Streamline the sales development process for financial services

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Speaker 1: Welcome to the SBI podcast, offering CEOs, sales and marketing leaders ideas to make the number. Greg Alexander: Good morning, good afternoon, good evening everybody. This is Greg Alexander, CEO of SBI, a sales and marketing consulting company dedicated to helping you make your number. This is the SBI weekly podcast show and today I'm joined by Spencer Hodson. Spencer is the vice president of sales and channel strategy operations and enablement at Harmonic, the world leader in digital video infrastructure. They allow broadcasters service providers and media companies to deliver stunning video on any screen. The company's based in San Jose, right smack in the middle of Silicon Valley, does a little over $400 million in annual sales, employs approximately 1,000 people and has been in business for 25 years. At Harmonic, Spencer co-developed a sales transformation and operational excellence plan to drive consistent double-digit profitable sales growth. He has 25 years of business experience, highlighted with a 13 year successful run at Cisco Systems, where he was responsible for sales strategy, planning and operations. Lastly, he received his undergraduate degree from Cornell, so he's no dummy, and an MBA from Rutgers. Boy, talk about the contrast method! What was it like moving from Cornell to Rutgers? Spencer Hodson: Actually, well. I was originally a New Jersey boy so the transition went really well. Greg Alexander: Very good. Yeah, all right, so today's topic is sales strategy development, which is right up your alley, Spencer. When this show airs, our audience will be heads down in the annual strategic planning process so our objective for today's discussion is to give them some things to think about when developing the sales strategy for 2016. We're going to use SBI's five-step sales strategy methodology to guide our conversation, not because we think it's the best one in the world, but we're doing so because we want to stay focused and keep this to 30 minutes instead of 3 hours. We want to structure the conversation and not go down any rat holes. Before we jump into this, it's important to note that our jumping off point, so to speak, so we don't confuse everybody is as such. Strategic planning for the new year typically follows this sequence. There's some type of market research that's done which leads to corporate strategy being determined by the CEO and the board, which usually cascades to product strategy or product road map, then leads to marketing strategy to drive demand and then a sales strategy to convert that demand to revenue. Then, of course, underlying all that is a talent strategy. How many people do we need? What type? What's the organizational model, et cetera? All right, so with that out of the way, here's it's the real brief overview of our five -step sales strategy methodology, and then I'm going to get Spencer to help me dive into each one of these one at a time. The first step in sales strategy development is planning and this is the annual sales plan that lays out all the assumptions. We're going to get $30 million from this market, $60 million from that market and so it goes. That leads to engagement, which defines how the sales team will engage with customers and prospects, literally the engagement model. That cascades to organizational design. Here we want to make sure that the org structure is set up for success and we have a proper headcount allocation. That leads to execution, which is usually two things, sales ops and sales enablement. Then, lastly, there's support, which is internal processes that make a company easy to do business with and make a company easy to sell for. All right, so let's pull Spencer in and ask him how he uses some version of this or his own version regarding sales strategy development as part of the annual planning process at Harmonic. Spencer, step one, planning, typically, the CEO hands the head of sales a revenue number and the CFO the expense number and says, "Make it happen." In your world as sales strategist, how do you convert company targets like revenue goals or maybe even EBITA goals into sales targets, things like quotas, et cetera? Spencer Hodson: Yeah, it's a great question, Greg. I would say, actually, Harmonic because we're a bit of a smaller company, and that's certainly by the way was a bit more the approach from my prior employer Cisco, which is a much larger company. At Harmonic it's actually a fairly We call our planning process more of a confluence so what we do is typically around the early November time frame, we get together ... I say we being the sales, product management, marketing, finance. All the major functions get together and we provide, I'll say, a bottom's up singular view, as far as what we see in the market, our interpretation of what we see in terms of current trending with our customers. Because we're a global company, 55% of our business comes from outside the U.S. We obviously would look at sort of regional views where we have hotspots, cold spots or challenging areas and then come together with sort of a disposition or perspective where we think outlook, let's say in the case of 2016, once we do this is November. Or what we did in the past for 2015, we would come up with a view as far as from a top line sort of number perspective. Then, of course, the... our counterparts or stakeholders in the different functional areas would, of course, kind of give their views as well. Then we bring that together in a two to three-day planning session all the cards, the assumptions and so forth, on the table and try to kind of triangulate between hearing the different perspectives, getting the different views and zeroing in on where we think we have alignment. Where we think we don't, we dig in further and perhaps even go off into teams to rationalize and reconcile the difference and then