Sales people and their managers should be celebrating the economic gains of the last few years but for many of them the gains may be illusory. In a new report compiled by CSO Insights, “Running Up the Down Escalator,” there’s evidence that these will not be remembered as the good old days in selling.
According to CSO Insights’ continuing research that stretches over more than two decades, 63 percent of sales reps made quota in 2012 but five years later despite an improving economy that number dropped to 53 percent. A variety of factors account for the drop. One nugget from the report,
Buyers are getting better at buying faster than sellers are getting better at selling. This creates downward momentum: Standing still (trying to maintain the status quo) is actually moving backwards. Successful companies are running up the buy/sell escalator fast enough to counteract the forces (buyer expectations, new competitors, etc.) that are combining to pull them down.
In other words some companies are just better at selling and in prior years that logic made some sense. But companies are still making their numbers which suggests to me that they may have over hired sales talent which is puzzling.
A traditional sales manager plugs bodies into territory to ensure no opportunity is ignored. That was once understandable. But today we have so much technology to plan territories, guide sales people, suggest next best actions, and which targets to go after given the time left in the quarter that it stretches the mind to think that much is falling through the cracks. In short all the sales tools that have come on line in the last two decades should have enabled everyone to do more with less.
If so then the clear conclusion I draw is over-hiring or under use of the technology but the question is why?
Perhaps, and this is just a hunch, although we have lots of sales tools today, we’re still planning and managing territories by hand. Estimating the number of target companies and dividing them up, keeping notes in our phones or scraps of paper, relying on memory to call someone back. It’s a long list.
Maybe a better analysis is that according to the data nearly half of the companies surveyed (48.4 percent) have mediocre sales processes while another 24.8 percent have chaotic ones.
CSO identifies four levels of sales process Random, Informal, Formal, and Dynamic and nearly 75 percent of sales organizations don’t get out of the first three process categories.
CSO has also identified five types of sales organizations as they present to the marketplace. From low to high they are Approved Vendor, Preferred Supplier, Solutions Consultant, Strategic Contributor, and Trusted Partner. The higher you go in the hierarchy the better things get. Trusted Partners have earned a place at the decision table, they discuss bigger deals, and those deals close faster.
It’s the trusted partners—with dynamic processes—that make the deals while the others are working very hard hustling to bring in some revenue—any revenue. Of course, this is an over simplification but aspiring to the combination of process optimization and becoming a trusted vendor have been around longer than SFA.
It’s hard to get to those lofty places. Reps who are new in their jobs know they have to produce or perish and the churn results in bad habits like using a random or informal sales process and not being too picky about what products the customer buys as long as they buy something.
Perhaps this results in too many sales reps chasing too few opportunities. Or maybe it just results in sales rep churn with the result that territories have new people running them all the time making the same rookie mistakes over and over. Whatever the analysis this all suggests that some attention paid to how people sell and how we support them might pay real dividends.
My two bits
One of the great thigs about CSO Insights is that they’ve been collecting the same data each year for a long time. The Sales Relationship Process Matrix has been around for a long time too and while the percentages move a bit from year to year, I have not seen an appreciable change in the distribution over time.
I wish there was more data. Things I’d like to know:
- How has sales headcount varied over the last 5 years as quota attainment has tanked?
- What’s the average time in position for sales people?
- Of the 53 percent of people who make or exceed quota, are they attaining more or less as a percentage of goal than the 63 percent five years ago?
Bottom line, sales is a GIGO business. Garbage in, garbage out. Most of all it’s a process and if you aren’t attending to the fine points of your process you are losing more often than you should. My hypothesis is that the people who make quota today are killing their numbers by bigger margins than they were 5 years ago. To change that dynamic we don’t need less software but we do need to spend some time learning how to optimally use it and we also need to think hard about why we still allow random or even informal sales processes to exist in our businesses.
I haven’t sold for a living in almost 20 years but then again as an independent analyst I am always selling my ideas. I’ve also studied selling for a long time both as a rep and now as someone who tries to understand how we apply technology to a very human-to-human process; I think my opinions are well informed.
Something crystallized for me in a recent briefing meeting I was discussing sales acceleration with a CEO. I’ve long thought that sales acceleration is not only an archaic term but also a dangerous delusion that could prevent greater sales success. It’s an idea you might be familiar with if you read this space occasionally.
It’s my position that sales acceleration has seen its peak and has been declining as a driving force in sales management for many years. Certainly there are many, many people and organizations practicing a form of acceleration and there are more than a few software vendors poised to assist that effort. But as a practical matter the attempt to accelerate to me is like pushing on a string. That’s because there doesn’t seem to be much left to accelerate.
By necessity most acceleration happens on the vendor side. So we have all sorts of ways to reduce latency in vendor processes and actions. We speed up configuration, pricing, and quoting so that we can put offers in front of customers before anyone else can. Or we use the latest social media tools to be in the moment with customers whenever they have questions or even stray thoughts. But there hasn’t been much change over many years in what customers do. They take in vendor information and process it as they must and reach decisions, even deciding not to decide.
Customers’ deliberations are not guided by much more than spreadsheet analysis and decisions arise from thinking about the collected information from various sources. So I don’t think there’s much further to go in actually accelerating because I don’t know how you speed up the way other people think.
