By Scott Gordon, The Chief Revenue Officer
We’ve all been there. If you’re a consumer, it’s “where is that proposal @&%$&! sales guy said he’d send me yesterday?” If you’re an operations person you might have complained, “@&%$&! sales guys expect me to do their job! Why can’t they just turn in a complete contract? They have a @&%$&! checklist!” Else or, you may be a sales manager who pondered, “What’s it take to motivate these @&%$&! sales guys?!?”
Regardless of how you interact with them, salespeople are everywhere, and like every other population, their drive, focus, intelligence, training, interpersonal skills, hygiene, et cetera are all over the map. However, they all share one thing in common: without sales professionals, few of us would be employed.
Salespeople lubricate the engines of commerce. They match willing (and sometimes unwilling) buyers with sellers, problems with solutions, and give the rest of us something to do whether that something is managing the herd of cats that they are, processing the sales they turn in, delivering the product/service they sold, or developing the next suite of said products and services for them to sell.
Let’s face it, without salespeople there would be a lot less transacting going on. Sure, many of us use the internet when we are looking for something specific, but what about those products, services, and solutions you didn’t know existed until some sales guy told educated you? While marketing reaches many, it’s often the belly-to-belly, in the trenches selling that gets deals done. This becomes increasingly true as the complexity of the transaction increases.
There isn’t much complexity in buying a widget. Amazon is perfect for that. A new backyard, on the other hand, is a bit more complex. An enterprise wide CRM rollout is even more so. The more complex the transaction, the more important the role and competence of the salesperson involved.
This leads me back to a topic often discussed on the CRO’s Blog: training.
For the customer above who didn’t receive their proposal on time, one of three things happened:
While one can go to school and get a degree in business, marketing, and finance, there are few if any degrees in ‘Sales’. So as companies, we can’t assume the sales people we are hiring have received any formal training in their craft. This puts the onus on business to institute formalized training for their sales teams or suffer the consequences – lumpy sales, high turnover, bad paperwork, poor customer experience.
For the operations person who continually receives crap paperwork from sales guys, I always like to know if there are sales people who turn in great paperwork (of course, there always are). How do they do it? The answer to this question alerts me to whether we are dealing with a systems or training issue.
How? Some sales professionals are exactly that: professionals. So, they don’t let little things like a lack or systems or training get in the way of selling. They’ll simply invent their own system to compensate for a lack of one and engage interdepartmentally with peers to figure out what needs to get done. If they make a mistake, they’ll ask questions so they can continue to improve. They bring donuts to the office to garner favor because they know who ultimately butters their bread. If we can capture what they are doing to be successful, we have the genesis of a formalized training program.
Unfortunately, this breed of salesperson is as rare as a unicorn at a fairy conference. Yet, many hiring managers believe that if they recruit hard enough they can weed through the sea of posers and find these golden geese.
A better solution is to have a formalized training program so your company can collect the far more abundant ‘diamonds in the rough’ and mold them into competitor crushing forces of nature.
Lastly, for the sales manager beating her head against the wall trying to come up with ever more innovative ways to motivate her sales team, stop attacking the symptom – lack of motivation, and get to the source of the problem. Is it:
As you can see, this is a far thornier set of issues to contend with, especially if the problem exists at the management level.
In any case, if you’re organization is experiencing similar issues with your sales teams, there are ways to get back on track as soon as you decide to uncover and remedy the root causes. Until you do, the symptoms will persist.
Remember, while it’s easy to blame the @&%$&! sales guys for a laundry list of problems, the answer is often staring right back at us in the mirror.
By Scott Gordon, The Chief Revenue Officer
Robert Kiyosaki, the author of Rich Dad Poor Dad , once famously wrote: “It’s not how much money you make, but how much you keep, how hard it works for you, and how many generations you keep it for.”
Many businesses I work with understand this concept well and are highly optimized to capture every penny of margin from every sale, every time. In fact, they can be so good, that they often ‘find margin’ in places where others seldom look. For these clients, I tend to focus less on streamlining process and more on top of the funnel activities like lead generation, sales training, and marketing initiatives. After all, these companies are poised for growth since their engines are properly calibrated and have horse power to spare. My job is to help them drive more business through those beautiful engines they’ve built.
