Tag Archives: sales effectiveness

Typical Sales Metrics…for sales managers who have never sold before.

6 Mar

Never been a sales person but now you find yourself managing a group of sales people?

Whether you’re the CEO of a midsized company or a senior manager who has been assigned the task, you’re going to get a lot of well-meaning suggestions on how to manage.  Press hard on results!  Inspect what you expect!  Always move out the bottom 20% of performers!  If you don’t show a willingness to move out non-perfomers then you’ll never gain their respect!  Expect a lot and you’ll get a lot.

Well I will offer up a suggestion also, based on decades of managing hundreds of sales people.  Here are a few thoughts for you to consider before I offer up some management metrics;

  1. Sales people are people.
  2. Sales people are one of the only employee groups that have to fill up their own in basket.
  3. Sales people are one of the few employee groups that have to fight through 5 failures to get one success.
  4. Sales people are one of the few employee groups where 30 to 100% of their compensation is entirely dependent upon their skill, will and tenacity to persevere on a daily basis.
  5. Sales people are the only people who actually go out every day with the sole focus of building your top line revenue.

If you’re going to be a successful sales leader then you should expect a lot.  But you won’t get a lot unless you give a lot…of yourself.

Okay so here’s the metrics I promised.  You should first identify the sales process (cycle) because all sales metrics spin-off the sales cycle;

  1. Suspects – a list of prospects who are likely to be qualified for your products or services.  Most companies buy lists of prospects.  Most people call them “leads”, but that’s a misnomer.  Leads are qualified prospects who have indicated an interest in knowing more about your product or service.  If your database of suspects have not responded to your marketing efforts then they are suspects. 
  2. Prospects – These are suspects who have been qualified.  Generally qualifying prospects has to do with financial ability, a potential fit as a target and is likely to have latent or blatant need for your product or service.
  3. First Presentation – A first meeting between your sales people and a prospect.  There is an exchange of information, your sales person is trying to qualify the prospect and uncover those latent or blatent needs.  The prospect is trying to decide if further discussions warrant any further investment of time.
  4. Needs Analysis – The sales person has found out enough about the prospect to see a good business fit and the prospect sees enough potential benefit to investigate the opportunity in more detail.  This stage of the sales cycle is all about investigation.  The results of that investigation will populate a proposal which is usually presented in the form of a proposal.
  5. Formal Presentation – Your sales person has worked through contacts, influencers, gatekeepers and key influencers to get decision makers into a formal discussion of the needs analysis findings.  The sales person uses this meeting to shape a discussion around the business fit of a business relationship.
  6. Decision Pending – This is where great sales people separate themselves from good sales people.  A good sales person has done an excellent job in the formal presentation and awaits the answer.  A great sales person has developed their contacts over the previous five stages to turn-key influencers into coaches.  They artfully work those relationships so they have enlisted several “internal sales people” who are selling the product/service even when the sales person is not there.
  7. Negotiation – Usually at this stage the prospect is trying to shape the offering to further fit their needs around price, performance and image.
  8. Program Approved (Implementation) – At this stage a good sales person will hand off implementation to an account manager or service group.  A great sales person will stay intimately involved until they are sure the new client gets precisely what they wanted, and that their employer gets all of the potential revenue & account penetration possible.

Okay…so where’s the metrics?

The metics that define the effectiveness of the sales person are the success ratio’s (conversion or close ratio) from First Presentation (step 3) to Implementation (step 8).  For business to business sales people the overall close ratio is usually around 16%.  In other words for every 6 new prospects that a sales person meets with will become a new client.  And here’s your AHA moment.  If you have a sales person who is falling dramatically below expectation you have a choice to make.  You can fire them and hire another sales person.  I will warn you that you only have a 1 in 3 chance that your new sales person will be better than the one you just fired.  Your other option is to peel this onion back another layer and find out why that sales person is failing.  If you’re willing to invest that time your odds of improving results are greater than 1 in 3!

