How B2B Companies Can Win Back Customers They’ve Lost

by: Frank V. Cespedes and Leon Poblete

This article was originally published in Harvard Business Review on June 3rd, 2019

Most research and training in sales focuses on acquiring customers, but, as ecosystems become increasingly dynamic and discontinuous, it’s also important to focus on winning back customers you’ve lost.

Reacquisition is especially important for B2B companies. Because of current trends— increase in the number and size of mergers, the variety of choice in global markets, and uncertainty about trade wars—customers are constantly re-evaluating their relationship with suppliers and making changes. Losing these customers is increasingly costly. As recently as 2014, for example, “the average publicly traded manufacturing firm received over 25% of its revenue from large buyers, up from 10% in the early 1980s.”

The process for reacquiring a customer requires a different approach than acquiring new ones. For one   thing, your previous customers will have prior experience, knowledge, and long-held assumptions about   your people and capabilities. Conversely, you have a basis for judging if that customer is worth  pursuing.

In our study of 26 broken customer-supplier relationships, we found that companies that had  successfully won back a customer followed a similar pattern. They identified the reasons for the initial dissolution, applied the right cost-benefit analysis, conducted an honest conversation with the customer, and accommodated their specific requirements.

To illustrate the process, we’ll use two companies, which we’ve disguised: Brex Tech and RILF. In 2009, Brex Tech, who supplied RILF with electronic components for its optical devices, lost RILF as a customer, but managed to win them back in 2012. Here’s how they did it.

Reasons for dissolution. The first step in the reacquisition process is to identify the reason why the relationship ended. Some buyer-supplier relationships have contractual end-points (e.g., projects scheduled for a specified period). Others may simply fade away due to a lack of attention. Pricing pressures, alteration of product specifications, or changes in ownership are also factors.

Your analysis needs to include who or what was responsible for the decision. It also needs to be ruthlessly descriptive, not prescriptive, focusing on what happened, not what should have happened.

In Brex Tech’s case, it had restructured, increased its prices, and laid-off key staff members. The CEO at RILF noted that “When their prices were raised by roughly 30%, we informed them about our concerns   but they kept the increased price.” What started as a pricing issue then led to disputes and loss of trust between executives from both firms, which in turn generated more problems, and RILF lost interest in continuing to work with Brex Tech.

Cost-benefit analysis. All customers are not equal and not all relationships are worth re-establishing. Therefore, before you re-connect with a previous customer, weigh the costs of winning them back against    the benefits.

Brex Tech did this in a few ways. After gleaning information from its previous transactions with RILF, including revenues, margins, and investments, Brex Tech’s CEO said that “RILF had accounted for more than 15% of turnover and we now had idle equipment in our plant that had been customized to manufacture products for RILF.”

Next, Brex Tech looked at both the economic and organizational requirements for re-establishing mutual  trust and reliability. Brex Tech had a few things going in its favor. Since manufacturing and delivering high-quality products on time had never been an issue in their past relationship with RILF, Brex Tech managers believed they had a good case to make to RILF. After the break up and as part of its   restructuring, moreover, Brex Tech was eventually able to increase factory productivity, which allowed it    to decrease its prices without compromising quality or delivery times. The production head at Brex Tech noted: “We knew RILF was interested in three parameters: delivery reliability, quality, and price. If we   could excel within these parameters, we could re-establish the relationship and make them switch  back.”

Brex Tech knew it could offer RILF price reductions, better technical assistance than its current supplier   in the relevant product categories, order-size flexibility, and other areas where the customer could   quantify the benefits of a reactivated relationship.

Interactive dialogue. Though your business case may look good on paper, people are the ultimate deciders.

When Brex Tech re-initiated contact with RILF in 2012, the key players were different at both firms. This led to a time-consuming process. A Brex Tech executive noted, “The discussions with RILF started at the operational level, then meetings with middle management to move on with the process, and finally— because of the strategic importance of the products involved—with top management.” Similarly, a sales manager recalled, “We went through a period in which we met at least weekly with the customer.

Management representatives were present but also engineers and technicians of the two companies.”

Knowing who does what, where, how and at what levels—the necessary rules of engagement–is imperative for successful reacquisition. For example, Brex Tech had discussions with employees that had been involved with RILF and with personnel not familiar with the account. While top management at both companies had been unable to reach an agreement, production personnel at both firms shared positive relations and unique know-how about products that RILF required. This was a key to reacquiring the account and underscores a repeated finding in management research and practice: people do business with people.

Accommodate specific requirements. When you are a supplier, the status-quo bias works in your favor. But when you seek to reacquire a customer, you must offer a better deal than the current supplier to motivate change.

RILF made it clear that Brex Tech would need to modify elements of its production processes, administrative routines, and IT systems—and provide special product designs while lowering price. But   the information collected during the reactivation process also allowed Brex Tech to adjust and optimize    its activities in these areas.

The resulting agreement justified the effort. Brex Tech’s sales and net profit from the re-established relationship with RILF were soon higher than in 2009. As Brex Tech’s CEO noted, “the fact that RILF purchases higher volumes compared to the past indicates the mutual value.” Moreover, the reacquisition helped to initiate positive word-of-mouth among other buyers in this market. Brex Tech gained two new customers as RILF recommended them to other companies. For RILF, meanwhile, more flexible and customized orders with Brex Tech increased its ability to sell and service in new segments.

In personal interactions, we often fear that others will judge us harshly and irrevocably if we make a  mistake in pursuing a goal. But research indicates that, in many circumstances, correcting a past mistake generates a more positive impression (if the mistake is not repeated) than never making a mistake in the  first place. The same is true in account relations.

Micromanagers in the Making? Why Salespeople Struggle to Lead

Published at Harvard Business School, Working Knowledge in April 2019

When salespeople become managers, they often do a horrible job. Four key steps can help them—and all soon-to-be managers—make the shift, says Frank V. Cespedes.

This sad scenario plays out at many firms: Top-performing salespeople get promoted to become sales managers, but don’t actually know how to manage. The result is a disaster—productivity takes a dive, disgruntled salespeople start heading for the door, and the new managers themselves burn out.

Why are so many salespeople so terrible at managing?

It’s because even after they put on their manager hats, they continue to suffer from the “super salesperson syndrome,” unable to disconnect from the thrill of selling. They hover over their salespeople and micromanage every deal to make sure it closes, says Harvard Business School’s Frank V. Cespedes, the MBA Class of 1973 Senior Lecturer of Business Administration.

“Every company has examples of people who persist in their behaviors as salespeople, and as a result they flame out as managers,” says Cespedes, who teaches management strategies at HBS and recently wrote an article called Sales Managers Must Manage for Top Sales Magazine.

“It’s all about the difference between learning to take care of yourself and learning to take care of others, from being an individual contributor in sales to being a manager who gets things done through other people. That’s a big transition that many people can’t make.”