Then there are the others. They often have the sales and marketing angles figured out, but their back office is a disorganized agglomeration of tribal knowledge flying by the seat of its pants. Unlike the first group of clients who prioritized process over growth, this is the flip side of the coin – growth at any cost.
For this second type of organization, growth often comes at a very high price.
The role of a Chief Revenue Officer isn’t just to wake up every morning thinking of ways to grow revenue faster, but also to maximize the profitability of every dollar that comes into the enterprise. That’s one of the reasons a recent article in Forbes Magazine called the chief revenue officer “The CEO’s New Secret Weapon”.
A CRO is responsible for creating the overarching strategy that generates predictable AND profitable revenue over time. To do so successfully requires everything from correctly pricing product offerings (what are the margins required to cover overhead costs by business segment? - otherwise known as ‘putting water over the rocks’) to overseeing the marketing initiatives that attract customers in the first place, and implementing sales compensation plans to both attract top talent and keeping a lid on customer acquisition costs. A chief revenue officer’s jurisdiction crosses every department, process, and database where revenue lives – sales, marketing, back office support & processing, customer service, installation, etc.
The CRO is all about creating a company culture where all stakeholders are focused on generating sustainable and profitable business over time. The keys here are sustainable & profitable. Which brings us back to the point of this article.
Companies that have high octane growth engines but lack the backend systems, processes, and accountability to deliver a seamless customer experience will eventually sell themselves out of business. They are like sharks that must keep swimming or otherwise drown. In other words, if they don’t keep revenue coming in at an ever-increasing pace, working capital requirements will overwhelm their businesses.
Worse, sales driven businesses that lack defined strategy and brand identity often turn into squirrel chasers – chasing anything that looks like a dollar. This is dangerous because squirrel chasers don’t have a true understanding of the profitability of the segments they’re chasing. They just see dollars and, for them, any dollar will do.
While process driven companies subscribe to the motto: “build it and they will come”, sales driven companies often take a different approach: “build it after they get here”. Therein, lies the crux of the problem.
Lack of systems and formalized processes usually manifest themselves in the following ways:
A salesperson turns in a contract. She is excited that she closed a deal and, in her mind, is already spending her commission. Two weeks later, her customer calls frustrated that he hasn’t heard from anyone since he signed the agreement.
The salesperson, lacking visibility into the process, can’t answer her client’s questions and proceeds to launch a bevy of calls and emails into the back office to get a status report. Unfortunately, the person who can answer her question is on vacation this week and the folks ‘filling in’ don’t know where to find that information. Other business related fires spring up and this salesperson’s email inquiries get buried under a tsunami of emails of a similar nature sent by other salespeople and customers.
The resource in question returns from vacation and begins working on their inbox from newest to oldest (LIFO – last in, first out), only he never makes it all the way down to the salesperson’s week old emails because the avalanche of new email prevents it. Worse, the other support folks who were involved previously are buried under their own pile of work, and the customer of last week is forgotten.
Two more weeks pass, and now the customer is livid. He calls the salesperson and chews her out, with thinly veiled threats that if things don’t start happening soon, he’ll cancel his order.
The salesperson drops everything (prospecting, networking, new sales, etc) in an attempt to turn this deteriorating situation around. She soon discovers that the contract has been sitting under a growing pile of paperwork on the very same desk she placed it on four weeks ago. Now she is fit to be tied. She decides to escalate the issue to her manager, who in turn involves in peer in operations, who drops everything to make this order a priority (cost is now piling on top of cost).
The operations manager ‘writes up’ the offending back office resource, excoriating their work ethic, and insisting the order now be fast-tracked at the expense of everything else in the workflow. With the workflow now thoroughly disrupted, other orders begin to suffer the same fate. Additional customers begin to call the salesperson with similar complaints. She again escalates to her manager, who involves his peer, and so the negative feedback loop begins (cost, cost, cost).
