Veteran's Great Quote Makes News and Has Terrific Lessons for the Sales Profession

Posted by Dave Kurlan on Tue, Feb 21, 2017 @ 14:02 PM

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Disclaimer:  This is not a political post even though I quoted someone with a political opinion.  The entire article is about sales.

On my way to the office, I was listening to FOX News when they cut to a diner in Jacksonville, Florida to interview some of the patrons there.  One of the people interviewed was Stanley, a Veteran who said he had two messages he wanted to share.  He said, "To the media, don't make in-depth assumptions from shallow observations.  And to the obstructionist democrats, we have a saying in the military.  When the horse dies, dismount and quit riding that dead horse."  

I might not have nailed his quote word for word, but I'm sure I captured the gist of it. Just think of the sales lessons that can be taken from this!  The short video below is from the FOX interview and below that I will share some lessons for the sales profession.

Don't Make In-Depth Assumptions of Shallow Observations.  Salespeople make more assumptions of a prospect's buying potential and readiness than you can imagine.  They observe what appears to be interest and then, instead of uncovering their compelling reasons to buy, thoroughly qualifying and building a case, they assume the prospect is "good" and will "probably" do business, hastily create a proposal, forecast the business to close, and then spend most of their time in the act of futile and ineffective follow-up.  Result?  Dead opportunity.

When The Horse Dies, Dismount.  Salespeople with nothing but dead opportunities in their pipeline are pretty much dead themselves.  We are seeing inadequate pipelines in many companies and there are multiples reasons for it.  They include, but aren't limited to: 

  • Lack of accountability
  • Lack of clear expectations
  • Confusion over whose job it is to find new opportunities
  • Unwillingness to make cold calls
  • Over-reliance on social selling

Salespeople who include their dead opportunities in the pipeline are reluctant to archive them for several reasons.  They include, but aren't limited to:

  • Fear of letting go
  • Repurcussions of an empty pipeline
  • The reality that without those opportunities they will have to prospect
  • Fear of rejection
  • Alternate facts
  • Lack of Commitment
  • Poor Outlook
  • Ineffective Hunting skills

I believe that Stanley shared two great, shallow quotes that deserve more in-depth analysis!

Speaking of News, here are some other things you should be aware of.

My thoughts and a fantastic Wharton School of Business video on why sales leaders fear predictive assessments appear on LinkedIn Pulse. Read and watch it here.

My Annual Sales Leadership Intensive - the best two days of training on the planet on how to be an elite sales coach - is coming up on May 17-18.  Learn more here. If you would like to attend, use discount code DK-Blog-Subscriber.

Earlier today, I presented a 30-minute session on how OMG's Tailored Fit is not only different from benchmarking, but makes benchmarking silly and unnecessary.  It was very fast-moving, had lots of data, a good story line and a sneak peak at the magic of the OMG sales selection tool.  

Topics: Dave Kurlan, sales leadership, sales pipeline, selling tips, lost sales opportunities, fox news

It's Coming Sooner Than You Think - 5 Keys to Prepare Your Sales Force for the Recession

Posted by Dave Kurlan on Thu, Mar 10, 2016 @ 06:03 AM

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You remember the last recession - the great recession - right?  I remember that in November of 2008, the business stopped coming in as if someone had turned off the faucet.  Bam!  We lost a third of our revenue overnight - and we were prepared for it!  I predicted the last recession as early as September of 2006 with this article and in the summer of 2008 with this article.

In my business, I can see two trends ahead of others and I began seeing both of those factors begin to kick in last month.  Do you know what  they are?

The first is sales candidates.  For about two years, there has been a very significant shortage of great candidates.  But that began to change last month, when in the areas where it has been most difficult to find good sales candidates and sales management candidates, we are now beginning to see more of them express their interest.  Why?  Things are not looking all that rosy where they are working and they are out ahead of the curve looking to make a change.

The second is spending freezes.  We are starting to see the larger companies put all unnecessary spending on hold - they are hoarding cash again - and when that happens, the economy stops growing, begins to shrink and bam - we are in a recession.