Here are some pretty dependable step by step close ratios;

  • 80% of prospects who receive an effective first presentation ( Step 3 ) will want to understand the potential benefit ( Step 4 )
  • 65% of prospects who participate in a needs analysis ( Step 4 ) will be willing to coordinate a Formal Presentation ( Step 5 )
  • 85% of prospects who participate in a Formal Presentation ( Step 5 ) will make a decision ( Step 6 )
  • 60% of prospects that make a decision ( Step 6 ) will want to negotiate ( Step 7 )
  • 60% of prospects that negotiate ( Step 7 ) will eventually implement ( Step 8 )
  • 16% of prospects that will receive a First Presentation ( Step 3 ) will eventually become a client ( Step 8 )

If you’re willing to peel back one more layer you can set up a sales excellence template.  Let’s say you need for sales people to deliver 16 new average sized clients every year.  You can now take that goal and run it backwards through your sales cycle and create a template.  On an annual basis your sales people should have a sales pipeline that looks like this;

  • 100 First Presentations
  • 80 Needs Analysis
  • 52 Formal Presentations
  • 44 Decisions Pending
  • 26 Negotiations
  • 16 Implementations

 

So now you know all the metrics you need to know.  But what are you going to do with that underperforming sales person?

If you compare an individual’s sales pipeline to the sales excellence template you can easily identify exactly where that struggling contributor is failing.  For instance you may find that sales rep. A is failing miserably.  But on further examination you see that they are extraordinarily good in the latter stages and extraordinarily weak in the early stages of the cycle.  Conclusion?  Improving this sales person’s ability to set appointments and make compelling first presentations may turn them into a sales star!  In other words…why start from scratch and take on all the risks of a new hire until you know if you can help struggling performers catch up?

Next steps?  Meet with your sales team.  Get them to validate your sales excellence template and step by step close ratios.  Then run your meetings based on these metrics.  Strugglers will begin to see where their pain is and ask for help.  If you are willing to help them…they will always return the favor ten fold.

Sales Managers! Sorry to be the one to tell you, but you’re not perfect.

21 Nov

Do you consider yourself to be an excellent sales manager?  I imagine you do, it’s difficult to imagine that any manager would continue to perform any task in a way that wasn’t working well.

But if you’re ever lucky enough to experience a formal upward feedback process fasten your seatbelt because you’re going to get some shocking results.

In my first sales manager roll I was ready to become that perfect manager.  I tried my hardest to be fair, treat everyone similarly, give clear direction and begin to build a high performance culture.  When I got my first feedback I got a lot of compliments, great scores compared to my peers…but I also read some shocking comments and saw that I had a lot of room for improvement! 

Let me share some of the shock.  “Greg plays favorites”, “he doesn’t make it clear what is expected of me” and “he doesn’t give me the freedom to do my job.”

How is this possible?  Me?  But my overall scores were some of the best in a very large company!  How could I still get these kinds of comments?  Since my upward feedback came from direct reports and from another level down I began to investigate.  But first a little secret.  If you want to know more about what you are doing that will drive people’s impression of your leadership you’re going to have to share some of the information about your feedback.  In other words, you’re going to have to admit that you’re not perfect, but you care enough to want to change.  Once I decided that I was willing to do whatever it took to become a better leader the rest became a little easier.

So I began to call a few of my direct reports.  I shared with them where I was doing well but also shared my lowest scores.  And even though those lowest scores were not a disaster they were still my lowest scores and they needed improvement.  I shared a few of the comments made and asked them what I was doing that was damaging my credibility as a leader.  Once you’ve opened that door get ready for some very interesting information.  I remember asking one of my direct reports, (still a close friend today) what I was doing that would cause people to believe I played favorites.  Bob told me that when he held meetings that people would comment “Greg called me about that subject last week and he said…”  Well after several weeks of hearing this one sales rep nearly broke down and blurted out “Greg never calls me about anything”.  That was really interesting!  I thought it was a very good trait to always be reaching out and getting information about what was going on in the field, but was totally unaware that the way I did it was making some people feel left out.  You can say they’re too sensitive, but what I learned was that my intentions are irrelevant!  People will form opinions about your actions, not your intentions.  Bob gave me another example; he told me that some people commented that I always sat by the same people at meetings or team meals and this may be leading people to believe I had favorites.  From my perspective I was flying around the country nearly every week, sometimes visiting four cities…that’s four meetings, four half days of joint calls and four team dinners.  I was sometimes exhausted and probably did look for a seat near people I knew.  But if you put yourself in a sales reps shoes and think that Greg has come to town four or five times and always sits by the same people you’re probably feeling very left out.  Both of these were pretty easy to fix.  I continued to make calls to reps to get their input, but I kept a roster by the phone and put checks by people I called so that I wasn’t calling the same people all the time.  And I continued to fly around the country attending meetings, making joint sales calls and going to team dinners.  I just made one little change, I looked for a seat next to someone I didn’t know very well.  You know what?  Very small changes, very big changes in my leadership credibility.

