Written by HENRY HAUGLAND
I’ve been wading through some sales research that is touted as new but really just confirms established areas of sales team improvement. Reporting on buyer habits, quota attainment, forecast accuracy, and managerial insights got me to thinking about my sales history and the importance of these figures.
If you were to fire up your time machine and go back in time and ask these questions to sales managers every three years for the last 50, the overall results wouldn't be all that different because the issues are fundamental process issues involving interpersonal dynamics. Aspects of the she selling environment today are not all that different from back in the day. Customers have always been busy and it has always been a challenge to grab some of their time. In the past, timing and expectations for sales were different. We used typewriters, FAX machines, and teletype machines to augment telephone communications. Sales relationships played a more nurturing role in educating the prospects.
Today email, smartphones and texting take up all of our time. Constantly connected, customers and prospects remain buried in digital clutter. Prospects are forced to prioritize where they invest their efforts and are continually trying to quantify value on their own terms, on their own timeline long before they will talk with a sales rep.
Why does everyone think it is so different? Because they either don't have enough selling experience or they weren't there. In the world of big ticket B2B the only thing that has really changed is the velocity of communications and the shortening of cycle times for product developments.
Often “revelations” aren’t so revealing to a seasoned senior sales exec. For example, studies cite that 50% or more salespeople don't make quota as if it is a distressing new scenario. Guess what? It's been this way for as long as I remember and senior sales managers plan for it. Here’s why? In a typical sales force 10% to 15% will be terminated at the end of a year for unacceptably bad performance. These are the folks on the far left of the bell curve. Next, you should have 10% or more of your sales reps being promoted. Next you have the replacement reps for the people who were terminated or who were promoted during the last year. You also have normal attrition of reps whose performance is OK moving on to other opportunities. In reality, a sales force that has 50% of the members making quota is likely to be pretty well managed.
Another discussion that addressed the fact that only 40% of forecast orders actually close is another exercise in lack of understanding. If you were to look at forecast accuracy versus sales rep tenure you would see that reps on board for two years or longer will have a much higher accuracy rating, probably 80% or more. A large percentage of deals that don't close are the “no-decisions” we talk about and most of these should never have been forecast to begin with.
Improving forecast accuracy is the Holy Grail that CRM systems have been trying to address and before that a variety of other tools were popular. The consistent idea is that if we define all of the things that happen in sales campaigns that are successful then we can track the degree to which these things are happening in each opportunity and adjust our forecasts accordingly. This lends some science, not as much as you might think, to a process that has a lot of subjectivity built in. If you have a really large sales force there is a good chance that the aggregate forecast won’t be too far off in terms of total numbers of widgets sold but the details describing who sells what will be different than forecast.
Two things stand out that will always be top of mind for managers-increasing win rates (94%) and deal size (83%). This is where technology can lend a hand. Customers are more empowered than at any time in the past because they have so much access to information. The irony is they don’t have the time do all the work. They expect salespeople to provide new ideas and all the information needed to make the decision. Customers exercise their empowerment through self-education but still look to their sales rep to lead the sale. The successful sales enterprise uses available data and technology to present content to the buyer that aids them in their self-education. Knowing how busy buyers are and the vast amount of content available to them, reps gain credibility and earn trust by acting as a guide.
* Statistics cited from Qvidian 2015 State of Sales Execution Report.