Adopt the ‘T’ Method to Sales Performance Improvement

What’s your approach to sales training? Do you have a process that defines which sales performance competency to train to and what impact it will have on selected performance silos if the training objective is successfully met? Or do you rely on ‘field feedback’ not associated with actual performance numbers and related ROI to decide where to put your training dollars?

Here’s a simple blueprint to gain more revenue in less time while maintaining fiscal accountability to the ‘Top-floor’.

At JDH Group, our go-to-market strategy is to understand a sales organization’s revenue goals and define what key results are needed in performance improvement. To illustrate it, we produce diagnostic performance solution ‘Blueprints’ for sales organizations that utilize the ‘T’ method; both vertical and horizontal.

Horizontally, we look at each KPI and help companies understand how to identify, train to, improve and measure competencies in each of the critical performance indicators.

The ‘T’ method of training evaluation is a process that utilizes both a horizontal approach to key sales performance indicators (KPI) and a vertical examination to calculate the impact, or ‘Return on Training Investment’ (ROTI). Aligning the two will not only give you the path of least resistance to your overall revenue objective but will point to performance silos that will produce more revenue and/or recover unnecessary costs from sub-par sales performance.

Horizontal Examination

Here’s an example of sales organization KPI’s that sells business solutions to small and medium size companies:

o 1st Appointment to Proposal ratio (60%)

o Closing ratio (40%)

o Average Revenue per Sale ($3500)

o Sales cycle (38 Days)

o Revenue goal ($25,000)

o Average New appointments generated per rep (5)

This model represents a sales team that statistically has an opportunity to reach 67% of their revenue goal. So let’s take a closer look at which KPI performance training could achieve the required result the quickest.

One way would be to focus on front-end activity. Improving the average appointment generation to 7 new appointments would achieve the revenue goal, all other factors remaining the same.

Option 1: Establish a Prospecting Methodology; a single, documented and agreed upon prospecting method across all sales regions. The training objective should be to spend less time to gain more ‘Targeted’ business appointments to initiate your current sales process.

Another choice might be to evaluate your current sales methodology to understand if there is any room for improvement in your current closing ratio of 40%. As an example, improving this KPI to 60% would secure the monthly revenue target with no other KPI changes. Or splitting the difference; improving the 1st appointment to proposal ratio by 10% and the closing ratio by 10% would achieve the same result while maintaining the necessary new appointments at (5).

Option 2: Initially, choose a ‘Top-down’ approach versus a bottom up; target and initiate your sales process with a fiscal level of authority. Develop a diagnostic sales process that points to the prospect company’s business objectives parallel to you product/service solution. Speak in terms of Return on Investment, Soft and Hard Dollar recovery and Investment Payback Period. Sell the diagnostic parts to your process in line with the prospect’s annual business objectives; don’t rely on ‘Features & benefits’. Then customize your proposal as a hypothetical case study with measurable results.

Vertical Sales Performance ‘Impact Silo’ Examination

Whether you are initiating sales performance training internally or outsourcing a niche training organization, most folks sitting on the ‘Top-floor’ now require accountability in line with budget expenditures.

Another way to say it is the CFO knows he’s wasting half the sales training budget, he just doesn’t know which half.

Approaching sales training expenditures with a Vertical ‘Silo’ inspection will help score points to the fiscal authorities within your own organization.

Let’s take a look at this same sales organization’s vertical performance silos:

o Average New-hire Ramp-to-Quota (5 months) (35 hires per year)

o Sales employee Turnover due to low appointment activity (30)

o Percent of sales reps at or above Quota (70%)

First, calculate your ‘sub-par’ average revenue. This number reflects the average monthly revenue a new-hire achieves before they achieve quota attainment.

As an example, if your current Average Ramp-to-Quota is 5 months, take the average total Revenue sold in the first 4 months of a new hires routine and divide it by 4. That will give you the average ‘Sub-Quota’ Revenue per Month during Ramp.

In this example, we will use $8,000 as the average ‘sub-par’ revenue.

