This is a series of articles on analyzing issues and developing a strategy to increase sales and growth.
It’s the beginning of a new year and a new Q1. Many of us and many companies are doing Sales Kickoffs this week. And some companies (i.e. their CEOs, COOs, CROs, VPs of Sales, and VPs of Sales & Marketing) are challenged because last year sales did not hit the number and revenue did not grow as intended in the annual plan. Others already see early signs that you may not be able to hit your sales target this year if you don’t make the necessary adjustments. In such cases, it’s important to diagnose and understand what happened and then develop a plan to fix it.
But there may be many factors to analyze and consider which may have affected the ability to hit the sales number. Here I wanted to share with others how to start with a framework that I created for myself many years ago that helps me start the audit and process to evaluate and troubleshoot and identify the problem(s). I defined it as the “5P Analysis” and talked about it in various articles previously – also wrote about the 5P in some of the e-books like this one I authored for fellow Sales VPs meant to give guidance on QBRs (Quarterly Business Reviews).
Note that the proposed 5P Analysis and framework is just a starting point to help you diagnose and troubleshoot that is preventing your sales from growing the way you had in the plan. But it’s not everything – you begin with the diagnosis to understand where to dive deeper and which areas need more attention or need to be fixed. However, a Diagnosis must be the first step. As doctors say: Prescription without diagnosis is malpractice. So start here first before you know what solution to prescribe to fix your sales growth.
The 5P Analysis and Framework:
The order here is actually important – everything in business and in sales management always start with your People. And here are some initial questions you’d want to dive into for each of the 5 areas – these are examples designed for a growing B2B Sales Organization that is between $10M – $200M in annual revenue) If you need help to analyze and troubleshoot more or if you have more complex factors that are beyond the scope of this summary then please feel free to reach out to me.
- How is the Sales Org Structure & Coverage model?
- Do we have the right people? Are they the right people “in the right seats on the right bus”?
- Do we have enough people (i.e. capacity / capacity planning)?
- Do we have enough Outbound SDRs? Inbound SDRs? AEs?
- Do we have enough First-line Sales Managers? Are they effective, are they well-trained?
- Are all reps well trained, coached, and developed?
Plan & Planning
- Is our Sales Strategy right / effective? (i.e. that is your Plan)
- Are all key areas (territory, quota targets, playbook, etc.) of your Sales Strategy correct and effective? (see the list I’ve used here)
- Were our goals/targets planned right or was it impossible to achieve/execute and that’s why we missed our sales target?
- Are we aligned well with Marketing & Demand Gen? Is our SLA solid?
- Are we aligned well with the Product team and we have the product that is competitive, solves a real problem, etc?
- Did we plan and create a tight strategy for our Positioning, Unique Selling Proposition, Elevator Pitch – are these tools helping us sell well?
- Is our Sales Process effective?
- Is the Sales Process based on the Target Buyer’s “Buying Process” and how the market wants to decide on a solution? Or is it all self-centered, all about us, about how we want to sell (ignoring the market, the target buyer)?
- How is the process for People Management, for Pipeline Management, for Account Management? How is the
- # Opps – do we have enough Opportunities (i.e. live, in-flight, active Deals in the making) in the Sales Pipeline? Total and Opps/Rep.
- And dive deeper: did we have enough Leads from marketing and did we hit the agreed Sales/Marketing SLA target and help the sales team fill the Pipeline?
- Pipeline Creation – were we effective at building the pipeline (and, although this is about Performance as the next P, also assess if we were achieving a consistent or better % Win Rate from the Opps or did it decline)
- Pipeline Management – are your reps managing their pipeline effectively in adhering to the correct Sales Process?
- Pipeline Mix – what was the mix of Opps? Or even go farther up the funnel, what was the mix of Leads that we got? Did we get ineffective leads, or low scoring leads, not qualified leads, wrong target personas or based on misaligned offer or wrong intent-based inbound? Quantity may be OK (you hit the lead target #) but if the quality is not there then you have a problem – do the Pipeline Mix analysis.
- Pipeline Congestion – do you have stalled deals and understand the primary reason that explains why most in-flight and active Opportunities in your sales pipeline stall (or become “UFOs” – i.e. Unlikely & Failing Opportunities which need to be either revived or pruned out of your pipeline)?
- Performance is execution – did we execute well?
- Pretend that everything else is fine (i.e. people, plan, process, pipeline) then did the team simply not execute well at selling? What happened (here you can go deeper and identify multiple other factors that are one level below).
- Asses the performance on the “Top 5 Sales Metrics that Sales VPs Must Use to Analyze Performance and Results“: Total Opportunities and per Rep (by # count, not $ deal volume), Closed Opportunities in Total and per Rep (by # count, not by $ volume), Deal Size ($ Average Sale or Avg $ACV in SaaS), % Win Rate, Avg Sales Cycle (by segments).
You can use 5P to troubleshoot your sales growth and help create a viable recovery strategy if you are behind the number. You can also use this framework to help plan your sales to help hit your number.
P.S. I originally wrote about the 5P model in 2009 and then covered it again in a few posts at InsightSquared in 2012-2013:
- QBRs thorugh the 5P Lens:
- How to Grow Sales in the Next 6 Months: