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FOREWORD

A myth in corporate America is ruining careers and profits. It has been detailed in the book The Peter Principle. The myth is that upon promotion of a top performer into management, the person mystically becomes endowed with all the skills necessary to create and manage a team that produces superior results.

In sales, this generally occurs when a top salesperson is promoted to sales manager. Whether or not the person has the temperament or skill set required by the new position is rarely considered. Indeed, the demands of a management position are often diametrically opposed to the activities of a sales position that high performers love to do. Is it any wonder that very often, these situations end in unhappy and unproductive sales teams, and the manager leaving the company to go work with a competitor—as a salesperson?

The problem is further exacerbated when the company throws the person into the position without providing him/her with the proper support. Rarely is any kind of management training provided. The newly-minted manager is expected to figure it out. They eventually do, but how long will it take? And, at what cost (damage to the organization, lost opportunities, etc.)?

First-level sales managers are critical to the success or failure of a sales organization. Good managers drive superior results. Bad managers drive superior people away. The rest just muddle along somewhere in the middle, hoping someday to catch lightning in a bottle.

It is astounding that so many companies virtually ignore this critical asset. On the other hand, world class sales organizations have management training and mentoring programs to develop their sales managers.

In order to successfully compete in today’s volatile markets, it will be crucial to implement an organization-wide training initiative that will enable the sales force to position itself as truly customer-driven. It is the responsibility of the sales managers to translate that training into actions and behaviors at the customer- interface level. The critical question for your company is: Will they be prepared and empowered to complete their task?

Howard Stevens, Chairman Chally Group Worldwide

3123 Research Boulevard Dayton, OH 45420 www.chally.com


Table of Contents

Chapter 1: Sales Management: Introduction 3

Chapter 2: Hiring Producers 11

Chapter 3: Managing for Results 18

Chapter 4: Developing Your People 25

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Chapter 1: Sales Management: Introduction

“Before you are a manager, success is all about growing yourself. When you become a manager, success is all about growing others.”— Jack Welch (Former CEO of GE)

The conventional wisdom in corporate America is a major contributor to a problem we call the “Management Myth”. It is the apparent belief that upon promotion of a top performer into management, that person mystically becomes endowed with all the skills necessary to create and manage a team that produces superior results. Unfortunately, the preponderance of evidence suggests that this is rarely the case. In fact, data collected over the last 20 years shows that when someone from the top 20% of their sales organization are promoted to sales manager, less than 10% are successful. It is not a coincidence that world class sales organizations have formal training and mentoring programs to develop their sales managers. The gap between myth and reality invariably leads to unmet expectations, reduced profits, and dysfunctional organizations.

The average life span of a Vice President of Sales in the United States in the period between 1990 and 2005 was 18 months. Bureau of Labor Statistic

“Take Charge” Sales Management

A sales manager can be unusually bright, work exceptionally hard, be well liked, and seemingly have everything going for them. Yet the odds are high that they will fail. How can this be?

First, they must make the transition from being an individual producer to producing through other salespeople; from being managed to managing; from being responsible only for themselves to being responsible for a team of people; and very often from being a peer to being a boss.

Second, they must get their priorities straight. Knowing what to do first, and doing it, is the key to successful sales management. This is what we mean by taking charge.

Sales management plays a critical role in the generation of the revenue stream required to sustain and grow the company. It is the sales manager’s role to oversee and enhance the implementation of the sales process. This brings with it a level of accountability that is much greater and more visible within the company than that of an individual salesperson.

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“Congratulations! You’re vulnerable.” F500 CEO to each newly appointed sales manager

Good sales managers produce results. Bad sales managers produce a dysfunctional sales organization and an exodus of good salespeople out of the company. Most sales managers fall somewhere in between. It is frequently said that salespeople take a job because of the company but leave or stay because of their sales manager.

Finally, it is normal to have doubts about your ability to transition from sales producer to sales manager. The failure rate among sales managers is predominantly due to a lack of training and support from their company’s executive management team. Even experienced managers occasionally have doubts. It’s part of the human condition. At Samurai, we call this collection of doubts and fears “head trash”. To be successful, you have to pro-actively and continuously “throw out the trash.” When this becomes a struggle, consider the following:

Managing for Results

As stated earlier, management is the responsibility for accomplishing results through the efforts of other people. It is the manager’s job to take the people on the team as they are, with what knowledge, training, experience, and background they have accumulated, and developing those people by increasing their knowledge, improving their skills and correcting their habits and attitudes.

Our Deepest Fear“Our deepest fear is not that we are inadequate.

Our deepest fear is we are powerful beyond measure.It is our Light, not our Darkness, which frightens most of us.

We ask ourselves, who am I to be brilliant, gorgeous, talented, fabulous?Actually, who are you NOT to be?...

As we let our own Light shine, we unconsciously give other people permission to do the same. As we are liberated from our own fears, our presence

automatically liberates others.” –Nelson Mandela

“We must make the best of circumstances and mankind as they are, since we cannot have them as we wish.”

–George Washington

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Management makes things happen. It does not wait for the future. It makes the future. For the sales manager, this is measured by the sales results obtained by the sales team. This is one of the most critical roles in any company. Sales performance will always be keenly watched by top management because, if Operations is the engine of a company, then Sales is the fuel that drives that engine.

The job of the first-line sales manager is arguably the most important job in the entire sales force. Top sales leaders determine the direction for the organization, but it is the first-line sales managers who en-sure that the strategy is executed.

