BUSINESS KILLING MISTAKES #7 – USING THE WRONG SALES MODEL

It’s disastrous how many leaders and entrepreneurs use a stale, old, or even flawed sales model. 

That strategic organizational design mistake is killing sales, ruining salespeople’s careers, and putting the brakes on what could be ridiculously profitable no-cost growth.  Let’s fix that. 

OVERVIEW – WRONG SALES MODEL

Quick! What is your company’s sales model? 

Don’t know or don’t care? You need to change your perspective because 98% of all companies suffer from “sales model-itis.” It’s a silent but “business deadly” disease affecting solo entrepreneurs and thousand-person firms. 

If you work in a company at any level, role, or capacity, you better care because sales is the engine that keeps the “lifeblood of a business” flowing and growing. Without the right sales model, your business will waste time, burn money, and eat through resources. 

This article will help you understand what a “sales model” is and why the perfect design is so critical to growth optimization and business wealth creation. Be sure to read the whole article to the end and share it with your teams. This information will help you learn the critical steps leaders, sales, and employees in your company must be doing. Many of our clients have seen sales skyrocket when they make minor to major changes in their model. However, be careful, as experimenting with “sales model design” when you aren’t an expert can be as messy as doing your own home dental surgery. 

WHAT IS THE WRONG SALES MODEL MISTAKE?

First, what is a sales model? Take a second and write down a description of your current model. If you are in sales or leading sales and you can’t quickly articulate your sales model, your company is probably not set up for maximum success – and you aren’t either. 

A sales model is the design, implementation, and execution of a combination of philosophies, components, and distribution of sales efforts to produce new sales. A highly effective sales model makes sure that all those parts are well thought out, integrated into a design, and morphed as necessary to stay optimized. Things change (COVID-19 pandemic, supply chain issues, inflation, and cyber-attacks, etc.), but most sales models don’t change and are more like “Model T’s” than high-performance Ferraris. 

Too many leaders, from CEOs to VPs of sales, follow the default, or what are called “coverage” or just “hire more to grow,” weak models. When instead, they could and should be using more sophisticated models such as hybrids, bifurcated, and even matrixed designs. As you read in my book Entrepreneur To Millionaire, Chapter 1, “more from more” will never maximize profits the fastest. 

Warning: A sales model IS NOT a sales methodology. 

WHY DO LEADERS MAKE THIS MISTAKE?

There are three reasons that leaders and companies follow stale, unsophisticated or even ineffective sales models.

First and foremost, the current model is producing sales – not necessarily shattering sales targets – but enough to keep management their jobs. However, salespeople get fired all the time, and it’s not their fault if they are in the wrong model. 

Second, leaders become hostages to success. Remember, “success” has the word “suck” in it, and you must realize that means success, even if it’s minimal, will suck you back to doing things the same old way.

And finally, too many leaders, including sales managers, don’t really understand sophisticated sales modeling – All they know is what they know. 

WHAT IS THE IMPACT OF FOLLOWING THE WRONG SALES MODEL?

You would think the greatest damage to a company with the wrong or outdated sales model would be loss of sales. Well, it is, but that’s not the top of the list. The greatest damage is “profit destruction.”

• Profit burned trying to attract clients;
• Profits missed from selling lower margin contracts;
• Profits chewed through with prospects stalled in sales pipelines;
• Profits eaten up through with churn and turn of salespeople in the sales organization;
• Profits wasted because operations and delivery have to cover for sales mistakes and over commitments. (Do your salespeople ever overcommit? No way.)

HOW HAVE LEADERS TRIED TO FIX BROKEN SALES MODELS?

What is worse than having a defective sales model and all the profits being lost? Here are typical unsuccessful sales model fixes:

• Grind out (stress out) the salespeople to work harder and smarter in spite of the bad model – like, “You just need to work your “Rolodex” harder.” (Yes, some leaders still use that antiquated term.)
• Hire more salespeople, knowing that some won’t survive the “model mess.”
• Train more, falsely believing that having more skilled salespeople can overcome a flawed model.
• Add more management – (read my last article) using stupid methods like Seagull, Mushroom, and Whack-a-Mole management philosophies… Yuk!
• The latest trend is to “support more”: adding more engineers, sales support, technical experts, etc., to go along with the salesperson – adding more costs with den mothers and sales nannies. 

