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Build a New Sales Culture
Build a new sales culture around clearly defined roles and the metrics that differentiate the superstars from the average players from the under-performers.
It has always puzzled me when sellers and their managers view the idea of sales metrics as a negative, or at the very least as a complete waste of time. I look at sales performance statistics as a positive. In every professional sports activity, performance is gauged by the player’s stats. In fact, every player and their coaches, use those metrics to establish performance improvement goals. In sports, the stats are recorded by the player’s position on the team. Did you know that in football there are 77 different statistics in offense, defense and special teams? And, salaries for those players are inevitably linked to their performance results. I suggest the same should be true for fulltime salespeople, and for Doer Sellers and Seller Doers. In fact, the purpose of this article is to recommend a cultural change in how sellers are coached and how they are compensated based on their performance statistics.
I will start with the roles that make up the sales team.
- The Fulltime Salesperson: Spends 100% of their time selling. Keep in mind that travel time can be a burden, and in many organizations cause the seller to work fifty or more hours per week. A fulltime salesperson can be a ‘hunter’ where he or she spends all of their time prospecting for business in new accounts. The fulltime salesperson can also be a ‘farmer, focusing primarily on growing revenue in existing accounts; including new business development in new business units or geographic locations in existing accounts. Depending on how long the seller has been with the company, the seller may be required to carefully balance time on new business development in new accounts with time spent on growing revenue in existing accounts.
- The Seller Doer: Spends the majority of their time selling. If a Seller Doer works 40 hours a week, at least 32 hours are focused on sales activities. The remaining hours are allocated to the performing their secondary job function. Seller Doers balance their time between new business development and managing existing accounts.
- The Doer Seller: Spends the majority of their time on their primary job function and a minimal amount of time on sales activities. Doer Sellers focus primarily on driving revenue from existing accounts. Since they are usually the ones either delivering the product or service or managing the delivery of the product or service, they have a distinct advantage from an account management perspective.
I recommend you look at your current organization and assign these roles to the players on your sales team. Now let us look at the statistics that measure performance for the players. Keep in mind that these stats are rolling averages based on historical performance, and that they are usually different based on the player’s role on the team.
- Meeting to Proposal Conversion Rate: The number of sales meetings held (by telephone or face-to-face) divided by the number of proposals or quotes generated.
- Proposal Decision Rate: The total number of yes and no decisions divided by the total number of yes decisions.
- Average Deal Size Sold: The total dollars sold divided by the number of deals sold.
- Pipeline Win Rate: The total dollars that are in the pipeline categorized as Business Development, Pursuit, Open Proposals, Deals Won, and Deals Lost, divided by the total dollars won. To do a forecast, I take the total dollars in my active pipeline (Business Development, Pursuit, and open Proposals) and multiply that dollar total by my Pipeline Win Rate percent.
I should point out that none of the above can easily be tracked without a Customer Relationship Management (CRM) system. Think about the impact these metrics could have on sales commission and or bonus dollars paid to members of the sales team. Should a player with a 60% Decision Rate make the same commission percent as a player with a 40% Decision Rate? Could there be a standard for Average Deal Size sold, that once exceeded, offers bonus dollars at the end of the year? Think about financial incentive as the motivation for performance improvement. Meeting or exceeding quota is not the only sales management objective. How a seller meets or exceeds quota has a greater impact on future performance.
It is true that every organization is different based on their vertical market. With that said however, there are standards that apply to technology companies, professional service companies, and financial service companies to name a few verticals. And, just like in football, the results differentiate the superstars from the average players from the under-performers. I recommend you start to track these metrics for a minimum of six months. Think about what you may learn about your team that will help improve your bottom line. When you manage the team based on their performance stats, you can forecast a realistic annual sales number. If that number does not meet your needs, hire more people. The secret to success is simple. Hire the right person for the right role who can demonstrate the right performance stats.
Learn more about the author, Howard Dion.
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- performance improvement
- sales management