Don’t ask how, just how many. This statement typifies the way most companies measure their sales organization; simply hire all of the great salespeople you can afford and count the revenue that comes in on the back end. If the team performs as we had hoped and its numbers are hit, we say it was productive; if not, it wasn’t.
The question is, are these terms – performance and productivity – interchangeable for one another? Or could it be that in today’s complicated b-to-b environment, simply lumping them together is entirely too simplistic? In this brief, we detail how mixing measurements of sales (performance) with metrics of selling (productivity) leaves sales leaders with few options to improve their output other than hiring and firing salespeople.
Synonyms? Not Quite
The word “sales” is a noun, generally indicating a person (headcount), place (territory) or thing (product or service). Most companies measure sales using a set of operational variables that compare costs in terms of raw materials (bodies) against a set of revenue-based performance metrics cut in a variety of demographic ways, from geographic regions to customer segments and product groups. These metrics are gathered from systems that include expense management, order entry, human resources and territory management, and rolled up to generate the reports we all know and love.
“Selling,” on the other hand, is a verb, the series of actions that take place after cost is allocated and before results are generated. To the uninformed, these actions are made up of a cosmic blend of social skills, good looks and sales experience combined with a sprinkling of marketing collateral here and there. Managing leads, identifying opportunities, positioning products, creating solutions, overcoming objections, dealing with competition and managing relationships? These are all tasks that are left in the hands of the salesperson to figure out.
Unfortunately, today’s environment is defined by a complex collection of marketing, presales, inside sales, sales support and sales management resources supporting a sales professional who must engage with multiple decisionmakers driving their own buying processes. As most of us know from the results of our sales teams, only a select few reps can manage this environment on their own. The rest need much more than a sales compensation plan that sets forth what they are to achieve – they need to be shown how achieve it.
What is productivity?
At a high level, defining sales productivity as something more than the metrics of expense and revenue first requires an understanding of what it takes to identify, execute and close an opportunity. The efficiency (time and effort) with which a salesperson can execute these tasks dictates how many opportunities they can manage at any one given time, although being able to quickly generate a proposal is meaningless if it isn’t relevant. Thus, the other component of productivity is the effectiveness (quality) of the tasks which is determined by the response of a prospect and his or her agreement to progress to the next step.
So while we can say that selling is the movement of an opportunity through a sales cycle, productive selling occurs when a rep has all the tools he or she needs to be both efficient and effective with a known set of tasks. Organizations can increase the productivity of individual reps – and in turn, their productivity as a whole – by focusing on improvements in three areas. The first is sales competency, which is comprised of three key components:
Processes. Processes tell a salesperson what to do, reduce guesswork and standardizes around best practices. For every critical sales task from prospecting to pre-call planning, order submission and client interaction, there must be a process.
Skills. It’s one thing to tell someone what to do; it’s an entirely different matter to teach them how to do it. Skills are that “how,” and developing them requires training, coaching and practice. As the front line of skills improvement, front-line managers must be trained themselves on how to coach to skills; if they aren’t, they will push the responsibility down to their reps to figure it out themselves.
Knowledge. Knowledge is more than experience; it is an in-depth understanding of the customer, the marketplace, competition, products and value they provide. In the absence of access to organizational knowledge, individual reps are forced to create independent messages regarding the company’s products and its value.
The second area of productivity is sales activity; it is comprised of six components that reps must demonstrate efficiency and effectiveness in relation to:
Administration. Activities associated with the business management of selling that include expense reports, management reports, pipeline and forecast submission, monthly plan and management, team events or internal meetings, commission audits, performance reviews and career development.
Education. Activities associated with the enrichment of sales competency, including skills, professional development, product knowledge, market awareness and competitive landscape reviews.
Prospecting/account research. Activities dedicated to the creation of opportunities, including contact discovery, list management, territory management, account management and opportunity planning.
Telephone. Activities associated with scheduling and coordinating sales interactions such as cold calling, lead followup, appointment setting and coordination of internal resources.
Call preparation. Activities associated with the preparation for a client interaction, including the gathering of account knowledge, competitive information, business issues and contact intelligence, call planning, presentation assembly, solution creation and proposal generation.
Face-to-face calls. Meaningful interactions with client or prospects, including travel time, building rapport, delivering presentations, negotiating and closing.
Opportunity management, the third area of productivity, is comprised of three components:
Sales methodology. Also known as the strategy for selling, sales methodologies are the set of organizational standards for managing territories, accounts, contacts and opportunities.
Sales process. Sales processes specify the sequential steps, common terminology and accepted metrics that define the opportunity life cycle.
Interactions. Client interactions are the culmination of strategy and tactics; the true act of selling. The result of each interaction determines the next activity, whether it is a new tactic or a shift in strategy.
By now, we hope you share our belief that sales productivity is much more than expense and performance data divided by headcount; that’s sales profitability. Productivity is a reflection of the time and effort expended by your salespeople to create the high quality, customer relevant interactions required to advance and eventually close an opportunity. Organizations that find ways to improve the competencies of their reps, the activities they perform and the opportunity management methodology that guides them find that they have coincidentally improved performance – one rep at a time.
Walking the Walk
We continue to hear from sales leaders that they want to improve productivity, only to find that they continue to have an acute focus on managing the expense line and hammering on performance. Improving sales performance is a byproduct that comes from taking a hard look at the productivity of salespeople and sales organizations as a whole. Those who fail to influence how a salesperson goes about the business of selling leaves success to the talent of each salesperson, and are doomed to results that fall on the all-too-familiar bell curve. SiriusDecisions believes that all sales leaders should be able to answer the following questions if they are truly committed to improving sales productivity:
About the Author:
SiriusDecisions, a leading source for business-to-business sales and marketing best-practice research and data. SiriusDecisions Executive Advisory Services, Consulting Services, Benchmark Assessment Services, Learning and Events provide senior-level executives with the sales and marketing operational intelligence required to maximize top line growth and performance.
©Sirius Decisions, 2009. Reproduced with permission.