SALES MANAGEMENT Let’s talk about sales growth
High-growth
companies have differentiated themselves in sales through analytics, big data,
and a focus on the changing technology landscape.
Slow-growth companies can learn much from the world’s sales leaders and their best
practices in presales, analytics, and use of technology. In this episode of
the McKinsey Podcast, Mitra Mahdavian, an associate partner in
McKinsey’s Marketing and Sales Practice, and Maria Valdivieso de Uster, the
director of knowledge for the Practice, speak with McKinsey’s Barr Seitz about
how companies successfully drive sales growth in a digital world.
Podcast
transcript
Barr Seitz: Hello, and welcome to the McKinsey Podcast.
I’m Barr Seitz, global publishing head for McKinsey’s Marketing and Sales and
Digital Practices, and I’m very happy to introduce our two guests today: Mitra
Mahdavian, an associate partner in our Marketing and Sales Practice, focused
particularly on tech in sales, and Maria Valdivieso de Uster, the director of knowledge
for the Marketing and Sales Practice and coauthor of Sales Growth: Five Proven Strategies from the World’s Sales
Leaders (John Wiley &
Sons, May 2016), which has recently come out in its second edition. I’ll be
talking to Mitra and Maria about how sales can drive growth, what strategies
work, and how sales is evolving in today’s digital world.
Let’s talk about sales growth
Maria, the first question is for you. I
was walking past the bookstore in an airport the other day and saw at least a
dozen books on sales. Does the world really need another book on this topic?
Maria Valdivieso de Uster: Hi, Barr. Yes, I think the world needs a new book
on sales growth. This book is a conversation with more than 200 leaders across
different organizations. It’s for sales executives and sales management, and it
provides strategies and tactics that are proven on how to drive growth.
Barr Seitz: Great, so growth is certainly a topic that’s
getting a lot of attention, particularly with the economic climate being so
challenging. But, Mitra, there are companies that are still able to grow, even
within the constrained environment we are in today. What are they doing that
the others aren’t?
Mitra Mahdavian: It’s an interesting question, Barr. We did a lot
of research, both an extensive survey of sales executives and many interviews,
and we found that there were five practices that shine through that
differentiated the fast-growing companies from the slow-growing companies.
First, they find growth before their
competitors do. So they invest in identifying growth opportunities, whether
through understanding trends or drilling into big data or finding pockets of
growth in their existing markets. Second, they sell the way their customers
want to buy. They use multiple channels to reach and serve customers of all
different sizes and different markets. And they optimize and organize across
direct, indirect, and digital channels very efficiently. Third, they soup up
their sales engines, and especially, they invest in sales operations, presales,
and the alignment between marketing and technology to fire up and build their
engines for growth.
Fourth, they focus on their people. This
one goes without saying, that there’s a need to spend time training, coaching,
and mentoring the frontline sales teams and to balance that between both the
drive for near-term growth and building longer-term capabilities for the field.
And finally, they lead from the top: they
invest in and gain commitment from the organization and are able to build the
vision for their change and their plans from the executives and from the top
down—but they also invest in change management and implement change from the
ground up.
Barr Seitz: That’s a great overview of what the book covers
and what sales leaders are able to do. In all those areas, what are the one or
two that stand out for you, where sales leaders differentiate themselves?
Mitra Mahdavian: One was the deployment and use of technology and
analytics. We found that sales executives are continuing to invest in deploying
analytics and technology to make their sales teams more productive, both in the
front end of sales—digital channels, ecommerce capabilities—and in the back end
with capabilities for their planning and sales operations. That was a clear
theme that emerged.
The second was people. We know from our
own research and the time we spend with our clients that talent and sales
talent is always a critical topic, but we were surprised that many of the
executives that responded to our research felt that they still didn’t have the
capabilities they need for growth. And they still haven’t even been able to identify
some of the capabilities they need for the future, and how they need to be
moving their sales teams.
Maria Valdivieso de Uster: The one that also stuck for me is investing in
future growth. One of the themes that many of the leaders mention is that
companies and sales leaders are so busy thinking about the quarter and the
annual quotas that it’s hard for them, but they push themselves to think about
where growth is going to come from ten quarters from now.
What are some of the trends around technology,
around demographics, around regulation, and how is that going to affect their
current business and their future business? They are bold enough to invest in a
current budget to capture that. We saw that fast-growth companies invest
between 4 to 6 percent of their sales budget to capture future growth.
Barr Seitz: I imagine that future growth outlook depends a lot
on analytics and digital, as you were pointing out, Mitra. That’s a key
feature. Maria, in the first edition of your book, you cover digital and
analytics, but the changes we’re seeing in those areas weekly, if not daily,
highlight how much has changed since that first edition came out. Emphasizing
the extent of that change, you open a chapter citing Taylor Swift. I’m going to
ask a question I never thought I’d ask at McKinsey: What can sales leaders
learn from Taylor Swift?
