Sales Insanity by Jason Jordan
PART ISALES FORCES AND BAD BEHAVIORS
CHAPTER ONE
SALES, CONSULTING, AND BEST PRACTICES
However, sales is also the part of any company where the most ridiculous stuff takes place. Literally, things happen in the sales force that are so unexpectedly wrong, it’s often hard to comprehend what you’re seeing. You step back and look at what’s taking place, and you can’t help but think to yourself, “Is that person insane?” Of course they’re not—yet they just did something that makes you wonder. So why is this silliness so prevalent in the sales force?
First, there is no formal education for people entering the sales profession
Second, sales is an uncontrolled environment
On Being a Consultant
I gained as a management consultant, because many of the stories that follow are told from that viewpoint: the viewpoint of someone who is hired on a temporary basis to solve problems that are painful enough for executives to seek outside help.
Another advantage of bringing in a temporary troubleshooter is that consultants work with lots of different companies. This experience allows them to see patterns of behavior across many organizations
A Rant against “Best Practices
Early in my consulting career, I worked for a very large accounting firm that had built a hugely profitable consulting practice. One of the ongoing initiatives in the consulting group was to build a comprehensive database of business “Best Practices.” This database included strategies and tactics for any business activity you could imagine—how to process an invoice, how to resolve a customer complaint, how to manage payroll, and most other things that businesses must do
The value of this database, I determined, was twofold. First, this database made us better consultants, because it institutionalized the learned knowledge of thousands of experts. In theory, a new consultant could come onboard and begin to dispense sage advice to clients with the same level of insight as a seasoned consultant. All that was needed was smart, confident employees with the ability to pose the right questions to the database.
The second source of value derived from this database, though, was much greater than just enabling an army of inexperienced consultants to sound smart. It also enabled us to be better sellers
Yet even in my earliest days as a consultant, I began to question the value of these touchstone Best Practices
I discovered that despite the allure of having a definitive body of guiding business principles, these universal practices were just too generic to account for every situation
There are simply common business practices that may or may not be applicable, depending on the particular situation. In my eyes, the Best Practice myth was therefore dispelled
Executive Comfort Food
Unfortunately, at about the same time that I purged the defeated Best Practices from my consulting toolkit, the rest of the world caught Best Practice fever
The Best Practice is now the single piece of information that everyone needs to know before they can make any meaningful business decision
I have instead tried to understand what it is that drives this ubiquitous obsession, and I’ve derived a couple of plausible reasons.
First, it’s corporate voyeurism, pure and simple. As the consequence of some unquenchable curiosity, executives desperately want to see what other companies are doing—especially the doings of their competitors
Second, I think Best Practices reflect the desire for an easy fix. Everyone wants quick and simple answers to our most complex questions
So basically, the gravitational pull of the Best Practice is too great to escape
Says a Friend …
Since I concede that Best Practices are here to stay, I will close my rant with an attempt to at least recast it in a more palatable light. I have a colleague who used to work for a prominent research firm that identified and published the Current Best Practices for sales forces
I inquired, “So what is it that you think your company actually sells to your customers?” As expected, he had a response that was as elegant as it was accurate. “I’ve thought about that question quite a bit,” he responded. “I believe that what we ultimately offer our clients is ‘ideas.’ Obviously, we can’t tell an executive that any given ‘Best Practice’ is the absolute right way to run her business. It’s just an option that she might not have thought about, and it could be a valuable input to her decision-making process.”
Maybe you should implement CRM in five phases because that’s how your competitor did it ... maybe not. But it’s an idea
So forget Best Practices for now. Whether or not you believe in them is for you to decide. However, I’d like to introduce something that I think could be much less controversial and much more fun. I offer to the world ... The Worst Practice
CHAPTER TWO
INTRODUCING THE WORST PRACTICE
The Genesis of this Book
The tales all followed a similar storyline: Someone did something that was unknowingly dumb (which is kind of funny), and that led to an unexpected and tragic consequence (making it even funnier). Of course, the tragedy could have been avoided completely, if only the person had recognized something that was completely obvious (which made them appear insane). Failure, after failure, after failure.
