“Executives and Salespeople Are Misaligned — and the Effects Are Costly,” according to Harvard Business Review
This article originally appeared on hbr.org.
Authors: Frank V. Cespedes and Christopher Wallace
Frank V. Cespedes is a senior lecturer at Harvard Business School and author of “Aligning Strategy and Sales.” Christopher Wallace is the founder of Incite Sales and a managing director for GrowthPlay, a sales effectiveness firm.
U.S. companies spend over $900 billion on their sales forces. It is, by far, the most expensive part of strategy execution for most firms. Yet, on average, companies deliver only 50% to 60% of the financial performance that their strategies and sales forecasts promise. And more than half of executives say that their biggest challenge is ensuring that their decisions about strategy and resource allocation are aligned with their companies’ strategies. That’s a lot of wasted money and effort.
An assessment of over 700 sales professionals and senior executives found that the problem stems from gaps in the perceptions, attitudes and information flows between executives and sales representatives.
Respondents were asked how well their organizations’ strategic directions inform the critical elements of their sales approaches: their target customers, the sales tasks generated by those customers’ buying journeys, the type of salespeople best suited to perform those tasks, how the firm organizes its sales efforts, and the interactions required to sell and deliver value.
A broad story emerged: Senior leaders have a better understanding of the company’s direction than sale representatives, but are concerned that they don’t have the right sales processes and people. For their part, salespeople are confident in their abilities to execute but have little understanding of their companies’ strategic directions. When leaders want to make changes, misalignment sets up a costly cycle.
To achieve alignment, companies need to treat causes, not symptoms. Good planning and leadership support are key.
Consider a large home energy provider in a market where deregulation is driving down revenue and profit. To spur growth, the company committed to a strategy of diversifying its offerings. This meant transforming its sales force. Here’s what the leadership team did:
— IT LINKED STRATEGY TO BEHAVIORS. The team identified the selling behaviors that needed to be abandoned and established a new sales process and set of sales tasks that needed to be clarified.
— IT CHANGED THE TRAINING APPROACH. It also committed to spread training over a series of weeks, allowing the salespeople to apply behaviors gradually. Simultaneously, sales managers developed their coaching skills to focus on how salespeople serve their customers.
— IT REVAMPED COMPENSATION AND PERFORMANCE EVALUATIONS. Commissions were adjusted, and additional incentives were added to reward sales reps who exhibited the behaviors to execute the strategy, not just the revenue outcomes. Further, adherence to the sales process was added to the salesperson’s evaluations, and reviews were now taken seriously as a development tool.
— IT CHANGED RECRUITING AND HIRING EFFORTS. The biggest personnel shift related to front-line sales managers. The company began evaluating potential managers on their ability to coach and reinforce the process in addition to their sales performance.