So what’s the learning?  For me it was that I do not own my leadership credibility.  My credibility as a leader is owned by the members of my team and they will give me credibility when I earn it, not just because I want it.

So I think that you probably are a good manager…at least in your mind anyway.  Are you brave enough to find out if you’re as good as you think you are?  If you have the courage to open yourself up, then you have the potential to move from a good manager to a great leader.

When Sales Promotions Don’t Work Out

10 Sep

So often you hear of sales people failing to make the grade after being promoted.  Why is this?  Are sales people simply not cut out for more senior positions?  Are the skills that make a sales rep. shine no longer valid as the promotions come?

Over the years I have witnessed sales people struggle mightily after promotions.  Usually they don’t fail, but they are not able to make the same outstanding contributions as a manager as they did as a sole contributor.  To understand this you should first think through how the roles change from sales rep. to field sales manager, to regional Director/VP.

Sales Representatives – The core them of any sales position is making the sale.  While each industry commands different responsibilities and practices, the primary focus is common to all – to successfully complete the sales.  This includes;

  • Making initial contact with prospects, qualifying prospects.
  • Meeting with prospects to identify, understand and seek concurrence of prospect needs AND the implications of not addressing those needs.
  • Maintaining continuous communication with prospects throughout their buying process, while building a coaching network.
  • Continuing to pursue the sale in the face of rigorous resistance.
  • Identifying & communicating the benefits of addressing the prospect’s needs to decision makers and key influencers.
  • Closing the sale.

So along comes the first promotion…field sales manager.  So the refined skills that made the sales rep. a stand out are a good basis to work from but look how the job changes.

Field Sales Manager – The theme of this position is driving the team to sell.  The sales manager cannot personally ensure goal attainment, they must reach goals through the efforts of others.  The first level sales manager is a player coach.  The best usually invest about 30% of their time helping close the most valuable prospects, and then invest 70% of their efforts ensuring that the team results are maximized.  This job is very complex.  It is most natural for a newly promoted sales person to mismanage their time.  They may very well spend 70% of their time helping close business and only 30% of their time developing the team.  This will most often result in a sales plateau.  So in addition to the skills listed for sales rep the sales manager has additional skills required,

  • Concern for Order – Like Stephen Covey documents in his 7 Habits book it is very easy for the manager to run from task to task trying to meet all due dates while investing what little time is left helping close business.  An effective manager will arrange their calendar to ensure they are spending time with all team members.  Maybe not equally the team results will drive more success than the manager’s personal sales contribution.
  • Coaching and developing others – This is more difficult than it sounds.  Many of the skills that made them successful as a sales rep have moved from conscious efforts to subconscious habits.  It is a difficult transition to move from doing to helping others do.
  • Creating & maintaining effective work teams.  This includes internal team members as well as collaborating with other symbiotic departments.

Okay, let’s say our candidate is an incredibly entrepreneurial and is able to make the transition from rep to sales manager.  What’s next?  Regional Director/VP.

Regional Director/VP – The core theme changes from driving a team to sell, to managing a larger organization.  The job has taken a turn towards analytical thinking, matching resources to potential, creating efficient infrastructures of materials and organizational resources to support the regional sales efforts.  The RVP does not create the sales strategy, but uses their skills to ensure execution of the plan.  The RVP must communicate upwards to clearly and honestly keep senior management appraised on forecasts, product and customer input.  Additionally the entire region looks to this person as the Company’s idea of how they define leadership.

