Sales & Sales Management Expertise

Defining Sales Success – The Art and Science of A Sales Managed Environment®

Tags: Sales Tracking, sales performance coaching, responsibilities of sales manager, how to hit goals in sales

I'm sure someone from the Harvard Business Review or the University of Pennsylvania Wharton School of Business could prove otherwise, but when it comes to defining success, I don’t believe there is an art to it.

Artbusiness.com

  • DeWitt Cheng, freelance art writer and critic, Bay Area, CA: Jorge Luis Borges wrote," Art has become, in the experimental 20th and 21st centuries, impossible to define."
  • Robert Berman, Robert Berman Gallery, Los Angeles: "Reality is by agreement. The reality of art is usually by some kind of agreement. The arbiters are the museums, the museum curators, the people who spend their lives and their time actually being critical of what they see and judging what they see. If you add in four or five art critics who are then able to write about it, if you get four or five major collectors who are passionate about what they collect to patronize it, and several major auction houses to auction it, then a consensus or vetting process begins to unfold."cat art.png

I don’t have the space to include, and you don’t have time to continue to read, all the articles available when I google "What Makes a Work of Art Successful", so we’ll let these two quotes validate that, when it comes to defining sales success, it is best not to be arbitrary or hope for a consensus.

Science Defined by Merriam Webster:

1:  the state of knowing :  knowledge as distinguished from ignorance or misunderstanding

2a :  a department of systematized knowledge as an object of study the science of theology  b :  something (as a sport or technique) that may be studied or learned like systematized knowledge have it down to a science.

It is safe to say that if, within your sales managed environment®, you have "defining success" down to a science, then you will be in a better position to identify:

  • Metrics that determine success
  • What leading indicators lead to success (kind of like a math problem – although there are a multitude of formulas you could use to arrive at the number 4, there are probably only a couple that people would use:
    • 2 +2
    • 3 +1
    • The square root of 16
  • Define the goal to be achieved – it’s a number or a definitive outcome.

But…

Maybe there is something beside the math/science that has to go into it.  I’m not sure it’s art (so I would love to hear from you what you think it is…) but here is what’s been noodling in my head for a couple of days.

This basketball season, Northwestern University of the Big Ten Conference, beat Michigan (Sorry, Jack, Mark and Marty...) with a buzzer beater full court pass and short jump shot.  Take a look here:  NCAA Video

In the aftermath, every sportscaster was talking about how this was the most wins in NWU history, it will be the first time EVER that the school has made it to the NCAA tournament and the coach, Chris Collins, has increased the number of wins every year he has been the head coach at the University.  With the win over Michigan, they recorded their 21st win of the season.  This information would lead us to believe that Coach Collins is successful because you are comparing his results to a standard that is generally accepted as success:  Winning 20 games a season and qualifying for the NCAA tournament.

The head coach at Columbia University with the most wins is Lou Little.  Lou coached the Lions to 110 victories!  When Coach Ray Tellier retired from Columbia in 2002, the article announcing his retirement declared that he was the 2nd all-time “winningest” coach in Columbia’s history behind Lou Little.  When I read this, I was impressed and happy for him; Coach Tellier was an assistant coach at the University of Connecticut when I played there.

What I didn’t know at the time of the article, but found out later, was that Coach Tellier, over a 13-year period, lead his teams to victory 42 times - a 30.7% winning record.  And he was second on the list at Columbia.  Coach Little, with the most wins, had a winning percentage of 48.8% and averaged just over 4 wins a season over a 26-year career as the head coach at Columbia.

What does this have to do with selling and determining sales success? Everything.

Companies collect lots of data and sales managers do their very best to spin a good story when outcomes are not equal to or greater than expectations (goals).  Here are some examples of how outcomes are described when attempting to put a good spin on a bad outcome:

  • We are trending the right direction
  • Our year over year production is positive
  • We are outperforming our peer group
  • We have gone from #____ in stack ranking to #______
  • We will finish in the top percentile of our district
  • _____% of our team will qualify for incentive compensation

Those descriptions tell you nothing about how a team is actually performing.

