Or they would claim that the marketers hadn’t put together the right campaign for their local market. When the CEO tried to hold the buyers accountable for the slow moving merchandise, they would blame the stores for not displaying it well enough. Or the buyers would point their fingers at the marketers for not moving the merchandise. When the marketers were confronted, they blamed the stores or the buyers. Another organisation in the office equipment business had started an intense focus on customer service and quality improvement.

As they began finally listening to their customers, they kept hearing how bureaucratic they were. One day a customer in one of the biggest cities they served, pointed out that they had 33 phone numbers in the phone book. “We don’t know whom you should talk to. Here, you figure it out,” is what the company was essentially saying to its customers. “Maybe you should give us an organisation chart so we have a fighting chance of getting to the right department,” the customer suggested. When improvement teams tried to map out some of the service processes in these departments, they had to follow the bouncing customers as callers were sung a few verses of “No, that’s not my department.” Service providers were just as frustrated by all the interruptions from “all those idiotic customers who keep calling us when we’re obviously not the right people for them to talk to.”

Both of these examples illustrate the behaviour-shaping role of structure and systems. It’s like the strange pumpkin I once saw at a county fair. It had been grown in a four-cornered Mason jar. The jar had since been broken and removed. The remaining pumpkin was shaped exactly like a small Mason jar. Beside it was a pumpkin from the same batch of seeds that was allowed to grow without constraints. It was about five times bigger. Organisation structures and systems have the same affect on the people in them. They either limit or liberate their performance potential.

We’re Getting the Behaviour We Designed

If we are unhappy with the behaviour of people on our team, we need to take a closer look at the system and structure they’re working in. If they behave like bureaucrats, they’re likely working in a bureaucracy. If they’re not customer focused, they’re probably using systems and working in a structure that wasn’t designed to serve the servers and/or customers.

If they’re not innovative, they’re likely working in a controlled and inflexible organisation. If they resist change, they’re probably not working in a learning organisation that values growth and development. If they’re not good team players, they’re likely working in an organisation designed for individual performance. Good performers, in a poorly designed structure, will take on the shape of the structure. Many organisations induce learned helplessness.

People in them become victims of ‘the system’. This often comes from a sense of having little or no control over their work processes, policies and procedures, technology and support systems. “You can’t fight the system,” they’ll say with a shrug as they give the clock another stare, hoping to intimidate it into jumping ahead to quitting time. These feelings are often amplified by a performance management system that arbitrarily punishes people for behaving like the structure they’ve been forced into. ‘\Empowering’ helpless people without changing the structure they work in is worse than useless. It increases helplessness and cynicism. It’s like ‘empowering’ that seed in the Mason jar to become a full grown, well-rounded pumpkin– but leaving it in the jar.

Reaching full potential

Improvement planning, process management, teams, skill development, and the like are either constrained or boosted by our organisation’s structure and support systems. If they are poorly aligned with our Context and Focus (vision, values, and purpose), strategies, and goals, performance will never come close to its full potential.

Lisa did the happy dance all the way down to her sales manager’s office and burst through the door. After an elated high-five, her sales manager asked her a few questions about the opportunity. “Uh oh! I forgot to ask about those things.” She better not cash the commission cheque just yet. There’s work to be done to best prepare a winning finalist presentation strategy.

Gear up for the final lap

The finalist stage is an exciting time, but top sellers don’t let exuberance knock them off their game. For your team to develop the winning finalist presentation strategy, you need to know answers to the six following questions:

1. What did they see in the RFP response that led you to be selected as a finalist?
2. What did they see in the competition’s RFP responses that they want you to address during your finalist presentation?
3. Who from their team will be represented at the finalist presentation and what do they want you to be sure to cover?
4. What other firms have been selected as finalists?
5. What criteria will be used to score the finalists?
6. What is the selection process following the finalist presentation?

Be prepared

For each of these six questions, there are several follow-on questions that needed to be asked based on the responses received. Will you always get answers to all of the questions? Of course you won’t. However, every information nugget you receive helps you develop your finalist strategy, select your team and craft your presentation.

During the conversation, be sure to also ask about logistics like:

• Amount of time for the presentation
• Who to ask for upon arriving at their office
• Projector/Internet access (if needed).

1. Customer spend

Spend plays a role, of course. The most important aspect of this is not to look at how much that customer spends with you at present, but to determine what the potential spend is. If you have a customer who may never spend more with you, is it a strategic account and why?

2. Profit margins

Some clients will always squeeze you on price. At the same time, there is an extra cost associated with a strategic account manager. Therefore, it’s unwise to allocate this type of high-level resource to an account that is not going to deliver a decent return on investment for your business.

3. Influence

Certain clients may not be big spenders, but they may wield a great deal of influence in a particular market. When KreditInform, the company my partners and I founded in 1982, wanted to ensure that our message was spread into the market, we would try to influence these customers, not only to buy our products, but to buy into the processes and procedures we wanted the industry to follow as a whole.

4. Industry leadership

If a client is a market leader, it’s advantageous to have them as collaborators with you. We placed a lot of emphasis on being associated with market leaders. That meant we would ‘go the extra mile’ to enhance our proposition and to ensure we blocked the competition.

We had several clients whose requirements enabled us to develop new and innovative products that were subsequently used by the industry as a whole. This approach to innovation was such that industries became part of our strategic planning for the business. We would meet with them to discuss their problems and the challenges they faced in their industries, and then develop a ‘dream solution’ for them. That closeness to the clients enabled us to grow our own reputation and to become truly innovative in our field of expertise so that we too became the industry leaders. The value of this type of relationship is more difficult to measure than one based purely on profit, but position your business correctly and your competitors won’t stand a chance of putting their foot in the door.

5. Strategic account manager profile

What does a strategic account manager look like? They have to be great communicators who are persuasive. They have to be attentive – and that goes beyond paying attention. They must be perceptive people who see possibilities, not only in the client base, but in the industry and the broader market too.

If they can provide valuable feedback to customers, your business will gain that slight edge over your competitors which, in our highly commoditised world, can place you streets ahead. Perseverance is another key quality. Strategic accounts may take years to develop. At the start of the relationship, some may spend very little. But it’s the relationship building that counts. For example, a strategic account manager may identify an individual with whom it’s worthwhile cultivating a solid relationship. As that person moves up the corporate ladder,  they will continue to use your products and services because your account manager will have become a trusted advisor.

Symbiotic relationships

Start by conducting a needs analysis for each client and then assigning the right level of sales person to the account.