After I had recounted a fair number of these vignettes, I jokingly pronounced that, indeed, I would write a book about all the insanity I had observed during my career.
Your Guide to Reading Sales Insanity
The remainder of this book is an assortment of Worst Practices that I either observed or participated in myself. They are organized into two sections: one with the insane behaviors of frontline salespeople; and the other with the exceedingly poor decisions of sales leaders. Regardless of your role in the sales force, I’m confident that you’ll want to read both.
PART II SALES PERSON INSANITY
CHAPTER THREE
A FAST PLANE TO NOWHERE
One of the craziest things about sales forces is the absolute urgency with which they conduct their business
But the selling environment today is different. Sales cycles are longer. There are more stakeholders involved. The politics are complex. Buyers are sophisticated. Competition is intense. Today’s professional sellers don’t necessarily succeed because they make ten extra calls a day. They might actually succeed if they make ten fewer calls. It’s all about the quality of the sales effort, not the quantity. The key message for sales forces today should be different: “Work smarter, not harder.”
So what does that mean for salespeople? It means that they need to slow down and think. Slow down and plan. But planning does not come naturally for most salespeople. The only type of planning that I see routinely and voluntarily employed by salespeople is the planning of their travel schedule. Where will they be on this day? Who will they see on that trip? Will they need a plane, a train, or an automobile to get them there?
This type of planning, though, doesn’t count as working smarter not harder. The type of planning that is most needed in today’s selling environment is not logistical in nature—it is strategic. Sellers need to stop and ask, “What am I going to try to accomplish in this visit? Which questions should I ask? How do I expect them to respond? What will I do if things don’t go as expected?” Or stop to ask: “What should be my objectives for this particular customer over the next 12 to 24 months? How will I help him accomplish his goals? What do I need to do differently? How will I measure my progress?”
The Good Ideas
CHAPTER FOUR
GOT BACKBONE?
I have often found that the skill of negotiation is a particular challenge for salespeople. Perhaps it’s a challenge for people in other roles as well, but it seems somehow more pronounced in the sales force. This observation is even more befuddling when you consider that salespeople probably do more negotiating than workers in any other profession. Indeed, sales should be the domain where we find the most advanced and sophisticated negotiators ... but we don’t
One reason for this, I believe, is that the ability to negotiate well is not innate
This typically leads to two common behaviors that cost the sellers dearly.
First, the negotiations almost always take place on price, without due consideration to other elements that could be negotiated in the deal. There are many places that buyers can find value in a product or service—delivery times, payment terms, post-sales support, and such
Second, the final price is almost always closer to the buyer’s opening offer than the seller’s. I assume that this is the result of a perceived imbalance in power between the buyer and the seller
The Good Ideas
CHAPTER FIVE
I RECEIVED A REQUEST FOR PROPOSAL!
Most salespeople are taught early in their careers the importance of qualifying new leads. A qualified lead stands a good chance of being won, but an unqualified lead can cost you days, months, or even years of wasted effort. So when you determine a lead is qualified, you should pursue it like a pot of gold. But when you find that a lead is unqualified, you should immediately drop it like an angry skunk. Taking the time to assess the quality of a new lead is critical to being an effective and efficient seller.
Furthermore, salespeople are given fairly universal criteria to determine whether or not a lead is qualified enough to pursue. Foremost, the prospective buyer must have a clearly articulated need. Unless the buyer’s need is known, it’s not only uncertain that she’ll find a solution, it’s even less certain that you’ll have the product she’ll want to buy.
Second, a qualified lead must have timeline. Even if a prospect knows what she needs, a sales cycle could go on forever without a definitive date on the calendar for the customer to make the actual purchase.
Third, the purchase must have an allocated budget. If the purchasing company hasn’t yet committed any funds to solving their need, then how serious can it really be? But more importantly, how seriously should the seller want to pursue it?
