Teamwork. Whether in meetings or retreats, there’s no doubt you’ve heard these words repeatedly preached by senior executives. However, few firms actually focus on alignment where it counts most: linking big-picture strategy with the nitty-gritty of customer acquisition and retention in sales efforts.
Poor alignment of sales and strategy incurs both direct and opportunity costs, putting your company at a severe disadvantage. As proven by income statements, selling is by far the most expensive part of implementation for firms. Companies in the United States invest in their sales forces three times more than consumer advertising, 20 times more than online media, and 100 times more than social media. Despite this spending on sales, 56 percent of senior executives agree their biggest challenge is ensuring that day-to-day decisions are in line with strategy and allocating resources in a way that supports strategy.
Selling is also increasing as a portion of costs. In the first decade of the 21st century, the average S&P 500 company reduced its cost of goods sold by about 250 basis points, primarily through continuous improvement in production efficiencies and back-office functions. But SG&A (Selling, General and Administrative Expenses) as a percentage of revenue has not declined. Winning in business is ultimately measured by relative advantage. Given these numbers, where would you – and should you – look next for a competitive edge? As referenced in Aligning Strategy and Sales: The Choices, Systems and Behaviors That Drive Effective Selling (Harvard Business Review Press), a good starting point is the “3Ps” of your organization:
- Priorities: Strategy is about choice, especially choosing which customers to focus on – and not all customers are created equal. If you don’t choose, then over time either your competitors or your customers will choose for you. Neither group necessarily has your best interests at heart.
- People: Companies don’t execute strategy; people do — especially those people in the field who deal with customers. Yet many companies maintain their equipment better than they develop their people. In sales, you need disciplined hiring approaches linked to your strategy (not to a generic selling methodology or allegedly all-purpose assessment), focused training initiatives, and market-right organizing principles that help people broaden their skills even as markets and sales tasks change. Almost all serious research underscores these fundamentals and debunks the many glib prescriptions about talent acquisition. There are practical ways to do this. For example, HubSpot and other firms now use data to track sales managers’ assessment criteria during interviews and the performance of those who are hired. This increases accountability as well as capability in recruitment.
- Process: Alignment is a process, not a one-shot deal at an off-site or periodic “customer focus” initiative. It starts with a coherent strategy. And it also requires ongoing management of what I call the Strategy –> Sales Performance Cycle: 1) setting performance expectations and behaviors; 2) creating plans that trigger actions needed to achieve performance expectations; 3) identifying relevant metrics for monitoring our progress (or not) towards goals; and finally, 4) rewarding, coaching, and changing behaviors as the market changes. Why? Because it’s not the responsibility of the external world to be kind to your strategy. It’s your responsibility to understand the market today – not yesterday – and adapt.
Business is a performance art, whereby value is measured by actuals in the field, not by strategic intent. If your strategy is failing, one or more of these 3Ps may be the culprit. Fixing them will improve selling and strategy.
Frank Cespedes is the MBA Class of 1973 Senior Lecturer of Business Administration at Harvard Business School. He has run a business, served on boards for start-ups and corporations, and consulted to many companies around the world. He is the author of six books and many articles in Harvard Business Review, The Wall Street Journal, California Management Review, and other publications.
Follow Frank on Twitter @fvcespedes.
This article originally appeared on Business 2 Community.