Start-Ups and Other Adventures

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Last week I had the good pleasure to co-present to a group of start-up CSOs, CMOs and CEOs.  The companies were different sizes, and maturities, mostly high-tech (some software, others hardware and manufacturing).  Also presenting was Anneke Seley, founder of PhoneWorks and author of the new book Sales 2.0, and Bill Binch, VP Sales at Marketo.  Bill talked about sales and marketing alignment and marketing automation-the New CRM.  Anneke defined Sales 2.0 and gave examples of various client success stories.  I presented data from our 2010 Sales Performance Optimization study comparing Start-Ups metrics with companies identified as Dominant players in their markets.

Not surprising, Start-Ups overall attained less of their 2009 targeted revenue than the Dominants (69% versus 83%) and a lower percentage of their sales reps met or exceeded their quotas (50% versus 56%).  Other metrics were also in line with expectations.  Start-ups had smaller average deal sizes, had a lower percentage of qualified leads result in first customer calls/meetings, lower percentage of presentations and proposals resulting in sales, and lower win rates on deals forecast to close (43% versus 52%).

What was surprising were the many metrics where there were not significant distinctions between Start-Ups and Dominants; and, the significant differences that existed within the Start-Ups.  As a deeper dive into the Start-Up category, we defined Overachievers where greater than sixty percent of reps met/exceeded quota and Underachievers where less than fifty percent of reps met/exceeded quota. The Overachievers realized 85% of their 2009 revenue target versus 50% for the Underachievers.  83% of Overachiever reps met/exceeded their quotas, versus 17% for the Underachievers!

So being a start-up doesn’t automatically relegate your team to subpar performance.  And being a dominant player doesn’t automatically assure that you will blow away your number.  What does make a difference?  One chart that was strikingly similar among both the Start-Ups and the Dominants was the reason we WIN deals.  The chart below compares answers from both these groups.

 

Comparison of Win Reasons for Start-Ups and Dominant Players

 

You can see the variances in answers; for example, Dominants’ #1 reason for winning is Brand Equity/Reputation, Start-Ups’ is Existing Relationships.  But what’s significant is the first area completely within the grasp of Sales to control–Sales Process Execution-is in fifth place for both groups!This strikes me as an area with huge upside potential.  If you haven’t seen our SRP Matrix you may want to read more about it in our 2010 Sales Performance Optimization Report.  Suffice to say, firms employing higher levels of sales process implementation and enjoying higher level customer relationships consistently fare better than those further down each scale.  How much better and does it really make a difference?

If we return to the Overachievers and Underachievers, their quota and revenue attainment figures were far different.  So were their sales process implementation figures (see chart below).

 

correlation between quota attainment and sales process type

 While two-thirds of Underachievers operate with little attention to sales process, 55% of the Overachievers have implemented sales process at the higher levels (one-third at the highest level).

 You can continue to ignore sales process but the data continues to affirm that you do so at your own peril.

 Next Week: Metrics that Matter

 Sell Well,

Barry Trailer

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