What to do instead:

  • Identify metrics that are critical success factors for your organization. (In most organization the #1 metric is revenue – it pays the bills.)
  • Establish standards for those metrics that exceed previous performance levels and are consistent with what the market will allow. (You wouldn’t expect an operating unit in Bangor Maine to produce the same loan revenue as you would an operating unit in Manhattan.)
  • Make sure you are looking at execution metrics so that your success is duplicable and you can identify choke points when there is failure.

Do this now:

  • Call me about Scorecards for sales opportunities – 513.226.3913

Why Sales Coaching is to Growing Like Low & Slow is to Tasty BBQ

Tags: Sales Tracking, Sales Coaching, sales performance coaching, sales productivity

It’s this simple:  If you want great barbeque ribs, brisket or chicken, the key is low temperature and slow cooking. Having said that, if you want maximum flavor and tenderness, make sure you sear or char the meat first, then go low and slow.  This is an undeniable truth.  Just read the Science of Cooking and discover all the neat things you can do to improve the outcome of any meal.

EXPERIENCE DOESN'T GUARANTEE FUTURE SUCCESS

20 years in sales does not guarantee future success.  Just ask anyone that has lost a sale at any time in their career.  Something always happens just a little bit differently.  If there isn’t an adjustment, a lesson or some learning as a result, then the salesperson is prone to repeating the sames mistakes or errors over and over again.

When you effectively coach your people, they will get better.  When they get better, you will close more business, more quickly at higher margins.  This is undeniable as well.  Just look at the information provided by The Sales Management Association.  **FYI - it’s also undeniable that a lack of coaching has a negative impact on sales success and talent development!

(Bob Rotella – coach to PGA Tour Players – Author – How Champions Think)

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THERE IS ALWAYS TIME TO COACH

In our Sales Management Certification Program, we discuss 5 Keys to Coaching for Success in our coaching module. These 5 keys cover what to do and how to do it when you are face-to-face with your salespeople. Many managers, before going through our certification, complain/tell me/make excuses that there isn’t enough time to effectively coach their people.  I don’t buy it. There are several opportunities for coaching without adding to an already busy schedule:

  1. Sales meetings
    1. Segment on sales training
    2. Role-playing phone calls to get appointments
    3. Role-playing conversations to get appointments with internal partners
    4. Role-play how to position financial planning
    5. Overcoming objections
    6. Appropriately dealing with questions, and stalls.
  2. Pre–call strategy sessions
  3. Post-call debriefing sessions
  4. 1-on-1 intentional coaching sessions
  5. Ad-hoc moments when they ask you if you have a minute
  6. Every time they give you an excuse for lack of effort or execution

IN-THE-MOMENT COACHING VS. COACHING FOR SUCCESS

Coaching does take place today, but most of it is in the moment. Kind of like when a coach calls a time out in a game. The team is gathered around the coach and a strategy is developed to take advantage of the “in the moment” opportunity. Normally, that’s the type of coaching that takes place in sales – in the moment.  That type of coaching helps close a sale, get an appointment, and/or move an opportunity through the pipeline, but it does nothing to change behavior or improve skills!

Do you find yourself or your sales managers constantly covering the same ground to close deals, improve effort or refine execution?  Are opportunities getting stuck in the pipeline in the same spot for the same reasons over and over?  When you look at the performance (effectiveness and productivity, not just the results), do you see actual improvement in sales ratios like average size sale, conversion ratios from opportunities to closes and average production for each quintile in the team?

Those are the types of metrics that determine if your coaching is effective!  Failure to collect that data leads to failure of the effectiveness of your sales manager and your sales team.  Collecting the data and then doing nothing about it leads to lackluster enthusiasm for entering data, thus limiting the integrity of your forecasting.

THE 5 KEYS FOR COACHING SUCCESS

So, let’s assume for a second that 1) you are collecting data and  2) you are creating opportunities to coach people.  We can now discuss The 5 Keys for Coaching for Success.

  1. Gain insight from data points: Your data points have to include data (numbers representing leading and lagging indicators), observational opportunities via joint calls, and observations made during role plays in meetings.

