Sales Interim Executive Case Study: Revenue Up by 15% with 10% Profit Growth
This article outlines several of the key strategies that were put into place by a sales interim executive team to drive controlled sales.
Contributed by David Shaffer.
The sales interim management team were able to establish appropriate milestones and benchmarks, and create accountability for a manufacturing company experiencing stagnant sales growth.
Background: The Case for Interim Management in Sales
Cerius was introduced to a privately owned manufacturing company with sales of approximated $20 million per year. The concern for the owner, whose background was primarily in product development, was that he was struggling with relating to his sales team and creating sales accountability. He recognized the need for putting in place the necessary processes to drive sales and, more importantly, to provide him the peace of mind that the company was in fact moving toward higher revenues and consistent profitability. Finally, recognizing that he was approaching retirement, his exit strategy options would most definitely be linked to the stabilization and consistency of revenue and profits.
With these factors in mind, Cerius recommended one of its contract executives with deep sales turnaround experience. A part-time Sales VP engagement was scoped that involved assisting the owner in defining a target operating model and putting into place the recommended sales strategies to move the company toward its goals of revenue and profit growth.
Sales Interim Executive Approach
Understanding the current situation
For an established business, a balance of new and existing customers is important as it is certainly an easier sale to deliver existing products to existing customers particularly if the track record of price and performance is good. The larger challenge is delivering existing products to new customers and an even greater challenge is delivering new products to new customers. With this understanding in place, the initial step in positioning for growth is determining where successful and profitable revenue has been derived and assuring the appropriate sales resources, internal and external, are in place to maintain the consistent and reliable baseline of revenue. To many business owners this statement is obvious yet frequently the better sales person is put into the most difficult sales challenge (new products/new customers) to the detriment of the established revenue and profitability stream.
With an understanding of product positioning and the appropriate sales representation in place, the following accountability processes were established.
A standardized set of sales closing probabilities was established within the CRM system. Rather than the sales reps arbitrarily establishing their own percentages, the company agreed to a five step approach in closing business and as each step was achieved the percentage was uniformly set at that step level. What that meant to the owner was a more realistic expectation of the probability of business closing.
Regularly scheduled sales meetings were introduced with each sales rep:
The backlog was reviewed, starting with the highest percentages of probable closing and an action plan for bringing those opportunities to fruition
A to-go number was reviewed by territory with reps listing their planned activities to meet the number
Information of successful strategies was shared among the reps
The company established for the first time product line profitability models that led to a balanced score card of sales performance. Through the linking of commissions to specific product sales attainment, the company was able to direct the sales reps time toward these products rather than toward the sales reps areas of comfort.
In the past commissions were tied to sales order entry. As part of the target, commissions were earned at sales time but paid upon collection. Commissions were netted against returns and sales reps began to better understand that they were in fact operating as a mini business.
To assure the maintaining of customer satisfaction, an order confirmation process was introduced whereby the administrative group maintained a checklist of all necessary contracts, planning documents, shipping authorizations, warranties and financial terms and conditions in place.
For select products that required installation support, the company established a “quick start” agreement whereby the customer, comparable to going down a menu, selected options for support that fit their business environment. This process not only drove revenue for the company, it made it easier for the customer to buy; a one-stop ease of use.
For select products and territories it was determined that a network of establishing non-compete resellers and independent reps would provide revenue opportunity in regions previously uncovered or too costly to have direct representation. This required setting up a screening process, a set of agreements and territory differentiation codes within their sales tracking software.
A one year post review validated that not only had sales increased by over 15%, customer service levels also improved and internal satisfaction among administrative personnel improved. Through the balanced scorecard approach and standard operating procedures, profitability had also grown by 10%. Most important to the owner, the company now presented an infrastructure for multiple exit options.
DAVID ASSISTS COMPANIES FROM EXECUTIVE STRATEGIC PLANNING THROUGH OPERATIONAL AND BUSINESS PROCESS IMPROVEMENT TO THE EFFECTIVE UTILIZATION OF FINANCIAL AND ORGANIZATIONAL RESOURCES. HE ALSO SUPPORTS PRIVATE EQUITY FIRMS IN DUE DILIGENCE ACTIVITIES EXTENDING FROM STRATEGIC PLANNING INTO LEADERSHIP DEVELOPMENT AND CEO MENTORING INCLUDING VALUE MAXIMIZATION FOR PRIVATELY HELD COMPANIES. HIS RANGE OF COMPANY SUPPORT INCLUDES START UP THROUGH FORTUNE 500. DAVID CAN BE REACHED AT [email protected]