Dave Kurlan

Recent Posts

Salesenomics - Many Sales Organizations Are Stuck in the 1980's

Posted by Dave Kurlan on Mon, Nov 22, 2021 @ 07:11 AM

1980s

Today is moving day for Objective Management Group.  When we first toured our new space, John Pattison, OMG's COO said, "It looks like something the 1980's barfed up!"  I'm happy to report that thanks to big-time help from PENTA Marketing CEO Deborah Penta, our new space is bright, cheery, modern, energetic, open and functional! 

Thinking about the 80's got me thinking...

When was the last time you saw a black and white television or even a console color TV?

How about an electric typewriter?

Or a car that didn't have anti-lock brakes?

You would have to return to the 1980's to see those things and when it comes to their operations, some sales organizations are still in the 1980's.

For example, check out these statistics from OMG's evaluations of 30,000 sales teams and more than two million salespeople.

31% of companies don't use CRM.

44% do not have a way to track the opportunities in their pipelines.

89% do not qualify their proposals.

39% do not track whether their salespeople are under/over quota.  

54% do not track win rates

51% do not know their average order size

74% do not track the length of their sales cycle

40% do not track the number of opportunities in the pipeline

65% do not track the quality of the opportunities in the pipeline

35% do not track margins!

90% do not track the number of meetings required to close

96% do not track the cost of a sale

Unfortunately, there is more, but these are the head turners and it makes me wonder...

It's been widely reported for years now, that fewer than 50% of salespeople are hitting quota.  From the data shown above, we know that 39% of companies don't even track that.  What percentage of their reps do you think are hitting quota?  My guess is less than 20% (think 80/20 rule) so how much worse would it be if those companies were included in the data?  I'm guessing we would learn that fewer than 33% of all salespeople are hitting quota.  That's much closer to what I from companies every day.

We are no longer in the early stages of the information era.  Data is king so how can companies operate without this crucial information?  Even prior to the dawn of the information age, companies found ways to track this information, so why would some choose to ignore this today?

I'm guessing that most of the companies in question are small with less than $20 Million in revenue and fewer than 8 salespeople.  I assume that they are not tech companies and more likely than not come from older industries, like building materials, small manufacturers and small industrial distributors.  But I'm just guessing.

You can easily track everything you should be tracking with the right CRM application.  OMG has an integration with what we believe is the best sales-specific CRM application in the world, Membrain.  It's user-friendly, ideal for complex sales, easy to customize, produces the most important data and reporting out of the box, and you won't have to nag your salespeople to use it. And for fans of Baseline Selling, there is a BLS specific edition of Membrain too.

Image copyright 123RF

Topics: Dave Kurlan, sales pipeline, crm, omg, KPI's, objective management group, sales team evaluation

2 Questions That Will End Every Request for a Better Price

Posted by Dave Kurlan on Mon, Nov 15, 2021 @ 16:11 PM

Pricing Optimization for Online Streaming Services | by Jordan Bean |  Towards Data Science

I was thinking about all the things we pay for that used to be free and are still free, yet we pay for them anyway.  How many can you think of?  I came up with the following:

Water - you can get an unlimited amount of drinking water from the tap but we not only buy bottled spring water, we buy FIJI, one of the most expensive brands, because it tastes so much better.  We pay around $1.25/pint-sized bottle.

Radio - you can listen to as much broadcast radio as you want, but all of our cars have SiriusXM subscriptions to the tune of around $600 annually.

Television - you can watch plenty of free broadcast TV and your local channel's streaming content, but we have five AppleTVs, and between Netflix, Amazon Prime, Hulu, Apple TV plus, and others, we pay close to $75/month for various streaming services.

Software Applications - there are free versions of most of the cloud-based software we use but I pay for versions that have all the features I want.

I get more value when I pay for the features I want than I can get with free versions.  In other words, the pain of not having better tasting water, more listening and viewing options, and software that does everything I need, is exponentially greater than the savings I would realize from not paying a premium.

What's the point?  When prospects tell you that they're going with the lowest price, it's total crap.  They might be saying that, but are they required to do that?  If they have any bottled water in the kitchen, pay for any streaming, or software then it's simply not true.  Can you say bluffing?

I don't blame companies for trying to buy for less, but it doesn't mean you have to sell for less, or match or beat someone's price.  They're just saying the words and waiting to see if you'll bite.  Just about a year ago at this time, I wrote another article about selling value where I used Dunkin Donuts coffee as an example.

So what should you do when a prospect asks for a lower price?

You should ask two questions:

  1.  "Is that a must have or a nice to have?"
  2.   If they say "must have" ask, "And what if I can't do that?"

If you are in a transactional conversation (which isn't really a conversation at all), I guarantee that you haven't sold value and those two questions won't help you at all. 