    The data points you have should not be a secret to your people. Share with them what you know and what you’ve observed.  Prior to meeting with them, call them to set up the coaching meeting. Tell them that the data you have indicates there might be some problems with them hitting their established extraordinary goal.  (Remember the extraordinary goal discussion?) Then tell them that you want to meet with them during your established coaching hours. Set the appointment.
  1. Provide feedback: Now that you both have the date, you don’t have to ask the worse possible question in your meeting, “So, Joe, what’s going on?”  Instead, you acknowledge that you’ve looked at the numbers and they’ve looked at the numbers and then you ask a question about the problem that you see.

    Let’s pretend that you see a choke point where his conversion of conversations isn’t leading to the assumed number of appointments. All the other assumptions look good, but - because the conversion is off - the number of appointments isn’t meeting the goal.  Without this information, the only coaching you can do is to tell Joe that he needs to see more people. But, with all the data, you see that the effort is there – the dials and discussions – but that effort isn’t leading to appointments.

    Instead of pointing that out, you ask Joe what he sees when he looks at the conversation ratio compared to the model in the success formula.  Assuming Joe sees the same thing as you, you are now in a position to ask further questions.  The key here is that both parties must agree as to what the problem is.

  2. Demonstrate what you expect to be done: In this case, you would listen to Joe’s approach to converting conversations to appointments.  You would identify areas where he might need to change or improve his approach and you demonstrate what that would look/sound like.

  3. Role–play: Now that you’ve demonstrated what you expect, you role-play various situations with Joe giving him several different responses.

  1. Action step: It is critical that every coaching session ends with an action step.  An example of that would be to agree to a number of calls that Joe is going to make over a short period of time (i.e. by the end of the day or week) and then instruct him to report back to you (on a specific day and time) the outcome of his effort.

(Click here for 9 critical coaching skills)

STOP WASTING YOUR MONEY ON SALES TRAINING

Understand that this might be an ongoing process for Joe, and you may have to take a more disciplined approach to his coaching and execution of the skills he is struggling with.  At the end of the day, the key is to recognize that improvement is vital for sales growth.  You cannot expect to grow sales without improving effort and/or execution. If you want to improve sales, invest your money in developing your sales managers and stop wasting money on sales training until your managers can and will coach.

Additional Resources:

Demo online Sales Learning Module

Sales Managed Environment® Certification Module – Free Document

Why is It So #%&@ Hard to Solve the Sales Growth Problem? – The 5 Constraints to Growing Sales – Part I

Tags: Sales Tracking, sales performance coaching, sales productivity, how increase sales, predictable sales growth

I’ve written on this subject, talked about it at workshops/keynotes and presented it to our clients in our Sales Managed Environment® Certification program for over 20 years.  But, here I go again and for good reason – it’s still a problem.  It’s still in the news.  It’s still something that we get asked about when we present at the Community Bank CEO Network and other venues.  It’s a problem that doesn’t seem to have a solution.

Wrong!

Let’s take a minute first to analyze the problem or to help you identify if you have a problem.  (This will be kind of like Jeff Foxworthy’s “You know you're a redneck if” routine.)

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You know you have a sales growth problem if…:

  • You cannot consistently and accurately predict future sales GROWTH
  • You recognize that most of the sales (90% or so) are being generated by 33-45% of the sales team.
  • Less than 10% of the sales are being generated by over 50% of the team
  • You have salespeople in the middle of the sales performance bell curve that are not performing as you expected. (Did you really hire those people to only perform like the average sales person on your team?)
  • Your new hires are not ramping up fast enough
  • Your cost of “ghosts” (people that you hire and are no longer there) is a 2-comma problem
  • You seem to be coaching the same stuff over and over and over again
  • Your people continually make excuses for lack of outcomes, performance results.

I could go on, but why?

I first recognized the sales growth problem in sales organizations many years ago when I was working with Anthem Blue Shield and Blue Cross here in Ohio. I was meeting with Jim Barone, who is currently the National Vice President – Business Development for Lincoln National.  At the time, he held a regional sales management position for Anthem and he and I were scheduled to meet in Cleveland with his sales team for a training session and sales meeting.