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Source: Harvard Business School Working Knowledge

It’s a problem that can permeate any layer of a business—a star performer is tapped to become a manager, then flops on the next rung of the career ladder. But the sales department is where a company’s promotion mistake can be particularly glaring. Sales is the pounding heart of a company’s cash flow, where the numbers coming in that day, week, or quarter often dictate the direction of the entire operation.

The answer to this problem is not as simple as deciding that salespeople shouldn’t ever manage, Cespedes cautions. Quite the contrary; sales managers make important decisions that affect salespeople’s lives—doling out territories and quotas—and it’s hard to gain the staff’s respect if managers have never walked in their shoes.

“The common advice you hear is that companies shouldn’t make salespeople sales managers, but I don’t think that’s good advice,” Cespedes says. “Sales managers determine how much money salespeople make and how well they eat. It’s difficult, if not impossible, to develop the relevant credibility to make those decisions if they haven’t demonstrated they can sell.

“At the same time, companies shouldn’t simply be saying, ‘You’re a great salesperson, and I’m sure you can manage.’ I do think sales managers must learn how to manage.”

Setting up sales-to-management success

Cespedes outlines four key steps toward setting sales managers up for success—strategies that could be applied in a variety of business departments.

1. Managers must assume a new professional identity. It’s crucial for managers to acknowledge they are shedding one professional identity to take on a new role with more of a focus on their teams than themselves.

As independent contributors, salespeople aim their attention at their customers and products, worried mostly about how to do their own job well. In becoming managers, they must pivot toward clarifying to their staff what the job requires, helping them build skills, and ultimately trusting them to skillfully handle the work of winning deals on their own.

By letting go of micromanaging every transaction, a manager’s time is freed up to immerse themselves in other duties, like developing a staff they can delegate more responsibility to and making broader contributions to their companies.

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Source: Top Sales Magazine, “Sales Managers Must Manage”

“A micromanager’s growth is bounded by what they can personally get involved in,” Cespedes says. “Managing is about leveraging not only what you do, but how you get other people to do things. If you persist in your behavior as an individual contributor, you’re not managing.”

2. Managers must learn how to hire and nurture talent. Companies should provide training and development for management trainees on how to recruit, hire, and nurture top talent. One common hiring misstep: Managers rely too heavily on interviews and vastly overrate their ability to judge whether a person is fit for the job by falling victim to a “cloning bias.”

“They’re interviewing and asking themselves what made them successful as salespeople, and they look to clone who they were six to eight years ago,” he says. “But what made you successful five to 10 years ago may not be what is needed today.”

Organizations should supplement interviews with on-the-ground work by asking candidates to role play, complete a job trial, or do an internship. This gives managers insight into how well they will sell for that particular company. “Selling is a performance art,” Cespedes says. “It’s not about how well you answered questions in an interview. You need to put in place processes that give you more data about the person’s behavioral fit.”

And once on staff, workers benefit from constructive feedback. So companies should train managers to conduct effective performance reviews, especially since many supervisors treat them as an afterthought, Cespedes says.

“They’ll begin to pay attention to someone a few days before the performance review, and then it becomes mainly a compensation discussion about whether the person did or didn’t meet the sales quota,” he says. “Compensation is important, but the research tells us that good coaching and performance reviews actually have a bigger impact on performance, and this is a tangible skill that managers can be taught.”

In working with high-performing salespeople, managers should also look to be talent developers–rather than talent hoarders, who hold back their hardest workers from moving on.

“Many of the best people are ambitious, and if they feel blocked from advancing, they’ll leave to look for respect and status,” Cespedes says. “The best sales leaders are what I call talent magnets; they develop a reputation as someone you want to work for because not only are they good managers who help you get better, but once you work for them, you move on to bigger and better things.”

3. Managers must know their numbers. With the rise of e-commerce, some question whether sales jobs might be declining. That’s not true, Cespedes says, noting that according to US Bureau of Labor Statistics, 12 percent of the workforce is listed as salespeople, a figure that has grown in the 21st century. Plus, the $900 billion that is spent on sales forces by US companies is three times what firms spend on all of their media advertising and 10 times what they spend on online advertising.

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Sources: SBI Magazine, “The World’s Largest Sales Forces”; Selling Power, “500 Largest Sales Forces 2018”; Interactive Advertising Bureau, “IAB Internet Advertising Revenue Report 2017.”

The internet has certainly changed the sales landscape, creating a new ability to collect and store an incredible amount of data. And that has made sales management a more complex job, requiring a level of analytical and business acumen that wasn’t needed 20 years ago.

Sales managers who have a shaky grasp on the difference between return on investment capital and accounting profit margins, for example, should be trained in “Finance 101,” Cespedes says.

Besides, the best sales managers are not only adept at bargaining for a chunk of the company’s budget to benefit their own people, but look for ways to increase enterprise value from a holistic company view.

“Finance now has a clearer line of sight on the enormous amounts of money they spend on sales, so they’re now asking questions,” he says. “Sales managers need to have answers to those questions, and that puts new pressure on their financial literacy.”

4. Managers must be sure they want to be managers. Managers are often stretched in various directions, including hiring and reviewing staff members, developing spending forecasts, and reporting to the C-suite. These responsibilities entail a lot of administrative tasks, like filling out employee rating forms and building budget estimates—work that can feel like sheer drudgery.

A person’s pain threshold for this type of busywork is something a company should consider when choosing managers and also something an individual should weigh when deciding whether to accept a management offer. Many companies spend a lot of time and money training their sales managers, but they’re not choosing the right people for the job in the first place.

“The company has a responsibility to clarify these expectations about the job, and many don’t,” Cespedes says. “Salespeople spend their lives bemoaning and developing end-runs around administrative tasks like entering data. So an individual who wants to be a sales manager also has to recognize that those tasks are exactly what they’ll need to do as a manager. And then they’ll need to decide whether to embrace the job at all.”

About the Author

Dina Gerdeman is senior writer at Harvard Business School Working Knowledge.

Sales Managers Must Manage

published in Top Sales Magazine, February 2019

Probably the most common complaint I’ve heard throughout my career from C-level executives about their sales colleagues concerns the latter’s ability to manage, not sell.

As one senior executive puts it, “I want sales executives: people with one eye on a sales number [and] another eye on serving a market, making customers successful, and representing the company.” The complaint concerns sales managers’ inability or unwillingness to embrace this role and “own the business” as well as the top line.

Nearly every firm has examples of successful salespeople who are poor managers because they persist in their behaviors as reps rather than managers. There are inherent challenges in selecting and developing sales managers. Moreover, multiple factors are making this a bigger, more visible issue with implications for building and sustaining a career as a sales executive.