Finally, the buying process and its participants must be defined. Even if a buyer has the budget to solve a need on a short timeline, it’s an unqualified lead until the wheels are put in motion to actually make a purchase.
So sellers are taught early and often that an opportunity is ‘qualified’ and worthy of pursuit if there is a clear need, a budget, a timeline, and a buying process. And this all makes sense. If each of those conditions is met, then someone is almost certain to buy something from someone. It then becomes the seller’s job to make sure the customer buys it from him. Enter the Request for Proposal.
A Request for Proposal, or RFP, is a document issued by a purchasing company to a select group of ‘vendors’ that it believes can meet its stated purchasing criteria
The Good Ideas
CHAPTER SIX
LOOK HOW VALUABLE WE ARE TO YOU
Different companies have different revenue models, and each has its own unique challenges. For instance, most management consultants generate revenue by selling their time. And that time is typically spent working on a clearly defined project, with a discrete beginning and a discrete end. So if you hire me to help you design an incentive compensation plan for your sales team, I might work on that project for several weeks and then move on to another project with another client. I sell my time in chunks.
But some companies have revenue models that are less reliant on a steady stream of new customers. They are fortunate enough to have streams of ‘recurring’ revenue that just flow and flow from a base of existing customers. You can think of these as subscription services in one form or another, like your phone company, your bank, or even your family dentist
In this revenue model, the challenge is not necessarily to continually find new customers, though that’s certainly a path to growth. In this situation, the most important goal of all is to retain your existing customers. Or at least it should be
However, I can’t begin to count the number of companies I’ve seen that ignore this obvious fact. The appeal of signing up new customers is so great that they put their very best sellers on the hunt for fresh faces, and they architect their sales forces to promote and reward the acquisition of new customers. In these companies, nothing—and I mean nothing—is as celebrated as bringing in a new customer
The Good Ideas
CHAPTER SEVEN
IT’S THE ‘MARKET PRICE
Sales forces are obsessed with revenue. In fact, most measures of success inside a sales force are quantified in terms of revenue. Salespeople’s quotas are set in terms of revenue. Their sales pipelines are denominated in revenue. Sales forecasts are based in revenue. Commissions are calculated off revenue. Everywhere you look in a sales force, you see revenue, revenue, revenue.
However, revenue is the most generalized measure of success. It’s the number that is the simplest to quantify and the easiest to discuss, but it’s not the ultimate goal of a company. In reality, profit is what determines whether or not a company’s doors stay open and its lights stay on. It’s the bottom line that determines how healthy a company really is, not the more blunt top line. Revenue is great, but profit is the best.
Foremost, many salespeople don’t have control over the profitability of the products and services they sell. Prices are set by another entity inside their companies—most often the marketing department. Profitability is predetermined in these cases, and the goal of the salespeople is rightfully to just sell as much stuff as possible. The more revenue the sellers generate, the more profit their company reaps.
But in other situations, salespeople have a great deal of control over the profitability of what they sell. They have the power to configure the products and services that they offer to their customers, and they have the ability to negotiate price. These salespeople not only influence the cost of what they sell, they determine the profit margin as well.
In this situation, things can get dicey. Recall that these salespeople are not compensated on profitability—they are compensated based on the revenue they produce. Consequently, the economic incentives of the sellers and their employers are not necessarily aligned, and company profits often evaporate.
Imagine that I’m a salesperson who sells a product with a $10 list price and a $1 profit margin. If I let a customer negotiate my price down to $8.50, then my company is now losing 50￠ on the product I just sold. However, I get paid a commission on $8.50 of revenue. In other words, I lost 15% of my commission, but my company lost all of its profit. Plus 50￠. Not a good deal for the company
The Good Ideas
CHAPTER EIGHT
LOOK, I’M THE EXPERT
As a practical reality, salespeople need to know more about the products they sell than their customers do, because it helps them to add value in the sales process. Customers expect sellers to understand what’s ‘under the hood’ of the products they sell and to connect their product’s unique capabilities to the customer’s specific needs. In many ways, salespeople are playing matchmaker between the particulars of their offerings and the particulars of their buyers. The better sellers understand their products, the better the match they can subsequently make.