If the client is spending less than they could be, it makes sense to assign a sales person who is a specialist at growing existing clients. On the other hand, if the client has reached maximum spend, it’s best to assign a customer relationship specialist to them to nurture and maintain the association. It’s vital to create a profile of your customer before you hand over to a strategic account manager. Alignment between the two is essential to pave the way for a good relationship. Ideally, a strategic account manager interacts with the leaders of the business, not the managers. Operating at the C or D level is what makes them strategic. At this level, you’re not selling, you are collaborating.

Strategic account management checklist

Generate the best value from your accounts:

• Define what a strategic account means for your business.
• Conduct a thorough needs analysis to determine whether you can align the clients’ objectives with your value proposition.
• If it’s strategic, develop a proactive strategy to own the account, you don’t want to share it.
• Use your strategic accounts to develop services and products. Listen to what clients want and what they don’t. This will give you the edge in the market.
• Develop a performance matrix to measure strategic account interaction vs ROI. A strategic account manager worth their salt will be expensive, so ensure that the performance criteria are specific. Remember, these are not trans-active sales people so think long-term
• Nurturing customers is usually less expensive than acquiring them.

A recent study of the experiences of former executives of Fortune companies and start-ups who captained the ship through the ‘70s stockmarket crash to the ‘90s dot-com bubble, reveals some useful home truths.

The perfect storm

They report a range of signs that it’s time to rethink how your company sells:

• Tenders appear to be an exercise to justify decisions that are already made, and not a serious opportunity to win the business
• Key customers slash budgets or rationalise their number of suppliers
• Deals you thought were ‘hot to trot’ go ‘off the boil’
• Your pipeline bloats with opportunities stuck in a holding pattern, with the seller not achieving any forward progress for several months
• Decisions become more complex, involving more people and taking longer to get across the line
• Price and risk mitigation become main topics for discussion in the negotiation phase
• Sales are for amounts far less than forecast
• Sales people spend time on low-yield activities like prospecting because the quality and quantity of leads from marketing is too low or dries up
• Your forecast is murky when you look out further than six months
• You win deals, but can’t repeat success across the sales force
• You lose deals and don’t know why, or when they became irrecoverable
• Good sales people bail out into management roles in other departments or leave the company altogether

Typical Reaction

Asked how their organisations dealt with these challenges, they said the typical gag reflex is to:

• Spend more on advertising
• Cut back on sales people
• Cut back on training and coaching
• Cut back on pricing
• Tell sales people to “work harder and smarter”

So what happens next?

• A downward spiral commences
• Managers focus on activity metrics and demand more calls, more leads, more proposals
• Sales people chase anything that moves, filling their funnel with unqualified, low potential deals to meet the activity targets
• Forecasts fill with fiction
• Managers start weighting the forecast report, which sends the message they don’t trust their team
• Sales people invite managers to help close their big deals, knowing that if the manager can’t win, the sales person is off the hook
• Customers invite managers to attend the final pitch, knowing they can approve larger discounts
• Coaching stops as managers don the cape of ‘SuperRep’
• Non-standard promises made in the heat of battle are off menu for what the delivery team actually does, establishing a gap between the customer’s expectations and what they then experience
• Repeat business drops as promises are not met
• Margin and market erosion begins
• Managers focus on even more activity metrics, more calls, more leads, more proposals
• The downward spiral gets deeper and deeper

If any of these danger signs look familiar, you’re in good company. Most executives who turned their companies around in former recessions first fell into the same traps because they represent a natural response in times of uncertainty. People focus on risk and get tactical. But these same executives report the secret to pulling out of the nosedive is to act against the natural impulse, keep your head, and take a contrarian path. Those that did so achieved stability and even growth while their competitors fell by the wayside.

Five dangerous mistakes

They cite the five most dangerous mistakes as:

1. Ignoring the problem. Fear and panic can cause indecision. When they do, business leaders can fail to evaluate options rigorously, and so make inappropriate decisions to maintain the status quo. Poor choices – or safe choices made too late – cause a company to go backwards. When the warning signs appear, take swift action.
2. Increasing advertising. For fast moving consumer goods, brand advertising can sway preference and so take market share away from competitors in the short-term. But in complex B2B sales, advertising does not lift short-term revenue because institutional buying decisions require a protracted period of assessment that outlasts most advertising campaigns. So don’t advertise and expect an impact on B2B sales this year. Instead, convert advertising budgets into ‘demand creation’ programmes that turn buyers with latent needs into buyers with active interest. Also, PIMS Associates1 reports how companies that maintain advertising presence end up growing faster over the long-term than firms that drop off the customer’s radar, seemingly swallowed by the downturn.
3. Cutting the price. Buyers in a tight market will naturally gravitate to low prices. But this simply reduces your margins, which must be paid for by cutbacks to operating expenses elsewhere. It leads to short-term gain but long-term pain; the loss of sustainability. Conversely in the B2B space, higher prices positioned as necessary to reduce the customer’s risk, actually play better to executive perception than ‘getting a cheap deal’. Sometimes putting your price up is the best way to build your market with the right customers who can help you grow, not slow.
4. Freezing sales expenses. Putting a hold on sales costs such as travel, entertainment and training are typical areas targeted by nervous CFOs. But a study by Mercer reports: “Only 27% of companies that indulged in intensive cost cutting were growing as a result of their pains.”2 As Tom Peters observed in his book The Circle of Innovation: “You can’t shrink your way to greatness.”3
5. Pushing more calls. Pressuring sales people into making more intrusions on the same number of prospects actually reduces sales. Speaking on studies of leading companies across thousands of sales people for three decades, Neil Rackham (author of SPIN Selling and Rethinking the Sales Force) concludes: “The least successful people are the ones making the most calls. Increasing the call rate results in fewer orders, not more.”4

Five winning ideas

Spotting and dealing with the danger signs is one part of the equation. The other is engaging in new activities that drive success. Past recession-beating executives suggest the following:

