(Shared) Sales Force Not Selling (all of) Your Products? Three Common Levers to Create Sales Focus (Part 3 of Series)
In the first post of this series, I discussed the widespread assumption in the Tech industry that shared sales forces help encourage “Survival of the Fittest” products. In the second part of the series, I discussed a checklist you can use to determine if your products can be sold via a shared sales force.
In today’s post, I will be talking about the Pros, Cons and Reality of the “Three Common Levers to Create Sales Team Focus”
Does “Survival of the Fittest” work for a shared sales force? Sometimes, but from what I’ve seen, more often there are major distortions to the “fittest” based on other factors that drive attractiveness to sales. In my experience the products that get sold by a shared sales force are not necessarily “the fittest”, but instead, the products that meet more “human” needs – like reps looking to meet their quota, hit their “accelerators”, or even just to keep their jobs for next quarter – and are often dictated by the comp plan. The way they vote with their time may or may not coincide with what the executives feel are the longer term interests of the company. Of course, a company falters if they miss short term performance needs, but I would argue that just as many tech companies falter when they sell the “products they know, or can sell fastest, until the differentiation for those products withers and they and the company are left in a weak strategic position…
In my experience, there are 3 main tools that most tech organizations use to gain sales rep focus.
3 Tools to Manage “Product Sales” in a Shared Sales Force
- Tool #1: Provide Transactional Incentives for Product Sales
- Tool #2: Provide Sales Overlays to Create Additional Sales Focus and Expertise
- Tool #3: Adjust the Compensation Plan to Provide Incentive to Sell Products
Tool #1: Provide Transactional Incentives for Product Sales
Creating Focus
Transactional incentives are the most common approach to influence sales rep behavior and focus. We’ve all seen this approach till we are numb and a bit confused by the overlapping incentives that are running from different groups each quarter.
Pros
- $s influence a coin-operated sales team
- Can be effective for transactional sales
Cons
Is “lack of an incentive” really the reason you don’t have focus on all your products?
- More often the issue is lack of sales fit see the Shared Sales Force Checklist
- Is the amount and type of incentive really enough to change behavior? If your rep is selling $ million deals is $1,500 going to change behavior?
- Also check out my post, “Channel Not Selling Your Products? 3 Questions You Can Ask to Diagnose the Problem” (much of this post applies to your reps too)
Tool #2: Provide Sales Overlays to Create Additional Sales Focus and Expertise
Creating Focus
Since Overlays only sell particular products, they can’t get distracted by easier sales, and they wake up every morning trying to sell your product. Often these overlays are SEs, so they can provide both technical expertise and some sales coaching specific to the product.
Pros
- Have a team focused on successful selling of a product
- Provide a feedback loop for product marketing or business units seeking customer feedback on their market
Cons
- Typically provide double compensation for the same sale, to encourage collaboration
- And as any sales executive knows, you don’t want to pay 120% of sales payout for 80% achievement…
- Sales overlays have different goals and it is common for organizations to have INTERNAL sales engagement across products. As companies get larger (think HP, Cisco, even mid-sized companies like VMware) different Reps have different agendas at the same customer
- The Account Reps/Teams who own the overall account and get credit for all sales into the account
- A great vendor sales rep is often quite “controlling” of the decision makers and timing for discussions within their accounts, and this instinct tends to undermine efforts by those who have different roles, including:
- Your Sales Overlay Teams that must sell their product
- Your Strategic Alliances that are trying to sell joint solutions into the same account
- Your Channel partners who might be selling your product as part of a larger solution that won’t close till next quarter
Tool #3: Adjust the Compensation Plan to Provide Incentive to Sell Products
The most common approach to setting a compensation plan is “a dollar is a dollar”, where the comp plan does not differentiate whether the sale is for Product A, Product B, Training or Professional Services ($ all goes to the same place anyway, right…???)
Creating Focus
- Quota for individual product groups. For example, a Reps $500K quarterly target might include a minimum $100K from a particular “Strategic” product group
- Accelerators for certain “emerging/strategic” products (e.g. earn 150% quota credit for selling emerging Product X)
- Carve-outs – making some easier, “low-hanging fruit products” or categories of sales not part of the compensation plan. For example, many/most technology vendors do not pay their field account reps for Renewals, because that might unnaturally incent Reps to “farm” the renewals business, rather than “hunt” for new business
Pros
- $s influence a coin-operated sales team
- Impact to compensation can be significant enough to influence behavior (more than incentives)
Cons
- Must be utilized sparingly, or comp plan is too complex and Reps get mixed signals on organization priorities
- Complex comp plan with accelerated payout can result in sales reps making their number, but the organization missing bookings, revenue and profit forecasts.
