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Driving Sales Growth and Asset Management – A Blinding Glimpse of the Obvious

Posted by Tony Cole on Thu, May 31, 2018

Velfredo Perato -- the 15th century economist -- demonstrated time and again the 80/20 rule. Yes, sometimes it's a 70/30 rule or a 60/40 rule. That is the obvious. There is nothing blinding about that. The blinding glimpse – the glimpse that causes you to blink like you are being blinded -- is when you look at the opposite end of the 80/20 rule. 

Producers/ quintile = 9

% of Total Revenue

Average Production

Performance % to Goal

1st quintile

51%

737,612

118%

2nd quintile

25%

352,607

82%

3rd quintile

16%

229,366

65%

4th quintile

6%

90,109

36%

5th quintile

2%

25,144

10%

Company A:  Insurance Brokerage - Commissions

These are real numbers from a real company.  As you can see, and when you do the math, the 80/20 rule here looks more like 76/40. The second quintile is being outperformed by the top quintile 2 to 1. The top quintile is performing at 118% of goal and every quintile after that is under performing. If I were to do this analysis for your group, you would probably shrug your shoulders and not be too surprised by this. But this is just the beginning of the blinding glimpse.

  Click to Survey your Sales Force!

As you look at the bottom 2 quintiles, you see that 40% of the sales team is responsible for 8% of the revenue. The compelling questions become:

  • Why?
  • Did you hire them this way?
  • Did you make them this way?
  • How long have these people been a part of your organization and allowed to stay at this performance level?
  • Who in the organization is in denial when asked “Does your company accept/allow mediocrity?”
  • Why is the bottom quintile being out performed by the middle quintile 9 to 1?
  • If we want to assume that the 5th quintile consists of primarily new hires (it doesn’t but I’ll be generous) and look at just the 1st and 3rd quintiles you have to ask the same question: “Why is the 3rd quintile being outperformed by the 1st quintile 3.21 to 1"?
  • Did we use a different hiring process to hire the 3rd quintile?
  • What would the monetary impact be if we got the 2nd, 3rd and 4th quintiles to perform to 100% of their goal but didn't attempt to make them as good as the top quintile?

Here is the answer to the last question:

Quintile*

Average Production

Production to Goal %

Production if 100% of Goal

Variance

Increased Revenue for Quintile (x9)

2nd

352,607

82%

 430,008.54

 77,401.54

 696,613.83

3rd

229,366

65%

 352,870.77

 123,504.77

 1,111,542.92

4th

90,109

36%

 250,302.78

 160,193.78

 1,441,744.00

 Total    

 

 

 3,249,900.75

*9 producers per quintile

Let's change your title from Market Leader or Sales Manager to Manager of Assets. Your Assets Under Management results are a reflection of hiring, onboarding, training and development, coaching and performance management.

Wikipedia defines asset management as: “any system that monitors and maintains things of value to an entity or group. It may apply to both tangible assets and to intangible assets. It is a systematic process of developing, operating, maintaining, upgrading, and disposing of assets cost-effectively.”

That would be you and your role in your company. The key sentence here I believe is "a systematic process of developing, operating, maintaining, upgrading and disposing of assets cost – effectively."

I’ve been researching our client data in search of how well companies are managing their assets, specifically the assets of the sales team.  A sales force has a singular responsibility – bring in revenue to pay the bills. Think about the sales team as an investment an insurance policy or a bank loan. With an insurance policy you pay a premium. In exchange, you expect growth from the investment and insurance coverage to reimburse you for covered losses. If you are in banking, you lend money and expect it back with interest. Failure to get that money back is considered an under-performing or non-performing loan. With salespeople you pay them compensation, benefits, social security taxes and probably a match for their retirement contribution. In return you expect them to sell. You expect a substantial return on that investment. 

Are you getting the return you expected when you hired quintiles 3, 4 and 5?  If not, why not? In the next couple of articles, I will further detail what the data is telling us and will cover how to transform your current sales team into a high producing, no-limit sales team in 18 months.

If you haven’t already done so, download our e-book "Why is Selling So #%&@ Hard?" If you need additional information, check out our e-book on "Why is Qualifying A Prospect So #%&@ Hard?"

Topics: effective sales management

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    About our Blog

    Founder and CLO Tony Cole has been working with financial firms for more than 25 years to help them close their sales opportunity gap.  He is a master at using science based data and finely honed coaching strategies to help build effective sales teams.  Don’t miss his weekly sales management blog insights.

     

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