• Create value. A tight market will change the priorities of your target customers. As they face new challenges, they look for answers. So equipping your sales force to shift from ‘value communicators’ to ‘value creators’ becomes a key part of your growth strategy. The ‘talking brochure’ type of selling no longer works because it adds no value. By thoroughly doing your homework on target accounts, anticipating the issues they’re about to deal with, and approaching them with answers even their own people don’t have, you stand out in the crowd, and show your organisation to be relevant. The goal is to make the type of sales calls your customers would want to write a cheque for because value was exchanged. When you end a sales call that produces no excitement and leads to no mutual commitments to move forward, it’s a sales call that fails both companies at the table.
• Chunk your offer. When customers face uncertainty, fewer high-cost projects clear the launch pad. Therefore, helping clients acquire your offerings in smaller modules that can be signed off at lower levels of the organisation has been shown to produce more revenue, as well as serving as a foot in the door for expansion and consolidation when the market rebounds. This doesn’t mean the product manager needs to invent anything new. It means sales people need to be selective about what chunks of their offering they emphasise and package to each customer. Consider trimming mentions of aspects of your product or service that aren’t core to the client need (the ‘nice to haves’). At the same time, emphasise ‘must have’ features that add to the client experience, sell them value and even justify a premium. Or seek out partner products to combine with yours in dynamic new ways. Involve your customers when refining your messaging. Enlist their guidance and engender a ‘we’re all in this together’ esprit de corps. When doing so avoid any language that smacks of desperation. They must understand your motive is in placing their needs first.
• Map your funnel. Gain a laser focus on the dynamics of your sales funnel. Enlightened leaders use difficult times to take stock of the mechanics of where sales come from and how to improve the system they pass through. They map their sales process by getting answers to the following:

1. What problem do we solve better than anyone else (differentiation)?
2. Who has that problem and where do we find them (targeting)?
3. What are the cognitive steps those prospects go through from being unaware of their problem, to being a satisfied customer (buying journey)?
4. What ‘ah-hah’ moments propel a prospect from one stage in that journey to the next (sub-sales)?
5. How can Marketing and Sales help those sub-sales happen (roles)?
6. What does average, fast and slow look like through each stage (velocity)?
7. How many move forward and how many leak from the funnel, at each stage (planned attrition)?
8. What is the average contract size (revenue)?

When you know these metrics, you’re able to start with the revenue figure you need to achieve this year, next year and the year after that, and can calculate backwards to know how many opportunities you need stacked at each stage of the sales funnel, each month, for the right number and value of deals to close each quarter. This informs how many new leads are needed monthly, and going back even further, how many new contact names Marketing needs to start connecting with at the very start of the demand creation process. It also informs when hiring is needed to keep reps at the optimum person-to-customer ratio, and can track forward to show when new problems and prospects will be needed to offset peaking in the initial target market.

• Circle the wagons. In a recession when pickings are lean, you will face increased assaults on your customer base by hungry competitors. So protect your clients – especially those that provide high margin. Identify the clients you cannot afford to lose, and initiate specific programmes to retain their loyalty. Get away from vague solutions and get known for delivering tangible results. This means agreeing outcome metrics for the work you perform, and showing your accountability for achieving these. It infers an agreement with these clients that you will track and communicate the value delivered, and deal with any shortfalls. 2010 data from executive buyers who swapped suppliers indicates that in most cases they didn’t churn because of price or any particular dissatisfaction, but because they just didn’t know if money spent with existing suppliers was well spent… because nobody had bothered to close the loop with them after making the initial sale.
• Coach performance. Doing this is difficult if sales managers do not go into the field to observe their sales people in front of customers. They cannot divine their team members’ strengths and improvement needs from behind a desk. Here are suggestions successful managers use to drive growth:

1. Map the activities that help customers move through the funnel. Agree with sales people what actions they can take to achieve those progressions.
2. Focus them on achieving this, along with the qualification, planning and presentation needed at each stage.
3. Give new hires specific but realistic metrics to achieve that. Take into account the fact that the average ramp-up time is now 7,4 months. Catch them doing things right and reinforce the positive. When improvement is needed, provide context, examples and suggestions.
4. For experienced sales people, focus performance coaching on the 60% of sales people in the middle of the bell curve (not the top 20% and not the bottom 20%). The middle of the bell is where the biggest gains will be made.
5. Set clear expectations for an accompaniment day and agree that the sales person will remain in control so customers don’t staple themselves to the manager. Managers should never hand out their business card or be seen approving any decision – they defer everything to the sales person.
6. Brief before and debrief after every call. What outcome do we want? Why would they write a cheque for this call? What went well? What could have gone better? Managers offer motivation and direction as needed. Always gain and give commitments and follow through.
7. After spending whole days with team members, trends will be spotted. Common needs are best dealt with during sales meetings in a peer setting. Every sales meeting should include a training component based on observations in the field. Push the administration and company news to emails. Use face-to-face time with sales people to hone their skills.
8. Run a quarterly performance appraisal one-on-one and always in person (never via webcam or telephone). Review performance to date. Plan what the sales person needs to create a sustainable, rhythmic approach to revenue attainment. Direct them. Enable them.
9. As unique needs arise, partner with human capital specialists and training departments as appropriate (but don’t abdicate the training role in sales meetings). The argument that sales managers must have first been successful sales people is less true than saying they need to understand the levers of sales performance, and be trained to identify gaps and coach their sales people to greatness. This requires deliberate, systematic process thinking skills; a blend of engineer, analyst and psychologist. There is increasing evidence that the role of sales management favours staff with a left-brain bias where the dominant traits are reasoning, speech, writing and number skills. This is in contrast to the right-brain processes of creativity, imagination, quick wits and visual processing that are more suited to the sales person. It doesn’t mean sales people should not be promoted to the management role, only that in the absence of properly profiling if a candidate exhibits the right behavioural fit to the role requirements, doing so blindly can be a risky proposition where mistakes are magnified by the number ofpeople under each sales manager’s stewardship.

Don’t try to reinvent the wheel

To avoid reinventing the wheel, learning from executives who weathered past recessions is a sound approach to reducing risk. In your own organisation, your alumni, or your online social network, there may reside active or emeritus officers with deep experience to share. Talk to them. Pick their brains. But one thing is certain when an ailing economy mimics a black hole: piecemeal remedies fail to achieve escape velocity. Cutting back on cost, though logical, is the opposite of what has pulled businesses through recessions in the past. Increased investment in the sales process, governed by greater discipline, is a more reliable approach for achieving sustainable revenue growth, even in difficult times.

Notes
1. What Strategic Investments Should You Make During A Recession To Gain Competitive
Advantage in the Recovery? by Keith Roberts, Journal of Strategy & Leadership, Vol. 31, Issue 4.
2. Wall Street Journal, Europe
3. The Circle of Innovation, by Tom Peters, Random House
4. Strategies for Hard Times, by Neil Rackham, Huthwaite

In the B2B arena, he says, surveys should not be limited to satisfaction. Instead, ask things like: Were you tickled pink? Did we wow you? Was this a positive, memorable experience in some way?

