Patrick Stakenas, President and CEO ForceLogix www.forcelogix.com

If you are a Senior Sales Executive and like most, need to drive more revenue out of more of your team, put the process in place with your managers and you will see the results:

Getting started on a Sales Effectiveness initiative; here are five questions every Senior Sales Executive should be able to answer… and if you can’t.. consider the benefits if you could!

Read below and decide if this makes sense. If it does, lend your sales managers a hand and start a sales effectiveness initiative.

1.                  What’s holding back your B and C players from driving more revenue and attaining quota?

2.                  Do you believe that coaching really has the impact that industry leaders have proven to be true and what leading analysts have studied, surveyed and documented?

3.                  What would it mean to have access to detailed rep. information on skill level, selling ability, product knowledge, marketing messaging or key leading sales indicators in real time?

4.                  How important is it to understand who is moving up, who is moving down, or who is not moving at all before the results come in?

5.                  Do the excuses of CRM or SFA challenges or other competing IT priorities trump the opportunity to improve team performance today?

In recent studies done by Ventana, Sirius, Nightingale Conant and the Conference Board of Executives, they found a common dilemma — a tremendous need for a sales performance and effectiveness plan, which is often thwarted by a lack of resources. This isn’t surprising considering the current statistics: According to the Bersin & Associates Performance Management 2006 Study, “only 32% of organizations have a consistent, enterprise-wide approach to this important business process.” And almost 90% still do not use specialized tools or software services to help get the job done.

Even though most senior sales executives are overwhelmingly enthusiastic about the possibility of implementing Sales Performance Effectiveness (SPE) it has been cited that internal time, resources, and budget as enormous barriers.

Here is the Reality: Implementing a Sales Performance Effectiveness plan actually may be the most cost-effective way to improve the results of your B and C players and remove the burden from your IT and HR teams to support the information you need to get the job done and improve the performance of your sales team.

The questions you need to answer:

1.                 What’s holding back your B and C players from driving more revenue and attaining quota?

Could it be a lack of attention to sales drivers and leading indicators?

Ultimately, a well-functioning and appropriately-used process can deliver real, bottom-line business results through understanding why people are not performing. Paying close attention, using automation, to track the critical leading indicators will give you and your managers a clear view of what is really going on with every individual and every team.  Understanding these indicators and tracking, monitoring and measuring them provide insight on if a salesperson is doing the right things to get them to greater revenue.

2.                 Do you believe that coaching really has the impact that industry leaders have proven to be true and what leading analysts have studied, surveyed and documented?

Fact is fact.. Coaching works, question is what do you do about it and how do you get consistent coaching and tracking of the coaching events.

Studies from the Center for Management and Organizational Effectiveness (CMOE) and the Sales Executive Council (SEC) who have analyzed over 2,500 sales professionals and as many as 500 sales managers determined coaching has a significant impact on sales results. 

Understanding this and implementing a coaching process to track, manage and monitor these results provides significantly greater value - up to 17% for your B and C players cites the CMOE.

The SEC study also revealed that the amount of sales coaching a person receives drove greater performance and had a direct link to retention. These studies and others have also drawn strong conclusions that tracking the individual being coached increases the level of engagement and overall effort given by these individuals on a daily basis as they can see themselves getting better and are acknowledged more often by both peers and managers.  This translates to increased revenue and profitability.

Establishing a coaching environment and providing the tools necessary to track and manage can take the results even higher. But what if they only improved your B and C players by 10%, or even just 3%?  Chances are that would still drive a huge increase in your numbers across the board. You would know who is coaching, who managers are spending their time with, and what they are coaching on.

You would know if it is really having an impact, the subjective nature of coaching becomes objective and actionable, it becomes real.  HR, marketing, senior management, supporting functions and everyone in the company will know that you are doing everything possible to drive more revenue to the company and that you care about your people.

3.                 What would it mean to have access to detailed rep. information on skill level, selling ability, product knowledge, marketing messaging or key leading sales indicators in real time?

Could it mean that you would finally have a simple way to understand the strengths and weaknesses of your team and how to correct them without having to rely on the IT, HR or finance team every time you are looking for information?

Often the IT department will tell you they will deliver this information… but it never comes or it comes on their terms. Don’t be held hostage: the need to view and access to sales rep. information on sales performance data for actionable insight is a must. You should expect to have detailed, rolled up information that gives you the power to be able to make decisions and realistically report to higher management on why thing are the way they are.

4.                 How important is it to understand who is moving up, who is moving down, or who is not moving at all, before the results come in?

Unlike most senior sales executives, you may be clairvoyant and know each week over week, month over month or quarter over quarter who is going to hit their numbers, but most senior managers do not know until the results hit.

OK, there are that select few, that 20%, who deliver for you time and time again. But what about the 80% that does not. Again, we are talking about the B and C players and understanding where they are headed is critical in order to improve team performance.

Managers who are activity engaged with their team and are using data and coaching on this data, based on the criterion you or your sales training or operations group have established will see who is engaging and getting better well before the results come in.

