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.

How to Use Time Management to Become a More Successful Sales Professional!

Time is Life

Each day comes with a package of 24 hours, distributed to all equally. It is up to us to make the most of the 24 hours in each day that are given to all of us. There is so much to do and so little time is the common complaint these days. Within these 24 hours we have to work, sleep, take care of our body and mind, look after our families, pursue our hobbies, and keep our mothers-in-law in good humor. We have to utilize these hours to grow, produce, and progress by managing time properly. Managing the fixed quota 24 hours effectively leads to fulfilling all our responsibilities and enhances our quality of life personally and professionally. When managed properly time yields the highest returns on energy invested.

For sales professionals time is money. They do not get paid in terms of the numbers of hours worked – to “punch a clock”. They are paid to produce results – sales results via sales numbers. So it’s imperative that sales professionals should manage their time properly and make the most of it. Time management is a critical skill for professional happiness. On it hinges your income, your home, all your dreams, and aspirations. Remember, you can’t manage time; all you can do is manage yourself with respect to time.

Managing Time

The art of managing time is based on a few simple and proven techniques. Only with practice can it become an ingrained habit that can produce amazing sales results.

o Get Organized: Getting organized is the first step towards managing time effectively. Highly successful sales people have their calendars chalked out for a year in advance. Create an organizer and schedule your tasks according to your top sales priorities. List the things to do. Minutes make an hour, so enter your plans to do things to the tiniest minute. Three minutes to scan the headlines should mean three minutes and not a minute more. Also prepare a log book of time spent on daily activities. Maintain the log book religiously and enter activities of each day before bed time. Do a weekly review of this to find out where you are spending/wasting your time and apportion that extra time to something worthwhile. Weed out unproductive activities.

o Visualize your action plan for the full day. Do it after the morning work out or the previous evening.

o Delegate tasks to others to save time. Things that can be done by your assistant, subordinates, family, or others should be handed over to them. Compensate and praise them well and they will feel good about being entrusted with the responsibilities of completing a task as well as earning something extra.

o Do not procrastinate. It is the biggest time stealer. Finish off things as and when scheduled. If possible “beat deadlines, do not just try to meet them”.

o Some sales executives take up the easy jobs first and keep the most difficult ones towards the end. Tackle the difficult tasks first. You may require accomplishing one or two easy tasks to warm up. That’s perfect. But then you should target the difficult jobs. You will be amazed how fast they get done when taken head on. Then you will have plenty of time for easier tasks.

o Staying clear of negative thoughts and negative people is a huge time saver. Both can sap energy, reduce productivity, and consume a lot of time. Once you slip into the whirlpool of negative thoughts it will take considerable time to snap out of it. It’s absolutely necessary to entertain only positive and good thoughts. Also it’s advisable to shun the company of negative people and mingle with positive and optimistic people. Steer clear of negative thoughts and stay positive.

Use your down or wait times creatively. As a sales professional, you probably spend a lot of time in your car in traffic getting to your next appointment. Why not take this time to make phone calls to your prospects We all wait at traffic lights, wait to meet managers, wait to get food served, wait for our secretary to finish preparing the report, wait in lines to pay bills etc. Utilize these times creatively to aid in enhancing your sales productivity

o The above time saving tips are based more on common sense. There are other time saving and productivity enhancing tips that are backed by solid research as well.

o Analysis of revenue growth curves of successful sales professionals reveal that it’s not important how much total time they spend on sales activities rather than how they allot their time. Super sales people from financially high performing companies working for high incentives and stock options allot 40% more time to their best potential customers and spend an additional 3-4 hours on high-value sales activities than their counterparts do in financially low performing companies. A survey conducted by Watson Wyatt of 841 sales people from 500 companies with large sales forces has established this. Sales reps at successful companies dwell more on identifying customer needs and spend more time with the leads that they know.

o The survey also establishes that high sales performers spend less time on administrative work – 30% less than the low performers. Administrative work should be delegated to administrative staff, the secretary, or should be kept to a minimum. The best sales people do all non-related sales activities between 6-8am and 6-8pm. 8am-5pm is defined as prime selling time to get “belly-to-belly” with a decision-maker.

