What kind of revenue growth do you want to see between now and the end of your fiscal year—or whatever date is most relevant in your world? What kind of figure should you be shooting for? And how can you be certain that target is both aggressive and realistic?
Here are three (relatively) simple ways for sales leaders to begin closing in on the answers to those important questions.
- Size the market opportunity in terms of your current customers. One good way to begin this (ongoing) process is to do a simple account-level analysis. Consider making the first part of that analysis the development of a rough, but realistic, estimate of the quantity known as “wallet share.” I’m sure there is a more up-to-date term for this, but let’s stick with “wallet share” now for the sake of convenience. Look at each customer you now serve who represents a significant amount of revenue, or the potential for significant revenue. Of course, how you define “significant” is up to you, and it’s a major decision. But once you’ve figured that out, sit down with the relevant members of your sales team and come up with your collective best answer to the following question: How much of this account’s available revenue is going to us? In other words, if the total revenue available is all the money in the customer’s “wallet,” how much of that are we getting right now? Using the best data available to you, come up with your best answer to that question for every significant account currently buying from you … and then figure out the total revenue available from those accounts. If your team services 50 accounts that deliver significant revenue or the potential for significant revenue, you can be fairly certain you are not currently receiving 100% of the available revenue you could be getting from those 50 accounts. So: What is the best estimate of the “wallet share” you don’t have, but could have, in your most important accounts? What is the best estimate overall? You might determine that you’re currently receiving 60% of available budgets across all 50 accounts. What, then, is a realistic target for growth? You might decide it makes sense to aim for a dollar amount that equates to 75% by the end of your fiscal year. You may also want to incorporate a product/solution penetration mix factor into the analysis. For example, if you have four primary products that you regularly sell, but a client only buys one, you would want to know that there is the possibility of cross-selling in that account.
- Size the market opportunity in terms of customers you do not yet have but want (or want to win back). Take a closer look at that account list you used to develop your “wallet share” estimate. About each customer on that list ask yourself (and the relevant member[s] of your sales team) this question: Who are this customer’s four most important competitors? Of those competitors, are there any you should be targeting? Of the ones you should be targeting, what is your best estimate of the dollar value of each potential customer? Add it all up, and you will be looking at the market opportunity expressed in terms of potential customers you either don’t have now – or had once and lost.
- Look at productivity per sales professional. These are straightforward numbers that are (or should be) already at your disposal; if you haven’t got easy access to them, it’s your job to track them down. Choose a relevant time-frame—say, the last twelve complete months your team has been selling. What is the total amount of revenue generated over that period? What is the amount per sales representative? What is the average? Who is performing noticeably above that average? Who is performing noticeably below it? Are you happy with that average? Is there another number you feel your team should be shooting for? What percentage of your reps are meeting their annual quotas? Can you make a case for reassigning or simply ending the relationship with someone who is performing well below average, and seems highly likely to continue doing so? Can you make a case for adding people to your team who share behavior or attitudinal profiles with someone who is performing well above the average?
The three steps I’ve just outlined don’t require massive amounts of research time. All they require of the sales leader is (in the first two steps) the ability to have pragmatic real-time conversations with members of the sales team … and (in the third step) a willingness to track down and analyze basic performance figures. Implement all three of these steps for each selling team, and you will have a good idea of the team’s – and the organization’s – growth potential.