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Why Is Sales Productivity So Hard to Improve?

by Michael Webb | * Comments (9)
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Should sales productivity be improving in your company?

If it should be, then year over year you should be able to measure the increase in whatever Output / Input terms you chose:

Revenue
Cost of sales (and marketing)

Quantity of orders
Quantity of opportunities

Revenue
Full-time equivalent (employees)

You would also be able to predict improvements in productivity, and count on coming close to those targets.

Improving sales productivity has a huge impact on the value of a company to its investors. Lots of companies know how important sales productivity is. Unfortunately, few companies know how to make this improvement happen.

How does your company try to improve its sales productivity?

Ways Not to Improve Sales Productivity

A popular approach is to try to improve by edict. This happens when companies issue higher quotas or lower budgets, without providing a means of achieving the new goals.

Sometimes they can get away with this in the short term, when the economy is strong. In the end, of course, it doesn’t work.

Sometimes, companies try to improve by implementing training or CRM software, or adding new products, channels, or other initiatives. The track record is not good, however, because most companies do not really understand how their sales processes work.

When initiatives like these do generate productivity improvement, it may not be sustainable. A big customer order won’t be repeated next year. The effects of sales training fade away. Reality seems to intervene.

The real trick is to set up a means of continuously improving sales productivity, quarter over quarter, year after year.

Do you know of many companies that have achieved that?

Why Doesn’t Sales Productivity Increase?

The primary reason companies cannot continuously improve their sales productivity has nothing to do with sales training, what CRM software they use, or how hard salespeople work.

It has nothing to do with Sales 2.0, or social networking technologies, or any other urgent fad.

Instead, it has to do with how the company manages sales and marketing. If you are to improve the performance of any production activity, it must be managed as a system:

  • Definitions of input, value add, and output are traced to observable evidence
  • Ability to measure flow of production in terms of quantity and quality
  • Feedback systems for detecting whether a corrective action really occurred, and whether or not it had the intended effect

Most companies haven’t the faintest idea how to do these things in sales and marketing. They struggle with the clash between the black-and-white mentality of the engineer and the personality-oriented culture of the sales executives.

Yet they MUST resolve this clash if they are to improve productivity.

Salespeople are Not the Center of the Sales Universe

Many executives are used to thinking that productivity involves improving the salespeople: improving their skills, getting them to work harder, or more intelligently.

This has a limited effect because it defines the problem too narrowly. It ignores factors outside the salespeople’s control (i.e., problems that are systemic, rather than local to the salespeople themselves). Lack of qualified leads, for example, is often something salespeople have a limited ability to control. Quality problems in product shipped to the customer, likewise.

The good news is this: if you can enable your management approach to be aware of the factors both inside and outside the salesperson’s control, you can begin figuring out the biggest causes of waste and bottlenecks. You can rely on data rather than assumptions.

The diagram below is useful in thinking about the sales production system, because it depicts components that are invisible if you think of the sales process only in terms of what salespeople do: the details of the work, the production flow, and the management system.

It helps sales managers realize salespeople are only part of a system that produces something, and that production system has stages and is measurable.

Some Components of a Sales Production System

Some Components of a Sales Production System

Figure 1

Managing the Sales Production System

The heart of the system is the production flow. The people doing the work need some kind of tools, job aids, and training to do their jobs (lowest level on the diagram). Since no two companies are alike, your people should generate these internally, though they may contain some proven “best practices” gleaned from elsewhere.

These “best practices” are not the secret, however. Far from it! Companies have paid millions of dollars to have best practices sitting on shelves unused by the sales force (this happens all the time!). There is a reason the best practices are not used.

The secret to improving the productivity of the system is in learning why the system is performing at a low level of productivity. Why are those best practices sitting on the shelf? (This is the “Problem behind the problem,” which I have written about before.)

Managers need to understand whether production is working as expected (highest level on the diagram). If implemented properly, measurements can reveal that information.

Most so-called “sales production systems” I’ve seen are focused on the details of doing (the bottom layer). They were not developed with any thought of detecting or analyzing feedback data (whether value was created or not). As a result, measuring and managing does not happen.

This is why managers cannot improve productivity. They do not have the ability to identify (much less implement) changes that will improve productivity because they cannot trace any evidence from the point where salespeople and customers are doing things all the way to those high-level Output / Input ratios we started with.

The ability to provide such measurements needs to be designed into a production system from the beginning. Unfortunately, in sales and marketing it usually isn’t.

At least, that’s been my observation. What are yours?

9 Responses to “Why Is Sales Productivity So Hard to Improve?”

  1. Great Post,

    I prefer to create sales "velocity"

    You can read about this on my post :Entrepreneur Best Practices; #1 “More” Sales or “Create Sales Velocity” ? http://nosmokeandmirrors.wordpress.com/2009/09/14/entrepreneur-best-practices-1-more-sales-or-create-sales-velocity/

    What do you feel is more important? Productivity or Velocity?