WHY HAVEN’T TYPICAL SOLUTIONS WORKED?

These “classic fixes” don’t work because they are all tactical. Changing business cultural beliefs, organizational design, and revenue growth philosophies are strategic. And besides, transformational changes are almost impossible to do on your own because you are already using the best you know-how. Our phone usually rings because of sales, growth or profit problems, however, few leaders have even considered that simply changing their sales model can create explosive profitable growth. 

CHANGE – WHAT SHOULD THEY DO INSTEAD?

There are about half a dozen sales models designs you should know about. I’ve already mentioned three. Here is an example of a sales model variation I used to generate tens of millions that you can use too. 

If you read or listened (Yes, audio format is available now) to the Entrepreneur To Millionaire, you know that at one time, I led a public software organization in growth from about $2M to $38 million in just under three years. One of the core strategies for that success was “bifurcating” the existing sales model. 

A bifurcated model is when the activities are split between people or departments. In this case, I separated lead generation (actually, lead management – contact me to discuss the difference) away from the salespeople. I went to my CEO as I wanted to hire a high-paid individual for lead management. I explained that I only wanted my salespeople to work on high-quality, highly qualified leads. At first, he said, “There is no way we are going to pay about $80K (today’s dollars) in salary for someone to generate leads.”

The COO, who was open to transforming the model, stepped in and said, “Let’s try it.” 

What made this model – one person owns lead management (not just lead generation) and another person owns the sale conversion – was not just the simple split design. The real secret was how the roles and responsibilities were demarcated, how each party was compensated, and what the deliverables were for each team member. It’s critical that you make all the “components” follow the right philosophy and design and be congruent whether you have one salesperson or thousands. 

What were the results? Our “radar” coverage gave us insight into every account and competitive movement in our territories, however, the most significant results were the crazy good numbers. Over a three-year period, we won 48 out of 50 major contract pursuits. That is an astounding 96%-win rate for 36 months – 12 quarters of shattering sales targets! 

BENEFITS OF USING THE PERFECT SALES MODEL

The street answer is… money, money, money! 

The corporate answer is sales optimization – you can maximize sales growth and performance while using the fewest possible resources. In many cases, changing the sales model can dramatically scale sales, revenue, and profits – and not add a single sales headcount. Many clients have found they could also reduce their marketing spend by half or double their efforts. 

SUMMARY – KEY LEARNING POINT

A sales model – when well thought out, aligned with the other departments, and executed with precision – can become one of the fastest, smartest, and no-cost ways to maximize sales. Yet too few leaders ever approach us, starting with a question about their model. They focus on “fixing the salesperson.” 

If you and your team want to create a highly profitable, faster-growing company, then sales modeling analysis must be at the top of your transformation list. 

ACTION AND URGENCY 

1. All leaders (or single entrepreneurs) must learn the “Sales Conversion System” found in Chapter 10 Entrepreneur To Millionaire to understand the thinking and parts of a sales system and model.
2. Discuss/analyze your current sales model – Who does what, where, when and why?
3. Know that every sales model can be tweaked or transformed to produce higher levels of performance.
4. Create a transformational sales model plan – how you will change parts, methods, or responsibilities and in what time frame.
5. Contact us to talk through “sales modeling” and all the different options, choices, and designs.
6. Also, contact us so we can explain how a change in your sales model will affect other areas of your business – good or bad. 

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AUTHOR BACKGROUND

Kent Billingsley is the founder and president of the Revenue Growth® Company, LLC (TRGC). He is a published author, international keynote speaker, and business transformation expert. He has become America’s Revenue Growth® Architect by helping thousands of entrepreneurs and CEOs (representing over a million employees) generate several billion in new sales, as well as tens of billions in new revenue and profits for large corporations. He has personally designed, built, transformed, and turbocharged several thousand organizations in 36 countries. Over the last 20 years, his proprietary content and trademarked programs have helped thousands of entrepreneurs and employees become millionaires and multimillionaires by “creating wealth” inside their companies. He can be reached at [email protected].