In preparation for the meeting, I reviewed the production report year-to-date for the team (about 25 reps). I had not yet read any Perry Marshall material on The 80/20 of Sales and Marketing (The book hadn’t been published yet…) and, though I had heard of the Pareto Principle, I really didn’t understand it like I do today.  When looking at the numbers, I discovered that roughly 20% of the reps were responsible for about 80% of the results.  That was startling. But, not nearly as startling as what I discovered next.

The bottom 20% of the team – about 5 reps – were responsible for less than 1% of the results and the bottom 33% of the team was responsible for less than 10% of the results.  The first question I was going to ask Jim was, “Why are these people still with you?” (CLICK HERE here to get rid of the 80/20 in your organization.)

Over a year ago, I did the same type of analysis for a large nationally-based broker dealer specializing in serving the credit union market.  We looked at 100 advisors.  What we were looking for was data to support the position that, in order for a financial advisor to break through the upper limits of their productivity, they had to segment their book. 

As I looked at the collective data, it became very obvious that every advisor in every quintile had a book that had a similarity – 36% of the clients represented in their client base (as many as 1,000 clients) were responsible for 94% of their total AUM (assets under management).  Furthermore, when we analyzed the bottom 36%, that group only represented less than 5% of the total revenue.  Taking one more step, we uncovered that it would take 16 sales from the lower 36% to equal the average AUM from the top 20% of the book.

We thought we knew this, but now we had the data to prove it. 

Just for fun, I looked at the AUM from the 100 advisors for the broker dealer and guess what I found?  You guessed it – 36% of the advisors were responsible for over 90% of the total AUM.  Again, the questions have to be – Why do you have the other 64% of the advisors?  Why do they perform so poorly?  Were they hired this way – to perform at this level?  What was missing in the on-boarding, training and management of those advisors?

One of the easy reactions to the data is this – “Tony, you have to understand that some of the advisors we were looking at don't have the same tenure as those in the top 36%.”  Okay, I will buy that.  But, are you telling me that is the case from #1 all the way to #100?  The answer is no.  In the mix of the top 1/3, there are less tenured advisors, and in the bottom 1/3, there are very senior advisors. 

The tenure argument doesn’t work. The economy argument doesn’t work. The competition argument doesn’t work. The compensation argument doesn’t work and, finally, the DoL regulation or regs of any sort argument doesn’t work.  In every instance, the numbers hold up.

So, what is the problem?  What are the constraints to sales growth? Why is it so $%^&* hard to solve the sales growth problem?  There are five reasons I want to discuss, but first, let’s agree to some assumptions:

  • Your organization has a solid strategic plan to gain market share. (If not, contact Gazelles.  Verne Harnish is a genius and the concepts in his book, Scaling Up, will change your business.)
  • Everyone is either rising or sinking with the economic tide.
  • Your company’s compensation plan fits with in the suggested range of the industry. (Contact Peter Bielen or Scott Stathis to discuss compensation.)
  • You have access to the products and services that the ideal prospects identified in your strategic plan want and need
  • Your support partners provide you the backend client services that you need.

Again, the list can go on – in general, let’s assume that the basics to start and sustain a business are in place.  But, something is missing year in and year out that makes sales growth so difficult.  Here are the 5 constraints to consistent and predictable sales growth:

  1. Weak or lack of Performance Management. Understand what performance management is NOT – setting goals and then telling people that they have to work harder if they are not hitting the goals.  It is NOT using PIPS as a way to get people to perform.  A solid performance management structure and strategy requires a couple of steps, systems, and processes.
    1. Identifies the right metrics to measure success
    2. Creates benchmarks that force salespeople to work harder and better
    3. Holds people accountable to the THINGS they need to do to get sales growth results
    4. In addition to the items listed above, the executor (sales manager, sales coach, sales leader) needs to have the right sales management behaviors and skills
  2. Any coaching is in-the-moment coaching rather than Coaching for Success. Coaching for Success is intentional/planned coaching.  It is based on what the data identifies as choke points in executions or lack of effort.  In-the-moment coaching does not focus on changing behavior and improving skills. It’s kind of like what happens in a time-out in most sports.  There is a situation in the game that requires some additional thought and strategy.  The coach calls a time-out to discuss the strategy and lay out a plan to execute “in the now.”  That type of coaching is designed to solve the in-the-moment problem, but it virtually does nothing to change behavior or improve skill overall.  Coaching for Success requires:
    1. Data points established as a result of the performance management success formula (The metrics that define success identified in your performance management strategy)
    2. Data collection
    3. Reporting that identifies the variance in actual performance from goal performance
    4. Gaining business intelligence from the data report
    5. Effective coaching skills http://c.ymcdn.com/sites/www.bisanet.org/resource/resmgr/onesource/9_skills_to_coaching_success.pdf, systems and processes
    6. A consistent process of disciplined coaching designed to help the advisor get on track and stay on track because behaviors change and skills improve.