“That said, when salespeople become too obsessed with the features and functions of their products, their knowledge can weigh them down. They become so enamored with the product side of the discussion that they lose focus on the customer side. They become talking brochures that prefer to spout product details rather than focus on buyer needs.
The Good Ideas
CHAPTER NINE
I KNOW WHAT MY CUSTOMERS WANT
Every salesperson has customers. A salesperson without customers is like a flower without sunlight—it’s unhappy, malnourished, and probably won’t be around for long. But some salespeople have customers that are the sunlight, water, and soil of their subsistence. They are the customers that these salespeople cannot live without because they supply most, if not all, of the salesperson’s revenue and resulting income
Often salespeople are hired specifically to manage a few large customers, and they have titles like Major Account Managers or Strategic Account Reps. These salespeople may have only a few accounts assigned to them, and it’s quite obvious that these special customers will be the center of each salesperson’s universe. It’s how their roles are defined
Regardless of how you acquire a big customer, it deserves very special treatment. Just like a precious and delicate flower that has been put into your care, you must nurture it so it prospers. If it gets enough of the right attention, it can be yours forever. But if it doesn’t, it will shrivel up and become nothing more than a hole in the ground. Or even worse, a hole in your wallet. So if you want big customers to be yours forever, you have to maintain a healthy relationship
The Good Ideas
CHAPTER TEN
KILL THE MONSTER WHILE IT’S SMALL
For salespeople, encountering objections is a part of life. As prospects proceed through their buying process, it’s inevitable that they will encounter information that will give them pause. They will stop to question whether they should proceed with the purchase or abort the mission. In other words, they will object. Sometimes the objections are totally legitimate, and sometimes they’re completely absurd, but salespeople have to resolve them nonetheless. Otherwise, a promising sale will come to a screeching halt.
‘Objection handling’ is therefore a topic that is commonly found in sales training programs. The more prepared salespeople are to handle objections, the more comfortably and confidently they can discharge them. This training will often describe the most frequent objections that sellers can expect to encounter and then provide them with thoughtful responses to appease the buyers’ concerns
Objection-handling skills are very important and useful, but some of the supposed wisdom that gets dispensed on the topic is laughable. One of my favorites is: ‘It is a great sign when customers raise objections, because it shows that they’re interested.’ Umm ... maybe. I think when customers raise objections, it shows that they don’t like something about the salesperson or the product. A much better sign is when they don’t object at all. That means that the salesperson and the product are both doing their jobs.
Another classic gem is: ‘The best way to handle an objection is just to ignore it, because the buyer will either forget they raised it, or they’ll answer the objection themselves in their mind.’ Umm ... no. If your buyer raises an objection and you don’t address it, it’s not going away
The Good Ideas
CHAPTER ELEVEN
THE CUSTOMER JUST DOESN’T GET IT
Innovation is both the best friend and the worst enemy of the sales force. On one hand, product innovation creates differentiation in the marketplace, which is a great thing for the sellers of the product. Until the competition finds a way to either replicate the innovation or minimize its perceived value to buyers, salespeople have in their bag a uniquely differentiated product that should be easier to sell and more resistant to pricing pressure.
But the greatest risk during a new product launch comes from the sales force. The company will have invested greatly in the product’s development, and expectations will be high. The innovative product will be launched with great fanfare and rosy forecasts, and it’s up to the sales force to make the marketing department’s dream a marketplace reality. All eyes will be on the salespeople.
