When it comes to business strategy, it's easy for companies to get caught up in the grand plans and ideas being developed in the C-suite, without fully considering the realities that their sales force will face when trying to execute those plans with paying customers. This disconnect between strategy and sales can lead to disastrous results, as was the case with the fictional company, Company X.
Company X had built a successful business around retrieving and securely storing documents for organizations, but as digital storage technology began to disrupt the industry, the company introduced its own cloud-based storage services and directed its sales force to bundle them with traditional services. However, the sales team was not equipped with the technical knowledge to effectively sell these new services, and pricing was a major issue. As a result, contract renewals for traditional services dropped sharply, profits plummeted, and Company X eventually had to spin off its digital unit.
This is a problem that plagues many companies - management creates a strategy without fully understanding the challenges that the sales team will face when trying to execute it. Studies have shown that only a small percentage of companies strategic plans are effectively executed, and that firms on average only deliver 50-60% of the financial performance that their strategies promise. This is due in part to a disconnect between "strategy priests" in the C-suite and "sales sinners" on the front lines, who may not fully understand the strategic commitments that their daily activities represent.
To avoid this disconnect and ensure that a company's strategy is effectively executed, the sales organization must be an integral part of every conversation about strategy. U.S. companies collectively spend $900 billion annually on sales efforts, which is three times more than they spend on consumer advertising, more than 20 times more than they spend on online media, and more than 100 times more than they spend on social media. Despite predictions that the internet would displace sales, the overall number of salespeople in the economy has remained unchanged.
One way to bridge the gap between strategy and sales is to ensure that the sales team fully understands the strategy and its implications for their day-to-day activities. This means clearly communicating the strategy and its implications for customer-contact behaviors, and providing training on negotiation and selling tactics within the larger strategic context. It's also important to continually improve sales productivity by focusing on three key variables: the sales force's technical knowledge, pricing strategies, and the sales compensation plan.
Another key factor in ensuring that a company's strategy is executed effectively is to continuously gather feedback from the sales team and use it to adjust and improve the strategy. This means having open and frequent two-way communication, and regularly reviewing and analyzing sales results to identify areas for improvement.
In conclusion, putting sales at the center of strategy is essential for ensuring that a company's plans are effectively executed and that they deliver the financial performance that they promise. This means involving the sales team in every conversation about strategy, clearly communicating the strategy and its implications, and continually gathering feedback and making adjustments as needed. By taking these steps, companies can avoid the pitfalls that Company X fell into and position themselves for long-term success.
Co-founder at Motionbox