Guest Column: Five Rules for Sales Disaster Turnarounds, Part 1

First let me clarify that I did not set out in life with a goal of becoming proficient at turning around sales disasters. Maybe it's a masochistic trait, or perhaps I was just never lucky enough to join a hot technology company right when its products were taking off.<br clear="none" /> <br clear="none" /> Anyway, for whatever reason, I worked through five disaster or start-up scenarios as an employee. Since starting my own consulting business, I've been involved with some 25 other situations on three continents as an outside consultant. Not to toot my own horn, but I have a pretty good track record of enacting dramatic positive turnarounds&#x2014;often in bad economic conditions.<br clear="none" /> <br clear="none" /> Having put my credentials on the table, I have to point out that in all of these turnarounds, the companies I worked for did have viable products and/or services. If you don't have these, don't bother reading the rest of this article.<br clear="none" /> <br clear="none" /> Now then, over time, I've come to learn five interesting empirical rules:<br clear="none" /> <br clear="none" /> 1. The executive who leads a company into a sales disaster is invariably incapable of solving it, and often goes into a state of "denial of obvious reality."<br clear="none" /> <br clear="none" /> 2. More sales training and/or a new CRM will almost certainly not fix the disaster, and may even make it worse.<br clear="none" /> <br clear="none" /> 3. If or when you get involved in a sales disaster, do not believe anything you are told unless you experience or see it for yourself.<br clear="none" /> <br clear="none" /> 4. Do not accept these two phrases, which you will hear often, as proof of anything: "We are doing that already," and "My people and I are very experienced."<br clear="none" /> <br clear="none" /> 5. If hired to sort out a sales disaster, you probably have three to four months of forgiveness to show some real progress. After that, it becomes your sales disaster, in which case someone else will be brought in to start over at number two.<br clear="none" /> <br clear="none" /> Before expanding on the above, maybe it's worthwhile thinking about what is, and what causes, a sales disaster. Here is a summary list from my personal experience:<br clear="none" /> <br clear="none" /> <b>External Issues</b><br clear="none" /> <br clear="none" /> &#x2022; Changes in market conditions.<br clear="none" /> <br clear="none" /> &#x2022; Changes in customer buyers and how they buy.<br clear="none" /> <br clear="none" /> &#x2022; Competition.<br clear="none" /> <br clear="none" /> &#x2022; The economy.<br clear="none" /> <br clear="none" /> <b>Internal Issues (Within the Organization)</b><br clear="none" /> <br clear="none" /> &#x2022; Monopolistic mindset or arrogance. Telling instead of selling.<br clear="none" /> <br clear="none" /> &#x2022; Senior management being disconnected from reality, or from frequent customer contact.<br clear="none" /> <br clear="none" /> &#x2022; Accountability. Few rewards for success, and no consequence for failure. <br clear="none" /> <br clear="none" /> &#x2022; Slow and/or stupid decisions.<br clear="none" /> <br clear="none" /> &#x2022; Unclear goals and accountability, coupled with weak performance management.<br clear="none" /> <br clear="none" /> &#x2022; Ethics that are bent&#x2014;e.g., it's okay not to tell the whole truth, or to fabricate a forecast, or to go back on personal commitments.<br clear="none" /> <br clear="none" /> <b>Internal Issues (Within Sales and Marketing)</b><br clear="none" /> <br clear="none" /> &#x2022; An unrealistic marketing plan.<br clear="none" /> <br clear="none" /> &#x2022; Lack of any realistic sales plan tied to a realistic marketing plan.<br clear="none" /> <br clear="none" /> &#x2022; Sales managers and salespeople without activity plans to exceed their main goals.<br clear="none" /> <br clear="none" /> &#x2022; Incompetent and/or untrained sales management.<br clear="none" /> <br clear="none" /> &#x2022; Salespeople and managers only operating inside their "comfort zone."<br clear="none" /> <br clear="none" /> &#x2022; Lack of focus and discipline within the sales organization.<br clear="none" /> <br clear="none" /> &#x2022; Not enough "top of the funnel" or associated funnel filling activities.<br clear="none" /> <br clear="none" /> &#x2022; Lack of repeatable sales process to help newcomers succeed quickly.<br clear="none" /> <br clear="none" /> &#x2022; Inaccurate sales forecasts that keep slipping.<br clear="none" /> <br clear="none" /> &#x2022; Incongruent goals and/or unclear role definitions.<br clear="none" /> <br clear="none" /> With all of that background out of the way, I'd now like to detail two real-life scenarios I've experienced.<br clear="none" /> <br clear="none" /> <b>Case Study #1</b><br clear="none" /> <br clear="none" /> I was hired by a computer company to become their western region manager. By way of a welcome, I was given a briefing by the president (on how the region's results had gone downhill), a one-way air ticket, and a handshake accompanied by a big "Good luck!"<br clear="none" /> <br clear="none" /> After flying in from the east, I discovered the region had grown well for three years, but results had started to slide for the last three quarters.