Therefore, it takes a highly skilled sales force to launch a new or substantially transformed product. New product launches fail with alarming frequency, and the companies’ sales forces are surely to blame for many of those disasters
领英推荐
The Good Ideas
CHAPTER TWELVE
IT’S ALL OR NOTHING, MR. BUYER
In our haste to sell stuff, it’s all too easy to forget about our buyers. Not to forget that they exist, of course—we fully understand that we’re selling to entities known as buyers. Rather, we fail to appreciate the fact that they are the ones with the real problems. The sales force has a goal to continually feed its company’s hunger for revenue, but that’s not really a problem. Sales only encounters a problem when it fails to reach its goal. Truth is, there’s nothing inherently problematic about being in sales.
But all buyers have problems that they are trying to resolve. Whether it’s a company trying to fix operational failures or an individual trying to remove some personal discomfort, buyers go into the marketplace only after they’ve identified that they have an issue that needs to be resolved. And somewhere along their journey to resolve that issue, they will encounter a seller who offers to help
It’s my observation that most buyers are highly motivated to solve their problems, and most are fairly forthright with salespeople. Sure, buyers will be coy when discussing your competitors, and they can color the truth when it’s time to negotiate. But most buyers are generally sincere, because they are the ones with the most to lose. When sellers lose a sale, they have dozens more in their sales pipeline to go pursue. But if buyers fail to find a solution, then they’ve visibly wasted their time and money. And worse yet, they still have the problems
Consequently, I’m surprised by the degree to which sellers view their buyers as adversaries. It’s as though salespeople are inherently suspicious of buyers, who are perceived to have the upper hand and are willing to use it
The Good Ideas
PART III SALES MANAGEMENT INSANITY
CHAPTER THIRTEEN
CRM OR BUST
When Customer Relationship Management (CRM) arrived in the late 1990s, it was guaranteed to be a game changer. Most companies had installed vast Enterprise Resource Planning (ERP) tools to run their back offices, and there was a strong desire to create equally efficient operations in their customer-facing organizations. CRM was being sold as a utopian dream for senior sales leaders—visibility into and control over the revenue-generating machine.
This was a particularly easy sell for CRM vendors, since sales was considered by many top executives to be a mysterious black box. Into it went tons of resources, and out of it came some revenue. What happened inside the box was less transparent than in any other business function. Unlike finance or operations, sales did not typically have neatly defined processes, nor insightful performance metrics, nor (most importantly) nerve-calming management reports
Into this void of sales discipline, CRM offered a better tomorrow. Sales would finally become integrated with marketing. Leads would be tracked. Sales would have processes. Efficiencies would be realized. Customers would be nurtured. With CRM in place, executives would finally be able to manage the sales force just like ERP allowed them to manage their operations.
What can’t be appreciated so many years later is how sincerely and universally senior executives viewed CRM as a strategic weapon. Now, CRM is a well-entrenched component of the corporate infrastructure—just like telephones, e-mail, and the Internet. But back in time, executives were scrambling to install CRM at any cost out of fear that their competitors would beat them to the punch. Literally, it was an information-technology gold rush of historic proportion. Money was no object, nor was sales management’s sanity in handling the chaos. For many organizations, it was CRM or bust.
The Good Ideas
CHAPTER FOURTEEN
WE’D BE BETTER OFF WITHOUT ALL THESE SELLERS
It’s not easy to be a consumer products retailer. There are lots of competitors who sell the same products and lure customers into their stores with low, low prices. Then there’s the Internet, where buyers can find even more competitors, endless information, expert reviews, customer feedback, and even lower low, low prices. Then there are the economics of running a retail business. It’s a thin profit margin, volume-driven industry that spends the entire year holding its collective breath to see whether the holiday shopping season will push it into profitability. It really is a tough gig.