What Sales Managers (Should) Do. Frontline sales managers hire reps and influence their training, organize and allocate efforts across market opportunities, conduct (we hope!) performance reviews and so reinforce good or bad selling behaviors, and when other functions need something from sales, it’s the managers they contact. In most firms, sales managers are the primary means by which strategy does or doesn’t get executed.

This crucial role gets mixed reviews. Studies find that, in the short term, excellent reps with an average manager outsell average salespeople with an excellent manager. But over time, people working for an average manager tend to decline in performance. Why? Many of the best reps get promoted, retire, or otherwise leave and, as the saying goes in talent management, “First class hires first class, and second class hires third class.” In addition, an excellent rep is excellent within his or her territory while a manager has, for good or ill, more influence across multiple areas and customers. Research also indicates that—across functions, including sales—first­line management is the level from which come the most reports of incompetence, burnout, and turnover. Here, the relevant and abiding aphorism is that “People join companies, but they leave managers.”

Moving from doer to manager is difficult in any circumstances. You move from being selected— typically for outstanding performance in the doer role—to being the new person in the management hierarchy who does not know the ropes. This transition even has a clever academic label: “heap reversal theory.” In sales, you must do this while learning about your people, judging their diverse strengths and weaknesses, performing administrative tasks, and making the numbers. As another executive says, “A good salesperson closes a deal, makes a commission, and moves on to the next deal. A good manager, on the other hand, sees the bigger picture and can judge the best way to use resources.”

What It Takes. You can’t just excel at sales to be a good sales manager. Yet, that’s precisely how most companies select new frontline managers. For this reason, some consultants believe the answer is to change these selection criteria. Proponents of the so-­called “challenger” sale, for instance, assert that “this approach to hiring is the root cause of many organizations’ high manager failure rates.” But choosing salespeople as sales managers is not just habit or an ignorant disregard by operating executives of what is “obvious” to consultants. It reflects organizational and human realities.

A key responsibility of sales managers is to provide opportunity by allocating prospects or territory assignments and establishing quotas. This allocation affects what salespeople do daily, their performance benchmarks, and their pay—how they are evaluated and how well they eat. Organizationally, this requires people who already know the relevant selling activities. Interpersonally, it’s difficult to develop the credibility required for candid performance reviews, necessary customer reallocations, compensation decisions, and other vital sales matters if the new manager has not demonstrated selling ability. The novels of Tolstoy and Joseph Conrad, the trial ­by ­fire memoirs of leaders across fields, conversations in hallways during sales meetings,  and numerous studies of management development all testify to the explicit and implicit testing of new people in these roles—as in other situations where some people must make tough decisions about others.

Selecting salespeople to be sales managers is not stupid. It’s how the selection is made, the criteria used, and what happens before and after the promotion that determines managerial effectiveness. But sales manager is not just a bigger sales job—for the individual and for the company. It occurs at a pivotal point in a career and represents both a reward for past performance and a bet on a person’s potential contribution to the managerial hierarchy. And there’s always a hierarchy, despite casual clothes, bicycles hanging from the ceiling, and the other now­standard signals of company cool.

And Today It Takes More. Years ago, John Miner devised a series of tests to measure “motivation to manage.” A key part, as Miner explained, is a “sense of responsibility in carrying out the numerous routine duties associated with managerial work. The things that have to be done must actually be done. They range from constructing budget estimates [to] filling out employee rating forms and salary change recommendations. . . . To meet these requirements, a manager must at least be willing to face this type of routine.” In other words, the test of a vocation is love of its drudgery.

Meanwhile, other factors are increasing managerial complexity in sales. Data analytics affect what is needed to do the job and keep the job of sales manager in more firms. Similarly, both selling and sales management are increasingly reliant on coordinating a network of connections within the firm and with channel partners. Developing these capabilities is a joint responsibility of the individual manager and the organization.

 

 

 

 

 

Assembling the Sales Team

published in Top Sales Magazine; August, 2018

 

Assembling the right sales team has always been crucial. As the old saying goes, “You hire your problems.” But recruitment and selection are now even more important. Data and analytical tasks have lengthened productivity ramp-up times in many sales contexts. Each hire then represents a bigger sunk cost for a longer time. As baby boomers retire and as firms seek to grow, putting more “feet on the street”—or in inside sales positions—increases hiring. Most companies look at their best reps and try to hire more like them. But you’ll never have enough stars and, in fact, don’t want stars in all jobs.

In any business, some activities exhibit high performance variability but have little strategic impact. Think about the design of power point presentations. Some people are much better than others in doing this. But how much impact do the slides have versus other sales tasks? Other activities may be important but exhibit little variability across sales reps—because the tasks are standardized, because the firm has reduced variability via support systems, or because the business model limits the range of performance variance. Think about the difference between fashion boutiques where personalized service and advice are integral to the value proposition versus mass-market retailers where low price and availability make selling less complex and variable. Or, more generally, think about transaction versus solution customers in your pipeline and how those sales activities vary.

You want stars in activities that exhibit both high impact and variability. Depending upon your go-to-market model, that may be prospecting or account management, direct sales or managing channel partners, initial sales calls or product demo’s. In activities with low impact and variability, you don’t need stars and shouldn’t overpay, either in money or time. In other words, effective hiring and selection in sales is about building the right portfolio of talent, and this has actionable implications:

Focus on how the salesperson makes a difference. Continually ask, “Where are we spending too much—or too little—time, money and talent across our sales tasks?” For example, the key activities will be affected by your sales structure and account assignments, as well as the necessity (or not) of team selling. Key tasks will change as your markets change. In many subscription-based SaaS businesses, selling activities with high variance and impact early-on are about initial customer acquisition. But over time, key tasks tend to shift toward reducing churn, up-selling, or cross-selling additional services. Allocation of sales talent should change accordingly.

Focus on behaviors in selection.  Managers are excessively confident about their ability to evaluate candidates via interviews. Decades of research across job categories indicate about a .25 correlation between interview assessments and job success. In fact, some studies indicate a negative correlation: the firm would have been better-off picking candidates at random! This danger is especially prevalent in sales, where hiring is often affected by a cloning bias: many sales managers hire in their own image because how that manager happened to achieve their performance is what got him or her promoted and in a position to hire.

The best results occur when you supplement interviews with observation of relevant job behaviors. There are many ways to do this, including intern-type positions, simulations, and other techniques. Further, technology is increasing options via game-like activities, virtual video environments, and online media that allow behavioral (not just personality) assessments by more people in less time.

However, the real constraint in many firms is a lack of assessment skills by front-line sales managers who know (or should know) key sales tasks in their markets. But HR managers typically know more about techniques for assessing behaviors relevant to those tasks. This should be an on-going partnership. Yet, too often, Sales and HR rarely interact beyond the realm of compensation. Sales often views HR as “the soft stuff” and HR ignores sales hiring in its “talent management” initiatives.

