The Island Called Sales: Sales Team Structure
Peter Drucker said, “The purpose of business is to create and keep a customer.” If finding a customer is the name of the game then your success in business may be more reliant on how good you are at finding customers, more so than how good your product or service is. It is fair to say then that the success of your business will be directly aligned with how good you are at finding customers.
There are many ways you can find new customers and the costs can vary greatly depending on the strategy you use. If you sell in a B2C market you may be able to use above the line advertising, or even social media to find customers, but if you sell in the B2B market the chances are you will use sales people to find prospects, and close business.
Some companies struggle with growing their client base organically and have a growth strategy of acquiring other companies to gain new customers. The costs associated with finding customers organically should be substantially less than by gaining customers through acquiring other companies.
So why would companies choose to buy customers rather than finding them themselves. The answer may be that they don’t have the expertise to run sales acquisition teams, and part of the reasons for that problem could be the way they define the role of the sales person.
How many times do you see a sales person join a new company all excited and ready to go on their first day. They receive their laptop, mobile phone, a workstation, a parking spot and some companies provide induction training including workplace safety; harassment laws and sales skills training. The time and money you spend in helping your sales people to succeed will either comeback to haunt you, or come back to reward you.
That’s about the normal level of support given to new sales people in most companies, there is a presumption that just because someone answered an advertisement for a sales role, that they are skilled and competent in all the tasks of finding and acquiring new customers. There is also a common belief that the so called wealth of information provided in the companies CRM system will enable the new sales person to understand, and research, what has happened in the past around finding and retaining customers.
But just how many of these sales people end up writing their target, and how many of these sales people fail and move onto the next interview to tell the prospective employer how good they are at finding new clients. In fact they will tell you how much they love making cold calls and being in the field knocking on doors, does this sound familiar.
So whose fault is it that these sales people keep failing, is it the fault of the sales person for holding themselves out to have skills that they do not have, or is it the fault of the company for having unrealistic expectations of its sales people. In my opinion and as unpopular as the truth is, much of the fault for the failure of sales people can be squarely laid at the feet of the company who employed them.
In a well run, sales focused company, it is the company’s responsibility to define the product, define the target market, gather information on the prospects, provide marketing support and it is the sales person’s job to quote and close new customers. There are five main parts to the sales process identified by Mark Hood being, Planning, Opening, Quoting, Closing and Post Sale. To run a successful sales organisation you must understand these parts and look at who does which part, and why.
Firstly let’s define a “Successful Sales Organisation” as an organisation that writes targets from a bankable, predictable pipeline. Other key measures such as sales staff turn over and sales staff engagement are critical, but in the end your sales team is there to provide revenue at an acceptable margin, so that must be the key measure.
So why do so many sales people fail? Well that is actually a pretty easy question to answer: You must ask yourself “What was the salespersons chance of surviving given all the factors that effect sales performance”. Companies which have a high sales people failure rate, also have high sales staff turnover, and the chances are those same companies also have a low rating, when it comes to the likelihood of the sales person succeeding.
In the companies where sales people do succeed and prosper, the survival rate of a sales person is high, and the reason it is high is that the company takes responsibly for many of the sales related tasks, rather than leaving it all to the sales people. This is a vastly different approach from companies that continually search for that ever elusive better sales person, which is generally a recipe for failure.
Therefore it is important when measuring a sales people survival rate that you take into account all the factors, which affect their performance such as your induction process, your mentoring program, your buddying system, your product and price, your brand, your Sales Management and your lead generation activity. You can’t judge success by those rare overachievers that everyone tries to recruit because you will never find enough of these people to fill a sales team. The top achievers will eventually levitate to companies that look after their sales people and that have a proven system to support them. You need to measure your sales force effectiveness by the bottom performers, not the top.
The key message around running a sales team be it 5 people or 200 people, entry level sales people or $300,000 plus sales people, is that the sales person is not an island. You cannot expect them to take responsibility for every part of your business that affects a prospects decision to buy, and to be good at every part of the sales process, and also know every feature of your product and your complete ordering processes.
