The Hidden Obstacle to Improving Sales Performance: Systems Thinking

Last week’s blog post, “Why Is It So Hard to Create Improvements in the Sales Department?” listed six examples of companies who tried and failed to improve sales results. All shared the same root cause.

Did you identify the common element, the root cause?

The root cause in each case was “Systems Thinking.”

If you know this simple idea already, you’ll find it interesting to see how it applies in each example. If it is new to you, I’ll provide a simple analogy to explain it.

What is Systems Thinking?

We’ve been taught that improving the parts of a thing will improve the whole.

Not true.

If you increase the athletic ability of football players, will that cause the team to win more games?

Answer: Perhaps, but not necessarily. Lots of other things also affect team performance, such as how well they know their plays and the game strategy, their camaraderie and team work, as well as their morale.

You know this, because you understand something about how these factors work together to affect the performance of the team. You know that athletic ability is only one factor among many that are important.

That is systems thinking.

Non-systems thinking treats the components of a system in isolation from each other. If you were tempted to think that improving athletic ability alone would result in improved team performance, that would be non systems thinking.

Of course that kind of thinking leads to enormous amounts of waste (work intended to achieve a desired result that does not do so in fact).

Systems thinking requires you to identify the cause-and-effect relationships among the components of the system, so you can improve the causes that will create the effects you are after.

Sales and Marketing is a SYSTEM

Although most companies do not treat it that way, sales and marketing is definitely a system!

For example, don’t you get frustrated when you go to a restaurant, or buy a car, and the advertising doesn’t match the salesperson’s offer, or the ability to fulfill their promise?

Companies are prone to these problems when they manage marketing, selling, and servicing as independent functions with divergent objectives. This is just one example of the disasters it creates.

The examples I provided last week illustrate it further:

• Why won’t salespeople follow the process?
  A company president dramatically increased his marketing spend and the flow of leads, yet revenue did not increase proportionally. His salespeople appeared to follow the process he had given them only when he was standing over them watching. He figured this was the problem. Why would that happen?

This executive assumed (at first) that his salespeople’s behaviors were the problem. Yet human beings behave the way they do for a reason. Fortunately, he was smart enough to realize he was missing something, and got outside help.

The real problem? Customers were resisting the sales process, because it was not designed to do anything they needed or wanted. Salespeople cannot make customers do things they don’t want to do anymore than anyone else.

The whole secret to good salesmanship is in finding common interests, in harmonizing with what the customer wants. Non-systems thinking caused this problem. It assumed the salesperson’s job was to close. If the CFO wasn’t on board with the decision, the salesperson quoted a memorized statement to “handle the objection.” If that didn’t work, the salesperson was left to their own devices.

Systems thinking, which respects how the components of the system work together, revealed the solution: redesign the sales process so it respected the customer’s interests every step of the way. If the CFO wasn’t on board, it provided the salesperson with reasons why it might be helpful to meet with the CFO to present educational case examples. It gave them questions that might uncover the real reason for the delay. It provided a nurturing program that generated additional reasons to contact the company at a better time in the future.

Design the sales process so the customer will follow it, and the salesperson will follow it too.

• Why Doesn’t Sales Training Work?
  Sales training initiatives often define success as “some of the best salespeople used the techniques and were successful with them.” Yet the methods often result in a lot more work for ordinary salespeople, who don’t necessarily get such fabulous results. After a time, behaviors tend to return to their original state. Why does that happen?

Non-systems thinking assumes you can fix salespeople’s behaviors by giving them some training. For a brilliant explanation of why this is so wrong, check out David Maister’s “Why (Most) Training is Useless.”

Systems thinking requires you to uncover the reasons in the salespeople’s environment that lead to the undesirable results.

• Why doesn’t the company know how to generate leads?
  A sales VP for an equipment company I know needed big gains in market share. He decided to participate (along with several competitors) in an expensive trade association study designed to learn the incidence of companies needing to replace their old equipment. The study distributed thousands of so-called “leads” to his sales team, who quickly learned they were worthless. Why does that happen?

