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Your Revenue Roadmap: Driving Your Sales Strategy with Compensation

 

Sales compensation season is almost upon us. It's not enough to just sit down at a conference table with a calculator and a few of your closest comp buddies. Compensation actually fits securely among about a dozen other sales effectiveness disciplines including business performance, sales strategy, and your sales roles. Because it's not an isolated part of the sales organization, it pays to pause and consider the big picture.

One of the first questions we ask when we look at sales compensation is: How should the priorities of the business be represented in the sales compensation plan? One of the ironies of sales compensation is that while it’s a tactical program, it can churn up issues that are actually bigger sales effectiveness misalignments.

We developed the Revenue Roadmap from our decades of work with hundreds of high performing sales organizations. The Revenue Roadmap identifies four major layers, or competency areas, and 16 related disciplines that must connect for the organization to grow profitably.

Below are the first two layers.

 

Insight

The first layer of the Revenue Roadmap, insight, pertains to understanding the market and competitors and how the business is performing. Insight is the highest level competency: understanding the voice of the customer, the macro market, competitor moves, and the performance of the business. That insight will drive certain decisions to the next downstream level, which is sales strategy.

Listening to the voice of the customer is a critical starting point. Sales leaders must understand the needs and expectations of their customers and their performance relative to those expectations. That insight allows leaders to see any gaps and determine where they can improve value proposition, sales coverage, and sales process.

Sales leaders also need to consider what’s going on in the macro market environment, especially as it relates to their industry, and how competitors are performing from a growth and financial perspective. Sales leaders also have to understand their competitors’ offers to the market and how they are positioning their products and services.

Finally, sales leaders should look at the company’s historic and projected revenue and profit performance. This evaluation should consider whether growth has come through the retention of current customer revenue, the penetration of customers through increased usage or additional products, or the acquisition of new customers. By understanding the business performance they can see where they’ve been strong and where they’ve been weak, and they can adjust their sales strategy accordingly.

 

Sales Strategy

The second layer, sales strategy, defines the sales organization’s action plan to achieve its goal. The sales strategy will drive decisions concerning product and service focus, concentration on certain markets, value propositions, and the resulting approach to market.

First and foremost to the strategy, it’s critical to define the core and strategic products and services the business provides. The organization determines how it will organize and prioritize customers and prospects through its segmentation and targeting. The most effective segmentation and targeting considers characteristics such as customer industry, sales potential, profitability, common needs, and overall fit with the sales organization’s business.

It’s important that segmentation and targeting flow into a plan that’s actionable by the sales organization. Simply defining the segment at a high level is not going to answer the sales rep’s question “Who do I go see on Monday morning?”

The value proposition goes beyond what the sales organization communicates to customers and articulates the organization’s understanding of the customer’s business and issues, what the organization can accomplish for the customer, and how the organization differentiates itself from the competition. The highest level value proposition is usually communicated at a company level. To be effective for sales however, the organization must convert its value proposition to sales messages that can be communicated at the segment level, customer level, and deal level to adapt to changing situations and customer needs.

When developing the approach to market, sales leaders should incorporate decisions about product, service, target segments, value propositions, and potential sales resources into a plan that can be executed by the sales organization. The customer coverage layer converts that plan into action.

 

For questions, email Mark Donnolo at Mark.Donnolo@SalesGlobe.com. 

 

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