“Assuming you don’t have a monopoly on the market,” Liebenthal asks, “what goes on in the minds of your loyal customers who consistently return to purchase from you? What about those who buy from you less frequently? And what about those who buy once and never return?”

Liebenthal notes that Gallup Organisation used various techniques to probe the concept of customer satisfaction. Their studies delineated two types of satisfaction: rational and emotional.

• Rationally satisfied customers described themselves as satisfied with a company’s goods or services, but had no evident emotional connection
• Emotionally satisfied customers said they were satisfied, but the difference was that they also exhibited feelings of confidence, pride, passion and integrity for a company and its goods or services.

Customer Surveys

Some of the most popular online tools are SurveyMonkey, Zoomerang, and PollDaddy. Surveys are often plagued with biases and inaccuracies. The really big problem is that the information they omit or obscure can be what’s most central to increasing customer loyalty. Here’s what to look out for:

• Augment satisfaction surveys with other measurement techniques. Measuring from a variety of perspectives with a variety of methods helps to confirm or deny the validity of your survey.
• Keep this question top of mind: Is our survey measuring how well we do on a survey or is it actually measuring the feelings and needs of our real customers when they are in real situations with our company?
• Be objective. Survey questions should be crafted to remove bias and reflect customers’ true concerns. They should be conducted by outside firms to ensure data accuracy. If this is not an option, work with a different department in your company to identify problems and gaps.
• Design your surveys and findings with the goal of facilitating next steps. Combine qualitative insights with quantitative facts and incorporate media clips, quotes and anything else that will help your team decide how to move forward with its customer satisfaction strategy.

Other Ways to Measure Satisfaction

Liebenthal advises companies to avoid measuring the entire customer experience in one fell swoop with one “does it all” method. Instead break the customer experience into distinct lenses, touchpoints and customer segments. “Try to reach customers before, during, and after their interactions with you,” he says. “Use methods relevant to each lens, touchpoint and segment.”

Feedback Cards: Feedback cards are cheap and allow customers to vent.

Interviews: Interviews explore rather than rate an experience. They allow you to probe the customer experience.

Mystery Shopping: Mystery shopping requires a company outsider to act as a customer. The ‘outsider’ then documents his/ her experience.

Experience Auditing: Experience auditing is a form of mystery shopping that involves the use of personas, scenarios and objectives to document and measure the variety of communication cues exchanged
between staff and customers.

Monitoring: Monitoring can be directed at phone, email, and chat communications. It gives a real-world glimpse into interactions between customers and front-line staff.

Performance Analysis: Performance analysis examines the real-world interactions between companies and customers, but with the use of criteria that has been detailed and vetted for each type of interaction that a company has with its customers.

Factors to Consider:

• How are you collecting data?
• Are your customers comfortable with giving you information?
• What are you doing with the data you are collecting?

Therefore, the majority of companies are missing a critical opportunity to improve their sales teams’ performance, better understand their competitive landscape, and enhance their products and services.

The rationale

Here are seven reasons why every sales manager should consider implementing a formal, independent Win Loss Programme for their sales team:

1. Understand your prospects

Sales people often ask prospects why they lost a deal, but they don’t typically get a straight answer. According to proprietary sales research data, prospects only share the complete truth 40% of the time. This means that on average, in 60% of new business situations, sales people and sales teams do not have a complete and accurate understanding of why they lost.

2. Leverage your advantages

Sales people generally do not ask prospects why they won the business; therefore, they do not fully understand why they win either. On average, sales people only conduct win reviews with new customers 36% of the time, and therefore, most sales professionals have a limited understanding of the true reasons why they win in new business situations. This negatively impacts a sales professional’s ability to leverage his or her strengths.

3. Offer anonymity

A third party interviewer can get the complete truth from prospects during post-decision debriefs. Prospects are more candid when giving feedback and criticism to an independent third party because they don’t have to worry about hurting the sales person’s feelings or fearing confrontation, criticism or reselling efforts from sales reps (who often become defensive while receiving feedback).

Given the option to remain anonymous, a prospect can feel at ease with a third party interviewer inviting the prospect to share any issues he or she might have had with the sales person, sales process or a company’s products or services.

4. Make training more effective

Tailoring sales training with actual data and feedback from prospects is a huge opportunity for sales teams to improve their selling efforts. Every year, sales managers spend significant time and money training their sales people. However, most companies do little to verify that sales people are actually implementing the right tactics in their interactions with prospects.

A Win Loss Analysis programme ensures that sales training focuses on the most critical and actionable sales performance issues.

5. Close the perception gap

Sales people are not aware of their true impact on winning and losing new business; most overemphasise their influence on why deals are won and underemphasise their impact on why deals are lost. In a recent sales study, when sales people were asked what percentage of the time they believed they were at fault for losing, the average sales person believed that their personal performance was to blame only 25% of the time. In stark contrast, when sales people win, they believe that 75% of the time (on average) they are a major reason why a deal is won.

However, proprietary sales data shows that in 40% of new business situations, whether a sales person wins or loses, it is a direct result of the sales person’s own performance during the sales process. Therefore, sales people are under-emphasising how often they impact a loss and overemphasising how often they impact a win. This data indicates that sales people’s perceptions of themselves are often not calibrated with prospect perceptions, a situation that negatively impacts a sales team’s close rate.

6. Enhance strategic decisions

Third party Win Loss feedback can become a comprehensive senior management tool. A Win Loss programme delivers a reliable, objective and consistent tool that can be used by senior management to improve its products and services, as well as provide competitive intelligence. This information transcends the sales process and can become a critical conduit for strategic decisions.

7. Analyse prospect satisfaction

While companies often perform customer satisfaction analysis, most don’t analyse prospect satisfaction, limiting a company’s knowledge of market dynamics. Just as customer satisfaction analysis is intended to increase customer satisfaction and thus retention, a prospect satisfaction analysis/ Win Loss Analysis can increase prospect satisfaction and thus a sales team’s close rate.

The process of only surveying customers creates a “customer-focused” distortion that can make organisations conservative and limit a company’s ability to truly understand competitive market dynamics. True market dynamics can only be gleaned from prospective customers.

Grow new business

The most important long-term goal and benefit of a Win Loss Analysis programme is to increase a company‘s new business win rate. This is achieved through an improved understanding of how a company‘s sales effectiveness, products and services compare with the competition. Other benefits include identifying a company‘s strengths and weaknesses, and formally sharing prospect perceptions across all areas of an organisation.