The remaining constraints are:

  1. Hiring sales people based on the wrong criteria with the wrong processes and systems. To Hire Better SalesPeople, you have to have a better way to attract better people and a better way to eliminate those 90% that will not do 100% of what you need them to do.
  2. Ineffective motivation via culture, sales meetings and recognition. Most sales managers don’t know what motivates their people.  If you are going to Motivate for Success, it is important to know what motivates them.
  3. Inadequate hiring. When just enough is good enough, the sales organization fails to regularly Upgrade the Sales Force.

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Contact us – 513.791.3458

Contact Tony Directly -  tony@anthonycoletrainingcom or text 513.226.3913 with the message “Call me”

Additional Resources:

 

Variability in Performance in Sales Teams, pt.3

Tags: Sales Tracking, sales management, sales accountability, variability in sales performance

It all starts with people, right?

Wrong… or at least I believe that to be wrong.  When I was the strength coach at Iowa State University, we had a debate/discussion/disagreement on in-season strength training.  Actually, the disagreement was with just one person, our defensive coordinator, who eventually went on to be a great success in the NFL while I went on to start and run a success business in sales training, coaching and consulting. 

The reason for the discussion was to eliminate variability of performance mid to late season. At the time, I didn’t recognize it as eliminating variability of performance. I just suggested to our football staff that, if we wanted to eliminate or minimize injuries to our players, we needed to keep their strength and endurance at a high level.  Other consistently high-level performing teams, like Nebraska and Penn State, had very aggressive in-season conditioning programs.  I respected the conditioning coaching at both of those programs and the records of the teams spoke for themselves.

The argument started and ended with this:

  • Coordinator: “What good is it if my linebacker can bench press 300 pounds but doesn't know where to go?”
  • Me: “What good is it if he knows where to go but gets his ass kicked once he gets there? Or if the guy that is supposed to be there is on the sideline because he separated his shoulder, blew out a knee or pulled a hamstring?”
  • Head Coach: “Starting next week, we’ll make sure our guys are working out at the end of practice every Tuesday and Thursday and we will include light lifting sessions during our recovery running and stretching sessions on Sunday.”

The variability of performance didn’t just apply to a single individual, but the performance of the team was impacted by the inability of one person to perform or perform well because of injury or endurance.  What an organization needs is a system and process in place to minimize lapses or lack of performance by individuals.

I believe it all starts with systems and processes in place to support the function and execution of the people expected to perform.  The organization needs to be strong and have endurance to support the skills of those going to the right place at the right time.

Take a look at the following findings from a Sales Effectiveness and Impact Analysis that we conducted for a sales team:

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Management is asked to identify, answer questions about the systems and processes in their organization that support the implementation and execution of effective selling by their sales team. The numbers and colors you see are reflective of how they answered the questions.  There are no “leap in logic” questions and findings here.  Just straight up math based on an individual evaluation by the manager.  If they said “yes” to five questions in accountability/tracking, they got a five.  In this example, the number is 2.

