The Number Game – Perform or Perish?

Having been into Sales for over a decade now, I blogged about “ABC of Sales” - Always Be Closing, I am tempted to write about my thoughts on “NUMBERS aka Sales Quota” which in sales is a familiar term and we live eat breathe our quota or numbers. I got tempted to write about by looking at some real life trends, and some thoughts I read and compiled from what sales gurus said.

I read an article which says over the past four years, sales quotas have risen nearly 33 percent, yet the percentage of representatives making their quota has fallen by 25 percent: A bad omen for companies, and perhaps a worse omen for the reps that depend on their sales to earn their keep.

The statistics comes from the Birgade Group, a Sales Strategy firm based out of Hudson. The report states that on an average, only about 50% of sales reps made their quota, and more than 42% of the companies reported that less than 50% of their reps were meeting or exceeding their quota. Such situation reflects the weakness at the TOP of the organization; a CEO should ensure that the organization has a well oiled sales process.

First very important thing is to ensure that the organization has a sales process, proper territory allocation, balanced offerings for sales people to sale, good backend support system and a fair and justified sales quota. This shall help in running a well oiled sales process, with good systems to support to track the progress and ensure things do not fall off the crack.

Second very important thing is to understand the human part of a sales guy and have figure out a best way to interact with them so that messages are passed, be it good or bad, but motivation levels and zeal to achieve is kept intact.

Third most important part is the incentives, rewarding structure. Remember the line “No Risk No Reward” thus if a sales guy has risked his career to an unpredictable compensation structure, only with the fact is that if he Kicks some Asses, he gets Big Mullah!!! The mullah should be really great, for him to keep his motivations to fire!!!

Let’s look at some scenarios of Sales Quota Failure and their aftermath:

Setting the Right Quota

Greed is Good is a famous quote, but too much of the same is Death!!

We have to be realistic in meeting the right quota. The biggest mistake we do is it we base on the fact “if they can why not we” ; some statements like “There was no reason why we could not grow at 70% in next 2 years”, issue is the company was anyways growing at 25% but the benchmark was with a business / segment who may have grown faster than a normal pace, say like the dotcoms in late 90’s to early 2000, but one should understand if your base is zero, the first dollar you make is 100% growth.

Thus being realistic is very important, and predicting correctly your growth strategy is very difficult. Even you have base, past data, good structure and composition, you may still go wrong. If you are new, the probability is higher. Even if you do the market research, it's hard to gauge how the market will respond, you might think it will sell, but do you really know how much? What's the competition like? What's the market like? Is the market saturated? Is your product unique enough? "There are a lot of things that come into play,"

As a manager, you should figure out how long it takes to actually sell one deal from start to finish. Is it eight hours, 10 hours, 20 hours? So when thinking about quotas, it's often best to start thinking of them as a function of capacity—and then start thinking about things like revenue and closing ratios.

Let him off the Hook – Easy Part!!

Before letting go of a rep who isn't hitting quota, an employer should look in a mirror!!!

You have to understand the overall environment. It goes back to taking the time to understand the gaps and do the pipeline inspections. You need to say, 'Tell me about the opportunities that you're working on, and tell me what happened in this conversation.' It's literally getting down into the weeds and understanding if the pipeline is real, and if there's hope. Good managers are doing that on a regular basis, and they know if their pipeline is well-qualified."

If the sales rep missed the quota, instead of reprimanding them, offer them training. When you run the numbers, it may be more cost-effective to invest in your employees, rather than firing off the poor performers and finding new ones, which, in sales, can be an expensive process that can take months. Study says a new sales person takes 4.5 months to be fully productive.

The problem identification is the key; "Maybe they're not so good on the phone, or maybe they have trouble closing, or maybe they can't handle rejection, I'm a believer that good selling is more of a science than an art. You can teach people. If you are born with some of those skills, that puts you in a better position from the get-go, but that doesn't mean they can't learn."

Biggest misconception today is that when a sales person come in, the company hiring believes “he has it all”, they believe they have all the training and ability, but the fact is you hire a sales person for his acumen, his nerves, his communication and his contacts. Rest the company owes to the sales person to offer them tools they need to be successful and use what they have in the right channel to bring out the best in them and deliver the best the company should deserve.

Oops I Missed it Again – Patience is the Virtue

This is a common issue with smaller companies. You get sales folks, try them out, give them aggressive targets, believe your product were sold earlier and not it is not, you fire and you hire and new team. The biggest mistake you are doing is you are not going anywhere. If you bring change sales team every six months, you are actually not making any progress. You need to figure out “Why?” Is it a Top Down issue of an ineffective management or a bottom up problem of lazy employees?

Marketing experts feels it can be bit of both. it starts from the very beginning: hiring the right people. I also agree and believe every organization should list out the metrics of a successful sales candidate for the position at hand, and when interviewing, trying to find a match that goes beyond just a "good sales person." After all, being a 'sales person' is a nebulous term. You need to ask, "Are you hiring a hunter? Or are you hiring an account manager and cross-selling and up-selling inside a current customer base?" Two very different types of selling, which yield two different types are candidates. Once you have identified the candidate, set the expectation, be patient and provide him with the time to get familiar with the product, services, markets, customer for him to deliver. Hiring & Firing will lead to nowhere.

Face It - When to drop the dead weight

Even after providing adequate training, coaching and mentoring, there may be a situation that you won’t get your worst sales reps selling.

At some point, all the training, tweaking, and coaching won't get your worst reps to start selling. But how do you know when it's time to let go of your lowest performers

If you've given everyone the same support, and seven out of 10 are performing at the level you've expected, and the rest aren't, you don't need to tweak the quota. Then you need to look at the individual and understand why they are not performing if everyone else is under the same conditions. If there is a situation, if you have hired the best sales guys (as per your requirement) and all of them are not performing, then we need to seriously retrospect “Why?” one cannot believe all can fail at the same time. There either has to be an issue, with the environment, offerings or the hiring. “Wrong people in wrong place”. Letting them go is the easiest part, as if the resource is good, he will find something else, but in midst of all this it is the organization who shall suffer.

If the offering, environment and condition are suitable and you have a 50% performing sales team, then we should face the fact that some people aren't cut out for sales—even if that's their current title. Sales people are money-motivated, they want to succeed, and most importantly, they want to be rewarded. But it always comes back to the organization.

"Management is a lot like parenting,” "You can't blame a kid for being bad if the parents don't teach them how to behave."