Be clear about what you mean by relevant “experience.” Previous selling experience is the most commonly cited criterion in sales hiring. Driving this view is a belief that there is a trade-off between hiring for experience and the time and money you don’t need to spend on training. But experience at another company—within or outside the same industry—is not easily portable. So much of sales success depends upon a firm’s strategy, the customer segments and sales tasks inherent in that strategy, and the internal relationships that reps develop to get those tasks accomplished. When a salesperson moves to another company, she leaves that behind and must recreate it in a different organizational context.

Further, “experience” in sales is inherently multidimensional. It may refer to experience with any (or any combination of) the following:

  • A customer group. For example, a banker or broker hired by a software firm to call on financial-services prospects; or in the health-care industry, companies sell very different products but many sell to hospitals.
  • A technology — an engineer or field-service tech hired to sell the equipment.
  • A company — in many B2B firms, service rep move to sales because internal coordination is a key sales task and they “know the people and how to get things done here.”
  • A geographical market or culture. For instance, someone from that country or ethnic group who knows, and has credibility within, the norms of the customer’s culture.
  • Selling — a retail associate with point-of-sale experience or an inside-sales rep who has demonstrated she can successfully work in that kind of transaction-intensive sales context.

The relevance of each type of experience varies with your firm’s sales tasks, not those of a generic selling methodology. In assembling their team, some sales managers “know it when they see it,” and many don’t. So consider what kind(s) of prior experience is truly relevant and then require the people doing the hiring to clarify what they mean when they see it.

 

4 Ways to Improve Your Content Marketing

by Frank V. Cespedes and Russ Heddleston (Harvard Business Review, April 2018)

In the past decade, content marketing has become a widely established practice. Companies have hired writers and Chief Content Officers to run departments, create blogs and other materials, and, in the process, some have assured sales people that content marketing can mean the end of cold calling.

The playbook sounds simple: attract prospects with content relevant to each stage of their buying journey and extend offers that motivate them to contact your sales team for a demo or discussion. With online technologies and targeted lists, this should be a cost-effective tool for separating the suspects from the prospects, accelerating customer conversion through the sales funnel, and, equally important, optimizing “data-driven marketing” by tying each piece of content to metrics like opens, reads, downloads, and so on.

But as Churchill reportedly said after Gallipoli, “However beautiful the strategy, you must occasionally look at the results.” Consider: blog output by brands has increased over 800% in the past five years but organic social share of blogs has decreased by 89% and about 5% of content gets 90% of engagement. An estimated 70% of the content generated by Marketing is never used by Sales reps and a similar percentage of the leads generated disappear into a “sales lead black hole.” And despite the repeated mantra about “data-driven,” there is contradictory advice about which content-marketing benchmarks indicate success as well as many blithe assertions about best practices in this area.

We examined 34 million interactions between customers and content on DocSend’s platform, which allows sales organizations to upload and share documents with prospects. The result is empirical data and a good starting point for examining core aspects of any content marketing initiative: how much time prospects actually spend on content, on which devices, when, and the type of content they prefer.

You have under 3 minutes to make an impression, and there is an optimal length

It’s no secret that buyers are bombarded with messages and the web has exacerbated the situation. That likely explains why the average viewing time for content is 2 minutes and 27 seconds. During that brief period, prospects are making many rapid-fire judgments, including whether or not they will move to the next step. Conversely, many sellers need to share lots of information with prospects to motivate desired buyer behavior.

Our data indicate that you should do your best to get that information into documents that are 2-5 pages — compared to content of longer lengths, first-time prospects spend more time viewing each page of the document and are more likely to view all of it. Documents uploaded to DocSend’s platform include case studies, overviews and guides, e-books, and proposals. (Keep in mind that prospects further along their buying journey may require more information.)

Our data also indicate that much of marketing and sales collateral is read by prospects outside of the normal work week. If initially engaged, a prospect reading a piece on Wednesday often returns for a longer visit on the weekend. This reflects an important 21st century buying reality that pipeline metrics often obscure: increasing numbers of buyers don’t move sequentially through a funnel; rather, they adopt parallel streams to explore, evaluate, and engage with content and sales people. Buying is a continuous and dynamic process, and content forms, formats and sequencing must adapt.

Mobile is important but overhyped

The proliferation of smart phones, iPads, and other devices has generated a certain folk wisdom about crafting content for the mobile buyer. But our data indicate that, at the top of the funnel, it typically makes sense to optimize content for viewing on multiple formats and devices. Further, once a lead is handed off to sales and becomes an opportunity, an overwhelming majority of prospects view sales content on desktop devices, not mobile.

These findings have actionable implications for marketers. Desktop devices remain very important, so avoid needless optimization for a single type of device and format. Focus on creating content that offers visuals to convey key messages quickly and that performs well on multiple formats. Think succinct copy and core take-aways that punctuate each slide, and avoid text-heavy information drops on each page. Also, given the way prospects often return for a closer look outside work time, consider creating a content-sequencing process for coupling an initial view with additional engagement to help your sellers prioritize their follow-up actions. And in doing this, recognize inherent differences between marketing- and sales-relevant content. In the former, the goal is to establish awareness and interest; for sales, the goal is to get the customer to sign a contract.

There’s no “best day” of the week to send content

There are many assertions about the best day of the week to send content. But opinions about Tuesday afternoon or Thursday morning simply don’t hold up to empirical examination. Our data indicate that total visits by prospects to sellers’ sites were almost evenly distributed across each day of the work week — slightly more on Tuesday, Wednesday, and Thursday and, unsurprisingly, a bit less on Monday morning and Friday afternoon.

Do not focus on specific days for sending content. In fact, doing that probably indicates unused capacity and a lack of cadence in your marketing and sales process. Instead, it’s better to prioritize based on level and type of prospect engagement with specific types of content and a process for follow-up after initial engagement. For many companies, this often means linking your content marketing efforts to what you know about the vertical your prospect is in and relevant guides for each type. Content by vertical also plays well with most sales teams.

Prospects still prefer one type of content more than others

Marketers put a lot of time and effort into crafting content. And the data indicate they need to keep working on this to improve actual use of their content by prospects and sales colleagues. But which type of content routinely outperforms others in terms of completion rate? The tried and true case study is, by far, the content that prospects complete more than others. In our data, case studies have an 83% completion rate — orders of magnitude higher than other sales and marketing content provided during the buying journey.

Buyers, especially B2B buyers, want to know what others are doing with your product, not what they might do to improve productivity or other outcomes. Good case-study content does that, while providing a compelling reason for the prospect to learn more and initiate a change process. Especially in B2B contexts, buyers must justify a decision to others in the organization who have competing priorities for limited funds. Knowing how other organizations have successfully integrated and used a new product, service or process is more important than grand assertions about “thought leadership” or “disruption.” As a result, good case content, like good follow-up, often has a specific and relevant vertical focus. And the process of finding and articulating that content requires on-going interaction between marketers, sales, and service people in your firm — interactions that often yield other benefits in addition to relevant and credible use cases.