A Win Loss programme also improves the effectiveness of sales presentations, determines key drivers for closing new business and can be used as a training and performance evaluation tool for sales and other presentation team personnel. Over time, Win Loss Analysis can allow a sales team to charge ahead of its competition by continually keeping a pulse on industry trends, the competition, and necessary enhancements to the sales process.

But Nelson had a strategic insight into how to deal with being outnumbered. He broke the British fleet into two columns and drove them at the Franco-Spanish fleet, hitting its line perpendicularly. The lead British ships took a great risk, but Nelson judged that the less-trained Franco-Spanish gunners would not be able to compensate for the heavy swell that day and that the enemy fleet, with its coherence lost, would be no match for the more experienced British captains and gunners in the ensuing mêlée. He was proved right: the French and Spanish lost 22 ships, two-thirds of their fleet. The British lost none.1

Nelson’s victory is a classic example of good strategy, which almost always looks this simple and obvious in retrospect. It does not pop out of some strategic-management tool, matrix, triangle, or fill-in-the-blanks scheme. Instead, a talented leader has identified the one or two critical issues in a situation – the pivot points that can multiply the effectiveness of effort – and then focused and concentrated action and resources on them. A good strategy does more than urge us forward toward a goal or vision; it honestly acknowledges the challenges we face and provides an approach to overcoming them.

Too many organisational leaders say they have a strategy when they do not. Instead, they espouse what I call ‘bad strategy.’ Bad strategy ignores the power of choice and focus, trying instead to accommodate a multitude of conflicting demands and interests. Like a quarterback whose only advice to his teammates is ‘let’s win,’ bad strategy covers up its failure to guide by embracing the language of broad goals, ambition, vision, and values. Each of these elements is, of course, an important part of human life. But, by themselves, they are not substitutes for the hard work of strategy.

In this article, I try to lay out the attributes of bad strategy and explain why it is so prevalent. Make no mistake: the creeping spread of bad strategy affects us all. Heavy with goals and slogans, governments have become less and less able to solve problems. Corporate boards sign off on strategic plans that are little more than wishful thinking. The US education system is rich with targets and standards but poor at comprehending and countering the sources of under-performance. The only remedy is for us to demand more from those who lead. More than charisma and vision, we must demand good strategy.

The hallmarks of bad strategy

I coined the term bad strategy in 2007 at a Washington DC seminar on national security strategy. My role was to provide a business and corporate strategy perspective. The participants expected, I think, that my remarks would detail the seriousness and growing competence with which business strategy was created. Using words and slides, I told the group that many businesses did have powerful, effective strategies. But in my personal experiences with corporate practice, I saw a growing profusion of bad strategy.

In the years since that seminar, I have had the opportunity to discuss the bad strategy concept with a number of senior executives. In the process, I have condensed my list of its key hallmarks to four points: the failure to face the challenge, mistaking goals for strategy, bad strategic objectives, and fluff.

1. Failure to face the problem

A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And, if you cannot assess that, you cannot reject a bad strategy or improve a good one.

International Harvester learned about this element of bad strategy the hard way. In July 1979, the company’s strategic and financial planners produced a thick sheaf of paper titled ‘Corporate Strategic Plan: International Harvester.’ It was an amalgam of five separate strategic plans, each created by one of the operating divisions.

The strategic plan did not lack for texture and detail. Looking, for example, within the agricultural equipment group – International Harvester’s core, dating back to the McCormick reaper, which was a foundation of the company – there is information and discussion about each segment. The overall intent was to strengthen the dealer/distributor network and to reduce manufacturing costs. Market share in agricultural equipment was also projected to increase, from 16% to 20%.

That was typical of the overall strategy, which was to increase the company’s share in each market, cut costs in each business, and thereby ramp up revenue and profit. A summary graph, showing past and forecast profit, forms an almost perfect hockey stick, with an immediate recovery from decline followed by a steady rise.

The problem with all this was that the plan didn’t even mention Harvester’s grossly inefficient production facilities, especially in its agricultural equipment business, or the fact that Harvester had the worst labour relations in US industry. As a result, the company’s profit margin had been about one-half of its competitors’ for a long time. As a corporation, International Harvester’s main problem was its inefficient work organisation – a problem that would not be solved by investing in new equipment or pressing managers to increase market share.

By cutting administrative overhead, Harvester boosted reported profits for a year or two. But, following a disastrous six-month strike, the company quickly began to collapse. It sold off various businesses, – including its agricultural equipment business, to Tenneco. The truck division, renamed Navistar, is today a leading maker of heavy trucks and engines.

To summarise: if you fail to identify and analyse the obstacles, you don’t have a strategy. Instead, you have a stretch goal or a budget or a list of things you wish would happen.

2. Mistaking goals for strategy

A few years ago, a CEO I’ll call Chad Logan asked me to work with the management team of his graphic arts company on ‘strategic thinking.’ Logan explained that his overall goal was simple – he called it the ‘20/20 plan.’ Revenues were to grow at 20% a year, and the profit margin was to be 20% or higher.

“This 20/20 plan is a very aggressive financial goal,” I said. “What has to happen for it to be realised?” Logan tapped the plan with a blunt forefinger. “The thing I learned as a football player is that winning requires strength and skill, but more than anything it requires the will to win – the drive to succeed… Sure, 20/20 is a stretch, but the secret of success is setting your sights high. We are going to keep pushing until we get there.”

I tried again: “Chad, when a company makes the kind of jump in performance your plan envisions, there is usually a key strength you are building on or a change in the industry that opens up new opportunities. Can you clarify what the point of leverage might be here, in your company?”

Logan frowned and pressed his lips together, expressing frustration that I didn’t understand him. He pulled a sheet of paper out of his briefcase and ran a finger under the highlighted text. “This is what Jack Welch says,” he told me. The text read: “We have found that by reaching for what appears to be the impossible, we often actually do the impossible.” (Logan’s reading of Welch was, of course, highly selective. Yes, Welch believed in stretch goals. But he also said, “If you don’t have a competitive advantage, don’t compete.”)

The reference to ‘pushing until we get there’ triggered in my mind an association with the great pushes of 1915–17 during World War I, which led to the deaths of a generation of European youths. Maybe that’s why motivational speakers are not the staple on the European management lecture circuit that they are in the United States.

For the slaughtered troops did not suffer from a lack of motivation. They suffered from a lack of competent strategic leadership. A leader may justly ask for ‘one last push,’ but the leader’s job is more than that. The job of the leader – the strategist – is also to create the conditions that will make the push effective, to have a strategy worthy of the effort called upon.