I sure hope I'm wrong, but the signs tell me I'm right.  So what does this mean for you?  These are the top 5 things you must do right now:

  1. You had better sell your ass off while you can because we just might have another 2-3 year dry spell.  It's not a coincidence that by the time the 2008 election took place, we were deep into it.  And what's coming up at the end of 2016?  Right.  And with the way the election is shaping up, our choices might not be the ones that we had envisioned.  If things continue the way they are heading, the choice will be the guy who is bad for business or the guy who is bad at being presidential.  (Just an observation, not a political stance!)
  2. You must be better at differentiating, selling consultatively, selling value, qualifying and closing than ever before.  On the line are the opportunities sitting in your pipeline today.  If you fail to get them closed because you skipped a step or two, or you accepted a put-off, you might not get that business closed until 2019!
  3. Prospect like never before.  Get every possible new opportunity into your pipeline while prospects are still willing to meet with you, talk with you and share with you.  Then see #2.  The window won't be open for very long.
  4. Salespeople who do OK when things are good, tend not to do so well when things take a turn for the worse.  If you have any salespeople that suck when it comes to getting people to spend money when they don't want to, then now is the time to get them trained.  Do not put this off.  Training for reasons like these is not  a nice to have, it can mean the difference between killing it in a recession and being killed.
  5. Coaching!!  Sales leaders must become masters at coaching - now - because the one thing that can make a difference is constant, effective, non-stop, coaching.  Impact every opportunity.  Grow every salesperson.  The timing is perfect as my top-rated annual Sales Leadership Intensive is coming up in May.  Attend this comprehensive two-day coaching extravaganza and you should be able to coach your salespeople through a recession.

Get ready because here it comes!

Topics: sales pipeline, Closing Sales, sales effectiveness, long sales cycle, sales win rates, recession of 2016

Sure Fire Way to Know Which Sales Opportunities are the Best Sales Opportunities

Posted by Dave Kurlan on Wed, Feb 24, 2016 @ 06:02 AM

I just love it when cool gets cooler and I'm not talking about the winter weather in New England.  About a month ago, I wrote this article on Targeting and shared a generic model for scoring opportunities.  George Bronten and Henrik Oquist, CEO and COO of Membrain, took note and already developed the concept as a new feature for their world-class CRM application, Membrain.  You have to see how we integrated this new feature into the Baseline Selling version of Membrain.  In the image below, you can see that we added a scoreboard milestone at two stages of the sales process.

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This allows us to purposefully rescore an opportunity as we learn more about it.  The next image has a little more of the scoring detail.

Scoreboard-Detail2.jpg

As you can see from our own instance of Membrain, we score the size, title, urgency, timeline and amount of competition for a particular opportunity.  This opportunity would have received a much higher score if there it was a smaller company, there was greater urgency and the timeline were this month instead of this quarter.  You might be questioning why the score would be higher if the company was smaller...A bigger company has 10 times the number of things that could delay or prevent a sale from closing and while all of those things could also occur with a mid-market or smaller business, they are far less likely at this stage in the sales cycle.  Don't believe me?  Then you don't have enough experience with enterprise size accounts!

Finally, in this listing we can rank opportunities by their scores (right-hand column).

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Some CRM applications have the ability to rate the likelihood of closing based on assigned weights to various milestones or stages.  While that is better than when salespeople enter an arbitrary percentage, it's not nearly as good as when you have created specific criteria and values.  Neither man nor machine can skew those things!

In just a few days, this scoring system has had a tremendous impact on our company.  We are able to look at opportunities through a different and more accurate lens, allowing us to make better decisions about sales forecasts, resource allocations, and specific opportunities.

Thanks, Membrain!

Topics: Dave Kurlan, sales process, sales pipeline, membrain, sales forecast, scorecard

What True Story Does Your Sales Pipeline Tell You about Your Business?

