How’s Your Product Mix?

One of the most critical choices that an executive or entrepreneur can make is to determine which sales/revenue opportunities to pursue vs. which ones to pass on. How do you determine where you will allocate your time, your resources, and your talent? Do you use a rational decisioning process to arrive at the right conclusion or are you the person that is often second-guessed or proved wrong because your decision was made irrationally and you arrived at your conclusion by default, osmosis or some other unknown process?

For purposes of this posting, I will exclude the greener pastures of decisioning new sales opportunities and focus on the most overlooked area of opportunity assessment which is prioritizing decisions surrounding sales of your existing products and/or services.

It has been my observation that many sales plans simply evolve for no quantifiable, qualifiable, or tangible reason other than just because Following are the top 10 reasons not to pursue a particular sales opportunity:

#10: Because a strong sales or product manager flexed his/her muscles and pushed their bias;

#9: To seek static gains in a vacuum buy just looking for increases in quarter over   quarter sequential revenue growth;

#8: To buy business in order to gain market share;

#7: Because more marketing budget exists for Product A vs. Product B;

#6: Because the sales force can’t seem to get traction with Product X;

#5: Because the sales force is getting traction with Product X;

#4: Because the ad agency made a good pitch;

#3: Because the market research said you had a competitive advantage;

#2: Because your competition does it, and;

#1: Because it’s always been done that way.

Some of the aforementioned reasons if encapsulated in an overarching strategy may not in and of themselves be bad reasons to pursue a sales opportunity. However, in the absence of a plan and standing alone in a vacuum they will result in wrong choices being made more often than not. To avoid the common mistakes outlined above to conduct a thorough comparative analysis of all product and service lines assessing the following key metrics:

€¢ Cost of sales and profit margins;

€¢ Length of selling cycle;

€¢ Sales/revenue obstacles;

€¢ Competitive analysis;

€¢ Current market demand;

€¢ Potential for future market growth;

€¢ Ability to further brand recognition/growth;

€¢ Quality and quantity of available talent and resources supporting a particular product or service line;

€¢ Execution and delivery capabilities;

€¢ Post sale costs of service;

€¢ Ability to add to lifecycle value;

€¢ Recurring revenue vs. one time revenue, and;

€¢ Creation of additional revenue opportunities.

Take the above metrics and plug them into a grid ranking each category from highest to lowest for each product or service line. In addition to individual rankings also create a weighted rank based on the metrics that are most important to your business. Lastly create a blended score for each product or service line. Conducting this type of analysis will help you determine where you should be placing your emphasis for the purpose of moving you toward a best practices approach when creating a well engineered sales plan.