ACCELERATED REVENUE GROWTH IN AN EVOLVING MARKET (Part III)
Let’s return to the “Jumpstart” case study I started a couple of posts ago.
Here’s the teaser: Jumpstart increased annual revenue by 290% in a two-and-a-half year period. In and of itself, this is an impressive performance; it is truly remarkable given that most other companies in Jumpstart’s market were experience either flat or negative growth.
Catch-Up In Summary
Jumpstart provided a market leading technology to a specialized customer base. To accelerate its organic growth, promote its value prop, and expand into new markets, Jumpstart needed to bring focus to its position as a provider of a full-service application.
A summary of how Jumpstart was operating at the beginning of the study period – including an outline of the three-stage process used to change the company’s revenue generation model – is covered in “Accelerated Revenue Growth In an Evolving Market (Part I).”
Even though the three stages overlapped, I am presenting them separately. The first, Branding & Market Positioning (included in “Accelerated Revenue Growth In an Evolving Market (Part II)”), called for a careful and targeted cultural make-over as Jumpstart adopted the role of a business process solutions expert, which built on its position as a boutique provider of specialty high-tech solutions to a specific market segment.
This post looks at how the company changed the way its direct sales force approached and dealt with its customers, re-focusing their efforts on understanding business problems and how Jumpstart’s applications helped solve them. Not only did Jumpstart expand its market reach, sales management was able to decrease the sales cycle by as much as 75%.
Stage Two: Sales Cycle Management
While new marketing programs were developing higher-quality leads, and a new incentive compensation plan (to be discussed in Part IV) was designed to improve Jumpstart’s sales cycle measurement, the company faced a business plan that called for annual growth of more than 30%. Management needed to dramatically accelerate Jumpstart’s contact-to-close and quote-to-close metrics, so they crafted a three-step plan to do so.
The first step was to fine tune the company’s services agreement. Not only was the length untenable, Jumpstart’s original agreement did not address its new market position. The new contract no longer provided users with a non-exclusive, limited license for Jumpstart’s technology. Instead, it became a services agreement, outlining the terms under which Jumpstart would provide customers with access to the company’s solutions. Key to this approach was the development of a new “User Guide,” into which Jumpstart moved all of the technical and operational terms that had been included in the old contract. With the implementation of this new agreement, contract negotiations became far simpler. No longer did Jumpstart need to engage in multiple and iterative re-writes; many customers simply accepted contract terms after legal review.
In parallel, Jumpstart’s sales leadership instituted a consultative sales process designed to compliment the company’s new market position. Jumpstart’s salespeople were trained to spend time evaluating prospective customers’ business requirements and the problems they were experiencing that could be addressed by Jumpstart’s applications. This enhanced qualifying step identified customers that were more likely to buy, and it uncovered possible objections before they became impediments to the sale. To further accelerate the sales cycle, account managers were trained to raise these objections (rather than to wait for the prospective customer to raise them) so they could be addressed and overcome early in the process.
Finally, account managers were required to complete and submit Weekly Activity Reports (WARs) every Friday morning. These reports summarized the previous week’s customer calls and other sales work and outlined future follow-up and prospecting activities. Reviewed with line management during weekly one-on-one meetings, the WAR summaries provided regular opportunities to improve individual contributors’ performance and gave Jumpstart executives the information necessary to predict each week’s results with greater accuracy. Combined with weekly Monday morning all-hands kick-off calls, the WAR mechanism became a highly effective tool in establishing and building a winning sales culture.
Naturally, Jumpstart’s legacy sales organization was suspicious of these changes. They were convinced the WARs and solutions-focused sales process would only make everything more complicated and lengthen the contact- and quote-to-close timelines; a minority of the individual contributors were not able to make the turn and incorporate these new tools into their approach. Still, the measurable results were incredible: A 75% decrease in the average sales cycle, while Jumpstart expanded its marketplace and attracted new customers.
In the next installment, I will outline the changes Jumpstart made to its incentive compensation plan that contributed to the shortening of the cycle and ensured that its salespeople continued to hunt new and profitable business.
