How to get sales results that link to strategy? That the question Frank V. Cespedes explores in his recently published book Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling. Thanks to his many years of experience as a business manager, consultant, and Harvard Business School professor, he can tell: „for most firms, the largest, most difficult, and most expensive part of strategy implementation is aligning sales and go-to-market efforts with the company's espoused strategies and goals.“ Poor alignment of strategy and sales creates direct and opportunity costs having a negative impact on the company's growth potential. Nevertheless, the topic has received very little attention by academics, consultants, and practitioners alike.
What is the Problem?
One common reason for poor alignment is the classical "one-way communication," Cespedes explains. In many companies, sales departments rarely get to be involved in strategy formulation, even though they are in constant customer contact and very familiar with the customers’ wants and needs. Instead, strategic directions are sets by C-level executives who are far removed from the sale realities; with the result that sales people often don’t not take strategy announcements from top management seriously, let alone implement them.
Another reason is the tendency of sales departments “to focus almost exclusively on tactics and daily operations, while failing to think or act strategically." (p. 11) As sales representatives are under constant time pressure trying to meet one deadline after another, such behavior is hardly surprising and quite understandable.
Finally, the strategic planning process itself often causes problems. Most companies treat strategic planning as a periodic (typically annual) event rather than an ongoing process. However, the buying behavior of customers does not accommodate such planning cycles. “Even if the output of planning is a great strategy (a big if), the process itself often makes it irrelevant to sales executives, who must make important decisions throughout the year in accord with external buying rhythms and selling cycles at multiple accounts," (p. 13) Cespedes says.
What is the Solution?
Cespedes argues that linking sales efforts with strategy should be a two-way street. “In any business, value is created or destroyed in the market with customers, not in conference rooms or planning meetings,” (p. 31) he says. Sales staff can provide valuable insights about current customer behavior, thus helping to keep business strategy relevant. Conversely, strategic direction is key to improving sales efficiency. To make this work, Cespedes proposes a multilevel framework.
- The first step is to understand the market and customer characteristics and make core decisions about where and how to compete. What are our goals? Which customer groups, product segments, regions, etc. do we serve and which ones not? Which value do we deliver to our customers? Lack of focus is one of the main reasons why strategies fail. If there is no clear strategic direction, Cespedes says, sales people will "sell to anyone willing to pay a certain price (often discounted to make a volume quota target) and so generate an unwieldy array of sales tasks, fragment selling effectiveness, and make profitable growth difficult." (p. 94)
In addition, the strategy must be communicated in a simple and consistent way so that busy sales people in the field can easily understand and apply it in their daily work.
- In the second step, the strategic choices need to be translated into specific sales tasks and measurable objectives. What must the sales staff be particularly good at in order to deliver value to customers and, equally important, to extract value from customers? This may vary greatly depending on the chosen strategy and the market and customer characteristics. Cespedes provides a number of examples here. What’s important is to define the "ideal customer" as customers create different costs. "Not every customer is a good customer!" Important selection criteria are quantitative aspects, such as order size, product mix, and cost of customer care, but also qualitative aspects, such as the name of the customer, which can serve as reference for potential new customers.
- The third step is to ensure that the actual behavior of the sales staff is in line with the defined sales tasks. Important levers for achieving alignment are the hiring of sales people with the right experience and skills, excellent training and development opportunities for sales staff, continuous measuring and reviewing of sales performance and organizational structures, appropriate compensation and incentive systems, and cross-functional communication and collaboration.
At the end of his book, Cespedes is quoting bestselling author John le Carré when he gives strategists the advice: “A desk is a dangerous place from which to watch the world.“ Not only sales people, but also strategists should stay in touch with costumers in order to maintain a grip on reality.
With lots of practical and theoretical background knowledge, Frank Cespedes walks the reader through the difficult process of aligning strategy and sales in a methodical manner and easy-to-understand, witty language. A must read for strategists, sales executives, and CEOs alike!
Frank V. Cespedes (2014): Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling. Harvard Business Press Books. 336 pages.