Sales and its pitfalls
For businesses selling their products or services to other businesses, a lot of discipline is required to keep sales sustainably profitable. These efforts are more difficult to gauge than those required from a production line to avoid waste and gain flexibility. They are nonetheless key to maintain focus, as sales can easily be blinded by the perceived upside of new deals.
There are four temptations to be aware of. The first one is to drift from what can consistently be delivered for the sake of striking a deal. Such instances are often observed when new customers are courted, to be gained whatever it takes. The delivery organisation can then find itself in the impossibility to profitably honour the contract, be it for high cost to serve, low quality issues, or challenging contractual arrangements.
The second temptation is to go for bigger and bigger bets when the sales forecast becomes difficult to achieve. With size come unfactored challenges. Negotiations can become complex and distract the sales and bidding team for elusive results. Execution on large programs is riskier and it requires managerial attention and high resource allocation. Finally, a greater exposure to fewer customers reduces the diversification of the customer portfolio.
The third trap is to believe that gaining new customers is an easy way to improve sales results. Too many sales organisations are attempting to “grow” their market share by cold-calling prospective customers with very little hope of dislodging the incumbent partner they have. Such practice has little odd of being successful without any reason to change arrangements in place. At best, it will serve as a benchmarking exercise for the potential customer.
The last temptation is to think that offering new features will attract and/ or retain customers better. Sure, the argument goes, there must be a killer product or service that would make offers stick, whose absence justifies the lack of success in selling the current value proposition. Whereas technologies evolve and products can become obsolete, poor sales results are more likely to have an internal cause, like the sequencing and timing of business development discussions.
These behaviours are hard to spot, as they tend to incrementally settle in. Yet, they can be avoided if the sales and delivery organisations work well together. Indeed, most of the trouble in which sales can put the whole organisation can be avoided through proper communication. This would highlight the dangers of excessively loading the production or service delivery schedule, flag the gaps between what is pitched for and where the delivery capabilities of the organisation are, or honestly assess whether someone in the customer organisation is ready to act as a sponsor for a particular proposal. Opportunities need to be given for these conversations to take place throughout the sales and delivery journey. Their presence can be shaped by the management team, and a little bit of formalism never hurts to make sure the fundamentals are well and truly covered.
For businesses selling their products or services to other businesses, a lot of discipline is required to keep sales sustainably profitable. These efforts are more difficult to gauge than those required from a production line to avoid waste and gain flexibility. They are nonetheless key to maintain focus, as sales can easily be blinded by the perceived upside of new deals.
There are four temptations to be aware of. The first one is to drift from what can consistently be delivered for the sake of striking a deal. Such instances are often observed when new customers are courted, to be gained whatever it takes. The delivery organisation can then find itself in the impossibility to profitably honour the contract, be it for high cost to serve, low quality issues, or challenging contractual arrangements.
The second temptation is to go for bigger and bigger bets when the sales forecast becomes difficult to achieve. With size come unfactored challenges. Negotiations can become complex and distract the sales and bidding team for elusive results. Execution on large programs is riskier and it requires managerial attention and high resource allocation. Finally, a greater exposure to fewer customers reduces the diversification of the customer portfolio.
The third trap is to believe that gaining new customers is an easy way to improve sales results. Too many sales organisations are attempting to “grow” their market share by cold-calling prospective customers with very little hope of dislodging the incumbent partner they have. Such practice has little odd of being successful without any reason to change arrangements in place. At best, it will serve as a benchmarking exercise for the potential customer.
The last temptation is to think that offering new features will attract and/ or retain customers better. Sure, the argument goes, there must be a killer product or service that would make offers stick, whose absence justifies the lack of success in selling the current value proposition. Whereas technologies evolve and products can become obsolete, poor sales results are more likely to have an internal cause, like the sequencing and timing of business development discussions.
These behaviours are hard to spot, as they tend to incrementally settle in. Yet, they can be avoided if the sales and delivery organisations work well together. Indeed, most of the trouble in which sales can put the whole organisation can be avoided through proper communication. This would highlight the dangers of excessively loading the production or service delivery schedule, flag the gaps between what is pitched for and where the delivery capabilities of the organisation are, or honestly assess whether someone in the customer organisation is ready to act as a sponsor for a particular proposal. Opportunities need to be given for these conversations to take place throughout the sales and delivery journey. Their presence can be shaped by the management team, and a little bit of formalism never hurts to make sure the fundamentals are well and truly covered.