The result of all of this wasted motion is double work (paying twice for the same thing), more dropped balls and confusion, inevitable customer cancellations & refunds, demoralized salespeople who question the efficacy of your business, inevitable personnel turnover with its requisite recruiting, training, and ramping costs, drop in word of mouth business (requiring ever increasing marketing spend to attract a steady stream new lower margin customers), negative online reviews (driving additional marketing costs), and relentlessly increasing overhead that will eventually overwhelm the stream of declining gross margin dollars.
Thus, the shark that must keep swimming...
A better scenario would obviously be one where more profitable revenue allows for increased investment in profitable customer acquisition to drive organic growth over the long haul. This can only be accomplished when an organization is focused not only on revenue acquisition but on the profitability of every dollar acquired.
It is a discipline many organizations lack. They never stop to, as Stephen Covey prescribes, “sharpen the saw”. They instead waste their valuable time fighting fires and figuring out how to make payroll every two weeks wondering why they can never get ahead.
It’s not about the dollars you make, it’s about the dollars you keep and subsequently reinvest in your people, systems, and brand.
Low margin and money losing businesses never have the money to reinvest. Therefore, they are outclassed and outperformed by their competitors who do. The haves (have defined business systems) will always clobber the have-nots (have no defined business systems).
These seat-flying firms mistakenly believe that if they can bring in new investors, they can ‘bridge the gap’ to profitability. Of course, smart investors run kicking and screaming away from such “opportunities” when presented with ugly EBITA numbers and hollow promises of future profitability. Yet less sophisticated investors, like family and friends, often swallow their pitch hook, line, and sinker. Sadly, the proprietors of these firms often swallow their own bait because they don't understand their numbers well enough to see the cracks forming in the dam.
Where is your business bleeding margin? Would you know where to look? Do you know your numbers? For example, do you know how much money each step in your process costs, how much work each resource can reasonably handle before you need to hire additional ones, what the aggregate cost to process an order is throughout your company, and how to optimize process to drive increased system wide profitability?
If not, you may need a CRO to drive the cross departmental discipline to make it so.
Of course, you can always keep swimming...
By Scott Gordon, The Chief Revenue Officer
If you’ve been in sales for any length of time, you’ve likely encountered one of these five nasties:
Every salesperson I’ve been acquainted with dreads the annual comp plan changes that crop up inevitably toward the close of each fiscal year. While it’s understandable that business conditions change and sales and marketing costs must be adjusted to accommodate, I know of few other professions where pay structure is adjusted so frequently.
The expectation of any pay structure change in the minds of your salesforce creates uncertainty and can dramatically affect performance. For example, if a salesperson believes next year’s comp plan will be less lucrative to them personally, they will race to bring in as much business as possible while the current plan is in force. Alternatively, if they feel next year’s plan may be better, they will ‘sandbag’ (put off orders) for the purpose of “front loading” next year. This is especially true if they’ve already hit their quota.
The first scenario creates a temporary boom in business followed by a bust, while the other weakens fourth quarter performance in the near term while artificially inflating the subsequent first quarter. Both scenarios throw all your forecasting models out the window and if you have investors, you may have some explaining to do.
“Claw backs” on the other hand are a different animal entirely. Rather than cast the future in doubt like annual adjustments, claw backs cast a punitive light on the past.
Claw backs may be justified for many reasons including:
Again, hardly an exhaustive list, but you get the idea. While claw backs are often necessary, whether right or wrong, they demoralize salespeople in deep and profound ways. Claw backs are often seen by sales as an unfair and undeserved punishment, and if the claw back was due to a customer cancellation that the salesperson feels your back-office personnel caused, they’re as good as working at your competitor as soon as practical and filing a complaint with your local Labor Board (which you’re now going to have to deal with both in terms of time and money).