However, if you've been in a consultative conversation, have uncovered their compelling reasons to buy, have properly differentiated yourself, quantified their problem, and created urgency, then they already want to work with you and those two questions will end the price negotiation right then and there, before it even begins.  Ending the negotiation before it begins is the only way to profitably win a negotiation on price.  You win by refusing to negotiate because once you open that negotiation window and the prospect learns that there is wiggle room they won't stop pushing for more.

Never negotiate price!

There are some salespeople who won't like that.  Salespeople who try to get the best price for their own purchases also believe they must provide the best prices to their customers.  These salespeople have non-supportive BuyCycleTM and this belief prevents them from being able to sell value, uphold margins, and compete based on the merits of their product or service.  According to Objective Management Group's data from the assessments of well over two million salespeople, 73% of all salespeople have a non-supportive BuyCycleTM and a good percentage of them have the belief that their prospects must receive the lowest price. Non-supportive BuyCycleTM is one of twenty-one Sales specific Core Competencies and you can see the data from all twenty-one competencies, sort by industry and even your company, here.  

Salespeople who win on price eventually lose on price because there will always be someone who comes a long with a better price.  Price-won business doesn't stick, isn't profitable, and is never representative of good selling skills.  There should be two columns alongside the revenue column for each salesperson indicating how much of a discount they provided, and whether the business was new, repeat, or inherited.

Never negotiate price!

Topics: Dave Kurlan, selling tips, price shopping, sales strategy, lowest price, value selling,, price negotiation

Sales Forecasts Do Not Have to Be as Wrong as Fortune Cookies

Posted by Dave Kurlan on Fri, Oct 29, 2021 @ 12:10 PM

Forecast

There has been much talk in the news about forecasts - and while most have been wrong they are still more accurate than Fortune Cookies!

Thanks to satellites, computer modeling and doppler radar, weather forecasts are more reliable than ever before.  Yet despite those advances, they are still guessing - educated guesses to be sure - but guessing about what will happen, when it will happen, and where it will happen.  I live in central Massachusetts and between late November and early April, most winter storms track up the east coast and when a storm tracks a few miles east, west or south of the New England coastline it determines whether it will bring, rain, snow, ice or a combination, and if mostly snow, how much snow to a given city or town.  They get it right - a lot - but they get it wrong often enough too.

We have also seen 19 months of COVID-19 case, hospitalization and fatality predictions which have been totally and consistently wrong.  Two weeks to stop the spread has turned into vaccine and mask mandates that show no sign of going away, especially when they treat each new variant like the pandemic is starting anew.  

We get economic forecasts, employment forecasts, and of course the most famous of all forecasts during October, political polling.  We know the polls are are always off by enough points to get the results wrong.

With all of these forecasts having the chance to be completely wrong, it makes me wonder about the way sales leaders and CEOs react to sales forecasts.  After all, should we expect anything different when it comes to sales?

For the longest time, sales forecasts were expected to be wrong because the salespeople themselves were the ones making the predictions.  That's like us predicting the weather.  "Oh, we're scheduled to go to the beach tomorrow so it has to be nice outside."  It's the equivalent of, "I've had some great conversations and I need one more deal to come in this quarter so it's looking good!"

Then, CRM's began to include calculated predictions to make the forecasts more accurate.  The calculations were based on how much of the sales process had been covered to date instead of how a sales rep felt.  It was supposed to improve the accuracy of the forecasts but it didn't because the percentage of sales stages completed is only as good as the sales process itself. To this day, most of the sales processes I review are missing entire stages, missing key milestones, or sequenced so poorly that they aren't really processes at all but are more like a bunch of loosely connected ideas about selling.  

I have personally reviewing hundreds of sales processes and Objective Management Group (OMG) has evaluated the sales teams of more than two million salespeople.  From that experience, I can tell you a few things with authority:

Overall, only 33% of all salespeople have the competency Sales Process as a strength or, if we flip that around, 67% have it as a weakness for all the reasons I mentioned in the paragraph above.  The good news is that 83% of the best salespeople in the world have it as a strength while only 6% of the weakest salespeople in the world have it as a strength.  The best salespeople are 1383% more likely to have sales process as a strength!

Related to that, but even more problematic, is CRM.  OMG has a sales competency called Sales Technology and CRM is the primary component of that.  Only 18% of all salespeople have it as a strength, 51% of the best salespeople have it as a strength, and only 4% of the weakest Salespeople have it as a strength.  Even though it the scores are worse than Sales Process, the best salespeople are still 1275% more likely to have it as a strength.

THE SINGLE THING that has the highest predictive accuracy is a properly built sales scorecard.  Not a marketing scorecard where you score how close an opportunity is to your sweet spot, but a scorecard that objectively - not subjectively - scores the opportunity itself based on six to seven very specific conditions.  While the conditions are different for every company and can vary by sales team or offering within a company, they can usually be selected from a group of no more than thirty-five possible conditions.  Then they must be prioritized, weighted and tested before being rolled out to the sales team.

