Sales Models for Consulting and Professional Services
by Cindy Bush, RGBA Principal
With dramatically reduced and/or isolated demand for IT-related consulting services and an intensified emphasis on sales and incremental business generation, what are the prevalent sales models being implemented and what factors can increase greater success?
There has been much debate about what is the appropriate way to sell consulting services and incrementally grow business. In reality, there is probably no right answer. Different company cultures, different people and organization models produce different results. Most companies have tried several approaches and probably none has it figured out completely. However, the importance of having a sales model that works may be the crucial determinant in a consulting services firm’s degree of success or failure, and especially so during tough times. This was illustrated recently in a comment made by one of our clients whose company exceeded its 2001 revenue and profit objectives and continues to do well in this challenging economy. We asked the President and COO of this mid-sized consulting and integration services firm, “ In a time when most companies have sharply reduced or have put off buying services, to what do you attribute your company’s success?” He replied, “ A key factor undoubtedly has been the commitment we made to a sales model two years ago.”
Prevalent Sales Model Examples
There are a range of roles and working relationships in a sales model that will vary according to a company’s management background and organizational structure. Broadly, there is a Partner organization model or a Corporate Sales organization model and combinations of both.
The Partner model is similar to that of a Big 5 in that senior executive status and promotion requires the combination of consulting delivery management experience as well as significant business development and revenue generation. The Partner is a “Rainmaker” who deals with “C’ level client executives and typically has P&L and overall delivery management responsibility. Positions below Partner include Principals, Practice Managers and various Senior Manager functions.
In the Corporate Sales model, career progression is to higher and/or broader levels of sales and sales management that typically does not include delivery or operations management and P&L. Typical positions include Sales Representative, Business Development Manager or Account Executive, Sales Manager, Director, VP and SVP for geographies, major accounts, industries, or service lines.
In combined models, a Partner may have sales “Hunters” (Account Executives, Business Development Managers, etc.) reporting to them who carry new business quota responsibility and/or account growth “Farmers” (Account Mangers, Engagement Managers) with client relationship and revenue responsibility. The Partner may also have Sales Directors or Business Development Principals who directly manage sales and handle sales plans and administration. The VP or Director in the combined Corporate model may have P&L and delivery executive direct reports.
Neither sales model nor combination has been deemed most effective in producing sales results. Other factors such as the following appear to matter more in the creation of a successful sales model.
High Value/High Impact Sales Philosophy
The organization’s philosophy and attitude towards sales can have the most positive or negative influence on attainment of a high performance sales culture. The value of sales to an organization can be revealed in many ways. The following are common indicators:
In some company cultures, sales is considered a “necessary evil “ with a limited role of cold calling and getting in the door, after which consulting professionals take over client relationships and opportunity/solution development. In more sales-supportive cultures, the sales executive plays a senior role with primary responsibility for initiating and orchestrating the entire sales process including business or market strategy, executive relationship creation, opportunity and solution development, contract negotiation, deal close and on-going client satisfaction.
Teaming and Shared Relationships
An effective approach is the teaming of an experienced sales person with services solution and/or industry subject matter experts. This is sometimes called a “pursuit team” or “capture team” model that varies in size with the company’s offerings and resources. Ideally the team works closely together in an atmosphere of mutual respect, communication and collaboration to develop an effective strategy and united approach that will win the client’s confidence and the business. The team members usually have defined functions for which they take the lead, such as Delivery for project plan definition, Industry Lead for executive brainstorming session coordination and Sales for contractual issues. No one person “owns” or controls the account. Each team member plays to the other’s strengths in managing a successful on-going relationship.
Opportunity and Compensation
There must be strong opportunity for sales to be successful. The key here is creation of ‘in- demand’ offerings and a strong value proposition that provides significant value to a defined, targeted client base and having good competitive differentiation with other alternatives in the marketplace. Sales (and other executives in the firm) must be able to communicate a strong value statement that will gain the interest of senior executives in targeted companies. Continual re-evaluation of offerings and delivery capabilities with the goal of staying in tune with the market and being “market –driven “ is important to long term sales success.
Opportunity assignment, setting of attainable goals and compensating well for attainment and overachievement are important elements in creating a successful sales model. Is the territory, set of accounts, or industry vertical a lucrative opportunity or barely viable? Are there higher percentages, accelerators and bonuses for reaching certain targets? Sales is a game of momentum in which the better one does and the more incentive there is, the better he/she will try to do. Capping compensation is a major de-incentive and a common mistake made by non- sales oriented cultures. It is expected that targets will be raised as revenue streams are built and opportunity for larger deals increases, but it is also expected that overachievement is reasonably feasible. Experienced sales producers typically expect sales plans paying $200K-$250K at target and more for overachievement. Stock and equity are additional motivators, especially when tied to performance. Compensation however is not always the most important thing to sales, as some tend to think.
Having key executive management with strong sales backgrounds and mentoring capability increases an organization’s ability to attract and retain the strongest sales contributors. Lack of defined career options and opportunity for having greater impact in a company is probably the most common reason top sales performers change jobs. We have worked with numerous sales executives earning $400K-$500K+ per year who left their companies for those in which they could attain VP/Partner management responsibility and equity opportunity. Significantly, these executives were willing to take a hit in first year earnings to get there.
Is cold calling the most productive way to use a $200K-$250K’ sales executive’s time or on qualified business solution discussions and “C” level relationship building? The answer probably varies with the company, people, offerings, etc. However, the best performing firms will usually employ some type of lead generation vehicle and business development or marketing support. Examples include telemarketing lead generation and qualification via in house personnel or vendor services, development of business partner alliances and programs, and development of regional or industry marketing campaigns and programs. If done effectively, these can create a steady flow of leads to sales and maximize senior sales skills and costs/benefits.
Other forms of sales support includes familiarization of target clients to the company’s name and brand or value statement through advertising, marketing collateral, industry press, association membership, conferences, seminars, sporting and charity event sponsorship, etc. Marketing could be providing industry and target specific research or business intelligence to help the sales team understand current “hot buttons” and business challenges. Executive peer-to-peer selling may require active participation and availability of management executives in sales and closing efforts. Lastly, finance, legal, delivery, deal structure and contract approval functions should be aligned to support the company’s sales and growth objectives rather than be “sales prevention” departments.
Flexibility in Hiring
Companies do best when they understand that building a successful sales organization may mean making changes to the profile of those they may have hired in the past. As an example, most successful sales executives do not, for the most part, have deeply technical skills or knowledge bases or engineering/ technical degrees. Having the ability to learn the essentials quickly and having a track record for being successful in somewhat similar and/or equally new environments is a stronger indicator of performance capability in sales. Also, since sales success is impacted sooner and more greatly by product, solution and market changes, sales executives tend to change jobs and companies more frequently than other functions. This is normal. Also, the much hyped and sometimes real opportunity of the dot.com boom era was hard for many to resist. It should not be alarming to find one or more possibly short-term experiences on a resume, depending on the individual and specifics. Additionally, although it is always good to hire a top “home run hitter” and have as many of these on the sales team as possible, there are benefits in having a mix of skills and experience levels as well, i.e. internal promotion and organic growth, mentoring opportunity, compensation budget maximization, etc. Those who are interviewing and hiring or influencing hiring decisions for sales should be made aware of these differences so that good potential sales contributors are not screened out.
retaining the best sales executives provide fundamental yet critical
advantages to a company. Customers really do value the consistency of
long-term relationships. Building a successful sales model not only can
help a company do well in challenging times but also position it to
capture the most opportunity in the next economic upswing.
- Professionalism - Commitment - Results