come back with, I think, an answer that we're all pretty comfortable with. That is one, typically, that we'll settle on with, let's say, over. Probably be about three to six weeks after that session. Certainly towards the end of December we'll lock in. Greg Alexander: Okay, so I guess my first question is. I understand that in a smaller company, and Harmonic compared to Cisco is a small company, but it's not as if you're a startup. You're still a substantial organization there at 400 million. When I hear doing this in November, my first instinct, and I'm sure there's a reason for it, is "Boy, that's kind of late in the cycle," and then you end up ruining Thanksgiving, Christmas, and New Year's because you're rushing to get everything done before January 1. How do you pull it all off if you start in November? Spencer Hodson: Yeah, I guess I should qualify that. November is the time frame in which we're getting together. By that point, though, we've already kind of done our homework from a stakeholder perspective. We're actually more or less kind of starting that work the latter half of September. We're on a fiscal quarter and so generally September we're pretty focused on closing out third quarter and then, I think, early October is where we really start looking at some of the planning and pulling together our views and perspectives, agreeing within the sales units, that's the unit that I work with, and getting the perspectives from the different regional vice presidents and also gathering the data and simulating that so that, as we come into November, we have a pretty good line of sight, as far as from a sales perspective, what we see in the market. Then we bring that forward in our confluence meeting in early November. Greg Alexander: Okay, very good. Spencer Hodson: The other stakeholders are doing the same so I guess I maybe misspoke. I'd say that process for everyone is really beginning in sort of that early or late September/early October time frame. Greg Alexander: Yeah, okay, very good. That makes a lot of sense. A question I have regarding level of complexity based on a company's size or complexity of the business itself. It's easy for these strategic planning sessions to get out of control but it's also just as easy to oversimplify. Sometimes we see our clients breaking sales targets down by market segment or customer type, or product category, region, or maybe even by sales team. What degree of, I guess, granular detail do you believe in? Spencer Hodson: We certainly would do all that. We do look at by product family and that's certainly the view that our respective product stakeholders would take a view on as well. Naturally, we're also look at from a geography perspective and so we have five different regions, if you will, and within that, even sub-regions that we'll have a point of view on. Frankly, we'll have a lot of historical averages as well, right, in terms of how have we been trending from any bookings and revenue standpoint that really comes into play as well. Then we'll look at, from our newer technologies, particularly where we may not have quite the same trending history, where do we see the customer interaction really picking up. Where do we see pilots, demos, some of that sort, and then help kind of play that in. We will take a look at it, both from a geographical perspective and from a market segment perspective, and then from a product family perspective. Greg Alexander: Okay, so kind of three legs of that stool. That seems about right. Okay. All right, very good. We're going to take a quick break here. If you're enjoying this podcast, you're going to love SBI TV, which is our monthly television show. If you're not familiar with it, here's some more information on SBI TV. Greg Alexander: Okay, welcome back, everybody. This is Greg Alexander, CEO of SBI. This is the SBI weekly podcast. Today, we are talking with Spencer of Harmonic and Spencer is a sales strategist and he leads strategic planning, or supports and sales team and strategic planning. That's what we're talking about today, is how to set yourself up for a big year in 2016. We're going through SBI's five-step sales strategy development process. We just completed planning. We're going to jump into step two which is engagement. This usually includes two things, prospecting and opportunity management. Think of these as processes. Prospecting process and a process to manage your opportunities. Spencer, at Harmonic, does your sales team- Do they have a formal prospecting methodology used by the sales team and channel partners to generate their own leads or is it kind of each individual person does their own thing? Spencer Hodson: It's a little bit of both. In other words, we certainly encourage our respective sales teams and, by the way, they also manage in the territories and the regions work with their channel partners respectively to understand their markets and to provide that in your go-to-market plans, which is a key part of our strategic planning. It also involves our go-to-market plans, identifying customers, the market segments where they believe they see opportunity for the forthcoming year and how, and what their go-to-market strategy is, whether it's a direct model, whether it's indirect or even a co-sell for looking with strategic partners, et cetera. Where they need help, of course, we have a marketing team that helps not only align where we think there's available, the different customer, customer segments, but also from a demand gen perspective. Obviously, this is a continuous cycle. It's, while we start the planning for the next fiscal years, you suggest in the fall, keep in mind that we're also executing on the different plans from the current year and assessing and evaluating how well that's going and if we are seeing some really good promising execution and output from our different demand gen programs and such. That we look at where we can either replicate that, perhaps double down, and