February 14, 2017
2017 Sales Quotas – How to Have One Heck of a Year!
As a sales leader, you naturally want to get the most out of 2017 and have a good year. If you’re unsure of your path to action, I’d like offer you a chance to do something radically different in 2017, by suggesting you follow these steps. First, identify company strategies currently yielding only marginal improvements, and second, think how to better leverage internal research findings to improve performance. Read on to see my rationale or watch the webinar on this topic.
The Ugly Reality: Sales Reps and Sales Managers Fail to Hit Quota
Sales leaders are held hostage to quarterly sales targets, quarter after quarter, year after year. And if they succeed in hitting their number – what is the reward? A bigger number the next year! A 2016 Sales Performance Optimization Study reported that over 92% of firms raised their revenue targets from 2015 to 2016, even though fewer sellers than ever are hitting quota, with average quota attainment at 57.1%. BPM Online research puts the number of reps at quota at just 55%. While these averages are alarming, they don’t tell the whole story. You have to look at this trend more closely to find actionable insights.
In our own comprehensive study of sales management practices, 75% of managers had less than 50% of reps making quota. In addition, only half of those managers met their own revenue targets. That means even when sales managers achieve their goals, they’re doing so on the backs of too few sellers. Sales leaders can ratchet up pipeline and forecast inspections and demanding more production from sellers, but that’s not enough.
Why Traditional Training/Development Spending No Longer Works
Traditionally, sales organizations spent resources on tools and tactics to improve individual rep performance, consuming most budget dollars. Sales executives have watched waves of sales methodologies come and go over the years. The promises of SPIN Selling, Strategic Selling, and most recently The Challenger Sale are very compelling. The promise of a newer, better sales process is always appealing. But despite herculean effort and enormous expense, the impact of these initiatives on sales performance is negligible.
The same pattern applies to sales tools. Leaders invested in tools to help sellers sell more, such as portals, social selling, CRMs like Siebel, SAP, and SFDC. Big data is hot! Leaders are hungry for more information, more sophisticated analytics. Gartner reported that in 2016, the CRM business approached $36 billion. These are expensive investments.
Why do companies enjoy such little lift from newer sales methodology and CRM investments these days? Why does this training fail to move the needle?
The early investments in sales methodologies were so impactful because they also formalized sales processes which in turn improved ROI. More investment in additional tools such as CRM has resulted in less value because there are very subtle differences between the old and new versions, and salespeople tend to use new CRMs the same way they used previous ones. New CRMs have tended not to lead to a change in seller behavior.
Question: How many times has your company done both of these without seeing improvement?
The Forgotten Secret Weapon, the Sales Manager
With 75% of managers getting less than 50% of their sales people to quota, sales executives need to hit the pause button on the dysfunctional sales training spending loop and take a different approach. The missing link with the potential to substantially influence the impact of any attempt to improve performance, is the fully weaponized sales manager!
Often overlooked as a resource when considering investments in training and development, sales leaders assume sales managers are, “… the best of the best. They’ve been here for 5, 10, 15 years. They’re smart and motivated. They’re the least of my worries.” It’s taken for granted that superstar reps will automatically become top performing sales managers. A 2016 study we conducted with the Sales Management Association on sales manager training and its associated impact revealed that companies that invest more of their sales training dollars in their sales managers outperform those that don’t. More specifically, those companies that allocated more than half of their sales training dollars to sales managers had 15% better revenue performance when compared to companies allocating less than 25% of their training dollars to sales managers.
Unfortunately, Vantage Point’s study showed that there is a huge variation in the performance of sales managers. In fact, the cost of one poor performing manager on an organization’s top line is about $3.5 million. If you have 10 managers underperforming – you can do the math…
Demistifying Sales Manager Best Practices That Lead to Quota
What is a proactive and forward thinking sales leader to do in these circumstances?
The sales management practices that govern healthy sales manager/sales rep interactions have been empirically quantified and proven to be direct links to more sellers achieving quota. After all, getting more sellers to quota is the only way to achieve the ever increasing revenue targets. Yet most sales organizations are still mystified about the specificity of these vital, day-to-day interactions managers should have with sellers.
The most critical sales manager activities involve pipeline management, forecasting, and coaching. You know that. But did you know that the best practices that drive healthier pipelines and more accurate forecasts are through leveraging your existing investments through better management and coaching? By the way, at Vantage Point we define coaching as equipping others to achieve desired performance.
Let’s look at a few examples:
• High performing managers tend to have sellers with smaller pipelines and better close rates. This is a result of very specific pipeline management and coaching practices regarding the health of the pipeline as well as proper attention to getting deals into and through the pipeline.
• Managers who produce more accurate forecasts actually forecast less frequently than others, because the circumstances under which they forecast are more well-defined.
• Conventional wisdom would suggest that the more time managers spend in the field, the better their reps will perform. Not true. In our research, low performers consistently spent more time in the field than high performing managers. We were not surprised by this finding; however, most of our clients are shocked by it. It flies in the face of everything they’ve been told. Field time should be only one element of successful coaching.
• Not all coaching should be formally scheduled within a management rhythm – which is also counter to current thought on the topic. Although many training companies are now touting their ability to help establish a management rhythm or cadence for coaching, many offerings are over-engineered, thus further negatively impacting sales manager effectiveness.
• Low performers report a higher number of coaching hours per month per rep than high performing managers. High performers conduct very deliberate types of coaching. We have identified those coaching practices and show how they lead to better performance by reps.
Invest in Targeted Training
Bottom line, it makes sense in terms of the dollar spend and the potential domino effect to train the smaller sales manager population in best practices and coaching skills. Careful choice of training is essential to reach the desired end point. In the Sales Management Association study mentioned, there was a complete disconnect between the most frequently taught topics and the topics that led to the highest lift in performance. The topics that led to the highest performance gains were assessing sales performance, pipeline management, forecasting, and planning and analysis. Concentrate on these.
As a sales leader, you want to ensure that you not only allocate the right resources to your sales managers, but that you also equip them to do those things that matter most when it comes to getting more reps to quota. Because there’s no one-size-fits-all to meet the specific needs of diverse sales roles, your company should examine internally generated research to see what yields only marginal returns and then identify, codify, and embed the vital few sales management practices that best fit your sales environment. These will result in the best performance. Well-designed sales manager training is a vital step in this ongoing process. Give your managers skills for their unique environments and you will get reliable, consistent, healthy pipelines and accurate forecasts, and the desired boost in sales performance.
Michelle Vazzana is a founding partner at Vantage Point Performance. Vazzana is also co-author of Cracking the Sales Management Code. She is a sought-after speaker on the topic of sales management and leadership and has more than 28 years of successful sales and management experience. Sign up for Vantage Point’s newsletter to stay up to date with the latest sales manager research and best practices.