Forget about what the colors and numbers actually represent in terms of implementation or execution - just look at the variability of numbers in the red boxes.  This alone is a major contributor to the variability of performance expected of those to execute sales systems and processes that are designed to help them be more productive.  Looking at “accountability” alone should give you pause to think about your own organization:

  • Failure to have or execute a tracking system that looks at leading indicators for future sales success
  • Tracking frequency is hit or miss on critical “smart numbers”
  • There is a lack of automation thus making it easy for salespeople to make excuses about having time to record data needed to help them grow and improve.
  • If there is automation, in this case, there aren’t any standards or there is a lack of accountability to using the automation (score of 4). So, if you have incomplete data, or missing data or incorrect data, then how can an organization gather any reliable business intelligence to help support sales teams grow, correct problems or eliminate constraints in their sales approach?

If variability of performance is an issue - and it always is (see below) - then assess your systems and processes as you assess the variability of the individuals that make up your sales management and sales team.  That post is coming NEXT!

 


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What to Trust When Evaluating Sales Performance and Talent

Tags: Sales Tracking, sales management, sales assessments

When evaluating sales performance - past, present and future - it’s difficult to figure out what information or data to trust when making decisions.  Just like investments where past performance is not a guarantee of future results, past sales performance does not guarantee anything for the future.  It gives you some, not all, insight into sales results, but it doesn’t tell you how the result was created.

Pipeline analysis (a great performance management tool) is a lagging indicator that can be used to uncover previous sales activity and give you some indication of future sales, but there are problems with that data point:

  • The sales person might be putting in data just to keep you off their back
  • Unless your pipeline is mapped properly with check points,
    then the probability of opportunities is subjective, not certain.
  • If the CRM being used does not provide reporting on conversion ratios from one sales step to the next, you certainly don’t have information needed for intentional coaching.

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Linda and I went to a “box store” to find appliances for a townhouse we had purchased.  We needed to replace all four major kitchen pieces: dishwasher, refrigerator, range/oven and microwave. We were working with a salesman and we were getting close to making a selection between models.  As Linda and the salesman were talking, Linda asked me to search for the ratings on the appliances.  This is what I found:

  • Refrigerator/freezer – 4.3 – 1,200 ratings
  • Range/oven – 4.2 – 2,000 ratings
  • Dishwasher – 3.2 – 1,600 ratings

I hadn’t looked up the rating yet when Linda asked me what I found out.  I reported the 4.3 and the 4.2; however, as I reported the 3.2 on the dishwasher, the salesman stepped back into the conversation and asked what the 3.2 was.  I told him it was the rating on the dishwasher based on 1,600 customer ratings.  His response was “You cannot rely on those ratings.  Those ratings are based on this model two years ago when it first came out – this is a newer version of the model.”

It was so hard for me to not reply with, “So I should trust the 4.3 and the 4.2, but not the 3.2?”  I didn’t want to go there because I know how I get when I challenge someone trying to sell me something. I'm a pain in the *ss.  I cannot help it when a salesman screws up the opportunity to handle something the right way and fails.  But, that’s not my point here.  My point here in this story for this article is this:

Your salesperson, and any sales candidate you are interviewing, will also refute anything negative you ask about, but will never debate the positives.

And that is a problem if you are not aware of that and deal with it when it happens.  Case in point.  We use Objective Management Group for evaluating both sales teams that exists today and future talent to hire.  The tool has been “tested” hundreds of thousands of times and is the most consistent and reliable sales talent evaluation on the planet.  (check it out)

With this business tool, we find a mix of things that are supportive of successful selling:  Strong desire, commitment, responsibility, and sales DNA.  And there are findings that indicate hindrances to successful selling:  lack of skills in consultative selling, asking questions, hunting, closing, and qualifying skills.

Time and time again, when we review the results with the sales manager or the sales person and we ask, “What did you think?”, most of the time we can count on the following:

  • I thought it was interesting.
  • I’ve taken lots of these in the past and you just have to take the results with a grain of salt.
  • I thought it was dead on.
  • I thought the findings really depend on different situations; some of the questions didn’t fit the way I sell.
  • There were a lot of things I agree with and a couple of things I didn’t understand or agree with.

We ask the sales person to then discuss the finding they want to talk about first.  Almost 100% of the time, they will want to talk about the things they disagree with. Obviously, those are the things that are viewed as “negative”.  Never, not once ever in over 20 years, has someone gone to desire, commitment, responsibility, hunting or closing findings that are positive and said,  “I don’t agree with this.  I’m really not committed, I don't have desire for success in sales, I make excuses when I fail, I suck at prospecting and I can’t even close a door.”

