Many companies find themselves struggling to meet their sales revenue projections. Even companies that seem to be enterprise heavy-hitters in sales revenue have faced unforeseen challenges. Case in point; Microsoft. In July, Microsoft announced a sales reorganization. The reason initially given for the change was that the company wanted to focus more on cloud-computing sales revenue. The secondary reason for the change, was the cost of sales at Microsoft. The truth is that the Cloud revenue-per-employee was too low to justify going on as they were. It takes more people and more time to make a sale, and changes had to be made. With the ever-increasing need for multi-department collaboration, Microsoft also spent time and money sorting out which teams and individuals were owed credit and commissions for making sales. The cost became too great because the complexity grew beyond their preparedness. Initially spun as a positive change for its sales team, the true cost of sales was made evident when the company later announced thousands of layoffs.
Microsoft’s 2017 Fiscal Year revenue was $24.7 billion and yet, it was spending too much to make sales happen. Their sales revenue was taking hits they could no longer absorb. Microsoft failed to create a sales strategy that was aligned with the recent changes in sales. There are now longer sales cycles, more people are needed to close a deal, and a growing complexity of customer needs. A successful sales strategy is one that has adapted to the changes in sales. Companies must discover disruptive ways to protect their sales revenue in the face of these changes. Companies that have not yet begun to find new approaches to growing sales revenue will have to make drastic changes in an attempt to make sales more profitable again. If your company has seen sales revenue falling, you’ve likely miscalculated the cost of these three changes;
1. More Sophisticated Customer Needs
One component of a sales strategy for the modern sales age is recognizing that customer needs have grown in their level of sophistication. As new technology changes the way nearly every department’s work is done, the customers become more diverse in their use of technology and their needs become more sophisticated. Just a few years ago, a customer buying a marketing tool needed a metrics dashboard and a log in. Now, customers want a marketing tool that integrates with their API, CRM, Google Analytics, social media scheduler, WordPress, customer service chatbot, and a slew of other tools. That marketing solution needs to be customizable, programmable, smart, predictive, and kick out metrics for every conceivable combination of data points. All of these needs mean your sales team has to spend more time walking the buyer through each need and feature. Your marketing team has to produce more content discussing the value of each feature. Your technology team has to work harder to engineer those features. It all hits your bottom line and plays a huge role in your sales revenue.
2. Multi-Departmental Collaboration
Customers buying a single solution will implement that solution across multiple departments in their company. In order to evaluate a single solution’s ability to meet the needs of several departments, leaders from each of those areas become part of a decision-making panel. These decision-maker panels develop more detailed needs analyses and require more data to support the claims made in a sales pitch. These complex customer needs have resulted in over 73% of sales teams having to collaborate interdepartmentally. This huge increase in the need to collaborate is costing your sales revenue far more than you realize.
Selling complex solutions to a decision-making panel requires hours of collaboration on the seller’s side of the deal, too. Most deals now require input not just from sales, but also from marketing, service, technology, and legal teams. Organizing all of this collaboration falls on the sales team and eats away at their time. In fact, 45% of sales teams report spending over 65% of their day on non-selling tasks like internal collaboration meetings. Add these stats up and you’ll begin to see why your sales revenue is lower than your projections indicated. Most companies have not factored in the impact of these huge, time-draining changes. Some companies hire more sales assistants to deal with administrative tasks, but adding headcount to the team also cuts into your sales revenue. Not only that, but these complex internal processes for sales reps will continue to contribute to the slowing of the average enterprise sales cycle.
3. Slower Sales Cycles
In the last five years, B2B sales cycles have slowed by nearly 20%. This is a staggering change that has begun to put companies well behind their YoY growth and sales revenue projections. Sales that used to close in six months now take nearly eight months to close. Enterprise sales reps went from closing multiple six-month deals in a year, to stretching out their funnels into the next calendar year. Slower sales cycles also mean the cost of sales goes up because you continue to pay salaries and benefits while the sales take longer to get inked. There’s an increased likelihood of losing a sale as time goes by and buyers lose focus, find other options, or reassign their budget in a new quarter.
The bottom line is that sales is evolving and part of that evolution is that it’s more expensive than ever. If your organization wants to avert major sales team layoffs and plummeting revenue, it’s time to hunt down disruptive ways to make sales faster without increasing overhead. And it all must be done without sacrificing the customer experience.