The CFO and sales leader have significant impact on their company’s ability to deliver on its strategies through processes. Unfortunately, the relationship between finance and sales is often more confrontational than collaborative. Given CFOs’ expressed interest in spending more time understanding customers — and sales teams’ concerns about re-engaging and re-energizing relationships strained by the pandemic — now is the ideal time for these reluctant partners to get together to improve their ability to measure and grow the “relationship capital” on which sales and enterprise growth depend. The author offers four strategies for focusing on customers and the customer experience by reducing friction between the CFO and sales leader. The guiding principle should always be to value people before processes.
During two recent business relationship seminars, I asked groups of assembled CFOs, “How many of you reduce your sales leader’s forecast 25% or more each month?” Without exception, every hand went up, with many pointing to the sky, indicating that they need to discount the forecasts even more. After many sets of eyes stopped rolling and comments faded, my next question was, “Why?” Here’s what I heard:
- Our sales leader’s forecasting track record is inaccurate.
- Our CRM system gives incomplete data or doesn’t connect with our other data, so we can’t really see what’s going on.
- The pandemic has changed customer buying patterns, calling all forecasts into question.
- Our goals aren’t aligned. The CFO is focused on cost and efficiency, the sales leader on revenue and growth.
- We’re just different people. CFOs are trained skeptics, whereas sales leaders have to believe the next call will produce a deal.
Unfortunately, our years of experience and research support the above, the result being that the relationship between finance and sales is often more confrontational than collaborative. The consequence: Internal friction that wastes energy that could produce the profitable growth both parties (and the CEO) want. Intramural friction is especially damaging for middle-market companies, whose processes are informal and rely on personal interaction.
Having started my career as a CPA, moving on to various sales leader roles, and now having helped hundreds of CFOs and sales leaders work better together, I’m convinced that both parties have nothing but the best intentions toward each other. I’ve also seen how dramatic the benefits of collaboration can be. For example, the CEO of a heavy equipment company in the Southwest that grew sales from $325 million to over $600 million in two years told me that the relationship and shared goals between the CFO and sales leader was the number-one reason for that extraordinary growth.
If ever there was a perfect time to reduce the friction between the CFO and sales leader, it’s now. After a year of caution and retrenchment, CFOs are as hungry for growth as their sales leaders — our studies show that, across the middle market, CFOs pick top-line growth over profitability by a nearly four-to-one margin. The straightest line to growth goes through the sales leader. A study by the National Center for the Middle Market shows that for midsize companies, the combination of sales force effectiveness and retaining profitable customers has more impact on growth than any other capability — 45% more than operating efficiency, 60% more than entering new markets, and more than two-and-a-half times more than innovation. It’s no wonder that more than 87% of CFOs tell us that they expect to spend much more time focusing on customers and the customer experience.
Now is the time, but what’s the path? To get meaningful results, CFOs and sales leaders should consider the following four strategies.
Invest in sales training and development. Training salespeople pays off quicker than almost any other expansion activity and is especially important now, because customer buying behaviors and the demographics of buyers are changing. Investment should be directed toward creating a “hybrid” sales force that’s as skilled at virtual selling as it is at face-to-face selling. Yet when CFOs are asked where they would put an extra dollar of sales force investment, they would allocate almost twice as much to putting more feet on the street than to training current staff and upgrading CRM software. This even though three out of five CFOs say their sales teams are concerned that Covid restrictions on meetings and travel will hurt their ability to meet targets — which again suggests that upskilling to hybrid sales models and tools might be the better investment.
Improve forecast accuracy and transparency by measuring the strength and value of customer relationships through business relationship assessments and CRM tools. Sixty percent of middle-market and emerging enterprise CFOs say they lack data to measure the value of customer relationships. Sales executives say much the same: 88% of sales executives agree that strong relationships have a significant impact on business, but only 24% say they use a formal and consistent process to create, sustain, and improve relationships, according to an internal study we commissioned from the Candice Bennett market research firm. Therefore, both parties have an incentive to develop shared measurements of relationship value and a process to increase it.
Focus on key strategic relationships. As a rule, a company’s best customer relationships are also its most profitable accounts. This makes them a natural focus for CFO/sales leader collaboration. Our research shows that even the best relationships function at less than half their potential, as measured by indicators like whether the buyer and seller talk to each other about strategy, share personal confidences, or spend extra time together. Together, CFOs and sales leaders can identify, measure, and support each other in getting more of the potential from these great customers.
Close the cultural gap between finance and sales by developing common data and — more importantly — common goals. Often, sales team incentives and targets are only loosely connected to the profitability goals CFOs pursue. Connecting tech stacks, agreeing on shared KPIs, and creating common dashboards would help finance and sales move from finger-pointing to handshaking. This is where upgrading or replacing CRM systems can help.
It’s important to do all of the above together. Each strategy can help on its own, but each one multiplies the benefits of the others; in particular, the impact of CRM investments will be much greater if accompanied by investments into relationships and sales training.
However, the most important strategy to reduce forecast friction and unlock growth potential can be found in the example I cited earlier, and it’s actually very simple: The CFO and sales leader should focus on and prioritize their own relationship first before the relationship between the finance and sales functions. Businesses are designed and driven by well-defined organization charts and processes, but when they stumble, it’s usually because of people, not processes. Weakness or lack of intention in relationships will blur the sharp lines of processes and hamper performance — again, especially in the middle market, where teams are small and a few people can make an enormous difference.
The CFO and sales leader have significant impact on their company’s ability to deliver on its strategies through processes. Given CFOs’ expressed interest in spending more time understanding customers — and sales teams’ concerns about re-engaging and re-energizing relationships strained by the pandemic — now is the ideal time for these reluctant partners to get together to improve their ability to measure and grow the “relationship capital” on which sales and enterprise growth depend. Therefore, it all starts with the relationship between the CFO and sales leader. The guiding principle should always be to value people before processes.