Predictable Revenue

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Predictable Revenue

The path to predictable revenue can be achieved through focus on systematic lead generation and specialized sales roles. Hiring more salespeople won’t lead to sustainable revenue. A metrics-driven sales process and an investment in the sales team are keys to success.

Predictable Revenue by Aaron Ross and Marylou Tyler

Much of this book is a counterpoint to old school sales techniques (“Always Be Closing”) which hope that brute force cold calling and cajoling customers will result in big deals. Ross believes that carefully designing a sales pipeline with associated metrics, investing in the sales team and focusing on the customer relationship will yield predictable revenue. He includes “selling selfishly, rather than solving” as one of his “how to make things worse” bullet points.

Ross tackles several common misconceptions about sales: hiring more sales people will result in more sales, account executives should be cold calling, and sales teams can take care of themselves.
Throwing more people at the problem will not help. Creating predictable revenue requires creating a metrics driven sales process.  Key metrics must focus on lead scoring and defined phases. He emphasizes the role the process and planning take in creating predictable revenue. He contrasts this with old school “Always Be Closing” which favors the close at the expense of everything else. Ross is a proponent of solution sales and says that sitting with your customer to craft a joint vision of success is much more powerful because it establishes a partnership focused on business outcomes rather than order document.
He counters the second issue by creating a separate team with a very specific role and process to conduct “cold calling 2.0”. The key to effective Cold Calling 2.0 is to screen all prospects against a well defined ideal customer profile.
Finally, effective sales requires investment in the team. This includes hiring, training, incentives, and executive support.

Revenue growth vs Predictable revenue

Ross and Tyler seek to explain how a company can bridge the gap between initial, relationship based, organic sales growth and systematic, predictable revenue. Common failures of sales leadership prevent a company moving from simply growing revenue and building a predictable and transparent revenue process.

Ross’s “fatal mistakes” include not taking responsibility for understanding lead generation, thinking account executives should be jacks-of-all-trades and prospect, careless tracking and measurement, enacting a command and control management style, and under investing in customer success.

Losing sight of the customer relationship will hurt the pursuit of predictable revenue in two ways: you’re fitting square pegs into round holes during the sales cycle and end up wasting a lot of time due to bad fit; focusing on closing the sale at the expense of customer success will result in lost reputation and low retention rates. Similarly, Ross is a proponent of disqualifying prospects early. The ability to do this hinges on having a clear ideal customer profile which drives lead identification and the rest of the sales cycle. The proposal phase is a key step at which customer interest can be measured by writing the proposal jointly rather than simply submitting a price list and hoping for a call back. Ross says “let go of trying to control prospects,  and trust that if it’s a good mutual fit, and you keep nurturing them, and your “layers” are relevant and useful, they will become a customer some day!”

Don’t just hire more salespeople

Ross says the #1 mistake of CEOs and sales leaders is to assume that more salespeople will solve the problem of weak sales. This is not a scalable strategy nor does it yield the intended results. Without a solid and repeatable sales process backed by a sales force automation tool with clear roles and metrics, more people won’t equate to more revenue. Moreover, by simply hiring more salespeople, sales leaders effectively side step their obligation to train, motivate, develop, and support their teams.

Cold Calling 2.0

The root assumption that gets Sales VPs fired…is the false assumption that salespeople will find new business on their own from past Rolodexes or lots of cold calls, with a minimum of help or investment from the company.

One of the cornerstones of the book’s method involves dedicating a team to deliberate and focused outreach to pre-qualified prospects. Cold Calling 2.0 isn’t cold-calling at all–it’s sending targeted emails to a set of highly screened opportunities. It relies on a clear picture of your target buyer and it isn’t done by account executives. Ross and Tyler recommend creating a team that is focused purely on Cold Calling 2.0, not qualifying marketing leads or other sales operations activities. One of their principles of success is to set up teams exclusively for each step of the sales process.

Ross emphasizes many times in the book that quota-carrying salespeople don’t like to do cold calls, they aren’t particularly good at it, and it’s not a good use of resources to have the most expensive sales role do lower-value work. Although there are some cases when account execs can be effective with prospecting, a dedicated team is the best approach.

Four Core Sales Roles

Ross exhorts the reader to “Specialize, Specialize, Specialize!” into four core sales roles. When these roles are combined into individuals, their effectiveness is decreased because the phases in the process are distinct and require specialized attention.

  • Sales Development teams who qualify and handle inbound leads and prospect into cold or inactive accounts. This includes outbound representatives and market response representatives. They pass qualified leads to account executives.
  • Account executives who close the leads they get from Sales Development.
  • Customer Success or Account Management teams who own the client relationship once it has been established.

Obsess about the decision making process

Because everyone is so busy now and delegates more, a single individual is rarely empowered to make a purchase decision entirely on their own. Often, cross functional teams will collaboratively make purchase decisions. Moreover, purchasing departments and finance processes require multiple levels of approval.
This means shifting from asking “who is the decision maker?” to “what is your decision making process?”, “who is involved in making the decision?”, and “how do you typically make these types of purchase decisions?”
Relationships are still important, but without understanding the whole process, a sales person can easily lose the deal at any point.

Uncover the problem

Killer salespeople uncover true problems behind desired solutions.
Getting to the real problem takes asking “The 4 Why’s.” Leading the prospect through the successive layers of business problems will yield the core issue or need that is driving the purchase process. This allows the development of a joint vision which results in a collaborative partnership rather than an adversarial one. Ross stresses the need to work alongside customers on a shared view of the end result. If you lose that, or don’t know what it is in the first place, the chances of a successful outcome (regardless of whether the sale closes) diminishes.
Closing is artificial. it is just a step along the path of customer success and a customer relationship.
Ross says that “Always Be Closing” is myopic because it misses creating a success plan with the customer before negotiating an agreement and focusing on ongoing customer success after the close. Sales people should be asking “is there a mutual fit?” rather than “when can I close?” The question of mutual fit can be answered by matching the opportunity with the Ideal Customer Profile which represents companies most similar to the top 5-10% of current customers who are most likely to purchase for the most revenue.

 


This book is a good mix of strategy and tactics. Ross provides several principles for success and then backs it up with a lot of implementation detail. The fundamental problem he addresses is how to turn a haphazard and unpredictable sales process into a visible, manageable, and predictable revenue generator. There’s a lot of detail in the book about sales metrics, roles, pipeline phases, hiring, and executing marketing programs. He also covers usage of sales force automation tools.
If you’re looking for an effective sales philosophy as well as actionable steps, this book will deliver. It’s written for sales leaders and would be a good for an environment where more structure and visibility are needed.

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