NOT EVER!

What they all want to focus on is the 3.2 rating to try and convince me that the negative findings cannot be true, BUT all those positive things, “Yep, that’s me.”

So, there you go.  Your salespeople, as well as the candidates, will do their best to convince you that all the positive data and outputs are accurate and true, but anything negative can be explained away.

Buyer beware!

Additional Resources:

Wacky Idea for Sales Management - Terminate Underperformers NOW!

Tags: hire better sales people, Sales Tracking, sales management, performance management, 80/20 Principle

I’m finally going to finish the book, American Icon.  It's the story of Ford and how Alan Mullaly helped the auto dealer regain its swagger. Time after time, Ford and Mulally had to make tough decisions on underperforming business units and automobiles. If the car or unit wasn’t performing, if the buying public was no longer buying and if the manager of the unit wasn’t getting progress or growth, they got cut.

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The first time I applied the 80/20 rule was when I was asked to attend a meeting with Anthem Blue Cross Blue Shield of Ohio. I was going to conduct a workshop with the reps in the state on how to more effectively build productive broker relationships.  One of the principles of the process is to identify (using the 80/20 rule) those brokers that were getting most of the business and those brokers that were licensed but essentially doing nothing.  The idea was to spend more time with those doing more and less time with those doing nothing.

Jim Barone, sales manager for Anthem in the state of Ohio at that time, provided me a list of all the wholesalers in attendance. In addition to the list of names, there was information about their production year to date. Just for the heck of it, I applied the 80/20 rule to his group to see what I would come up with.

The group consisted of somewhere between 25 and 30 wholesalers.  When I did the math, sure enough, Pareto’s principle held true. About 7 of the wholesalers were generating about 80% of the premium.  When I took another piece of the remaining group, I found that about a total of 12 people were responsible for over 90% of the total premium. When I arrived at the meeting, I found Jim and shared this information with him.  His response was something like “holy crap”.

The problem that Jim had (and the problem that anyone has in the channel development business or in business where you have to have representation wherever you have a "branch") is that there is a belief that you have to have a body in the seat where a desk is. Twenty years ago, when I was working with companies like Anthem, that was true.  With technology today, I’m not sure it is anymore.

Here’s my wacky idea for sales managers: Terminate those bottom 20% that are not producing.  Not in 30 or 60 or 90 days.  Right now. Ohio is an employment-at-will state. Meaning that, unless you have a contract for a stated specific time period, an employee can be terminated without cause. If you have to, give them 30 days to find a new job, but get rid of them. They are costing you time, money and effort.

Now, start replacing the bodies. But don’t replace them with high cost sales people that won’t be any better than what you just terminated and take a long time to break even.  Instead, look to your top producers and those in the 2nd and 3rd quintile and ask yourself this question: How much more effective/productive could this group be if I provided them with the right sales support?

Why would you do this? There are several reasons, but the one I’m thinking of is this - to build your own sales team instead of trying to draft one.  Think about how hard it is to find really good, solid sales people that can have an immediate impact on your current sales people.  Think about all the "stuff" you’ve heard from your top tier sales people about support, paper work, meetings etc.  Yes, I know they are excuses, but suppose you put an end to them?

Suppose you went out and found people that were talented at account management and farming books of business? They know the technical side of the business, but maybe they aren’t great at hunting, networking and developing new relationships. Or, maybe they can become that, but they are new in their professional careers and just need exposure and experience to sales!

To do this, you need to do more than just go out and hire them.  You have to have systems and processes in place and then make sure your sales people use the support talent and stop making excuses.  You have to have a development plan for these new hires so that they learn selling. You have to make sure you have data collection systems in place so that you can more effectively coach the sales people you have today that are not reaching their potential.  And, you have to have the career advancement process in place so that your new support people know what they are aiming for and your experienced sales people don’t think that the only way to advance is to become a sales manager.

I know this is wacky.  But how wacky is it to keep 33% of your team that represents less than 10% of your revenue?