But even after building a scorecard, I still see companies with inaccurate forecasts because of inconsistent use of it.  Unless the scorecard becomes a required milestone in the qualification stage of the sales process, nothing will change.  Each opportunity must achieve a minimum score in order for a salesperson to proceed to a formal quotation or proposal and if it doesn't achieve that score, the opportunity should not be pursued.  That is a tall order for salespeople, frontline sales managers, and their sales leaders.  And when an opportunity does meet the required minimum score, it should be pursued with all available resources because that opportunity is winnable.

There is a time-tested and successful process for building a predictive sales scorecard and its success transcends industries, offerings, territories, audiences and verticals.  The question is, will you ask for help in getting a scorecard built, or will your forecasts continue to be as inconsistent as pandemic predictions have been?

Need help on this?  Send me an email or reach out over LinkedIn.

Image Copyright 123RF

Topics: Dave Kurlan, sales pipeline, sales forecast, pipeline review, sales scorecard

When Your Sales Opportunity Stalls, Do You Call Roadside Assistance?

Posted by Dave Kurlan on Mon, Oct 18, 2021 @ 14:10 PM

flat-tire

We were driving on the highway when the dashboard indicated low pressure in the left rear tire.  That can't be good!  As we exited the highway eight miles later, the tire was flat and we were able to drive another mile to a safe location and call roadside assistance.  Until that moment, I wasn't aware that the car did not have a spare tire but was equipped with a tire inflation repair kit instead.  Roadside assistance told us that the lack of a spare tire meant the car would be towed to their nearest dealer.

There are typically three possibilities when you have a flat tire:

  1. Change the tire if you have a spare and know how to do it or have roadside do it for you
  2. Use the tire inflation repair kit and keep the tire inflated long enough to get to your mechanic
  3. Get towed.

In my opinion, getting towed is the worst possible option and the last thing we want to deal with and in the waning days of a pandemic, they'll take your car but not you, so that doesn't solve anything.  Your car is still broken, you are still stranded, and you are temporarily separated from your beloved vehicle.

When salespeople get into trouble and an opportunity stalls out or goes off the rails, their sales managers are the sales version of roadside assistance.  In the context of a sales opportunity, there are typically three possibilities:

  1. Change the tire - put another salesperson on the opportunity
  2. Repair the tire - the salesperson does enough damage control to keep the opportunity alive until they can get coaching from their sales manager
  3. Call Roadside and the sales manager calls or shows up to get the opportunity back on track if possible

If you agree that a tow would be your last possible option, then it should follow that a rescue from a sales manager would be equally bad.  The prospect loses respect for the salesperson and will only speak with the sales manager after the rescue. Salespeople learn to lean on and use their sales managers as crutches, salespeople never become strong enough to handle these situations on their own, and sales managers fail to develop strong teams.

According to Objective Management Group (OMG) and their assessments on more than two million salespeople, sales managers and sales leaders, only 18% of all sales managers are well-suited for the role and only 7% are actually good at coaching. We know from this article on being an underdog in sales that the bottom half of all salespeople totally suck.

When you combine those three pathetic data points, there are a few insights that pop to the surface.

Most sales managers are a lot better at selling than they are at managing and coaching and are at their best when salespeople call for roadside assistance.  That explains their universal desire to accept those calls without pushing back, coaching and challenging their salespeople to do better.  Salespeople improve when they have no choice but to improve!

Most sales managers actually believe it's their job to be the hero and that is one of the biggest impediments to developing strong salespeople.

There are far more salespeople whose opportunities go off the rails and need help but who end up following one of three even worse scenarios than calling their sales managers:

  1. At the time, they lacked the situational awareness to realize the opportunity went sideways on them so they follow up as if nothing bad happened.
  2. They realized the opportunity was going sideways but chose to use the tire repair kit instead of calling for roadside assistance
  3. They knew it went sideways but lacked the commitment to call for roadside or use the tire repair kit and simply gave up.

These scenarios play out every day, on every sales team, at every company, all over the world.  Isn't it time to raise the bar on both sales mangers and salespeople, train them up, coach them up, and stop accepting so much mediocrity?

Join me on October 26 for a free 45-minute introduction to Baseline Selling and learn how to avoid the mistakes that most salespeople make, shorten your sales cycle, differentiate from the competition, and improve your win rate.  Register here.

Image copyright 123RF

Topics: Dave Kurlan, sales training, Sales Coaching, sales managers, ineffective salespeople, ineffective sales manager, OMG Assessment

Most Salespeople are Underdogs Like the Boston Red Sox

Posted by Dave Kurlan on Wed, Oct 13, 2021 @ 16:10 PM

Kiké Hernández's dream postseason continues for Red Sox: 10 things we  learned from ALDS-clinching walk-off win - masslive.com

Anyone who has followed this Blog over the past 15 years knows that other than sales, the only thing I write about nearly as much is baseball.  A Google search from within the Blog yields 605 results, and a search on my son playing baseball over the past twelve years yields 208 results. I haven't really mentioned baseball 605 times, but I have probably written about it 150 times!

