Sales and Sales Management Blog

March 17, 2008

Moving Sales Out of the Dark Ages


There was a time when marketing and advertising were viewed as seat of the pants processes, based on gut feeling, hope, and simply looking at the overall results to determine whether they were ‘working.’

Instead of trying to understand marketing as a quantifiable activity, the marketing department would simply generate a number of targeted activities such as direct mail pieces, radio, TV and print ads, and other such promotional pieces, then sit back to see what happened. If sales increased, the marketing was working. Which particular pieces of the campaign were generating the inquiries and ultimately the sales wasn’t known, but the overall outcome was known.

As marketing became more disciplined and as the marketing department was put under increasing pressure from upper management to justify expenditures, marketers had to develop ways to quantify and analyze the results of each marketing activity they engaged in. Marketing metrics was born. Over the years, the ability of marketing to track and quantify each and every dollar spent increased. Not only did the marketing department become more accountable for their activity, their results increased. By analyzing the results of their activity they became better capable of determining which activities would work, what return they could reasonably expect from any particular activity, and how to very quickly spot activities that were not producing sufficient returns—and equally important, spot new opportunities.

This isn’t to say that marketing has become a science. There is a tremendous amount of art and creativity in marketing. And certainly not every company has instituted sufficient monitoring systems to be able to adequately manage their marketing efforts.

Furthermore, the ‘science’ part of marketing is still evolving, as it always will. Managing the marketing function can never be distilled to numbers only. Nevertheless, marketers work in a fast-paced, evolving marketplace. They must be prepared to change as quickly as the marketplace changes, which can be almost overnight. Without real data, needed change to keep up with the marketplace cannot happen in a timely manner. Any marketing department that operates off gut feeling and instinct is going to be left in the dust by their competitors.

This combining of hard data with the art and creativity of marketing has yet to be transferred to sales. Despite the similarities and the interconnection between the two disciplines, sales has been left far behind marketing when it comes to understanding what is really working and what isn’t.

Certainly, sales has a basic set of numbers. Managers may get reports that show the number of sales, sometimes by product, of each of their salespeople. They get commission reports. Possibly call reports. They get reports that show how sales have increased or decreased over a period of time—a quarter or maybe a year.

Individual salespeople are expected to know some of their basic numbers, their closing ratio for instance—maybe even how many cold calls they’ve made. They may even know their appointment-setting ratio from their cold calls.

For most this really isn’t data because most of these ‘ratios’ are based on a guess, not on real numbers. Ask most any salesperson what their close ratio is and you’ll get an answer such as “45%.” Ask how many sales that is and they’ll say, “About 30.” Ask how many presentations they made and they’ll say, “Somewhere around 75 to 80.” Ask how many contacts they made to get those 75 to 80 appointments and they’ll say, “I don’t know, maybe 400.” Ask how many attempts at contacts to reach those 400 prospects and they’ll say, “Gee, I really don’t know. Maybe 900.”

Their ‘ratios’ are nothing but guesses and those guesses often have nothing to do with reality. In fact those ‘ratios’ are often purposely skewed up or down by the salesperson to match what they think you want to hear.

Without having a solid database of reliable information, salespeople and their company are left to guess. More importantly, their production, their development as salespeople and their future is left completely to luck and chance.

The consequences of not knowing the actual sales and production data of salespeople are costing companies billions of dollars a year:

  • Sales forecasts are grossly inflated because salespeople base their forecasts on hope, not reality
  • Sales training dollars are wasted because individual salespeople are not getting the specific training that will help them increase their production
  • Sales leads generated by marketing are not converted into sales because they are not being closed by salespeople
  • Sales opportunities are being lost because salespeople are engaging in ineffective marketing activities and pursing unproductive market segments
  • Sales managers are wasting thousands of hours a year trying to nurture salespeople in the wrong methods and the wrong activities
  • Turnover is unnecessarily high because salespeople don’t know what to do to become successful in their sales efforts

On an individual level, salespeople are suffering more than their company. Without real data about their sales and marketing activity, salespeople don’t know where to make changes that will positively affect their efforts. They can only guess and work by trial and error, often washing out of sales before they accidentally hit on the right things to do.

Yet, all of this wasted time, money and effort are needless. Sales production is predictable. A salesperson and manager can know exactly what changes to make to a salesperson’s activity and skill set that will have a positive impact on their sales efforts.