3. Bad strategic objectives

Another sign of bad strategy is fuzzy strategic objectives. One form this problem can take is a scrambled mess of things to accomplish – a dog’s dinner of goals. A long list of things to do, often mislabeled as strategies or objectives, is not a strategy. It is just a list of things to do. Such lists usually grow out of planning meetings in which a wide variety of stakeholders suggest things they would like to see accomplished.

Rather than focus on a few important items, the group sweeps the whole day’s collection into the strategic plan. Then, in recognition that it is a dog’s dinner, the label ‘long-term’ is added, implying that none of these things need be done today. As a vivid example, I recently had the chance to discuss strategy with the mayor of a small city in the Pacific Northwest. His planning committee’s strategic plan contained 47 strategies and 178 action items. Action item number 122 was ’create a strategic plan.’

A second type of weak strategic objective is one that is ‘blue sky’ – typically a simple restatement of the desired state of affairs or of the challenge. It skips over the annoying fact that no one has a clue about how to get there. A leader may successfully identify the key challenge and propose an overall approach to dealing with the challenge. But if the consequent strategic objectives are just as difficult to meet as the original challenge, the strategy has added little value.

Good strategy, in contrast, works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favourable outcomes. It also builds a bridge between the critical challenge at the heart of the strategy and action – between desire and immediate objectives that lie within grasp. Thus, the objectives that a good strategy sets stand a good chance of being accomplished, given existing resources and competencies.

4. Fluff

A final hallmark of mediocrity and bad strategy is superficial abstraction – a flurry of fluff – designed to mask the absence of thought. Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise. Here is a quote from a major retail bank’s internal strategy memoranda: ‘Our fundamental strategy is one of customer-centric intermediation.’

Intermediation means that the company accepts deposits and then lends out the money. In other words, it is a bank. The buzzphrase ‘customer-centric’ could mean that the bank competes by offering better terms and service, but an examination of its policies does not reveal any distinction in this regard. The phrase ‘customer-centric intermediation’ is pure fluff. Remove the fluff and you learn that the bank’s fundamental strategy is being a bank.

Why so much bad strategy?

Bad strategy has many roots, but I’ll focus on two here: the inability to choose and template-style planning – filling in the blanks with ‘vision, mission, values, strategies.’

1. The inability to choose

Strategy involves focus and, therefore, choice. And choice means setting aside some goals in favour of others. When this hard work is not done, weak strategy is the result. In 1992, I sat in on a strategy discussion among senior executives at Digital Equipment Corporation (DEC). A leader of the mini-computer revolution of the 1960s and 1970s, DEC had been losing ground for several years to the newer 32-bit personal computers. There were serious doubts that the company could survive for long without dramatic changes.

To simplify matters, I will pretend that only three executives were present. ‘Alec’ argued that DEC had always been a computer company and should continue integrating hardware and software into usable systems. ‘Beverly’ felt that the only distinctive resource DEC had to build on was its customer relationships. Hence, she derided Alec’s ‘Boxes’ strategy and argued in favour of a ‘Solutions’ strategy that solved customer problems. ‘Craig’ held that the heart of the computer industry was semi-conductor technology and that the company should focus its resources on designing and building better ‘Chips.’

Choice was necessary: both the Chips and Solutions strategies represented dramatic transformations of the firm, and each would require wholly new skills and work practices. One wouldn’t choose either risky alternative unless the status quo Boxes strategy was likely to fail. And one wouldn’t choose to do both Chips and Solutions at the same time, because there was little common ground between them. It is not feasible to do two separate, deep transformations of a company’s core at once.

With equally powerful executives arguing for each of the three conflicting strategies, the meeting was intense. DEC’s chief executive, Ken Olsen, had made the mistake of asking the group to reach a consensus. It was unable to do that, because a majority preferred Solutions to Boxes, a majority preferred Boxes to Chips, and a majority also preferred Chips to Solutions.

No matter which of the three paths was chosen, a majority preferred something else. This dilemma wasn’t unique to the stand-off at DEC. The French philosopher Nicolas de Condorcet achieved immortality by first pointing out the possibility of such a paradox arising, and economist Kenneth Arrow won a Nobel Prize for showing that ‘Condorcet’s paradox’ cannot be resolved through cleverer voting schemes.

Not surprisingly, the group compromised on a statement: “DEC is committed to providing high quality products and services and being a leader in data processing.” This fluffy, amorphous statement was, of course, not a strategy. It was a political outcome reached by individuals who, forced to reach a consensus, could not agree on which interests and concepts to forego.

Ken Olsen was replaced in June 1992 by Robert Palmer, who had headed the company’s semi-conductor engineering. Palmer made it clear that the strategy would be Chips. One point of view had finally won. But by then it was five years too late. Palmer stopped the losses for a while but could not stem the tide of ever more powerful personal computers that were overtaking the firm. In 1998, DEC was acquired by Compaq, which, in turn, was acquired by Hewlett-Packard three years later.

2. Template-style strategy

The Jack Welch quote about “reaching for what appears to be the impossible” is fairly standard motivational fare, available from literally hundreds of motivational speakers, books, calendars, memo pads, and websites. This fascination with positive thinking has helped inspire ideas about charismatic leadership and the power of a shared vision, reducing them to something of a formula.

The general outline goes like this: the transformational leader (1) develops or has a vision, (2) inspires people to sacrifice (change) for the good of the organisation, and (3) empowers people to accomplish the vision.

By the early 2000s, the juxtaposition of vision-led leadership and strategy work had produced a template-style system of strategic planning. (Type ‘vision mission strategy’ into a search engine and you’ll find thousands of examples of this kind of template for sale and in use.) The template looks like this:

• The Vision.

Fill in your vision of what the school/business/nation will be like in the future. Currently popular visions are to be the best or the leading or the best known.

• The Mission.

Fill in a high-sounding, politically correct statement of the purpose of the school/business/nation. Innovation, human progress, and sustainable solutions are popular elements of a mission statement.

• The Values.

Fill in a statement that describes the company’s values. Make sure they are non-controversial. Key words include ‘integrity,’ ‘respect,’ and ‘excellence.’

• The Strategies.

Fill in some aspirations/goals but call them strategies. For example, ‘to invest in a portfolio of performance businesses that create value for our shareholders and growth for our customers.’

This template-style planning has been enthusiastically adopted by corporations, school boards, university presidents, and government agencies. Scan through such documents and you will find pious statements of the obvious presented as if they were decisive insights. The enormous problem all this creates is that someone who actually wishes to conceive and implement an effective strategy is surrounded by empty rhetoric and bad examples.

