We recently spoke to a senior sales operations leader who confessed that they paid more than $2B in sales commissions and had no clue what they actually got for it.
That sounds pretty insane, right? Surely, they got $5B to $20B in revenue for that investment. They had to — or did they?
Therein lies the critical sales problem: Did we win because we outsold the competition, or did we win despite the fact that they’re outselling us? Most sales organizations don’t know the return they’re getting for their sales investment because they don’t have any insight into their selling and coaching behaviors.
That doesn’t mean they don’t recognize the correlation. They simply don’t know whether or not their investment causes them to win more often.
This makes the sales profession the overwhelming laggard in putting quality/process improvement and performance systems in place. It also means this is an opportunity for companies to solve the problem and gain a sustainable competitive advantage.
Production and Performance Profession
Sales is a unique profession in that it is part production job (think new opportunities, calls, meetings, etc.) and part performance job (think consultation, presentation, differentiation). And unfortunately, most companies’ approach to managing this unique function provides little insight into how a team or individual is doing in either part of the job.
Let’s start with the production side of this. As we have written before, sales results are the output of a process — one that can be expressed by a simple mathematical formula:
Activity X Proficiency = Sales
This means that for every person and team in your organization, you can work your way backward from a sales objective to determine exactly what must be produced in terms of predictive metrics such as:
• New opportunities
• Proposal ratio
• New proposals
• Closing ratio
• Average sale value
Every person in every sales organization can and should have their own unique “sales success plan.” However, less than 10% of the people we meet have created and are measuring performance against this type of plan.
Why? Primarily because without customization, their CRM won’t allow them to set these targets and measure performance against them.
That’s right! The CRM won’t do the math! Perhaps this is also why many sales organizations create “funnel standards” or “activity standards” instead of creating mathematically valid sales success plans.
Want to read more about the fallacy of this approach? Check out our blog post on the worst metric in sales
In sales, most sellers, teams, and companies are measuring sales performance and reacting to what happened after the fact rather than looking at leading indicators that can help them proactively act to shape the outcome. So, approximately 90% of all sales organizations are missing the mark on the production side of the profession. Surely, they’re doing better on the performance side, right? Clearly, companies make tremendous investments here. In fact, ATD estimates the average company will invest over $1,400 per person annually for sales training.
The majority of that training is specifically designed to help more people become proficient in the skills needed to win in the marketplace. However, studies indicate that only about 20% of the people who attend sales training actually use what they learn.
Again, we have to ask, why?
And the reason is shockingly simple — leadership has no insight into who is and isn’t engaging in these behaviors and which managers are and aren’t coaching to the training. They also have no way to determine the impact these behaviors they can’t measure are having on sales performance.
It isn’t that training programs aren’t measured. It’s that the measurement approach almost ensures that the results aren’t actionable. In today’s world, the “impact” of training is most often determined by interviewing participants and asking questions about what they learned, how they’re using it, and the impact it’s having on their success. To get participation, the results must be anonymized, which means we may uncover themes such as:
• I would use it more if my manager coached to it.
• I don’t use it as much because our systems aren’t aligned with it.
• I don’t remember everything I learned and don’t have easy access to the reinforcement I need, when, and where I need it.
However, we won’t uncover precisely WHO is and isn’t using the training, to what degree they’re using it, who IS and ISN’T coaching, and so on. This means we can’t intervene with the people who need help. To use a medical analogy, it’s great to know in general that certain conditions are linked to heart disease, but it’s of no value to a specific patient if we don’t know about her condition. Moreover, the CRM and LMS systems aren’t designed to trigger the need for learning reinforcement, deliver the learning at the point of need, and then measure its impact.
Not a People Problem … a Systems Problem
Without near real-time visibility into learning, coaching, and selling behaviors, it’s nearly impossible to understand the return we’re getting for investments in selling and coaching initiatives, let alone maximize that return. In the absence of actionable insights, sales teams often replace the people who aren’t performing in hopes their next hire will deliver a better result. This is a wildly expensive approach to performance management and coaching.
The lack of insight combined with investments reaching as high as 25% of revenue has caused many CEOs to refer to sales as a black hole. And this may be the most unique characteristic of the profession: These problems exist DESPITE the fact that other parts of the business, and other professions, solved them long ago.
For example, the production analytics in manufacturing and logistics are now wildly predictive, thanks to a concerted focus on quality management that began in the 70s. Meanwhile, performance professions such as athletics capture powerful data about the effect of training on skills, behaviors, and performance and use this to coach teams and individuals to achieve greater performance. Considering the size of the sales profession and the impact better (or worse) sales performance can have on the success of an organization, isn’t it time we apply the same rigors to sales performance that we do to manufacturing and golf?
Axiom provides a unique alternative to traditional sales training. Unlike traditional sales coaching events, we embed our methodology into your sales cadence, delivering dramatically better sales results. To learn more about our methodology, Kinetics Sales Effectiveness Platform, or unique, guaranteed approach, please visit us at www.axiomsaleskinetics.com.
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