For non-baseball fans, the regular season ended last week and two teams - the Boston Red Sox and the New York Yankees - finished in a tie for the wild-card spot, requiring a one-game playoff.  The Red Sox were the best team in baseball during the first half of the season and one of the worst teams during the second half.  I've been cheering on the Red Sox for 65 years and despite that, was very confident they would succumb to the Yankees in last Tuesday's one-game wild-card playoff.  If they somehow managed to beat the Yankees, which it turns out they did, I was even more certain they would fall to the Tampa Bay Rays in the American League Division series.  I was wrong again and the Red Sox not only won, but they won the best of five series decisively, winning the last three games in a row.  Now they will take on the Houston Astros in the best of seven American League  Championship Series, with the winner moving on to the 2021 World Series.  Despite the fact that the Red Sox are now playing in a manner consistent with their first half identify, they will be underdogs for the rest of the post season because of their second half identify.

How does that tie into sales?  Easy!

If your company is not the brand leader, market leader, or price leader; if you have a complex sale, a story to tell, a new technology, a new brand, a new product, a much higher price or a much tougher sale, then you are an underdog too.

Brand leaders, Market leaders and price leaders have it easy.  There is no true selling involved.  They show up, write proposals, provide quotes, conduct demos and take orders. They get what they get.

Underdogs must not only sell their way in, but they must also sell their value to justify the higher prices, differentiate themselves to prove their value, and use a consultative approach that supports selling value.  On top of that, they must follow a proper milestone-centric sales process that supports a consultative approach for selling value.

Most salespeople simply can't do this.  The data in the table below, from Objective Management Group (OMG) and their assessments of more than 2 million salespeople, shows the percentage of salespeople who are strong in the three competencies I just mentioned.  

It's not very difficult to grasp the takeaways from this data.  Even some of the best salespeople struggle to take a consultative approach to sales but compensate with their adherence to sales process and their ability to sell value.  The worst salespeople aren't capable of much more than a transactional sale described earlier in the article.  The best salespeople score, on average, 4823% stronger in these three competencies.  There are actually a total of 21 Sales Core Competencies and you can see the data for all of them right here, play with the data a bit, and filter by industry and company!

The top 5% and the bottom 5% represent only the extreme examples of 10% of all salespeople.  The other 90% are represented in the "All Salespeople" column.  We can filter the numbers some more if we break down the other 90%.  Wait until you see these numbers!

As you can see, there is a significant drop off from the top 5% to the next 15% and an even greater drop off to the 30% after that.  The big takeaway is that in these three competencies  the bottom 50% are nearly as weak as the bottom 5%. They all suck.  As a matter of fact, once you get past the top 20%, the picture is bleak.

What can you do about this? 

Use OMG to Evaluate your sales force so you can see what the capabilities are at your company.

Use OMG to Assess your sales candidates so that you can be assured of hiring only those who will succeed in the role.  

Train, train, train, coach, coach, coach, drill, drill, drill, role-play, role-play, role-play.

Join me on October 26 for a free 45-minute introduction to Baseline Selling and learn how to avoid the mistakes that most salespeople make, shorten your sales cycle, differentiate from the competition, and improve your win rate.  Register here.

Image copyright MassLive.com 

Topics: Dave Kurlan, Consultative Selling, Baseline Selling, sales process, sales training, sales recruiting, Sales Coaching, Baseball, Boston Red Sox, value selling,

Most Sales Processes, Funnels and Pipelines are How Old?

Posted by Dave Kurlan on Wed, Sep 29, 2021 @ 16:09 PM

Have you ever conducted a Google or Amazon search for one thing only to be presented with search results that were completely different than what you were looking for?

I was looking for an image of a sales funnel and couldn't believe what I found!  My search results can be found here.  Can you believe all of those images of sales funnels?  Look them over and see if you can recognize the  problem with all of them.

There were a number of marketing funnels included on the page but I wanted to see the images for sales funnels. 

The first one I found had the title, "Sales Funnel Stages."  It had six stages and none of the stages were sufficiently defined so as to determine where a prospect is in the sales process or for forecasting whether the opportunity will close and when it will close.  The six stages were:

        1. Awareness
        2. Interest
        3. Consideration
        4. Intent
        5. Evaluation
        6. Purchase

I'm sorry, but that is not a predictive sales funnel.  Awareness is a marketing stage.  Purchase is post-pipeline.  Evaluation is just like consideration.  Intent - is that intent with us or intent in general?  This funnel is for an optimistic sales leader who wants things to look good but I guarantee that the win rate out of this funnel is brutal.

I found a variation of that funnel without the evaluation stage and with intent replaced by decision.  In other words, they are evaluating!

The second funnel I found had the title, "Sales Funnel."  It was four stages so that seemed promising until I saw the stages:

        1. Awareness
        2. Interaction
        3. Interest
        4. Action

More awareness.  Interaction - you mean like a conversation to get them interested?  And once they were interested they were going to take action?  Wow.  I'm sure that has a high win-rate.  Not.

