Building Sales Effectiveness Exclusive Online Content
September 22 2011 by Howard Stevens and Geoffrey James
Sales Specialty Map
METHODOLOGY OVERVIEW OF THE WORLD CLASS SALES DATABASES & METRICS
The Chally Group Worldwide has conducted the World Class Sales research project since 1992. Each World Class Sales research cycle has involved two phases.
The first phase, through telephone interviews, is the assessment of the needs of corporate customers and the collection of their individual ratings of each of the specific salespeople who call on them. The aggregate of salesperson ratings from the same sales force were then tabulated and aggregated into the overall rankings of each of these sales forces in comparison to their competitors in the same market segment. The few who were also rated as World Class in comparison to all vendors were recognized as the best or World Class.
The second phase, with the cooperation of the top customer-rated World Class Sales forces, collected full benchmarking research results, including best practices, metrics, management processes, and profiles of each World Class Sales force. Overall, Chally has developed the leading Six Sigma styled set of World Class Sales force metrics and databases available today.
Customer Positions Interviewed:
- 80,000 customers have been interviewed.
- They have rated 210,000 salespeople on 15 separate performance criteria.
- And identified how much each customer bought from each salesperson (share of wallet) over a three-year period.
Conventional Wisdom: Find and Develop More “A” Players!
One of the favorite “Consultants’” solutions to build sales force productivity goes like this: Study the techniques of your “A” players, your superstars (the top 20%). Identify the techniques they use. Then, train the rest to use these winning techniques. So let’s test this sales myth with a little common sense and basic sales math.
Our test dummy here is a very typical 200 person sales force for a company that has annual sales of $200 Million. If we plot the normal bell shaped curve, the basis for the famous “80/20 rule” cited so frequently to describe typical sales force productivity, it would look like this:
Myth one: However, contrary to the popular 80/20 expression the top 20% of our sales force does not deliver 80% of all sales. Based on a broad, cross industry sample from 900 B-B sales forces, the top 20% actually produces 52% of top line revenue…but 52% is still pretty good. So let’s study the techniques of the top 20% and train the middle 60%. And let’s assume we could get an aggressive 5% improvement from training. What growth can we expect? The Result:
Improving the performance of the middle 60% by an aggressive 5% each can only produce a 2.25% improvement in sales. It’s likely that the superstar benchmarking research and training cost at least several hundred thousand dollars. But to make it even worse, research by Arun Sharma at the University of Miami (Fla.) has exposed an additional flaw in the consultants’ logic. Having studied broad differences in the behaviors of sales superstars across many industry segments, he found that their sales techniques with customers were not so unique. Their competitive advantage was largely based on their ability to manipulate their own company’s resources more effectively to “prioritize” their customers. In fact, they typically managed to consume a significant percent (up to 50%) of their company’s internal resources.
Most sales execs recognize that their top reps are expert at bending and stretching their companies’ processes to take care of customers…and often difficult to manage as a result. But in reality, we are really paying these superstars twice: once in allowing them greater resources than the others, and then again with much higher variable compensation when they consume these resources to win sales.
Total Quality Management Can Save the Day
Applying Total Quality Management (TQM) principles (i.e. focusing on finding and eliminating the sources of sales failure) will focus on the real problem with this sales force: the bottom 20% who are losing all the money!
Reassigning or replacing the bottom 20% with just “average” sales people will increase production by a minimum of 9%. If you now train the entire sales force and get a 5% gain, you get an additional $5.7 Million.
Our real mistake is not studying what type of people fail, and stop hiring them to begin with. Instead we usually try to study why supertasters succeed, and try to recruit more of them. The trouble is that, by definition, they are the top 20%…and there aren’t enough to go around.
The Bottom Line
Replacing conventional wisdom with real math, common sense and a little Total Quality Management thrown in costs less and grows productivity by $19.3 million more. In fact applying TQM to sales or TQSalesM™ as a continuing process improvement produces even more dramatic results.
Conventional Wisdom Shattered!
For more information, go to http://chally.com/tqsalesm-download/.