CEO Advisor Newsletter August 2023
Focus on Growth and Metrics for Success
A) Organic Growth - Business growth by increased sales to new and existing customers
B) Inorganic Growth - Business growth through acquisitions (this will be covered in future articles)
CEOs that put strategy, sales and sales management as their top priority outperform their competitors in revenue and profits by up to 80%. While CEOs and presidents of small and mid-size companies play a key role in driving performance improvements across all aspects of a company, sales has traditionally not been the primary focus or expertise of CEOs and business owners for many companies. This is a very costly mistake. CEOs, presidents and business owners of top performing companies are very hands-on in driving their businesses forward. Setting budgets and sales goals are just the beginning. The best CEOs pinpoint a specific sales strategy, tools, sales management processes, analytics and metrics or key performance indicators (KPIs) to ensure substantial growth (at or above industry growth rates) in revenue, gross margins, and profits in order to substantially increase shareholder value.
Similar to marketing, sales is both an art and a science. Below are 5 key sales and KPI initiatives that will create a tremendous return on your investment and grow your business to the next level. If sales and sales management are not your strengths, gain the help you need from a seasoned business advisor as failing in these important aspects can cost you millions of dollars in sales, profits, value and your ability to sell your company in the future.
1. Sales Goals to Increase ResultsWell managed sales teams produce big results. CEOs should demand more than monthly sales goals for each member of the sales team. CEOs must require sales goals that produce heightened, consistent results to meet company goals. A direct sales team should have clearly defined goals for each salesperson with a commitment to a Customer Relationship Management (CRM) software for optimal productivity that include: a) Dials per day, b) Live contacts per day, c) Opportunities created per week, d) New qualified sales appointments per week and month, e) Proposals presented per month, f) Number of closed sales per month, g) Closed sales in dollars per month, h) Upsells and cross-sells in dollars per month, i) Renewals per month, j) Referrals received per month and more.
2. Key Performance Indicators (KPIs) to Drive Sales and ProfitsAdditional goals that can be readily tracked monthly (in real time in a CRM if possible) will be the difference in a proactive, results-oriented sales team vs. a sales team that is always behind the curve. You should monitor and track the following KPIs: a) Average dollar size of each sale (ensure you are selling to larger prospects and customers with larger budgets), b) Average length of contracts in years (contracted Annual Recurring Revenue (ARR) is key), c) Renewal Rates of contracts, d) Amount of sales per month, quarter and year to your top 25-50 customers to ensure you are properly servicing them and hitting sales goals, e) Average number of days to close a sale (Ave. Sales Cycle), f) Gross Profit Margins, g) Customer Churn, h) Revenue Churn, i) Industry Growth Rate, j) Your Total Market Share, k) Growth Rate (quarter over quarter and year over year).
3. Build a Sales and Marketing Machine to Optimize Sales and alue of your BusinessBy building a sales and marketing machine within your company, you will optimize your gross and net profit margins and tremendously increase the value of your company. As part of your sales strategy, expand your direct sales efforts with indirect sales by creating a Reseller Channel Program and then recruit, build, train, motivate and support these Resellers and Referral Partners. This takes planning, focus and expertise to put in place and manage, so gain the needed outside help from a business advisor to get this right the first time. A Reseller Channel is how you leverage, scale and expand your business cost-effectively.
4. Get Out of the Office and Visit CustomersAs the CEO of your company, get out of your office and go with sales managers and individual salespeople to visit your major customers quarterly or at least annually. Understand the customers' needs and satisfaction level, understand how you can help them by upselling and cross-selling additional products and services, renew annual contracts and secure a tighter relationship by demonstrating real interest and commitment to your customers.
5. Focus on Sales and Account ManagementStrong sales management should be part of the fabric of your company. Making top sales performers heroes at your business should be paramount to you. Training your sales team should be exciting and part of every weekly sales meeting. Designing the right sales compensation plan and retention of your best performing sales team members should be a top priority. Consistently held weekly sales meetings that are motivating, numbers driven and training-intensive should be a weekly occurrence like clock-work.
Ensure Account Managers focus on large customers weekly, mid-size customers at least monthly, and smaller customers quarterly. Create a written, disciplined Account Management Program that will enable you to generate loyalty among your customers, increase renewals, generate upsells and cross-sells, and increase sales, profits and the value of your business substantially. Sales are the lifeblood of your business and will be the difference in reaching your goals and a successful exit in the future versus strained cash flow and diminishing value of your business over time.
CEO Advisor, Inc. has the expertise, hands-on approach and experience to help you focus on the growth of your business and achieve your goals. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370 by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Key Factors to Grow Your Business
to the Next Level
- Growth is the life blood of your business for building sales, profits and value. Below are seven key factors to optimize your growth:
- 1. Planning
- Have a clear vision, mission and business model. Document your Business Plan in the form of a presentation to keep it concise and usable throughout the year. Create a monthly Forecast that mirrors your Profit & Loss statement and track your Forecast monthly vs. actual results, and make needed changes and adjustments to your business accordingly. This involves a business strategy with defined goals to achieve the desired results. Without this planning, there is a tremendous loss of time and wasted money. Annual planning is a critical step in achieving your goals and a business advisor that focuses on growth can be a tremendous help in growing your business to the next level.
- 2. Forecasting
- Forecasting for the current and upcoming years enables (forces) you to think through your business thoroughly, set financial goals, plan effectively, implement price increases, and better budget and manage with higher profits. When forecasting, refine your business model, your pricing, costs, gross margin targets, marketing and plans for personnel and new hires. Relook at operating expenses for the right level of profitability. Get objective expert advice from a seasoned business advisor in this area to ensure your growth and success.
- 3. Strong Management Team
- Make sure you have a reliable, effective and competent management team around you to complement your own skills and expertise. If not, re-assess, define your needs and replace the weak link(s) in your management team. If you cannot afford the management team you need today, bring in a seasoned business advisor that can do some heavy lifting for you - hands-on work and expertise for an interim period of time to achieve your goals.
- 4. Put Processes and Procedures in Place
- Document your processes and procedures to ensure your on-going success. This will enable you to run your business more profitably, is easier for new employees to get trained faster, will make the business more efficient, and will make your business more valuable and attractive to investors and acquirers. A business advisor can accomplish this very efficiently.
- 5. Innovate
- Innovation is important for all businesses. Focus on how you could do something differently to generate a higher ROI for both you and your customers, make your customers more loyal and profitable, reduce time, be better than your competitors, and develop a more effective business model. Innovation takes expertise, planning and the mindset to execute so seek the expertise you need.
- 6. Sales Strategy
- Your sales strategy is critical to your growth and profitability. Pinpointing your target markets, determining your most efficient and cost-effective sales structure, sales compensation, product mix, gross margins and sales goals are all critical to your success. This requires diligent and proactive sales management on a daily business. The majority of your growth may depend on the strength of your sales strategy and effective sales management so engage with a seasoned business advisor that utilizes best practices to achieve your goals.
- 7. Build Value
- Ensure you have the proper management team, need-to-have product, pricing and a recurring revenue business model that maximizes sales, margins, profits and value for a successful exit when you decide to sell your business, or the right buyer knocks on your door.
- CEO Advisor, Inc. has the expertise, coupled with hands-on advice and work performed to help you increase sales, profits, value and to grow your business to the next level. Contact Mark Hartsell, MBA, President, today for a no cost consultation by calling (949) 629-2520, by mobile phone at (714) 697-3370, by emailing MHartsell@CEOAdvisor.com or visit www.CEOAdvisor.com for more information.