What is a “lead” anyway? Most salespeople would define it as “someone who wants to buy what I sell in the near future, and who has enough of a relationship with my company to give me a listen.” Generating prospect relationships that actually contain sales opportunities is probably the biggest challenge companies face, especially in a recessionary economy like the one we have today.

In the old days, salespeople could find leads through cold calling and networking. Today prospects prefer to find the information they need on the Internet. This sales VP was willing to gamble on the industry study even though he had no prior experience with it because he did not know any alternatives.

Unfortunately all the competitors were duped, because the study was aimed at other goals, not generating leads for equipment manufacturers. The mistake was assuming the trade association used the term “lead” in the same way he used it.

Non-systems thinking allows you to think you can buy relationships, or that a one-off initiative might “solve” the problem for a year. Systems thinking requires you to identify the root cause so you can solve things once and for all.

Attracting and cultivating relationships that could turn into sales opportunities requires sales savvy talent and experience in things like search engine optimization, direct-response whitepaper and event-style marketing, as well as relationship nurturing. Nothing could create a higher return for your sales force than solving this puzzle before your competitors do!

To Improve Sales Results, Executives Must Apply Systems Thinking

Sales and marketing is a complex system. Learning which levers will produce the desired results is not a trivial thing. Executives need to look for evidence of how the system works.

They should not rely on their gut feel.

The way to know if your decisions are moving the needles in the right – or the wrong – direction is to track the flow of leads, opportunities and deals.

Consider the three examples of mistaken senior executives I provided in that same blog post:

• First Example:
  A manufacturing company’s marketing director had successfully used landing pages and postcard campaigns to generate good leads, something his salespeople were starving for. Yet the marketing director’s requests for budget to expand the lead generation campaigns were turned down. Why? The company president believed “Our problem is that our salespeople need to manage their territories more effectively.” Results did not improve after that decision.

How could this tragedy have been prevented? Only one way: by relying on data rather than gut feel.

What evidence did the senior executive have for his interpretation of the situation? What evidence did the marketing manger have to support expanding the lead generation campaign?

Everyone is entitled to their opinion. Yet when it comes to high-level decision making, only the senior executive can insist on finding and using data.

If the senior executive does not insist on getting data, there is no hope for the organization to learn from its experience.

• Second Example:
  A consultant hired by the CEO of a $600 million services company had recommended they shift from a “hunter vs farmer” sales model to one in which  individual salespeople were expected to do both. Yet this change did not resolve any of the salespeople’s problems; it aggravated them. The manager assigned to create the training for people who would take on the new roles was in a situation she could not win: regardless of what training she could find, she knew no one would be happy. The organizational change, which really amounted to a RIF, went ahead. Needless to say, results did not improve.

Tragedies like these ruin fortunes and careers. If the solution to your sales problem is indeed to move from a “hunter vs farmer” model to one where individual salespeople are expected to do both, what impact will that have on the flow of leads, opportunities, and deals? How do you know?  What proof or evidence do you have from this month’s or this quarter’s business?

Systems thinking is expressed in process terms. It enables you to connect theory to hard evidence (or not). If you understand the system, your predictions come true.

Non-systems thinking relies on authority politics. What other choice is there?

• Third Example:
  The sales V.P. hired a training company to improve the quality of telesales agent’s prospecting techniques. After great effort and expense, agents began to engage prospects more effectively, they left a better impression of the company, and they were finding more sales opportunities. Unfortunately, the agent’s calls were taking longer, so the number of calls reported per week started to decline. Senior management objected, and prioritized the number of calls above all other measures. In doing so they undercut everything that had been accomplished to that point.

The senior executive in this example was on the verge of a breakthrough. Had he allowed things to proceed, he would have learned the value of improving the quality of the work compared to focusing on the quantity. Instead he fell back into old-fashioned ways of thinking.

Systems Thinking Achieves Sales and Marketing Success

Management’s job is to set up a system that can achieve their goals and objectives. Attempts to improve results fail when someone expects the system to work according to their expectations.

This is true whether you are a salesperson, a sales or marketing manager, or the senior executive.

Attempts to improve results succeed if, and only if, you have changed your expectations to match how the system really works.

Michael Webb
May 4, 2009