<br clear="none" /> <br clear="none" /> At the regional headquarters, I was greeted by the secretary to the previous manager who had been fired. She showed me to a sumptuous office with wonderful leather furniture, and two walls of glass giving a great view of the mountains.<br clear="none" /> <br clear="none" /> When I went outside this very comfortable office, I found a dispirited group of employees who had been managed previously by a despotic manager. Among other things, he had:<br clear="none" /> <br clear="none" /> &#x2022; Held forecast review meetings where he demeaned salespeople who did not forecast to the level that he wanted, or who missed meeting their previous month's forecast&#x2014;which he had pressured them to raise to an unrealistic level.<br clear="none" /> <br clear="none" /> &#x2022; Had a number of employees on two months' probation to be fired for more than six months. As a result, they lived in constant fear of instant dismissal.<br clear="none" /> <br clear="none" /> &#x2022; He had set up a third-party dealership in which he was a major shareholder. Predictably, this company received unusually high amounts of demo equipment at no charge, along with other special favors.<br clear="none" /> <br clear="none" /> &#x2022; Most, but not all, of the salespeople complained about the economy, our products being too expensive, not enough leads from marketing, and all the standard excuses.<br clear="none" /> <br clear="none" /> &#x2022; The one that really make me chuckle was a complaint about delivery times, especially since the region had sold almost nothing in the last quarter. <br clear="none" /> My response to the last point was, "Please give me <i>that</i> problem to deal with."<br clear="none" /> <br clear="none" /> So apart from the time it took me to discover all the above (and more), I was confronted daily with "broken culture" situations. For instance, about 10 days after my arrival, the celebration of one of the first large sales was spoiled somewhat by four salespeople all claiming they should all receive compensation for the whole, or half of the sale. <br clear="none" /> <br clear="none" /> Each of the four had a litany of reasons why they should be paid, and in total were claiming that the company should pay three times the normal sales commission for this one sale. This situation was solved by confronting the four with the simple truth that the company would only pay its normal full compensation&#x2014;and would only pay this if and when the four of them agreed on how to split it.<br clear="none" /> <br clear="none" /> The root cause was the previous manager's responsibilities placed people in conflict versus in cooperation with each other.<br clear="none" /> <br clear="none" /> Each of the five branch offices in the west had a locked cupboard with a plentiful beer supply which was unlocked often&#x2014;and every Friday at noon, for sure, when the phones to and from eastern HQ stopped ringing. Needless to say, not much useful work occurred each Friday.<br clear="none" /> <br clear="none" /> In summary though, the former region manager had so badly managed the organization that it was relatively easy to recover the business. How? No Rocket Science here:<br clear="none" /> <br clear="none" /> First, I visited each office and met with each person one-on-one, as well as holding branch meetings.<br clear="none" /> <br clear="none" /> I held a regional meeting where I made it known that a few things were changing. For instance, we all agreed on a very simple mission backed by a set of values:<br clear="none" /> <br clear="none" /> <b>Mission</b> <br clear="none" /> <br clear="none" /> &#x2022; To exceed our booking and revenue goals by selling and implementing the products and services of our company.<br clear="none" /> <br clear="none" /> <b>Values</b><br clear="none" /> <br clear="none" /> &#x2022; Honesty and ethical behavior.<br clear="none" /> <br clear="none" /> &#x2022; Courage to face reality and confront the tough issues.<br clear="none" /> <br clear="none" /> &#x2022; Respect for the individual.<br clear="none" /> <br clear="none" /> &#x2022; Have fun, based on and to celebrate success.<br clear="none" /> <br clear="none" /> Since the previous regional manager had run a dictatorship, I also used the above values to empower people on the basis that if you did something that contributed to our mission within these values, you didn't need my okay to proceed. Just get on with it.<br clear="none" /> <br clear="none" /> Naturally, a few people did not "get it," but they soon sought alternative employment.<br clear="none" /> <br clear="none" /> I also moved out of the sumptuous office and, apart from meetings with any degree of confidentiality attached to them, just sat at a small desk with a phone in the middle of the office area to show openness and approachability. I wanted to demonstrate I was part of the team, seeking no special favors.<br clear="none" /> <br clear="none" /> The overall outcome that year was that our sales almost doubled-testimonial to finding the root cause and addressing it.<br clear="none" /> <br clear="none" /> Note: The second customer case study mentioned above will be addressed in our next installment.<br clear="none" /> <br clear="none" /> <i>Peter Michie is founder of the sales performance improvement system <a href="" target="blank">PERFORMAX</a>.</i>