incorporate that into our planning as well. Much of that also is in the prospecting and in qualifying opportunities. Greg Alexander: Okay, very good. As it relates to the first step in the engagement stage, prospecting, it sounds like there is a method that everybody follows. You also allow them to do their own thing and then they're getting quite a bit of support from the marketing team so there's a very clear strategy formulation there. All right, let's move on to the second thing that happens in engagement, which is opportunity management. Some people call this a sales methodology or a sales process. This is a lead's been qualified, been converted to an opportunity, now we got to win it. In companies that have a formal sales process, usually help produce those that don't in three critical metrics so their win rates are higher. Their deal sizes are bigger and their average sales cycle length is shorter. Do you all have a formal opportunity management/sales methodology there at Harmonic? Spencer Hodson: We do. In fact, actually, that was one of the first things that we incorporated when we came in. As far as our multi-year sort of sales transformation was, in fact, to establish first of all our selling process and a sales playbook along with that, with the help of a consultant, the Tas Group, actually, and we're using their methodology. In fact, their software capability dealmaker within Salesforce, they actually help us standardize our selling process and our qualification sort of process, universally and worldwide. We took them through a pretty rigorous training exercise last year when we adopted this and use this on an ongoing basis when we do deal reviews and opportunity reviews, as we enter into the quarter and, certainly, during our monthly forecast and pipeline reviews. Greg Alexander: Okay, great, so their sales methodology's been in place for roughly a year? Spencer Hodson: No, about a year and a half, we introduced it and then, of course, we hardened it and because it takes a lot of repetition when you're changing a lot of behaviors, particularly across the different cultures and different regions. I would say sort of the last year, we've really, really, I think, seasoned that approach and it's been universally applied. Greg Alexander: Okay, fantastic. Normally, we measure the before and after of a project like that on three things, win rate, cycle length, and deal size. Do you have any before and after numbers on that? Spencer Hodson: Absolutely, so what we certainly have seen and you're right, we look at it from a deal size, win rate as you say, and as well as number of opportunities and then cycle time, as you mentioned. Deal size, we certainly are up on that and that's been sort of the approach that we've taken with a lot of our demand gens and the things we've talked about. In terms of deal size, interesting. I think it really depends on the markets and the segments we're running after. In some areas, we've actually seen where deal sizes have indeed increased because we've taken a bit of a different focus in those markets. In some industry consolidation, customer consolidation is kind of evading some of that as well. Then, of course, win rate and we also look at win rate from the different region perspectives as well. We are seeing our win rates increase. From a deal size perspective, as I mentioned, it's actually been rather mixed. In some areas, it's actually gone up. In other areas, it's gone down but in some cases for good reason. That is because part of the selling process and part of our forecasting acumen, we're really encouraging our sales team to really put everything into our CRM, our sales force. As a result, we actually have better tracking and better visibility of all the business. Naturally, I think, actually, our win rates have gone down statistically, and that is because they weren't entering all of their opportunities in there. I think some of that's just because we just have better transparency into the actual business. Greg Alexander: All right, very good. It sounds like that was a successful project, okay. All right, we're going to take another quick, short break here. The new SBI magazine is out, holding up a copy of it right now. If you're not subscribed to the magazine, you should do so. We have some great profiles on companies such as Autodesk and Iron Mountain in this addition, which I think you'll like. Here's some information on the SBI Magazine. Greg Alexander: Okay, welcome back everybody. This is Greg Alexander, CEO of SBI. You're listening to the weekly SBI podcast series. Today I'm talking to the head of sales strategy at Harmonic, Spencer Hodson. We're talking about the annual strategic planning process and developing a sales strategy. We're going through our five-step process. We're through two stages right now. Let's pick up on the third step, which is organizational design. Everybody loves to roll out a new org chart. Spencer, describe your org model for us and tell the audience why you chose this particular org model. Spencer Hodson: Yeah, when you- just a question here, Greg. When you mention org model, are you referring in terms of our overall organization or really from a sales perspective. Greg Alexander: Yeah, just in the sales force. Is it hunter/Farmer? Is it stratification? What's the model you go to market with? Spencer Hodson: Yeah, so we actually have a model in which First of all, it's geography based, as you imagine, so we have sales leaders leading each of the different regions, whether it be in the Americas, APAC, Amia, et cetera. Then, within those team structures, we have account teams that fall into different sub-regions geography based. Then, within those, naturally there'll be a number of folks who are more, I'll call them, territory based. They manage their territory respectfully, typically through channel partners and maybe others that will be on named accounts, large accounts, that we typically go direct and then have a support