Chronic underperformers will be called out continuously as they will be measured  against the leading indicator criterion: are they making the calls? are they calling on the right prospects? do they understand the product or service? can they deliver the latest marketing message? are they at least working towards getting better?

Managers will be freed up from the tasks of gathering information to know who is getting better or worse. Accenture cites that sales managers spend 2 hours per day hunting for data, 50% of which is useless.  Managers will have the opportunity to spend the time with the people who need help, they can gauge and adjust to upward positive changes and have the knowledge and documentation to take action with those who will not or cannot perform to expectation. 

5.                 Do the excuses of CRM or SFA challenges or other competing IT priorities trump the opportunity to improve team performance today?

Let’s face it, this is holding you back.  Your livelihood is dependent upon your ability to deliver, but the priorities of the day are preventing you from taking action.  

Every day, more and more senior sales executives are coming to terms with the fact that CRM and BI tools have helped with efficiency, but it is very hard to link it back to growth and optimization of the sales talent. 

Even with the are countless articles from analysts and consultants that support this fact that  tracking, measuring, monitoring and coaching will drive 15% to 30%+ productivity improvement in your B and C players, you let IT, HR and others prevent you from doing what is right. Maybe it is a convenient excuse to dodge accountability?

 CSO Insights, Accenture, Bain, The Corporate Executive Board, Ventana, Sirius and countless others have cited the importance of getting grounded with their sales management, and it is time to wake up to this.

Patrick Stakenas, President and CEO ForceLogix www.forcelogix.com

The cost of CRM project failure…
By Richard Boardman

I get a bit blasé about the importance of selecting the right vendor. MyCustomer.com is due to publish an opinion piece that I wrote about CRM consultants not just being about vendor selection. And I have been known to suggest from time to time that effective requirements definition is actually more important. I think this is partly because we get to work with excellent vendors and avoid the incompetent. And while I’d love to say everything works perfectly all of the time, that would not be entirely true, but we tend to be dealing with hiccups rather than major issues.

However from time to time I’m reminded as to the price organizations pay when they make a misjudged purchase decision. I made a call this week to see how the second phase of a project we’ve been working on had panned out. The client had first involved us a couple of years earlier wanting help turning round a failing project. They had installed a supposedly front/office back office solution which had been partially delivered substantially over budget, considerably late, and with a wealth of missing functionality. The internal project team was working silly hours to make the best out of a bad lot, while having to endure the inevitable finger pointing that only failed IT projects can generate.

The impact of the failing system was widely felt. Not only was senior management embroiled in a time consuming battle to at least get things on an even keel, the lack of a stable IT infrastructure was impacting customer service, and key new product releases were being undermined. Overall the ‘system’ disrupted operations for about two years.

While the temptation was to throw the system out entirely, many of the elements of the system were so bespoke and critical to ongoing business continuity, that this wasn’t a practical option. We helped the company install a mid-market CRM package to take over the front office functions, integrated with those back office functions that worked, and have been steadily helping them steadily migrate functionality from the failing system into the new CRM environment.

The vendor we selected to implement the CRM system has done a great job, and the client’s confidence in using and implementing technology has steadily increased. The fault for the failing project lay exclusively with the ‘rogue’ vendor, but inevitably in these circumstances there’s a tendency to blame yourself as well, and as a result there was a creeping lack of belief within the client as to their ability to implement technology successfully.

Rather coincidentally another client we later worked with had a similar encounter with the same ‘rogue’ vendor. After two years trying to implement a system the client simply gave up and wrote their own solution. The cost of the episode was enormous and the psychological scars are deep.

It’s perhaps the impact on confidence that project failures create that may ultimately be the most damaging aspect. In an era where corporate success and failure will increasingly be determined by an organization’s ability to harness technology, it will be the confident that ultimately prosper.

The ‘rogue’ vendor is still trading and still gaining (and presumably fleecing) new customers. The laws of economics don’t seem to apply well to IT companies perhaps. We seem to tolerate incompetence in IT far more than in any other field of life. For anyone looking to make a major investment in technology I’d strongly advise they perform their due diligence well, the cost of project failure may be bigger than you realize.

Richard Boardman is something of a grizzled veteran of the CRM space having worked in the industry for the last 12 years and having been involved in implementing over 300 CRM systems. In 2004 he went from poacher to gamekeeper, and left one of the UK’s leading CRM vendors to set up Mareeba CRM Consulting with the pretty simple objective of helping organizations get a considerably better return on investment from CRM technology than was the traditional norm.

It Is Difficult to Control External Events if You do not Have Control Internally
by Jonathan Farrington

Even companies that enjoy the luxury of clearly superior products, realise that those products will not sell themselves. As a minimum, companies need a sales force comprised of skilled professionals who understand the application of the product range, have an in-depth knowledge of their customer base, market sector and of course the competition. But even all these elements together are not sufficient to ensure optimum performance levels and profitable sales.

