibitors include things like mindset, an adequate knowledge base (both in product and sales approach), and the skill to apply all of this.
The salesperson whose mindset is to take it personally when a buyer says “no” to them will never succeed. They will drown in their bad feelings.
The salesperson whose mindset is “I can’t sell because of [insert external force acting upon them here],” will also never succeed. It’s rare that the stars align, market conditions are ideal, competitive pressure is low, and your company is operating like a well-oiled machine. The best salespeople adapt and deal with adversity effectively rather than looking for excuses for poor performance.
External Sales Inhibitors
External sales inhibitors are things in your company that are getting in the way of selling that you can change. Things that get in the way of selling include:
- Unclear sales goals
- A lack of sales coaching
- Overly complex sales compensation plans
- Production plans not matched to sales plans
- Administrative processes that make setting up new customers and placing of orders onerous
Most often these are the types of things that business owners can control or highly influence to find a solution. At your company, determining what these issues might be is as simple as asking your sales team. It’s my guess they will respond loudly and quickly when asked, “What types of things do we need to fix in order to make closing of sales easier for you?”.
Applying the Formula to Increase Sales
Assess your sales team and grade each seller on their Sales Potential. The simplest way to do this is to take an inventory of the traits and characteristics of your best salespeople and measure all others against this standard. There are also many paid inventories out there that can help you.
This assessment will tell you whether or not you have the team in place that can achieve the revenue generation success required to take your business to the next level. It may be that you have the raw material for success but require some process optimization and training to bring the best out of your folks.
On the other hand, it might be that you have the wrong people in the sales seats on your bus. If that’s the case, you can then strategize appropriately how to get the right people in. Then, ask a question of your sales team about what roadblocks to selling exist.
Inventory those, set them up and knock them down one by one by addressing and resolving them. This will likely involve multiple stakeholders across multiple departments, and (sadly) not be a fast process. It will, however, definitely be worth the time and effort when it ultimately helps you improve revenue generation.
As with all things, there is nuance to cracking the code of how to increase sales. If you would like to chat about this further, please feel free to reach out to me at [email protected]