team behind them as well that are calling on those large accounts. Greg Alexander: Okay, so- Spencer Hodson: Then support- Excuse me, just one last thing. Supporting both of them, of course, we have the inside sales team local in the region. That also helps with any lead gen conversion and also working with the different customers for smaller quoting and things like that that we don't want to have A.M.s tie up their time with. Greg Alexander: Okay, so the dominant design principle of the org chart and sales in is geo. Spencer Hodson: That is correct. Greg Alexander: Okay, and normally, when companies choose that, they do so because they believe that the geographic proximity to the customers matters. The customers value having that local relationship. Was that the case with Harmonic or did it just evolve naturally with time that way? Spencer Hodson: No, it's absolutely the case. We have, again, as I mentioned, we have a fairly distributed customer base, 55% of the revenues are outside the U.S. and such, and that customer base is fairly attuned and a bit specific. We wanted to make sure that we have closeness and that intimacy within those markets and those customers and align ingly. Greg Alexander: Okay, and I didn't hear any vertical specialization or any product specialization. Why did you decide not to go that route? Spencer Hodson: We actually have a support team that's, I mentioned this is more sales go-to-market but we do have a support team that actually falls organizationally within our product management team that are vertical specialists if you will, solutions specialists. They're overlay support and they will exactly kind of provide that expertise. They're centrally located but they provide that regionally to the sales teams as warranted. Greg Alexander: Interesting, so product overlays sits within product management and centralized. That's an interesting approach to that. Spencer Hodson: Yeah. Greg Alexander: Normally we see product overlays sitting in the sales force and they're distributed into the geos. Obviously, you guys decided not to do that. What was the rationale behind that? Spencer Hodson: I think it's just looking at more from the sales expenses standpoint and where do we get the greatest ROI between their quota carrier versus an overlay. I think naturally, as you grow bigger and certainly that was the model that I came from Cisco as well. They have that embedded because they have a much larger customer base. I could see that certainly, over time as we grow, that we want to bring that in-house expertise and localize that within the region. Greg Alexander: I think centralized product overlays works and I advise my clients on it quite a bit but they always push back on me. It sounds like it's working for you. Spencer Hodson: Yeah, it is working and, say it was centralized, we do have some of those members located within the regions and supporting that but I would say we're still fairly It's not a large team and we're fairly embryonic in that respect. Again, I think as we grow, I think the model that you espouse would become a little bit more apparent and probably the way we will go. Greg Alexander: Okay, very good. All right, let's move on to the fourth step in our sales strategy development methodology, which is known as execution. This involves really two things, sales ops and sales enablement. Spencer, do you guys have a sales ops team? Spencer Hodson: Yeah, actually, I run it so part of my... Greg Alexander: I didn't know if you were a one-man show. Spencer Hodson: Responsibility actually- Yeah, well, it's- I have a team of a number of folks, both from sales ops, order management, data proposals, deals desk, CRM support, commissions, et cetera that- Greg Alexander: It's a full-blown team. Spencer Hodson: -with sales. Greg Alexander: You got a full-blown sales ops team. Spencer Hodson: We do. Greg Alexander: Yeah, okay, very good. What's the objectives for your sales ops team? What are you guys mandated to accomplish? Spencer Hodson: Our charter quite simply is to enable and drive sales productivity. If that means we help grease the skids if you will to help the selling process become more smoother, if that means we need to look at our processes and what we're asking our sales teams, in terms of conducting business quote to cash and those types of things, and if it's burdening them from them spending time with customers and increasing time, then we look at how we can remove that or give them as much time as we can to spend with customers. It's really all about how do we drive sales productivity and help smooth out and streamline processes so they can go do that. Greg Alexander: Fantastic. I want to point out to the audience we- in this conversation; Spencer worked at Cisco, which is a huge company. Harmonic at $400 million is smaller than that, yet he has a well-functioning sales ops team. He's not a one-man shop. He's got a legitimate team underneath him. When I asked him what the objective is, he could state it to me clearly. A lot of the people that are listening to this, even in big companies don't have sales ops, if they do, it's this hodgepodge of group. When I ask them what their objective is, they really can't articulate it. What it's become is this kind of catchall department that does everything that nobody else wants to do, which is usually not a great way to run that organization. Hats off to you guys for having a very tight execution focused inside of your company. All right, we're going to take one more short- oh, I'm sorry. Go ahead. Spencer Hodson: No, I was going to say, Greg, I would be remiss to tell you that there's- It is a common dumping ground, I've heard from my colleagues. Naturally, there are fire drills of the day where, because of just our unique nature and some of the demands of the business, there's no proper landing spot where to handle this issue or try to resolve it and it does find its way in the sales ops. I think, in many ways, that