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6 Key Things CEOs Should Know About Sales

As the CEO you play an active role in driving performance improvement across the organization. Yet sales has traditionally been neglected by CEOs. Especially if they did not come up through sales, so here are the six key things CEOs should know about sales.

Growth – Where is it Coming From?

Do you know where your sales growth is coming from? Is it coming from specific clients? Or verticals? Or markets? If you don't know, it may be in your best interest to get aligned with your sales leader.

Knowing where your sales growth comes from helps you decide where to expand your company, acquire new assets, design new product or service offerings, or pivot when there are less than desirable outcomes.

Know Your Ideal Client

In any business, you must know who your ideal client is—failing to understand who your ideal client is can cause things to be misinterpreted.

Rather than making a wild guess, take some time to analyze the people or companies with whom you currently conduct business. Look at their size, industry, location, business model and culture. Ask them what attracted them to work with you. This can quickly provide a good overview of who your ideal client may be.

Knowing your ideal client allows you to build your entire business, message, products, services, sales, and support to attract and serve this narrowly defined group.

Know What Your Sale Leader's Plan Is

The sales leader is the person who leads the sales organization to generate predictable and repeatable revenue for the company, correct? That's a lot of responsibility, so it would be ideal if you knew their sales plan.

You will want to know where your sales leader plans to spend their time. Take a closer look at reports required, their time spent in meetings, and on special projects.

You'll want to know what markets, accounts, goals, and their plan of attack to reach those goals. That way, you'll be aligned and understand and can better hold them accountable for those actions and reaching those goals.

Identify the Metrics You'll Want to Know

Three metrics that you should be looking at are The Big Three: opportunities, close rate/effectiveness, and average deal/account size.

Your opportunities are leading indicators, those activities that typically lead to sales, such as discovery calls or meetings, new "qualified" opportunities, demonstrations (demos) of your product or service, site visits to your company, etc.

Your close rate shows how efficiently the team is performing. It can be determined by selecting a leading indicator that is relative to your business and uncovering what portion should convert into a closed deal. That is your close rate. Here are some examples:

  • Percent of qualified opportunities converted to deals
  • Percent of proposals converted to deals
  • Percent of calls converted to deals (very transactional business)
  • Percent of meetings converted to deals

There is no universal standard for a close-rate goal so, you’ll want to discuss this with your sales leader.

Average deal size is based on your type of company; some companies look at average sales, deal, or project size. However, some companies with recurring revenue models might look at average revenue per client, monthly recurring revenue, or yearly recurring revenue. In some cases, a company will look at how many units per order people have, or even gross profit per order or account.

If you don't know these numbers, then get together with your sales leader to have these conversations.

Know the Difference Between Pipeline and Forecast

Sales leaders will often get excited about what is going on with accounts and may misinterpret the numbers.

A sales pipeline is a view of all of your opportunities. As such, it will often show everything – from a newly identified opportunity in the first stage of the sales process through to deals ready to close in the final stage. The pipeline can also lead you to believe you have a lot more revenue potential versus what will actually be closed.

On the other hand, a forecast is a smaller segment of your pipeline used to forecast expected revenue in a specific time or stage of the sales process.

You and your sales leader should agree on what you want and need to see. Most CEOs will want to know what they can bank on and don't need to see every opportunity from every stage. That is just noise. But discuss, so you are on the same page as your sales leader.

Not all Salespeople are the Same

If you've never worked in sales, you may think all salespeople are the same: extroverted, charismatic, competitive, ambitious, and always on the phone.

But salespeople know that the personalities that make up a sales team are as diverse as those of the prospects they talk to every day. Expressive and amiable, assertive and subtle, insightful and analytical - all of these traits (and more) can be found within your sales organization.

Because of the vast differences in characteristics, there are different roles your salespeople can fit into, such as:

  • Farmer - someone who is looking for the next opportunity within a customer that their organization already has an established relationship.
  • Hunter - someone who is targeting new businesses that doesn't currently work with their organization.
  • Hybrid - someone who needs to find new prospects and maintain them. 
  • Inside Sales – someone is trying to set up appointments or calls for the hunter, who then goes in and shows the prospect the value and differentiation.

You'll want to know what role your sales team is comprised of and may be looking to hire.

In The End

As the CEO, you will benefit from knowing where your sales growth is coming from, who your ideal client is, and your sales leader's plan. You'll also want to know what metrics to keep an eye on, the difference between a pipeline and forecast, and know that not all salespeople are the same.

About Gary Braun

Gary is a founder and co-owner of Pivotal Advisors. He has worked for 20+ years as a salesperson and sales leader. Gary has been a guest speaker for many groups such as Vistage, Allied Executives, CEO Roundtable, Sales Management Association, and more. If you want to find out more about Gary check out his profile here.
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