WHAT IS A CHIEF SALES OFFICER?

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1 $125 WHAT IS A CHIEF SALES OFFICER? CSO White Paper Series from Chuck Reaves, CSP, CPAE, CSO What will your customers want from your salespeople years from now? Someone in your organization needs to be planning for this because at least one of your competitors will be. How many companies do know of that have a Chief Sales Officer (CSO)? Yet how many companies profess to be sales-driven or customer-focused? If sales is the primary driver of the organization, why isn t there someone in the C-Suite representing that side of the business? If we are supposed to be focusing on the customers wants and needs, who is representing them in the strategic planning sessions? At the top of most organizations is the CEO or president. This tier is the Visionary level. Every organization needs a visionary someone who understands where the organization needs to go in order to achieve its maximum success or, maybe, to survive. This is the person who has the longest view of the future of the organization, industry, markets, etc. Like the captain of an airplane, the visionary focuses on destination: where is the organization going? If obstacles arise, like bad weather for the airline captain, the visionary is responsible for determining the best alternative for continuing towards the destination. The second tier of an organization is the Strategic Level. These individuals are planning for the future as well, but with a more near-term view. Their focus is on developing the necessary strategies for achieving the corporate objectives. At this level we typically see the Chief Financial Officer whose responsibility is to plan for the financial future of the organization and then manage the corporate expenditures accordingly. The Chief Operations Officer plans for the future of the operational functions and capabilities while overseeing the existing production of the organization. This second tier, the strategic level, is known as the C-Suite or the C-Level. It s even lonelier at the top for the Chief Sales Officer The CEO may be thinking and planning for three to five years in the future while the strategic levels focus two to three years out. Decisions made today will impact the organization s capabilities in the future. Therefore, someone needs to be thinking long term.

2 The third tier is the Tactical level. Typically this is the vice presidential level where leaders are handed the corporate strategies and then are expected to develop and execute the tactics necessary to make the strategies happen. The missing piece in the C-Suite is sales. Overview The titles of Chief Financial Officer (CFO) and Chief Operations Officer (COO) are familiar as are the newer titles CIO/CTO, Chief Information or Technology Officers. What about the person who represents sales and customers? It is interesting that all companies share three primary purposes: make or deliver something, sell it and collect and manage the funds. While most corporate leaders will see the value of sales, the role of the senior sales person as a CSO has been lacking. Does this indicate a lack of respect for sales? Is it an indication of a lack of understanding of the importance of having a cohesive sales strategy? When we look at the typical organizational chart we usually see the top sales executive carrying a title that is less prestigious than the people in charge of other critical areas of the company. CEO VISIONARY CFO COO CTO? STRATEGIC VP Finance VP Operations VP Technology VP Sales TACTICAL The role of the CSO is similar to that of the other members of the C-Suite. They make high-level strategic decisions in their area of responsibility. They are usually invited to the important planning meetings and off-site conferences. Their input is as valuable as anyone else s but until now their title has indicated that the importance of their role is not as high as the people at the strategic C-Level. While they carry the title of Vice President of Sales (or Sales and Marketing) or even a title like Executive Vice President of Sales (and Marketing), they still have the same responsibility as the other C-Levels. They are ultimately responsible for the planning and performance of the company s sales team. Or are they? Chief Sales Officer Page 2

3 We ve Never Had One Before The argument against having a Chief Sales Officer is often the fact that businesses have survived this long without having one. Why would they need one now? The answer is change. There has been more change in the world of sales in the past few months than there has been in decades. There are rampant changes in: Sales processes (including Kaizen for Sales yellow to black belts) Sales analytics (new KPIs) Sales tools (tablet, desktop/laptop, paper, etc.) Compensation/Incentive/Recognition programs Accommodating changing demographics (Boomer, Buster, Gen-X, Millennial, etc.) There has been more change in the world of sales in the past few months than there has been in the past twenty years. The sales process is becoming increasingly integrated with other systems, such as CRMs communicating with ERPs. Sales processes are becoming more dependent on other processes, especially manufacturing, and sales processes are having an increasing impact on other areas of the organization. It is important that sales be represented at the strategic level in order for organizations to make the best decisions. Just because it has not been done before does not mean it should not be considered now. Several years ago I worked with a $60 million distributor who had no computers. In fact, they had grown through acquisition. Whenever they acquired a distributorship that was computerized, the CEO ordered the acquired company to print out their records and sell the computers. When I asked the CEO how he could manage a company of that size without computers, he answered, Son, there were sixty-million-dollar companies a long time before there were computers. How do you argue with that? They were not competing with companies that had computers. Your organization does not have to have a CSO. However, if your competitors do, you may have a problem. Chief Sales Officer Page 3