Content marketing is evolving, and, as buying becomes increasingly non-linear, can play an important role in aligning selling with buying. But there are now many myths and unexamined assumptions that have accrued around content marketing as the practice has exploded. Don’t follow the herd. If you can’t track what prospects read, when, where, and for how long, you have a blind spot in a big part of your marketing budget and are unlikely to get the ROI possible with this approach.


Effective Sales Training: What Are the Foundational Elements?

Frank V. Cespedes (Top Sales Magazine, April 2018)

Someone once told me that many companies maintain their equipment better than their people. If so, they get what they don’t maintain. This is especially true in sales. Across industries, turnover in sales averages about 25-30% annually. This means that, at many firms, the equivalent of the entire sales force must be replaced and trained every four years or so. Any talk about talent management which ignores a requirement of that magnitude is just talk.

Despite what you currently hear about “big data” and “predictable revenue,” selling is not a science reducible to a few methodological rules that can be specified ex-ante. Many variables affect selling effectiveness besides the sales person: price, product, competition, market conditions, and so on. It’s your responsibility to adapt, not the market’s responsibility to be kind to your sales efforts.

But as the phrase implies, “sales reps” represent their organization to the market. They need reinforcement, periodic upgrading, adaptation of skills to changing circumstances, and the motivation that is a by-product of a good developmental process. Stated more bluntly, training salespeople (and other professionals who must deal with a range of changing situations) requires what the U.S. Air Force in training pilots calls the 8P’s: “Proper Prior Planning and Preparation Prevents Piss-Poor Performance.”

In my experience, effective sales training has certain foundational components, with implications for sales trainers, sales managers, and senior leaders at companies:

Build Your Team, Not another Firm’s Team. There’s no such thing as effective selling if it’s not linked to your firm’s strategy and objectives. So first focus on identifying the sales tasks required by the target customers and value proposition in your strategy.

Selling is a contextually determined set of skills: what works at that company does not necessarily work here, because sales effectiveness is a function of the sales tasks inherent in strategic choices. Chasing “best practices” can be counterproductive, and training firms have an incentive to apply their approach everywhere, whether or not particular circumstances are a fit with that approach. Beware of one-size-fits-all methodologies. Sometimes an off-the-shelf training tool can address the desired outcome. But more often, customization is required.

Develop the Fundamentals. Train salespeople with attention to actual behaviors that can be practiced and taught, not just preached via the football-and-war rhetoric that still dominates in many sales meetings. Core content in training should reflect knowledge about who buys, why, and how—today and tomorrow, not yesterday.

Selling is ultimately about the buyer. The fundamentals are driven by that fact. Up-to-date criteria for opportunity identification, relevant call patterns, active listening, understanding the customer’s business and translating your capabilities into customer business outcomes are typically core selling skills. But how those skills are developed and applied depends upon market conditions and the buying process in each segment. In an early-stage tech market, for example, customer education and applications development are often key sales tasks. But as the market develops and standards emerge, people typically spend more time selling against functionally equivalent products or developing third-party relationships. Training should keep pace with those task changes.

Experiential Learning.  Selling is a performance art. Acquiring behavioral skills (versus concepts) requires repetition. People must try a new behavior multiple times before it becomes practiced enough to be comfortable and effective—anywhere from three to twenty times, according to different studies.

Hence, on-the-job learning is crucial. But in many companies, on-the-job training is a euphemism for no real training at all. It’s a random process dependent on a particular sales manager’s calendar, temperament, and ability. That’s a mistake. Adults learn best when they can repeatedly apply new information or a skill and see results—what some now call “deliberate practice.” Effective sales training cannot be a single event confined to a classroom or seminar. It requires feedback from interactions with customers. And as Sam Walton repeatedly told his people, “There ain’t many customers at headquarters.”

Follow-Up. The biggest developmental impact from training, according to many studies, is what happens after training sessions: follow-up and feedback. Too often, however, nothing happens after training initiatives. By contrast, effective sales training is linked to subsequent performance reviews, ride-alongs, win-loss analyses, and other core performance-management practices. In other words, sales managers must manage. They can’t “outsource” development of their people to a training event, no matter how well designed and executed that event may be.

Sales training at many firms still merits Hamlet’s critique of Elsinore Incorporated’s values statement: more honored in the breach than the observance. In a given year, over a third of firms do not train salespeople at all. And many budget training according to last-in-first-out accounting principles: training budgets (like advertising) increase when sales are good, and get cut when times are tough. So it’s hard to determine cause and effect. Sales training also affects other functions in a firm: each product manager wants her product emphasized; finance wants a shorter order-to-cash conversion cycle; operations prefers certain types of orders. So “a little bit of everything” is often a default option in sales training programs. But given the amount of money spent on sales by companies (an average of 10% of revenues across industries, and often more in B2B companies), executives have a fiduciary responsibility to manage and measure the people part of that investment more rigorously.

 

 

How a Fast-Growing Startup Built Its Sales Team for Long-Term Success

by Frank Cespedes and David Mattson

It’s common for leaders of sales teams to focus almost exclusively on short-term tactics and current
operations while failing to think and act in a way that supports the longer-term needs of their businesses —
and it’s hard to fault them. Sales teams must meet the immediate needs of their customers, respond issue by
issue and account by account, and meet quarterly goals. As one sales manager noted, “In this job, if you
don’t survive the short term, you don’t need to worry about the long term.”

The biggest problem with a short-term approach is that managers develop blind spots around crucial
processes such as recruiting, hiring, and training and development.

These blind spots are especially prevalent in growing firms where a common rationalization —“I know those
issues are important, and I’ll get to them when the quarter closes and things settle down” — often shapes
management’s attention. But ignoring talent processes and strategies can have unintended consequences
and stall one’s scaling efforts. There are ways to avoid these blind spots, however.

Splunk, a San Francisco-based B2B software firm, is a case in point. Founded in 2003 with $40 million in
venture capital funding, Splunk was among the first companies to target the “big data” space. It had no
track record to point to when targeting and interacting with top talent during its early years, and indeed no
recognized industry to point to. This situation soon necessitated a creative approach to recruiting, hiring,
and training. During the critical early years, moreover, there was a big internal debate at Splunk about
allocating time and resources to these activities. Many felt that money and time were best devoted to other
activities, ranging from R&D to trade shows.

Here are some insights on how Splunk avoided the blind spots as it scaled.