So What Is A Sales Process?

Put quite simply, it is a set of procedures, which determine how a company wishes its sales team to operate – “The way we do things around here”

The most successful organisations have implemented a process and an all-encompassing framework for defining performance standards. This involves assessing, appraising, developing, reviewing, providing continual feedback on performance, as well as implementing efficient and relevant process tools

Lack Of Direction

Far too frequently, competent salespeople are expected to channel their own activities into the areas that will produce the quickest wins. Unfortunately, left to their own devices, they don’t develop and pursue a formal strategy for moving a sale tangibly forward during each prospect interaction, neither do they have a clearly defined set of goals against which to measure the progress they are making.

Typically, their judgment is based on gut reaction and is purely subjective i.e., “Oh yes, I’ll get that order, he likes me”, because salespeople have to be optimistic by nature. They end up “dancing around” with prospects, in the hope that eventually they will get to their chosen point on the dance-floor i.e. -the sale. In this scenario, the customer has complete control.

A Discouraged Sales Force Diminishes Sales Efficiency

When their efforts don’t pay off immediately, even experienced salespeople tend to become discouraged. They spend more and more time struggling to meet their sales quotas and working less and less efficiently.

Feeling increasingly powerless to influence prospects, they may also begin to press for a sale in ineffective ways – for instance, by arranging formal product presentations to prospects that they have not even qualified or who haven’t yet agreed that they need the solution. They allow prospects to milk them for information without getting a commensurate commitment first – and even worse, they fail to defend margin and make unprofitable sales in order to achieve quotas. The details of what goes wrong differs for each individual salesperson but the net result is always the same, a discouraged sales force, diminished sales efficiency (i.e. wasted investment of sales time and resources that fail to produce high quality sales) and, consequently, increased cost of sales which inevitably drastically reduces net profit.

What’s the bottom line? Sales never result efficiently and with maximum revenue unless the sales process is continually and closely managed. But before the sales process can be managed, it must be manageable.

Developing A Consultative Sales Process

From the Sales Director’s perspective, developing a consultative sales process means developing a comprehensive, formal, realistic and step-by-step outline of what salespeople are expected to do. This is just as appropriate for internal and totally reactive sales teams as it is for external pro-active ones. This outline includes the activity and calls they must make, the relationships they should establish with prospects, the documentation they should use in sales calls, the issues they must discuss and resolve with prospects and the tangible goals they must achieve in sequence along the path to each sale, in order to achieve maximum effectiveness.

It’s only when such an outline is in place that sales management can be in a position to:
o Monitor the sales force’s activity, progress and results,
o Assess issues as they arise and take appropriate action,
o Redirect individual sales representatives’ efforts efficiently.

Although many organisations appreciate the importance of being customer-focused and talk in vague terms about their “consultative sales process”, surprisingly few sales leaders invest the time and energy required to develop a formal sales process – a process that is at once detailed and resilient enough to guide their salespeople and permit effective management of their efforts.

Patrick Stakenas, President and CEO ForceLogix, www.forcelogix.com

The strongest houses are built on the strongest foundations. No matter how well-constructed and reinforced the basement, walls and roof are, none of it will stand under stress if the foundation is weak.  As well, a strong foundation will help strengthen an imperfect structure. 

The role of the sales manager is probably one of the most critical roles inside a company, yet executives rarely spend the appropriate  amount of time and money on them to ensure they have the proper tools, training and focus to achieve the goals that are set upon them.  

Recently there has been quite a bit of banter on blogs and in articles on how senior sales leaders, mid level sales management and sales people all do not want to be measured on anything except the end result at the end of the day. All that can be said on that is who is running the asylum, the doctors or the inmates?   Of course no one wants to be measured: to be measured is to be held accountable, and who wants to be held accountable?

What we are seeing at ForceLogix is a fundamental shift in thinking among senior sales leaders and probably more importantly mid level sales management.  Perhaps our customers are way ahead of the curve; they understand and appreciate sales process and the importance of tracking, measuring and monitoring both the objective and subjective elements of sales.  They are looking to set a benchmark from which to grow and they are focusing on their sales management to make it happen. They are practicing what the marketplace is preaching and the results are irrefutable.  

It is interesting, in the 20 plus years I have spent in senior sales executive roles, the best sales managers have always understood this.  They do not sell for their sales people, they do not swoop down and take credit for the sale, but just the opposite, they relish the thought of the win by the salesperson, they support, they coach, they track, they measure, they monitor, and they coach some more. Even good or OK sales managers can be great managers, as long as they are given a path from which to learn, to understand and to perform the functions that are necessary to provide the leadership necessary to build a strong team.

 There are countless articles from analysts and consultants that support this fact. Tracking, measuring, monitoring and coaching will drive 15% to 30%+ productivity improvement in your B and C players, will reduce your unplanned turnover in A players significantly, and will provide you with the documentation you need to support planned turnover of chronic under-performers.

