CEO’s often ask me about “poor performers”. Downturns in the economy are often a catalyst to weed them out as companies watch every penny going out the door. I’ve found there are patterns that can identify these people so they can be weeded out of the organization. I share these below.
Sales People fail for (one or more than one) of the following reasons:
- Fit
- Motivation
- Compensation
- Training
- Ramp
- Sales process failure
- Misalignment of goals and expectations
- Time management
- Mismanagement of pipeline
- Work ethic
1. Fit
I am a firm believer that you can train a good salesperson to sell anything. So when I say “fit”, I am not referring to “domain expertise” or “dental experience” but rather are they a “profile fit” for the position?
Let me explain. There are normally 3 and sometimes 4 distinct profiles that map against the customer lifetime continuum.
a. Hunter b. Farmer c. Nurturer
I often times find sales people miscast in roles that do not fit their profile. A hunter wants to sell something, and sell it fast, and doesn’t want to have to farm or nurture them after the sale. They make horrible Account managers. On the other hand, a farmer wants to develop an existing account. They are better with an existing book of business where they upsell and cross-sell. The nurturer wants accounts to love them. And typically the accounts do; the nurturer will work tirelessly to keep their accounts happy and satisfied. But don’t ask a nurturer to sell anything.
In most cases, sales people tend to find their way into only one bucket, or have a strong preference for one bucket. If the primary role of your sales team is hunting, then we should be hiring hunters. We have interview questions and background checks that can test for hunters. People that have traditionally managed a book of business or a list of accounts in a given territory most often do not fit the profile.
2. Motivation
I want people that “want the A.” Mary is someone who always “wants the A.” She wants the executive team and her peers to say “nice job.” She wants to be recognized as a top performer and that drives her every month to success. And when she has a bad month, she tells herself, “I’m not going there again.” “I am going to go kick some butt this month, and make up for last month”
Passion, drive, motivation, success-oriented, goal-oriented are all terms that describe this characteristic. People who are driven to success, usually make good sales people.
Warning: Sales people with this characteristic are sometimes a pain in the butt. They are so driven that occasionally they will step on toes. They are not always elegant and tactful in getting things accomplished. As long as their passion is channeled in the company’s best interests and they are not creating any issues externally (with prospects and customers), I found that the internal challenges of highly motivated people were well worth the extra “internal mgmt. required.
3. Compensation
More and more companies are moving to a 40/60 or 45/55 base/variable plan with less than half of the OTE (on target earnings) salary and more than half on the variable comp.
I recommend that your base salary is conservative enough that people can’t get too comfortable living on their base salary alone. If your comp package is above-market, this should allow you to attract excellent sales personnel.
4. Training
Formal training along with on-the-job training is a must. For most companies, there is a lot to cover for new sales people. Be sure to align training that is appropriate part of the customer lifecycle they deal with.
Ongoing training is always useful. Even simple things like:
a. Telling the company story b. Overcoming objections c. Getting past the gatekeeper d. Giving a great demo that gets to close e. Phone scripts, email templates f. When to use referrals
Making time for peer-to-peer best practice collaboration is important. Sharing successes, strategies, tactics, wins, and losses are all important. Brownbag lunches can be great forums for this sharing.
5. Ramp
Be patient, but not too patient. Ramping to full quota should take place somewhere between month 3 and month 9. I would suggest that the average of those (month 6) is a pretty good guidepost. Certainly if someone has not fully ramped by month 9 (unless the sales cycle is 12-18 months), they should be placed on a PIP (Performance Improvement Plan.) Typically if they are unable to hit quotas by month 6, they are probably not likely to hit quota by month 9.
Make sure, though, that the goals are fair and the sales individual is fully trained.
6. Sales process failure
Let’s look at a company where the sales process centers around the demo and the close with the following steps:
a. Qualifying the opportunity b. Identifying the decision maker c. Getting to the decision maker early d. Demo (and discovery) to decision maker and key influencers e. Overcoming objections (might have to do a second demo, price discussion) f. Getting the order
If the deal is not properly qualified or access to the decision maker is blocked or the decision maker is not available for the demo, et al., the sales process breaks-down and the likelihood for success diminishes.
7. Misalignment of goals and expectations
Sometimes the goals are unachievable. Stretch goals are fine, but should usually be set on top of an achievable goal. And achievement of stretch goals should be rewarded over-and-above the normal compensation for quota achievement.
Set goals that match the company goals (or the company re-stated goals) within a 10% factor. So if the company goal for a given month is $500K, align your quota model to distribute between $450K and $550K to your sales people. Under normal business conditions my personal bias is to roll out quotas that total the company goal. There can be factors (product delay, infrastructure issues, etc.) that justify rolling out something less than the company goal, but I still like to use the +-10% as a guide.
Sales People are “coin-operated”; they want to make money. They also want to over-achieve their quotas/targets. Usually quotas that are unattainable lead to sales people that are not making money and are running at 50-70% of target each month. The good sales people will eventually look elsewhere if the goals are not aligned and the poor performers will hang out for awhile until something better comes along.
8. Time management
And as important as “time management”, is “time prioritization” (spending time on the right activities)
I have had sales people who were wonderful managers of time, very efficient, got a lot of things done, but were not “effective” at selling and working their pipeline.
So this means 2 things:
a. Are they using their time wisely? b. And are they spending time on the right activities?
It also means, do they manage their time in order to maximize their productivity:
a. Making calls when it is a good time to catch decision-makers (early, late, maybe even lunch) b. Doing their research and emails during times when it is impossible to get a hold of decision-makers c. Prioritizing their month or quarter; working their pipeline to close business each week/month
9. Mismanagement of pipeline
This is typical with farmers and nurturers who are thrust into a hunting role with no formal training or experience in working a pipeline.
Pipeline management is not intuitive. You have to know how to most effectively work your pipe:
a. How many deals do I need at each stage to make my number this month/quarter b. How many calls do I have to make to get XX number of demos c. Which deals should I focus my efforts on this week/today d. “Win early and lose early” e. Am I talking to the decision maker, and I am talking to them early in the sales cycle?
Often times, inexperienced sales people spend way too much time on deals that are never going to happen. Learn to disqualify deals early and move on. Spend your time on deals that fit the “Hot Opportunity Profile”, that is prospects who fit our ideal customer profile.
You want to avoid being in the business of educating the marketplace. Leave that to consultants and analysts and marketing departments. We want to find people who can make a buying decision, and make it now. The marketing team should put on seminars/webinars to find and educate these people. Leave it to them if you are in Sales.
10. Work ethic
This is an issue that typically surfaces after 2-3 months. People can fake it for a while or they can be energized by a new opportunity. But people who would prefer to be golfing or lounging or playing video games show their true colors at some point.
I am not a huge fan of the “work smart, not hard” philosophy. Typically, that is just an excuse. I want people who want to “work hard and work smart”…that combination can yield success.
And the early warning signs are usually obvious:
a. activity levels (calls/demos) dropping b. Pipeline is stagnant c. Missing meetings/work frequently d. Customer/prospect complaints
Use this as guidepost. Quickly identifying the issues/problems, will help us quickly determine a remedy/cure. If you want some help, talk to us about a Sales Process Optimization project. Having the right metrics and processes in place readily identifies the issues outlined above.