“Vision without action is a daydream. Action without vision is a nightmare."–Japanese Proverb

The sales manager has three constituencies: the customers, the company, and the salespeople. The sales manager succeeds by meeting customer’s needs and achieving company goals. But the manager is not the hunter, the play-maker, or the center of action. Managers contribute to customer and companysuccess when their people are successful. Managers are coaches, not players; they achieve their objectives through others.

The Five Challenges Facing Sales Managers

Challenge 1: How to Take the Leadership Role

Management and leadership are two different things. Management focuses on the efficiency and effectiveness of the organization. Leadership focuses on the satisfaction of the people who are doing the work.

“If people are coming to work excited...if they’re having fun...if they’re making mistakes freely and fearlessly...if they are concentrating on doing things rather than preparing reports and going to meetings – then some-where in the organization you have leaders.”

–Robert Townsend, CEO of AVIS and author, Up the Organization

–Samurai Wisdom“Bosses fix blame. Managers fix mistakes.”

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A good leader creates in his sales force a sense of confidence in him. A great leader creates in his salespeople a sense of confidence in themselves and a desire to strive for greater performance.

“Don’t lower your expectations to meet your performance. Raise your level of performance to meet your expectations.”

–Ralph Marston, author, The Daily Motivator

The leaders who are most effective never say “I”. They don’t think “I”. They think “we” and “team”. They understand their job to be to make the team function effectively. They accept responsibility, but “we” gets the credit.

“It is amazing how much you can accomplish if you do not care who gets the credit.”

–Harry Truman

Challenge 2: How to Improve Your Volume / Profit Contribution

Whether you are able to achieve your sales growth objectives depends on how well you understand and manage the relationship between volume and costs. These are the two major factors that affect your profit contribution. By understanding the cost-volume interaction on profit, you will be able to predict how many units of your products or services you will have to sell, what quotas to set for them, and at what price you will have to sell them in order to reach your objectives.

If you are in a situation where quotas and prices are set for your sales team by upper management, you still must look at the cost of sales, which you do control. The costs associated with closing / servicing a particular prospect must be considered in relation to the amount of revenue that customer will generate.

“Dan, we don’t want all the sales. We just want the profitable ones.”–Jim Fowler, IBM Branch Manager,

to rookie salesman Dan Kreutzer

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Challenge 3: How to Plan Your Territory Sales Growth

Your territory, like all territories, is made up of two kinds of customers. There are a small number of heavy users of your products and services, customers who use them in large volume on a repetitive basis. The rest are light or periodic users. The two are not equal and should not be treated as such.

These heavy-user customers are your key accounts – and they must be planned for. If you can zero in on their unique needs and offer them the product or service values they perceive to be the most beneficial, you can improve your penetration of the most profitable market segment available to you.

Your key accounts must determine two aspects of your sales growth planning: 1. Your sales growth objectives, which will be largely dependent on the penetration you can make into heavy-user demand; and 2. Your sales growth strategies, which must offer the highest perceived value-to-price benefits to your key accounts.

If future projections for a key account promise higher volume, you have a good volume / profit grower. If the projections are lower, you are in danger of having a heavy user fall back into the light-user category. Take remedial action at once, either to boost their contribution back to heavy-user status or to replace their contribution by developing other heavy-user accounts.

“Profit is the cost of the future. Without it, you have no future.”–Peter Drucker

Challenge 4: How to Develop Your Sales Team

In several recent surveys, business customers identified the effectiveness of the sales person as the most influential factor in their decision to buy. Since individual sales effectiveness is the leading factor in sales success, then it stands to reason that sales training and development plays a critical supporting role in that success.

“The sales professional is the sale.”–Howard Stevens, CEO, Chally Worldwide

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Most sales training focuses on product knowledge, presentation skills, and sales administration / CRM. While this knowledge is required for the sales person to function within the company and his market, it is not enough to be successful in today’s business markets. The more advanced companies also include some sales skills, but most companies hire “experienced” sales people and assume that they already possess these skills. Unfortunately, the statistics show that this is very often a bad assumption.Today’s business customers expect their vendors to provide ever-greater levels of technical and applications expertise. It requires more than product knowledge to meet this expectation. It requires an understanding of the customer’s value chain and the markets into which their customers sell. To rise above the status of vendor to your key accounts, you must be able to demonstrate how your products and services increase their competitive advantage and profits.

“How you sell is more important than what you sell.”–Neil Rackham, author, Spin Selling

The ultimate goal is to become a trusted asset to your key accounts. This implies that trust has developed between you and the customer. Trust is a human to human phenomenon. It requires that the salesperson connects at the human level with the customer’s decision makers, and that their actions are conducive to creating and fostering trust. The human element / relationship in all sales situations cannot be ignored. In fact, the sales team must be trained in understanding human behavior in order to be effective.

To effectively implement this approach, the sales team will need to improve their skills in the following areas: 1. Analyzing customers’ motivational and behavioral styles. 2. Analyzing the customer’s business. 3. Integrating your products and services into specific customer applications that are designed to improve the customer’s value chain and competitive advantage.

“The question is not whether you can afford to conduct sales training. It’s whether you can afford not to.”

–Samurai Wisdom

“If you think training is expensive...try incompetence!”–Anonymous

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Challenge 5: How to Manage Your Sales Team

Before you begin to recruit or develop your sales force, you should define the key duties currently re-quired of each kind of sales representative (inside, key account, territory, junior, senior, etc.) and the standards of performance by which you will judge how well these expectations are being met. Focus on the activities that will comprise 80+% of their time and that lead directly to results. These requirements should then be written down as position descriptions.