 CSO Insights, Accenture, Bain, The Corporate Executive Board, Ventana, Sirius and countless others have cited the importance of getting grounded with their sales management, and companies are beginning to wake up to this.

Everyday more and more senior sales executives are coming to terms with the fact that CRM and BI tools have helped with efficiency, but it is very hard to link it back to growth and optimization of the  sales talent.  It is only when companies decide to truly help their sales management team with effectiveness by providing the necessary data, in a simple and easy to use format,  to do their job and provide a coaching process that is consistent and easy to do, will they see the impact as cited by the many analysts and consultants.

The funny thing about getting started is that Vice Presidents of Sales and Sales Operations have  the notion that their managers are uninformed or the task is too overwhelming to tackle because their data is not clean or because we don’t have sound process in place so there is no place to start. 

The key is to just get started and to keep it simple. Remember what we are doing here is building the foundation from which to provide the information and the process necessary to have great managers.  Pick a handful of attributes that you are sure are contributors to driving revenue and be sure to include leading indicators, not solely lagging. Then add the key lagging indicators to the mix.  From there, isolate the attributes and break them down so your managers can coach on them and track, measure and monitor the process. 

This may sound simple, and it is.  The problem is, senior sales executive get caught up in perceived roadblocks that prevent them from taking action;

·         We are in the middle of rolling out a new CRM system

·         We have built a process and we need time for it to settle in

·         We are training or have just trained our sales team and we need to see what happens

·         Our data is bad, so we cannot measure or hold them accountable

·         My managers do not know how to coach

These are among the many reasons that executives succumb to no action, when in fact if they saw the light, they would realize that by applying some basic measures to each of these they would get more out of their investments, clean up the data and begin a process for their managers to learn how to truly and effectively coach.

Take action!  Start by asking a few questions about each of your sales managers;

·         Was the sales manager one of your top reps. who was promoted or were they the person who demonstrated the ability to lead and coach?

·         Was the sales manager promoted solely on individual sales performance or because they followed and completed a leadership development plan?

·         What tools and training did you provide for your sales manager before they were turned lose?

·         Does the sales manager really understand the key attributes and behaviors that drive revenue?

·         Are you providing the sales manager with the necessary data on drivers and lagging indicators, or are you just giving them the end of the month sales report?

Effective sales management requires a substantial amount of personal leadership that is built on sound information and coaching.  You can build and even rebuild the foundation of your sales organization through taking  immediate steps that provide the manager with what is necessary to lead a team to greater heights.

Throw out the past notions and institutionalized thinking, forget about the perceived reasons to not take action, make a business decision to take action and begin building the foundation for your successful management team.

The sooner you begin, the greater chance of success you will have.

Patrick Stakenas, President and CEO ForceLogix, www.forcelogix.com

Naturally, if you’re in the market for a reasonably large system, you have a great many ways that you can customize the system for your organization’s particular needs.  But even if you’re small you have some choices to make, and possibly a little customization to do.

But options and customization means decisions and decisions inevitably mean you probably can’t have the system do everything that everyone in the company would like it to do.  So, where do you put the emphasis?  What department gets what they want, and which departments have to give something up?  Or does everyone share the suffering and everyone gives something up?

The natural tendency is to try to get the system to do everything everyone wants and when it is obvious that it can’t, to have everyone give a little, meaning on one really gets what they want, but everyone gets a little something.

That design by committee tendency results in failed installations.  The system never lives up to expectations because it never really had a chance to impact any department in a meaningful way.  When everyone gets a little but on one gets it all, everyone ends up frustrated, with the company being the biggest loser.

The natural first question is why is the system being implemented?  What is the primary purpose for the system?  Is it to exchange information between sales and customer service?  Is it to manage compensation?  Is it to track the activities and behaviors of individual salespeople in order to improve sales efficiency?  Is it to coordinate the activities of and exchange information between sales and marketing?

That natural first question however should be secondary to the question of who will be primarily responsible for imputing the information.  Is it marketing?  Is it sales?  Is it payroll or shipping?

If the primary user sees little or no return on their time investment, the installation will fail.  If sales is responsible for the bulk of the data entry and the individual sales team members are the ones doing the data entry, they must see tangible benefits to themselves or they simply won’t give the system adequate attention; likewise if the primary user is customer service, marketing, or any other department.

Certainly, senior management can dictate compliance.  But demand compliance seldom works well.  Bribery can be used, but that tends to wear off after awhile, meaning the bribes have to get bigger to maintain compliance.
Rather than trying to force a system that offers little benefit for those who are primarily responsible for its maintenance, why not recognize human nature for what it is and design the system from the beginning to cater to the natural tendency of employees to use those things that help them and avoid those things that don’t?

Rather than creating a system that encourages resistance, why not opt for a system that encourages cooperation?  If customer service is the primary user, institute a system that will bring real benefit to customer service reps.  If it is sales that does the heavy lifting, design a system that gives salespeople real information that will improve their ability and skills to sell.