Then there was a variation of that funnel where Interest is replaced by Decision.  So we go from a conversation to a decision.  It's very transactional, isn't it?

Then I found a "Detailed Guide to Building a Sales Funnel" and it even had descriptions of its five stages:

        1. Unaware
        2. Lead
        3. Prospect
        4. Customer
        5. Fan

In this funnel, they go from lead to prospect to customer so the only part of the sales funnel that has anything to do with selling is stage 3 - prospect!  Guess what their win rate must be?  This is an incorrectly named marketing funnel!

Then I found a three-stage six-part funnel that had:

        1. Awareness
          1. Visit
          2. Lead
        2. Consideration
          1. Marketing Qualified Lead (MQL)
          2. Sales Qualified Lead (SQL)
          3. Opportunity
        3. Decision
          1. Customer

It appears more complex than the funnel before this one but it is essentially the same thing with the same problem.  The entire sales part of the sales funnel was 2.3 - opportunity.

It was only a matter of time before I found a graphically modern and pleasing version of the original sales process, AIDA:

        1. Awareness
        2. Interest
        3. Decision
        4. Action

Now it should make sense to you.  Nearly every single pipeline, funnel and sales process shown on that page full of funnel images is based on this old, antiquated AIDA process that was developed by St. Elmo Lewis in 1898.  That's right. In the 19th century, five years before Henry Ford rolled out the first Model A from his plant in 1903, St. Elmo Lewis gave the world a sales process that is still being used by most companies.

So what should a modern funnel look like?

It should have just four stages.  Any additional stages would be for marketing and if it's marketing-related it doesn't belong in the sales funnel!

The funnel should mimmic the sales process.  The stages don't necessarily need to have the same names but the stages should represent the same milestones.

The funnel or pipeline should trace the evolution of a sales opportunity as it moves from suspect to prospect to qualified opportunity to closable opportunity.

          1. Suspect - you have a first meeting, call, or video scheduled (3 milestones) based on discovering that they have issues that you can address
          2. Prospect - they have a compelling reason to buy what you sell and buy it from you (5 milestones)
          3. Qualified - they are thoroughly qualified to do business with you (7 milestones)
          4. Closable - they have given you a verbal and you are waiting to formalize the agreement (3 milestones)

If you want to see what a funnel should look like when you bring it to life, in the context of a full and comprehensive sales process, then watch this video.  It has a run-time of ten minutes.  I have shared this video before so if you have seen it and don't need to see it in the context of this article, feel free to skip past.

You heard and saw in the video that the only complete sales process with a built-in methodology is Baseline Selling.  Baseline Selling is pre-integrated and easy to further customize in the Baseline Selling edition of Membrain, simply the best sales-specific CRM application on the planet.  Check it out here

The danger of having your funnel rooted in 120-year-old theory becomes even more troublesome when your sales training and coaching is based on this and it is this which is integrated into your CRM.

It should be crystal clear by now that most of what you learn about sales today, is no more relevant, thorough, fresh, on-point or correct than the sales process served up by St. Elmo Lewis in 1898.

Topics: Dave Kurlan, sales process, sales pipeline, crm, sales funnel

Hidden Sales Competition and Why it Could Happen to You

Posted by Dave Kurlan on Mon, Sep 27, 2021 @ 14:09 PM

I recently took these pictures of mushrooms on our property that I had not seen prior to this year.  Bright reds, bright oranges, whites and more.  After living on this property for the past twenty years, it really surprised me that these bright colored mushrooms appeared out of nowhere.  Then again, my wife and I have cut down a lot of trees and cleared a lot of brush in the last twelve months.  Could they have been growing there right along and we simply didn't see them?

Can you guess where this is going?

Have you ever had a sales opportunity that was completely under control, you were following your sales process, everything was looking great, and then, from out of nowhere and without warning, surprise competitors appeared?  

Yes, the magic mushroom competitors! 

Were those competitors competing for the business the entire time and the prospect didn't share that important piece of information?  Did you neglect to ask if they were talking with or looking at anyone else? Or, and this is important, were they eleventh hour additions to the game?  

The late-to-the-game addition is the easiest to deal with because we have the most clarity on this scenario.  Prospects invite additional competition when they are not 100% sold on one or more of the following 15 possibilities:

  1. your offering
  2. your price
  3. your company
  4. your timing
  5. your delivery
  6. your options
  7. your responsiveness
  8. your testimonials
  9. your quality
  10. your track record
  11. your politics
  12. your sense of humor
  13. your location
  14. your customer service
  15. your technical service

Prospects generally don't want to compromise so it only takes one thing that was either not covered, not explained, not handled, not offered, or not included and they may look elsewhere.  So what can you do to make sure that never happens to you (again)?

You need to more thoroughly qualify your opportunities!!! 

