The secret sales strategy they don’t teach you in business school

ILLUSTRATION BY ALBERT G. RODRIGUEZ

I was sitting in the boardroom with the owners and CEO of an American family business conglomerate. The sales of the group had been stagnant for some time but nobody really knew why. The faces of the company directors were clueless. No one had seen a steady increase in sales, and the numbers looked bleak.

“What is your optimum sales strategy?” I asked the CEO. They had no idea. Most of them had never even heard the term. What is this strategy and how can you use it to boost your sales and revenues?

The No.1 thing every CEO should focus on

Sales are the lifeblood of your business. Yet it is surprising how little attention most business leaders, owners or CEOs actually pay to sales or make sure they devote enough of their time to it. Without sales, you are nothing. In the early growth stages of a business, the business owner and top management should spend most of their time optimizing sales. But that necessity does not go away.

When a business falls short of its full growth potential, stagnates, or even makes losses, we find almost always clear neglect of sales at one point or another.

The success of a business is a direct result of the degree of its focus on selling.

The Power Law

Peter Thiel, the German-American billionaire entrepreneur and venture capitalist, states: “We don’t live in a normal world, we live under a power law.” What does that mean and how can you use it to boost your profitability?

The Power Law means that we do not live in a world of “normal” distribution that is commonly represented by the bell curve. Instead, we live in a world where 20 percent produces 80 percent of the output. This phenomenon, which has been called the “Pareto Principle,” or the “80/20 Rule,” can be seen in both natural and man-made phenomena such as the size of earthquakes, the distribution of wealth, even box office movie successes—and yes, sales.

The Power Law explains the phenomenon that when you repeatedly focus on the 20 percent that produces 80 percent of the outcome, you additionally trigger the principle of compound interest or accelerated returns so that your growth will be exponential. Investors who use this law earn multiple times the money they invested.

In life and in business, most solutions are singular: one market will be better than all others; one distribution strategy will dominate all others and one sales strategy will produce vastly greater returns than all the others combined. Your job is to find that strategy and then focus on it so you can trigger exponential growth in your sales.

Diversification in sales is for losers

Most companies do not know the concept of the optimum sales strategy or the Power Law. They believe the myth of diversification that is still taught at most business schools around the world even though it has no practical relevance in sales.

For every company, at any given time, there is only one optimal way to get new customers. That is your optimum sales strategy.

I am often surprised how many companies do not regularly ask this question or take enough time to come up with the correct answer. They are much too busy with “work for work’s sake” instead of focusing on the few things that really matter. Remember, in business, most solutions are singular. Let me share a few practical examples from the global client roster of my global strategy and management consulting firm.

Future-proof

An owner family from a multinational food conglomerate approached us to make them future-proof, and reorganize their sales, marketing, distribution, organizational structure and supply chain from the ground up, including their long-term strategy and vision.

When we looked at their optimum sales strategy, we quickly realized that they had been clinging to the directive of the founder: put a fixed number of new products on the market every year. This directive was useful in the beginning stages of the company but we analyzed that it was no longer relevant after many decades of being in business.

On the contrary, it was so detrimental that it completely overloaded all of their distribution channels and made a focus on their optimum sales strategy virtually impossible. We analyzed their entire product portfolio and came up with a formula that allowed them to massively reduce their portfolio to focus on a few cash cow products that delivered over 83 percent of their revenue.

Follow the money

When we consulted a fast-growing Asian multimedia agency on their strategy for globalization, we asked them the same question: “what is your optimum sales strategy?” Their answer: “Our social media presence. That is where we get most of our clients.”

However, when we analyzed where most of their clients really came from, the founders were surprised to find out that they came from leveraging their professional network of contacts they have built up over the years. As soon as they realized that, we could go to the next level, which was to optimize that interaction with their personal network to generate even more sales.

The result? Exponential growth. That is the beauty of the optimum sales strategy and the Power Law.

Once you realize what your optimum sales strategy is, you can focus on it and optimize it to trigger exponential growth.

Another example: a global consulting company tried various methods to generate sales, from referrals to industry events, from publications to traditional and social media marketing. However, in the end, one optimum sales strategy dominated all others: the keynotes of the CEO. After every keynote speech, prospective clients would line up and the CEO could pick whom to work with.

When we advised a publishing company on their optimum sales strategy, they were reluctant to focus on what works and wanted to stick to textbook methods. This is a common misconception a lot of business leaders share. They are afraid to do what works if it is unconventional, unusual or out of the box, but that is precisely the point. Every business is unique so you should have the courage to follow the money, find out which strategy will generate 80 percent or more of your sales and focus ruthlessly on optimizing it.

Solutions and next steps

If you are like most businesses, which secretly wonder why your sales are not improving at the rate they should, ask yourself the following questions to find your optimum sales strategy:

1. If you are starting, re-starting, or pivoting your business:

Where will you find your customers?

Which product will be the first product that you are going to sell?

What is your plan to persuade them to buy it?

In the beginning, you will have to try out a lot of different strategies to see which will be the optimum one. Only in these beginning stages of a business should you diversify your sales strategies.

2. If you own or run an existing business, ask yourself the following question to determine your optimum sales strategy:

Which strategy delivers 80 percent of your sales? INQ

Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email Tom.Oliver@inquirer.com.ph.

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