Quite likely, you have inherited a set of position descriptions. If so, it is also likely that they are out of date in terms of changed requirements or the judgments that you yourself will want to apply to the way they are performed. One of the most important tasks is to update your sales force position descriptions and convert them to fit your own management style. No manager can manage a sales force according to someone else’s position descriptions.

A position description is an implied contract between you and each of your salespeople. It tells them what you expect of them. It permits them to appraise their own fitness for their jobs and it allows you to evaluate them. A position description provides a simple interview guide for you to use in recruitment interviews. It also sets a foundation for your training and development program.

“People will manage themselves if they have a clear idea of what is expected of them and why it’s important – if you let them.”

–Samurai Wisdom

It is critical to establish standards of performance. Standards of performance make evaluations measurable and objective. Without standards, you can only employ your salespeople; with standards you can manage them. This means that you can help each salesperson maximize their contributions to the sales team’s objectives. Standards of performance also provide a fair basis for evaluation and compensation.

If it’s not about winning or losing, then why do we keep score?”–Adolph Rupp, basketball coach, University of Kentucky

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The Ten Most Common Mistakes Made by Sales Managers

1. Failing to shift from “super salesperson” mode to a managerial mindset.

2. Continually fighting fires.

3. Leaving your staff to sink or swim on their own.

4. Ignoring the importance of performance standards and holding people accountable. 5. Failing to leverage the strengths and resources of the team’s top producers.

6. Spending too much time working with the bottom 20%.

7. Allowing senior salespeople to get stuck in an unmotivated rut.

8. Being inconsistent in the recruiting and hiring process.

9. Assuming your sales reps will figure things out the same way you did. 10. Hanging on to low-producing salespeople for far too long.

Exercise

1. Think about the worst sales manager you have worked for. Why do you rate them as the worst? How did this manager affect your performance on the job? How did they affect your feelings about the job and the company?

2. Think about the best sales manager you have worked for. Why do you rate them as the best? How did this manager affect your performance on the job? How did they affect your feelings about the job and the company?

3. How do you rate yourself with regard to each of the five challenges? For which one do you feel the best about? Why? What evidence can you cite to back up your choice?

4. Which challenge gives you the most trouble? Why? How is this manifesting itself in your team’s performance?

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Chapter 2: Hiring Producers “Processes allow ordinary people to achieve extraordinary results, predictably.” — Michael Gerber (author of The E-Myth)

Hiring Process: Introduction

A Bureau of Labor Department study shows that 75% of new hires either quit or get fired within six months; or are placed in jobs not suited to their skills, aptitudes, or education. Is it any wonder that another study shows that a full 50% of all experienced workers report that they are under-employed?

It has been estimated that up to 50% of the people who are currently trying to make their living by selling are in the wrong line of work. They may be excellent communicators, gregarious and likable, but they lack the emotional and psychological makeup to win in an increasingly aggressive marketplace. Only people who love to compete, have supreme confidence in themselves, and are willing to laugh in the face of rejection have the constitution to survive and thrive in this most competitive of business environments.

The expenses accrued in the recruiting, training, lost sales, and managerial time devoted to a bad hire often exceed $100,000

–Study by Marketing Professor Gilbert Churchill Jr

Probably the most crucial decisions any manager must make will be their hiring decisions. This is because it is impossible to manage effectively without hiring effectively. Virtually every manager subscribes to formal systems and processes to accomplish the various goals and tasks of their organizations. Yet most managers have no formal process for their most crucial activity – selecting and hiring the members of their teams.

Objectives of a Formalized Hiring Process

The objective of having a formalized hiring process is to find the right person for the right job, and to do it consistently. While no hiring process will ever be 100% successful, a formalized process will dramatically increase the probability of hiring the right person.

Most sales managers decide in the first few minutes if they want to hire the candidate and spend the rest of the interview “selling” the position instead of determining whether or not the candidate will be a solid producer.

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A formalized process will compensate for this tendency. A recent survey conducted by the DePaul University Center for Sales Leadership discovered that the rate of hiring successful sales people increased dramatically if a formal and comprehensive hiring process was followed. Consider the following:

Successful Hiring Processes(Success Defined by Salesperson Performance)

Process Followed Success RateInterviews Only 15%Interviews / Behavioral Assessments 50%Interviews / Assessments / Focus on “Drive” & Culture 85%

DePaul University Center for Sales Leadership 2011 Sales Retention Survey

The conventional practice of holding interviews and making a decision almost always leads to failure. This is due to the human factors that are brought into the equation by the hiring managers themselves. (It is not a coincidence that the majority of hiring decisions in a sales organization are made by the same ineffective sales managers – they’re the ones that always need to fill openings!). Notice that even when behavioral assessments are included in the process, the results amount to a coin flip as to whether the candidate will be successful. Only when a formal process that includes multiple sources of input and focuses on the candidate’s intangibles and cultural fit, does the process yield acceptable results.

Key Criteria for a Good HireThere are four key criteria that, if present in the candidate, will guarantee a good hire. They are:

1. Ability to do the job: Most hiring decisions are based on this factor alone. Indeed, it is a necessary condition, but it is only a piece of the overall puzzle.

2. Willing to do the job: This is typically assumed. After all, the candidate has freely applied for the job; therefore he must want to do it. There can be a distinct gap between the ability to do something and the willingness to do it. Every job has tasks that may be unpleasant or not as much “fun” as other aspects of the job. Is the candidate willing to take the bad with the good?

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3. The fit with the existing staff: Most new hires have “good chemistry” with the hiring manager. Unfortunately, it is rare that the manager considers how the person will fit with the rest of the organization. Failure to consider this factor often leads to friction within the team and a loss of effectiveness and efficiency.