Does that mean your system might not do all they you want?  Yes.  Does it mean that some departments will be disappointed?  Yes.  Does it mean that eventually you’ll need a system primarily for those other departments?  Yes.

But talk to one of the companies that has thrown millions upon millions at systems that do a little for everyone and not much of anything for anyone and you’ll probably be happy to invest a fraction of the dollars for a system that really does do something of value.

Fortunately, technology is evolving and may someday be able to be all things to all departments–as some developers currently claim their systems to be.  Until that day comes when the wish is a reality, it is best to remember that human nature isn’t evolving quickly enough to expect your employees to act outside of what’s beneficial to them.

According to Shamus McGuillicuddy of SearchCIO.com, AMR Research’s study of 190 IT executives indicated that almost a third of all CRM installs failed, while Forrester Research discovered less than 50% of all installs it surveyed were fully satisfactory.

The main sticking point in these failures?  Salespeople.

Why?  They saw no value in the systems for themselves.  For the salespeople, the systems were time wasters, draining sales time for no return.

OK, so that’s no great big surprise.  We already know the vast majority of systems ignore the end user in terms of providing an incentive for using the system.

The unfortunate surprise is how developers are looking to resolve the issue.  They recognize that they must include the salesperson in the equation if the system is going to be successful.  They have to give the salesperson a reason to participate.

And their enlightened answer?

According to AMR senior research analyst Robert Bois, the industry’s solution to the issue is to give salespeople value in terms of providing them ‘performance metrics.’  Great idea.  But what ‘performance metrics’ are they building into their systems?  Hold on to your seat—this is a big one—they’re providing metrics that will show the salesperson how they are performing against————their quota!  As though every salesperson doesn’t already know how they’re performing against quota.

Until CRM developers get serious about including the sales team in the design of the system, they’ll continue to flounder with unhappy installations.  Salespeople don’t need a software package that demands a great deal of time and energy to maintain to tell them something they already know.  They need real metrics, not some easy fix that some IT guy decides must be important.

I received an interesting email over the weekend from a VP for one of the companies that develop sales metrics technology. He took great exception to my post of last week titled “Will Sales Metrics Technology Ever Become a Needs Based Sale?”

Before I get into his email, let me again point out he identified himself as a VP, not necessarily of sales, just as a vice president of the company. Nevertheless, I did find it interesting that he chose to send the email to me rather than posting it as a comment on the blog. Whether that indicates a desire to confront me directly or an understanding that his views may not sit well with salespeople if made public, I really have no idea. So, assuming it the latter, I’ll not reveal either his name or his company—and since I’m far from convinced that his position is unique to him, I’m not even sure his identity is important anyway.

The reader, I’ll call him John, challenged my contention that sales technology firms should be targeting part of the sale towards salespeople and front-line managers to gain their support for the technology. John contends that the technology’s benefits and application go so far beyond the individual salesperson that unless they have a larger perspective of the company’s needs, they simply cannot appreciate the value of the technology and are thus in no position to give an opinion on its value or what it can help accomplish for the company.

Technology developers, he says, have limited marketing and sales budgets and don’t have the time or the money to address individuals and their ‘personal issues.’ Instead, the companies must concentrate their limited resources on the decision makers. Selling to the individual sales team members would like “a lumber yard selling to each individual carpenter instead of to the builder, hoping the carpenters will then demand the builder buy from the lumber dealer.” According to John, “the builder designs the house and buys the lumber; the carpenter’s job is to use the material to the best of their ability.”

He argues that targeting the decision maker in the sale of sales technology is no different than any other sale. “Those salespeople’s managers would be outraged if they discovered their salespeople were wasting company resources targeting non-decision makers.”

John’s analogy of the lumber yard trying to sell the carpenters on using the lumberyard’s product indicates a lack of understanding of what his company is selling. Both the builder and the carpenters understand that lumber must be bought. There isn’t a question in either of their minds as to the necessity of the product. Consequently, it generally makes little difference to the carpenters who the builder buys from as long as the lumber is bought and delivered in a timely fashion. The lumber dealer doesn’t have to convince the carpenters that lumber is a product that will enable them to do their job better—they can’t do their job without it.

Salespeople have been doing their job–many quite successfully-for thousands of years without sales metrics technology. John’s product is fundamentally different from products that are needs based–unless John and his associates can create a real need through demonstrating the product’s real value to the end user.

Furthermore, many salespeople spend a great deal of time selling non-decision makers. Most salespeople want to identify not only the decision makers, but those non-decision makers who can influence the decision to purchase—or not to purchase. In most instances, those non-decision makers who can influence a purchase can have only negative influence on the purchase—that is, they can only influence to say ‘no,’ not to say ‘yes.’ For John and his competitors, those non-decision making influencers are the salespeople and front-line mangers who must use the product, ignoring them and their ‘personal issues’ can only be done at great risk.