The kernel of good strategy

By now, I hope you are fully awake to the dramatic differences between good and bad strategy. Let me close by trying to give you a leg up in crafting good strategies, which have a basic underlying structure:

1. A diagnosis: An explanation of the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as being the critical ones.
2. A guiding policy: An overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.
3. Coherent actions: Steps that are coordinated with one another to support the accomplishment of the guiding policy.

I’ll illustrate by describing Nvidia’s journey from troubled start-up to market leader for 3-D graphics chips. Nvidia’s first product, a PC add-in board for video, audio, and 3-D graphics, was a commercial failure. In 1995, rival start-up 3Dfx Interactive took the lead in serving the burgeoning demand of gamers for fast 3-D graphics chips.

Furthermore, there were rumours that industry giant Intel was thinking about introducing its own 3-D graphics chip. The diagnosis: “We are losing the performance race.”

Nvidia CEO Jen-Hsun Huang’s key insight was that given the rapid state of advance in 3-D graphics, releasing a new chip every six months – instead of at the industry standard rate of every 18 months – would make a critical difference. The guiding policy, in short, was to “release a faster, better chip three times faster than the industry norm.”

To accomplish this fast-release cycle, the company emphasised several coherent actions: it formed three development teams, which worked on overlapping schedules; it invested in massive simulation and emulation facilities to avoid delays in the fabrication of chips and in the development of software drivers; and, over time, it regained control of driver development from the branded add-in board makers.

Over the next decade, the strategy worked brilliantly. Intel introduced its 3-D graphics chip in 1998 but did not keep up the pace, exiting the business of discrete 3-D graphics chips a year later. In 2000, creditors of 3Dfx initiated bankruptcy proceedings against the company, which was struggling to keep up with Nvidia. In 2007, Forbes named Nvidia ‘Company of the Year.’ 2

Despite the roar of voices equating strategy with ambition, leadership, vision, or planning, strategy is none of these. Rather, it is coherent action backed by an argument. And the core of the strategist’s work is always the same: discover the crucial factors in a situation and design a way to coordinate and focus actions to deal with them. n

Notes

1. Nelson himself was mortally wounded at Trafalgar, becoming, in death, Britain’s greatest naval hero. The battle ensured Britain’s naval dominance, which remained secure for a century and a half.
2. The effectiveness of even good strategies isn’t permanently assured. ATI, now part of AMD, has become a powerful competitor in graphics processing units, and Nvidia has been challenged in the fast-growing mobile-graphics business, where cost is often more important than performance.

There’s this funny thing that happens to someone new in a management or leadership role. There is the urge to take action immediately, to put your stamp on the organisation, to bend the organisation to your direction. This is almost always a path to failure – both individually and for the organisation.

Finger on the pulse

Great leaders are very disciplined when they move into a new management role. Rather than taking action immediately, they take some time – usually about 90 days. They use that time to ask questions, to listen, to learn, to figure out what’s happening. Great leaders wander all over – they talk to their people, they talk to customers, they talk to other people in the organisation. They are constantly wandering, questioning, listening, exploring.

They are trying to get their fingers on the pulse of what’s happening, to figure out how the organisation works and what needs to get done. They analyse reams of data, trying to understand performance – then they talk to people to get better insight into what drove the numbers. They look at processes, systems, and tools, always assessing – do we have the right ones? Are we using them as effectively as possible? They don’t restrict their conversations to just their teams and customers, they seek input and insight from other parts of the organisation – those that their teams work with. They seek insight and views from their peers, from their managers and executives in the organisation.

They are in search of all the pieces of the puzzle, constantly trying to put them together to figure out what has happened in the past, what is happening now, and to use those insights as the foundation for establishing their change initiatives. They rush to learn as much as possible – but don’t rush to conclusions or judgements.

Only after they figure things out, do they start developing ideas and strategies. They develop views about what changes need to be made and how to implement the changes – but still they don’t rush into implementation. They take the time to test the ideas and socialise them. They want to get input on the ideas and strategies, tuning them for greater impact.

They want to engage people in thinking about them, in adopting them, owning them and wanting to be part of the change. They know they can’t drive the change by themselves, but must align and engage everyone in implementing the change. They take the time to go through this process, assuring their people are behind them, their customers support them, the rest of the company supports them, and their managers and the executives support them. It becomes a team driving the change, not the managers imposing the change.

Gain insight, then act

Generally, this takes 90 days. But on the 91st, everyone knows what they need to do, how to do it, how they will be measured, and when it needs to get done. On the 91st, they’ve internalised and taken ownership of these steps.

It’s no longer the “new manager’s plan,” it’s their plan. When you move into leadership positions, do you have a 90 day plan? Do you share it with everyone? Do you seek to first learn before acting? Do you make everyone part of the solution? If you do, your success rate will skyrocket.

“Marketing exists to drive sales, which is the lifeblood of any company,” says McDonald. “Yet on the FTSE 100 there are a mere 14 companies which have the marketing director on the board. This has to change, because in today’s economy, two factors matter: who is your target market and what is your differentiator. Whatever business you are in, there’s a copy of it somewhere – so the only way to differentiate, is in how you market it.”

McDonald says global retailer Tesco is one of the few big organisations that truly understands the value of marketing as the driver of sales; as a result, it has left competitors like Asda eating its dust. Another example is Procter & Gamble. “This is the age of customer power, and as marketing companies, they really know their customers. Through segmentation and qualitative (not quantitative) market research, both have ensured ongoing profitability and a growing market share. These are not companies driven by budgets, which are backward looking and inflexible.”

Marketing in the boardroom

McDonald says there are ten questions that directors should ask marketing – and that marketing must be able to answer. These include understanding key markets, addressing real segments, prioritisation of markets and the key segments within each one, setting realistic objectives for revenue growth and market share, devising strategies that are consistent with objectives, assessing risks associated with marketing strategy, and measuring effectiveness of the strategy.

The Ten Questions

1.  Do we know and understand quantitatively our key target markets?

• Is there a clear and unambiguous definition of the markets we wish to serve?
• Are they clearly mapped, showing product/service flows, volumes/values in total, our shares, and critical conclusions for our organisation?
• Do we know what the key decision points are in the value chain?

2. Do we address real segments in our target markets that will create super profits?

• Are the segments in each target market clearly described and quantified?
• Are the real needs of these segments properly quantified?

3. Do we really know for sure whether we have differential advantage in each of the principal segments in our key target markets?