Timing is Everything

In sales timing is everything – at what time to make a sales call, at what time to make a presentation, when to talk, when to listen, and when to close a sale. It may not require the precision of a Scientist, but nevertheless it requires a proper sense of timing. A super sales person knows that there is an appropriate time to meet the CEO of a company when he or she would be in a relaxed and receptive mood. Also there is an appropriate time to close a sale without allowing it to linger.

There is a time for everything. There is a time to work and a time to rest as there is a time to talk and a time to remain silent. This is the essence of time management. Wise sales people know this and know this well.

Qualifying Prospects Is the Better Way to Sales

In our last blog, “We All Live in the Sandler Submarine”, I talked about the seven steps of the Sandler system and how working through these steps will improve your sales process. Step 3 – Pain; Step 4 – Budget; and Step 5 – Decision; are the qualifying steps in the Sandler system. If your prospect reveals 3 to 5 issues to you that are clearly various levels of pain, they have money budgeted to fix the problems, and they have the authority to make the decision to buy your product or services, then congratulations! You have a qualified prospect.

The Sandler way of qualifying prospects before you ever present to them, is substantially different from the traditional way of selling. In the old traditional selling methods, sales people present benefits and savings to prospects who may not even need their products or services at that time. And worse, you often give away free consulting and walk away empty handed. That’s why qualifying the prospect before any presentation is made, makes so much sense to both parties. Nobody’s time is wasted.

THE TRADITIONAL SALES METHOD

In the traditional selling method, the prospect is typically in control of the sales meeting, leaving the sales person in a weak position. Here’s why:

1. Traditional Selling Step one typically means the prospect plays his or her cards close to the vest and reveals very little to the sales-person. In fact, the prospects are so guarded they may outright lie to the sales-person, rather than share the truth about their problems. Some sales scenarios may even include manufactured reasons for the meeting because the prospect is just seeking information about your products and services, especially pricing, so they can use it as leverage in negotiations with other vendors, or to get you to offer major concessions in your pricing. Either way, it’s not a winning situation for the sales-person.

2. The prospect wants to know what the sales-person knows, and they eagerly launch into a presentation and talk, in detail, about all the benefits and advantages of their company. He or she offers a quote, a proposal, references, and a lot of free advice. But, Step two typically ends with the prospect offering what sounds like a big compliment. For instance: “You really know your stuff, and I’ll get back to you in a week.”

3. All too often, though, more than a week goes by and the prospect does not get back to the sales-person at all. The salesperson has entered step three in the prospect’s buying system. Step three is very similar to step one because the prospect has misled the sales-person again. Even though they didn’t live up to the promise of returning a call, the sales-person will still make an inquiry to the prospect in hopes of progress.

4. The sales-person may connect with the prospect, but the prospect is likely to put them off. They will usually make up excuses as to why they haven’t gotten back to you or made a decision. They want to keep the sales-person on the hook, or they are too embarrassed to let you know they chose a different vendor. The sales-person is left dangling in limbo and continues to pursue a prospect that won’t be buying.

5. Finally, that’s how the process ends: in voicemail jail. The prospect doesn’t pick up the phone and “goes dark” on the salesperson. You may never hear from them again.

Notice that the prospect’s system for buying things is the same as the traditional salesperson’s approach for selling things. It works for the prospect, so they won’t change it. The Sandler System, on the other hand, is designed to level the playing field so the salesperson and the prospect can establish an Adult-to-Adult relationship, where both parties have something to gain. Working at the same level, they can decide as adults whether to proceed with the sales process, rather than remain in limbo. The key to knowing whether this relationship will work is uncovering the prospect’s degree of pain. Stay tuned to our next blog for more on identifying a prospect’s pain.