One of the overall training objectives could be to improve the New-hire Ramp-to-Quota. So you consider the training result and impact as it relates to revenue recovery by selecting a ramp-to-quota goal that’s more efficient than the ‘status quo’ of 5 months. In this case a 1 month ramp-to-quota reduction would recover $595,000 in additional new sales. That equates to $17,000 per new-hire. And if you have determined that the performance training Cost-per-head is $2500, there’s your internal training ROI; 680%.

And we’re not done yet.

You have defined that 30 sales reps per year go out the door directly related to low activity, not setting enough new business appointments to justify the required revenue result.

Let’s take a closer look at it pertains to related costs and potential recovery. Here are your expense breakdowns relating to a new-hire sales rep:

o Average Salary: $28,000

o Recruiting Costs: $1,200

o Training Costs per Rep: $2500

o Monthly Sales Quota: $25,000

If the focused KPI training initiative reduces your sales rep turnover by 50% (15 reps), that recovers $1,953,500 in measurable dollars, something everyone can actually put their finger on.

That’s over $130,000 of real return for every rep that learns how to effectively set new business appointments.

Considering this cause and circumstance versus the realistic training benefit as a ROI factor, you choose Option 1 to establish a Prospecting Methodology across all sales regions. And in this case, that also justifies the training investment to the “Top-floor’.

In the 3rd Vertical Sales Performance ‘Impact Silo’ we determined that an average of 70% of the sales reps are achieving quota per month. And the average month ‘sub-quota’ revenue achieved for the 30% of reps not reaching quota is found to be $16,000.

We also determined the average new appointments generated per week is (5), but

by improving the 1st appointment to proposal ratio by 10% and the closing ratio by 10% we would achieve Quota consistently.

Next, let’s determine our Return on Training Investment if we meet our training objective of improving the 70% team Quota ‘water-mark’ up to 90%.

o 1st Appointment to Proposal ratio (Improve to 70%)

o Closing ratio (Improve to 50%)

o Average Revenue per Sale ($3500)

o Sales cycle (38 Days)

o Average New appointments generated (5)

o 100 sales reps

Implementing a focused performance improvement system to advance our middle KPI’s in supporting an additional 20 sales reps per month to achieve Quota would increase our monthly revenue results by $180,000.

That’s an annual return of $2,160,000 or a training ROI of 864% based on a $2500 cost-per-head training investment. And with a 38-day sales cycle, the training investment ‘break-even’ point would be approximately 80 days.

Because of this cause and circumstance versus the realistic training benefit as a ROI factor, you choose Option 2 to establish a ‘Business acumen’ sales methodology, develop supporting diagnostic tools to establish financial business metrics parallel to your prospect’s initiatives and your product/service solution.

Adopting this ‘T’ method to sales performance training will allow you to determine the shortest path to your revenue goals, determine and implement ‘Best Practice’ sales performance training and justify the training investment to the “Top-floor’.

Because at the end of the day… it’s all about Return on Investment.

5 Tips for Improving Performance in Small Sales Teams

In my years of experience in sales and sales management, I have observed many small and medium sized sales teams. Often, they struggle to perform at capacity and hit their goals and it’s frequently a sales management issue. Sometimes it’s because the CEO or business owner is the de facto sales manager and is wearing many hats. They are often just too busy running their business or spread too thin. Sometimes they’re the technical experts in their field and their expertise and time is being used to improve products, systems or services. It’s sometimes because a top performing sales person was promoted into a sales management role and their strength lies in salesmanship and delivering revenue to the business personally rather than in a broad sense. Below are five things you can do to improve sales management in your company now.

1. Planning

Many business owners have at best a rudimentary sales plan. If they do have one, often times it consists of higher and higher sales goals, without accounting for what will drive that new business. Will a new product line be added, a new market be opened or new additions made to the sales team? Will the company be able to support the added expense while markets are opened and new sales people trained? How much risk will the company bear? A good but simple sales plan takes this into consideration. Takeaway: Make a better sales plan with concrete steps to get to the desired goal.

