Sales As a Science

A successful business model is one that effectively translates customer value into profits and company value.  A successful sales and marketing model is one that helps make that translation seem seamless.

Understanding the true economic value proposition of your product or service to customers and successfully reflecting that value in product position and pricing are critical precursors to an effective go-to-market strategy.  But it isn't sufficient to stop with the strategy and messaging - building an effective sales organization requires applying scientific-like rigor to managing the sales process.  Although the process of selling and closing includes intuition and "emotional intelligence" on the part of the individuals involved, the process of managing a sales organization to produce predictable performance comes down to rigorous management of metrics and numbers.  Increasing the "yield" of new bookings to sales spend requires a deep understanding of:

• Buying patterns and decision making processes
• Market segmentation - who is the b ideal purchaser and why?
• Sales cycle timing and milestones
• Customer acquisition and implementation costs
• Sales process at a very detailed level
• Price sensitivity in various sectors of the market and the right economic levers to pull to close a profitable sale
• The relative value and profit impact of bundling vs. a la carte pricing

When I joined MDeverywhere as CEO, a systematic review of the sales and marketing model led to a wholesale restructuring from a traditional region-based, "feet on the street" model with all reps handling small as well as a "enterprise" accounts."  The results from that approach were predictably average.  Reps were doing an average of 3 meetings a week with new prospects, the average contract value was $35 K reflecting the lower resistance of smaller accounts for reps and "yield" - new sales vs. sales spend was a paltry 1.2 x.  We were spending almost as much on sales-related expenses as we were bringing in every year in new revenue.  In our restructuring, we concentrated lead gen in an internal team, put the reps on a "next up" rotation without concern of geographic region, created an Enterprise team that focused on larger, more complex sales and transitioned from a "feet on the street" model to one focused on online demos.  The impact was immediate - meetings with new prospects every week went from 3 to 12 for each rep, average contract value went from $35 K to $120 K and our sales yield grew to 3.5.  To support all the changes, we implemented a sales management tool to give much greater visibility to the activity levels and pipelines of each rep.