And what of the sales force? Well, the ‘sales force’ for retailers is the staff of associates who roam the floor and are responsible for offering insight and guidance to inquiring buyers. Unfortunately, insight and guidance is rarely forthcoming from these entry-level sales positions, and I can personally think of no environment where the quality of the salespeople varies more wildly than in a retail store
The Good Ideas
CHAPTER FIFTEEN
OUR SALESPEOPLE SHOULD ENTER THE DATA
Sales productivity is the product of two distinct factors: sales efficiency and sales effectiveness. Though the terms get used interchangeably in casual conversation, efficiency and effectiveness are not the same things. And from a sales management perspective, it’s quite useful to understand the difference between the two
Sales efficiency is about the prudent allocation of sales force resources
Sales effectiveness is not about how you allocate your sales force’s resources—it’s about how potently you utilize them to accomplish your goals
Someone once described the distinction between efficiency and effectiveness in this way: Efficiency is about knocking on as many doors as possible; Effectiveness is about what you do when the doors open. You could call it a dichotomy of ‘Will versus Skill’ or ‘Braun versus Brain,’ but the important thing is to understand that there are two different forces at work that influence the productivity of your sales team.
Of course, improving both efficiency and effectiveness is the ultimate objective of good sales management, but you approach these two factors in decidedly different ways. Improving efficiency is often the easier of the two tasks, since it can be accomplished by simply shuffling around tasks on the calendar to make room for more productive effort. Truly, efficiency can be improved today with just a little thought and discipline.
Effectiveness requires a lot more effort to improve, because it involves the development of additional capability on the part of your sales team. Whether that incremental capability comes through training, or coaching, or the implementation of new sales tools, there’s almost always a period of learning and adoption that must be endured to reach higher levels of sales effectiveness. Regardless, you always want to be trudging forward on both fronts, and you never, ever, ever want to purposefully move backward. For that would be insane.
The Good Ideas
CHAPTER SIXTEEN
GO CROSS-SELL ...NO, WAIT!
Companies love to purchase other companies. Each year thousands of companies merge with their competitors or acquire companies that offer complementary products to their own. In the case of competitive mergers, the value is typically created by eliminating redundant costs or by improving the purchasing power of the combined company. In other words, when competitors merge, it’s most often an exercise in cost reduction. Pretty boring stuff as the sales force goes.
However, when one company acquires another company because it has products or services that complement its own, then it becomes a very interesting story for sales. It’s the story of revenue growth by cross-selling the combined company’s expanded product set. Sure, there may be some cost-cutting as well, but the justification given to Wall Street is all about top-line synergy. Pretty exciting stuff for a sales force.
The assumption is that both companies will approach their existing customers with something new to sell. If you’re an executive at one of the two companies, it’s like instantly amplifying the size of your sales force. You now have an entirely new group of salespeople who can begin to sell your products. And even better, the new sellers have existing relationships with customers that your old sales force doesn’t know. The new sales force has access and credibility that your current sales team does not, and now they’ll also have your products in their bags. Let the revenue storm begin.
This logic is what causes investors to periodically ‘roll up’ groups of similar companies inside an industry. If the benefits of acquiring one complementary company are good, imagine the benefits of acquiring five such companies. Or ten. Even without consolidating the companies’ operations or doing much cost-reduction, the revenue to be gained by cross-selling products among the sales forces is financially compelling.
That is, of course, if you can actually accomplish the feat of cross-selling the products among all of the sales forces in your newly combined behemoth. Otherwise, you have a company that’s no bigger or more profitable than the sum of its parts. More importantly for the investors in the roll-up, the new behemoth is no more valuable. In this type of investment equation, one plus one must never equal two—it must always equal three. Unfortunately, that kind of math is easier sold to Wall Street by the bankers than to Main Street by the sales force.
The Good Ideas
CHAPTER SEVENTEEN
LET THE SALES FORCE FIGHT IT OUT
How you choose to organize your sales force has a huge impact on how efficient and effective it will be. The two most basic ways to organize a sales force are to align your salespeople with certain types of customers or with certain types of products. In practice, most companies organize their sales teams in a matrix of both. This is because as a sales force grows, it makes sense for it sellers to begin to specialize in one way or another.
