Shareholder value is a nebulous concept. For some investors it simply means increasing the price of shares, but this is a rather short-termist definition as, especially in bubble situations, it is possible for the share-price to be rising but at the same time the company can be spending more and more on its daily business.
Shareholders own the company. So, increasing the shareholder value should be concerned with improving the long-term viability of the company. In order to do that you need to focus on the basics of customer satisfaction, having a product or service the market actually wants and not wasting resources on dead end processes.
Know What to Measure
Training your business leaders can be an extremely cost-effective way to improve company performance. Sales management training can really help by enabling them to create realistic forecasts that will reassure shareholders whilst at the same time enabling the company to plan for the future. People respect what you inspect and often forecasting is poor because you have been basing your predictions on what you expect, not on what you’ve actually measured. Poor forecasting leads to lack of confidence in the sales process, the team and lack of investor confidence which decreases shareholder value.
Implement Ways of Measuring
Whilst targets are great for focussing on specific areas there is a danger that they can become the sole motivating factor. Sales targets based simply on number of deals closed can lead to salespeople bending the truth and making claims that, ultimately, will lead to customer dissatisfaction and a reluctance to place repeat orders.
Using CRM tools can ensure that you can analyse your important metrics without needing to boil everything down to a single, overly simple, target to aim for. A CRM system can be deployed across the whole business allowing oversight of customer satisfaction, quality of sales activity and, ultimately, value to shareholders, to be assessed on an ongoing basis.
Increasing productivity increases value across the whole organisation. Ensure that you aren’t carrying “dead wood” by identifying procedures, processes and people that aren’t working to the standards you expect.
One area that often seems extremely busy without appearing to produce much can be the sales department. Of course, there will always be sales cycles that fail to close and the reasons for it are myriad. But the point at which it becomes apparent that a sale is unlikely is different for each potential client, so it is important that, instead of wasting time phoning or emailing a lead who isn’t interested, your sales team identify the leads that are more likely to buy. Moving from a model of “let’s see who we can sell to” to a commitment based selling approach that identifies hot prospects can allow you to focus on the sales that you can win, which in turn can change your company from one that wins 3/10 sales to one that wins 7/10 sales. And that has got to be good for shareholder value.