What’s Wrong With The Sales Machine? Determining Why The Sales Force Is Broken

salesThis is Part 2 in a four-part series on operationalizing the sales force in order to create consistency, transparency and predictability in the sales function. Read Part 1 here.

“I put a dollar into the candy machine, pull the lever, and I get a candy bar. I put a dollar into the sales machine, pull a lever, and I have no idea what will come out.”  – Fortune 500 CEO

In our initial installment, we acknowledged the frustration many CEOs face in trying to gain control of the sales function and we emphasized the importance of “operationalizing” sales so it operates with the same levels of efficiency, transparency and measurement as other functional areas. We also urged CEOs to sit down with their senior sales leader and ask five key questions to uncover their current stage of sales maturity.

  1. What’s our approach to sales?
  2. Is individual rep performance fairly balanced?
  3. How much visibility do we have into performance?
  4. Are our managers effective?
  5. What is our sales enablement capability?

This is the starting point for any initiative to operationalize sales: leaders must know where they stand before they can identify where they want to go and how to get there.

Not long ago, we worked with the CEO of a global technology company who, like many CEOs, knew he needed to operationalize his sales function but was uncertain about where to start. By working through the five key questions with his VP of Sales, the CEO made some insightful discoveries. In the “individual performance” category, the CEO learned that sales rep performance was highly variable with the majority of sellers below quota. Other categories had similar challenges. Sales management approaches varied by manager, CRM was used infrequently and by only a few reps, and – not surprisingly in light of the limited CRM usage – there was little visibility into where the company would land against sales targets until the very end of each quarter. By matching these findings against the corresponding descriptions for each stage of sales maturity, the technology company understood itself to be somewhere between Stages 1 and 2 – between Artisans at Work and Building the Foundation.

If you worked through the five questions with your senior sales leader you, like the CEO above, now understand what is broken in the sales organization; the next step is to determine why these things are broken. That’s because each problem uncovered in the process of pinpointing a company’s level of sales maturity can be the result of several factors – and may well be a complex combination of those factors. For example, lack of visibility into performance could mean an organization is not applying best practices in sales operations, or it could mean sales managers aren’t inspecting CRM inputs and using the data as the basis for coaching, or it could be a problem related to the technology itself.

This second step in operationalizing the sales function is about identifying root cause. You need to look deeply at each problem holding your organization back from a higher level of sales maturity to figure out what factors are foundational contributors to the problem.

Let’s take the category of individual performance. If you calculate the gross margin brought in by each sales rep and discover that fewer than 50% of reps are bringing in more than 80% of the margin, then you’ll want to look more deeply here as your company is likely over-dependent on a few high performers. What are some of the most common causes underlying variable performance among reps? There are typically three elements that influence performance: talent, motivation, and process. In order to grasp the root cause of variable performance, leaders will need to examine each of these three elements by exploring questions such as:

  • Do we have a good understanding of the personality characteristics/qualities that lead to success in each sales role?
  • Are we hiring the right people for each sales role?
  • Do we have clear role descriptions and competency models that include adjustments for sales rep tenure?
  • Do we recruit new reps using a company-directed process that is consistent across the entire sales organization and is recruiting a true competency for the organization?
  • Is our training and development program effective, enabling new hires to ramp up and be productive within 90-120 days?
  • Is our sales compensation plan aligned with company strategy?
  • Does the comp plan disproportionately compensate top performers, offer frequent payouts, include attainable goals, and offer both financial and non-financial motivators?
  • Is the comp plan competitive in the industry and easy to understand?
  • Do we have a “sales management system” based on best practices and are managers coaching their teams effectively using the system to drive sales performance?
  • Is there a company-directed selling process that is used by all reps, e.g., the “Company Way of Selling”?
  • Does the company manage the sales function using key metrics that track activities linked to success?
  • Are the best practices in the company-directed process continually updated and shared among reps?

This is not an exhaustive list, but it does show the complex array of variables that can lie behind what’s broken in a sales organization. A “no” answer to any of the questions reveals a lever that may be the right one for a company to pull to produce improvement in the individual performance category.

Notice that there can be overlap in root cause contributors between categories. Sales manager effectiveness, which would seem to fall into the “sales management” category, greatly impacts individual performance variability. Similarly, management according to a “Company Way of Selling” must certainly be examined in the “approach to sales” category, but it also can be a significant factor when it comes to consistency in rep performance.

After evaluating the analytics underlying individual performance of sellers, the global technology company mentioned above discovered several high-value opportunities. First, leaders learned that different sales roles meant different things in different regions – there was no company-defined role description to guide hiring and expectations for each sales role. There was also no company-defined sales process. Reps sold in whatever way they thought worked best, leaning on whatever experiences they had gained in their pasts.

This not only led to problems with consistent performance, it led to unnecessary friction given the poor role definition. In one case, management was trying to move away from legacy products and services and focus on sales of cloud-based products but most sales reps resisted change and stuck to their old ways of selling . Finally, there were dozens of different compensation plans – some with only one or two individuals tied to them. One of the many downsides of these plans was that low performers were often more likely to get raises than get fired.

For the sake of simplicity, we have focused here on just one of the five main areas of the sales function that must be examined. A similar deep dive into the analytics and root causes behind what’s broken – or, what’s holding your company at its current stage of maturity – must be undertaken for any significant problems discovered in a company’s approach to sales, visibility, sales management and sales enablement/tools. Once that is done, your leadership team should be well positioned to know not only what is broken in your sales organization but to know why it is broken.

The next step is to determine how to fix it. Which levers should you pull to move your sales function towards an operationalized, stage 4 organization and how should you be pulling them? We will examine that question of how to fix what’s broken in our next article.

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