In today’s economy, the opportunity for companies to continue growing is dependent on their ability to generate internal profits to fund expansion.
When you have an increasing demand for internal corporate cash, paired with an increasing demand for capital investments to grow your top-line revenue, you create a vortex where funding has exceeded business requirements. This vortex is forcing many companies to miss business milestones, established players to reduce fixed costs, and mature firms to sell assets. As companies miss their management teams, investor milestones, or Wall Street commitments, they reduce their business valuation and subordinate their ability to succeed and fund growth. The crucial issue for growth-directed companies in today’s economy is to meet predetermined revenue milestones on time and on budget.
In a world where increased revenue has become an executive mantra, turning business plan strategy into actionable steps that create revenue has become, for some, an albatross.
The key to success is to continually increase internal funding capabilities and help reduce dependence on third-party funding resources. For companies to continually grow, business units must quickly produce tangible sales results. One methodology to accomplish this is through a Sales Scorecard.
Like other scorecard concepts, the success of the Sales Scorecard is driving fundamental business changes. By creating identifiable tactical measures for each of your sales team members and contributing departments, you can transform silo performance into group performance and create a pattern for integrated sales team performance.
Sales Scorecards are sub-segments of the original scorecard concept currently used by approximately 60% of Fortune 1000 companies. The original premise of the scorecard is based on linking, intersecting, and managing four distinct business perspectives. The scorecard process is presently used as a centralized business implementation and strategy tool. The success behind the scorecard methodology is based on its ability to transcend executive philosophies and help departments become more productive as a team from the boardroom to the mailroom.
Unlike other management philosophies, the sales scorecard is not a static business concept. Instead, it is a continuously changing management tool that allows companies to adapt to market conditions as they develop. Unlike Management By Objective (MBO) theorems where corporations are focused on changing behavior by studying yesterday’s performance to bring about the modification for today, the scorecard model focuses on today and tomorrow and those elements that can turn present strategy into future action. Through the utilization of the Sales Scorecard, businesses can manage the sales team’s performance based on today’s information and react to tomorrow’s market changes and sales success needs.
The scorecard is not just a static list of metrics or isolated Key Performance Indicators (KPIs). Instead, it is a graphical framework for implementing and aligning sales tactics and managing strategies for companies seeking to become successful.
Businesses must manage their capital capabilities to succeed.
Today, most companies can break down their corporate assets into three specific areas, which include:
- Human capital (employees)
- Operational capital (product and service development and delivery)
- Financial capital (business funding, revenue, monthly burn rate, valuation, corporate revenue, A/R, line of credit)
With these capital elements always at risk for companies, it becomes crucial for management to develop a strategic blueprint for all employees to work together. The Sales Scorecard is such a program, but it integrates five areas rather than four. Through its implementation, line and staff associates interact weekly as a packaged team to help drive performance and create revenue as a group instead of traditional department silos.
Five sales management pillars to track are:
- Product Development/Operations
- Strategic Partners/Alliances
It is important to understand that revenue generation in companies is a cause-and-effect process. Revenue will be short without a market-driven product, services to sell, or appropriate positioning support. Success will be minimized if the focus is placed on the sales department as the primary driver for revenue shortfall rather than identifying and fixing the primary problem. The Sales Scorecard is a visual measurement device used to view the integrated variables of revenue generation from all salespeople.
Additionally, by identifying all sales tactics needed to sell and/or non-contributions as they happen, you can make adjustments to your sales team’s current behavior before it is too late and identify help from other departments that may be needed.