What you do as a company to support the sales people will have a greater impact on results than the quality of the actual sales person you employ. A true sales organisation should be able to recruit an average sales person and have them succeed in a minimum of 8 out of 10 times. Any failure rate higher than 80% would indicate a major flaw in the sales process that will destroy the ROI of any sales team.
What does the company need to do?
There are literally hundreds of parts to a sales process and having an external consultant map out your company’s sales process may be the first step, in other words a Sales Diagnostic. Again be very careful here, as most mainstream consulting companies and sales process re-engineering companies will map out the process from the point after a meeting with the prospective customer has been gained. Granted that is still important to do but you must be able to identify the major tasks or actions that lead up to an appointment.
The sales person will succeed if they are regularly in the right spot, with the right person who can buy, and will buy. It is in this part of the sales process where making some small changes can result in massive gains in productivity. The secret is to start looking at the sales tasks, rather than the sales people.
Referring back to the five major steps in the sales process of Planning, Opening, Quoting, Closing and Post Sale. If you map out what percentage of the time each sales person spends on each step, you will be able to highlight the problems with the effectiveness of your sales people, and also maybe find some opportunities for improvement.
Planning:
Seriously when you think about it, how wise is it to allow a new sales person to decide who to call, and who not to call when they have no knowledge of your current and past sales people’s attempts to find new customers. There is nothing worse than a sales person phoning a prospect to be told” I told the last person from your company to never call again”, after three or four of those calls how motivated do you think the new sales person is going to be. Knowing who to call is just as important as knowing who not to call.
About this stage some people reading this will be saying, ” hang on all that information is in our CRM”. Sales people generally end up as sales people because they are unstructured, yet companies expect them to be structured enough to keep a CRM up to date with accurate information. Add to that the last sales person before leaving the company may have been under performance management, and probably not all that keen to help their replacement by leaving accurate and timely information in the CRM. The other reality point here to consider is, what is the data entry capably of your average sales person; it is generally not that good.
Every time a sales person makes a cold call to a wasted prospect there are three things that happen,
1. Your companies’ brand takes a pounding
2. Your sales persons moral takes a pounding
3. Your ROI on your sales channel takes a pounding
So why would you deliberately do that to yourself and what is the solution? I will talk later about building a “Centralised Sales Intelligence Unit” but for now the answer is DO NOT allow the sales person to make the decision on who they should call.
Ideally you should provide them with a prospect list, which has been researched and gives them a list of companies who have a need for your product and have some chance of agreeing to see the sales person, and then buy your product. There is no use in gaining an appointment with a prospect that cannot or will not buy; it is a waste of their time and your expensive sales resource.
Eighty percent of a sales person’s time and effort is wasted in trying to find the right prospect to contact. Not only is that a waste of money and resource, they are generally not good at it because it is not their core skill, which is to quote and close deals. How much in dollar value is eighty percent of the cost of running your sales team because that is how much you are paying for your sales people to plan who to call. We can be talking millions, if not tens of millions of dollars wasted, but it happens nearly every day and in most companies.
Companies can save massive amounts of money by just taking the planning function away from the sales people, but you obviously must first build a team to take over that function.
Opening:
If you believe that the sales person is not the best person to decide who to call, then it also stands to reason that the sales person may not be the best person to decide what to say, when they do call a prospect. Planning and Opening are attached at the hip, a great prospecting plan will enable a great and successful opening, a poor prospecting plan or no prospecting plan at all means you will need to rely purely on the ability of the sales person to sell the appointment, or sell your product to a prospect that may not even be capable of buying your product. It is near impossible to build a predictable, bankable pipeline based purely on the individual ability of the people in your sales team.
I will add one caveat to that; there are professional sales organisations whose core business is purely selling. They pride themselves on their ability to recruit, train and drive direct sales people to high pressure sell and some companies I have seen are sensational at those functions. Sadly though even some of these professional sales organisations allow their sales people to waste valuable closing time in researching and deciding who to call, and then deciding what to say. Having said that, most professional sales organisations build, test and role-play scripts for their sales people.