  • Analytical Thinking – The RVP must be able to rise above the level of any one particular customer or prospect.  They must look at the sales pipeline as an aggregate indication of the effectiveness of all teams.  They must be able to translate pipeline analytics into action plans including training, product/service redefinition and as a tool to coach & develop their sales managers.
  • Using Business Expertise – By now the successful incumbent has accumulated enough industry, product and customer experience to understand not only what the sales pipeline looks like…but is able to anticipate what it should look like and is able to formulate tactical plans to guide the regional to sales plan attainment.
  • Enabling the team – The incumbent is accountable to communicate to senior management exactly what is needed in order to make plan.  When sales teams face obstacles they rely on the RVP to identify & acquire resources to help them overcome these roadblocks.
  • Training and developing people – The RVP must make themselves accountable not just to their direct report’s development, but for every member of the regional sales team.  Keeping up routine inspection of individual, team and regional pipelines can help the RVP see trends.

So why do people struggle as they move along this track?  Well, I’ve worked within some very large sales organizations and made it to top sales officer.  From my perspective the failure of people falls on the shoulders of their employer.  Field sales is one of the only departments where you sit miles away from your boss.  You do not get the daily coaching sessions.  The accidental conversations that take place in the hallways simply never occur in field sales.  To make matters worse I have not seen leadership training offered to newly promoted sales managers.  There are not training courses on how to interpret the sales pipeline.  How to create developmental action plans around the analytics of the pipeline.  We do a disservice to the organizations most valuable commodity…people.  Not only do we leave the newly promoted manager swinging in the wind…but we withhold excellent leadership from the sales people who depend upon their manager to help them succeed.

I know this is ending up in a rant…but if you want different results perhaps you need to do things differently.

What’s More Important? Sales Cycles or Buying Processes?

12 Jul

Unformly CRM platforms focus on the user’s sales cycle.

No wonder so many sales pipelines can’t forecast sales with at least 90% certainty.  The sales cycle assumes that the sales person’s last task completed is a good indicator of where the customer is in their decision process.  Far too many sales people mislead themselves and produce a pipeline of prospects that is chock full of unqualified opportunities that may have already stalled out.

Think like a buyer…you’re somewhat interested in a new leading edge product, you think it may save your company some money but you need to collaborate with other department heads to ensure that the new service is good for all departments.  Meanwhile that pesky sales rep keeps calling wanting to know when you’re going to make a decision on the proposal they sent you.  What?  I’m not even sure I want any product, let alone if yours is the best.

Sales cycles are simply a list of sequential tasks that a sales person performs in order to move from introduction to close in an orderly fashion.  BUT please!  Align those tasks with the customer’s buying process!

Are You a Hard Helper or a Hard Closer?

24 Jun

I think most of us have the same visual image of a hard closer.  A slick dresser, everything’s perfect including the shiny shoes.  They know more closing techniques than anyone else on the team.  You say your prospect has put off the decision for a week or two and they chime in “you should have used the take away close”, before you can finish your sentence.  There are some things to be admired about hard closers and they will get a few deals that only they could have gotten.  But does that mean that they are the master sales people?

Then we have the hard helper.  They understand & honor the prospect’s buying process.  They work hard to collaborate with multiple contacts within the prospect’s organization…to build consensus & identify obstacles.  They are continuously active and prospects love them!  You know who else loves them even though they will never meet them?  Shareholders!  Clients that are sold by a hard helper stay sold for a very long time.  The net present value of these clients is markedly higher than the average client.

So which one is better?  It’s an interesting question.  The top 2% of your reps are actually both hard helpers and hard closers.  But they’re a little different from the person alluding to in the first paragraph.  They close very hard but asking tough questions about the impact of doing nothing!  They keep reminding the prospect of the agreed upon needs & benefits and emit urgency on taking action!  The next 18% of your top performers are hard helpers but not hard closers.  They do an excellent closing job but may back off when they perceive the risk of a no. 

The next 30% of your reps might just be going through the motions.  They are performing tasks.  Make a call.  Make a presentation.  Generate a proposal.  Follow up on the proposal.  Ask for an order.  It’s okay I guess because they bring in enough business to warrant a congratulations.  So let’s call this group the “as expected performers.”  So the question is how do you turn as expected into above expectation.

