Five Ways to Combat Your Sales Plateau
As we bid farewell and its growth challenges, Q1 presents an opportunity to review and correct flaws in the sales process and start the year off on a strong note. In reality, however, most businesses will not seize this opportunity – instead, they will wait for the mythical “auto-correct”: an organic refresh of the sales cycle. This approach, while certainly the easiest, has two fundamental flaws. First, it ties the sales cycle to the calendar cycle, though these may differ dramatically by both duration and cadence. Second, and perhaps more concerning, it belies the magnitude of the problem.
Last year, almost 50% of sales organizations surveyed by CEO Insights reported missing their monthly goals more times than reaching them in a 12-month cycle. In the automotive industry, for example, after years of record growth, Detroit’s Big Three experienced declines between 7 and 15% in 2017 - leading some to revise forecasts by up to one million units. And this year, it seems, auto companies continue to battle headwinds, with a reported 1% decline in total new car sales.
With the rise of e-commerce and the “Amazon effect”, changing consumer dynamics – in particular, increased demand for shortened sales cycles – have companies scrambling to drive operational improvements and increase speed, all whilst maintaining high quality of goods and services. In the retail industry, particularly, the more traditional brick-and-mortar behemoths have dismayed investors with lackluster sales results: two-thirds of Macy’s market value has evaporated over the last two years; JCPenney has dropped 90% since early 2012; and Sears Holdings (which also owns Kmart) has incurred losses in excess of $10 billion over the last 7 years.
Certainly, it is easy to blame falling or stagnant sales on the rise of digitalization or other macro trends beyond our control. In fact, most sales plateaus are attributable to organizational dynamics, a loss of energy or momentum, or the inability of leadership to embrace transformational change. It is the savvy executive who looks beyond her competitors and context, and instead looks inside the organization to find areas for development.
Drawing on the insights of Fortune 500 executives and top-rung sales organizations, we look at five reasons your sales organization might be in a slump – and, more importantly, how to get out of it.
1. Invest in constant competence development
Maintaining the right balance of skills in an organization is critical for commercial excellence. But all too often, companies focus on sales training for entry-level or junior staff, while more tenured professionals become at best complacent and at worst apathetic. Across hundreds of companies reviewed – both Fortune 500s and mid-size organizations - the quality of training, skills development, and general level of talent is generally sub optimal. Even more concerning is that approximately 2 out of 3 companies do not even have a defined sales process or training program. Grant Cardone, author or Sell or Be Sold, insists that “even a veteran sales person needs to continue to read, educate and train in order to keep skills sharp”.
An under trained salesforce can have disastrous consequences for even a very large mature player, but more insidious is the culture of complacency that often accompanies a lax organization. Touted often as the “silent killer” of business, complacency is the number one impediment to business growth. For a sales team, particularly, sales slumps can breed a vicious cycle – missed sales lead to lost confidence, which in turn leads to reluctance and negative attitudes.
Instating structured training is not enough by itself. To take a program from good to great, companies should be using dynamic data to track competencies across functions, job roles, offices and industry peers. This is used to paint a clear picture of the strengths and weaknesses within the organization, as well as to understand relative performance against industry peers.
2. play the numbers game
For seasoned sales representatives, account management becomes more about nurturing key clients, and less about finding new ones. But in a sales slump, this can be a dangerous fallback. Instead, companies should constantly pursue new business by prospecting on a weekly and even daily basis. Certainly, there are more and less effective ways to do this, but ultimately – numbers matter. With a fixed average rate of return on cold calls and email outreach, the simplest way to get more through the pipeline is to build bigger pipes (double the number of cold calls, increase the cadence on your sales campaigns, request more referrals from key clients). Perhaps more importantly, keep the pipes warm – in other words, follow up on every single lead, proactively track contact and cadences, and identify leads that have been forgotten. A “lead aging report” (similar to the dashboard pictured below) can help to highlight leads that have had minimal or no activity, helping sales reps redirect their attention in line with immediate priorities. This kind of follow up can often prove to be the critical bridge between an efficient and an effective sales organization.
3. Nurture Your key accounts
While prospecting is the most statistically sound way to build the pipeline, new leads should never be sought at the expense of your key commercial relationships. Existing customers require less “ramp up” (i.e. cold outreach, introductory materials, etc.), which is often the most time-consuming and demotivating part of the sales process. They also spend more, on average, than new clients. During a plateau, it is advisable to revisit and reinvest in your top accounts – not just trying to sell more but to sell new products that fit your clients’ evolving needs. Many companies adopt a generic customer retention strategy to realize economies of scale, but for top clients – particularly dynamic, complex organizations – a personal and tailored approach will go much further.
Reinvesting in key accounts also serves as an intelligence gathering exercise, by helping you to better understand the “ideal” target customer and thus duplicate efforts with others. And though key account management requires effort and resources, it’s likely to yield ROI for your company that exceeds your returns from simple pipeline expansion. Even more importantly, it’s a long-term strategy that can help avoid a similar sales plateau in the future.
4. create incentives that everyone "gets"
Sales contests and incentives are a common and powerful tool to help a sales team move beyond a plateau. But they are often riddled with complexity and land up creating more confusion than enthusiasm. If you have recently introduced or altered a compensation plan, or are thinking of doing so, your best bet is to keep things simple. The key here is to ensure that everyone understands what it takes to win (i.e. set precise goals and targets by month, quarter, and year) and what the winners will get (i.e. introduce a compelling prize).
Most importantly, get the team excited about the contest and maintain a sense of healthy competition and energy. Many contemporary companies use gamification to motivate and excite the salesforce – for example, building a sales leaderboard that is publicly visible so everyone can see who is leading and by how much. This is most often digital (an electronic dashboard, perhaps projected on a big screen) but a simpler, traditional poster board can work just as well.
5. Change the channel
Sales complacency doesn’t just refer to the sales force – it can also mean you’re using “tired” sales channels, or that they simply no longer make sense for your organization. A shrewd organization will regularly revisit its channel strategy to make sure it continues to add value efficiently. The ebb of a sales plateau provides a great opportunity to do this: look at the sales channels currently used, understand the relative efficacy of each one, and rethink their allocation.
A simple optimization exercise helps to analyze each channel based on financial and operational aspects, and to create an appropriate channel mix strategy. To so, companies should consider two categories: 1) Product Characteristics such as offering (product vs. service vs. solution), complexity, and size of purchase; and 2) Customer Characteristics including geographic footprint, buying process, and changing preferences.
If this exercise yields results that look different to the current state (which is likely the case during a plateau), the next step is to determine where - and by how much – to shift between existing and new channels.
Channel partners, particularly, can help breathe new life into a stagnant sales machine. They can also help to provide on-the-ground understanding of market trends. Of course, the effectiveness of a channel partner depends on several things, like the technical complexity of your product/service; the sophistication required to sell it; the partners’ sales process and their compatibility with your own; and various legal or contractual parameters.
No two companies are exactly alike, and your optimal channel mix and sales strategy might look very different to those of your peers. One thing is true of all companies, however: that a thoughtful and data-based approach can help you to understand where you are, where