The relationship that the executives and other leaders have with the sales organization is among the most important elements of growth leadership. Very often, that relationship is distant and limited. With more frequency than I’d like to admit, I’ve seen it as adversarial. And it nearly always lacks a strategic connection. Research on executive involvement with customers and the sales organization fortifies these observations.
Noel Capon and Christoph Senn published a paper in which they concluded that nearly a third of CEOs (28 percent) are deliberately and totally uninvolved with customers or the sales organization. All but 14 percent of top corporate leadership holds itself either completely aloof from customers and sales or is not involved with them on any strategically meaningful level. In other words, nearly nine out of ten CEOs, 86 percent, are completely or significantly disengaged from or misaligned with sales when it comes to determining the direction of their company.
Whether they realize it or not, the third of CEOs who are abdicating their responsibility for customer relationships are making sales responsible for the company strategy. Even among those leaders who do not abdicate totally, the strategic connection between the C-suite and the customer is in varying degrees suboptimal or downright dysfunctional.
You’ve likely seen this before: A major technology firm had been enjoying success and consistent growth in revenue and net income for years. Then came a patch of flattening growth and shrinking margins. The board brought in a new CEO with a strict mandate to restore growth. Acting on his marching orders, the new CEO invested in several acquisitions intended to broaden the firm’s suite of offerings and enable the company to provide end- to-end solutions to customers. The strategy was focused on selling a wider variety of things—technology products and services.
As the acquisitions closed and were folded into the larger company, the pressure on the new CEO became intense. He had to show results— beginning now, in this quarter. Accordingly, he decided to motivate the sales team—hard.
Every few days, he peppered the leaders of the sales organization with questions about deal progress and calls for forecast updates. They in turn did the same with their direct reports—and they with theirs, all down the line. The conversations were rarely, if ever, about how the company would differentiate and create value in the sales process. Or how the company would provide subject-matter experts to support cross-selling new solutions in early stage opportunities that had great strategic potential. Or how the company would address the organizational challenges to advancing key opportunities. The only substantive conversations with sales were about forecasts. “What are they? Why aren’t they higher? They better be higher!” The relentless message was unmistakable: “Push harder. The current quarter is all that matters. Everything else can wait.”
The CEO took action without a genuinely strategic purpose, and the effect was anything but a tornado of growth. He confounded a tactical objective (revenue in the current quarter) with a strategic goal (future success sustainable over the long term). Leadership’s shortsighted, single-minded message was to just sell now. And sellers will always translate that to mean they should sell what they can to any customer—and not necessarily the most strategic product or customer. The short-term tactic and intensity around it—current revenue is all that matters—eclipsed all the attention that could be directed toward executing the stated growth strategy for the business. The CEO lacked a vision and strategic focus for the sales organization and neither enabled nor required the sales organization to create value by selling in line with a solutions-based strategy. This myopic focus became a toxin that soon cascaded throughout the entire management structure, from the EVP of sales to the sales personnel on the front line, compromising the actions of the sales team every day.
It’s commonly understood that more strategic business, the kind of business the CEO of this company wanted, with customers buying broader solutions, doesn’t often close as quickly as more transactional product sales. We hear all the time that these sales cycles can be more involved, take longer, and require greater proficiency with a consultative approach. But when pressure to make sales and make them now takes center stage—or, as it did with this company, the entire stage—these realities can get dismissed as excuses. When that happens, the investment in strategy—improving products and services or building new ones, making acquisitions to expand capabilities and offer a wider suite of solutions—falls flat. Further complicating the issue is that it’s difficult for sales professionals to toggle back and forth between strategic and transactional approaches to business. It’s one or the other.
Month after month, quarter after quarter, sellers focused exclusively on getting whatever deal they could. The faster they could close, the better. Simple sales tactics replaced strategy. Strategic growth gave way to tactical, transactional sales. Scenting the desperation of the sales reps, customers pushed back, holding out for larger and larger discounts, which were invariably approved because of the intense pressure to bring in business, any business.
