Why Is Sales Productivity So Hard to Improve?
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:
Cost of sales (and marketing)
Quantity of orders
Quantity of opportunities
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.
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?