Next, we’ll tackle the category of payments: specifically miscalculated, late, and unpaid commissions. I’ll put this as plain as I possibly can. Salespeople are coin operated. In other words, as long as you are popping coins into them, they will continue to operate, else or, they’ll stop. Whenever a company messes with a salesman’s money (and the reason for doing is moot), it has an immediate and negative impact on his morale and faith in the company in question. Inevitably, they stop selling. Yeah, they may continue to go through the motions (especially if there’s a salary involved), but that’s all they are doing.
Unpaid or late “check’s in the mail” excuses are obviously the most egregious offenses in sales’ mind, but miscalculated commissions will shake their faith equally. They will begin to question the company’s motives and the intelligence of the accounting/payroll team. You want neither.
I worked for a company that had allowed salespeople to ‘pad’ deals above par. Whatever they added, they got to keep half. This arrangement went on for years without incident, and the sales team absolutely loved it. One day, without warning, the executive chairman of the company decided to change that longtime and popular policy and make it retroactive!
What do you think happened? Since there was no convincing him otherwise, salespeople lost out on a lot of money they were counting on, and half the sales team quit. I lost many multi-million dollar reps in one fell swoop. That was a very, very tough hole to fill, and the sales organization was never again the same. Those that remained continued to sell, but did so with one eye open.
Quota adjustments are often justified by boards who feel that salespeople earn too much. Of course, without sales, there would be no board, but that’s for another blog.
I’ve never seen a quota adjustment in the down direction. They are most always up. Salespeople will usually suck it up the first time it happens, but over time, their ability to make money is significantly diminished and so is their motivation. These often-talented sales professionals will inevitably jump ship and entice colleagues to go with them. Think carefully before implementing wholesale quota adjustments as they’ll often cost you a lot more in the long run as your long-time talent rushes for the exits and into your competitors’ waiting arms.
Lastly, I will cover earnings caps and commission ceilings. In short, if you have these in place you’ll have a harder time attracting top talent (who don’t like earnings limits and will work for competitors who offer uncapped comp) and you’ll ultimately screw a cap on your own growth. Let your salespeople go for the gusto. Why would anyone want to put a cap on what salespeople can sell? That’s just crazy talk!
Every single time I’ve interviewed for a sales job and there’s an earnings cap, I’ve declined that job. I’m not alone.
In conclusion, salespeople are money motivated professionals. The less you mess with their coin, the higher their morale, and by extension their performance. Consider carefully before rolling out any of the changes covered in this blog or any that might be perceived in a negative light. If you must make changes, you are best served by enrolling the sales team in the process.
So, how do you do that? Stay tuned…
By Scott Gordon, The Chief Revenue Officer
It never ceases to amaze me how many salespeople I meet that see their role in the sales process as one dimensional. All many of them want to do pitch and close.
Yet there’s so much more to professional selling than closing business. Don’t get me wrong, closing business is by far the most important thing a salesperson can do both for their own self interest (income & job security) and your company, yet it’s only one very small part of the job, and top sales professionals know this - which is one of the reasons why they are such consistent high performers.
Sales is a Marathon.
So, what else should a truly professional salesperson be doing other than closing deals? Well the short list is:
Like I just wrote above – Sales is a Marathon.
Take this graphic for example. It’s widely circulated on the internet, and in my personal experience of over 20 years selling and managing sales teams, it’s pretty darn accurate:
Even outside my selling experience and management experience, I relate to this slide as a consumer. I can recall several sales presentations over the years, where I was doing a home improvement and collecting multiple bids. Three that come to mind are: Window treatments, Garage remodel, and pool remodel.
In all cases, at least one of the bidding companies sent a salesperson who was charming, had the appearance of being knowledgeable about their product/offering, and presented me with a professional proposal. Several worked the ‘one call close’ angle hard, and in almost every case, the hardest closers had the worst follow-up. In fact, most had no follow up skills whatsoever.
After the initial pleasantries and presentations, at least half of them never bothered to follow-up with me again.
When I say never, I mean: not a phone call, not an email, not a text message – nothing.
As a professional sales manager, I want to call all of their bosses and advise them to never, ever waste another expensive lead on these people again. As a customer, I’m baffled. After all, they’re salespeople, right? Don’t they want the deal?
