How to Avoid the Fatal Sales Process Mistake Most Sales Managers Make
A few months ago, two sales managers, I’ll call them Frank and Betty, were stymied by a serious problem. They knew how to make their numbers, yet results weren’t happening.
Although their company was small, they had created a management system as sophisticated as those of much larger companies. However, they made one fatal mistake.
Below is a description of their system. Can you spot the flaw?
- Their product led their market niche, with more than 5,000 customers and lots of testimonials and successful case histories.
- Their sales process included descriptions of activities for each step.
- Compensation was competitive with other companies who were looking for similarly talented salespeople.
- They knew the personalities who could best succeed, so they screened candidates carefully.
- Their sales training demonstrated the company’s proven ways of qualifying prospects, conducting demonstrations, making proposals, and asking for orders.
- Their CRM system was configured with the stages of their sales process and the activities required for each stage.
- To help keep the pipeline moving, they established expectations for the amount of activities (such as phone calls, demonstrations, commitment letters, etc.) each week.
Now, if you guessed that this might be a technically-oriented company, you are right. It was a business-to-business software company that sold mostly over the phone. When I was there, it was clear that people enjoyed the camaraderie of a small company and liked their jobs as well.
Yet the numbers were not happening.
Frank and Betty were frustrated, to say the least. As we asked them to describe what was happening, a familiar story unfolded.
Frank: I think a lot of my guys. They’re working hard. But when the numbers aren’t happening, we have to be enforcers. It makes me feel like I’m acting like their mom, but what else can I do?
Betty: We’ve got to figure something else out. I still believe that if they hit their targets, things will turn out in the long run. It is just hard to keep revving them up to achieve that level of performance.
Frank: Tell me about it. Jason, my best rep, had to leave early for a doctor’s appointment the other day. He hadn’t made his quota for prospecting calls all month. I like the guy, but when I had to put my foot down, it wasn’t any fun at all.
Betty: Well, at least you don’t have to deal with Kamal. He almost always hits his call targets, but hasn’t made his quota for a long time. I guess I’ll have to put him on a program and start looking for someone else again.
I know you’ve heard these frustrations before, right?
Managers carefully think out their processes and the activity levels, and still things don’t work out. Or, they work only when the market is good, but not when things dry up.
You’ve been there, and so have I. It feels like the rat race was somehow converted into a maze. It is still a race, but most of the rats are stymied for some reason or other.
So what’s the problem? Have you spotted the flaw yet?
Quantity (Activities) vs. Quality (Results)
Most people in sales assume “the numbers game.” I learned it years ago when my sales manager said “If you throw enough spaghetti on the wall, some of it will stick.” It stuck with me, so to speak, because working our way through college, my dishwashing pals and I had thrown lots of spaghetti on the walls. Literally!
Unfortunately, the numbers game assumes quantity is the right strategy. More volume. More calls. More deals. Some of them will close.
This is true to a certain extent. If you don’t know how to improve the quality, it has to be true.
However, there is much more leverage if you can figure out how to increase the quality. A lot more spaghetti sticks to the wall when the noodles are just right.
For many years in sales, mangers had little idea about how to increase the quality. Fortunately, that is changing. Here were the keys Frank and Betty needed to turn their operation around:
1. Define the buying stages (from the customer’s perspective)
What problems cause them to start looking into the kinds of things you sell? What kind of information are they looking for when they are not yet ready to buy? What kinds of things happen internally that cause them to get serious? Who is typically involved in those situations, when they are almost ready to buy? What can your company do to help them get through each of those stages?
2. Define what quality means
What, exactly, is a qualified opportunity? What are the observable characteristics? One crucial factor is to identify this from the customer’s perspective, as well as your own. Develop these characteristics into a series of numerical scales (you can if you try hard enough), and you can perform some extremely valuable experiments. These experiments usually enable you to give salespeople a tool that will tell them (with 90% certainty) which deals will close.
Paying attention to the stages your customers go through and the quality scores of those deals gives you a powerful insight into your deal flow. Productivity means getting customers to go to the next stage and knowing they are even more highly qualified when that happens.
This is the difference between managing based on activities (which ignore quality) and managing based on results (which respects quality). Activity targets do not equal productivity. Far from it!
Salespeople know this viscerally (although they may not be able to articulate it). They may (or may not) know how to move deals along. But if you, the managers, do not know how to move deals along, everyone is lost in a maze.
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Productivity in Sales Equals Customer Actions, Not Activities
Frank and Betty knew well enough how to move deals along. They just had difficulty translating it into their system. The solution to their dilemma was to help them through the stages of sales process improvement: They quickly defined their customer’s journey, aligned their activities to those stages, and developed and statistically validated quality criteria.
The final change, which fixed the fatal flaw, was in the way they used the CRM.
No longer would they track salespeople’s activities each week. Instead, they tracked the flow of qualified opportunities. Only then could they get down to the brass tacks of helping salespeople sell. Activities, such as ways to qualify, do demos, etc., were tools salespeople could use as they saw fit.
They are craftspeople in a performing art, after all. When they got to a tough spot, their managers were there to help them analyze the situation and select the right tools (and even invent new ones) from the options available.
Salespeople and managers respected each other more. Forecast accuracy improved. When the funnel was low, the focus turned to lead generation instead of fruitless “closing activity.” Jason went on to win the salesperson of the year award. Kamal went on to be a highly valued member of the customer service team. And the rat race was good, as it should be.
Michael J. Webb
April 29, 2008
You’re right on target with a number of your points, especially configuration of the CRM system. So many sales leaders we speak with have brought in CRM hoping that it would force structure into selling approach. (Notice the word force, as in forcing salespeople to pound in data that does nothing to help them win business.)
What these sales leaders wind up with, though, is automated chaos.
The quantity vs. quality discussion is so, so important. I interviewed Jill Konrath for a podcast last week http://www.esresearch.com/e/home/document.php?dA=Jill_Konrath We discussed that very issue and were in total agreement.
There has to be a balance. If you make no calls at all, you won’t generate any business. If you only make calls, you won’t have any time to pursue business through the customer’s buying cycle to a win. So balance is important and the real metric is the flow of qualified opportunities. Bulls-eye!