2. Modernize

There are many new technologies that make it easier to interact with prospects. Among them are CRM systems, collaboration tools, the cloud, dialers, email tracking, prospect and customer information systems. Existing systems are being upgraded all the time with the newest capabilities. All are designed to more efficiently and effectively reach more buyers, disseminate information, warm them up and help make sales. Social media platforms allow a business to extend its reach inexpensively and makes your business more visible to search engines such as Google.com. Takeaway: Evaluate new technologies on a regular basis to make sure you are keeping up and modernize as needed.

3. Training

Training sales people serves three purposes. The first is that it provides them an opportunity to hone and refresh their skills. The second is that it reminds them that performance is important and that expectations for them performing well are high. The third is that it shows a willingness to invest in them and that they are part of the long term plan for the organization. Takeaway: Make sure you offer training to your sales people every year (a sharp axe cuts better than a dull one).

4. Lead Generation

All businesses need sales and most small and medium sized businesses are subject to the feast/famine paradigm. When they’re busy, the first thing that gets pushed aside is prospecting for new business. Until business slows down. Then there’s a flurry of sales activity and soon business is back where it should be. For a while. Most small businesses don’t have bandwidth to prospect effectively in a consistent way.

Lists should be highly targeted and refreshed regularly. Technology should be used and a proven process followed. The technology should reinforce the process rather than detract from it. Top management should enforce the use of the technology and following of the process. Utilize social media and blogging to widen your reach inexpensively. Finally, no one can be an expert on everything so get help from the professionals when needed. Takeaway: Make prospecting part of the company routine and culture and call in the experts when needed!

5. Measurement

You get what you measure is the old adage and it’s mostly true. The challenge is top management often has a hard time pinning down the exact actions, activities and behaviors they are trying to encourage and measure. Here’s a practical example. Maybe top management believes that offering free webinars will increase sales since it worked well in the past. So the goal is to run well attended webinars.

How will these webinars be promoted to prospects and clients? Will a set of emails be sent, starting a few weeks before the first webinar? Then a prospect list with email addresses will need to be purchased and loaded and a compelling email invitation created.

Will prospects be called and told about the webinars? Then phone numbers will be necessary, a script will need to be created and a person designated to make the calls. To track call results, an activity report should be created and run on a regular basis to test the messaging, to make sure the calls are being made and to analyze the prospect responses. Will the report be grouped by prospect type (or industry or state or city or source)? Then that data will need to be captured or imported for each prospect.

Finally, reports should measure the success of each webinar, so that results can be tabulated. How many people registered and attended are important to measure, as well as what happened to the prospect once the webinar was complete to determine the ROI. Takeaway: Create reports that measure actions, activities and behaviors that drive sales success, run them regularly and share the results.

How to Raise Emotional Intelligence for Increased Sales Performance

Sales and Emotional Intelligence Training for Sales Managers, Sales Professionals, and Entrepreneurs

Research into Emotional Intelligence has shown that there is a strong relationship between this ability and sales performance1. Daniel Goleman then made the concept better known since 1995 with his book by the same name. If you think about it, this makes complete sense. Do you work better when you’re happy, or unhappy? Furthermore, emotional intelligence increases our ability to empathise. This in turn, helps us to understand and sell to our prospects better. Zig Ziglar once said “Selling is essentially a transference of feelings!” Today you’ll learn three ways you can improve your emotional intelligence, which will in turn improve your sales performance.

Emotional Intelligence Tip #1: Put your health first Your emotions will be heavily influenced by the three pillars of health. This includes exercise2, sleep3, and nutrition4. What’s that? You don’t have time for that? That my friend, is exactly why you need to prioritise your health! Think about it – have you ever set out to do sales activities… Only you didn’t? Or, how enthusiastic are you when trying to work after a late night? Your emotional and physical energy levels will directly influence your sales. When your body is deprived of these factors, you simply cannot work at your best. I’ll make my tips for you simple but scientific. Here are three ways you can improve your physical health:

  1. Walk (or jog) outside for 30 minutes a day. You’ll benefit from the physical activity, and the sunlight will also enhance your mood5.
  2. Sleep for 8 hours a day. The reality is that what you do outside of work affects how you perform at work! Because this tip is easier said than done, I highly recommend you check out the book Sleep Smarter for great advice on improving your sleep.
  3. Reduce sugar intake and eat more low GI foods. High GI foods have been correlated with depression and fatigue6. Therefore, you can protect yourself against common negative emotions that naturally arise with sales.