I’m certainly not advocating that technology developers ignore selling to upper management, but by doing so exclusively, they are not creating the grassroots need and demand that can drive the sale. Certainly, all companies have limited marketing and sales resources and those resources must be used wisely. A wise use would be to generate demand for the product–and that isn’t going to come from upper management.

A reader from Microsoft recently asked me an interesting question:

• What are the key parameters which define Operational Excellence in a sales and marketing organization?

I like the question, because Operational Excellence isn’t just a slogan or a matter of opinion. It is a fact that businesses that achieve Operational Excellence produce the most consistent growth and profit performance in the long run.

Operational Excellence is the result of applying the scientific method to achieve the goal of a business (which, as Goldratt said, is to make money now and in the future). The scientific method gave rise to the seven quality tools and the Lean and Six Sigma tool sets (among others), which enable people to measure facts so they can understand causes and effects. Armed with these insights, people can cause their companies to steadily improve quality and yields while reducing waste and cycle time.

Ask production managers how their business is going, and they’ll be able to provide projections based on carefully defined measurements of facts. They’ll be able to translate their figures from operational into financial terms in the blink of an eye. And their answers will turn out to be mostly correct in the end.

Ask sales and marketing managers how things are going, and they’ll typically say “Great!” If they’re lucky, they’ll be able to point to a big customer order that recently landed and to say “We’re ahead of plan!” However, their projections usually don’t turn out to be correct in the end.

Does the Emperor Have Any Clothes?
Sorry, but I have to be “in your face” about this. Most corporations have a pretty poor idea about what is really going on in sales and marketing. Of course, marketers and sellers (and company presidents) desperately need to know what is going on. They track their “results” like a pride of lions track straggling cattle on the African Sahara. Often these are some of the smartest people in the company, but they really don’t know what is going on.

That’s because they haven’t built the means necessary for them to know. Want proof? See how well your people can answer any of these four questions:

• Do you really know what a lead is? 
  This one is so easy, you’ve probably tried it before: Ask a couple of people in the sales department how they define the term “lead.” Now go ask a couple of people in the marketing department the same question. Chances are, their answers won’t even be close. You’ve just identified a gigantic hole in your company’s bucket. This is a fixable problem, don’t you think? Until it is fixed, marketing will continue to generate more of what sales doesn’t want while leaking profits uncontrollably.
• Do you know which deals on the sales forecast will close?
  The accuracy of most field sales forecasts is miserable. The cost of this problem ripples like a tidal wave throughout the company. Yet, this is quite a fixable problem. With help, your sales team can build and validate a short-medium term sales forecast instrument that is accurate 90% of the time. Forecast accuracy can be gotten under control and systematically improved. Otherwise, it’s another big leak in the bucket.
• Do you know which process improvements are working? 
  Get the data for the number of orders or the revenue by time period over the past two years. Does the data demonstrate a shift in the mean of the process yield as a result of attacking a root cause? You do have a program in place for knocking out the most important reasons for lost deals, don’t you? Fail this one, and, well … how many holes are in your bucket now? 
• Do many of your corporate initiatives fail to achieve their goals?
  How many of your product launches, promotional campaigns, lead generation efforts, and other initiatives have failed to achieve their goals? Most companies live with this chronic problem. Yet it is hard evidence that someone doesn’t know what they need to know about what works out in the field with real customers.

How did you do? On any of these questions?

I didn’t think so.

Now, go over to your VP of manufacturing’s office and ask him/her some similar questions (tell him/her to be patient and that laughing at you isn’t fair):

• How do you get people in the purchasing department and the production department to have the same definition of the term “raw material?” 
• How do you manage to continuously improve the accuracy of your production forecast?
• Could you tell me about some process changes that have caused at least seven points above the mean in your production yields over the past two years?
• How many of your production initiatives or projects actually fail to achieve their goals?

See the difference?

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It’s Not Your Fault, but It Is Time to Grow Up
As I said previously, marketers and sellers (and company presidents) are often among the smartest and hardest working people in the company. The fact that they don’t understand what Operational Excellence means in sales and marketing is not their fault.

At one time, manufacturing executives didn’t understand those things either. Thanks to the efforts of geniuses like Shewhart, Deming, Taguchi, Ohno, and others, they realized they needed to make their work more visible so it could be measured and analyzed–and improved. 

By trying to “see” inside their manufacturing processes, diligent manufacturing executives and engineers created a market for improved sensors and control systems and production management systems. Now the inside workings of molds, extruders, and production equipment of all types are taken for granted. So is measuring the conversion of raw material to work in- process and finished goods, making it possible to translate operational measures into financial ones.