Posted by Dave Kurlan on Thu, Nov 05, 2015 @ 12:11 PM

Yesterday I was looking at the dashboard in my new car and noticed that one of the gauges could be swapped out.  There aren't any fixed gauges on this dash because the gauges, ranges and needles are displayed digitally. I can even change their color!  The thing that caught my interest though, was the flashlight effect where the ticks to either side of the needle are brighter and bolder to draw attention to where the needle is pointing.  That got me thinking about the dashboards for my company.  First I looked at the dashboards for Kurlan & Associates and because of what I saw, I never got to the Objective Management Group dashboard.

We use Membrain for our CRM/Opportunity/Pipeline Management system because it's the one we recommend most often to our clients and if we're going to recommend a CRM application, shouldn't it be the one we use, embrace and love?

While changing the filters for one of the graphs, I noticed some things that I hadn't noticed the last time I checked in.  And I promise, the things I noticed are probably occurring at your company too.  The question is, can your CRM application let you know (and do you know) what to do next?  So here's what I found that was so interesting.

In the past two months, there were 40 new opportunities added, bringing the number of active opportunities in the pipeline to 80. That's an average of 1 new opportunity per person, per week, which is exactly what it should be in our business.  So that's good.  But I also noticed this:

There are currently 16 highly probable, closable opportunities representing 20% of the pipeline which is a lot better than what we normally see.  For instance, for every 2 new clients, it historically requires the following:

  • 20 suspects that convert to,
  • 10 prospects that convert to,
  • 5 qualified opportunities that convert to,
  • 3 closable opportunities.

In other words, only 10% of the prospects we begin talking with typically become clients.  Not because we aren't effective or that prospective clients go with other companies; but mostly because half of the 20 suspects we start conversations with are either the wrong person for us to be speaking with or there isn't a good fit and we disqualify them!  Similarly, we often disqualify half of the remaining 10 prospects because they don't have or won't spend the money to work with us.  That's how we get from 20 to 5.  And as with any business, we don't close every one.  Some decide to do nothing at all and once in a blue moon, a prospect chooses to go with another company.

I also noted that there was forward progress made on 58 opportunities - meaning that no single opportunity is sucking up the team's time or resources at the expense of other opportunities.

The metric that really stuck out for me though was that 22 of the 80 opportunities were stalled.  They had exceeded the baseline number of days allowed for an opportunity to remain in a particular stage of the sales process and our dashboard in Membrain has some very compelling data about opportunities that stall.  The image below represents the graph of stalled opportunities. Green represents an opportunity that we closed and gray represents one that we archived or lost.

This small red line in this graph indicates that when an opportunity stalls for more than 19 days, the chances of closing that business decrease dramatically, from 78% to less than 50%.  It further illustrates that if an opportunity stalls beyond 35 days, there is very little chance that the opportunity will close, with the win rate dropping to just 10-15%.

So when I saw that there were 22 stalled opportunities, I dug a little further and found that all of them were stalled beyond 35 days.  So the probability of any business occurring with these opportunities is already below 15%.  Next I wanted to identify which stage of the pipeline they were stalled in.  In Baseline Selling, we have 5 stages of the pipeline where opportunities are either:

  1. On Deck - 1st Meeting has not been scheduled.
  2. 1st Base - 1st Meeting has been scheduled but not yet held (Suspect).
  3. 2nd Base - 1st Meeting has been held and it is a real opportunity (Prospect).
  4. 3rd Base - Opportunity has been thoroughly qualififed (Qualified).
  5. On the Way Home - Opportunity is Closable (Closable).

I found that all but four of the stalled opportunities were on Deck.  So either a lead had come in, someone had expressed interest or we were referred to the company but no meeting had been scheduled - after more than 35 days!

That's the beginning of the process of reading a useful CRM dashboard.  The data tells us where the problem is, who has the problem, and what we should be asking.  In this case, one person - a very busy senior sales expert - was responsible for 36% of those stalled opportunities.  So while we can understand how the business interfered with getting meetings scheduled, it is still not acceptable.  The opportunities should have been handed off to a consultant on the team who isn't as jammed with training, consulting and coaching as he is.  In another case, one person was only responsible for 5%, or just 1 of the stalled opportunities.  That's good, right?  No, it's bad.  Everything is relative.  He doesn't have as many opportunities in the pipeline as the others, so his 1 stalled isn't an indicator that he's moving things along as much as it's an indicator that his pipeline is too small!

