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Trend Hunters are Sales Leaders


The Best Sales Leaders Are Trend Hunters

by Pär Edin, Oskar Lingqvist, and Åsa Tamsons  |   6:00 AM July 26, 2012
Sales is all about hitting your numbers. The rapid fire, adrenalin-infused process of nailing monthly and annual sales targets comes with the territory. But who's aiming for targets two and three years out? It's not just a job for strategy; the best sales leaders are hunting for trends.
Future growth isn't about gut instinct or reading tea leaves to find the next big thing. Sales leaders we spoke to in writing the book Sales Growth systematically invested time, effort, and resources in figuring out where growth will come from next. Despite all the short-term pressures, the best are looking at least 10 quarters ahead. "In our international operations, we introduced a three-year sales planning process to get beyond the 90-day mentality of 'How will I make my number this quarter?'" says William Teuber, Vice-Chairman of EMC.
An automobile manufacturer got it right when it tried to crack the Indian market. The whole industry knew that there was an emerging middle class in India that would be buying cars. This company recognized that big city dealerships were already tied up with local manufacturers, but also saw that second-tier cities were untapped. Based on this competitive analysis, it decided to build relationships with a network of dealerships in these smaller markets. Within five years, the company was a top-five player in India and its return on sales far exceeded its initial investment.

Here's how the best trend hunters operate.

1. Choose the right trends. It might sound obvious, but companies often don't monitor the most relevant data. A basic materials company selling to the automotive sector, for example, drove its sales projections by the number of cars sold by region, which seems logical. However, its orders were actually tied to the number of new automotive projects (e.g. prototypes, factory modifications). The company simply got the correlation wrong. One way to figure it out is to "analyze your analysis." Trend analyses are often based on false or old assumptions that haven't kept pace with changes in the market place. Each data set you're examining should tie directly to your sales goals — selling more of a product, getting more share of wallet, etc. If you can't make that direct connection, you're looking in the wrong places. One trick is to look back 10 quarters to see whether the datasets you're monitoring now would have correctly predicted growth. If not, that's a sign that you're looking at the wrong trends. One critical way to identify the trends that matter to you is to ask yourself, how could this affect my customers? It's a basic question but one that's often overlooked when looking at long-term trends.

2. Keep it manageable. Even when you've narrowed down the trends to the ones that really matter to you, it's still easy to drown in complex models that become both time consuming to run and hard to make sense of. For example, one industrial company tried building a market growth model based on trends that sought to predict sales in all its segments. But this resulted in more than 15 market drivers to manage, impossible for a lean organization to do on a monthly basis as part of its performance management. Choosing three or four trends that drive 60–80% of the sales growth would have been a better option. You need information to help make decisions — investments, resource allocations, hiring — not awe-inducing spreadsheet models to impress particle physicists.

3. Tie insights to operations. Too many companies fail to take effective action or manage performance based on the insights they uncover. If you're still rewarding the frontline based on short-term results, then any long-term effort will fail. The best sales leaders routinely invest 2–4% of their selling costs in promising trends. Our India car example above put teams on the ground to sign up 110 dedicated dealers across India. The company also subsidized the dealers for two years to help them build parts inventory and facilities. Put in place the right metrics, and track them closely. This isn't a "bet it and forget it" approach; you need to stay on top of what's going on, and adjust. "We monitor how markets are going to develop and prioritize opportunities that will generate the best growth over the next four to eight quarters," advises EMC's Teuber.
Forward planning must be part of someone's job description — not just part of top-management's lengthy to-do list. Some companies establish formal operations — a hardware manufacturer has a team of analysts talking to venture capital firms about their up-and-coming investments, for example. Others embed forward-looking analysis into annual capacity planning.

While the challenge of spotting profitable trends even once may seem daunting, the best sales leaders do it again and again. That's because they've institutionalized the approach. Success requires a fundamental belief in finding growth in future trends and having the courage of your convictions.

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