Part 4: Sales Without Salespeople – Simple Test Two – Engagement

The second test is salesperson (and sales manager) engagement. I once answered a call from a sales engineer that was accidentally “butt dialed.” It was early afternoon midweek and he was obviously practicing with his band. I could hear him talking to his bandmates about song arrangements. Good salespeople typically work long hours, creating quotes in the evening after a full day of sales calls, starting early to check email before heading out, prospecting on weekends, and this person had been the top salesperson just two years ago. What was going on? Was he having personal problems, “sandbagging” this year to reduce his quote, or was he cruising on his sales momentum? Even before this call, the problem was already obvious and corrective action was being taken, but this is a good demonstration that despite our best intentions and abilities, it is possible for salespeople to stray. This does not mean you need to implement a surveillance state with GPS trackers and phone taps, but you do need to be aware of the work ethic and activity levels of your salespeople. These aspects can be summarized as salesperson engagement. Are salespeople prospecting for new accounts? What percentage of the time? What tools do they use to track prospecting activities? Are they spending time with accounts of a variety of sizes and types? Are business lunches with the same customers on their expense reports month after month? Unlike conversion, there are no hard and fast rules for measuring engagement. It takes understanding and experience combined with the right intent: an intent to help salespeople keep performing at a high level (not an intent to just catch them goofing off). Most salespeople love what they do and they do it very well. There is a danger of micromanaging salesperson activity that is instantly demotivating, but being aware of engagement levels is an important tool to improving sales performance. In niche technology companies, it is even more critical since sales cycles can be long and complex, making engagement a key factor in success.

Like conversion, there is a lot more to evaluating engagement, but reviewing the factors above are enough to answer key questions such as:

  • Do salespeople need additional challenges to improve engagement such as more complex project involvement or sales campaigns that motivate them to develop new opportunities?
  • Do salespeople have a process that encourages consistent involvement in appropriate activities?
  • Are leads being prioritized so outside salespeople are being used effectively. Hopefully, your top performers’ time is not being taken up with follow-up calls to customers needing cables or adapters.
  • Are low priority activities (such as those quotes for cables and adapters) visible to salespeople? There are numerous examples of a quote for an expendable item being a clue to developing a key opportunity.
  • Do salespeople have the tools and support they need to stay engaged? There is nothing worse than salespeople avoiding certain opportunities due to lack of sales or other tools.

If you have sales managers, the approach is the same. Additionally, this article has an excellent chart “World Class vs. Average Sales Managers” that describes the focus activities of top performers. Next time, the most important test will be explored: resource usage. This test goes hand in hand with engagement, so stay tuned.

Part 3: Sales Without Salespeople – Simple Test One – Conversion

It is 4 PM on July 3rd, the worse time to publish a post in the US. Then again, wouldn’t it be nice to have something interesting to read July 4th during that lull before the festivities get started? If you are not in the US, it might be a little quieter due to the US holiday. So maybe this is a good time to introduce the Three Simple Tests. These tests are not meant to be “sales 101” posts, but it is critical to understand the current value and roles of your sales organization before sales alternatives can be evaluated and implemented. For niche technology companies with smaller sales teams, these simple tests might prove sufficient. If your sales channel includes manufacturers representatives, no problem, these tests apply to direct salespeople as well as reps.

The first test is measuring conversion: are sales activities being converted into opportunities and resulting in sales? Most companies do this through sales pipeline forecasting with a monthly review of pipeline size, close percentages, and the status of major opportunities. The test described below is only effective if a specific set of activities, opportunities, and sales are measured. By following specific activities at a predefined set of current and potential accounts, it is possible to track conversion to opportunities. Next, monitor a specific set of opportunities: are they closing or are the salespeople “just making the numbers” (maybe through sales that are not part of the forecast)? A good forecasting system should track the history of opportunities. If yours does this, watch opportunity percentages: are the majority in flux month to month? If so, salespeople are probably regularly reviewing opportunities as they progress toward a sale. If, for example, salespeople are “shoveling” opportunities into future months, it is a sign that the overall pipeline might not be as healthy as it seems and that salespeople are not developing opportunities effectively. Finally, and this is a radical idea, salespeople should be losing a certain percentage of opportunities and explaining the reasons for their losses. There should be no stigma attached to this since, as explained in a previous post, even healthy companies will lose up to a third of their opportunities. If they are not losing, they are not selling, they are just taking orders.

There is a lot more to the art and science of measuring conversion, but measuring the factors above are enough to answer key questions such as:

  • Are certain types of opportunities closing on their own? If so, can those be moved into an automated sales channel like a webstore or inside sales team?
  • Are certain marketing or sales activities generating leads already known to salespeople? If so, can those activities be updated or discontinued?
  • Are certain sales activities effective but repetitive (common demos, system configuration visits, etc.)? If so, can those be leveraged to reach more customers through webinars or online product configuration tools?
  • Are certain types of customers underrepresented in activities or opportunities leading to sales such as younger customers, high end customers, traditional customers of a competitor, etc.? If so, can alternative methods be used to reach and influence these groups: a trial program, free demo materials, or customer involvement program?

