Practical Perspectives

Colorful Funnel

Relying Too Much on the Sales Team – Possible, Common, and Costly

The Sales team has one of the most mission-critical roles for any company. As the front-line hunters who turn prospects into signed deals, salespeople supply the rest of the company with the fuel that keeps everything else moving forward: Revenue.  And as almost any executive outside of the venture-funded world of Silicon Valley can tell you, a failure to generate enough revenue will quickly end a CEO’s tenure, or even kill the company itself.

But for many suppliers in the biopharma industry, there is often so much emphasis on salespeople and the Sales department or function that the larger goal you hire them to accomplish – generating revenue – takes a back seat. It’s an ironic outcome, but it’s also one of the biggest mistakes we see from companies that want to sell more to biopharma clients.

Now, before we go further, let me clarify two things:

1) You almost certainly need a Sales team and salespeople so this post isn’t about talking you out of that. An effective Sales team is essential to most supplier companies, and all I’m asking you to think about is whether your focus and reliance on the Sales team is so acute that it’s actually harming your company’s ability to do a better job at selling. As we note below, salespeople are expensive, so you want to focus their efforts on the things best accomplished by the one-to-one relationship that a salesperson makes possible, rather than relying on them to carry out every activity that’s part of the overall sales process, or sales “funnel”. Salespeople have an important role, but too many managers in supplier companies think salespeople carry out all aspects of a sales generation system well, and in almost all cases, that’s not true.

2) For most people – even smart, savvy business people who have built successful companies – selling is hard. Management teams and board members spend a lot of time talking about Sales, but surprisingly few of those individuals want to take on the daily responsibility of making cold calls, following up on leads, circling back many times with prospects, and asking complete strangers to give them money. So, salespeople are viewed with a certain degree of awe because they can do what others can’t do, are afraid to do, or don’t want to do. But let’s not confuse our admiration and awe of the people doing the job with the ultimate goal of generating revenue, because in today’s market for solutions purchased by biopharma companies, increasing your revenue and creating a reliable, sustainable sales generation system often requires more than just having a good Sales team. Here’s why:

First, let’s start with what you know about how prospects and customers view your company. If your primary source of customer information is what your salespeople tell you, your view may be incredibly biased. We were working with a large pharma client last year, and suggested a particular supplier to a member of a brand team as a potential solution to a problem they had. They noted that another part of the company had worked with the supplier, and asked us to make contact to gather some preliminary information while they “asked around inside.”

During our call with the supplier’s COO he went on and on about how much the client brand team loved their solution (based on what his salesforce was telling him), so we were surprised that they hadn’t expanded their business at the company beyond the initial deal. We soon discovered that contrary to what the COO was being told, this customer was far from being in love. In fact, they were in the process of ending their contract, but hadn’t told the salesperson. But they were certainly telling their peers, including our client. The lesson? Salespeople don’t always know how a customer really feels, so you need additional, alternate methods and channels to gather customer insights both before and after the sale.

Next, let’s think about the story your salespeople tell. We’ve worked with many companies over the years with effective sales forces, producing a decent level of sales. But when you looked at their sales presentations, it was hard to believe they all worked for the same company. One person emphasized a particular aspect of the product or service, another something else, and a third had yet a different point she kept hammering home.

In most situations we’ve witnessed, these variations aren’t a matter of emphasizing different messages and benefits to customize the pitch for a particular prospect, which would be admirable. Instead, it’s often each salesperson doing what feels right to them, over and over, because it works well enough to let them make their numbers. But the effect on the company’s brand and positioning (which we’ll discuss in a separate, later article) can be devastating. So remember, while you might be achieving a “decent” level of sales, getting everyone on the Sales team to tell the same story in the same way can help your sales explode.

We recall one supplier company that had more than a 2.5x increase in sales, and more than a 3x increase in earnings, largely because they focused on getting everyone in Sales to tell the same story about a new service in the same way. Had they done that the first two times they launched the service, they may have prevented two years of underperformance and the replacement of two VPs of Sales. A third Sales VP found this great success by focusing in large part on consistency of message (the story). He became the CEO of another firm soon after this, and ran a similar play book for his new team. He hit another home run there, too.

Finally, it’s important to remember that just like an army, even a successful salesforce can benefit from “air cover”. We often see suppliers whose idea of lead generation is a neglected website and having their salespeople call everyone they know to ask for an appointment. They’re often churning through salespeople quickly and frequently, because that’s what happens when a company relies on someone’s personal address book as the top of their sales funnel. It’s an incredibly expensive and largely ineffective approach, and it also prevents the company from forming deeper relationships and reaching their true potential inside the clients they do have. Being dependent on a salesperson’s relationships also doesn’t scale very well, especially in biopharma, because experienced sales people often know and have “great relationships” with many of the same potential customers. The new person gets lots of meetings and there’s a lot of hope when they start, but their performance often starts to look oddly similar to that of the previous person. And the vicious, expensive, ineffective cycle continues.

A better alternative to relying on a salesperson’s relationships is having a wider group of prospects develop an interest in your company through non-personal channels, then having a salesperson further educate and close those prospects. But if you’re focusing most of your time, money and other resources on just your Sales team – the sales people – you’re probably focusing too much on the bottom of the sales funnel and not enough on the top. It’s OK to spend a majority of your revenue-generating resources on the Sales team in many situations, but placing your entire bet on that one “horse” is risky, and often suboptimal as an approach.

Salespeople are incredibly expensive, so you should focus them on high value activities such as pitching and closing. But that doesn’t mean you should ignore development of general brand and solution awareness – the top of the funnel – which is what far too many companies in the supplier space often do.

We could list more ways that over-investment in and over-reliance on the Sales team actually hurts a company’s ability to create a sustainable revenue generation system, but we think you get the point. High-performing suppliers tend to have a more complete and well-rounded approach to selling that begins well before the salesperson contacts the prospect, and continues to support the sales process, salespeople and the client relationship via channels designed to augment the personal selling effort.

These suppliers have effective sales forces, and value their essential role and contribution. But high-performing suppliers to the biopharma community also know that the salesforce itself is only part of their larger sales generation system.  We’ll discuss some other important elements of this in our next post in the series. Until then, we hope you’re building a great sales generation system in your company. If you need help with that, we’d love it if you gave Health Accelerators a call.