What does Operational Excellence look like in sales and marketing? Here are some prerequisites for being able to achieve it:

• Value = actions by the customer.
  Recognize that marketing, selling, and servicing exist to serve the customer. The value created (for the customer and for your own company) is measured by the customer’s responses to your actions (headlines, offers, requests, proposals, etc.). Actions without customer response = waste. 
• Banish the functional mindset. Replace it with systems thinking.
  Your customer wants to get the results you promised. Their relationship is with your company as a whole, not the marketing department, salesperson, or service representative. Those functions are interdependent–they must be managed as a system. Optimizing one function at the expense of another causes your company to fail its promise to the customer. Period.
• Make actions and results visible.
  Language is a tool for dealing with the facts of reality. Every word, concept, and generalization should be traceable to the specific facts and characteristics that give rise to them. Creating operational definitions is a critical step, especially for the stages of production (such terms as “leads” and “qualified opportunities”). Don’t allow “floating abstractions.” All words should mean something measurable in reality. Everyone should be able to trace those meanings.
• Have the discipline to “close the loop” on your process.
  Executives are prone to “defining the sales process” and leaving the details up to everyone else. Employees are prone to “lip service” to keep the boss happy and avoid the uncomfortable. Don’t fall into either of these black holes, because you’ll never come out. The sales process must be “home grown.” Break it into its smallest components and learn how salespeople solve those problems. See how their solutions vary and why. That is where your real sales process is. Always remember that.

Why Pursue Operational Excellence?
Companies whose sales and marketing departments choose the path toward Operational Excellence will have a variety of competitive advantages:

• Their knowledge of what their customers respond to will be clearer and more timely.
• The ideas that flow from customer and salespeople’s insights will drive a variety of experiments, each of which increases the company’s knowledge of how to make deals flow faster and how to make more money in their markets.
• These businesses will understand where their bottlenecks are and the financial impact of potential improvements in their processes.
• They inherently take less risk, because they have established a range of simultaneous experiments, the results of which provide the evidence needed by product managers, marketing managers, and sales VPs for decision making. Initiatives that don’t meet expectations are the exception, not the rule.

The predictability and stability of their financial results will make them more attractive to investors, who will be willing to invest more money in them than their competitors. 

And those are just a few of the reasons I can think of. Can you think of others?

May 7, 2008
Michael Webb and Robert Ferguson
Sales Performance Consultants, Inc.

Will salespeople and managers ever demand their company acquire a sales metrics system or will the sale always be a ‘need’ created by the technology companies themselves? Currently, there is little or no demand by the sales force for the company to acquire the technology. The sale of sales metrics technology is driven not by demand from the field, but rather by the push of the technology companies to create the need in senior management.

If you examine the literature and discussions on the subject, you find that virtually everything written—from the articles to the blogs to the commentary on the blogs is written by those with a vested interest in the sale of the product—developers and tech consultants. Seldom do you run across anything, including interviews, by the product’s users or those who would be users.

The question, then, is this an indication that the technology is so new that its existence hasn’t been recognized by the end user—or is it an indication that the product isn’t viewed by the end user as having any real value for them?

The answer to that question will ultimately determine the success or failure of the technology. CRM has been a top down decision with senior management determining it to be of value and then finding resistance at the user level because the user hasn’t found personal value in the technology.

Is sales metrics technology headed in the same direction? Unless the industry can create awareness and demand at the salesperson and front-line manager level it may well be that the technology will end up with the same reputation with salespeople as CRM—accepted and welcomed by a few, resented and misunderstood by the majority.

Investing time and energy to get independent voices—from salespeople to managers to trainers and coaches acquainted with the technology and ‘on-board’ with its value is going to be necessary if the industry wants to turn the product from a created ‘need’ to a demand from the sales team for the company to invest in the product.

The alternative is to slowly build the industry through a top down sale, hoping eventually enough product will be on the market and enough salespeople will find value in the product that other salespeople will begin demanding the technology be implemented in their company. With dozens upon dozens of companies in the marketplace and more entering all the time, do product developers have the time to take a long-term approach?

If technology developers in fact have products that will help salespeople identify their specific skill and behavioral needs so they can address them and increase their sales, they need to be aggressively seeking to bring salespeople and managers on-board as enthusiastic supporters of their products. In addition, they should be seeking to develop the interest, support and enthusiasm of the sales trainers and coaches who work with and influence salespeople and front-line sales mangers. Convince the sales team of the product’s value and the company will follow; sell the executives without selling the user and the process will be a long tough pull.

What does a new sales manager cost?  Unfortunately, there has been little written and less studied on the subject.  The cost of hiring a salesperson is fairly well documented—somewhere in the neighborhood of at least three to four times their salary, so if your average salesperson is making $50,000, your minimum cost to hire and train a new salesperson will be $150,000 to $200,000.  That’s a significant investment.

A small, very unscientific, informal survey by McCord Training indicates the hard and soft costs of hiring an outside sales manager or promoting a salesperson into management is significantly more expensive than hiring a salesperson.  The survey indicated the minimum costs associated with a new manager are in the area of five to seven times salary.  So if your manager’s salary is $50,000, your first year expenses for that new manager are in the area of $250,000 to $350,000—minimum.

Where are the dollars spent?  Whereas a new salesperson’s investment tends to be in formal and informal product and service training, lost sales opportunities, management’s time invested in the new hire, and the costs associated with hiring the salesperson, the new manager’s costs are almost all related to lost opportunities and wasted resources.

