Jun 302012

At first sight, one could question that there even is a trade-off between high revenue growth and forecast reliability by claiming that closing probabilities should be the same in both scenarios. Sales people with some experience intuitively know that a reliable forecast requires to be more stable and less aggressive in revenue growth. So, let’s look at the topic in more detail. First, let’s identify what actually determines forecast reliability. Reliability here means a very high likelihood that the forecast numbers for bookings or revenues are met. Or in other words, deviation from the forecasted number shall be small. Forecast reliability (or likelihood) is determined by the following two aspects: The average closing probability (or … Read more

Apr 292012

What do I mean by this title? Isn’t Sales always entrepreneurial? How can it be static if I keep on winning customers? Well, what I mean is allocating territorial responsibilities to your sales people in a way that they have their own region, no matter what size, under their responsibility rather than allocating them specific accounts or splitting up regions in strange ways. In doing this right, three key elements need to be considered: Potential (size of the responsible area) Synergies Goals 1. The main function of Sales is to exploit a certain potential. So, the potential should be large enough in order to be attractive for the individual sales persons. And “attractive” means, it … Read more

Feb 182012

Many people, sometimes even experienced sales guys think that trade shows are a great place to generate new leads and sometimes even to win customers. This myth is fed by the media headlines, in which big deals at trade shows are announced (as this certainly makes better news than just announcing there was a show with some exhibiting companies and some visitors). Also, long time ago back in history, trade shows (they weren’t called like that then) used to be indeed the only market place where buyers and sellers could come together. And, especially smaller companies sometimes seem to think, trade shows are the only way of making themselves visible to the outside world. All … Read more

Nov 192011

In the times of traditional software sales, the roles of supplier and customer were pretty clear. The vendor provided a solution; the customer obtained a solution. Nowadays with Cloud solutions, a new partner model between vendor and customer needs to be established as (B2B) customers and vendors have become equal partners (see also previous posts to “Effective Channel Management”). Also, in the past the main focus was on winning the customer and therefore on presales activities, since closing the deal already provided the main chunk of the revenue. Postsales activities were often managed by so-called farmers, sales people specialized in keeping the customer and focusing on support renewals and add-on sales (usually providing not more … Read more

Sep 182011

In almost all high-tech start-ups (and actually also in most Fortune 500 companies), profit aggregation only happens at business unit or company level and not at customer level. That is mainly because customer responsibility is in Sales. And Sales usually only cares about revenues because that is the key indicator they are measured on. Most managers do not see customer profitability as a priority because they make the false assumption that profits can be optimized by simply adjusting fixed costs (usually meaning human resources). However, understanding customer profitability is important for two reasons: If you have non-profitable customers it has an impact on your bottom line; in order to address this you have to know which customers these are … Read more