In the case of the Window Treatments project, our first visit was from a women who worked for a very large company that promises delivery of blinds and such in just a few days (oops, did I say too much?). She was knowledgeable and affable, and after she spent 90 minutes measuring all our windows, she informed us that she didn’t ‘high pressure close’ and would work up bid that she would email to my wife and me in a couple of days.
Okay, like many, I appreciate a consultative sale and rue the crushing one call close, so we amicably parted ways. A week or so passed, and we never received a bid. Did we call her to check on the status and whereabouts of the alleged bid? Heck, no. We called another company.
This is where it gets good. The salesperson from the other company arrived to present and take measurements. Not long into the meeting, my wife said, “We had this lady come from XYZ blinds last week. She seemed nice, but she dropped off the face of the earth.”
You know what the sales woman’s responses was? “I hear that all the time. I get most of my customers following her around. I don’t know what she does, but I wouldn’t change a thing.” (see my blog on Advertising for your Competitors)
Just as the graphic above illustrates, I (like most people) rarely buy anything on the first call. Yet most sales training (particularly in home improvement) is laser focused on one call closing.
It takes 3-4 follow-ups before I choose a company to go with. In my experience, if I get four bids, only one salesperson will stick with me through 3 contacts. 100% of the time, that’s the company I go with. The rest? Well, they just vanish.
For me, a salesperson’s ability to follow up tells me a great deal about how involved they’ll be with my project after the ink hits the paper.
My perspective as a customer is: If you become a ghost after the first presentation, I’d bet the farm that you’ll be a ghost after ink.
My perspective as a sales manager is: If you become a ghost after ink, I’ll end up dealing with your customer and any issues that arise later. Forget about what I think about pitching, missing, and bailing. Why in the world would I ever waste another lead on you? Coffee is for – well you know the rest.
How does your sales organization treat follow-up with prospects? Is it institutionalized? Is it tracked? If so, how?
I’m admittedly a poor one call closer, and I’m okay with that. My personal methodology dictates that I will systematically and professionally follow up with any and all qualified prospects until they tell me no, and even then, I assume it’s ‘no, for now.’
Most of my deals are won because I was the most knowledgeable, asked the most questions, and, most importantly, was the only one to complete the entire sales process – e.g. marathon.
I know I’ve lost deals to slick one call closers, but that number is dwarfed by the thousands I’ve closed by staying the course and outrunning them all. For me, it’s quite simple, 73% of my competitors never get past a second contact and 85% never pass a third. I may not be built for speed, but I am built for distance. You team should be, too.
Can your sales team go the distance? Sales is a marathon. It’s time to let your sprinters know that you know that there’s a new sheriff in town and his name is Follow-up. The race starts… now!
By Scott Gordon, The Chief Revenue Officer
The ‘gig economy’ has been declared a modern wonder of convenience and efficiency. Whether it’s Uber, Lyft, AirBNB, Turo, ParkingPanda, Postmates, TaskRabbit, Amazon Flex, Grubhub, or a thousand others like them, job seekers today have myriad options to make money where and when they want, even across multiple platforms simultaneously!
While this is a boon for anyone seeking to earn a living, or supplement their existing income, it’s increasingly a challenge for more traditional employers. This blog will focus specifically on sales people and how the gig economy can affect their productivity and your profits.
Sales professionals are generally compensated in two ways:
The commission only model is obviously the less risky of the two options if you’re the employer. In the old days (think four years ago), the motto of most sales managers was “keep ‘em hungry”. This simply referred to the correlation many managers made between a salesperson’s productivity and the existence (or lack) of a base salary.
The thinking went like this – The hungrier the salesperson, the more motivated she was to find deals. After all, she had to eat, pay her rent, make her car payment, etc.
Commission only sales jobs are typically those offering products that by their inherent nature have short sales cycles. Think – solar leasing. You get a lead, book an appointment, close the deal, get paid – hopefully all within a couple of days if you’re good.