4. Manage ability once on the job: Time is a manager’s most precious resource. High maintenance employees will waste a great deal of it in non-productive activities. Prima donnas, spoiled brats, martyrs, victims, people with chips on their shoulders, etc., can make a manager’s job a virtual nightmare.

Strategies for Recruiting Top Performers

Strategy 1: Define your ideal candidate

Study your best sales reps and determine the characteristics that differentiate them from the average ones. Find out what drives your best reps to be the best and to outperform the pack. Discover what talents and skills are crucial to success in your unique sales environment.

Strategy 2: Build a bench

It’s absurd to expect the perfect candidate to walk through the door right when you happen to have a job opening. When your caught shorthanded, the last thing you want is to make a job offer to whomever happens to be available at the time. Rather than waiting until your moment of greatest need, interview candidates all the time, even if you don’t have any job openings. Keep in touch with the best candidates, and you’ll have an entire network of potential top sales reps whenever you have an opening.

Strategy 3: Ask questions that delve into character

The standard interview questions always elicit the standard interview responses. Rather than have a dialog that sounds like it has been lifted from a job-hunting book; focus on the intangible areas and dig deep. Talk about their past experiences and behaviors and delve into their core motivations. Ask why they did what they did and, if they could do it over, what would they change? At the end of this type of interview, you should know a great deal about their character and what they are fundamentally about.

Strategy 4: Get HR out of the loop quickly

If you are too busy to meet with a candidate, it says to the best candidates that you don’t care if you hire them or not. Chances are that the best candidates will be talking to several companies and will have more than one option available to them. If they are the kind of people you want to hire, they’re the kind of people other companies will want to hire. Why would they want to go to a company where top sales reps are parked in HR until the sales manager can be bothered to see them? They won’t – but the candidates that are desperate and have no other options will.

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Strategy 5: Hire for attitude rather than experience

Conventional wisdom says to hire sales reps with sales experience, preferably from your competitors; however, many years of experience may actually mean the candidate has one year of experience that has been repeated over and over. Don’t focus on the past. Focus on their potential future as sales reps in your organization.

Strategy 6: Don’t hire from competitors

Many sales managers think that hiring a sales rep with a book of business from a competitor is a better investment than hiring somebody who’s new to your business. But consider this: That candidate was being paid, by your competitor, to build up that book of business. What does it say about the ethics of the candidate if he or she is willing to share those clients with you? And what do you think they’ll do when they leave you? What’s more, why would the candidates from competitors want to work for you anyway? If they didn’t think their former employer was the best in the business, why were they working there? And, what will the clients think when they show up asking them to move, because your product is better than the one they’ve been selling to them for the last several years?

Rules for Hiring Smart

Rule # 1: Hire people that are smarter than you. Hire the best and the brightest you can afford, and then lead them to be even better and brighter.

Rule # 2: Pick lieutenants who complement your strengths and compensate for your weaknesses. Don’t hire clones.

Rule # 3: Pay attention to resumes: neatness and punctuation count. How can people do a credible job for you when they are careless about presenting their most important product...themselves?

Rule # 4: Interview to get the facts. Ask questions, listen, and don’t sell or tell too much or too soon.

Rule # 5: It isn’t over until it’s over. Make sure you’ve actually hired the person you want before you turn away the other leading contenders.

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The Ten-Step Hiring Process

1. Develop a pool of candidates2. Develop the job description3. Develop an ideal candidate profile4. Perform resume screens5. Perform phone screens6. Conduct functional/behavioral interview(s) 7. Perform candidate assessments8. Conduct follow up interview(s)9. Recruit selected candidates 10.On-boarding process

Step 1 is an on-going process for any sales manager. Really good people are hard to find. You must constantly be on the look-out for them; and when you find one, make sure you stay in contact with them.

The characteristics and criteria outlined in steps 2 and 3 will be used as a measuring stick for each of the candidates during the process. Steps 4 through 10 are a screening out process. Only candidates that successfully pass a step will move on to the next step.

To many sales managers, this approach may seem like a time-consuming and drawn out process. Perhaps it is. But the amount of time spent on the front end to find the right candidate for your organization will be recovered in multiples as opposed to the maintenance, aggravation, and poor performance that will be caused by a poor hiring decision.

Great salespeople are a product of environment. A recent study found that when salespeople classified as “top performers” by their employers left their position to work at another firm, they were classified as “top performers” by their new employers less than 50% of the time. The study went on to show that the reasons for sales success have as much to do with environment as their sales ability. You need both to be successful.

The Sales Environment

Current research has shown that the sales environment is as critical a factor in determining the success of an individual sales person as the person’s sales skills. This explains why top performers at one company often produce less than expected results when they join another company...same person, same skills – different environment.

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Salespeople that are incompatible with their environment will produce below expected results and are more likely to leave the organization. The conventional sales roles of “hunter” and “farmer” are too gener-ic to address the multiple and varied roles that make up modern sales organizations.

There are seven environmental dimensions that combine to uniquely identify and define the specific sales environment. The result is sixteen clearly delineated sales environments, each of which has a specific set of “best fit” behavioral profiles that are compatible and have a high probability of success in that specific role. They are:

Nature of the Sales Role: Inside Sales vs. Outside Sales Nature of the Sale: Transactional vs. Consultative

Nature of the Offerin g: Simple/Packaged Products vs. Complex /Customized Products & Services

Nature of Position: New Business vs. Add-on Business (Hunter vs. Farmer)

Nature of Compensation: Commission Only vs. Salary Only

Nature of the Sales Channel: Direct vs. Indirect Nature of the Focus: Business Development vs. Customer Service

Cheetahs and Cougars are both hunters that are perfectly matched with their environments. Cheetahs live on the plains of Africa. They get their prey by simply outrunning it. Cougars live in forests and mountains. They get their prey through stealth and surprise. Put a cougar on a wide open plain, or a cheetah in wooded, mountainous terrain, and neither would fare very well.