Although sales is an activity whose results are dependent upon a number of factors such as the individual’s skills, the amount of time and energy they invest, and their ability to find and connect with prospects, those items can be monitored, measured, and improved. However, without knowing what is happing in a salesperson’s business, effective time management change cannot be made, effective skill improvement cannot be made, and increasing their ability to find and connect with the right prospects cannot be made. At least not in a systematic, disciplined, rational manner. Without knowing what the root problem is and why it exists, you’re left with guessing, with costly and time consuming trial and error.

With proper and full data, a salesperson can know exactly what their production will be in the future; they can know exactly where and how to make real, results changing improvements in their business; they can know not only which prospects they connect with, they can know exactly where and how to find them and exactly how to approach them.

The typical data companies and salespeople keep are not only inadequate, they are almost worthless for making real change in a salesperson’s or the company’s future. A completely new set of metrics must be kept. Each salesperson must have a complete numerical overview of their business including:

  • Complete prospecting data including:
    • how many prospects they attempt to contact
    • how many were contacted, how many appointments were set
    • how many of the appointments were with qualified prospects
    • the demographic data on those prospects
    • how they found and contacted each prospect
    • how many prospects bought
    • exactly what each prospect bought
  • Complete marketing activity data including:

    • what market segments they marketed to
    • what marketing activities they engaged in for each segment
    • what the results were for each activity, not only which activities generated prospects but which generated sales,
    • what each prospect within each segment bought
  • Complete sales data including:

    • who bought
    • what they bought
    • why they bought
    • why those who didn’t buy didn’t buy

A lot of numbers? Yes. Will this take a good deal of time and effort? At first, yes. However, with a well-developed system in place, maintaining these numbers need not be overly burdensome for either the salesperson or the company.

Yet, despite the initial trouble of setting the system up on either an individual or a company basis, the rewards can be tremendous. With several months accurate data in hand the salesperson or company can accurately predict exactly:

  • what a salesperson’s production will be over a period of time
  • exactly what changes to the salesperson’s prospecting, marketing and sales process will increase production
  • exactly which market segments, marketing methods and sales process will generate the greatest returns for the salesperson.

Although it is important to institute a metrics system on an individual or company basis, a much quicker and equally effective process is to have each salesperson reconstruct their previous year’s (or at least 6 months) sales and marketing history. Whereas with instituting a system going forward you can generate highly accurate data in a matter of months, by simultaneously reconstructing a past history the analysis and changes can begin much immediately.

For millennia, salespeople and companies have treated sales as part art, part luck, part hard work, with little or no expectation that it can be a predictable and controllable process. Companies spend hundreds of millions of dollars every year using assessment tools to try to identify quality salespeople, then leave to chance the result of their hiring process. However, just as marketing has discovered that their efforts need not be left to chance, accident or instinct, sales need not leave their discipline to chance or instinct either.

Will salespeople rebel and feel they are being micromanaged with such a system? That depends upon how the system is instituted and used. If the metrics are used to help the salesperson improve and make more money, then no, they won’t feel micromanaged. If on the other hand, the system is used to beat and berate the salesperson, to spy on and ‘keep them in line,’ yes, rebellion will take place. Like any other system within the company, a full sales metrics system can be an asset or a liability, depending upon how it is introduced and how the information generated is used.

The marketplace is changing more rapidly than ever and change will continue at an increasingly rapid pace. Today it is crucial for salespeople and companies to know exactly what is working and what isn’t.

No longer can a salesperson or a company hope to operate successfully based on instinct. Competition is too fierce, prospects have too many options, and it is too costly to continue to work from trial and error. Combining sales, technology, mathematics, and astute analysis can and eventually will change sales. The question isn’t will it happen, the question is will you or your company benefit from it or be a victim of it?

 

Paul McCord is a leading authority on prospecting, referral selling, and personal marketing. He is president of McCord and Associates, a Houston, Texas based sales training, coaching, and consulting company. His first book, Creating a Million Dollar a Year Sales Income: Sales Success through Client Referrals (John Wiley and Sons, 2007), is an Amazon and Barnes and Noble best-seller and is quickly becoming recognized as the authoritative work on referral selling. His second book, SuperStar Selling: 12 Keys to Becoming a Sales SuperStar will be released in February, 2008. He may be reached at pmccord@mccordandassociates.com or visit his sales training website at www.powerreferralselling.com or his highly popular Sales and Sales Management Blog at http://salesandmanagementblog.com

Copyright 2008, Paul McCord. May be reproduced without change, with proper attribution and brief bio. Notice of when and where article is to appear to pmccord@mccordandassociates.com

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1 Comment »

  1. Carnival of Sales & Management Success – March 22, 2008

    Trackback by Sales Management 2.0 — March 22, 2008 @ 6:39 pm | Reply


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