When you boil off the ancillary stuff that business developers do, four distinct objects remain:<\/p>\n
1. Capture:<\/strong> Acquire new customers No mere coincidence that the word customer<\/em> appears in each one. This indicates the basic element has been revealed. Time to stop boiling.<\/p>\n The problem is that the slew of activities involved in augmenting the Income Statement\u2019s top line have obscured these fundamental objectives. For revenue generation, organizations now employ specialists for direct selling, indirect selling, measuring, forecasting, dashboarding, best-practicing, comparing, spreadsheeting, analyzing, planning, content developing, press releasing, training, storytelling, elevator pitching, and social-media-ing! How did this happen? Discuss . . . <\/em> Sales pundits offer a reason for this by proclaiming that customers have suddenly become \u201cmore demanding than ever.\u201d<\/a> That\u2019s an illusion designed to induce panic, sell services, or both. Customers are not <\/em>more demanding. They have demands that are new and different<\/em>, which throws vendors for a loop. Bain attributed the increased cost percentage to four emerging buying trends:<\/p>\n 1. Customer needs becoming more sophisticated<\/strong>, evidenced by faster revenue growth in vertical industry solutions over general enterprise systems.<\/p>\n 2. Customers defining value as derived from outcomes or results<\/strong>, rather than in simply receiving the lowest price.<\/p>\n 3. Customers becoming more experienced conducting disciplined, competitive bid processes.<\/strong><\/p>\n 4. Customers becoming more wary<\/strong> about risks of incurring high switching costs.<\/p>\n These trends complicate almost every activity between trading partners. More intricate, collaborative processes for buyers drive congruent challenges for sellers. And for both, increased transaction costs, and greater risks. For B2B vendors, longer sales cycles and less predictable outcomes have become the new normal. Not everyone is upset. These problems represent red, billable meat for strategy consulting companies, which predictably promise \u201csolutions\u201d by positing new, box-intensive revenue frameworks.<\/p>\n Here\u2019s one from PwC: The Sales, Channels & Distribution Diagnostics Framework<\/em><\/a>. Despite the impenetrable title, multiple layers, lots of arrows pointing left-to-right and top-to-bottom, and odd categories under the Sales Technology Solutions stack (CRM Solutions\/ Sales Portals\/ Channel Integration Solutions\/ MIS\/ Sales Dashboards)<\/em>, it\u2019s a useful visualization that takes a spaghetti bowl of cross-departmental projects, and organizes them into a concise, linear arrangement.<\/p>\n It\u2019s easy to believe that adopting a more complex selling framework offers salvation from revenue calamity. But without knowing a company\u2019s current situation, it\u2019s hard to know whether that\u2019s true. Regardless which selling model or framework your company uses or chooses to implement, expect to encounter a unique collection of risks. Some familiar, some brand-spanking new. For mitigation, consider one or more of these risk strategies:<\/p>\n 1. Accept.<\/strong> Many executives regard risk as something to get rid of. But every<\/em> business strategy involves risk acceptance. The challenge is knowing which are appropriate<\/em>. For example, any company unable to accept the risk that a sales opportunity might fail is not market-ready. So for commercial organizations, the possibility of losing a deal is an appropriate risk<\/em> to accept. From there, the question becomes how much capacity the company has for failed opportunities.<\/p>\n Examples of risk acceptance: <\/strong> 2. Reduce.<\/strong> This is the most common approach to revenue risk. After all, when it comes to risk, shouldn\u2019t less<\/em> be better<\/em>? Maybe. Yet, some companies want the very risks that other companies willingly chuck over the fence. In fact, entire companies have been built on this idea. Who can\u2019t think of an entrepreneur<\/a> or two<\/a> that has created a business by providing an effective solution for the difficult or hard-to-serve customer?<\/p>\n Examples of risk reduction:<\/strong><\/p>\n \u2022 \u201cWe are tightening our lead-scoring requirements before handing opportunities to Sales.\u201d<\/em> 3. Eliminate.<\/strong> Some risks can be so catastrophic \u2013 bad ethics, for example \u2013 that they exceed a company\u2019s capacity to bear them. But eliminating a risk is rare, because it means crushing it to zero probability. When getting rid of a risk is the objective, often the best that can be achieved is making it a very, very low possibility.<\/p>\n Examples of risk elimination:<\/strong><\/p>\n \u2022 \u201cNo orders will be shipped without payments clearing in advance.\u201d<\/em> Examples of risk sharing:<\/strong><\/p>\n \u2022 \u201cWe are engineering this new energy technology with a consortium of trading partners who will have exclusive rights if we are successful.\u201d<\/em>
\n2. Maintain:<\/strong> Keep current customers happy
\n3. Grow:<\/strong> Encourage customers to increase spending with your company
\n4. Reclaim:<\/strong> Win back former customers<\/p>\n
\n
\nDriven to distraction.<\/strong> \u201cThe sales models for many large companies have become more complex and less efficient, putting pressure on profit margins,\u201d a Bain & Company survey<\/a> explained. Using financial data between 2003 and 2011, Bain compared the income statements of about 200 US healthcare, technology, and financial services companies. \u201cMore than half of these companies had increasing sales and marketing expenses as a percentage of revenues over the period, or they failed to demonstrate the scale benefits that one would expect from their growing size.\u201d<\/p>\n
\n\u2022 \u201cWe expect that [X%] of our pipeline leads will not result in a sale.\u201d<\/em>
\n\u2022 \u201cWe\u2019re going to monitor trends X, Y, and Z. But for now, we\u2019re not mitigating their risks.\u201d<\/em>
\n\u2022 \u201cWe have budgeted [X%] of gross sales for Bad Debt Allowance.\u201d<\/em><\/p>\n
\n\u2022 \u201cWe are increasing our sales pipeline multiplier.\u201d<\/em>
\n\u2022 \u201cWe are conducting background checks on all of our new hires.\u201d<\/em><\/p>\n
\n\u2022 \u201cMoving forward, we\u2019re discontinuing all channel sales and adopting a direct model.\u201d<\/em>
\n\u2022 \u201cOur CRM system will not advance an opportunity to the next stage until we know [X.]\u201d<\/em>
\n
\n4. Share. <\/strong>Some risks are too great for a single company to sustain, but they can become feasible when shared between two or more entities. This often occurs with co-development agreements between trading partners, or when projects are underwritten by other investors. Risk sharing occurs on the operational level, too. When a company cannot afford a salaried sales rep in a territory, the arrangement might become possible when base pay is lowered, and commission percentages are increased.<\/p>\n
\n\u2022 \u201cOur reseller contract provides protected territories to our exclusive channel partners.\u201d<\/em>
\n\u2022 \u201cOur suppliers have revenue incentives if we meet our target sales volumes.\u201d<\/em><\/p>\n