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Exercise

1. Think about an interview that you had that left you with negative feelings toward the company. What was it about the interview that caused those feelings?

2. Think about an interview that you had that left you wanting to work for the company. What was it about the interview that caused those feelings?

3. What is your current hiring process? How effective is it? (Remember, a 50% success rate is barely above random chance.) How high is the turnover in your department? (One of the main causes of turnover is hiring the wrong people.) Where does it seem to break down? What elements of the process seem to work well?

“Men judge themselves based on their potential. Others judge them based on their achievements.”

–Dale Carnegie

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Chapter 3: Managing for Results

“In theory, there is no difference between practice and theory, but in practice, there is.” –Yogi Berra (Baseball Hall of Famer)

Achieving Superior Performance: Introduction

Traditionally, sales organizations operate on the premise that the only things worth measuring are the end results. Ultimately, results and achieving corporate goals are necessary. However, the idea that anyone can manage the “results” is a fallacy. What need to be measured and tracked are the activities that produce the “results”. This requires a paradigm shift – focus on activities rather than end results.

"You cannot achieve a new goal by applying the same level of thinking that got you where you are today."

–Albert Einstein

The activities a sales manager must focus on are the ones that have a causative effect on producing the desired results. However, without an underlying, clearly defined process, the causative linkage between activities and results is very difficult to discern. This is why a clearly defined sales process is critical to good sales management. Without it, there are no predictable results; no analytical basis by which to manage. Instead, the manager is left to manage subjectively, based on his or her biases and preconceived notions, subject to external events and forced to operate in “react mode.”

These causative activities are always accompanied by objective indicators, which are known as Key Performance Indicators (KPIs). Focusing on KPIs provides the sales manager with objective data as to the progress of the sales team, as well as projecting the expected results that will be attained by the team. This is why the KPIs utilized by sales managers should also be leading indicators. If the projected results do not meet the teams goal, the manager has the opportunity to take corrective action early enough that the final results can be positively altered.

Sales results (the numbers) are a lagging indicator. By the time you know what the results are, it’s already too late to do anything to change them. The fact that most compensation plans are based on results produced biases the focus of most sales managers. The truth is that in order to achieve your sales goals, you have to manage the process that produces that achievement. The KPIs that are leading indicators will help you do just that.

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“If you can’t measure it, you can’t manage it”–Peter Drucker

Sales managers are responsible for achieving their sales goals. But they also need to work with their teams to transform those goals into a series of behavioral benchmarks. The manager needs to make sure that the team and individual goals are consistent with and support the corporate goals. It is then the responsibility of the manager to hold each individual accountable for the achievement of their goals. Then, if you manage your team members to meet their goals, corporate goals should also be met. Teams must be coached to see the big picture mission of the company so they will understand the interrelationship between their personal and the corporate goals.

Sales Management Tools

Sales Pipeline Report

The main tool utilized by sales manager is the sales pipeline report. It was originally developed as a tool to help the salespeople and their managers keep track of their current sales opportunities and activities. In general, it included every potential customer with whom the sales organization had any level of contact. In many cases, accounts that were on the pipeline report had shown no discernible evidence that they were sincerely interested in making a purchase. But they appeared on the pipeline because the salesperson involved had them targeted, for various reasons, as worthy of a sales effort.

Sales Forecast Report

The sales forecast report was a management tool designed to project future sales during a specific period of time. For each active account, a projected revenue amount and close date were listed. In an attempt to provide increased forecast accuracy, each account was then assigned a percentage probability of closure. This percentage was applied to the projected revenue to generate the expected revenue from the account. The assumption was that as the numbers were rolled up from salesperson to sales manager to sales organization, the expected revenues would “even out” at the aggregate level and the resulting forecast would be fairly accurate.

From a statistical point of view, this would be fine – providing that the percentages applied were statistically accurate. Unfortunately, they were anything but statistically accurate. Salespeople were left on their own to decide which percentage to assign. The biases of the individual salesperson were endemic in these subjective percentages that were being assigned.

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There were very few guidelines as to the meaning and parameters associated with any particular percentage. If guidelines did exist, they were based on educated guesses by sales management, and served very little purpose from an accuracy point of view; but at least they provided some standardization to the forecasting process. The fact remained; there was no statistical basis for any of the percentages being assigned.

“Truth lies in the mathematics – not in the mathematicians.”–Blaise Pascal, mathematician and physicist

Over time, the two reports merged, introducing even higher levels of inaccuracy into the process.

CRM Systems

CRM systems have dramatically altered the sales management landscape. Pipelines are no longer necessary to track and plan sales activities, since that functionality is included in the system. Forecasts can also be automatically generated by the system. Unfortunately, most CRM implementations fall far short of the original expectations for them. Forecast accuracy improves very little, if at all. There are two main reasons for this:

1. The CRM is a computer system. Therefore, its accuracy is dependent on the accuracy of the date being input to it. In most cases, the existing pipeline, with all of its inherent inaccuracies, is merely loaded into the CRM. 2. CRM systems are often implemented with the expectation that they will provide the sales organization with a process. They do provide a reporting process. But they do nothing with regard to providing a sales process.

