ExpertCEO

What do you (especially investors/Board Members) also see as the most common fatal sales mistakes that CEOs and VP Sales make? Not the kinds of mistakes made in individual deals, but the kinds of strategic/culture/hiring mistakes that kill overall momentum, kill results and kill companies.

In a discussion with Tim McAdam of Trinity Ventures, we started chatting about the mistakes that CEOs/VP Sales make time and time again, company after company. So I'm curious what the crowd here has to share.

For example, here are two of Tim's (and I agree with them):

1) Assuming a channel will "just work" (that is, the execs assume revenue will flow very easily once a deal is signed).
Companies have to control their own destinies with direct sales/busdev, say for the first five years while reputation, a client base, etc are established...the things that will make channels successful.

2) Underinvestment in customer support.
Teams are too focused on customer acquisition and ignore account management and support. Companies need to handhold their first 50 customers and really create customer love, with account management, great support, and great sales engineers.

I have some more of my own (hiring mistakes, tracking wrong key sales metrics, ego, denying reality...) that I'm collecting into a presentation/list I'll happily share here once it's further along.

So what do you see personally as the worst/most common (and avoidable) mistakes in sales?

biggest mistake i've seen is not designing for distribution from the beginning. a lot of the product-market-channel fit can be designed in from day one vs building a product then trying to figure out who wants it and how to sell it.

Lack of focus or constantly changing focus.

Not training the salespeople on how to overcome objections.

Great question Aaron! As a marketer, I'd add the following issues that I have seen with CEOs and VP Sales folks:

1. Being to product centric instead of customer centric in selling approach. One client referred to it as "selling beer by showing how the cans are manufactured". With tech products, sales teams do need to be prepared to answer tough product questions, but value proposition should drive the conversation. Also, to echo your second point--customer support is important--in fact, it's part of the overall offering. Savvy customers will be thinking total cost of ownership, including services, and want a deal that ensures their own success.

2. Compensating on the wrong things (as you said). Sales people listen very carefully to the comp formulas and act on them. If you comp on revenue, expect price erosion. If you comp on profitability, expect a lack of focus and creativity on the big whale deals.

3. Lack of organizational learning over time. I don't think that startups should invest lots of money in fancy reports and paperwork--but simple Win Loss records and some tracking of major competitors can help sales folks and product teams alike anticipate challenges and opportunities.

4. Lack of proper support for sales. IF and when you find a great sales person--get them lots of support for everything from writing of ppts and proposals to background research on target companies. It's hard to find great sales talent, but when you do, they need to be saved for their highest and best use.

I'm looking forward to seeing your final list/preso, Aaron!

Warmly,
robbie

in my experience, the worst mistake senior management make is to isolate themselves in the "ivory tower" analysing data upside down and backwards. All management, Executive, Sales, Marketing, Client Support, Technical etc. should allocate a minimum of 25% of their time in the field with their salespeople (particularly in hard economic times), it motivates sales, impresses clients, and educates management. The results are truly surprising.

(a) assuming top performing salespeople will make great managers
(b) thinking that Marketing is primarily an outbound process
(c) CEO founders: not knowing when to hand over the reins
(d) demonising their No. 1 competitor. Whilst it may help to rally the troops, do it too much and you will end up with your competitor detarmining your strategy
(e) CEO founders again: assuming that growth for its own sake will lead to personal fulfillment and happiness (see c) above!

Underestimating the time required to get new sales reps up to speed and producing bottom line profit.

A few more:
1) Lack of strategic planning - the "chase after the next bone in the yard" approach without clear strategic direction, I have seen this happen too many times. Better method, in my opinion: plan first, evaluate execution options, acquire skills (hire), verify plan, build sales confidence, then fund & execute with confidence.
2) Capabilities & features selling rather than relationship selling - Key factor for a product company is the relationship with channels/distributors/customers. There are plenty of technologies out there, they have to trust you before they buy anything from you. CEO's make the mistake of pushing the capabilities as the centerpiece of their sales strategy.
3) Letting Expense get ahead of sales growth - common mistake is to "build and they will come" attitude. This often leads to moral issues, implosion of sales structure, RIF and rebuild.

I suggest three things:

1. Failure to accurately define and agree on a target market (and include marketing in the discussion). Frequently, lack of a clear target causes marketing to market to one audience while sales sells to another. This happens frequently when a company sells point and enterprise solutions but hires elephant hunter sales people who will not sell point solutions.
blog.pointclear.com/blog/bid/19408/Truth...rketing-are-Critical

2. Failure to establish and enforce the definition of an opportunity. What percent of leads is effectively followed up in your company? Would it surprise you to learn it was less than 10%? blog.pointclear.com/blog/bid/19369/Truth...-Well-Qualified-Lead

3. Failure to control deployment and actually measure results. Failures in this area cover a multitude of sins: Sales people have too many so-called prospects and are "too busy" to complete accurate records in your SFA; rather than measure movement in the funnel, sales management and senior management accepts promises about next quarter without regard to what happened after the end of the last quarter. \
blog.pointclear.com/blog/bid/18616/Truth...th-about-Sales-Leads

Large companies are actually doing a worse job in these areas than mid-size companies.