I don’t really know the answer to that question without knowing your company & products.  But I can tell you that most often I have found the issues to be;

  1. There has never been a core theme to sales training.  You can’t expect continuous improvement in sales effectivenss if you keep hiring the trainer de jour.
  2. First level sales managers are smart, but they need help.  Give them an ounce of leadership training and watch the numbers soar.

I’d like to know your thoughts on this topic.  Please leave a comment!

What Is A Quality Sales Organization?

21 May

When networking with other sales reps early in my career I began to see correlations between the various sales organizations and the type of sales people they attracted & retained.  It was very interesting to hear people describe their sales cultures, compensation plans, management’s leadership style and the employer’s focus on client satisfaction.  Over time I was promoted several levels, each new role required a relocation to another part of the country.  Through networking I continued to accumulate a diverse collection of perspectives from sales managers from a variety of industries.

My career journey led me to NYC leading a National Account group.  This was more of a business development role leading a team of 8 people and managing the relationships with a dozen accounts that generated $1.3 Billion in annual sales.  This was the capper to my experience as business development forces you to consider client satisfaction, a strong interaction with operations, client profitability and new sales.  I won’t bore you with the details but we did create a very interesting client service agreement.  Each quarter we contracted four goals with our clients.   Two goals came from the client and usually included one customer service goal and one goal that would help our contact attain their major job objectives.  We also then had one goal that the Account Director was able to set that would help them achieve greater account profitability and one sales goal (like an introduction to a sister division) that would be validated only after the two client goals were met.  This was a great tool that minimize attrition and creating a very positive climate for cross selling & account expansion.  After two years this portfolio grew to $3 Billion annually and we did not lose any clients.

My final career destination was to build a new sales organization within an existing Fortune 500 company.  I poured everything I learned into the culture of that sales organization and it paid off royally.  In four short years we moved from non-existant to an organization acquiring over 5,000 new clients annually, producing an incremental $180MM in sales with each new annual batch of clients.  The NPV of these clients was nearly double that of any other client portfolio.

So here is what I learned about sales cultures and what makes a “Quality Sales Culture”. 

There are three parties (constituencies) that are affected by the culture you build.

  1. Clients – Your focus on making reasonable commitments and then driving over-delivery will payoff in a huge way.  The Net Present Value of your client base is driven by retention rates and gross profitability.  You can easily model the value of high customer satisfaction by raising your client retention rate by 5% and improving gross margins by 1%.  This is the value of ensuring that your culture demands a high customer satisfaction rate.  I dumbed down these numbers.  You can acheive much better benchmarks if drive customer satisfaction into your sales culture.  It will not only make them believers but their closing ratio’s will be dramatically better.
  2. Shareholders – This is the easiest constituency to satisfy or dissatisfy.  If your Business Development Efforts focus on customer service delivery within a cross selling framework, and your sales efforts are highly disciplined around skill, will, execution and leaderhip it is nearly impossible to disappoint investors in your company.  I do believe that investors have now learned that mid term results trump short term returns.
  3. Employees – Why bother?  Because clients and shareholders will never get the best possible outcomes if your employees are distracted.  Sales people and account managers should get all the direction & support they need to create healthy, profitable client relationships.  People who are distracted by poor leadership, non-existent training or poor customer service attitudes will never be able to deliver to their potential.

So what’s the conclusion?  Senior Leaders must balance their focus.  I know that in this economy the shareholder will get more attention than employees but in the end that’s a bad tasting medicine that we know is good for us.  But you still need to balance your focus reasonably.  Focus 80% on shareholders, 10% on clients and 10% on employees is a losing tactic.  When the economy begins to improve you will have a lot of issues to fix and you may miss out in that growth.

Assuming you have some employee goodwill on your asset sheet, in today’s economy I would recommend a focus of 45% on shareholders, 35% clients and 20% employees.  I think you can get through the next 18 months providing you keep the communication level high so employees know they’re valued but investments in them are on the back burner for the short term.

In the longer term my focus would be 40% shareholder, 30% clients and 30% employees.

If you are interested in more discussion on this topic please leave a comment with the specifics of your interest.

