Turning the tide: five strategies for growth and profitability
It’s that time of year when businesses are reflecting on last year’s financial performance. Sadly, many of them will be disappointed and will be looking for ways to turn the ship around.
Two private equity firms in the UK have contacted us for assistance, as their portfolio companies are facing difficulties in achieving profitability and growth. The challenging economic conditions are adding further pressure on them (and many other businesses).
A significant amount of that burden is focused on revenue-generating teams.
So, how do we ensure that our revenue-generating teams (sales, marketing, channel etc) smash their quotas or annual budgets?
Every business is different, but there are five practical areas that each business should consider:
1. Planning (action and attitude)
If you fail to plan, you are planning to fail.
Begin by creating a plan. Set ambitious goals and use them to establish a framework and roadmap for your journey. A good plan helps us identify and prioritise the resources we will need to get where we want to go.
With this in mind, ensure that your plan is a collaborative effort. Too many businesses we work with suffer from a siloed mindset, often starting in the C-Suite.
But successful businesses understand that they are systems, and are subject to the rules of systems theory. So, start by seeking input from every division, and understanding the effects across the company. It is crucial to seek alignment and buy-in from all departments, with everyone aware of the priorities and actions required to reach the desired growth.
For example, companies seeking 40% growth must coordinate the effort of multiple departments. The sales team can only secure more business if the marketing and channel teams can generate more leads. Talent acquisition may need to hire more resources, which will affect your finance. Product, engineering, and support teams must also be involved, providing both ideas and approval to support the influx of new business.
Only when you have a consensus, can you start to build out sales targets and goals, which can be used as a basis for forecasting.
Of course, a good plan must be ambitious enough to drive real change, but flexible enough to adapt to the inevitable mishaps and unexpected road bumps. (Businesses are systems that operate inside of much larger systems that are outside their control.)
When it comes to executing, your focus should be on action and attitude.
But what kind of action? What kind of attitude?
Many businesses we work with are stuck fighting fires, seeking short-term success (those quick hacks) that are easy, but rarely sustainable.
A good plan demands consistent, longer-term action. To take a simple example, one discipline we recommend is having the sales team spend two hours a day on business development (e.g. cold calling, prospecting.)
This is not just about getting more leads, pipeline and business (although it will do that)… it’s about fine-tuning their sales pitch and approach. Through consistent practice and attitude, the team are developing the ‘muscle memory’ to be more efficient and effective at business development.
Of course, the right plan can help instil this kind of thinking into every part of the business system. This is the foundation of achieving your sales quota and improving sales forecast accuracy.
2. Top of funnel
Our clients often blame low sales on an insufficient pipeline. This is especially true for high-velocity businesses with low touch and high volume.
But if your business is high touch (or has longer sales cycles), it is important to look at other metrics to see if you are on track to hit your quota.
What are those other metrics that you should be looking at?
- Pipeline velocity: This is the number of opportunities in your pipeline divided by the number of days since they were created. It shows how quickly your team can close leads and opportunities.
- Close rate: This shows the percentage of opportunities that close. If there are too many opportunities that never close, this could indicate you need to improve your process or increase the number of touchpoints with your prospects so they are more likely to buy from you.
Depending on your sales cycle, it can be beneficial to anticipate future quarters in addition to the current quarter. With some clients, we analyse the effectiveness and efficiency of their best and worst quarters and use them as benchmarks.
This kind of insight gives you early warning signs, allowing you to focus on the top of your sales funnel and how it impacts your ability to meet your sales goals.
3. Sales team
Many great companies are dragged down by mediocre sales teams – reps that lack the training, drive, energy or grit to turn opportunities into business. If your strategy is to double your business from the previous year, you’ll need to start by building the sales capability that this requires.
We generally recommend starting with proper training and coaching, because hiring more people into a poor process only exacerbates the problem.
The key here is often to focus on strategy. Your strategy is tested every time a member of your sales team interacts with a customer. Do they spend time pursuing companies within your ideal customer profile, or do they call on whoever will meet with them? Do they invest time with the decision maker and budget owner, or are they squandering time and money on the wrong people?