    Mark Allen Roberts

  2. Mark,

    in my book velocity is a way to higher productivity

    ~Christian

  3. Michael,

    I'm a firm believer in sales process optimization and sales/marketing integration. However I also believe in the importance of the sales peoples DNA. It is my observation that sales reps with higher goal orientation and lesser barriers to sales than average tend to sell more and take greater responsibility in getting new leads or contacting new prospects. I think you can be inspired and add another dimension than process thinking to your very inspirational thought leadership by understanding also the value of the sales rep profiles. I normally apply tests as SPQ Gold Test or Sales Key to help visualize and measure the strengths of the sales force as supplement to the sales process and management practices.

    Christian Milner

  4. Michael says:

    Christian,

    It is true that personality traits affect salespeople's productivity. I generally stay away from that topic because it hides the primary problem: Far more good can be created by designing and improving the system salespeople live in.

    If your team has a few supermen and women who can succeed regardless of the obstacles the company leaves in their way, that's great. However, having your business dependent on them is a poor strategy, IMHO.

    Just imagine what those people could achieve - and how happy they would be - if the system they operated in was designed to maximize everyone's productivity!

    Michael

  5. Niraj says:

    Hi Michael

    I have recently read your book (Six Sigma way to ) which is available in India now. I am a regular reader to your blog and read all the comments by other experts in the field of sales adn marketing. In my experience the biggest bottleneck a manager faces in India to sell his idea on Sales Process to top management. In India the economy is on growth path hence personality of sales person yield good results. Hence the top management thinks that Process is a waste of time and effort as it does not give results overnight and any process initiative is vehemently opposed by the high performing sales people.

    I would love to have some idea on the implementation of the sales and marketing process in high growth economies as China, India, Brazil etc.

    regards

    Niraj

  6. Michael says:

    Niraj,

    Process thinkers had a hard time selling senior management on process ideas in manufacturing at the beginning too. Now, among most manufacturers it is difficult to argue against the benefit of a process approach (though it is still not implemented well in many places).

    I think one reason this is true is there are more angles now that share some common foundations. Deming had his techniques and stories. Goldratt had Theory of Constraints and his success stories. Six sigma has its successes. Womack did a great job with the lean thinking concept. Then of course there is kaizen.

    Each of these provides a different way of communicating value to senior management. If they don't understand statistical variation, maybe they’ll respond to reducing waste. Maybe they'll understand the concept of bottlenecks.

    Selling anything requires communicating in the language the recipient understands. This is especially true for abstract words like "sales process" (You can learn about manufacturing processes in schools. You cannot learn much about sales processes there.)

    Which concrete problems and pains are your senior managers having? Solve for those.

    For example, which of these solvable selling challenges are most important?

    • Generating enough highly qualified leads for salespeople?
    • Enabling salespeople to prioritize the right prospects (rather than the wrong ones)?
    • Achieving much higher sales forecast accuracy?

    If you are dealing with a person who is uneducated about processes, you have to start on simple, small things and build from there.

    Michael

  7. Michael, please accept my apology for weighing in on your post almost 3 months after the original post. I found your post over the weekend and had to put my two cents into the mix.

    I’m glad to see someone talking about sales productivity platforms. The challenge of conceptualizing a sales productivity system is one I deal with everyday. As the VP of Sales for a sales production platform software company (www.xfi.com) our greatest hurdle is lifting sales leaders vision to think holistically about increasing productivity across the their sales ecosystem.

    Identifying and fixing isolated bottlenecks is so tempting for sales leaders. Seeking to make a positive impact on sales productivity these CSO will implement a central repository for sales material, or put in a system to facilitate the reference process, or implement a knowledge mash-up to help sales people research their prospects. These are just three of the hundreds of point solution categories available. The price is cheap ($50 per seat), short implementation (3 to 4 weeks) and seemingly intuitive results.

    The problem as you point out is that each of these solutions, taken individually or collectively, don’t address “the problem behind the problem,” are expensive to implement and support and don’t integrate well with one another.

    Instead sales leaders would do well to turn to the same type of platform concept used to automate factory floors decades ago. I don’t mean to suggest that sales, especially complex sales, is a routine repeatable process that can be easily automated. Instead I’m suggesting a platform that connects the people, process, programs technologies and content into a single, unified go-to-market production engine.

    Such a system focuses on automating the mundane elements of the even the most sophisticated sales process, provide sales with customized and personalized sales material to facilitate sales conversations and providing a closed loop quality and quantity feedback system on lead and production flow for all participants in the sales ecosystem.

  8. Michael says:

    Thank you, Ken. Well said!
    Michael

  9. sales management tools and softwares services like Extended DISC®, InField™ COACH and Profiler™ will help for appropriate knowledge to balance the additional loads on sales management team and sales managers and that's also help for sales productivity improvement.

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