Transforming Commercial Operations: A Structure for Business Metamorphosis
Entrepreneurs typically embark on their journey with a remarkable concept and the expectation that investors will quickly discern its potential. They spend considerable time perfecting their value proposition, seeking funding, and dreaming of that life-altering payment. However, a serious blunder is often committed at the outset: the belief that a remarkable product or service will sell without a meticulous commercial strategy. In fact, sales triumphs seldom occur by chance. Instead, they're the result of a strategic approach to selling—a well-organized commercial plan.
A company that encapsulates the power of a systematic sales approach is Qualtrics. In its nascent stage, Qualtrics received a $500 million all-cash buyout offer. Boasting nearly 5,000 paying clients and a decade of stellar growth, the three owners faced a critical juncture: either sell the company or accelerate growth even further. Opting for growth, they recognized that boosting sales necessitated a shift in their commercial strategy.
A Strategic Approach to Sales
Transforming sales can be an intimidating undertaking. To navigate this journey, an organized approach is crucial. With my colleagues from IESE, Francisco Iniesta and Juan Manuel de Toro, we've developed a framework designed to guide organizations through this transformation effectively. The essentials of this framework can be summarized in the following pyramid.
Using Qualtrics as a role model, this structure demonstrates the impact of a disciplined "sales system," comprising five essential components, which serve as a strong framework for analysis:
- Firm Base: Strategy: A successful commercial transformation begins with a clear and precise strategy. It encompasses defining a target market, refining the value proposition, and identifying which offerings can be scaled easily. Qualtrics started with a specialized survey tool for academic researchers and later expanded its product line to appeal to broader customer segments.
- Smooth-Running Organization: With strategy in hand, the subsequent step is to design an organizational structure. Qualtrics embraced an inside sales model, utilizing direct salespeople in a single location who followed a well-defined and highly efficient sales process. By preserving a flat organizational structure—growing from just a few employees to 200 sales professionals—Qualtrics ensured that everyone worked in harmony. This straightforward setup facilitated easier training, reduced complexity, and boosted rapid growth.
- Clear Guidelines and Procedures: For a sales organization to prosper, well-articulated guidelines and procedures are essential. Guidelines address key areas such as recruitment, training, incentives, motivation, and evaluation. Procedures, on the other hand, outline the specific methods used to implement these guidelines—including how evaluations are conducted. Consider the instance of Qualtrics, where the evaluation system assessed not only sales results but also adherence to an established sales process. Sales representatives who achieved strong numbers while adhering to the process were celebrated as stars. Those who faced challenges with results but adhered to the system faithfully were esteemed as “rising stars.” Conversely, employees who achieved outstanding results but ignored the prescribed methods were flagged as problematic, while poor performers who disregarded the framework were promptly dismissed. This straightforward approach fostered a culture of accountability and continuous improvement, emphasizing the importance of discipline in the sales process.
- Implementation: Implementation is where strategy, organization, and guidelines converge. Clear processes and measurable key performance indicators (KPIs) ensure that each sales move furthers the company's aims. Salespeople understand exactly what to do, managers can coach effectively, and leaders can make informed decisions.
- Results: By focusing on metrics that reflect both activities and outcomes, organizations maintain alignment between daily tasks and long-term objectives.
This structure is not necessarily a "silver bullet" for companies like Qualtrics. Numerous other companies have flourished using entirely different sales systems. Nevertheless, the Qualtrics example underscores the significance of an integrated and comprehensive approach. Additionally, it highlights the value of deliberate design, as Ryan, Qualtrics' first salesperson, put in substantial effort to shape the system.
Why, then, consider altering something that has already proven successful? The answer lies in the ambition to drive even more rapid growth. To achieve it, Qualtrics required expansion into international markets, targeting larger accounts, and transforming its product into a platform. These strategic shifts necessitated a thorough reassessment of the sales system.
Identifying Catalysts for Transformation
Not all companies possess a well-defined sales system from the get-go, and many neglect to review or transform it frequently. Triggers for commercial transformation vary, but the most common one is underperformance. Often, underperformance stems from commercial difficulties—poor market access, weak differentiation, inadequate sales talent, insufficient sales technology infrastructure, or a lack of insight into market trends, as per the latest CMO Survey. When results fall short of expectations, it's time to examine the system, diagnose what's broken, and decide on solutions.
However, companies need not wait for a crisis. They can proactively transform their sales approach in response to new opportunities, whether those arise from automation, digital channels, or changing customer journeys. The secret is to recognize these triggers, articulate the rationale for change clearly, and execute the process in a manner that maintains customer relationships and retains top sales talent.
A Comprehensive and Systematic Model to Transform your Sales System
Building a robust commercial system entails more than merely tinkering with incentive schemes or implementing a new dashboard. A holistic approach considers every facet of how the company sells—from strategy, channels, and processes, to organizational design, roles, guidelines, execution, and supporting technologies. Leaders must invest the same focus on their commercial processes and decisions as they do on production lines or supply chains. Although improving sales systems may seem more subjective and challenging to quantify than investing in factories, the impact on revenue growth, profitability, and competitiveness is indisputable.
In fast-changing times, relying on old sales methods won't keep businesses ahead. Instead, they need to step back, examine their surroundings, and adopt a structured strategy for commercial transformation. A strong sales structure isn't a quick-fix solution; it's a dynamic, continuously evolving framework that adapts, ensuring consistent growth and triumph.
Here's a comprehensive breakdown of the subjects to focus on during a commercial transformation:
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- Recognizing the importance of a comprehensive sales strategy, the author suggests that Qualtrics, in its expansion phase, needed to reevaluate its sales system to cater to international markets, larger accounts, and transform its product into a platform. This necessitated a thorough reassessment of their pre-existing sales system.
- Companies, not just those facing underperformance, can proactively transform their sales approach in response to new opportunities, such as automation, digital channels, or changing customer journeys. Leaders must recognize these triggers, clearly articulate the rationale for change, and execute the process effectively to maintain customer relationships and retain top sales talent.