But here is the dirty little secret of shared sales forces…
Even if you can assign a Product-Specific quota and have an Overlay Sales Force it is quite possible that your organization will lose sales focus (and revenue) on some products
What can organizations do to have a cost effective sales force and sell all their products? In next weeks post I will talk about some “Out of the Box” approaches organizations can use to gain the cost advantages of Shared Sales Forces AND Sell a wide range of products.
I welcome any comments below — And make sure you “Follow” our blog (look for the “Follow” link on the left sidebar) and have your say. I’m also available as a public speaker, to support local and global events in Silicon Valley, or the rest of the flattening world…
For more details, and to stay in touch with this community, contact me or Subscribe to our “Climbing Out of the Box” Newsletter via the form below.
(Shared) Sales Force Not Selling (all of) Your Products? Use the “Shared Salesforce Checklist” to Uncover the Issue (Part 2 of Series)
Last week I talked about challenges tech organizations encounter when they use a shared sales force to sell multiple product groups. The organization may indeed recognize increased sales efficiency, but also may see a drop in sales and profits derived from some products. Which of these effects is larger depends on your business – but beware of adopting a shared sales force, without taking a hard look at the potential negative impacts on some parts of your business.
(Shared) Sales Force Not Selling (all of) Your Products?
In Part 2 of the series, we will talk about the variables that make a shared sales force across products a success, and when the benefits are an illusion.
When does using a shared sales force work well?
At a high level, it can work well when the products or the business model for the products being sold fit together in some way. In this weeks’ post I will explore this fit in more detail and talk about a tool that I have developed and have used over the years to help companies think through when a shared sales force approach makes sense for an organization. I call this tool, “The Shared Sales Force Checklist”, and the checklist is shown in Figure 1 below.
A good way to get started is to complete the checklist yourself, and then get additional perspectives from customers, and folks within your sales, marketing and product organizations. You will notice that while the questions are Yes/No, you need to think about the underlying question before you decide if the answer is the same for both products. For example, to answer, “Sold to Same Customer”, you need to define target customer for each product. You can use the “Description” column on the right to fill in these details. By comparing the answers from customers and your internal staff, you can make a lot of progress determining how well your products fit together for a shared sales force.
Figure 1: The “Shared Sales Force Checklist”
Let’s take a look at the questions in the Checklist in more detail. A single shared sales force selling multiple product groups can work well when:
- They are Targeted to the Same Organization
- If you are selling to different types of organizations, you may not be able to get sufficient customer intimacy to sell both product groups For example, problems can arise if one product is sold mainly to Healthcare and another is sold as a horizontal sale across industries.
- They are Sold to the Same Buying Group and Decision-Makers
- If you must sell to very different buying groups within an organization – like Line of Business for one product and IT Operations team for another, you may find that it requires a completely separate set of sales calls and account relationships.
- They Solve Related Problems and are Part of Complementary Solutions
- If two products are part of the same solution, like two components of the corporate network, you may find that both projects are part of some of the same projects – and therefore get solution synergy.
- There is “Shared Learning” Across Products
- If two product groups have a different set of baseline technology and industry learning needed to sell them effectively, training can be difficult and the sales team may resist requirements for hours of enablement training.
- For example, it may be difficult to sell one product that fits into the network and another product that optimizes storage with one sales force. Your sales team would need to be educated on technology, industry trends, problems and competitors for two separate ecosystems of vendors – a lot to ask for a group of employees who are supposed to be spending their time with customers…
There are also some other significant elements of the GTM for Products that can accelerate or sabotage efforts to share a sales force, and in my experience, organizations tend to overlook or discount their importance. A single shared sales force selling multiple product groups can work well when:
- They Have a Similar Sales Process
- For example, if one product is sold transactionally based on price, and another is a consultative ROI-based sale, they will be very hard to sell with one sales force.
