While tremendous shifts are underway in modern B2B selling, some things never change.
Consider the persona-appropriate hubris we associate with salespeople. A small dose of arrogance may indeed be desirable in the quota-carriers we employ, of course. Nevertheless, this confidence gene can negatively impact enterprise performance if it is allowed to unduly influence sales forecasting and corporate planning.
A quick query on LinkedIn reveals approximately 4,500 Chief Revenue Officers — 78% of them in the US. This title was virtually nonexistent a few years ago. Where did it come from?
An answer to that question can be found in No Longer Sitting at the Kids’ Table: Sales Management Finally Grows Up, which highlights a recent and striking evolution among B2B sales leaders. Specifically, our research reveals how much more big-picture thinking and increased corporate responsibility is expected of people in these roles today.
Much as the role of CMO — you’ll find 43,000 of them on LinkedIn — evolved from VP-status to a C-suite position responsible for “Return on Marketing Investment” (ROMI), so too are SVPs and EVPs of Sales increasingly being seen as folks who should “lead a business within the business.”
You Can Only Sell Your Way So Far Up the Ladder
Considering all the traditional alpha behavior involved in successful B2B selling, it’s safe to assume that heavy doses of confidence, ambition, and drive fuel both outstanding sales performance and the career arcs of sales leaders. Hence, many of them would find the opportunity to inch closer to the “big chair” of the CEO hard to resist and, therefore, find the new CRO position the perfect stepping-stone for moving up the food chain.
A C-suite role, however, is frequently easier to assume than to fulfill. For years now, CMOs have earned their place at the table by transitioning traditional performance metrics from activities to results. As we know from Aberdeen’s research, marketers who once were judged by the volume of clicks, registrants, or eyeballs, are now judged based on the volume of sales pipeline they create and how much revenue each of their campaign dollars yields.
By producing measurable value for the enterprise, business-minded marketing and sales leaders have just as much opportunity to grasp the top corporate rung as their counterparts in finance, operations, and supply chain.
Figure 1: Tidal Changes are Happening in Modern Selling
In Figure 1, we see a dramatic illustration of this new era in sales management. After six years of Aberdeen market research on sales effectiveness, the concept of margin-centric sales management is finally coming to the fore. Only a year ago, in fact, sales leaders were still predominantly held accountable for simply selling more product. In other words, their mission was to “hit quota and worry about profits and throughput later on.”
Suddenly, however, we see a 38% delta (58% vs. 42%) in how sales leadership views this top-down management style versus bottom-up, performance-sensitive business approaches. Furthermore, the research reveals that Best-in-Class companies are much more likely to favor profit-oriented sales management.
If the most successful organizations now view the sales function as a P&L business unit, it follows that their best practices are worth adopting by any practitioners seeking a coveted C-level sales management title.
Enterprise Sales Forecasts Are More Crucial Than Ever
If sales leaders are going to run their function as a business, it follows that they need to adopt the data-driven practices and systems of their line-of-business peers.
In this context, they must focus attention on the revenue forecast (arguably the most crucial contribution that sales makes to overall planning and strategy). At the moment, however, the internally published sales forecast is often considered a joke by the rest of the company’s line-of-business leaders. Why? Because all too often it represents emotionally driven aspirations rather than logically predicted sales outcomes.
In other words, the overflow of confidence typical of many sales professionals does not mix well with the hard facts companies are looking for when it comes time to planning month-to-month and quarter-to-quarter.
We already know that more accurate sales forecasts are directly associated with Best-in-Class business results, and that companies focusing on delivering more precise internal data out-perform those who don’t prioritize forecasting accuracy. More accurate sales forecasts also instill more confidence in other line-of-business leaders — one’s potential C-suite-mates — who rely on the sales team to provide their departments with mission-critical data.
Consider this remarkable finding from What Do You Mean, “There’s a Debit on My Commission Check?” – Best-in-Class companies are 50% more likely than under-performers (43% vs. 29%) to indicate that “some portion of sales managers’ compensation is impacted by the accuracy of their team’s forecast;” and they are 23% (29% vs. 23%) more likely to apply the same approach to individual contributors.
As the provocative title of the aforementioned report implies, even the time-honored sanctity of variable sales compensation is not immune from this shift to data-driven sales management and its emphasis on accurate forecasting.
Why Can’t We Forecast Accurately?
Why are accurate sales forecasts so difficult to create, anyway? When survey respondents were asked to identify the top barriers to accurate forecasting, the results (shown above) reveal a clear theme: the human factor. In other words, that which is so important to accomplishing the business of B2B sales, actually gets in the way of the business’ need to understand short-and long term sales results with precision.
Let’s face it: Unless there is a specific carrot or stick involved, sales reps have little motivation to spend time accurately predicting their future. Neither do their managers, for that matter, who are just as focused on meeting quota, attaining President’s Club status, or simply keeping their jobs.
All of this changes, however, when we introduce the profit-oriented sales management trends shown in Figure 1 above.
If ambitious sales leaders seek to prove their worth beyond simply hitting a gross revenue number, they need to do a better job effectively managing their portion of the company’s business. This requires controlling the cost-of-sale and growing the bottom line along with the top line.
Both initiatives are, of course, crucial — they represent the top-two goals among all Sales Effectiveness survey respondents – but only around the concept of growing profits do Best-in-Class companies lead under-performers, with 63% (compared to 56% of All Others) prioritizing this when it comes to managing their teams.
Curious to find out how Best-in-Class sales leaders ensure forecast accuracy? Read the full report: No Longer Sitting at the Kids’ Table: Sales Management Finally Grows Up!