This specialization evolves in a pretty typical fashion. When a company hires its very first salesperson, that seller is expected to sell anything the company offers to anyone he or she can find to buy it. In other words, there is zero sales force specialization and no need to align with a particular type of customer or product. Any sale is a good sale
However, when a sales force grows to a certain size, it makes sense to divide the sales force into smaller teams, most often aligned with different types of customers. The simplest form of customer specialization is to assign geographic territories, within which salespeople can sell to anyone. Slightly more sophisticated forms of customer alignment are to segment sellers by customer size or industry affiliation. Any way you can divide your population of targeted customers, you can align a sales force with them.
Managers in organizations like this find themselves spending a lot of time mediating settlements between warring sellers. Who knew the customer first? Who identified the opportunity? Who gets the commission? Who owns the customer going forward? In the salespeople’s minds, the answers to these questions determine who has won and who has lost. However, the real loser in this situation is the sellers’ company, which has to focus its attention on internal strife rather than external prospects.
These are the reasons that every sales force tends to become increasingly specialized—both its customers and its internal stakeholders demand it. It creates order, and it makes good sense. But once you’ve gone down this path of dividing your sales teams into specialists, it can be tricky to unwind. Throwing your customers and products back into the general population creates a free-for-all environment that can incite a prison-yard brawl. And one of my clients was determined to learn this lesson the hard way
The Good Ideas
CHAPTER EIGHTEEN
YOU CAN HAVE A TEST DRIVE AFTER?YOU BUY IT
Sales processes have come a long way. Once upon a time, they were completely ignored, since sales was considered a pure art form. To even suggest that salespeople should follow a process was to limit the very freedom that made rock-star salespeople rock stars. Sales management's job was to hire the best salespeople and then stay out of their way. Any desire for rigor was effectively perceived as a sales force killer.
The truth that is often ignored or forgotten is that the sales process exists only as a reaction to the buying process. Buyers are in control of the selling motion, not the sellers. In fact, a salesperson's actual job is not to ‘sell’ anything to customer—a salesperson's job is to shepherd the customer through a buying process. Without the buying process, the sales process is irrelevant.
Furthermore, a sales process is only valuable if it closely mirrors the customer’s buying process. When the two processes are misaligned, bad things happen. Salespeople spend a lot of time dutifully executing their series of selling tasks, while frustrated buyers stare at the salespeople in disbelief, wondering how the sellers can be so oblivious to their clearly stated needs. This disjointed process is long and painful for both participants, and the outcome is satisfying for neither
In short, an organization can define a formal sales process, and it should. But it is the buyer’s journey, and it’s the buyer that is ultimately steering the sale. A salesperson can pull the buyer only so far off the buying path before both parties get lost in the wilderness. Chances are the buyer will eventually make it back onto the path and make a purchase, but it will be from the seller who stayed close to the buyer every step of the way.
The Good Ideas
CHAPTER NINETEEN
MOTIVATION THROUGH FAILURE
Sales management spends a lot of time trying to motivate salespeople. Unfortunately, this can create an outsized sense of urgency that emphasizes short-term activity over the achievement of long-term goals. And management can fall into the trap of relying on incentives as a replacement for good, attentive management. But make no mistake—motivation is extremely important to the sales force.
Of course, motivation is not exclusively for salespeople. From the factory floor to the executive suite, you’ll find rewards, recognition, and incentive plans everywhere you look. Which makes sense. You want your employees to come to work every morning with a desire to do well, and acknowledging good performance is a very powerful way to keep a strong wind in your employees’ sails
If you break down any incentive program to its most basic components, there are two fundamental pieces. First there is the performance target
The second component of an incentive system is pretty obvious—the incentive itself
There are many other considerations in administering an incentive program, such as the mechanisms by which performance is calculated, the process of setting objectives, and the timing of the actual rewards. But in general, you can motivate your salespeople successfully if they simply know what they need to do and what they’ll receive if they do it.
