The 2 Mistakes Sales Leaders Make When Trying To Close A Revenue Gap


Originally published in Forbes

By Randy Illig

I recently had the opportunity to ask sales leaders from over 100 companies what was the No. 1 challenge they were facing.

All but one of them expressed concern about a significant gap between their current performance and their target, between where they might end the fiscal year and their plan.

That wasn’t terribly surprising.  But what did alarm me was that these leaders were making two huge errors in meeting that challenge and closing the gap:

  1. More than half of them hadn’t properly analyzed the size of that gap.
  2. No matter what the gap was, nearly all of the leaders were trying to close it in the wrong way.

Let’s explore what you can do to avoid falling into the same traps.

Problem No. 1: Sales leaders often don’t know the true size of the gap.

The sales leaders had forecasts upon forecasts, but they hadn’t gone any further. Forecasts are inherently error-ridden, full of poorly qualified and often stale opportunities.  What is needed is more precise data that comes from the sales people and is scrubbed through discussions with their leader.

Here’s how to get more precise data from your team:

  • You have an existing momentum of your business that will produce some amount of revenue with little to no additional effort. Identify that number.
  • You then have what we call “stroke of the pen” initiatives: investments or activities you could execute through your positional power and authority. For example, you could raise prices, launch a new product or buy a company, for example. Estimate the amount of revenue you could bring in that way.
  • Add up the momentum of your business, plus the revenue you could gain through “stroke of the pen” initiatives.
  • Now subtract that total from your target. That’s your real gap.

About half of the leaders I worked with hadn’t thought through this process and were unable to pinpoint the size of their gap. And it’s hard to solve a problem you haven’t accurately assessed.

Problem No. 2: Sales leaders are addressing the gap all wrong.

Whether they’ve sized the gap well or not, sales leaders almost always have a long list of smart strategies to close it—launching campaigns, making bold investments. And that’s precisely the problem.

They’re operating with the hypothesis that the more bets they have, the more likely they are to hit their number. There’s comfort knowing they have multiple shots at hitting a goal: I have five great bets, and certainly one of them will carry the day.

But FranklinCovey knows from years of research that the more bets you place, the less likely you are to hit your number. You’re diluting your resources, energy and focus across too many projects. It’s the law of diminishing returns.

As stated in our bestselling book The 4 Disciplines of Execution: “If a team focuses on two or even three goals beyond those demands of their whirlwind, they can often accomplish them. However, if they set four to 10 goals, our experience has been that they will achieve only one or two. They’ll be going backward! If they go after 11 to 20 goals … they’ll lose all focus. Confronted with so many goals, the team members will stop listening let alone executing.”

Here’s how to focus:

  • Instead of having four, 13, or 21 initiatives to close your gap, determine what would be your single best bet. What is that one thing that, if you put all of your focus and energy behind it, could help you more predictably close that gap?
  • If you’re not convinced that one bet would be sufficient, calculate how much that one bet would impact—you’ll usually find it covers 75, 85 or even 90% of the gap. Not bad. Additionally, when you exercise the discipline to align all of your resources, people, energy and investments around a single bet, you’ll also see a halo effect where that laser-beam focus raises the general momentum of the business.

It can be scary to say, “We’re going to shut down those 11 bets we made. We’re going to figure out what our best bet is, and we’re going to maximize it.” Leaders in all different industries across the United States are struggling to do this—and then they’re confused when they fall short of their targets.

While it might sound counterintuitive, the more you do, the more likely you are to fail. Focusing on a single, high-impact idea is much more likely to get you where you need to be.