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Non-Performing Sales People and What to Do With Them

Tags: hire better sales people, Sales Tracking, sales management, Sales Coaching, 80/20 Principle

I have 30 years tenure with my wife, Linda. “Tenure” may not be the right way to put it, so I’ll say it the way I do when we celebrate our wedding anniversary – 30 years of “marital (I pronounce it myrtle) bliss”. And the future is looking really good for me - based on how Linda makes decisions about when to keep things and when to discard them.

tony-linda-beach

You see, Linda hates to get rid of stuff that’s working. Except for coffee makers. She is very particular about how her coffee tastes and how long it takes the coffee maker to make the coffee. Aside from that, as long as an appliance, an article of clothing, a piece of furniture is working, is functional, is not broken – she keeps it. It doesn’t have to function as well as when it was purchased; it just has to function well enough to avoid being replaced by a newer, better model.

I celebrated by 60th birthday last December. For my birthday, I wanted a new wide screen 4k flat screen. I pained her to get rid of our 16 year old, boxy big screen Toshiba. But it still worked. The picture was… well, it was a picture from a 15-year old TV that had the “3 guns” that created the picture on the screen. It was connected to the digital box from the cable company and provided us with all the TV entertainment we needed.

The way I see it, as long as I am functional, I’m in good shape. When things stop working in our house or we finally decide that we need to “get rid of something”, we just put it out by the street in front of our house and, depending on what it is, you can generally count on it being gone before the next morning. So, as long as Linda doesn’t ask me to sit out by the street, I figure I’m good.

What does any of this have to do with you and your sales people? Plenty.

Who do you have on your team that’s just getting by? Yes, they are functional; yes, they produce some numbers that contribute to your overall success; yes, they might manage books of business that may leave if you fire them; and, yes, you need a warm body in the seat. But, does that mean you should keep them? Does that mean you shouldn’t take them to the shop for some upgrading? Does that mean you should tolerate their lack of performance just because the team, as a team, is hitting its numbers? The answer to all three questions is no, no, no.

You know the 80/20 rule right? (Perry Marshall’s 80/20 Power Curve – Must see!) Do you know the 36/96 rule? If you double click on the 80/20, that is what you get. Let’s suppose you have 100 sales people generating 1,000,000 of something. 20 of your salespeople are responsible for generating 800,000 of something. If you apply the 80/20 rule to the remaining 80 people, you get an additional 16 people for a total of 36% of the sales team. These additional 16 people are responsible for 80% of the remaining 200,000 of something – 160,000. Add that to the initial 800,000 for a total of 960,000 somethings or 96% of the total.

36% of the sales team responsible for 96% of your results. What the hell is everyone else doing and why are they still with you?

I understand a couple of things about a couple of things. If you have these 100 people and some of them are sitting in chairs in rural Ohio, Indiana, Wyoming, New Mexico, etc., then you need someone there. You just cannot eliminate the only person working the location, but that doesn’t mean you should not have someone there that isn’t hitting their goal. Now, forget about the rural salespeople for a minute; that doesn’t explain why you keep others that are in the heart of metropolitan areas like Indianapolis or Columbus.

So, here’s what you do:

  1. You get these underperformers in a room (if possible) and you show them the data, show them the results. You then ask them to answer the question - “Why should you stay employed here?” Make them all answer the question. Tell them that their answer isn’t good enough and that, starting today, this is how things are going to work.
  2. How things are going to work – everyone must commit to a sales productivity number by going through the “extra-ordinary discussion”. (Call Jack in our office and he’ll explain that to you or text me at 513-226-3913, Subject Line: “Extra-ordinary” and I’ll give you a call. Please provide your name).
  3. Build a success formula based on that target number.
  4. Build huddles to start collecting relevant sales activity information.
  5. Start providing data back to them.
  6. After 60 days, review your data and, to each individual with whom you are working, report back the business intelligence you’ve gained because of the data.
  7. Put the people that are failing to perform – either sales activity or sales results – on a disciplined coaching schedule so that you can correct the one or two problems contributing to the lack of results –effort and/or execution.
  8. After an additional 60 days, if you do not see improvement, ask them to go sit out by the street.

 

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