Year after year, the State of Sales Report from Sales Xceleration shows how well sales organizations within small to mid-sized businesses (SMBs) are performing. Frankly, the results continue to be discouraging for SMBs overall, but perhaps this is not surprising considering they struggle to find and utilize competent full-time sales leadership at the Sales Manager and/or VP of Sales levels. Just how bad is the situation for SMBs? How great is the need for leadership – even at the part-time, or fractional, level? And what could this mean for you and your own career path?
Read on for answers:
The Big State-of-Sales Picture According to SMBs
The 2023 Sales Xceleration State of Sales report (our 5th annual edition), presents findings from the 2022 calendar year. It is made up of self-reported insights from leaders (one person per company: the CEO, President, or COO) representing 3,686 North American small to mid-size businesses on how well their sales organizations are functioning. These SMBs have annual revenue ranging from $1M to $100M.
What did our survey respondents tell us? Frankly, their self-assessments tell us they need help with all aspects of their sales programs. Overall, the stats indicated a 4% increase in Poor ratings from 2021 to 2022. In other words, companies continue to rank themselves Poor in having the appropriate (or any) sales infrastructure in place. A full 76% of respondents rated their sales organizations as Poor, compared with 19% as Below Average. This total of 95% negative ratings compares with only 5% of companies who rate themselves as Average (4%) or Excellent (1%).
Clearly, sales success can be improved drastically in most organizations with focused and proactive attention to four key areas:
- Sales Strategy
- Sales Methodology
- Sales Analysis
- Sales Organization
A Closer Look at the State of Sales Strategy
Our 2023 annual State of Sales survey revealed that nearly 9 in 10 organizations (89%) struggle mightily with their Sales Strategy. Just what does a sales strategy encompass? Three key components:
- Industry Positioning
- Value Proposition
Key survey insights regarding Sales Strategy show that post-COVID gains in developing sales strategies have backslid as pre-COVID operating norms have returned, leaving well-intentioned strategy development and execution by the wayside. Some 59% of respondents admitted to being Poor in the area of Sales Strategy while another 30% rate themselves Below Average. Ten percent rate their sales strategies as Average, while a measly one percent say they are Excellent. Bottom-end numbers (Poor or Below Average) are slightly worse than in 2019, the first year of our State of Sales report while top-end numbers (Average or Excellent) are also down a bit. In other words, no real progress is being reported in the area of Sales Strategy. Clearly, organizations continue to struggle on their own.
Digging deeper into specific metrics, a surprising and disappointing 54% of SMBs admit they don’t have a Value Proposition while an even more alarming 73% don’t even know what makes their company product or service offerings unique! On top of this, 57% of survey respondents admitted they don’t know their competitors in the markets they serve. Obviously, these combined factors make it more difficult for sales reps to succeed.
A Closer Look at the State of Sales Methodology
Our 2023 annual State of Sales survey indicated that more than 9 in 10 organizations (93%) continue to have trouble with their Sales Methodology. A company’s methodology includes four essential components:
Key survey insights regarding Sales Methodology show that a full 80% of respondents rated their company as Poor. This is a 5% increase in this rating over the previous year and is the worst rating in the five years of our State of Sales reporting. Another 13% rate themselves Below Average for a bottom-end total of 93%. Only 2% rate themselves as Excellent, with the remaining 5% claiming to be Average.
Lack, or underutilization, of an effective CRM factors heavily into these underwhelming ratings. Lack of clear sales processes and team accountability also brought ratings down significantly. Alarmingly, only 15% of respondent’s reported that their sales organizations prioritize sales efforts by customer potential! This, of course, leads to misguided and ineffective use of time and effort in customer targeting and sales efforts.
When it comes to sales processes, a growing number (84%) of companies report they have not documented their sales process, while 92% admit they have not educated their sales teams on the steps in their sales cycles, making it impossible to determine when a prospect moves to the next stage.
A Closer Look at the State of Sales Analysis
Our 2023 annual State of Sales survey revealed that nearly 9 in 10 organizations (89%) continue to have trouble with Sales Analysis, an area which encompasses 5 parts:
- Compensation & Incentives
Key survey insights regarding Sales Analysis show that a full three-fourths of respondents rated their company as Poor. This is an 8% increase in this rating when compared with the same subject in 2019. Fourteen percent rate themselves as Below Average – an uptick from 18% the prior year. Only 2% rate their sales analysis as Excellent.
Companies continue to decline in utilizing the right goals, metrics, tracking, and incentives. They have backslid 7% (to 51%) in Poor ratings for real-time insights into sales performance; and Poor ratings for clear sales metrics have gotten worse, as well, now standing at 78% — or 4% worse than the prior year.
One bright spot in this area is sales compensation, with Excellent ratings for building and maintaining the right compensation plan up 5% to a 19% level. This has likely been driven by market forces due to keen competition to attract and retain top sales talent.
A Closer Look at the State of Sales Organization
Finally, our 2023 annual State of Sales survey revealed that nearly 9 in 10 organizations (87%) continue to experience difficulty with their sales organization, including these four areas:
- Roles and Responsibilities
Sixty-eight percent of respondents rated their sales organizations as Poor, compared with 63% the prior year. Another 19% rated their organizations as Below Average while Average ratings came in at 10% and Excellent ratings at 2%.
Overall, in this category, it is clear that companies are not doing a good job of investing in their sales teams. Some 62% don’t have an onboarding process for new reps, while 57% do not define in writing their sales resources, roles, and responsibilities. Worse still, a full 92% do not address gaps in sales competency when identified. These negative realities can certainly impact employee recruitment and retention. According to a recent Forbes article, 94% of employees indicated they would stay with an organization if it invested in their career development.
Bottom Line: The Case for Fractional Sales Leadership Consulting
Clearly, SMB sales organizations continue to underperform. While they appear to be aware of their deficiencies, they seem to be ill-equipped to correct their shortcomings. Perhaps this is why 90% of companies say they are looking at outsourcing one or more functions.
However, the bad news for SMB sales organizations creates good news and incredible opportunity for outsourced fractional sales leadership consultants. In addition to intangible benefits like reduced travel time and more time with family, as well as the ability to work with renewed purpose and make a difference for smaller organizations where the need is greatest, success as a consultant is statistically very likely.
Certainly, the need has never been greater – which means the opportunity has never been more appealing. Better yet, Sales Xceleration currently has opportunities available in all North American metropolitan areas and certain international markets. We’d love to help you determine if sales leadership consulting as a Sales Xceleration Advisor is the right path for you. To learn more, click here or contact us at 844.874.7253.