Educating and enabling your sales team is not a one-off event. Training needs to be ongoing and responsive, adapting to both successes and failures, and ensuring that everyone has the support they need to execute consistently.
(In this article, we have intentionally left out hiring more salespeople. We believe that most companies are currently better served by driving operational efficiencies and maximising effectiveness… as opposed to incurring new headcount costs.)
4. Pipeline qualification process
Like you, I receive a dozen cold emails and LinkedIn messages daily that are all similar in nature, inquiring about my interest in buying sales leads, developers, contact databases or IT staff.
The problem with this approach is that even if I have a need for these services (which I do!) – the messages are generic. From the first line, it is clear that I am just another name on a marketing database – and personally, that puts me off.
Perhaps your clients, leads and prospect share the same frustration. They want to know that you understand their problems and challenges. They want to know that you’ve done your research, taken your time and offer a credible solution.
Most importantly, they want to feel like you are someone who “gets” them.
We all know how frustrating it can be when a salesperson sticks doggedly to their script, rather than seeking to understand our problem.
And yet, so many of the companies we come across put the script before the skill.
So let’s agree on an obvious truth.
Great salespeople engage deeply. First, they focus on understanding the real business need and challenges. Then – and only then – do they present a tailored solution.
To be clear, this does not need to be a customised product. It may be as simple as emphasising the features that best targets the prospect’s pain.
It may be as simple as starting with empathy.
This moment, at the top of the funnel, is where we start to create value. When we understand what’s truly important to our prospects, it becomes much easier to craft a message that resonates.
Is it slower than reading from a script? Yes, but the extra time spent on qualification will increase the close rates and revenue of any sales team. Likewise, your sales metrics will benefit from higher-quality opportunities in the pipeline.
This is how we improve our forecast accuracy and quality.
5. Multi-threaded engagement
How many times have you established a great rapport with a decision-maker — only for them to leave for another company, go on an unplanned holiday, get sick, have a change of heart… or simply stop responding?
This happens surprisingly often in the companies we work with, and the diagnosis is usually pretty simple.
They were relying on a single relationship to close a deal.
Anyone who’s been “ghosted” at the end of the quarter knows how frustrating this is, so let’s talk about how to avoid it.
The key is simple – build multi-stakeholder relationships.
As with the step above, this is about long-term thinking and investment. Building trusted business relationships with decision-makers, influencers, users, and sponsors take time and effort.
Here are a few simple guidelines to help you maximise your chances of building attention, connection and trust:
(Note: If these seem obvious, ask yourself whether you are really acting on them. Many companies pay lip service. Successful businesses do it.)
- Understand their needs and priorities: Take the time to understand their business objectives, goals, and pain points. This will help you tailor your approach and offer solutions that align with their needs.
- Communicate effectively: Be clear and transparent in your communication, and follow through on your commitments.
- Build rapport: Make an effort to get to know the person on a personal level, by showing interest in their work, their industry, and their goals. (Side note: In our experience, when we rise above the ‘closing logos’ mindset, people are interesting.)
- Be reliable: Meet your deadlines and deliver on your promises.
- Be a valuable resource: Be generous in sharing your expertise.
- Be responsive: Be available when they need you.
- Be persistent: Building relationships takes time and effort. Be persistent in your efforts to build a connection and follow up regularly to maintain the relationship.
By following these simple steps, you can build long-lasting relationships that last beyond the current quarter.
This gets around the problem of ghosting and allows you to get gauge their commitment and timelines to procure from you.
I began this article by referring to companies that had a disappointing 2022. Of course, there can be complex reasons for this, but in too many cases it is simply a matter of ignoring the fundamentals.
Delivering against your budget requires a practical mix of planning, people and processes. Despite what some believe, getting the basics right is rarely rocket science.
If you are looking to make a bigger impact in 2023, the list above is a great place to start.
About Mitul Ruparelia
Mitul Ruparelia is a Managing Partner of Fortius Partners, a growth transformation partner for private equity and venture capital backed businesses. He has over 20 years of growing profitable, sustainable business units, defining strategy and leading sales, marketing, product, innovation, finance, raising investment and people management for established, underperforming, and scale-up businesses. He has helped companies scale to valuations of over $1 billion.
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