Recruiting

Any business process is only as good as the people involved. Recruiting — an uncertain and expensive
process — is no exception, especially in sales where differences in individual performance are stark. The best
salespeople generate orders-of-magnitude more than their average peers: from three to ten times more,
depending upon the sales context. Talent matters.
“For recruitment…” says Bart Fanelli, Splunk’s Vice President of Global Field Success, “[w]e set our sights on
talent from companies already operating at the level we want to operate at.” That’s a process which requires
leadership time and resources, not just a speech about talent at an off-site. So if you’re a $50 million
company and your goal is to grow to $250 million, consider targeting hires from firms operating at that level
or higher. And to do that, you must make recruitment and hiring an ongoing part of the management
culture, not only an HR responsibility.

Interviewing and Hiring

Managers are excessively confident about their ability to evaluate candidates based on personal interviews.
Across job categories, there is almost no correlation between interview performance and on-the-job
performance. In fact, some studies indicate that interviews can hurt in selection decisions: the firm would
have been better off selecting at random! This danger is prevalent in sales. Choosing for an activity where
talent varies widely often leads to a cloning bias: many sales managers hire in their own image and assume
sole personal control of the interviews.

Better results occur when companies complement a manager’s assessment with multiple interviews with
diverse people (to off-set the cloning bias), establish a structured process (so comparisons can be made
across common factors), and emphasize behavioral criteria (because gut-feel does not scale). This approach
is best supported by simulations, assessments, onboarding programs, and other means that technology is
making less costly. But the real constraint remains management’s commitment to establishing,
communicating, and keeping up-to-date a clear hiring process.

Splunk developed profiles that specified skills and capabilities relevant to each role. They also established
certain behavioral elements, which, in management’s view, were important across roles. For a field sales
position, for example, Splunk specified skills that managers could look for and discuss in the applicant’s
work history during interviews—e.g., forecast accuracy, messages to relevant market segments, and other
categories.

Behavioral elements refer to the on-the-job choices that people make. For instance, is the candidate
coachable? Does he or she interact with others without giving a sense of being entitled to special treatment?
Do they work hard without being offensive or disruptive in a negative way with others?

Fanelli notes, “We believe both types of screening criteria—skills are applicable to the specific job and
culturally-compatible behaviors that we seek in all of our people—are equally important. We all own the
culture and I don’t believe that any company can make a habit of hiring brilliant jerks.”

As Splunk grew, these profiles were updated, refined, and became the focus of quarterly reviews. After
hiring, sales managers were accountable for coaching and developing their people based on the elements
specified in the profile. “Our assumption,” Fannelli explains, “is that if we understand our business, if we
get and keep the profiles right, and if we execute the process consistently, we will succeed. The quarterly
reviews help to prevent the common scenario where down the road management is sweeping up broken
glass due to performance or interpersonal behaviors.”

Processes like this create a healthy mindset. You’ll soon realize that there is only a finite universe of great
people out there, and that, in order to land them, you’ll need to improve upon and fine-tune your approach
to interviews and hiring. And, hopefully, you’ll learn that great recruitment practices create a multiplier
effect: creating a network of good hires generates referrals to more good hires.

Training and Development

Blindness can be a degenerative organizational malady. Many companies, as Fanelli puts it, “reduce their
field of vision by following a hire-and-forget approach.”

In a given year across industries, over a third of firms do not train salespeople at all, and common practice
has training budgets increase when sales are good and decrease when sales are tough. This approach is not
only (in a time-honored phrase) bass-ackwards; it also makes it hard to determine cause and effect. Effective
sales training, like most useful development, cannot be a single event. People need reinforcement, periodic
upgrading, advice on adapting their skills to new circumstances, and motivational help.

A key is to focus training and development on an analysis of current sales tasks and put in place a process
that gives reps, their managers, and leadership timely feedback as they move forward on performance goals.
To scale, you must control what you can control. In Splunk’s case, as Fanelli notes, “we kept a certain
leader-to-contributor ratio in mind to make sure the first-line sales leader can train contributors on the
desired skills. We track this quarterly, looking at training and coaching with the same attention that we use
to review ‘the numbers’ because the effectiveness of our first-line leaders is the gateway to the performance
we want to see in sales outcomes.”

Any sales force is composed of people with different temperaments, capabilities, and learning styles. To be
effective, coaching and development must adapt to the individual and be updated. A regular review
cadence in the sales organization drives the process up the chain and makes it an ongoing developmental
tool. “The first-line review process,” says Fanelli, “connects quarterly to every manager in the field. The
second-line review (a review of those who manage and review the first-line managers) focuses on a broader
set of skills, happens annually, and goes into more depth than the quarterly process.”

Splunk uses a variety of good practices that have helped it avoid common blind spots in sales as it’s grown.
But our intent is not to suggest that all companies should do what Splunk does. Markets are different,
strategies vary, and so specific practices will and should vary. The lesson is that, once you get beyond lipservice
about talent, any company must be worthy of talent by making core processes like recruiting,
interviewing, and development a real priority in daily practice. As Aristotle emphasized a long time ago,
“Excellence is a habit.”

CEOs Should Get Personally Involved in Talent Development

Chief Executive, August 31, 2017

Frank Cespedes, Jay Galeota, and Michael Wong

Korn Ferry recently estimated that, globally, human capital has a value about 2.3 times that of physical capital.[1] This difference is likely to widen in increasingly service economies. Yet, most companies maintain their equipment better than their people. The issue is not good intentions. Executives repeatedly cite employees as critical for success; we rarely hear them mention picking a software package or supplier in the same way. But C-Suite attention and rigorous processes are typically in place for software and supplier selection, not for core people activities. At a minimum, you have three levers to manage human capital with the same rigor as other assets:

 

Business Reviews are crucial in setting priorities and focusing attention on what “really” counts. Without explicit attention to the skills and behaviors required in a changing market, development of people is hit-or-miss or treated as an abstract set of “competencies.”

 

By contrast, when one of the authors led Merck’s Hospital and Specialty Care area, human resource reviews were integrated into business operating reviews, with the same amount of time allocated to both, and a few things happened. Employees understood the value that leadership placed on them. Conversely, when either a business or employee was struggling, a number of turnarounds took place, but if results did not materialize, tough decisions were more clearly made about divesting businesses or changing key people. Perhaps most importantly, an artificial separation between “the people” and “the business” was mended. Leaders were questioned about their business lines and talent, and expected to apply disciplined approaches for both inputs to performance.

 

Talent Profile Tools The availability of assessment tools based on predictive analytics is increasing, while their price is decreasing. It’s important to understand the role and limits of these tools. They can aid judgments about talent but, ultimately, you are paid to execute your company’s strategy, not the skills in a generic assessment tool. But these tools can provide a common language and evidence-based dialogue among executives about talent.