Thanks everyone for the great comments and suggestions. Here is the first set of Fatal CEO Sales Mistakes (and I expect to evolve it over time). Please keep the suggestions coming!

1. Not Taking Personal Responsibility For Understanding Sales & Leadgen
>>When a CEO delegates his understanding to his VPs. I made this mistake as a CEO, which is why I then went to salesforce.com to really get sales.

2. Thinking Salespeople Should Prospect
>>NO!! Junior sales development reps should prospect. Salespeople should close. Closers should only prospect into their top 10 strategic accounts and to current customers.

3. Assuming Channels Will Do Your Selling For You
>>They won't. First control your destiny with your own sales, then channels will come.

4. “Sales 1.0” Talent Approach (Hiring, Training, Incenting)
>>Hiring a VP Sales too early. Using $ as the main motivator. Not training people enough. Hiring for looks/rolodex rather than entrepreneurialism/aptitude.

5. Being “Product-Out” Rather Than “Customer-In”
>>This is how I described your comments around pushing product rather than solving problems or targeting a market need.

6. Won’t Ask For Help / Advice
>>"I already know it all." "We can do it ourselves." "I have to look strong."

7. Command-And-Control (“Push”) Management
>>A culture of stress and pushing people used to work...but things are shifting. It's more effective to create a workplace that people enjoy coming to every day, that inspires them to want to give back to.

Here are the slides that provide the details:


www.docstoc.com/docs/35726436/The-7-Fata...nd-How-To-Avoid-Them

Oh - I forgot the Bonus one! Phil - I really liked the way you phrased it...

BONUS: Assuming More Growth Will Lead To More Happiness
> Employee (and CEO) happiness increases inspiration/motivation, customer satisfaction and retention, improves hiring of talent
>Happiness leads to more growth; growth doesn’t lead to happiness

Of course this one is most dear to me because of PebbleStorm/CEOFlow :)

Dear Aaron ,

After my experience being dealing sales departments in different companies and having the opportunity to meet companies in different sectors I won´t dare to make a rule for mistakes in sales because maybe there is a correlation ship between the type of mistakes and the organization size but I could give some mistakes that I have found :

1. Sales strategy doesn´t fit with global strategy.
2. To be more focused trying to gain more market with new customers than to maintain and develop the actual portfolio.
3. Companies are more focus on the product than in their customers : is easy to answer from the point of view of a company ,what we are selling ?, but is not easy to ask ,what our customer are selling to us?.
4. Internal communication problems : most of the time the strategy is made on marketing departments , sometimes without to involve sales department.
5. Objectives are not clear and the tools to evaluate performance neither too or sometime contradictories.
6. Lack of formation and investment in sales force : training , tools …
7. Company has not clearly define their market.
8. Lack of pragmatism.

My guess at the number one mistake is a top-down calculation of market size/potential without accurate estimates for change costs, sale cycle times, competitor response, real pain value (i.e. your solution does not save enough pain to make the pain of changing worth it) or network effects (some solututions only work at scale).

Many markets are smaller and more niche than they appear....... or can be made so by enterprising competitors.....

Lots of great comments here - most of which I agree with. One dynamic in particular that I often see repeated again and again in the CEO / Sales dynamic is turnover in the sales management team because the objectives are not being met. Too often the answer seems to be "Let's find the next head of sales because the current guy (or team) isn't meeting objectives." All too often, the answer is never that simple. Instead, the management team should be spending more time understanding why, not who. Sales management is rarely the issue - especially with experienced sales managers. Instead, it's often some other business factor like: 1) wrong customer with the wrong product; 2) mismatch between sales pitch and reality of the offering; 3) wrong offering (price, features, value prop), to the right target or vice versa; and 4) wrong channels with the wrong incentives. The team can waste alot of time trying to fix the symptom (poor sales results) rather than focus on the problem. And you churn through a lot of good people and destroy morale and momentum in the process.

I also want to echo the comments about sales process and metrics. In trying to increase the sales of an inside sales team, we started looking at different measures to determine how we could close more business. We had tons of leads coming into the system. But we found we were giving too many leads to sales - they couldn't handle them. We started looking at lead aging reports and realized that 90% of the leads were not opportunities. They were leads, not prospects or opportunities. We were drowning our sales team in low quality leads and they couldn't function. There was no focus and no ability to filter the high quality leads. So we had to rethink the entire sales process - from marketing all the way through to contract. We ended up creating a "marketing" pipeline with lower quality leads and cutting the number of leads that went into the sales pipeline by 66%. Quota attainment rose from 33% of the team to over 75% within two quarters while we increased quotas almost 20% in that same time frame. We were focused on the wrong metric - leads per sales rep. We should have been focused on quality leads per sales rep.