Here’s the teaser: Jumpstart increased annual revenue by 290% in a two-and-a-half year period. In and of itself, this is an impressive performance; it is truly remarkable given that most other companies in Jumpstart’s market were experience either flat or negative growth.
Catch-Up In Summary
Jumpstart provided a market leading technology to a specialized customer base. To accelerate its organic growth, promote its value prop, and expand into new markets, Jumpstart needed to bring focus to its position as a provider of a full-service application.
A summary of how Jumpstart was operating at the beginning of the study period – including an outline of the three-stage process used to change the company’s revenue generation model – is covered in “Accelerated Revenue Growth In an Evolving Market (Part I).”
Even though the three stages overlapped, I am presenting them separately. The first, Branding & Market Positioning (included in “Accelerated Revenue Growth In an Evolving Market (Part II)”), called for a careful and targeted cultural make-over as Jumpstart adopted the role of a business process solutions expert, which built on its position as a boutique provider of specialty high-tech solutions to a specific market segment.
This post looks at how the company changed the way its direct sales force approached and dealt with its customers, re-focusing their efforts on understanding business problems and how Jumpstart’s applications helped solve them. Not only did Jumpstart expand its market reach, sales management was able to decrease the sales cycle by as much as 75%.
Stage Two: Sales Cycle Management
While new marketing programs were developing higher-quality leads, and a new incentive compensation plan (to be discussed in Part IV) was designed to improve Jumpstart’s sales cycle measurement, the company faced a business plan that called for annual growth of more than 30%. Management needed to dramatically accelerate Jumpstart’s contact-to-close and quote-to-close metrics, so they crafted a three-step plan to do so.
The first step was to fine tune the company’s services agreement. Not only was the length untenable, Jumpstart’s original agreement did not address its new market position. The new contract no longer provided users with a non-exclusive, limited license for Jumpstart’s technology. Instead, it became a services agreement, outlining the terms under which Jumpstart would provide customers with access to the company’s solutions. Key to this approach was the development of a new “User Guide,” into which Jumpstart moved all of the technical and operational terms that had been included in the old contract. With the implementation of this new agreement, contract negotiations became far simpler. No longer did Jumpstart need to engage in multiple and iterative re-writes; many customers simply accepted contract terms after legal review.
In parallel, Jumpstart’s sales leadership instituted a consultative sales process designed to compliment the company’s new market position. Jumpstart’s salespeople were trained to spend time evaluating prospective customers’ business requirements and the problems they were experiencing that could be addressed by Jumpstart’s applications. This enhanced qualifying step identified customers that were more likely to buy, and it uncovered possible objections before they became impediments to the sale. To further accelerate the sales cycle, account managers were trained to raise these objections (rather than to wait for the prospective customer to raise them) so they could be addressed and overcome early in the process.
Finally, account managers were required to complete and submit Weekly Activity Reports (WARs) every Friday morning. These reports summarized the previous week’s customer calls and other sales work and outlined future follow-up and prospecting activities. Reviewed with line management during weekly one-on-one meetings, the WAR summaries provided regular opportunities to improve individual contributors’ performance and gave Jumpstart executives the information necessary to predict each week’s results with greater accuracy. Combined with weekly Monday morning all-hands kick-off calls, the WAR mechanism became a highly effective tool in establishing and building a winning sales culture.
Naturally, Jumpstart’s legacy sales organization was suspicious of these changes. They were convinced the WARs and solutions-focused sales process would only make everything more complicated and lengthen the contact- and quote-to-close timelines; a minority of the individual contributors were not able to make the turn and incorporate these new tools into their approach. Still, the measurable results were incredible: A 75% decrease in the average sales cycle, while Jumpstart expanded its marketplace and attracted new customers.
In the next installment, I will outline the changes Jumpstart made to its incentive compensation plan that contributed to the shortening of the cycle and ensured that its salespeople continued to hunt new and profitable business.
posted by Ken Boasso at 12:58
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