 

One company uses an assessment quarterly to analyze staffing, succession planning, and development plans. The tool is a means for gathering feedback and skills ratings that rest on more than an individual manager’s judgment. Further, the process itself makes senior executives more aware of the activities required to establish true “high potentials,” rather than simply the top 20% of available talent. The resulting gap analysis is often the most important part.

 

Involvement in Training & Development   Research indicates that the greatest impact from training often has more to do with who is in training sessions: involvement and follow-up actions by senior executives to ensure that people apply and practice the relevant skills and behaviors.[2]

 

Senior and mid-level employees participate in Boeing Institute leadership training taught by Boeing executives at least twice per year. Consider the value of this approach. Informal peer pressure motivates each “professor” to prepare, and those executives are regularly re-grounded in the current realities of the business with a cross-functional group of employees. Conversely, the participants hear and learn from those who are or will be their supervisors—a bigger motivator in adult learning than grades or certificates–and they are socialized to “pass it on” and be Institute teachers as their careers advance. This combination encourages task-relevant dialogue, often with specific action implications for a business, function, or project.

 

Senior executives establish the foundational conditions for talent development by using business processes to manage human capital as rigorously as other assets.  Strong leaders allocate their scarcest resources–time and attention—to this process.

 

Frank Cespedes teaches at Harvard Business School and is the author most recently of Aligning Strategy and Sales (Harvard Business Review Press).

 

Jay Galeota is President of G&W Laboratories, Inc. and is the former Chief Strategy & Business Development Officer at Merck and Co., Inc. and President of Merck’s Emerging Businesses Unit.

 

Michael Wong is an Associate Partner with IBM’s Global Enterprise Transformation consulting practice.

 

ENDNOTES

[1] https://static.kornferry.com/media/sidebar_downloads/Korn-Ferry-Institute_The-trillion-dollar-difference.pdf.

 

[2] K. Anders Ericsson, “The Influence of Experience and Deliberate Practice on the Development of Superior Expert Performance,” in Cambridge Handbook of Expertise and Expert Performance (Cambridge University Press, 2006); and “Unlocking the DNA of the Adaptable Workforce,” Global Human Capital Study (Somers, N.Y.: IBM, 2008).

Find the Right Metrics for Your Sales Team

Harvard Business Review (site)

by Frank V. Cespedes and Bob Marsh

“What gets measured gets managed” is a longstanding business aphorism. But today’s sales technologies enable companies to measure almost anything, which leads many managers to try to measure everything. As a consequence, managers don’t have a clear sense of what is really driving sales in their business, while salespeople, who are inundated with dozens of metrics, get lost in the day-to-day noise. The result is poor management of what matters.

The challenge, of course, is to decide on the right metrics. Consider the results of a survey of key performance indicators (KPIs) being used by more than 800 sales teams across industries. Wins are the most common metric used across sales roles and industries. On average, firms measure closed deals and rep production against quota monthly, which isn’t surprising. Selling is a performance art, and “making the number” should be the goal of any sales organization, but a closed deal is an outcome and a lagging indicator; it can’t be used by the salesperson or sales manager to improve future outcomes.

This is why leading indicators such as demos, web registrations, calls, or C-suite-level meetings are often more instructive. Instead of reviewing historical results, which are beyond a rep’s control, they offer real-time feedback on whether salespeople are spending their time and efforts in the best way. Leading indicators are within a rep’s control. If salespeople are behind on a key indicator, for example, they and their managers can change behavior to increase the probability of success.

Deconstruct Your Sales Funnel

In order to improve sales outcomes and clarify the relevant sales KPIs in your business, you need to deconstruct your sales funnel.

Here’s a typical flow of activities:

Prospecting: cold calls, email, phone, LinkedIn, etc.

Qualifying: initial conversations aimed at separating the merely interested from the actual prospects and determining who is a qualified opportunity

Advancing opportunities: discussions with qualified opportunities to communicate the value of your product to the right contacts

Closing: final steps in negotiating and winning the business

Post-sale: service, order fulfillment, possible customization, and onboarding activities to ensure the client is successful

Every company is different, but every business has a sales conversion funnel. Some funnels are relatively short and simple, while others are long and complex. Knowing what type of funnel applies in your business is essential to clarifying key metrics and performance management practices, including sales incentives.

Consider one SaaS company that sells a menu display and advertising platform to restaurants, which is a big but fragmented market. The challenge for reps is that, because restaurants all have different budgeting processes, they must be there at the right time to close that sale. Once a sale is closed, the firm incurs low marginal costs in setting up and maintaining a customer on its platform. In this situation, it makes sense to “feed the funnel” and provide reps with incentives, through proper metrics, to make frequent and repeated calls.

By contrast, consider another SaaS firm that sells a subscription software product that provides big productivity and environmental benefits if the customer is willing to alter some traditional workflow processes and use the software at sufficient scale. This is a more protracted buying and selling process, where ongoing customer education and onboarding is crucial. Awareness and initial enthusiasm from a prospect on the capacity to adopt new software can be deceptive and expensive for this firm. Here, simply “feeding the funnel” is a mistake: Lead generation is less important than pursuing the right leads. Moreover, this SaaS firm’s profit margins are mainly in contract renewals and ancillary services it can provide if it gets the right scale and usage in the initial sale. Here, management must ensure that sales reps vet the top part of the funnel carefully so that they don’t spend months chasing the wrong prospects, while providing reps with the means and an incentive to manage that long selling cycle and renewal process.

The experience of Paycor, a payroll processing company, is a useful example. Like many firms, its frontline sales managers were typically former top-producing salespeople, many of whom were managing other salespeople for the first time. In making that transition, they tended to focus on what they knew best: helping to close a deal. But after closely examining the selling cycle, it became apparent that the best time to work with their reps to influence the sale was earlier in the funnel. Sales managers used the leading indicators to drive a 55% increase in relevant new-business meetings and a corresponding 50% reduction in onboarding time.

Make Performance Reviews Count

Finding the right metrics isn’t the end of the story. Selling is about behaviors, not just analyses, and making sure that salespeople align their behaviors with those metrics is an ongoing process. Performance reviews can help, if they’re done right.

Unfortunately, reviews are typically underutilized levers for influencing behavior in most organizations. Busy sales managers tend to treat them as cursory, after-the-fact discussions about quota attainment and compensation, not coaching about going-forward behaviors. The result is that, too often, “feedback” from managers is really a sermon whose message is “get better and sell more.” Like most sermons, this may work when you’re preaching to the already converted, but it’s too abstract if you’re not. Clarifying leading indicators can make a difference, because the salesperson then knows the behaviors they need to change in order to improve performance.

Many sales managers begin conversations with reps by asking well-intentioned but generalized questions like, “What’s closing this month and how can we make those deals happen faster?” In response, reps focus on the next 30 days and the required onboarding of new customers, and then neglect important activities that happen in between. This is one reason why sales output is so variable — strong sales months followed by catch-up prospecting during the lean times — in so many organizations.

