Sales Growth

Five Proven Strategies from the World's Sales Leaders

Thomas Baumgartner, Homayoun Hatami, Maria Valdivieso de Uster

• Publisher: Wiley
• Year: 2016
• ISBN:
  9781119281061
• Edition: 2
• Topic: Business
• Subtopic: Sales
• Index: Business

The challenges facing today's sales executives and their organizations continue to grow, but so do the expectations that they will find ways to overcome them and drive consistent sales growth.

There are no simple solutions to this situation, but in this thoroughly updated Second Edition of Sales Growth, experts from McKinsey & Company build on their practical blueprint for achieving this goal and explore what world-class sales executives are doing right now to find growth and capture it—as well as how they are creating the capabilities to keep growing in the future.

Based on discussions with more than 200 of today's most successful global sales leaders from a wide array of organizations and industries, Sales Growth puts the experiences of these professionals in perspective and offers real-life examples of how they've overcome the challenges encountered in the quest for growth.

The book, broken down into five overarching strategies for successful sales growth, shares valuable lessons on everything from how to beat the competition by looking forward, to turning deep insights into simple messages for the front line. Page by page, you'll learn how sales executives are digging deeper than ever to find untapped growth, maximizing emerging markets opportunities, and powering growth through digital sales. You'll also discover what it takes to find big growth in big data, develop the right "sales DNA" in your organization, and improve channel performance. Three new chapters look at why presales deserve more attention, how to get the most out of marketing, and how technology and outsourcing could entirely reshape the sales function.

Twenty new standalone interviews have been added to those from the first edition, so there are now in-depth insights from sales leaders at Adidas, Alcoa, Allianz, American Express, BMW, Cargill, Caterpillar, Cisco, Coca-Cola Enterprises, Deutsche Bank, EMC, Essent, Google, Grainger, Hewlett Packard Enterprise, Intesa Sanpaolo, Itaú Unibanco, Lattice Engines, Mars, Merck, Nissan, P&G, Pioneer Hi-Bred, Salesforce, Samsung, Schneider Electric, Siemens, SWIFT, UPS, VimpelCom, Vodafone, and Würth. Their stories, as well as numerous case studies, touch on some of the most essential elements of sales, from adapting channels to meet changing customer needs to optimizing sales operations and technology, developing sales talent and capabilities, and effectively leading the way to sales growth.

Engaging and informative, this timely book details proven approaches to tangible top-line growth and an improved bottom line. Created specifically for sales executives, it will put you in a better position to drive sales growth in today's competitive market.

Strategy 1
Find Growth Before Your Competitors Do

Chapter 1
Look Ten Quarters Ahead

For tomorrow belongs to the people who prepare for it today.

—African proverb

Back in 2009, the United States Congress spent weeks drafting the American Recovery and Reinvestment Act. Most companies simply followed the process, praying it would help kick-start sales that had been ravaged by the deep recession. But at one major high-tech equipment company, sales leaders weren’t waiting. They knew the legislation would create opportunities for them. They put together a dedicated team with a field sales leader to spearhead the stimulus program and made it a focus for the sales organization. This group was responsible for developing compelling offerings, finding target customers, and creating an investment plan.

As soon as the outline of the bill came into focus, the group got busy planning how to exploit the potential that the new law would provide. They saw that the legislation called for grants and tax rebates to encourage healthcare providers to upgrade IT infrastructure and transition to electronic medical records. This infrastructure included products the company made.

The sales group swung into action, quickly developing a tailored offering for hospitals over the first four to six weeks. This was not a case of working with product development to launch tailored products. There was no time. Instead, the group had to select the suite of products that best fit customers’ needs and that fell within the scope of the legislation. It also developed sales collateral that told hospitals exactly how to take advantage of the federal subsidies in the stimulus bill. The company quickly met with many hospitals and was able to secure multimillion-dollar deals within the first few weeks after the bill was passed. It was months ahead of its competitors.

This is a prime example of forward-looking sales management, an important differentiator of top-performing sales organizations. Certainly, all sales leaders know that they should pay attention to what is happening in the wider world to anticipate changes that could turn into opportunities or threats. But the best follow the example of this company; they make trend analysis a formal part of the sales planning process and, as a result, are perfectly poised to capture the opportunities created by sudden changes in the environment.

Turning the stimulus package into a coherent, on-the-ground program is just one example of capitalizing on a forward-looking view of the market. Another leading high-tech company’s sales leadership continuously monitors economics, consumer behavior, and other forces to identify two or three relevant trends each year, and then translates them into concrete sales programs. It develops cross-functional SWAT teams that work with customer account teams to educate customers on the nature of a trend and to sell them on its solution. These teams engage with potential clients over a set period, explaining their reasoning and how the particular trend translates into a business impact. Customers valued this forward thinking and, as a result, favored partnering with the high-tech vendor as a way to get ahead of their rivals.

Whether it’s ecobusiness or cloud computing, by linking sales activities with emerging trends the company has scored breakthrough wins at Fortune 500 customers.

Based on our research and the discussions with the 200 sales executives we interviewed, it is clear that great companies do three interrelated things to capture the benefits of forward thinking:

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Sales leaders continuously monitor economics, consumer behavior, and other forces to identify two or three relevant trends each year.