Maria Valdivieso de Uster: She is incredible at managing an omnichannel
strategy. That is, she’s able to have fantastic engagement with her fan base,
and she continues to build her fan base through her social-media channels.
At the same time, her concerts are
phenomenal, money-making events. Then on top of that, she’s very good at
figuring out what channels are going to work for her and which ones are not—so
how she leverages iTunes and other channels for her benefit. I think she’s
phenomenal at that.
What companies are struggling with in
today’s world is how to create a seamless, omnichannel experience for their
customers. Customers expect to be able to access products and services through
a variety of channels: some of them are direct channels, some of them are
third-party channels. But they’re expecting the same service levels, and
they’re expecting that you—as a vendor, as a company—are able to understand
them through all these different channels. That creates complexity, and it also
creates cost. But we’ve seen that winning organizations are able to capitalize
on omnichannel strategy.
Mitra Mahdavian: And that’s increasingly true with the modern buyer
and the way customers want to buy today. We found the top channel for B2B
buyers, when they’re doing research on what they want to purchase, is just an
online search—the Internet.
We also did some research on B2B decision
makers, and you wouldn’t be surprised to know that they’re always on for
business, even during their commute, their evenings, and their weekends. They
spend a lot of time on their cell phones and tablets, doing research on
business products via their personal devices. More than ever, that omnichannel
presence for B2B buyers is important in reaching target audiences for all
companies.
Barr Seitz: What’s interesting about this point with
integration is that it’s a theme that comes through in the book a number of
times. But I was particularly struck by the point with presales, which is often
overlooked. In presales, to really function, it needs to be an integral part of
the sales pipeline. Mitra, can you tell us what presales is, and what its value
is?
Mitra Mahdavian: Presales is a dedicated team of experts that spend
their time on a mix of technical and commercial activities. Let me give you
some examples: things like crafting solutions for customers’ problems or
managing deal qualification and bid.
We found that companies that invest in
this capability are able to achieve win rates of 40 to 50 percent in new
business and 80 to 90 percent in renewal business, well above average rates of
what we see with other companies.
What enables companies to achieve that
kind of success is that they’re able to better deploy their resources against
opportunities that matter. They don’t just identify leads; they spend the time
to qualify and do the prework to understand which opportunities are going to
provide the highest results, typically by doing advanced analytics or using
historical trends as predictors.
Another opportunity in presales is
submitting bids. We found that many companies end up not having acted on leads,
even a few days after they’ve been submitted. Companies that have invested in
presales are able to more effectively deploy resources against those leads and
act on them more quickly. That integration of activities and deployment of
resources—with some digital and technical abilities to make them more efficient
and intelligent—is what allows those companies to capture additional growth.
Maria Valdivieso de Uster: One of the things I would add is that presales
resources tend to be expensive, and you have to be mindful in how you align
them and assign them to different projects. Many of the clients that I’ve worked
with and many of the companies we interviewed—they’re thoughtful as to
understanding what deals are competitive, which ones are strategic, and which
ones are complex—and they develop a formula to assign resources based on need.
Alternatively, you can end up spending in the wrong places, and you can end up
decreasing your sales through that.
Barr Seitz: Given how important presales is, why do you think
it’s such an overlooked area?
Maria Valdivieso de Uster: It’s an overlooked area for a few reasons. The one
that I would highlight is that many organizations have developed presales
resources and capabilities in a nonorganized manner. You might have a sales rep
that ends up having more technical skills, so you end up leveraging that sales
rep much more like a technical expert as opposed to systematically thinking
about the right organization structure and capabilities required.
In times of slowdown, companies
unfortunately look at nonquota-carrying resources, and many presales experts
tend to be nonquota carrying, and they cut that first. When companies continue
rebuilding their sales forces, they tend to forget to continue to bring this
capability in.
In technology companies you tend to see
better organization structures, and you tend to see much more advanced presales
processes and practices. I would look at those organizations as some of the
great examples.
Mitra Mahdavian: Many of the companies that are doing presales well
have also invested in the technology to make resources productive. Having
analytical insights and tools to better understand where in the deal cycle to
plug in and which deals to plug into, they’re able to get the most leverage
from the resources that they’ve invested in.
Barr Seitz: Excellent. OK, I want to pivot away from the
tactical area of presales and move to our crystal-ball moment of this podcast.
In the book, you look at a number of trends and extrapolate what they could
mean for sales. Knowing that this is a dangerous question with few clear
answers, where do you see the future of sales? Maria, let’s start with you.
