Recently, I decided to analyze the business sales models of Enron and other large technology companies, which have stumbled (and are continuing to stumble) in the current economy.
As the economy continues to chug along, everyone is in search for the definitive turn in the market. Yet, when you sit back and look at the failure of Enron and as well as other public and private technology companies like them, many of these failures can be linked to incorrect sales quotas and poor sales operating models, not just the economy.
Yes, there were lots of "adjustments" in the accounting department at Enron and others. But these adjustments were made to cover the lack of top-line revenue growth previously forecasted to Wall Street and then assigned to their sales teams.
As the sales forecasts were not met, and corporate general and administrative costs increased in anticipation of the sales forecasts, lack of profitability followed. To offset rising costs, the accounting department managers made the now widely discussed adjustments.
So, here's what I discovered about Enron's sales operating model: Its sales forecasts were inaccurate. The company marketed technology--not customer needs--and it believed in relationship marketing to sell large long-term sales cycle deals.
If Enron's sales forecasts were met or if they aligned their sales operating models more accurately to the current market, what would have happened? The price of their stock would have gone up, Wall Street would be happy and their funky accounting methods would have been hidden on some annual report as a line item transaction buried in accounting jargon.
Enron's failure appears to be due, in part, to their inability to forecast technology sales quotas correctly and adapt their sales capture model.
So, here we sit in the last quarter of the calendar year--the time slice where IT sales managers, VPs of Sales and CEOs start juggling revenue forecasts to determine next year's goals.
Is Your Firm an Enron in the Making?
It's now time to calculate corporate sales numbers and roll them up to senior management to be reviewed and accepted. But are your IT sales forecasts for 2003 accurate? Is your firm still talking technology when customers are buying value?
To help analyze and predict the success of your firm's IT sales in 2003, take The 2003 IT Sales Planning Success Test. It seems like such a simple test, but your answers say depths about your firm, its current sales model, and your potential success next year.
To get a more accurate score with the test, have your sales team and your executive team take the test separately and then compare scores.
The 2003 IT Sales Planning Success Test
1. Does your firm use an outbound IT sales model?
Yes • No
2. Does your firm calculate accurate sales quotas?
Yes • No
3. Does your firm's marketing department focus on your IT's features and functions more than your client's business pain?
Yes • No
4. Does your firm believe in relationship marketing instead of transactional marketing to generate fiscal year revenues?
Yes • No
5. Has your firm done a market demand review for the last six months for the technology or services you sell?
Yes • No
Answers (score 20% for each correct answer)
So, what's your score? Did you pass?
Is the sales team's score different than the executive team's?
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"People can make or break a company. Management can do whatever it wants with the banks and borrowing and manipulating and everything else. If the spirit of the people isn't in everything they do, it's going to fail." Vic Barouh