Acceleration is a relic of a much different time. In 1911, Frederick Taylor published his famous time and motion studies and inaugurated the age of acceleration. But Taylor’s goal was to eliminate wasted time and motion in manufacturing processes, to get humans to function as much as possible like the robots that have continuously replaced them over the intervening century.
Taylor’s efforts gave form to the industrial age and time and motion became cornerstones of business processes everywhere whether or not they were appropriate. Perhaps selling is one of those areas. Efficient selling has been a goal for a very long time and at first there were many efficiency gains to be had. Giving telephones, cars, computers, among other things, to sales people gave them the ability to reduce the inherent latency of selling. Today we’re at an intersection point of two important trends going in opposite directions. The drive to make selling more efficient is heading south while the need for reps to intuit, empathize, and adjust to customers has never been greater.
If you look at the sales tools that have been released in the last decade, most of them (certainly not all) aim not at efficiency in the Taylor sense, but at capturing various forms of data that enable better understanding of customer situations so that reps can focus their time and attention on the deals most likely to close. In effect, this has provided the ability to accelerate revenue if not individual situations because the automation we have makes it possible to keep tabs on many more situations. The net effect is more predictable revenue even if it doesn’t do much to accelerate a specific deal.
This is all very good but it brings into high relief the place of efficiency and acceleration in modern selling. Why are we still banging on the efficiency and acceleration drum? My thought is that acceleration has become a meme; something each of us inherits as sales people. It’s a bit of social genetics that we don’t think much about because, hey, it’s groupthink.
But I’d suggest that two things are happening. First the concept of acceleration is morphing to be more about revenue acceleration than about deals, which therefore accommodates the new reality. Second, at some point we’ll realize the gap between what we say and what we mean and we will adjust selling to better reflect the realities. If that happens across a broad swath of the profession it could usher in a new golden age.
If there’s one thing that vendors and channel partners agree on, it’s selling. More or less. Everyone agrees that more selling is better but the discussion can diverge greatly from there. Vendors and their partners are not immune from the virus that affects direct sales people. We often hear direct sales people say their leads are no good and we hear marketing say that sales doesn’t follow up. Sound familiar? Of course it does.
The name of the game in sales is finding the fastest route to the cheese, so to speak, and anything that slows down the transaction (or the mouse) is suspect. In the real world, we all know that customers are not simply purchase order generators and that selling takes work but this shouldn’t be taken to mean that the marketing and sales process can’t be improved.
Marketing gets a lot of attention because today’s marketing automation platforms bring some scientific rigor to the process. Better marketing makes better leads and better leads make for shorter sales cycles and happier partners. That all sounds good, but how do you get there? Here are some tips.
First, stop giving every lukewarm bit of customer response to a sales person with a mission to bring in the business. It’s not a lead — yet. If a prospect downloads a white paper for instance, it certainly shows some kind of interest but what kind? Is the prospect looking to buy something or is a grad student writing an MBA thesis?
Marketing automation is popular today because it provides lead nurturing. Instead of handing over such “leads” to sales people, marketers hold onto them and put them through nurturing processes that aim to capture more information such as who the buyer is, what the business problem is, whether or not there is a budget. Only when such information is in hand does a modern marketer release the lead but this brings up a challenge for the vendor-partner relationship, namely, who is responsible for lead nurturing?
The answer is it depends. It depends on the nature of the product, relationship, and market. Ideally both parties should engage in some kind of nurturing — partners can’t expect all of their leads to come from the vendor. This means vendors and partners ought to come to some agreement on how to approach the market and what defines a lead. This is part of the value a vendor brings to the relationship.
Second, and many partner programs already have this down, a vendor needs to have some standards about lead handling. There should be mutually agreed SLAs (service level agreements) in the channel defining how quickly a partner contacts a vendor lead AND reports back on it. There’s nothing worse than nurturing good leads only to have them ignored. A modern PRM system can usually handle this and it is one of the best reasons to have one.
Third, the vendor must be able to track and report on lead disposition. Metrics for first touch, follow up, close rate, wins, losses, and no-decisions, and similar things can help a vendor in determining how to share leads and ultimately participate in stack ranking vendors. Having your PRM integrated tightly with your CRM and Marketing Automation platforms makes this effort much easier.
Of course, partners should have the ability to accept or reject leads once they’ve done their due diligence. This is completely analogous to direct selling where marketing generates a marketing qualified lead (MQL) and sales verifies it as a sales qualified lead (SQL). Sadly, it is not yet state of the art in many partner programs.
Rejection is often a good indicator of the lead generation process’s effectiveness. If too many leads get rejected it might indicate that they’re too raw going out the door and a need for better nurturing. But if an individual partner has a consistently high reject rate along with a poor win/loss ratio, it might say something about that partner. That’s why it’s important to capture partner data throughout the deal funnel and to analyze it.
Too often we hear that marketing and selling are not exact sciences, like physics for example, and that’s right. But they are sciences nonetheless, just more like economics and sociology or anything that relies on a Bell curve. Using analytics and metrics to understand the fat middle of your curve and to identify your long tail outliers can help any organization improve marketing and sales and that will improve the effectiveness of your channel.