While the sales organization at this tech company was given different things to sell, selling differently—creating a different sales experience—was never a part of the strategy. Since strategy was discarded in pursuit of booking revenue, the result was that the sales organization concentrated neither on selling those different things (in which the company had so heavily invested) nor in selling things differently. As a result, the new solutions and bundled offerings never reached anything close to the projections they’d made.
The typical relationship between the CEO and their sales team is distant at best and antagonistic at worst. Even though many leaders are conversant in the long-standing ideas about sales being more consultative and focused on selling solutions, their interactions with the sales function have little connection to strategy and the importance of the sales team in executing that strategy.
Much like the technology firm’s CEO, too many leaders still default to the traditional and more transactional focus of the sales organization: to pitch and close, period. Salespeople just meet with customers, are charismatic, and tell them how good what we offer is, and close. Even when executives say we need to “sell the value,” the follow-up conversation reflects their typical focus on how well the reps can explain how good the company is at what it does. Such conversations rarely integrate the idea of creating a valuable sales experience and using that to connect products and services to the business outcomes the customer wishes to achieve. Remember: Every sales call reflects the success of your strategy or its failure, one customer or prospect interaction at a time.
The financial performance of a business is driven by the quality of the interactions between the sales team and the customers. Assessing the impact of a sales force on revenue and profit growth is challenging, because so many factors can influence growth rates. Harvard Business School researchers examined the relationship between relative growth and sales force ranking by Sales and Marketing Management across industries, including healthcare, technology, and business services. That relative impact ranged from 20 to 30 percent in some industries and as much as 40 to 50 percent in others.2 That contributes a massive boost if you are doing it well—or creates a huge anchor if you fail to give it proper strategic attention and focus.
If you allow sales to be separated from your company’s strategy, this shortsighted approach means you are allowing the sales team to dictate your strategy. It doesn’t matter what you say your strategy is in the boardroom or in leadership team meetings. What actually happens with customers and during sales calls will tell you what your strategy really is. Is your sales team proactively pursuing meetings with prospects and customers that are a match for your ideal profile, the kind who are likely to have the issues and needs that your products and solutions can address? Or are they spending time with whomever they can and being reactive with requests for proposals? Are they interacting with the proper level of buyers who can authorize purchases for the kinds of business you want? Or are they comfortably engaging with contacts who don’t really have the authority to say yes? Are they leading conversations about the customers’ business outcomes and making connections focused on how your competitive advantages can help them improve those outcomes? Or do they pitch and present whatever they are most familiar with, often neglecting the larger opportunity in favor of a smaller deal now? Without a strong and aligned relationship between senior leadership and the sales organization, it is unlikely your strategy will have the right connection to the customer. As a result, your product, and maybe even your company, will become commodified.
The leadership mindset that cedes strategy to sales is the same mindset that recognizes no strategic role for sales. Even cut loose from strategy, the sales organization can still make sales, but it is unlikely to develop the kind of value-focused relationships that create collaborative, partnering relationships with customers—the relationships that create loyal customers. To differentiate your company in today’s market, you must connect with the customer. You must offer them other value for their business.
Excerpted with permission from The Growth Leader: Strategies to Drive the Top and Bottom Lines by Scott K. Edinger. Copyright © 2023. Available from Fast Company Press, an imprint of Fast Company, a registered trademark of Mansueto Ventures, LLC
Written by Scott Edinger.
Have you read?
Ranked: Countries That Produce the Most Carbon Dioxide (CO2), 2023.
Ranked: These Are The Most Desirable Jobs in the World, 2023.
Ranked: U.S. states by the number of billionaires, 2023.
Ranked: Biggest banks in the world in 2023.
These Are The Highest Grossing Films Of The 2023 Worldwide.
Add CEOWORLD magazine to your Google News feed.
Follow CEOWORLD magazine headlines on: Google News, LinkedIn, Twitter, and Facebook.
Thank you for supporting our journalism. Subscribe here.
For media queries, please contact: firstname.lastname@example.org