After deconstructing the funnel, however, managers can use different talking points that allocate attention and resources toward those activities. For example: “Sofia, you are making lots of calls and scheduling many meetings, but you’re calling on too many small firms and your qualification criteria have you chasing many prospects that are highly unlikely to close. Let’s fix your account prioritization.”

Or: “Arjun, you are behind peers in setting meetings with VP-level prospects, and we know those contacts increase our win rate substantially. Let’s talk about the organization of your prospects and what we can do to get the right access.”

Among other things, conversations like these — especially when reflected in accessible reports and personalized scorecards — empower reps to know where they stand and where to focus. They allow sales managers to provide feedback about behaviors, not just intentions. Beyond individual coaching, moreover, relevant leading indicators can also spur more systemic means for generating proactive selling behaviors: incentives to schedule new-business meetings with the right contacts or to pitch bolt-on products that amortize onboarding time and increase renewal rates.

These steps are within a company’s internal circle of influence, not in the less controllable external market environment. But exercising that influence requires managers who know what metrics count and who can then translate data into relevant selling behaviors. Those managers are not just discussing quotas and after-the-fact outcomes; they are truly managing sales performance.

Sales Productivity, Not Just Sales Technology

Frank V. Cespedes, for Top Sales Magazine, August 2017

There is lots of buzz about big-data and “Sales Enablement” (SE)—the current catch-all term for attempts to increase sales productivity via technology. There are now hundreds of vendors of such tools, and SE is increasingly a formal position in more companies. The interest is driven by multiple factors.

One is the declining costs of the technology. Also, many SE tools utilize established CRM platforms and are therefore an incremental investment resting on the sunk costs of an extant CRM system. A second reason is a change in cost structures spurred by the financial crisis. S&P-500 companies, for example, have decreased their COGS by over 250 basis points in the 21st century.[1] In the aggregate, that’s a lot. But SG&A and selling costs have not decreased. The result is a shift in the focus of productivity improvements. Companies have in fact done a good job in managing back-office costs, supply chains, and infrastructure. The next frontier is their go-to-market costs because (as the bank robber said when asked why he robs banks) “that’s where the money is.”

A third reason is that selling is increasingly data-hungry work in many markets. To see big-data analytics in action, don’t just go to Facebook or Google. Look at what consumer goods salespeople must now do to get shelf space, develop promotions, and garner in-store support at retailers. Similarly, you might assume that wholesale distribution, where firms resell products manufactured by others, is a simple transaction sale. But a study for the National Association of Wholesaler-Distributors[2] finds the same need for analytical selling skills in this sector—in large part because transactional sales migrate to the web. In general, personal selling is looking more like a research-based as well as persuasive activity.

There are, therefore, compelling reasons why SE merits attention. A recent survey of more than 1000 companies[3] indicates the top areas where these tools are currently deployed: lead generation and lead scoring; pipeline management and forecasting; and helping to identify cross-sell and up-sell opportunities at current customers by trolling thru buying histories.

However, these analytics are a pre-requisite to improving productivity. Reporting that the pipeline grew by so many dollars is not managerially meaningful by itself if the firm is serious about profitable growth. How did the pipeline grow? Did we add lower- or higher-profit customers? Are we bringing in shorter- or longer-selling-cycle prospects? What are the implications for other functions and the center of gravity in our business strategy? You can’t substitute data for management. And you can’t manage sales effectively unless you have a framework for diagnosing sales productivity in your business.

Here is a starting point (see Figure 1: Sales Productivity = Capacity x Close Rate x Profit/Sale). The productivity of a sales model is a function of capacity (how much the sales force can do in terms of call capacity and their capacity, or capability, to reach target customers), the close rate (what percentage of prospects the sales force sells), and profit per sale (what they sell and at what prices). What levers are available to sales leaders to improve each component and how can SE help?

To improve sales capacity, people can work harder: generate more leads and make more calls. New tools provide a window on what, historically, has been opaque in many firms: call patterns, the amount of time reps spend in selling activities, and their persistence. Data indicate, for example, that in most inside sales efforts, it takes 6-8 calls to make customer contact, but most inside reps stop after 3-4 calls. You also improve capacity by working smarter: focusing on the high-impact sales tasks inherent in your strategy and so increasing the odds that customer contact will be more productive. For example, studies indicate that marketing departments spend about 25% of their budgets on sales collateral, but as much as 70% of marketing content is never used by sales reps.[4] Tools from companies like DocSend and Showpad enable firms to track what reps do use, what they send to prospects, and what prospects do and don’t pay attention to. In turn, this data can allow both marketing and reps to work smarter.

To increase close rates and accelerate selling cycles, get better at identifying the different types of customers that confront most firms. Which are solution customers where customization is required and worth it? Which are transaction customers where the issue is to take costs out of your sales approach? Tools from firms like LevelEleven and Pipeliner help to track leading indicators relevant to these distinctions, and so provide a basis for smart managers to address those buying-behavior differences in their sales metrics, account management policies, and channel-partner decisions.

To improve profit per sale, constantly work on basics that go beyond the sales force: e.g., production, product mix, and pricing. You also improve profit per sale by lowering irrelevant selling costs. In too many firms, standard practice is still indiscriminate across-the-board cuts when volume stalls or declines. The result is often a self-fulfilling downward spiral. Perhaps the greatest impact of SE is its ability to help managers to lower selling costs without harming selling, because the tools help them know where and where not to cut, increasing selling time and resources for the key sales tasks.

Every strategy has an implied sales productivity equation. For some firms, capacity, close rates, and profit per sale involve many pre-sale and post-sale activities. Think about enterprise software and many professional services. For others, this equation can be a single sales call. Think about old-time door-to-door selling or current inside sales for many B2C and B2B goods. For both types, this framework can help a sales leader track best practices in the business and improve via smart use of the available technology. And note the cause-and-effect: SE can provide data, but it’s managers who make good use of it. As usual in business, the core drivers are people and management, not technology.

REFERENCES

[1] “Five Ways CFOs Can Make Cost Cuts Stick,” McKinsey Quarterly (May 2010).

[2] “Transforming Wholesale Distribution Sales Teams to Thrive in the New Economy,” a study by the NAW and Chally Group (2016).

[3] “Unlocking the Power of Data in Sales,” McKinsey Quarterly (December 2016).

[4] See the data in “The Sales Lead Black Hole,” Journal of Marketing (January 2013), and in the report from Sirius Decisions, https://www.siriusdecisions.com/Blog/2013/May/Summit-2013-Highlights-Inciting-a-BtoB-Content-Revoloution.aspx.

 

Frank Cespedes teaches at Harvard Business School and is the author most recently of Aligning Strategy and Sales (Harvard Business Review Press).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIGURE 1.