Emotional Intelligence Tip #2: Practice meditation daily Emotional intelligence begins with understanding what you are feeling. By practicing mindfulness on a regular basis, you will more easily identify your emotions. As a result, you will be better positioned to handle those feelings. When practicing mindfulness, listen to your inner-monologue. Are there any negative thoughts or limiting beliefs? Challenge them! Ask yourself questions like “Is there any truth to it?” or “Where did that come from?” If you replace negativity with positivity, you can improve your emotional state and sales performance. By the way, sitting still for more than 3 minutes will probably feel a little uncomfortable! Nowadays, our minds are being constantly stimulated. For this reason, I strongly recommend using an app like Calm or Headspace so you can learn the basics. After one or two weeks of using the program, I recommend you practice mindfulness for 10 minutes a day. Your stress levels will likely drop7 and unlock your potential to sell more.

Emotional Intelligence Tip #3: Empathise through active listening

Empathy is the foundation of emotional intelligence for others. By practicing it, you will better understand other people. With this, you will be better equipped to understand what your prospects are going through, and sell more effectively. To increase empathy, I recommend that you become an expert in active listening. These are the three key components of active listening:

  1. Acknowledgement: Keep eye contact. You can make subtle sound cues like “hmm” or “uh huh” to help your prospect know that you are listening. Nod your head and use other non-verbal body language.
  2. Reflection: Let your prospect know that you understand. You may start your sentences with “So what you are saying is… ” or “Just so I understand… “
  3. Follow-up: Ask related questions to better understand what the prospect is saying. Doing so will demonstrate that you are genuinely interested in what they are saying.

Conclusion

Emotional intelligence is essential for successful sales professionals. The above action steps are simple, but often neglected. I’d like to encourage you to put your health first, practice mindfulness, and empathise more. Doing so will grow your emotional intelligence and subsequent sales performance. Because of the numerous tips provided, choose just one habit to put into practice immediately. You’ll be happy you did!

References

1 Elizabeth J Rojell Ph.D., Charles E. Pettijohn DBA & R. Stephen Parker DBA (2014) Emotional Intelligence and Dispositional Affectivity as Predictors of Performance in Salespeople, Journal of Marketing Theory and Practice, 14:2, 113-124

2 Edwards, Meghan; Rhodes, Ryan; Loprinzi, Paul (2017) A Randomized Control Intervention Investigating the Effects of Acute Exercise on Emotional Regulation, American Journal of Health Behavior, Volume 41, Number 5, September 2017, pp. 534-543(10)

3 Deliens, G., Gilson, M. & Peigneux, P. Exp Brain Res (2014) 232: 1403. Sleep and the processing of emotions

4 White, D. (2016). Improving Your Emotional Health Through Healthier Eating. Psych Central.

5 An M, Colarelli SM, O’Brien K, Boyajian ME (2016) Why We Need More Nature at Work: Effects of Natural Elements and Sunlight on Employee Mental Health and Work Attitudes. PLoS ONE 11(5): e0155614.

6 Breymeyer KL, Lampe JW, McGregor BA, Neuhouser ML. Subjective Mood and Energy Levels of Healthy Weight and Overweight/Obese Healthy Adults on High-and Low-Glycemic Load Experimental Diets. Appetite. 2016;107:253-259.

7 Jenny Gu; Clara Strauss; Rod Bond; Kate Cavanagh (2014) How do mindfulness-based cognitive therapy and mindfulness-based stress reduction improve mental health and wellbeing? A systematic review and meta-analysis of mediation studies, Clinical Psychology Review, Volume 37, April 2015, Pages 1-12