While most of my articles address sales selection, sales force evaluations, sales competencies, sales DNA, sales strategy, sales process and sales tactics, sometimes getting the pipeline right can make all the difference in the world.  Of course, to get the pipeline right, you must have an application that gives you the right information, in an easy-to-access format.  You also need an application that your salespeople embrace and always keep up-to-date so that you have real-time data.  And finally, you must be willing to consistently review your dashboard and let it tell you a story.  What story is your dashboard telling you today?

And before you comment, I'll make the first one:

"Dave, you talk about consistently reviewing the dashboards, but in this case, you weren't aware of the stalled opportunities until they were all beyond 35 days.  Isn't that hypocritcal you fat, old, sales guy?"  Someone was going to write that so I figured I would save him the trouble.  Yes, it would have been a male troll.  And yes, I should have been on top of that, but I wasn't this month.  And hey, my mistake is your gain because it made for a good topic for the blog, didn't it?

Don't miss this article that was published on LinkedIn Pulse about Fred - The Top Salesperson or a Horrible Salesperson?

 

Topics: Dave Kurlan, sales process, sales pipeline, sales win rate, sales opportunities

Sales Slumps - What Causes Them and How to Fix Them

Posted by Dave Kurlan on Mon, Sep 28, 2015 @ 13:09 PM

During the course of a baseball season, both hitters and pitchers fall into slumps. In basketball, players slump with their outside shots and from the foul line. Football Quarterbacks go into passing slumps. Golf and Tennis pros have swing slumps. Tiger has been in a slump since Thanksgiving of 2009! (I'm sure there must be some kind of a slump that Soccer players can fall victim to, but I don't know enough about soccer to weigh in.) With slumps being so common, it shouldn't come as a surprise that salespeople get into slumps too. In this article, we'll explore what causes salespeople to get into slumps, what their slumps look like, and how can they be fixed.

In baseball, the sport I know the most about, slumps are often the result of poor mechanics, where the player gets away from doing things that work. My 13-year-old son is in a hitting slump right now. He hasn't been keeping his weight back, resulting in his being way too far in front of the pitch, taking unbalanced swings, dropping his hands, and pulling his head off the ball. It's not unusual, as you can see from the image of Yankee's star Alex Rodriguez, pictured above. My son had a game-winning grand-slam on Saturday, but he uncharacteristically struck out in four of his seven weekend at-bats. It's not his first slump and it won't be his last, but the time during the slump can be difficult as he deals not only with fixing the swing mechanics, but also with the frustration and discouragement of a slump.

In sales, slumps can also come from poor mechanics, where salespeople get away from doing things that work. Some slumps occur at the bottom of the funnel, when deals that were expected to close either don't close at all or are awarded to a competitor.  Slumps can also occur at the top of the funnel, when salespeople experience difficulty converting calls to meetings. Slumps can even occur in the middle of the sales cycle when reps struggle to get traction or velocity with their new prospects.

Regardless of the timing, the causes for a slump can usually be narrowed down to 2 possible categories.

In the 3 scenarios above, the most common cause is rushing, when salespeople hurry to reach a milestone they are comfortable with or an outcome they wish to achieve.  

The other possible cause is laziness. Sometimes the slump is less about converting an opportunity, and more about not having anything to convert. Sometimes salespeople get away from prospecting, asking for referrals, and following up with contacts that at one time weren't ready. 

If this behavior continues for just 90 days, and the salesperson has a 3 month sales cycle, the sales manager won't realize there is an issue until 3 months after the laziness has begun. At the same point in time, the salesperson finds very little in the monthly commission check. Assuming that the laziness is corrected, it will take 3 more months before new opportunities move through the sales cycle, close and produce commissions again. A six-month problem!

How do you fix a sales slump?