EVERYTHING that could go wrong must be anticipated and discussed during your qualification stage. That's why you should never, ever, ever rely on a proposal or a quote or a Scope of Work to explain your offering, prices or fees.  Those documents merely formalize in writing what you have already agreed to!  YOU close and if they want to move forward WITH YOU, then you can send it. 

Prior to that you should discuss EVERYTHING from fees, to terms, to timelines, to alignment, to expectations, to fit, to yes, competition.  And if there is competition, discuss it, ask why, ask how they feel about them, who they are leaning towards, why, and what you can do about it?  And when it comes to what you can do about it, DO NOT EVER LET IT BE ABOUT LOWERING YOUR PRICE.  NEVER.  If they ask you to match or lower your fees, ask, "other than pricing, what can I do?"

Qualifying is one of the 21 Sales Core Competencies that Objective Management Group measures in both its sales force evaluations and its accurate and predictive Sales Candidate Assessments.

When it comes to hidden competition, don't act like you've been taking the magic mushrooms and developing happy ears.  ASK QUESTIONS!

Topics: Dave Kurlan, sales core competencies, sales qualifying, selling against competition

How to Prepare for the Coming Sales Team Super Storm

Posted by Dave Kurlan on Wed, Sep 22, 2021 @ 16:09 PM

LittlePawz - Freak summer snowstorm blanketing red maples

What would you do if, in the middle of summer, a big box store said you would really need a snowblower in preparation for the summer snowstorms we were about to get?  Crazy, right?

What if Staples sent out a promo to buy all the printer paper you can in preparation for a printing explosion as we move away from digital?  Wouldn't that be nuts?

What if a professional sports team reached out to your really good 12-year-old and offered them a professional contract?  Is that even possible?

So when a promotion for an upcoming webinar appeared in my Twitter feed last week I was equally astounded by the lack of anticipatory awareness of the sales training firm and online publication promoting it.  It said:

My first reaction was that this must have been something from 2016 - right before the boom that lasted until the pandemic slammed the economy to the ground.  Or, from the 4th quarter of 2020, when we expected the economy to come roaring back.  But it simply can't be something that is remotely relevant to what we are about to experience.  Here's what we know, and how that will impact companies and their sales teams in 2022.  

I'm not an economist, but I can read, seek out trustworthy sources, and have 46 years of business experience. On top of that I am street smart, have good common sense and  can do the math.  

Inflation.  According to Trading Economics, the current inflation rate is running at over 5% compared to 1.2% just a year ago.  That is bound to lead to higher interest rates and a drop in consumer confidence, followed by layoffs, spending freezes and more price increases.

Federal Debt.  According to Statista, the federal debt is over 28 trillion dollars, more than four times what it was 20 years ago.  On top of that, Congress is debating on two bills, which together, would add another 5 trillion dollars to the debt. Regardless of what anyone in the US government says, it can only lead to higher taxes. One of the bills being debated right now has provisions for significant tax hikes.  According to the NY Times, the corporate tax rate could increase by more than 30% and the rate for the wealthiest Americans could double! According to Tax Policy Center, senior fellow, Howard Gleckman, "95% of all federal taxes are paid by households in the top two quintiles — those making about $98,000 or more." 

No matter how you cut it, higher taxes lead to layoffs and spending freezes. The wealthy will have less disposable income to inject into the economy and the businesses they run must layoff staff to compensate for profits being redirected to pay additional corporate income taxes.

Don't get me wrong. If multi-billion dollar companies aren't paying any taxes they should pay their share but this won't affect them.  According to the US Treasury30 million SMEs account for nearly two-thirds of net new private sector jobs. This will affect them and their employees.

Immigration.  You don't have to live in a cave to see what's happening on the southern border and with the Afghanistan immigrants.  Millions of people streaming into the US means millions more low wage workers.  According to George Borjas, professor of Economics at Harvard University, "Immigration redistributes wealth from those who compete with immigrants to those who use immigrants—from the employee to the employer." 

As wages go down, disposable income vanishes and that negatively impacts the economy.

Stock Market.  Wall Street has the jitters right now because they don't like what they are seeing.  According to Morgan Stanley's Chief Investment Officer, Mike Wilson, stocks could be in for a 20% correction. 

That's a devaluation of 20%! 

According to BTIG's Juilian Emanuel, the markets are mimicking 1999 and for those of us who were around back then, it's not good news.  As a matter of fact, that's the kind of news that causes companies to stop spending money in a hurry.

If you've been reading anything in the news, you know there's a lot more going on but these four issues directly impact our economy.  And you don't have to live in the US to be affected by the US Economy because according to the NY Times, as the USA goes, so goes the global economy.  

These four issues don't suggest a coming boom, they warn of a serious recession, with high inflation, high interest rates, and high taxes, coming soon to a city near you.  In other words, an economic disaster.  Not as bad as the complete shutdown we saw in 2020, but probably as bad as the economic crisis we faced in 2009.