Finally, here is an interesting recent article about an all too common conversation that also provides a look at more advanced sales pipeline metrics and another article that will get you thinking about creating more value from your existing sales team. Next time, test two will be explained: account development. Happy 4th!

Part 2: Sales Without Salespeople – Sales “Managers”

Interestingly, a salesperson can be called many things: Account Manager, Sales Engineer, Sales Manager (District, Regional, National), Customer Engineer, Technical Account Manager, Sales Consultant, feel free to mix and match. If you are thinking about optimizing your sales function, your “managers” are another important place to look. For many niche technology companies, growth and / or history can result in an inefficient organizational structure. A superstar salesperson gets promoted to a manager, then hires more salespeople who drive growth for awhile until a sales empire is created. Do those managers still drive growth? Sometimes and the big question is if “sometimes” is worth the $150K (more or less) a year you are paying them. Don’t get me wrong, these people are valuable, but maybe putting them into a more appropriate organization role (with appropriate compensation structure) can take your company to the next level.

Monster.com has a great definition of a Regional Sales Manager:

Sells products by maintaining and expanding customer base; managing staff. Accomplishes regional sales human resource objectives by recruiting, selecting, orienting, training, assigning, scheduling, coaching, counseling, and disciplining employees in assigned districts; communicating job expectations; planning, monitoring, appraising, and reviewing job contributions; planning and reviewing compensation actions; enforcing policies and procedures. Achieves regional sales operational objectives by contributing regional sales information and recommendations to strategic plans and reviews; preparing and completing action plans; implementing production, productivity, quality, and customer-service standards; resolving problems; completing audits; identifying trends; determining regional sales system improvements; implementing change. Meets regional sales financial objectives by forecasting requirements; preparing an annual budget; scheduling expenditures; analyzing variances; initiating corrective actions.

There are several other items in this description, but you get the idea. A “Sales Manager” is part HR, part marketing, and part witch doctor translating between the wild, wild west of sales and the rest of the organization. Again, it is worth reviewing whether this is a really an operational management position, whether this function could be distributed back into its respective departments (HR, Marketing, etc.), or whether it is a sales position in which case it might make sense to restore a direct sales responsibility to the “manager” to justify commission and bonuses. These are complex decisions and dependent on the exact structure of the company and its industry, but the payoff from a more efficient structure can be significant both in direct costs and in organizational effectiveness.

Next time, three simple tests you can apply to begin to evaluate your sales organization’s value and please don’t forget to take a moment to sign up for our bi-monthly newsletter at ElephantTech.com in the right hand column.

Part 1: Sales Without Salespeople

I told myself I wasn’t going to start a new series yet. Of course, I told myself that before I started the last seven part series, but I had a dream last night. I dreamt that my wife and I were going to open a new grocery store. We went to an outdoor mall which seemed like a good location and told the realtor what we wanted. She showed us a space. I was concerned about displacing the current businesses so she showed us another space that was currently a small convention center. The three of us then sat down at a table and the young woman agent gave us a contract. After a couple minutes, she said “Are you going to make a decision? I am in sales and I don’t have all day.” I told her point blank, “This is not sales, we are telling you what we want.”

It is a common situation. You pay your salespeople to “sell” and you suspect that 90% of their “sales” is taking orders from customers who would have bought from you in the first place. There are many justifications for this: salespeople provide valuable “maintenance” on existing accounts, somebody has to have “ownership” of an account, these “bluebirds” are the price to be paid for prospecting efforts, but most niche technology companies have limited resources and let’s face it, salespeople are expensive. Can you get rid of your salespeople? Probably not, but a large part of sales success is a numbers game. One study summarized that a well run company will win a third of their sales no matter what, lose a third no matter what, and that the remaining third is the only part in question. The example given was based on batting averages. The best historical averages have been around .350 and the 2013 top 25 player “average” is .320. I am not a baseball expert, but the study’s point is that a very small game to game improvement would shift an average player into the superstar category. Many companies monitor the ROI on their capital equipment more closely than the ROI on their salespeople.

There is an art to sales. I have been fortunate to work with salespeople who are truly gifted and seem as if they can perform miracles. However, looking closely some of those miracles were based on charm and luck, the salesperson’s equivalent of smoke and mirrors. One great year and a salesperson can coast on their reputation for three more. The challenge is to invest wisely and pay for value received. This series will explore some of the ways that technology and good judgement can be used to optimize that investment and move your company closer to the superstar category.

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