Lost opportunities and wasted resources come in a great many shapes—insufficient coaching and mentoring of the sales team, overlooking new market opportunities, not recognizing and reacting to new initiatives and expansions by competitors, not acting to correct or eliminate destructive behavior by team members, misallocating discretionary training and marketing dollars, as well as a number of other areas.

False Expectations
Few companies hire a new manager or promote a salesperson into management with the intention of simply letting them sink or swim.  Most often the company’s management sincerely expects to give the new manager the resources they need to succeed through an informal structure where the new manager’s manager–and possibly others in the company–is available to help the new manager as he or she has questions or as situations arise.

Seldom does this informal structure work.  Soon after coming on board or being promoted, the new manager discovers that his or her manager isn’t available when needed; others in the company are too busy to help, as are the other front-line managers the new manager tries to connect with.  They quickly discover that despite the best of intentions, they’re left on their own.

Within short order a pattern develops.  The new manager determines they can’t wait for help and either makes decisions on their own without sufficient background to make the appropriate decision or they simply ignore the issue hoping it will resolve itself.  Mistakes are made.  At first, the new manager is given a gentle slap on the hand and some guidance.  As more and more mistakes are made, the gentle slaps become harder; the new manager’s manager becomes less patient.   Within a few months, both the new manager and their manager are both frustrated.  Within 12 to 18 months, there is a better than 50% chance the new manager will no longer be with the company—either leaving on their own or having been let go.

Informal Training Programs Don’t Work
Although well intended informal training programs don’t work.  An informal program is by definition a catch as catch can program.  The new manager is encouraged to seek help as needed, wherever that need arises.  Consequently, not knowing when or why they’ll need help, help is usually sought only when it is needed immediately.  That immediate need often occurs when the individual who can help address the need is unavailable, requiring the new manager to either wait until someone who can help is available or to address the issue without counsel.

The expectation in an informal program is that the new manager will have the ability and foresight to seek guidance before it is needed or that those who can help address the issue will be available when needed.  Both of these are unrealistic expectations as the new manager doesn’t have the experience or background to anticipate many of the situations they will encounter, and those that can give guidance and support cannot neglect their primary duties to be ‘on call’ at a moment’s notice.

Addressing the Issue
Of course, it doesn’t have to be this way.  There are alternatives to the well intended but ineffective informal training the company intended to do:

Training Program: A formal training program that each new manager undergoes is an excellent choice for larger companies.  Whether constructed and presented by the company’s training department or by an outside vendor such as McCord Training, a formal program should enlist support from a number of departments to address each area of the new manager’s responsibilities.  Consequently, the program may bring in individuals from finance, accounting, shipping, manufacturing, human resources, and a number of other departments.

Although most often presented in a structured, multi-day classroom setting, additional one-on-one coaching for an extended period must be an integral part of the program to insure success.

Coaching Program: A one-on-one coaching program for each individual manager is perfect for small to mid-size companies and has certainly been very successfully employed by large companies as well.  Typically an outside management coaching company such as McCord Training or any of the other quality coaching companies is hired by the company on a 6 month to year contract to formally coach the new manager.  Often the coach will pull in individuals within other parts of the company as needed to address particular areas of responsibility.

Management Based Mentoring Program: An alternative used very successfully by McCord Training has been to set up a formal mentoring program within the company’s management where a senior manager from each department that touches on the new manager’s areas of responsibility engages the new manager for a set period of time to mentor them on how to manage their responsibilities within that area.  A senior manager from accounting would work the new manager on budgeting and cost control, a manager from human resources would work with them on human resource issues, and other managers from other departments would take their turn.

The difference between this and the informal program established by most companies is the formal mentoring program is just that–formal.  Both the new manager and the department executive know the mentoring process is important and a set time is scheduled for meetings.  It is the department manager’s responsibility to prepare the new manager for the issues they will face, not just to react to the particular questions the new manager may have.  Each department manager has a formal agenda to address that is designed to prepare the new manager to fully execute their duties.

Manager Hired Coach: The least desirable but often used method of addressing the issue is for the new manager to hire their own coach.  Once they understand that they are in a sink or swim situation, many will take the initiative and hire a coach to help them learn and perfect their management skills.  Although their coach will help them become quality managers, a byproduct is often resentment on the part of the new manager that the company ‘left them out in the cold.’

Manager Training is Becoming More Critical
With the introduction of sales metrics, training front-line managers will become increasingly more important.  Those costs of five to seven times the manager’s salary will increase as the opportunities to increase sales performance increases due to better understanding the coaching and training needs of individual salespeople, more market opportunities will be exposed through an analysis of better and more accurate sales and market data, and as competitors enlist the sales metrics technology to sharpen their sales teams.

Whether a company chooses an outside vendor, an in-house training department, or a management based mentoring program, investing in the success of front-line managers doesn’t cost, it saves, it increases sales, and it increases profitability.