• Is there a clear and quantified analysis of how well our company satisfies these needs in each segment compared with our competitors?
• Are the opportunities and threats clearly identified by segment, with implications for the company spelled out?

4. Have we prioritised our scarce resources across our customer base?

• Are the markets, and the segments in each, classified according to their relative potential for growth in profits over the next three years and according to our company’s relative competitive position in each?

5. Are the objectives for revenue growth and market share realistic?

• Are the objectives consistent with their position in the portfolio (volume, value, share, profit)?
• Are we certain that, for example, if we have aspirations to grow our competitive position in an attractive market where we have few strengths, we do not set an unrealistic profit growth objective for it?
• Are we certain that we are not over-serving markets which are not particularly attractive and in which we have few strengths?
• Are we being prudent in these markets where we have strengths but which are not particularly attractive to us in terms of future growth?

6. Are our strategies (including products, services and solutions) consistent with the objectives?

• Are these strategies based on the improvements we need to make in our offers to the market as a result of a deep understanding of the needs of customers in all targeted market segments?

7. Have we assessed quantitatively and dispassionately the risks associated with our strategic plan?

• Have we assessed the riskiness of the markets we are targeting?
• Have we assessed the riskiness of the strategies we are planning for these markets?
• Have we assessed the riskiness of the profit pool available in our markets (price levels, margins, competitor response)?
• Based on the risk assessment, have we reduced the forecast free cash flows if necessary?

8. Is our business plan creating or destroying shareholder value?

• Have we allocated a notional amount of capital to be invested in each major product in the plan?
• Have we multiplied that by the cost of the capital?
• Have we deducted the resulting sum from each of the risk-free cash flows from each product or market? (Some will be positive and some will be negative if we are taking a deliberate decision to invest in them for the future).
• Having done this for each year of the strategic plan, is the resulting figure positive? If so, the plan is creating shareholder value. If not, the plan is destroying shareholder value and should be revisited.

9. Do we have a marketing effectiveness matrix and is it in use?

• Do we know the levels of promotional expenditure necessary just to maintain our current levels of sales and market share?
• Have we subjected any promotional expenditure over and above ‘maintenance’ levels to net present value calculations based on new or incremental levels of sales?
• Are we clear about the difference between ‘lag’ indicators (sales, market share growth, profit growth, customer retention/growth, cross-selling, up-selling) and ‘lead’ indicators (the actions taken by us such as product/service improvements, promotional expenditure)?
• Have we decided:

» What needs reporting?

» Why it needs reporting?

» How frequently it needs reporting?

» Who should be responsible for reporting?

10. Are our strategies world- class? Are we happy that the time, effort and expense involved in developing them are worth it?

• Do they demonstrate a clear understanding of the market?
• Do they list in order of priority key target markets and segments?
• Do they describe the value that is required by each market?
• Do they spell out how our company is going to create sustainable competitive advantage?
• Are they creative, interesting and believable?
• Do they enable us to allocate appropriate resources to achieve our commercial objectives?
• Do they enable us to initiate reward structures to facilitate the achievement of our commercial objectives?

Sustainable Advantage

“The best companies in the world roll out marketing plans that contain the answers to these questions,” says McDonald. “These companies do not give customers discounts because they understand that you cannot trade on price. They also know that the purpose of strategic marketing planning and its principal focus is the identification and creation of sustainable competitive advantage. It’s that type of strategic thinking that creates real shareholder value and that will get the marketing director onto the board.”

Malcolm McDonald is an Emeritus Professor at the Cranfield University School of Management and an Honorary Professor at Warwick Business School. He has written over 40 books on marketing and is a renowned speaker. He has consulted to major companies around the world in the areas of strategic marketing and marketing planning, market segmentation, key account management, international marketing and marketing accountability.

Not every CEO has time to understand every nuance, but here are ten things CEOs must know about sales risk:

1. There is a clear linkage between sales risk management and financial performance.
Reduced sales risks contribute to higher sales productivity, shorter sales cycles, more accurate forecasts, and lower inventory costs.

2. Sales risk management belongs in the executive suite, not just in sales.
Sales risks are enterprise risks. Sales risks aggregate, so the risks individual sales people encounter in every meeting, every conversation, every interaction, every day, matter.

3. You can’t figure out your risks without knowing what your sales team must deliver to your company and to your customers.
Ask your colleagues and your sales team, and see whether the answers are consistent. Most sales teams must contribute more than revenue, because sales people are often required to deliver profits, customer satisfaction, market intelligence, and sustainable customer relationships.

4. Sales risks are becoming more complicated.
Technological innovation, developments in social media, globalisation, world events and the accelerating pace of commerce and communication all contribute to growing numbers of risks and to their increased complexity.

5. Effective enterprise risk management requires governance of lead qualification policies and procedures.
If lead qualification practices are inconsistent, or if sales people accept too much risk – or too little – your financial strategy is at risk.

6. Focusing on preventing familiar risks won’t protect you from blind-side tackles.
Sure, everyone knows about economic and competitive pressure, but while you’ve been reading this, at least a dozen sales opportunities tanked because unanticipated events derailed the effort. In fact, in a 2010 Sales Risk Survey I conducted with global online community CustomerThink, over 40% of sales executives reported that unanticipated situations caused one or more lost sales opportunities. See more survey findings on the opposite page.

7. Transferring risks doesn’t reduce them.
Hedging your bets through a channel sales programme or staffing full-commission sales people provides some risk relief, but it’s superficial. If your sales partners can’t achieve their revenue plan, neither can you.

8. Ethical risks and social media risks are intertwined – and bigger than you think.
Companies that turn staff loose on Facebook, Twitter, and blogs without any guidelines will experience at least one related boardroom discussion this year, and it probably won’t be pleasant. In addition, the impact of negative social media sentiment on your company and your brand could be catastrophic, unless you plan what to do right now.

9. Risks create opportunities.
Not all risks need to be avoided. Through more accurate and timely information, your company might embrace a certain type of risk because of a unique capability or advantage you have developed to manage it.

10. As with any risk, your strategic options are adapt, innovate, or mitigate.
Adapt to what you must accept, namely that prospective customers might not purchase. Innovate new ways to gain proprietary advantages. Mitigate the risks that have the highest likelihood and highest impact.

The top three risks to sales objectives

1. Market related risks due to poor economy, interest rate fluctuations, currency valuations, or rapidly changing buyer needs.
2. Competitive risks due to competing firms having better products, more effective sales resources, better strategies and execution.
3. Promotion risk due to brand image and company reputation.