Increasing Sales Productivity7 Jun, 2011 By: Tom Callinan, Strategy Development imageSource
Increasing Sales Productivity
One of the largest and most overlooked issues within dealerships/VARs is sales productivity. For one, it usually isn’t measured. It is rare that a prospective client knows their sales productivity (average revenue per sales rep). That figure is as rare as the same dealer knowing their sales turnover statistic. Nevertheless, let’s focus on how the business owner can increase their sales productivity.
We’ll first start with some basics. The average employee stays with a company for less than four years. That isn’t my figure or a figure for our industry, or even specifically for sales, but rather a statistic from the US Census Bureau. In 1996, 39.3% of adults were with their current employer less than two years; in 2008 that figure was 35.9%. On the other end of the continuum in 1996, 27.8% of employees were with the same employer for more than 10 years and that figure was fairly constant at 27.1% in 2008. The total of all employees adds to 90% and there is no explanation in the chart: I assume the other 10% weren’t employed. That would mean the under two years figure is actually 40% of those employed.
The bureau of labor statistics has tracked 10,000 individuals since 1979, which at that date were between 14 and 22 years old. In the last 40 years this group has averaged 10.8 jobs between the ages of 18 and 42 (24 years).
My guess is that if you surveyed sales professionals you would find a higher than average employee turnover. But that is a hypothesis without any data so let’s run with the stats that clearly demonstrate we have less than four years with the average sales employee, and 40% will be with us less than two years. One fact of those statistics absolutely jumps off the page: I have to get the sales professional productive as fast as possible in order to ensure I get a return on investment!
Who is going to have the greatest influence on the success of the sales professional? His/her manager. You can find endless studies that support that statement so there is no qualification needed. But we might be in trouble because a recent survey of front line managers, conducted by consulting firm Development Dimensions International, Inc., demonstrates that bosses overestimate their own managing skills. One survey asked managers: “In your first year as a manager, did you question your ability to lead others?”…72% responded “never.” These managers were then asked to rate their skill levels in various areas. The weakest area was delegation. The next 3 weakest areas were gaining commitment, coaching, and adaptability.
So we have supremely confident managers that cannot truly delegate, coach or adapt - and that doesn’t gain commitment! Tell me that is not a scary situation. The manager’s self perceived strengths include decision-making, planning and organizing, and work standards. I look at my own career and these stats fit perfectly. As a sales rep I did everything I could to avoid my sales manager. He provided almost zero benefit and I could close a sale better than he could. As a front line manager—with the benefit of hindsight—I was totally unprepared and probably destroyed many sales employees’ careers. Don’t get me wrong; by the standards in place at the time I was highly successful, earning sales manager of the year recognition, etc., but that was because I drove my team extremely hard and was a strong closer. I “got them the business” rather than truly developing them professionally… unless of course, they learned through observation.
I eventually learned how to really be a strong manager. Unfortunately, as a manager you either learn by destroying careers or you learn by emulating another good manager…or if you are sensitive enough, your subordinates help you to become a real manager. And best of all, if you were or are fortunate enough to attend some type of training environment that provides you with the appropriate management tools and road map, to learn the necessary skills of being an effective manager, all the better.
Keys to Success
So the first key to rapid success for your sales professionals is to have a manager that is well trained in the art of management. If your sales productivity is not where you want it to be; and/or if your sales turnover is higher than you wish, the first place you need to look is at your sales management. That does not mean fire your sales manager but rather demonstrate through example and help develop your sales management. Start by getting them into a training program that provides a solid management system.
After the manager what do you think is the most important determinant of sales success in the copier industry? Is it work ethic? Is it sales ability? Work ethic and sales ability are both extremely valuable characteristics of a successful sales professional, but in the copier industry the single most important determinant of success is the MIF managed by the sales professional. Period, the end. Don’t believe me? Take your top sales professional and take away his (her) customer base and see what his results look like. Have him go out and cold call to find zero-based accounts.
One of the first processes we take a new client through (as a management consulting firm) is to value their MIF at the company level and then at the territory level. Typically, 100% of the time, and there are a large number of samples, the top sales professionals are never writing their MIF. Another way to say that is, 100% of the time the most tenured reps are losing the company’s customers. 99% of the time the company’s revenue is lower than the value of the MIF. So the company is investing in new sales professionals working to grow their revenue while the tenured reps are actually losing customers, and the company as a whole is not writing the revenue available in their MIF.
So if you want to increase your sales productivity you must ensure you have well developed sales territories. We need to have well developed sales territories and a highly trained sales manager. Now let’s move onto the sales professional.
Our industry has changed dramatically over the last decade, yet many in our industry sell the exact same way today as they did in the last millennium: Bigger, better, faster, same (lower) price (BBFSP). You know the routine—move the service revenue over to the lease to fund the buyout and show how the new device is the same or less in TCO.
The BBFSP sales tactic works okay when selling a replacement device to your customer base, but it isn’t nearly as effective when trying to displace your competitor. You see, choosing a new vendor adds risk to a transaction, and whenever risk is involved the decision moves up the management structure. Moreover, you have new competitors coming in through IT or finance, the areas where your sales professionals may not have comfort.
The final suggestion to increase sales productivity (at least in the confines of this briefly worded article) is to get your sales professional trained in how to sell in a more complex world. Your sales team really needs to understand IT and finance issues as well as purchasing, and they need to know how to develop a true business case and not simply sell on BBFSP.
Get your manager trained, develop solid territories using statistics, and get your sales professionals trained on how to sell in today’s challenging environment. Then you will see your sales productivity soar.
Callinan is the founding principal of Strategy Development, a management consulting firm for the technology & outsourcing space specializing in business planning, advanced sales training & operational & service improvement. He’s a former Vice President & General Manager of IKON’s largest business unit. Callinan@strategydevelopment.com.