Do you have a sales problem? Or a revenue problem? And what to do about it

revenue sales Sep 07, 2020

 

When CEOs or Founders come to me for help with a “sales problem,” the first thing I do is find out whether it's really a “sales problem” or a “revenue problem.” 

What’s the difference between the two? 

You may already know the technical differences between sales and revenue. If not, this is an excellent overview from Investopedia. 

In short: Sales are when customers give you money for your product or service. And revenue is when you recognize it on your income statement. 

Sales relate to the transaction, while revenues relate to the entire business operation. A salesperson can make a sale, but the whole company has to turn it into revenue. 

And that's a crucial distinction to make when diagnosing what is preventing a company from performing as well as it could. 

Is the source of the problem in sales, or somewhere else that is affecting sales? 

Sales problems can be solved within the primary sales activities. This means the source of the problem is in sales processes, practices, or people. If we don’t have to go beyond the primary sales activities to find the source of the problem, we have a sales problem. 

You can't fix revenue problems with changes to sales practices. The source of revenue issues may be an inferior product, ineffective or absent marketing, poor customer service, weak leadership, or a toxic culture. While these problems may affect sales, solving the problem is going to need a more holistic solution. 

The prescription can only be as good as the diagnosis, so getting this right is critical. 

Take, for example, a B2B SaaS business I worked with recently that was experiencing a slump in sales. They’d self-diagnosed a “sales problem” and came to me to help. They asked me to audit their sales process and offer a diagnosis on how to get things back on track. 

In auditing the sales process and meeting with the sales team, I learned: 

  • Customers often complain about their software crashing. 

  • Customers cannot reach anyone in customer service, and emails don’t get returned. 

  • Customers have begun switching to a cheaper and better competitor in droves. 

  • That competitor has an insanely effective marketing strategy targeting users. At the same time, this business has no marketing strategy at all. 

  • Another competitor has been effectively poaching top sales reps from this business. 

These challenges won't disappear with better sales presentation scripting, email copy, or automation. The point: these are revenue problems, not sales problems, so sales solutions wouldn't work.

These kinds of issues extend well beyond the walls of "Sales". They go more into product development, marketing, customer service, strategy, and elsewhere. 

Would improvements to the sales process or practices help? Perhaps, but treating symptoms instead of core issues won't fix anything long-term.

Putting NOS in a Pinto may get you more speed, but you aren't going to get very far. This is where a lot of people go wrong. They treat their business as a sprint instead of a marathon.

So how can you avoid wasting time and money on treating the wrong issues, as well as creating frustration with your team?

The framework I use to help businesses identifies these core issues and reveals what to do about them. It looks at six things:

  1. Have you justified being in business with a strong value proposition?

    If you aren’t delivering value, or are delivering less than your competitors, you’ll be hard-pressed to create sustainable solutions to grow your business. If you ignore this fundamental challenge, you’ll find yourself treating symptoms like a frustrating game of Whac-A-Mole. 

  2. Are you using the right messaging to attract the right audience from the right places?

    The less targeted your marketing is, the more sales have to compensate with practices that aren’t customer-centric. How are sales going to weed through 1,000 unqualified prospects to find the few they should be talking to? Usually with unpersonalized, volume-driven practices that most of us don’t like.

  3. Do you have a strong process to convert awareness and interest into sales?

    The worst thing about bad sales practices is that they work sometimes. And when they stop working, you're left hanging in the dark. Bad sales practices are short-lived, and they aren't scalable. That's why it's so important to be able to define, document, and measure the core of your sales process. It's essential in knowing what needs to improve and staying on top of things in your business. 

  4. Have you operationalized the way you keep and multiply your customers?

    Any customer you keep is one you don’t have to replace. And the most profitable customers to sell to are the ones you already have. Building operations to support repeat business and referrals is a critical part of growing - both your customers and your margins.

  5. Is the environment that everyone is working in making things easier or harder? 

    A lot of lip service is paid to things like “culture” in business. But when a business walks the talk, it is an asset that helps businesses create exponential growth. Trying to fix sales issues without considering the culture of the business won't get you far. It's like painting over cracks on a wall while ignoring the foundation problem creating them.

  6. Does everyone know what direction they should be going, or are they making it up as they go? 

    One common source of sales problems is a lack of clarity on where the business is going. When the destination isn’t clear, people tend to make up their own route. Establishing a clear destination helps everyone course-correct on the fly. This is why a defined strategy is important. 

These six key points form my 'JACKED' framework: Justify, Attract, Convert, Keep, Environment, Direction.

Evaluating these six things helps diagnose whether you have a sales problem or a revenue problem. And it helps identify the necessary steps to unlock the full potential of your business. 

Few things are as damaging to a business as treating symptoms instead of the core issues. Using the approach above helps save time, money, energy, and morale. It provides clarity on where your business is stuck, how to clear things up, and how to move forward.

I use that system to get businesses out of ruts on a regular basis. If you'd like to learn more about it, check out my free ebook, Systematic Growth. And if you’d like help diagnosing what is keeping you from growing and figuring out what to do about it, feel free to schedule time with me at www.rayjgreen.com/services.

 

 

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