Unless a clearly defined business process, which has been developed for the sales organization (i.e. a standard sales process), exists that can be integrated into the CRM; all that has been accomplished is the addition of another level of complexity into the equation.

More than half of the companies investing in CRM consider it a disappointment.

McKinsey on Marketing, July 2004

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Sales Forecasting as a Metric

The key metric for all sales managers is the forecast of future sales that they provide to the company. It is also a KPI, and if properly constructed, a leading indicator. This means that the metrics you use as KPIs must be early enough in the process that you will have time to react appropriately and therefore impact the final outcome.

Sales forecasting is utilized differently by different companies. Some firms need to know how much inventory to stock. Service firms want to know when sales will actually close so that they can plan the utilization of their service personnel. Manufacturers are looking at sales forecasts to schedule their production. Most companies are looking at cash flows for financial planning purposes. Some will use the forecast to determine the size of the sales force required. Companies use sales forecasts for all these purposes and more. The purpose(s) that the company will utilize the forecast for will determine the units of measure of the forecast, for example: sales revenue, total units, units per product line, market share, % growth, etc. Sales forecasts that will be used to support manufacturing or operational decisions must usually be much more accurate than forecasts that are used only to plan sales capacity.

Detriments to Forecast Accuracy

Everyone knows that even the best forecasts will be wrong to some degree. However, the sales managers should continuously work to improve sales forecasts. Sales managers can often improve forecast accuracy by avoiding these common pitfalls:

1. There is always a temptation to underestimate to make the numbers look better down the road. 2. There’s also a tendency for new managers to over promise. 3. Forecasts that rely almost exclusively on the subjective input of the sales force are almost always very inaccurate. 4. Subjective-based forecasts are further biased by politically motivated distortions as they move up the ladder.

“The difficulty lies not in new ideas, but in escaping the old ones."–John Maynard Keynes

Exercise:

The following questions are designed to evaluate your current forecasting process and to challenge your current process and assumptions. The objective is to find ways to improve the accuracy of your forecasts.

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1. What is your current method for compiling your sales forecast? 2. What has been the historical correlation between your forecasts and your production? In other words, how accurate are your forecasts? 3. What are the main factors contributing to any inaccuracies? 4. What steps can you take to address these factors?

Improving Forecast Accuracy

What top management wants, and what sales managers should shoot for, is accuracy, no matter how difficult it is to achieve. A combination of both quantitative and qualitative information should be used when compiling the forecast.

Quantitative methods include extrapolations of historical data, statistical analysis, modeling, and customer trend analysis. Qualitative methods include knowledge of customer plans, market conditions, economic factors, and critical uncertainties which are then interpreted based on industry experience and knowledge. Qualitative methods include the subjective opinions of the sales organization as a whole, and play a part in determining the accuracy of the forecast.

“There is nothing wrong with change, if it is in the right direction.”–Winston Churchill

The entire sales organization should be involved in the forecasting process. They have valuable input to offer. But that information must be cleansed of subjective biases and collected in an efficient manner by the sales manager. To the extent that the forecasting process you put in place is able to accomplish this, the accuracy of your forecasts will improve and the more time you will have available to manage your team.

The foundation for an accurate forecast is a clearly defined sales process. It acts as a road map to the sales cycle. Without it, it is virtually impossible to determine your progress. The Buyer Process Management ModelTM is an example of a sales process model that was developed by Samurai Business Group to provide sales managers with statistically accurate data that will enable them to produce accurate forecasts.

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Sales Management Metrics

Key performance indicators (KPIs) are metrics that are closely tied to the achievement of the business goals. They allow management to quickly assess the performance of the organization and act as a dashboard and early-warning system. While they won’t tell you exactly what the problem is, they will tell you where the problem area is. In order to be able to affect outcomes rather than having to react to them after the fact, you must select and track KPIs that are leading indicators. There are four KPIs that every sales manager should track:

Sales Results:

This is the metric that every sales manager and organization tracks. It is the ultimate determinate of the success or failure of the sales organization. However, while it is extremely important, it must be noted that it is a lagging indicator – by the time you know the results, it’s too late to do anything about them. Unfortunately, most sales managers focus only on the results, many times to the point of obsession. This is understandable since most compensation plans are closely tied to the results produced.

“Manage the numbers” is a common mantra among sales managers. The problem is; you can’t manage numbers. You can manipulate numbers, but you have to manage people. More specifically, you have to manage people’s behaviors. The key is to manage the behaviors that lead directly to and produce the results.

Discovery Calls:

A discovery call is an initial meeting with a lead that has shown a strong indication that they are a prospect. It is a leading indicator, and represents the culmination of the marketing and prospecting efforts of the sales process. Over time, as you gather data, you will be able to determine how many discovery calls are necessary to find a prospect that will turn into a customer. It will also provide you valuable information as to the effectiveness of your marketing and prospecting efforts.

Engaged Prospects:

An engaged prospect is one that is clearly traversing your sales process with you. It indicates that you have a real prospect, which is determined by the fact that the prospect is engaged in activities with the sales team. This is also a leading indicator.

Proposals:

The number of proposals submitted to engaged prospects is a key leading indicator because it indicates that an expected decision will be forthcoming shortly. It must be noted that this number tracks proposals to prospects with which there has been significant engagement.

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Many sales organizations routinely submit proposals to prospects prematurely, before they have a clear understanding of the prospect’s needs and motivations. In doing so, the sales organization becomes little more than a “proposal generation” organization, which is quite different than a sales organization. Such proposals should not be counted. In fact, the practice of submitting proposals prior to engaging the pros-pect in a significant way should be stopped immediately.