Slowing down, listening and asking more questions will usually help salespeople solve sales slumps that arise from rushing.  But just like baseball, you need to practice doing it the right way. And as I learned in short game school, practice makes permanent!

One advantage of a modern opportunity-focused CRM application, a formal, structured, milestone-centric sales process, an up-to-date sales methodology, and on-going sales training and coaching is that each is a reminder of the fundamental things that work. It is far easier to slump without these resources than with them. However, the single biggest resource that can prevent a slump is....

...the sales manager. Daily accountability and coaching are the two most important things a sales manager can do to head off slumps before they can happen.  

Don't get me wrong. I am not saying that a proactive sales manager that practices accountability and coaching will replace the resources I just mentioned. No way. They are a package. They must go together! You need a proactive sales manager, and the right CRM, sales process, sales methodology and training.

Pull these things together to minimize the slumps and maximize the sales!

Topics: Dave Kurlan, sales process, sales methodology, sales pipeline, sales slump

A Guaranteed Fix for Inaccurate Sales Forecasts

Posted by Dave Kurlan on Tue, Sep 15, 2015 @ 06:09 AM

The weather has become quite predictive - if you want to know what it will be like in say, an hour.  Meteorologists are still fairly accurate within 24 hours, but for the most part, especially where I live in New England, they are challenged to get it accurate beyond a day in advance.

Think of that in terms of your pipeline, forecast and budget.  We know that forecasts are notoriously inaccurate, but that's when you're looking at the forecast for the month, quarter or year.  Meteorologists would never be accurate if attempting to predict temperatures, precipitation, cloud cover and storms a month in advance.

Are your expectations completely unrealistic when you attempt to forecast sales for the month or quarter?  For most companies, inaccurate forecasts are the norm and expectations for accuracy are insane.  But that's when companies rely on CRM applications that fall victim to any of the following 10 challenges:

  • It was designed for customer service rather than sales.
  • It has a contact or customer focus rather than an opportunity or sales process focus.
  • It was over-designed with too many features.
  • It is not user friendly.
  • Salespeople hate to enter information into it.
  • It's too easy for salespeople to manipulate the likelihood of closing.
  • Sales Managers do not regularly inspect opportunities for accuracy and appropriate stage.
  • Pipeline is a state of being, not a gap analysis.
  • Pipeline is a report rather than a staged, visual representation of the business.
  • Salespeople don't live in it and it hasn't become an essential part of the sales culture.

There are dozens of CRM applications out there.  While some are very well-known, like Salesforce.com, others are very obscure.  Well-known doesn't mean you should use it at your company - it might not be right for you.  Obscure doesn't mean that you shouldn't use it at your company - it might be perfect.

In the end, regardless of features, if the salespeople don't embrace it, then it will be a failure.  We have so many clients that bought CRM applications that aren't being used as expected, it's embarrassing.  Yet moving to another CRM application seems like throwing money out the window and admitting that your initiative was a failure.

On the other hand, companies think nothing of changing copier brands - even in the middle of a lease, they change banks when terms or relationships make it necessary, executives move in and out of cars every two years, homeowners cycle through crappy landscapers, we upgrade our phones, tablets and laptops every year or two, and we never think twice!  Why is it such a nightmare to move to another CRM application?

Moving is really not that difficult.  The problem is that it cost a lot of money to customize the first application, get everyone trained, and input all of the data.  There is a huge fear that moving to another application will be just as difficult as the first go-round.  But that's more fear than reality.

For example, we moved a client from a popular CRM application to a more useful and appropriate application.  They did spend and waste a fortune on the first one, they did spend months entering data, they did go through a long and drawn out training program for users and it was a monumental failure.  However, moving to the new application was a easy as pie.  It needed almost no customization, had no complicated navigation, and an hour of training had everybody up and running. The data was imported, not entered manually, and the salespeople love it so much they are not only using it, but embracing it.

The best news of all comes in the form of the client's results:  

  • Salespeople are living in CRM!
  • Opportunities cannot be arbitrarily moved forward in the sales process.
  • The likelihood of closing is calculated based on reality, not hope.
  • 100% adoption translates to real time, accurate data in the dashboard.
  • Salespeople see their pipeline stage gaps and proactively respond to them.
  • Forecasts are accurate.
  • Everyone is happy.