4 Role of the CEO Think about this: what is a CEO? To appreciate the role of the Chief Sales Officer better, take a closer look at what the CEO is expected to accomplish. As Chief Executive Officer, the CEO is ultimately responsible for the decisions that are made at the highest levels of the company and the results of those decisions. This is the position where all of the other C-Level decisions and strategies come together for a final decision and corporate strategy. Therefore, the CEO takes input from each of the other C-Levels. Making a good decision requires having good data from good people. The CEO fills the C-Suite with good people who know how to find the quality of information they need. Without counsel, plans go awry, but in the multitude of counselors they are established. Solomon, Proverbs 15:22 The wisest man who ever lived, according to many, used the phrase multitude of counselors three times in his writings. Each time it was to show the value of being surrounded with good people and the danger of not doing so. Ultimately every leader must call their shots based on all of the counsel he or she has received internally and externally. So the CEO position is actually an amalgam of all of the other C-Levels. The CEO is ultimately responsible for the corporate expenditures making this person the Super Chief Financial Officer (SCFO). They are also ultimately responsible for the operational efficiencies and effectiveness so they are also the Super Chief Operations Officer (SCOO). Regardless of their background or expertise in technology, the responsibility for the use or misuse of technology still falls on them making them, again, the Super Chief Technology Officer (SCTO). The CEO who grew up in finance will find the SCFO role easier to play than the CEO who cut his/her teeth in technology or operations. As a result, companies tend to become profitoriented with a CEO who came from finance, operations-oriented with a CEO from operations and product-focused when the CEO grew up in technology. The CEO s focus creates the corporate personality. The personality of an organization is a direct reflection of the personality at the top. In the pie chart above, sales is a no-show. But the sales results determine what the company has done and what the organization will be able to do. Sales results tell us about how our products and services are perceived in the market. Sales forecasts tell us what we can expect to have in expendable resources in the near future. Both of those are critical pieces of information that are important to have handy when major decisions are being made. The pie chart at the right includes sales participation but who is the sales leader? Chief Sales Officer Page 4

5 Lacking a true CSO, the next-in-command, usually the VP/EVP of Sales, is included with the other C-Levels as a counselor to the CEO. Still, the perceived value of this sales counselor is not as high as the others because of their title, not necessarily the value of their contribution. When there is no actual CSO, the role defaults to the CEO. For many organizations this is not likely to change any time soon. So the modern CEO needs to understand how to serve in the CSO position. There are two types of CEO s: those who have sales experience on their resume and those who don t. There are advantages and disadvantages for each. CEO WITHOUT SALES EXPERIENCE CEO WITH SALES EXPERIENCE ADVANTAGES The CEO is less likely to be too sympathetic to some sales weaknesses. They are less likely to give in on some common objections, such as the price objection, at least initially. The CEO knows what is needed to make a sales team successful and appreciates the value of non-quantifiable aspects of sales such as motivation, recognition and sales tools. DISADVANTAGES The salespeople may not trust the CEO or take the CEO s ideas seriously. It will be necessary for the CEO to build credibility with the sales team. Ways to do this include: Meet regularly with sales leaders, occasionally with salespeople Make sales calls with and without the salespeople (usually with) The CEO will have a tendency to think their way of selling worked well for them in the past and, therefore, will work well for everyone else. In fact, there is no one right way to sell. To overcome this tendency: Teach the PRINCIPLES, not the techniques of selling that worked Be open to new ideas Congratulate successful salespeople who sell differently Chief Sales Officer Page 5

6 The Real World In the real world the division of the CEO s time is rarely as neat as the pie chart might suggest. The aspect of the business with the greatest need usually gets a larger portion of the CEO s mindshare, time and effort. For instance, when an entire industry is in a slump, a company within that industry will need to focus on expense controls because sales are not as viable an option for restoring profitability. Example: when Congress levied an excise tax on yachts, sales of the big boats plummeted. Anyone supplying boat manufacturers had to either find a new market or had to pare back. In that scenario the CEO would want to focus on cost controls and would apply more of his/her resources towards being a SCFO. This is where many airlines CEO s seem to be spending much of their time these days. Another scenario would be a company that is implementing Six Sigma as an approach to developing their next generation of products or implementing Lean Manufacturing to develop a stronger differentiation in their industry. That is a time when many of the company s resources would be devoted to the operational areas of the business thus creating a need for the CEO to focus there. H OW TO L EAD AS A CSO Improving sales can often be a part of the cure for other corporate ills. When the organization needs to boost sales, the CEO finds their time moving toward the Super Chief Sales Officer role. Regardless of their competence or confidence, they are now leading the sales effort. How can they function better in the sales leadership role? Trust and credibility go a long way with sales professionals. It is important that the CEO/CSO believe they are being heard. Since more than 80% of selling is done at the subconscious level, salespeople must have an ingrained belief that the company they represent and the products and services they are offering are exactly what they are telling their customers they are. We cannot fool kids, dogs and customers. Customers know when the story they are hearing is accurate. Any doubt in the salesperson s mind will be communicated to the customer directly or indirectly. Chief Sales Officer Page 6