is a testament to the value that sales ops can bring, actually, to a sales organization and help them with that. Greg Alexander: Yeah, because they come to you when they need to get it done, right? Spencer Hodson: Exactly right. Greg Alexander: Yeah, all right. We're going to take one more short break. I want to draw the audience's attention to the SBI blog. This blog delivers a sales best practice that you can read on your mobile device in under five minutes each day. Here's some information about the SBI blog. Greg Alexander: Okay, welcome back everybody. This is Greg Alexander with SBI. We're talking about sales strategy development as part of the strategic planning process with Spencer, who heads sales ops over at Harmonic. So far, we're through the first four stages of our five-step process. Let's get into stage five. This final step in sales strategy development is known as sales support. Sales support has two goals in our view. First is you want your customers to feel you're easy to do business with and second is you want your reps to think it's easy to sell for you. Spencer, let me put you on the spot here. Is your company easy to do business with? Spencer Hodson: I think- I would say, yes, with the caveat that we always have significant areas where we can improve upon. We know that because our customers tell us so. As you know, Greg, there's many different areas in which our customers relate or transact with us, whether it be negotiating commercial terms, whether it's order and fulfillment, whether it's logistics support and those types of things. There's a number of different areas which I think Harmonic as a company, I think, excels at and there's other areas, frankly, that I think maybe we're not on par where we need to be and we need to improve upon them. All in all, I think we've done a pretty good job there. Greg Alexander: Okay, good, so it doesn't take a month to get a configuration approval. Spencer Hodson: No. No, no. In fact, that's one of the- Again, coming from a very large company to a small one, I've ... It's one of the real benefits is just seeing how agile we are and can be, just because there's a lot less people that need to get involved to make a decision. Greg Alexander: If I called some of your sales reps and said, "Hey, is it easy to represent Harmonic? Are they easy to sell for?" what would they tell me? Spencer Hodson: Oh, absolutely. I think they would tell you that our customers feel as though that they have the support of Harmonic and, if they feel as though that they have an issue that they need to get resolved and they can escalate it, that we have an executive management team that is not only willing to listen but highly engaged. Greg Alexander: All right, very good. All right so we're at our time limit here. We're going to wrap this up for the nice neat package for the audience. We just reviewed our sales strategy development methodology five steps: planning, engagement, organizational design, execution and support. Spencer was kind enough to share with us how they approach those five things inside of his company. Spencer, if I was to ask you to advise the audience maybe on two to three things that they should do while they're developing their sales strategy for the new year, what would you tell them to focus on? Spencer Hodson: Yeah, the first I would say ... and typically- and also, I guess, with my sales ops counterparts, is, "Put yourself in the sales shoes, if you will." Many times, it's easy to, especially from corporate, is to have that sort of head office syndrome in which you put together great plans. You put together these different programs and you try to push them out without really understanding what's it going to take and the impact and the burden it's going to take for sales to actually execute it into the region and making sure there's a support team with them that can help them execute it. One is put yourself in their shoes. Also, understand what's it going to take with that support structure to really be successful in executing initiatives. I think we have a always looking to be very aggressive and tend to over plan things. When it comes down to execution, I think we may be a little bit overzealous in that as well. Being pragmatic, knowing what are those two to three things that are really going to make a difference and focus on those, and it's all about execution. Greg Alexander: Very good advice. Walk in the shoes of the sales team. Don't over-engineer things. Let's be pragmatic in this process. Strategic planning can get out of control quickly so that's great advice. All right, I'm going to point the audience to two resources that they can rely on as they go through their planning process. The first is I would advise everybody to download SBI's annual research report, which we just released, titled, "How to make your number in 2016." This is the ninth year that we've done that and it's packed on how to develop sales strategy for the new year. You can get a copy of that by going to salesbenchmarkindex.com\2016-rep The second thing I would suggest is scheduling a workshop with one of our sales strategists to apply the research findings in the report directly to your business. This is where it comes to life. If you want one of our guys to come out and see you, go to the same website, salesbenchmarkindex.com\2016-wo. Same URL, the only difference is one says "report" one says, "workshop." Spencer, on behalf of our audience and personally- I learned a lot from you today. I appreciate you coming on the show and unselfishly sharing your years of wisdom with us. Thanks for being on the show. Spencer Hodson: Was certainly my pleasure. Greg Alexander: Okay, to our listeners, thanks for listening and tuning in and here's- I'm wishing you the best of luck in making your number. Take care. Speaker 1: This has been the SBI podcast. For more information on SBI services, case studies, the SBI team and how we work, or to subscribe to our other offerings,