Salaries, then, are often reserved for sales cycles that are longer by nature. Large commercial transactions can take 12-18 months. Expecting a salesman to wait 18 months to get paid his first dollar is unrealistic, so these folks are typically offered a salary to cover their living costs until their first deal(s) come in.
Now let’s get back to the gig economy. What if you called an Uber after dinner and the driver was an employee of yours? What if it was your lowest performing salesperson? Chances are you now know why they are performing at such low levels – they are moonlighting until God knows when every night only to arrive at your place of business on subsequent mornings sleep deprived and unmotivated. Worse, they’re not hungry at all – the bare necessities are covered.
What do you do?
I once had a salesman who went from earning $200,000 annually with my company to just over $50,000. When I investigated (I really wanted to help him succeed), I discovered that he was shuttling people around ‘til the wee hours of the morning most nights. Sure, he still closed deals when I gave him leads, but all the time he previously spent prospecting, networking, and developing deals was quickly consumed by the small dollar doses Uber shelled out after each ride. Short term pleasure won out over long term success that required planning, persistence, and effort.
His case was particularly painful, because I was paying him a salary on top of commission! I was essentially paying him a salary to drive Uber. Ouch! Worse, I soon discovered, he was not alone on the team.
Unfortunately, as time has gone on, the gig economy has enabled salespeople to feel less hungry and to view their ‘full time’ sales job as less of a vocation and more of a hobby. This is the result of the easy, fast, and frequent money they can earn performing gig jobs that require very little skill or effort but provide ample instant gratification.
Increasingly, I’m encountering sales organizations that have become revolving doors of low performers bouncing from salary job to salary job in order to supplement their Grubhub and AirBNB gigs rather than the other way around.
Often these workers view the job with your company as a gig with benefits (salary, healthcare, 401k, etc) and their goal is to perform the minimal amount of work required to fly under your radar while milking as many streams of income as they possibly can on your dime. This new paradigm makes the use of sales metrics and forecasting more urgent than ever before.
Even if they lose their job with your company, it’s rarely a fatal financial blow as their other gigs are far less picky about how and where they spend their time and will continue to remunerate them regardless.
Outside salespeople are particularly vulnerable to gig jobs as they tend to work remotely with little oversight. Worse, if they aren’t hitting their numbers and earnings targets with your company, they can always supplement by driving a few more Lyft shifts and AirBnb’ing their spare bedroom.
While salaried salespeople obviously impact your bottom-line more severely than their commission only counterparts when they are underperforming, the latter are more likely to ‘gig’ out since you’re not paying them anything and they feel very little loyalty toward you or your company. As a result, their commissions (if they earn any) are viewed as upside.
In other words, if they close something, great, it’s a bonus, but they aren’t necessarily focused on becoming a highly productive member of your organization. Growth as a sales professional is hard work rife with rejection, follow-up, meetings, role playing, accountability, and schedules. Driving home drunks after an epic night of binge drinking – not so much.
As a sales manager or VP, you’d be best served to weed out potential moonlighters during the interview process. Ask them what they think of Uber or Grubhub. If they answer that they enjoy the convenience these services provide, no problem. If they answer that they enjoy picking up a few extra dollars on the weekends, caveat emptor! (and, by the way, it’s never ‘only weekends’). This latter interviewee has red flags all over him and is not likely to provide long term value to your organization.
Take notice when an employee becomes less responsive to calls, texts, and emails, has higher absenteeism, or generally comes into the office looking exhausted. Put metrics in place to measure not only sales performance, but engagement and use of tools and protocols related to their jobs. A decrease in tool use (like logging into your CRM less frequently) could be an early indication of a near term drop in performance.
Create training, contests, and programs to help your sales team(s) become more engaged, see their relationship with your company as more valuable (since you’re investing in their success), and cause them to realize they are far better served with a focused approach to work than a scattershot one.
Your challenge as an employer in today’s gig economy is to become your employee’s exclusive gig, and this only works if they can make more money, receive better benefits and training, and have a more flexible schedule (like weekends off) than what the thousands of gig alternatives offer. Otherwise, sooner or later, you’ll lose them to the gig-a-sphere in whole or in part.