7 For instance, suppose the CEO were to accompany the salesperson on a call. In this case let s assume the CEO came up through the financial side of the business and is most comfortable when all of the columns and rows add up. This The questions you ask your CEO/CSO will manage the sales team by the salespeople will determine what numbers. They will encourage the salespeople to sell questions they ask their customers. by the numbers. The salesperson may open the call with a statement like, Mr. Customer, we can have a positive impact on your bottom line. After all, the CSO has set client ROI s the best method for closing the sale. The salesperson may not know how his or her product or service might impact the customer s bottom line, but they are being managed or instructed to sell based on the ROI impact for the customer. Their experience has taught them how to ask the questions that will uncover the customer s want or need that will lead to the sale. But do they have the ability to convert that into a coherent financial cost justification. Other C-Levels? Are there other potential C-Level positions? Of course there is. In fact, many organizations have a Chief Marketing Officer, Chief Morale Officer, Chief Security Officer and more. The CEO identifies the type and quality of the information they need to make the best decision for their organization. If any strategic information is not being provided, it may be time to bring a person with that expertise into the C-Suite. This paper addresses only the role of the Chief Sales Officer and the impact their role can have on the others in the C- Suite. Financial and Operational decisions are most dependent on the results of sales. The CFO needs to know what funds are in the pipeline and when they are expected. The COO needs to know what products or services need to be delivered and when the customers are expecting them. To a growing level, sales activities are impacting the technology side of the businesses as well. So what would a true CSO spend their time doing? A common question: Can t our Sales VP just do this? The Life and Times of the CSO In fact, most organizations have their tactical sales leader following these unspoken expectations: You are expected to develop and implement all of the tactics necessary for achieving or exceeding the corporate sales objectives. These may include revenue, profit, unit sales, market penetration, market expansion, etc. 90% of your tome will be spent at the tactical Chief Sales Officer Page 7

8 level. However, if there is a whale (key account, significant account, visible account, etc.) in our base, you are expected to be intimately involved in that account. We cannot afford to lose a whale. So, 9% of your time will be spent at the task level maintaining and growing these accounts. Then, three days a year, you will be expected to spend 1% of your time attending the strategic planning sessions and thinking like a strategist. Do you know anyone whose mind is that flexible? The activities of the true Chief Sales Officer focus on future organizational and growth strategies. These can include: Organization o Sales Tiers? By territory (geographic, for example) By product (complex technical sales) By customer (major accounts) Blend of the above o Compensation Salary Commission Reward Recognition Blend what percentage? o Based on Vertical? Horizontal? Competitive analysis o Not me-too o Fad vs. trends Sales Technology o Options o ROI Targets o Markets o Industries o Products/services Regulatory & legal Chief Sales Officer Page 8

9 Going Forward So what is the CEO-as-CSO to do in the meantime? Here are a few tips based on some valueadded selling principles: Ask your salespeople good questions. Rather than asking them how many sales calls they are going to make or how many units they are going to sell, ask them questions like, What are the top three problems your customer is facing right now and what can we do to help them? (See the CSO Checklist at White Papers.) Take the same sales training and refresher courses. Stay on top of your game as a sales officer by keeping your sales skills sharp. You will understand the principles and techniques your salespeople are using and you will be supporting the concept of continuous sales improvement. Think strategic but use street smarts. The CSO is exposed to the latest ideas in the market and in the industries they serve. Balance the latest and greatest with the wisdom of the streets. Ask the salespeople before implementing new ideas and programs. Occasionally you may need to override their input but usually it is solid advice. Network with other CSO s. There is nothing new under the sun share your ideas and concerns with other people in your same situation. If you are a part of a CEO networking group such as TEC/Vistage, this is an ideal environment for developing and honing your CSO skills Chuck Reaves, CSP, CPAE, CSO Chuck@ChuckReaves.com O: (800 MR. REAVES) M: Chuck Reaves, CSP, CPAE, CSO is a pioneer in the latest trends, tools and capabilities in sales and sales leadership. For more than twenty years he has been assisting CEOs, sales leaders and salespeople in taking their performance to the next level. A former top producer for AT&T (number one out of 1,100), he works with Fortune 100 and start-up companies and everything in-between. He has written eight books, created hundreds of sales tools, and is one of the highest rated speakers to the world s largest membership organization for CEOs for which he has delivered more than 700 presentations. Chief Sales Officer Page 9