It's not that moving to a better CRM application is a new cost or even difficult - it isn't!  It's that for most, walking away from the initial investment of money, time, emotions, commitment and your bad decision is so hard.  But it's not a divorce, it's more like changing banks.  You move away from one that no longer suits your needs and begin working with another that you perceive to be better.

Do you need some help sorting out your CRM situation?  Just shoot me an email and I'll steer you in the right direction.

Topics: Dave Kurlan, sales pipeline, salesforce.com, sales forecast

The Conversation Sales Leaders Must Have with Salespeople

Posted by Dave Kurlan on Wed, Jul 15, 2015 @ 06:07 AM

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Thanks to another recommendation from my client and friend, Chris Collias, I am reading a terrific book called The Hard Thing About Hard Things: Building a Business When There are No Easy Answers.

On page 49 (of the Kindle Edition), there is a must-read passage for Sales Leaders who want to properly lead a sales force. The passage sums up what sales coaching and accountability are all about. 

After assembling a top-end sales force, he completely revamped the sales process and sent every salesperson through a rigorous and unforgiving training program. He demanded mastery. Any slip-up in technique, skill, or knowledge would be met with total intolerance from Mark.

We held a weekly forecast call where Mark reviewed every deal in front of the entire 150-person sales force.  On one such call, a salesperson described an account that he'd forecast in detail: "I have buy-in from my champion, the vice president that he reports to, and the head of purchasing.

My champion assures me that they'll be able to complete the deal by the end of the fiscal quarter."

Mark quickly replied, "Have you spoken to the vice president's peer in the networking group?"

Sales rep: "Um, no I haven't."

Mark: "Have you spoken to the vice president yourself?"

Sales rep: "No."

Mark: "Okay, listen carefully.  Here's what I'd like you to do.  First, reach up to your face and take off your rose-colored glasses.  Then get a Q-tip and clean the wax out of your ears.  Finally, take off your pink panties and call the fucking vice president right now, because you do not have a deal."

Mark was right.  It turned out that we did not have a deal, as the vice president's peer in networking was blocking it.  We eventually got a meeting with him and won the deal.  More important, Mark set the tone:  Sloppiness would not be tolerated.

 

I loved this passage. I'll read it at every Sales Leadership Intensive. I don't condone using the language [Update:  See comments below for clarification] with a salesperson, but the approach is spot on. The challenge, for most sales leaders, is whether or not they can do the following:

  • Can they see around the corner?
  • Can they anticipate 5 steps ahead?
  • Can they be cynical?
  • Can they be both optimistic and skeptical at the same time?
  • Can they push back and challenge their salespeople without being afraid of their salespeople hating them or quitting?

If you can't imagine a sales leader having any of these difficulties, then you are fine! If you have some of these difficulties, then you absolutely must attend my annual Sales Leadership Intensive in August.

Topics: sales management, Sales Coaching, accountability, sales pipeline, pipeline review

An Ode to the Evolution of the Pipeline

Posted by Dave Kurlan on Mon, Jul 13, 2015 @ 07:07 AM


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Over the weekend, I was thinking about sales pipelines and inaccurate forecasts, how companies are always experiencing issues at the top of the funnel, and it inspired the following poetry. It won't win an award for imagination, creativity, rhyming or flow. I'll stick to my day job for this, I surely know.

The pipeline on the left with all the eggs in one basket
Scares me to death - a business, one hope, surely heading for a casket
The one on the right has a healthier look
With more opportunities for deals to be booked.

Once so simple, my pipeline for next quarter
Suspects, prospects, and the sales cycle was shorter
Names and numbers on cards was a must
In a shoe box or a file box, today they collect dust.

The prospects were familiar - referred or introduced
Not like today where leads are seduced
Tire kickers, assistants and all the wrong folks
Wanting ebooks and samples -- it's all a cruel joke.