This data, when correlated to the close data, will provide you with conversion rates as well as important information regarding the effectiveness of your sales process.

Closes:

The number of closes is a lagging indicator, but it will provide useful data when assessing the performance of individual salespeople, especially when one of the goals is to increase market share and the size of the customer base. Since the size of the deal will vary from customer to customer, this measure will be different than sales results.

Customer Satisfaction Levels:

This is a key lagging indicator – lagging in the sense that it occurs after the close. However, it is also a leading indicator in the sense that satisfied customers will lead to additional sales and referrals to new business.

Exercise:

1. Which KPIs do you currently track? Are they leading or lagging indicators? 2. How are you using them to manage your team?

“Success is a science, dependent on insightful analysis of accurate data.”

–Six Sigma Axiom

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Chapter 4: Developing Your People “The will to win is not nearly as important as the will to prepare to win.” — Bobby Knight (Basketball Coach)

The essence of management is producing results through other people. In order to continuously produce better results, it will be necessary for the people to increase their skills and abilities. It is the manager’s task to orchestrate this process and to provide their people with an environment that will allow them to be successful.

In today’s business markets, traditional sales-skills training programs that focus on hard-selling skills and product familiarity are inadequate. Instead, sales organizations that strive to dominate their markets today and in the future must focus on training and development as an ongoing and essential strategic business process. This process must be one of continuous needs evaluation and re-evaluation designed to identify and close the gaps between the competencies of the sales force and the demands of the marketplace.

Do you view your sales force as an asset or an expense? Consider this: if your operations are the engine that drives your business, then a sale is the fuel for that engine. For without sales, there would be no need for your operations.

–Samurai Wisdom

Studies conducted by the HR Chally Group have shown that in business-to-business markets, the sales professional has become the leading influence on the customer’s buying process – more important than the offering’s features, more important than the product and service quality, and more important than the selling price. This means that the effectiveness of the sales professionals themselves can be an added value to the customer and a competitive advantage for their employers. Therefore, sales training and development play a critical supporting role in the success of the sales organization. It is the responsibility of the sales manager to translate that training into actions and behaviors at the customer interface level.

“The sales professional is the sale.”–Howard Stevens, CEO, HR Chally Group

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In fact, the only sustainable competitive advantage that a company can have is the people that represent that company to the customers and the market (your sales force). Your competitors can and will quickly duplicate or match any features, programs, prices, technology, etc. that gives your company a competitive advantage. But they can’t duplicate your people.

Example: Adapting to Changing Market Expectations

The COO’s perspective: “Training does not stand alone, but fits in with the strategic narrative of the business.” According to the VP of Sales: “We are trying to develop a sales force that is not there just to sell products; they are there to sell productivity to the customer, to improve the customer’s revenue stream, or to reduce their costs. A headliner in our training is changing the mindset and developing business expertise and sensitivity.”

Manufacturer of Machine Tools

The Way Forward: Customer-Driven Focus

The evidence is clear that, in order to succeed in the twenty-first century, companies will be required to develop sales organizations and processes that adapt to evolving customer expectations and requirements. Although the terms “customer-driven” and “customer-centric” have become basic elements of the corporate executives’ lexicon, the evidence overwhelmingly shows that these initiatives have been, to a great extent, lost on the actual customers. The buyer’s perception is that a very small minority of salespeople are highly responsive to his needs while the vast majority is essentially oblivious to them.

To understand why there is such an apparent, widespread lack of customer-driven behavior by salespeople, one must examine the gap between the corporate initiatives and their implementation. Customers do not interact with the organization, they interact with individual salespeople. In order to be effective, corporate strategies must be translated into tactical behaviors to be activated during the cus-tomer/salesperson interaction.

The concept of “customer-driven” requires a concentrated focus on customer needs and expectations. Without this focus, companies become internally focused and tend to impose their own needs on the customers, rather than responding to the customer.

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Customers today expect professional salespeople to understand their businesses. A knowledgeable salesperson can engage in a meaningful business conversation and offer insightful business advice, rather than ask frustratingly basic questions and recite product features and benefits. There is only one reason for a customer to interact with a salesperson: He believes that the organization the salesperson represents can create some type of business value through the implementation of her products and services. Salespeople’s source of value is no longer in knowing the products, but in knowing how to solve the customer’s unique business problems.

Customer Perceptions of Salespeople and Their Effect on Customer Loyalty

Customer Rating % of Salespeople Annual Turnover Rate

Excellent 4 <10%

Good/Very Good 80 50%

Poor 16 >90%

Take a look at the above chart. The data comes from a study conducted at the London Graduate School of Economics. Customer ratings (perceptions) of the salespeople that call on them were correlated with the annual turnover rate (actions), which is defined as replacing the current vendor with a competitor. The fact that over 90 percent of the vendors whose salespeople are viewed as poor are replaced within a year is not surprising. What is surprising is that half of the vendors whose salespeople are viewed as good or very good are replaced. Apparently, just doing a good or very good job is no longer sufficient to ensure customer loyalty.

On the other hand, for salespeople whom the customers perceive as excellent, being replaced by a competitor is almost out of the question. The customer perceives them as a valued resource, in some cases treated them as if they were part of his staff. In the few instances where they are replaced, it was almost always due to a merger, change in management, relocation, or some other external event that precipitated the change.

The message is clear: being good or very good at delivering your product or service is not enough. The customer expects you to be good or very good. After all, they didn’t select you because they thought you would do a bad job! It is only through delivering exceptional value to the customer that you become more than a vendor; you become a partner. This is the essence of customer loyalty.

