Increased sales scrutiny: are you ready?

31st October 2015 |   Frank Cespedes

Sales should be a core agent of strategy, not just a vehicle for a given selling methodology.

Enterprise value and profitable growth

Figure 1: Enterprise value and profitable growth

  • The goal is to maximize the financial value of customer relationships. The sum total of revenues from exchanges with each customer, minus the directly attributable costs – now and in the future
  • In turn, there are 4 core ways a company can increase enterprise value

In my career, I have attended many strategy meetings. Very few articulate the implications of espoused strategies for Sales. Moreover, the process for introducing new initiatives often exacerbates the separation of the “strategists” from the “doers” in the field.

The typical process is a kick-off sales meeting followed by a string of emails from headquarters with periodic reports back to headquarters on sales results. Each communication is one way, and there is too little of it. One result is that the root causes of underperformance are often hidden from both groups.

But changes in companies are creating the conditions for more dialogue, especially between Finance and Sales. The number of C-suite executives in US firms has doubled since the 1980s, largely driven by people responsible for specific functions (CIO, CMO, etc), not general managers responsible for activities across functions. Business requires more specialist knowledge.

At the same time, the number of COOs has decreased to about 35% of Fortune 500 and S&P 500 companies.1 Three decades ago, COOs outnumbered CFOs in those firms, but the proportions have flipped.

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Frank Cespedes teaches at Harvard Business School and is author most recently of “Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling,” (Harvard Business Review Press).