Back then our forecasts were accurate and true
We reached all the ones who made decisions too
They paid on time, not 90 days late
And cared about partnerships since those were first rate.

We have CRM, email, and marketing tools
And our blogs and our websites make visitors drool
Graphics and videos are now all the rage 
And they clog up the pipeline in the very first stage.

I love all the tools for managing the pipe
Membrain is awesome and will keep prospects ripe
While you're sleeping, Hubspot helps prospects find you 
And their Workflows automate your messages too.

ConnectAndSell gets prospects to the phone for you
7 in an hour - almost too good to be true
Schedule new meetings from calls that are cold
It's today's way of calling - what's new is really old.

With all that has changed, one thing remains clear
You must still do the work or your pipeline goes bare
Get on the phone and talk with some prospects
Or quit sales today and move to customer service.

The End. No it isn't.

Selling - the art and science of getting people who didn't necessarily want what you have, to pay you a premium for it. Before you can sell anything, you must have some people to sell it to! Fill the pipeline today!

Would you like to contribute a verse to this pipeline poem? Give it a try - it can't be any worse than mine!

Topics: Dave Kurlan, HubSpot, sales pipeline, membrain, sales forecasts, chad burmeister, connectandsell

Do We Have Sales Compensation All Wrong?

Posted by Dave Kurlan on Wed, May 06, 2015 @ 06:05 AM

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Earlier this week, I posted an article that explored whether or not a salesperson should be punished for landing a big deal if that same salesperson had nothing else in the pipeline.  It generated some heated discussion in the comments section and since there was disagreement about compensation in the comment section, I thought it would be helpful to discuss that.  Should a salesperson receive the maximum commission on the big deal if there was no other activity, critical KPI's weren't met, and the pipeline is essentially empty?

I believe the question merits more than a simple yes or no answer.

The negative comments appeared not only on my Blog, but also in the various LinkedIn Groups where the article was shared. One commenter said that we can't reward effort OVER results while another commenter said that we can't reward results to the exclusion of effort.  Both have their pros and cons, but is there a happy medium?

Let's suppose that our company expects each of its salespeople to generate $2 million annually, or $500K each quarter.  The sales cycle is 8 months, the average sale is $50,000, the closing percentage is 30%, and one quarter is already in the books.  The company has 5 salespeople and their quarterly performance was as follows:

Salesperson

# of Opps 
in Pipline

Value of Opps 
in Pipeline

Revenue YTD

Qualified 
Proposals

 Overall
Results

Overall 
Performance

1

0

$              0

$500,000

0

  On Target

 Poor

2

27

$ 1,850,000

$385,000

6

  Below Target

 Good

3

16

$    800,000

$520,000

3

  On Target

 Excellent

4

6

$    300,000

$250,000

2

  Under Target

 Poor

5

30

$ 1,500,000

$550,000

4

  Above Target

 Excellent

 

One commenter said the only thing he cared about was the results. He was referring to the big deal that salesperson #1 landed in the first quarter.  He wanted to celebrate this deal and this salesperson, but when you see the overall performance in black and white, it's clear that with an 8 month sales cycle and one quarter in the books, salesperson #1 will have annual sales of only $500,000 - the same number achieved for the first quarter.

Salesperson #3 is on target, but with a 30% closing ratio, there is not enough in #3's pipeline to support more than $240,000 in additional revenue.

# 5 will be fine, but #4 is currently failing and the rest of #4's year will likely be horrible.  

The interesting example is #2, who is below target, but has the healthiest pipeline, the greatest number of qualified proposals and will likely lead the sales force in revenue for the year.

Now let's factor in compensation.  If #1 maximizes his possible compensation by hitting his quarterly number, and then bombs the rest of the year, he will have been overpaid for his first quarter contribution to revenue.  If #2 is paid on the lowest possible scale for missing first quarter quota, she will have been underpaid for her first quarter contribution to revenue.

Those two salespeople and their first quarter performance make a great case for a compensation plan that factors results as well as quality effort (# of new opportunities/value of opportunities).  Results should still be weighed more heavily than effort, but if we include both, then both salespeople would be paid more in line with their overall performance.