Sales Cultures, Is Yours Heart Healthy?

7 May

I know you’ve heard someone say, “We have a high performance culture here at Amalgamated.  We have high expectations of all our people!”  So, if you’ve been a member of a larger national sales organization how often did the term “high performance culture” turn out to have any benefit for you as a person in the trenches?  Did the leadership team have high expectations of themselves on creating a sales culture that was not only good for shareholders, but also good for clients and employees?

Sorry for a little culture slamming, and I won’t mention any companies, but here’s the facts m’am.

“We have a high performance culture” usually means we are going to expect a lot from you.  Okay, fine.  But what can I expect from you in return?  Can I expect a vibrant lead generation program?  Can I expect to have a manager in my corner who will routinely carve time out of their schedule to help me succeed?  Instead of telling me that I’m not doing enough can you tell me how to do more?  Can I expect to have up-to-date sales collateral so my presentations help prospects visualize the benefits of our programs?  When I bust my hump to over deliver can I enjoy even better rewards next year or will I bask in the sunlight with dramatically increased goals coupled with dramatically lower commissions?  In other words, will you invest as much in me as I am being asked to invest in you?

First I would like to propose a definition of what an organizational culture is;  The quality that arises in a person by virtue of belonging to a group.  That person’s behavior begins to reflect what they have learned through training and observing others in that group.  With time, the members form agreement with what the group prizes as excellence.  So with my definition of culture let me disclose something else.  I am a huge believer in building a culture that benefits clients, stakeholders and employees equally.  I believe strongly that satisfied employees will deliver a superior service, which customers will be willing to pay for…and stakeholders like that outcome.

So where do you begin to build a sales culture that will help develop a sustainable world class sales organization?  Essentially there are four drivers;

  • Sales Effectiveness – A bundle of skills that arm each sales person & account manager with the tools they need to effectively help prospects navigate through a buying process and end up with needs that are satisfied.  This isn’t just about holding people accountable to having & using these skills.  It’s really about hiring people with high potential and then provided them with the training they need.  This is much more than simply enrolling people in training.  This is field managers who are experts in all the skill areas, and providing them the training they need to be excellent coaches in the field.
  • Reward & Recognition – There is a lot more to reward & recognition than a compensation plan & an annual outing.  The compensation plan should produce a target income at sales goal attainment.  Your peak performers should earn two or three times what your average performers earn.  Why?  Because sales people are great understudies and peak performers are the people you want them to imitate.  Management reports should be shared throughout the organization and include not just the top performers but also the strugglers.  The only people that should not make the standing report should be untenured sales people.  Additionally there are all kinds of recognition vehicles formed around peer recognition, Sr. Management recognition and yes, family and friend recognition.  For those recognized this affirms their contributions.  For those that did not make the grade it affirms what the organization values.
  • Execution – Do all members of the team understand the sales strategy?  Good communication is the key and good communication is not solely reliant upon the message…good communication is driven by understanding.  Can people recite a summary of what the strategy is?  Do they understand the role they play in the execution of that strategy?  Has there been a set of metrics devised that will benchmark how well the organization is performing and how well each team member is doing?
  • Field Leadership – The Rosetta Stone of the quality of yoursales culture is the company’s investment in first level field sales managers.  If you’re expecting for your army of revenue generators to win battles you’re going to have to invest in field support.  Do your field generals understand their priorities?  How should they be investing their time & energy?  Is it 50% making sales calls, 30% admin., 15% forecasting and 15% coaching & developing people?  If this is the reality of how people are spending their time your organization may never get any better than it is today.  I have one question for CEOs and top Sales Officers.  How many leadership training courses have you delivered to your field generals in the last 5 years?  Don’t hold them accountable for moving from a peak performing sales person to an excellent management leader.  That’s your job.

Is a heart healthy culture worth the investment?  Only if you want the best sales people in your industry to aspire to work for your company. 

The sales culture that develops in your organization cannot be controlled, but you can influence it dramatically.  Your culture will be known for a theme, for it’s character, for it’s composure, for it’s courage and yes…for it’s care for people.  You must deliver results, but how you go about delivering those results will define your culture.