Maria Valdivieso de Uster: This is one of my favorite questions, and it was
one of my favorite parts of the research for the book. I saw a few trends
emerging, so let me share those with you. The first one is a trend around
automation and artificial intelligence.
One of the things we learned through some
of the research conducted by the McKinsey Global Institute is that with today’s
technology, up to 40 percent of sales activities can be automated, which is
tremendous, if you think about it—40 percent of sales activities can be
automated. If we think about technology evolving, that number could get up to
50 percent.
If you look across different roles, of
course it varies. For example, for a hard salesperson, 80 percent of his role
can be automated. But if you think about a sales manager, it’s only 5 to 10
percent. As Mitra has mentioned throughout the podcast, technology’s here to
stay, and we have to help sales leaders think about how to embrace technology
and what technology to use.
With that, artificial intelligence is also
coming—will come and will stay here. We see bots being used already in customer
service, and there’s a very small bridge to cross to move bots from customer
service to transactional sales processes and sales products. We will be seeing
bots more and more. I was surprised by the level of technology, and how smart
the bots are, and how much they could learn from different interactions.
The other big area that we saw is around
outsourcing, so letting somebody else do the selling for you. It’s a different
type of outsourcing in the sense that it’s end-to-end marketing and sales
outsourcing. Again, in some of the more transactional sales, we’ve already seen
being able to outsource all the way from starting a campaign to acquiring a
customer, where the vendor or the organization is paying for performance.
Mitra Mahdavian: The opportunity with analytics and digital in
sales is tremendous, and we’ve seen that in the results of companies that have
started to deploy these capabilities in their sales. As we go forward, we’ll
see more and more of those solutions adopted in sales, beyond the traditional
applications of analytics and tools (such as customer relationship management
or basic forecasting) to more advanced functionality (such as deal-scoring,
next-product-to-buy insights, and better ways to deploy sales resources to
opportunities like we were talking about earlier).
That’s going to enable sales teams to
unleash a level of productivity that’s going to be higher than anything we’ve
seen in the past and, at the same time, allow them to do what they do best,
which is selling and spending time on selling activities rather than on some of
the back-office tasks that may be taking their time away.
Barr Seitz: With all this talk about digital, technology, and
robotics, I’m going to voice something I know we’re all thinking: that the
machines are going to take over the world. I know it’s easy to get caught up in
those kinds of quasi-apocalyptic views of machines, and that makes great for
great movies, but as you both have pointed out during this podcast, it’s easy
for the need for humans and leadership to get lost in all this talk, and it’s
particularly crucial. What stories of leadership stuck out for you and why?
Maria Valdivieso de Uster: One of my favorite conversations was with Jeff
Schomburger, the global sales leader for Procter & Gamble. We talked to him
about big data in sales. It was very interesting because he kept mentioning to
us that the fundamentals of selling have not changed. The questions that are
being asked have not changed. However, we have much more data and ways of
answering those questions. Many organizations struggle with making their data
strategies a success, and that is because they have a lot of data, but they
don’t know how to turn data into insights.
Many organizations have insights, but they
don’t know how to make the insights actionable for the sales rep out on the
front line. One of the things that I found fascinating in talking to Jeff was
how to actually drive insights, shopper insights, all the way down to the
account manager that is having discussions with a retailer, and then bring
those insights into strategies on how to drive sales growth.
Mitra Mahdavian: As you said, Maria, the need for basic selling
capabilities and the empathy and solution-selling capabilities that a
salesperson brings are not going away. In fact, what’s happening is that the
bar on that is going higher and higher over time, because with digital and
technology enabling the basics of information getting to customers, the bar for
the sales rep’s role is increasing over time to be more solution led, more
consultative.
So the need for sales teams to be
investing in developing those skills for their front line is increasing. It’s
this duality of building the skills on the empathy side, the solution-selling
side, and the relationship-building side while at the same time investing in
some of these new capabilities that allow the sales team to use and leverage
the analytics and the technology that exists today—and bring those insights to
their customers more effectively and connect to them faster.
The CEO of a large tech company told us
that she recently visited a call center and met a few young millennial
inside-sales reps that had recently closed a few large, complex deals. She was
astonished.
She asked them, “How were you able to
close these deals remotely without ever meeting the customers?” The
inside-sales reps said, “What do you mean we haven’t met the customers? We talk
to them all the time, we FaceTime, and we’re connected on social media. We have
a ton of information about them from our systems and from our lead call
process, so of course we’ve met the customers.”
It was this interesting moment where the
CEO realized that the new generation of sellers think about the selling process
in a different way, compared with the historical, traditional view of wining
and dining and meeting up in person.