The “Opening” by definition are the words or the message that you use to get the client to listen to your spiel. You may want an appointment or to make a sale but none of that will happen if the prospect does not take your call or read your marketing piece. You may want to sell a product, or make an appointment or even just gain information but the opening should reflect the prospects circumstances and should be part of a Sales Campaign and not just generic vitriol. A generic Opening is something like “Hello my name is Pete from “Company name’, I am the new Account manager in your area and I would like to come and see you to discuss your needs.
Who would fall for that spiel in this tight market, and when I am talking about the tight market I am talking the market of “available time” that a prospective customer has to meet with sales people. Not all CEO’s and their Management teams are sitting around waiting to have appointments with sales people wanting to meet with them. You need to able to demonstrate that meeting with you will be time well spent, and to do that you need a powerful opening. No one likes timewasters and you should not enjoy paying people just to waste other people’s time.
So do you really want to leave all that decision making process to a new sales person with no experience in your market and past attempts at finding new business. Planning and Opening are the first parts in a sales person building a personal written “Business Growth Plan”. This plan can be reviewed, discussed, altered and is something the company can play a major part in developing.
Planning is an area where a subject matter expert can add immense value and the same applies to building a strong opening. Once you have these two parts to the sales steps working you can value add with sales scripts, marketing tools, website content and other pre approved sales tools for the sales person to implement.
Quoting and Closing:
By now I hope you have pulled out the job descriptions of your sales people and are looking to see if it truly reflects what they need to do, and to be good at, to enable them to succeed. Does your job description look for someone that can just quote and close which is truly a sales person’s role, or does it define the other function that must be performed of “Planning and Opening”. Your job description should reflect the true nature of the role if you want to find the right person, and your interview questions and process should test their abilities to perform those functions.
In reality “Planning and Opening” are both marketing skills but we judge sales people on their ability to perform those tasks even though they are not trained to do them.
“Quoting and Closing” business are the skills that every sales person should possess and if we judge them on those skills they would be judged on their ability to close a pipeline rather than their ability to build a pipeline. The ability to quote and close are the true test of a sales person but for most they only get the chance to use these skills on average about 10% of their time.
If your sales people are only in front of a prospect only for 10% of their time each week then your sales people are probably spending most of their time planning and opening, the very two skills that they are not trained in and probably should not be doing.
Post Sale:
Once a sale has been made it is generally the role of the sales person to ensure the paperwork is correct and complete. Depending on the intricacies of your product or service you are now asking a person with a general lack of structure to make sure your structure is followed. Much of sales persons time can be taken by being compliant in this area and this are also an area where a great deal of angst can be caused between the office people, and the sales people but it is also an area where you cannot be flexible. Again a solution may lie in looking at the tasks rather than looking at the people, is the sales person really the right person to complete the sale.
Sales & Marketing need to be friends:
What is the purpose of employing a sales person if they do not bring in revenue for your company at an amount greater than what it costs to find that revenue? What is the purpose of marketing if not to bring in the revenue themselves by driving inbound campaigns or to support the people who are bringing in the revenue being the sales people? Sales people and marketing people must be aligned, they must meet regularly, and they must work on the same campaigns as one team. If you can achieve that, you will achieve great results and will be a stand out amongst your competitors.
Summary:
When you look at the five steps to a sale which many new and existing sales people are asked to perform it is no wonder the fail. When people are not good at something they will stop doing it and you start to see things like fake sales reports, fairy tale pipelines or an increase in chatter by the team about how bad the market place is. The best action is to help them rather than replace them.
You could build a centralised Sales Intelligence Unit that researches prospects and issues contact list to sales people, you could build a contact plan backed up by pre approved marketing pieces and if you do that you could probably reduce your sales head count by up to 50%. The remaining sales people would make more sales, make more money, be motivated and not leave your company. In fact you may become a company that sales people levitate to, instead of leave from.
It is doable, it is possible, it is practical and your will move from a “plan of hope” to a plan where you consistently over achieve your revenue forecasts and have a bankable predictable pipeline. In fact many careers may depend on it.