So how will that impact companies and their sales teams?

When large companies enact spending freezes, it has a trickle down effect.  For B2B, think cancellations, PO's that aren't issued, layoffs, fear and most especially, real challenges to getting products and services sold unless companies can't do without them.  And even then, there will be more competition and a race to the bottom as companies demand lower prices. Salespeople are ill-equipped and will be scared, while the companies they work for will be too risk-averse to rely on order takers to suddenly sell value in hopes of maintaining margins. 

"Selling value will be the key to survival but
selling value does not occur in a vacuum".
 

It requires strong consultative selling skills (listening and questioning) in the context of a sales process that supports a consultative approach.

Selling value assumes that your salespeople actually got themselves a meeting!  While getting meetings aren't that difficult with good lead generation efforts, meeting with a decision maker is.  46% of all salespeople believe they are reaching decision makers while Objective Management Group's (OMG) data shows that only 13% are actually doing that.  And if the economy tanks the way I expect it to, watch what will happen to those lead generation efforts!

From 2017 to the pandemic, most salespeople were successful in spite of themselves because there was more business than capacity to deliver.  Yet 50% of reps still failed to meet quota.  What will happen to the bottom half of your sales team when there will no longer be orders to take and each opportunity will need to be found and properly sold?  It doesn't sound very exciting.

Now is the time to take control of what lurks ahead.

The. Single. Most. Important. Thing. You. Can. Do. Right. Now. is to have your sales team professionally evaluated.  You must:

  • Learn who is part of your future and who was part of your past
  • Whether sales management is up to the task of coaching up your salespeople
  • Who has the ability to become effective taking a consultative rather than transactional approach to sales?
  • Who has the ability to sell value instead of price?
  • Is your sales process ready to support a consultative, value based approach?
  • How effective are your salespeople at reaching actual decision makers?
  • How effective is your team at gettin prospects past nice-to-have and getting them to must-have?
  • How much better can your salespeople become?
  • How long will it take?
  • What is required?

Those are the first ten things that came to mind but there are hundreds of other questions that could be and should be answered as part of a sales force evaluation.  What do you need to know about your sales team to navigate what I expect will be a very difficult 2022?

Learn more about a sales team evaluation here.

Explore OMG's data from more than 2 million salespeople in the 21 Sales Core Competencies we measure.

Request a sample from a sales team evaluation. Check off the following boxes on your sample request:

Topics: Dave Kurlan, assessments, sales performance, economic crisis, recession, closing deals, 2022

The Sales Compensation Plan from Hell and How to Improve It

Posted by Dave Kurlan on Fri, Sep 17, 2021 @ 11:09 AM

Challenge Yourself with a Puzzle That's All the Same Color - Nerdist

Have you ever attempted to complete a jigsaw puzzle when the entire puzzle is a solid color?  You dump all the pieces on the table and say to yourself, WTF?

 

Have you ever come to a strange intersection and the signs are pointing in every possible direction?  You sit there with drivers leaning on their horns, urging you to move and you're looking at the signs and wondering, WTF?

Frankenstein: Shelley, Mary: 9781512308051: Amazon.com: Books

And the perfect analogy, Frankenstein. The monster was not at all what its creator, Victor Frankenstein had intended or hoped. Victor, a scientist, looked at his creation and said to himself, WTF?  If you are familiar with the book, then you know that at birth his creation was not a monster on the inside but Victor was so horrified by what his creation looked like that his abusive behavior towards the creature forced him to morph into a monster.

Have you ever seen a compensation plan so complicated, so illogical and so detailed that all you could do was stare at it and wonder, WTF?

I did.  This week.  Couldn't make heads or tails of it. There were several sales groups selling different services to different audiences, several roles in each group, different plans for each role, different percentages, some of the compensation was guaranteed but some was variable and had to be earned by achieving quantitative and qualitative goals consisting of variable weighted goals, some of which were based on revenue while others were based on percentage achievement of goal.  The only way to figure it all out was to draw a table on the white board and start filling it in.  When we were done it looked like the monstrosity below:

It was worse than the solid color jigsaw puzzle and crazy street sign!

A good sales compensation plan is one that is so simple that salespeople can look at it and in about twenty seconds, understand exactly what their base salary will be, how much they can earn in commissions, what they must do to earn it, and when they can expect to be paid.  Period.  The plan I saw required two calls and one meeting with half of my team to get to the point where we understood what was in it and how it worked.  It was so complicated that I thought I would have to go back to school to decipher it!

A good sales compensation plan is motivational.  Salespeople must know that if they outperform the budget then there are commissions and bonuses to earn.  This plan was capped with no commissions or bonuses for over-performing the budget.

A good sales compensation plan should guide salespeople's behavior and incentivize them to focus on the things they will be compensated for.  This plan had a weighted variable for retained business but offered almost no incentive to spend any time on retention.