Barr Seitz: Maria and Mitra, you’ve told some great stories,
and we have some great statistics here behind the strategies, but I imagine a
question you get all the time is, OK, that’s great, but how do we do this? Any
examples or cases or minicases that you can share about a company that embarked
on a change to drive greater sales growth?
Maria Valdivieso de Uster: We talked to the head of sales strategy for a
global technology company, and the first thing he mentioned that was quite
interesting was that the reason for the sales transformation was that the
customer was pushing for it. The customer didn’t need to buy products anymore
but had problems that needed to be solved.
They came to the organization and said,
“We need to solve all these problems, help us with solutions. Don’t sell
products to us, sell solutions to us.” Of course, it’s easier said than done,
so for the organization to move away from just selling products to selling
solutions, they had to change quite a bit.
They had to change how they were
organized. They had to change how they inspired people. They had to change the
technical expertise required. It was all starting with a customer.
Mitra Mahdavian: The biggest step was aligning the leadership
around a common vision. There was siloed activity in the various geographies
and in the different parts of sales, and for all of that to come together in a
harmonized fashion, there was an effort required to make sure that the vision
at the top was clear enough that it could then get translated to the field in a
harmonized and aligned manner.
The second thing was getting specific on
change management, down to the rules and responsibilities on the front lines.
So not just a theoretical exercise of what we want to do differently or how we
want to be organized differently or what are some of the new things we want to
bring to our customers, but drawing that red thread through the roles and what
the field was doing, how they were spending time, and what they were being
trained on—and making sure that all of those things came together to deliver
the customer experience the company was aspiring to deliver.
Barr Seitz: I imagine, as with any change effort, that what is
planned is different from what happens on the ground. Can you talk about what
did happen in assigning those roles? How did the organization set itself up to
react and change to make this successful?
Mitra Mahdavian: It’s a good question, Barr, and the fact is things
change. What made this effort, and what made those sales transformations
accessible, was the focus on salespeople and the focus on customers, because that
gave a true North Star throughout the journey, which was a two- to three-year
journey of transformation.
As you said, not every role transition
went the way it was expected, not every capability effort, not every
harmonization played out the way it was planned. But because there was a true
North Star of the customer experience—what the customer wanted, and also our
people and our sales teams—it allowed the company and sales leadership to come
together when they hit some of those roadblocks and some of those questions, to
reevaluate and reset their direction but always align to where they wanted to
go and that true North Star for them.
And that was a big part of what made this
successful, because it’s one thing to say that this is what we want to do but
it’s another to play that out and live that transformation every day for three
years. Unless you have that anchor point of where you want to get to and what
you’re trying to do, it can be easy to get fragmented quickly.
Maria Valdivieso de Uster: I think also the way they measure the success of
the program: on the one hand, it was measuring the impact on profit, but on the
other hand, and equally important, it was measuring the impact of customer
satisfaction. All of it being back-anchored on the customer was quite critical
for the successful transformation.
Barr Seitz: Could you provide a detail in terms of how having,
as you say, that North Star of understanding the customer in a practical
situation allowed them to overcome a hurdle, which is just a natural byproduct
of any transformation effort?
Mitra Mahdavian: Sure, I’ll give you one example. There were two
sales roles that had similar activities. One of the efforts coming out of the
sales transformation was to merge the roles. But keep in mind, this was thousands
of people in each role, and so for it to get merged at an account level was
quite an undertaking.
The
sales secrets of high-growth companies
One of the things that happened was that
although there was an original description and definition for what the combined
role was going to do, there was also an understanding that we were going to
learn as we go. The transformation itself would show what works and what
doesn’t work, and we would correct course as needed.
When that aspiration of a combined role
was taken into the geographies and into the account level, there were questions
raised: is this the right thing, what about the responsibilities that fall off,
how would we handle certain types of customer requests, and do all customers
need the same thing from this role.
All these questions came up. We had the
attitude of “We will go back and we will reassess so that we can handle the
questions that come up appropriately,” and then second, we had the North Star
of “How does the customer want to buy?”
For all these questions that were raised:
what is the right thing, this is how we want to sell, this is how we used to
sell, or this is what’s worked historically—coming back to say, OK, but what do
we think the customer needs moving forward, how would the customer prefer to
interact with this role, what are the responsibilities of this role that matter
most to the customer—those two things allowed for the role definition to evolve
slightly over the course of about a year. That was the timeline required to truly
merge those two roles.
Barr Seitz: Great.
I’m afraid we’re out of time, but thank you for joining me in this
conversation.
http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/lets-talk-about-sales-growth?cid=podcast-eml-alt-mip-mck-oth-1609
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