If sales is worth 75% and effort is worth 25%, how would that affect compensation for these two salespeople on a bonus plan that pays out a maximum of 10% of revenue?

Salesperson #1 would be paid 75% of the maximum $50,000 (on $500,000 quota), or $37,500 for revenue and $0 for effort.

Salesperson #2 would be paid 25% of the maximum $50,000, or $12,500 for effort and 75% for revenue, or $28,500, for a total of $41,000.  Despite sales that were $115,000 short of quota, salesperson #2 would earn $3,500 more than salesperson #1 for adding 27 opportunities worth $1,850,000 to the pipeline.

I'm sure this will cause many to chime in with their own versions and variations and that would be awesome!  And based on what we read from commenters in the earlier article, I'm sure others will criticize the concept and they are more than welcome to do so.

I'm simply suggesting that we can get more from our salespeople if we factor more into the compensation plan than results.

Let's get as much feedback as possible. Have a comment?  Want to read what others think?  Either way, please use the buttons at the top of the article to share it on LinkedIn and Twitter to reach a wider audience for their thoughts.

Topics: Dave Kurlan, sales pipeline, sales performance, Compensation

Fix Your Mediocre Pipeline for Accurate Sales Forecasts

Posted by Dave Kurlan on Mon, Jan 26, 2015 @ 13:01 PM

Most salespeople don't pay too much attention to this.  Even though we perform a pipeline analysis and restage the pipeline with every individual sales evaluation and comprehensive sales force evaluation we conduct, we typically discuss this exclusively at the executive level.  So imagine my surprise when a salesperson sent along his lessons learned from a session on closing deals and included this...

He said, "I went back to your evaluation to see exactly how you restaged my pipeline...You said the quality of my pipeline opportunities was:
U-Toronto - Medium 
Mt. Sinai - High
New York Genome - Medium 
Columbia - Low

If this is how your method determined the order - then it was spot on...On both the low and high ends. Columbia has fallen completely off the radar while Mt. Sinai has progressed to the proposal and closable stage.  U-Toronto and NY Genome are still progressing forward slowly - with additional presentations required and much more qualifying work needed by me. 
I staged the pipeline today and:
Columbia is a only a suspect
U-Toronto is a prospect  
New York Genome is qualified and
Mt. Sinai is closable" 
So what exactly took place?  Two months ago, this salesperson answered 19 questions about each of 4 late stage opportunities that were - and this is the key - considered to be proposal ready and closable.  After we analyzed the data, we rated the quality of those 4 opportunities as you saw above, and then restaged them as you can see below.  Keep in mind that if they were truly late stage - proposal ready and closable - his pipeline would have looked like an umbrella stand base:
pipeline1-1
However, based on what we learned from our analysis of his answers, instead of his pipeline looking like an umbrella stand base, it looked more like a top!  The image below is what his supposedly late stage pipeline really should have looked like:
pipeline2-2
Obviously, that's quite a difference!
The ability to place your opportunities in the proper stage of the pipeline is the key to a predictive pipeline and accurate forecast.  Gerhard Gschwandtner of Selling Power Magazine recently interviewed me about this very topic and you can watch the 5-minute video right here.
"Is your pipeline a reliable predictor of future revenue?" is just one of 19 important questions we answer when we evaluate a sales force.  And while it's quite helpful to see the actual quality and restaging of your pipeline, the additional 18 questions/answers/insights are usually even more important to most clients.  You can learn more about a sales force evaluation by clicking the image below.
evals .

Topics: Dave Kurlan, sales force evaluation, sales pipeline, sales assessments, objective management group, sales forecast

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About Dave

Best-Selling Author, Keynote Speaker and Sales Thought Leader.  Dave Kurlan's Understanding the Sales Force Blog has earned a medal for the Top Sales & Marketing Blog award for six consecutive years.  Dave's Blog earned a Bronze Medal in 2016 and this article earned a Bronze Medal for Top Sales Blog post in 2016. Read more about Dave.

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