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From this perspective, the salesperson’s ability to understand the customer’s business is the driver of the entire buying process. It accelerates the understanding, by both the salesperson and the customer, of the situation and its consequences; and it increases the likelihood that the solution proposed by the salesperson will successfully deliver the expected business value. True customer-driven salespeople understand that they will only create value for themselves by creating value for their customers.

According to Professor Robert E. Spekman, who teaches sales force management at the University of Virginia’s Darden School of Business: “Salespeople now need to be perceived as taking an ‘I will help you solve your problems’ approach to clients.”

“Bring me solutions, not problems”.–Margaret Thatcher

Continuous Training and Coaching

Professional football players are paid millions of dollars per year. Yet the actual time that they perform in a game is approximately three hours per week. The rest of their time is spent practicing and training in preparation for the game. No general manager or coach would tolerate players who refused to practice, but who just wanted to show up on the day of the game and play.

But sales managers and executives routinely tolerate, and often encourage, such behavior. Training is often viewed as a detriment to“making the numbers.” It takes the sales staff out of the field and is viewed as nonproductive. This is a classic case of the trade off between the “urgent” and the “important.” Any executive will tell you that continually developing the skills of their sale force is critically important to the ongoing health of the company’s revenue stream (the lifeblood of the company). But when faced with allocating selling-time to training, very often the training gets postponed.

To reach sales force excellence, training must become a top priority. It is mandatory to view training as a long-term investment that will return a significant multiple of the short- term costs. However, to do this requires the courage to fore go the short-term gains for the long-term returns, a situation that often conflicts with the compensation plan in effect for the executives themselves.

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"In times of change, learners inherit the Earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."

–Eric Hoffer, author

Anyone who has been in sales for more than a couple of years has probably had a bad experience (or most likely, more than one) regarding sales training programs. The obvious problems are a lack of relevance to the actual job, salespeople with “expert’s learning disability” (I’m an expert, therefore I already know everything), and a lack of commitment from management. All of these problems can be resolved, if management is willing to take the necessary action.

“The illiterate of the 21st Century will not be those who cannot read or write, but those who cannot, or will not, learn, unlearn, and relearn.”

–Alvin Toffler, author, Future Shock

Unless the management team is truly committed to the training, and backs that commitment up with actions, the program will fail. Salespeople will not put any effort into a program that is ignored by their managers. Even worse, many times the program is contradicted by them. It is critical that the management team participates with the sales team in the training and that the managers are further trained to coach and reinforce the program.

But training for training’s sake will not get you where you need to go. The training must instill the knowledge and behaviors required to be successful in today’s markets. Product training is merely a precursor, not the main event. An understanding of business principles, the industry, the customer base, customer applications, human behavior, and the customer’s buying process are all required to function as a truly customer-centric salesperson. Professional salespeople must essentially become business consultants, and the breadth of knowledge they must have to interact with their customers has grown well beyond product features and benefits, and traditional sales tactics.

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The format and delivery of the training must also change. Motivational speeches and generic Power-point presentations are ineffective. The training sessions must be experiential and relevant to the salespeople’s daily lives. Workshops and role plays, based on actual account situations, must be integrated with the key concepts that have been learned, preferably through homework before the training session is held, in order for the participants to get the most experience and practice possible during the time allotted for training.

Research has shown that within 60 days of the training event, 87 percent of the content has been lost. To be truly effective, training cannot be an event. It must be a process, consisting of continuous reinforcement until the behaviors and skills become second nature. Effective training programs should consist of in-person workshops for the initial training followed by a combination of e-learning programs for reinforcement and periodic in-person sessions.

Most importantly, the key component, the “secret sauce” of successful training programs, is aligning direct sales management coaching with the training. In any sales organization, there is no single role that will have a greater impact on determining the success or failure of the sales organization than that of the sales manager. They have intimate, day-to-day contact with the salespeople and the customers. They are in a perfect position to apply the training to the sales force’s daily activities. When their coaching is done properly and consistently, the training is reinforced, behavioral change is accelerated, and sales results improve.

When sales managers spend one day per week coaching the salespeople, the result is a 60% improvement in sales results.

CSO Insights

Exercise:

1. Recall sales training programs that you were involved with in the past. How effective were they? Why or why not? 2. How much coaching have you received during your sales career? What impact did the coaching have on your success? 3. Name a sales manager that you consider a good leader. How does their leadership manifest itself? How does it translate into sales results?

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Sources:A Note on Sources

This is a text book designed to help the reader understand the critical aspects of sales management. It is not a PhD dissertation. It is based on real-life experiences backed up by research, both empirical and scientific. The following books and reports were referenced during the writing of this book.

1. The 2007 World Class Sales Excellence Research Report, (The HR Chally Group, March 2007)

2. Building a Winning Sales Force, Andris A. Zoltners, Prabhakant Sinha, & Sally E.Lorimer, AMACOM Press

3. Never Hire a Bad Salesperson Again, Selecting Candidates Who Are Absolutely Driven to Succeed, Dr. Christopher Croner & Richard Abraham, Self Published

4. Take Charge Sales Management, Mack Hannan, Howard Berrian, James Cribbin & Jack Donis, AMACOM Press

5. Sales Management Research Survey, (CSO Insights, January 2012)

6. Sales Effectiveness Insights, Optimizing Front Line Sales Management, (Special Report, Mercer Company, August, 2010)

7. Sales Effectiveness Survey, (DePaul University, Center for Sales Leadership, March 2012)

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