- I saw this in one client where they had two similar products, but one was sold directly to developer teams and the other was an Enterprise sale. The Product Marketing folks that sold to developers kept expecting the sales team to carve out part of their time to sell their product, but were consistently disappointed…
- They Have a Similar Route-to-Market
- For example, if one product is sold by a group of Enterprise Sales Reps on Global Accounts and another is sold by System Integrators who build the product into their solutions, they will be hard to sell with one sales force
In next week’s post, I will talk about the 3 main tools that Technology vendors use to prevent issues with using a shared using force, when these tools are effective (and when they don’t have the intended consequences…)
I welcome any comments below — And make sure you “Follow” our blog (look for the “Follow” link on the upper left) and have your say. I’m also available as a public speaker, to support local and global events in Silicon Valley, or the rest of the flattening world…
(Shared) Sales Force Not Selling (all of) Your Products? (Part 1 of a Series)
For many technology vendors, a Shared Sales Force across multiple product groups is reality of how they go to market and sell their products. Sometimes this approach brings the hoped-for coverage synergy and robust bookings, But as we have all seen in our careers, sometimes “things don’t work out so well…” If you’ve had the role of VP/GM or Product Marketing for a product business unit, you know that
“SHARED SALES FORCE” OFTEN EQUALS BUSINESS UNIT FRUSTRATION AND LOW SALES $
A friend of mine used to be the VP and GM of a Product Business Unit with a tech vendor with many product groups and about $700M in revenue. His organization used a shared sales force across many business units, and his business was allocated a share of the cost of several other sales organizations within the company (that could conceivably sell his products). The problem was that despite all of these “allocated” sales resources, none of the sales teams to spent time selling his product (which did not help his BU performance…). After a year or so, he concluded that he could not control his own destiny, and he chose to move on to greener pastures.
The challenge is that when organizations use a shared sales force across multiple product groups, the sales team is asked to vote with their time, by focusing on selling some products and not others. The Tech industry generally sees this decision as an application of Darwin’s “Survival of the Fittest” theories on evolution, to “Survival of the Fittest” tech products.
Shared Sales Forces are usually seen as a way to gain sales efficiency. While it always makes sense to look for ways to reduce the cost of sales…
My experience is that tech vendors often make the decision to use a “Shared Sales Force” without fully accounting for how the approach will also reduce revenue (and profit) for some products…
Some lost revenue is inevitable and planned for, but what if some of the product groups lose a significant amount of their sales, or even just do not grow as expected. Would the decision to use a shared sales force still make sense? Of course the answer is “it depends”, but I think it is fairly common practice is to make the change to a shared sales force based on “financial necessity”, and assume that the BUs and the Sales Team will “figure out a way to make it work”.
The issue is that what often what happens is an accompanying reduction in sales and profit from some products – which can make a decision made for a “financial necessity” into a “financial disaster”…
Let’s take a look at a sample scenario below.
- In Table 1 we have the baseline situation with 5 products being sold, each with different revenue and gross margin %.
- In Table 2, we see a potential scenario of how that revenue could change with a shared sales force. The new approach works very well for Product A and Product B, which see 18% and 20% revenue growth respectively. The problem comes with Products, C, D and E (which have smaller revenue, but a higher GM% (perhaps due to lower competition, or a developing market). These products see significant revenue decreases and lost margin $.
Table 3 below shows that in this example, the Total Revenue $ Decreases by $4 Million (=96-100) and Gross Profit Decreases by $4.65M ($55.30-$59.95) – not exactly the outcome that the company wanted…
I am not saying that this always happens when companies go to a shared sales force
What I am saying is that companies need to be honest with themselves, recognize that this scenario can happen, and factor this into the decision on how to structure their sales organization
Technology Companies tend to assume that that sales and the product teams will “figure out” a way to minimize this issue, but depending on your situation, the revenue you lose may be gone forever… So how do you know when you are pursuing better sales effectiveness and when you are pursuing an “illusion”?
In next week’s post I will talk about “The Shared Sales Force Checklist”, a tool that I’ve developed to identify when different product groups can be sold together successfully – and when the hoped-for synergy is an illusion…
I welcome any comments below — And make sure you “Follow” our blog (look for the “Follow” link on the upper left) and have your say. I’m also available as a public speaker, to support local and global events in Silicon Valley, or the rest of the flattening world…
For more details, and to stay in touch with this community, contact me or Subscribe to our “Climbing Out of the Box” Newsletter via the form below.
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