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1. Surf the trends. Good sales leaders know how to hit monthly and annual sales targets. Great sales leaders tap into the big picture, watching for strategic openings in economic trends or changes in customer sectors and regions. They know these can be real opportunities.
2. Invest ahead of demand. This might mean making a small investment in analytic capabilities or beefing up the number of frontline sales staff ahead of the emerging trend.
3. Make it a way of life. Programs that successfully exploit emerging trends are not one-off flukes or lucky bets. Leading sales organizations have a built-in forward perspective and mechanisms to turn insights into action.

Surf the Trends

The high-tech equipment company reacted swiftly to a political change. But developments that create new selling opportunities can come from many sources: technology trends that change consumer shopping patterns or redefine business models, regulatory trends, or political trends (Table 1.1). To ride these trends, the best sales executives make it their business to know what is happening beyond their organizations, their customers, and their industries.

Table 1.1 Great sales teams constantly scan the horizon for the next opportunity²

Example trend		Opportunities
Technological	Internet of Things: estimated economic impact is $3.9 trillion – $11.9 trillion by 2025.	Use IoT data and advanced analytics to generate sales insights.
Political	Cybersecurity: The US government has set a $16 billion budget for cybersecurity in 2016; the budget has been growing at an annual rate of 24%.	Offer products and services with increased security, and emphasize these features in value propositions.
Geographical	Emerging markets: Expected to expand by an average of 4.7% annually from 2012–25.	Invest sales resources in growing markets to establish incumbent position.
Regulatory	Carbon emission reductions: e.g., EU targeting 40% reduction by 2030.	Go after customers most affected by regulatory changes.

Knowledge is only one part of the equation, though. Top-performing sales organizations have the will and the means to translate macro-shifts into real top-line impact fast. Often, they are able to launch tactical, opportunistic sales programs that deliver differentiated growth in a challenging environment.

For example, as the 2008 financial crisis unfolded, South Korean auto manufacturer Hyundai concluded that economic uncertainty would make consumers skittish about committing to major purchases such as cars. On January 2, 2009, the company launched the Hyundai Assurance Program, which allowed consumers to return their cars with no penalty if they lost their jobs or suffered any other involuntary loss of income. The program was free for the first 12 months after purchase, and there were no restrictions on types of customers. The company actually negotiated exclusive private-label use in the United States of a guarantee scheme provided by a Canadian company called Walkaway.

In the immediate wake of the program’s announcement, automotive consumer-research organization Edmunds reported that “purchase intent shot up 15 percent … and has remained at 7 percent above its seasonal norm.” Such was the popularity of the offer that Hyundai augmented it with a limited-term offer to cover three months of payments while the customer looked for a job. Longer term, Hyundai became the only major car manufacturer to actually increase US sales in 2009, and research cited the Assurance Program as one of the major factors behind customers’ decision to buy a Hyundai.¹

Forward-looking sales management can be strategic as well as tactical. The first-mover advantage created by forward-looking sales plans drives sales in areas where competitors have yet to arrive. This enables the pioneer to build share and enjoy high margins, at least for a while. For example, a major IT company that we discuss in detail below has a forward-looking sales function whose sole purpose is to accelerate the acceptance of next-generation technology among early adopters to give the company an edge within a few years.

As we have said, sales executives don’t just monitor economic trends; there are also megatrends such as climate change that create enormous challenges and opportunities across industries and markets. Of course, corporate strategists and marketing departments adjust their organization’s long-range positioning (in capabilities and products) to address needs created by these trends. But forward-looking sales departments also study how they can tap into changing consumer attitudes caused by such megatrends.

A maker of heating and air-conditioning equipment, for example, realized that perceptions about climate change and sensitivity to energy prices already have a real impact on when and why consumers decide to buy new equipment. The company has developed a model that incorporates different scenarios for energy prices and other key drivers of energy demand. Each scenario includes implications for different types of customers, including each client’s likely demand and which products to highlight.

For example, in a scenario with steeply increasing oil prices, more customers are expected to purchase heating systems based on alternative fuels or add modules to use solar energy. Those interdependencies have been modeled based on market and customer data. The results are translated into sales targets for different product groups and insights to guide sales force tactics and define incentives. The model is frequently updated to ensure it incorporates fresh data and thinking. There are also periodic reality checks to make sure that the program continues to reflect likely scenarios. This process allows the company to turn a very broad trend into practical insights for the sales team and gives it a leg up in a competitive marketplace.

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The first-mover advantage created by forward-looking sales plans drives sales in areas where competitors are yet to arrive.

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Invest Ahead of Demand

Forward-looking sales programs also depend on access to resources: companies have to be willing to take risks now to get themselves out ahead, creating sales capacity long before the revenue will materialize (see sidebar “Reborn in the Cloud” for the story of Adobe Systems’ reinvention).

Many sales executives we interviewed explicitly account for investment in new growth opportunities in their annual capacity planning processes. While this usually involves simply drawing territories and assigning customer lists to support growth initiatives, it can also include requests for dedicated resources to pursue new sources of long-term demand, particularly in emerging markets. Forty-five percent of the companies we interviewed conduct sales planning that goes beyond one year, and the level of investment can be high. More than two-thirds invest at least 4 percent of their sales budget on activities supporting goals that are at least a...