Cost of Sales is a critical KPI, particularly when you operate on thin margins.  Influencing factors include attrition, training, travel, equipment, compensation, recruiting and administrative costs.  Some of these are generally fixed while others can vary widely.

If 100% of your salespeople consistently make their quota or budget at the desired margin, much of the concern about Cost of Sales would evaporate.

So why worry about it? I was speaking with an SVP of a brand-name company with thousands of salespeople.  He told me that most all of their sales teams have only a few (2-3) salespeople achieving quota while the rest consistently struggle.  Let's take a look at a typical sales team of 8 people.

The net gap in margin, $210,000 in this example, replicated 6 times to account for the 5 similarly performing teams in the organization, has a direct impact of $1,260,000 on the Cost of Sales.  You don’t need to be a financial wiz to see that even a small drop in margin has a significant effect on profitability.

My experience is that when salespeople consistently do the things which they don’t want to do (healthy behaviors), good things happen.  Highly-effective people do the hardest and least desirable things first, assuring greater productivity.

In this light, the SVP’s comments illustrate both a huge problem and an amazing opportunity.  Yet most senior executives assume the 80/20 rule will be true, but simply leads to more unacceptable behaviors and outcomes.

Consider what would happen if your financial people were able to account for only 92% of your money or if operations shipped only 92% of your product.  It’s virtually certain that things would change quickly.

Let's put aside the impact on profit and look only at the salespeople.  Self-limiting thinking impacts everything.  For example:

• I can’t help a prospect who's happy with their current supplier.
• The economy is hurting our business.
• It’s OK if I miss my quota as long as I come close.
• I’m not an executive.
• I wish that I didn’t have to deal with being rejected.
• People are under pressure to buy the lowest priced products.

These thoughts influence bravery, execution, adherence to sales process, motivation, outlook and most importantly whether the salesperson can execute the call strategy.

What are your salespeople thinking when management isn’t looking?  Is sales management skilled enough to address this challenge?  What don’t you know about your sales force that’s costing you 8% or more of your margin dollars?  Are you accepting the 80/20 rule, the one which says that 80% of your sales organization is underperforming?

Many business owners and leaders that I speak to believe that “sales training doesn’t work.” What do you think?

If you read the comments, you’d see a range of thoughts, including, “Sales training is a must.”, “They likely have the wrong trainers.”, “Not all salespeople are trainable.” and “It works only when senior management is bought in.”  All of these statements are true particularly if you include the context.  What I found upsetting is that there was little reference to sales leadership.

In my experience, the majority of CEO’s do not come from sales.  They generally have finance, operations, technical, scientific or marketing backgrounds.  Many lack a full appreciation of professional sales, the nature of salespeople or seeing sales as less structured than other parts of the business.  Given this, it’s not surprising that when hiring a sales leader, they choose people who desire autonomy and operate well independently.

Objective Management Group’s research shows that only 7% of sales leaders are truly effective at coaching salespeople.  While shocking, this finding is not surprising when you consider that most sales leaders fail to invest enough time in this critical function.  Autonomous sales leaders were autonomous salespeople first. They operated with little assistance and intervention.  Imagine how much more productive they would have been if they had sales leaders with great coaching skills.  Since only 7% of sales leaders are effective coaches and they work for CEO’s whose core competencies are not in sales, building a high-performing sales organization is almost impossible without sales leadership training and development.

Sales leaders should spend 80% of their time on accountability, coaching, motivating, mentoring and recruiting.  A significant majority fails to invest this much time. Their approach to coaching (and I’m not knocking sales leaders) is to tell salespeople what they should do instead of helping them to discover the right strategy themselves.  They also frequently close the deal for them.  How can anyone learn without making mistakes and learning from them?

Kurlan and Associates, Inc. is hosting a two-day Sales Leadership Intensive at the Boston Marriot Long Wharf in May.  This program will focus on practical strategies and skill development for sales leaders.  Additional Information can be found by clicking here.

 

The other night I answered the phone and was greeted by “Hi is Susan there?” I replied “Yes, who is calling?” the response was “Charlene”. This happened during what I’ll call “the telemarketing period”. 

Without thinking I walked downstairs handed the phone to my wife and told her Charlene was on the phone.

It turns out Susan knew Charlene but I didn’t know that I just felt like Charlene had the right to speak to her.

How did I form this opinion?

1. She sounded totally sincere
2. She sounded like Susan was expecting her call
3. I had almost no information to disqualify her
4. Her tonality was exceptional

Because Charlene felt like she had the right to call and expected to speak with Susan there was no formal introduction. Because she was relaxed and stress free her tonality was great. Because she didn’t give me much information I formed an opinion based on my sense that she knew Susan and had the right to speak to her.

Great character actors are trained to create a perception in the audience that they are the character. Your salespeople should take a page from my experience and character actors.

Do your salespeople sound sincere; like they have the right to speak to the person they are calling and project great tonality?

If your answer to these questions is “no” or “I’m not sure" you need evaluate their phone skills, determine what needs improvement and proactively help them work on it.

Do you have the skills, desire, willingness and expertise to build an exceptional sales organization? 

• Do your sales leaders thrive on growing and developing people?
• Are they highly passionate about the team’s success?
• Can they remove their egos and accept mini failures?

Great sales leaders understand their limitations, leverage their strengths, ask for help and find ways to implement other people’s ideas.

The most common concern I hear is inconsistent execution. There are many causes of this, not the least of which is, do you have the right people in the right roles? Other issues include metrics, inspection, urgency and management skills. How effective is your sales leadership as coach, mentor, motivator, recruiter and driver of accountability and what are you doing to improve your salespeople’s skills?

In almost every interview I conduct the candidate says, “I’m a consultative salesperson”. The problem is they can’t explain the “how” and most of the time they don’t demonstrate they have the skills. What is your value proposition, can your sales team articulate it, is there a selling process, do they follow it and how effective are they at differentiating themselves from the competition and creating high value relationships?

External influences impact our attitude, bravery and clarity. Salespeople react differently to this; some need close monitoring and others a kick in the back side. Sales leaders must know their people better than they know themselves. Are you a great role model for attitude, bravery and clarity? What causes you to loss focus and where do you go for help?