Sales Performance Improvement Trends for 2018 and Beyond: Actively Creating Value in Portfolio Companies
We asked Sales Performance International executives and consultants what kind of changes we can expect to see for the sales profession in the coming new year and compiled their perspectives and opinions in our eBook, “Sales Performance Improvement Trends for 2018 and Beyond”.
Grant Cox is a Senior Sales Consultant at SPI and specializes in working with private equity firms.
What major trend do you see in your area of sales or learning performance expertise?
Private Equity (PE) firms are always looking for ways to create value, whether it is in their current portfolio companies or new acquisitions. We see more PE firms focused on the midmarket space engage 3rd party companies who have the expertise to help them build and grow more profitable sales for their portfolio companies.
What is causing this trend?
Many PE firms lack the experience and expertise to assess the health of sales and marketing organizations — whether it is in the pre-bid, due diligence or post close phases. Moreover, they question what levers to pull that will have the biggest financial impact on the business. Revenue is the output of a complicated set of interdependent components such as products, channels, sales force performance, pricing and many others. Payback on growth investments can take years to realize, and there is always much uncertainty. By comparison, cost reductions are easier to execute. However, you can only cut so deep, and studies have shown that the typical contribution of revenue growth to value creation over a five year holding period is 3X that of cost reduction – approximately 60% for revenue growth and 20% for cost reduction.
What opportunities or threats does the trend pose for businesses and sales organizations?
Companies who help businesses to improve sales productivity and profitable growth are well positioned to thrive in 2018. If the current administration can pass the rewrite of the tax code, companies doing business in North America will have more capital to invest in themselves because their cash flow is likely to increase by 15- 20%. Tax code changes are a huge opportunity for those companies who are smart and agile to take advantage of these changes.
In light of the trend, what advice do you have for business and sales leaders?
Profitable revenue growth and value creation require the right leadership executing the right strategy with the right sales structure and sales personnel. Metrics are an integral piece of this formula. Investment and operating partners should define metrics that matter across that particular portfolio company, and then continually measure those metrics to gauge and manage performance benchmarks where possible.
Download our eBook “Sales Performance Improvement Trends for 2018 and Beyond” today!