In 1849, hundreds of thousands of people saw an opportunity to strike it rich and rushed to California in search of gold. While these 49ers, as they were called, had the right idea, the methods that they used to find and capture their riches were crude—at least by today’s standards. I can almost hear the banjo playing in the background as I picture it: a bearded man in a wide-brimmed hat, kneeling over a stream, panning for gold for hours, working incredibly hard but not smart—and thus typically for little return.
Is this how you’re running your business?
Well over a century later, their namesake San Francisco 49ers organization finds itself preparing for the NFL draft, as part of an organizational rebuilding process. For this group of 49ers, the franchise’s future is depending on its ability to identify player potential, evaluate individual draft value and thus increase the yield on the team’s personnel investment through the draft. In this case, bluntly panning for gold won’t be good enough. The 49ers will invest extensively in draft preparation, evaluating players’ performance on the field and at the NFL combine, their character, system fit and every other possible detail to project a measure of player value. They will need to be bold and innovative in their approach; leverage all available data, analytics and resources for insight; and be precise in how and where they invest their resources.
In my experience working with technology companies, the concepts of being bold and innovative, increasing return through advanced analytics, and doing more with less aren’t new, yet I see far too many organizations sending their sales teams and channel partners off in search of gold with nothing more than a pan and directions to the nearest stream. For these companies, the only real winner is the competition.
Arming sales teams and channel partners with the right level of insight and turn-by-turn directions to the sales potential typically requires five steps:
- Organize the right data. Even the sports-minded stat heads at the 49ers can’t measure everything, and will need to project or estimate value based on the best available proxy, such as performance on a skill at the NFL combine. For your sales team, start with an integrated database of all relevant company and third-party data, and recognize that the data will be imperfect. With this information, challenge the conventional wisdom around the primary observable drivers of sales performance, such as the number of employees, through some predictive analysis.
- Cluster like accounts. Group accounts that “look alike” and “behave similarly” based on the core criteria determined in the first step. Establishing groups based on the right drivers (such as industry group and company size) and clusters within those drivers (like size buckets, or other segmentation dimensions which impact the sales opportunity) will enable comparisons and projections around the available sales potential within each account.
- Establish a frontier. Develop a 360-degree view of the sales potential. Assess historical sales results and establish a performance frontier, to establish the desired level of achievement, within a given cluster. This, enhance this frontier view of performance by incorporating more advanced elements like market penetration, product maturity, and customer insight and behavior (such as propensity to buy), moving from “what we have done” to “what we can do.”
- Project sales potential. Establish total or addressable measures of sales potential based on the relationship of the key drivers to sales and the performance frontier. It’s often valuable to translate this to a sales potential performance curve based on the driver inputs (for example, sales potential per employee or industry group). Developing this simple formula will make it easy to project potential onto both customers and prospects.
- Apply some logic. Engage sales managers and let them review and refine the outputs. Arguably the biggest success factor in this process will be the application of expertise and logic to ensure the appropriateness of the outcomes. Allowing sales managers the chance to provide input will improve the accuracy of the sales potential data, and also collective buy-in and support, enabling more effective and efficient use in other areas of sales planning, too.
Technology companies invest heavily in onboarding, enabling and compensating their sales teams. While the presence of a granular sales potential measure isn’t transformative in and of itself, embedding it in the overall go-to-market approach can be. For example, in a recent study, ZS found that when companies ensure the right customer coverage plan or create a performance-focused sales team, they could improve their performance by 5%, on average, in the first year.
How would you describe your company’s approach to identifying and capturing sales potential? Are you still panning for gold or are you targeting it more precisely?