A good sales compensation plan should have a single number.  That number is the average percentage of revenue on which all salespeople in a particular group/role are paid.  This plan had to be reverse engineered to come up with the number of 3.4%.  On average, total comp was 3.4% of revenue.  So that becomes the number salespeople can expect to be paid in commission for over-performing their budget.

Find the number, go for simple, motivational, and behavioral and your salespeople will run with it.  Otherwise, you'll be proud as heck of the monster you created and left wondering why you have so much turnover, sales aren't growing, and what you have to do to fix it.

Topics: Dave Kurlan, Motivation, sales compensation

The Chainsaw Massacre and Building Sales Teams

Posted by Dave Kurlan on Tue, Sep 14, 2021 @ 09:09 AM

chainsaw

I was on the back of our property with my chain saw and I was ready to take down the third tree of the afternoon.  I determined where the tree needed to fall, made the two front cuts to create a hinge and made the final cut in the back to take it down.  Only it didn't go according to plan.  Somehow, the tree began to drop right where I was standing, ninety degrees from where I intended.  If cutting down trees is a hit or miss proposition, this was definitely a miss - as long as I could get out of its path quickly enough.  There is a science and a process for taking down trees and obviously, I didn't follow it properly!

Despite the existence of both a science and a process for hiring salespeople, most efforts also tend to be hit or miss and the emphasis always seems to be on miss.  There are plenty of reasons why, and we can discuss some of them, but the biggest and most insane reason is...

There are processes, websites and tools and plenty of help is available every step of the way. With all of those resources, why is hiring salespeople still such a hit or miss proposition? 

The answer is: Stubbornness.

HR professionals are stubborn because they think hiring salespeople is the same as hiring everyone else in the company.  It isn't.  Salespeople have three additional challenges which no other employee has to face:

  1. Competition - competitors will try to prevent your new salespeople from succeeding. Who other than salespeople in the company have to overcome that?
  2. Resistant and Disinterested Prospects - they hide from your new salespeople and when your salespeople do manage to get them to the phone they are resistant and disinterested.  Who other than salespeople in the company have to overcome that?
  3. Fear - salespeople have a lot of self-limiting beliefs, discomforts and fears that prevent them from doing some of the things required to be successful in sales even after they have learned to do them.  Is there any other role in the company where demons interfere with getting the work done?

Sales Managers are stubborn when they insist that their years of hiring salespeople validates their gut instinct and because of their experience they will get it right.  Yes - they can get it right as often as 50% of the time.  With only 50% of salespeople hitting quota each year, sales is the only profession where employees can fail dramatically and still have a job.  Unfortunately, as Elton John sang, "I'm still standing" is not a KPI for sales success.  Meeting or exceeding quota each year is.

CEOs are stubborn because they refuse to hold their Sales Leaders accountable for eliminating mediocrity. That mediocrity includes not just the horrible quota achievement, but failing to meet forecasts and sales hiring results.  How long would it take the CEO to fire the CFO if the CFO could only account for 50% of the company's money?

Recruiters - both internal and external - are stubborn because they don't want to change the way they do things.  As such they attempt to prevent companies from using Objective Management Group's (OMG) very accurate and predictive sales candidate assessments because it makes their job so much more difficult when they have to present quality candidates instead of any old candidates.

When Sales Leadership, HR, Recruiters and CEOs break through the stubbornness barrier, they are rewarded with the benefits of using OMG's sales candidate assessments - the equivalent of a sales hiring crystal ball.  OMG is incredibly accurate and predictive, as well as customizable down to the specific selling role so HR, sales leadership and recruiters can all see into the future and determine in advance whether or not each sales candidate is ideal for the selling role the company is attempting to fill.  As a result:

  • Recruiters deliver and recommend candidates with confidence!
  • HR saves dozens of hours they would have spent pouring over applications and resumes as well as making calls and can focus on reaching out to only those who will succeed in the role.
  • Sales Leadership interviews only those candidates who have the sales capabilities to succeed.
  • New salespeople hit quota, forecasts are finally realized and CEOs celebrate.

Best of all, executives can hire the salespeople they need and then move on to the other important aspects of their job.  it doesn't have to be hit or miss and it doesn't have to be difficult.  If it wasn't for stubbornness, hiring salespeople would not be a year-round proposition!

Speaking of resources, here are some I can point you to:

Free sample of OMG's Sales Candidate Assessment 
Free trial of OMG's Sales Candidate Assessment 
Free White Paper on the Science of Salesperson Selection

Image copyright 123RF

Topics: Dave Kurlan, assessments, hiring salespeople, sales hiring assessment, sales candidate assessments

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Best-Selling Author, Keynote Speaker and Sales Thought Leader,  Dave Kurlan's Understanding the Sales Force Blog has earned medals for the Top Sales & Marketing Blog award for nine consecutive years. This article earned a Bronze Medal for Top Sales Blog post in 2016, this one earned a Silver medal for 2017, and this article earned Silver for 2018. Read more about Dave

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