What you absolutely do not want to do is screw up your incentives so badly that you actually demotivate your sales team. During my career I’ve seen pretty much every possible way to design a suboptimal incentive system, but most of the time the blunders were benign enough that they didn’t completely destroy the integrity of the program
The Good Ideas
CHAPTER TWENTY
I DON’T NEED BABYSITTERS
Once upon a time, salespeople were lone wolves. As late as the nineteenth century, ‘peddlers’ and ‘drummers’ loaded up their horse-drawn wagons and journeyed into the American frontier to sell their wares to remote households and local storefronts. They were both the manufacturer’s sales force and its distribution channel. They left home with a bunch of stuff and returned when the stuff was gone. One man, one wagon, and one goal: empty the wagon.
Then in the early twentieth century, large corporate sales forces began to appear. Led by innovative leaders like John Henry Patterson at National Cash Register and then Thomas Watson at IBM, companies began to assemble the sales organizations that are familiar to us today. Their companies hired thousands of professional salespeople with formal job descriptions, assigned territories, training classes, incentive programs, and quotas. The lone wolves became a pack. And to help lead and direct these groups of professional sellers, companies created sales managers.
Today sales managers play an invaluable role in the operation of a sales force. In fact, the role is so multi-faceted that it’s difficult to succinctly describe. Sales managers are the intersection of many functions inside an organization, connecting field sales with executive leadership, marketing, finance, manufacturing, IT, and every other nook within the company. But unquestionably the most important role of sales managers is still to manage their frontline sellers.
Sales managers are therefore the leaders of the pack
In short, sales managers are the glue that holds a sales force together. Without sales managers, you would see a far-flung collection of independent agents, most of whom would perform below their potential. With no one to communicate, coordinate, and calibrate their performance, salespeople would fail to continually grow their capabilities. Many would find a comfortable orbit and remain there indefinitely. With no clear career path and no internal advocate, sellers would live much less inspired lives. So sales managers matter. A lot
The Good Ideas
CHAPTER TWENTY-ONE
DO WE HAVE THOSE COMPENSATION PLANS YET?
Sales compensation plans are uniquely disastrous in many sales forces. More than any other part of the sales ecosystem, a bad compensation plan can poison the water and air that would otherwise sustain a healthy selling environment. The worst part is that sales compensation plans—and especially the bad ones—are often concocted with great management care and attention. The damage that they inflict is therefore deliberate, even if unintended.
In fact, toxic sales compensation plans can be the product of substantial organizational effort. The desire to get compensation plans ‘right’ can lead management to hire external consultants, form large internal design teams, and endure prolonged projects. Yet the more time organizations spend churning out the next compensation schemes, the more convoluted and calamitous they seem to become.
Compensation from the Sellers’ Perspective
Salespeople tend to pay more attention to their compensation plans than any other aspect of their jobs
Sellers care intensely about their compensation plans for two understandable reasons. First, compensation is very personal. The amount of money you make has a direct impact on the life you lead
Second, compensation is a tangible measure of success or failure
Compensation from Management’s Perspective
Sales management also cares intensely about compensation plans. Of course they understand how important they are for the reasons mentioned above—they too were salespeople once upon a time
But sales management also has other objectives for sales compensation, and this is where the messiness begins. Management incites insanity when it tries to use compensation plans to accomplish too many things. I’ll share with you three of management’s most common goals for its sales compensation plans—two that make total sense and a third that creates the madness.
The first goal is by far the most important and useful, which is to create an incentive for sellers to do the right things
The second management goal for compensation plans is also a legitimate use, which is to reward good performance
The third management objective is the chief offender in most compensation crimes. This is the desire to use compensation to police bad behaviors by salespeople
Trying to police salespeople’s behaviors through a compensation plan not only demonstrates a lack of trust and alignment in your sales force, it can complicate the plans beyond the bounds of common sense. If you find an over-engineered compensation plan, you can be sure there is police work embedded somewhere in it. My obvious advice: Limit the role of compensation to incentives and rewards, and forget about compensation as law-enforcement device.
In sum, good sales compensation design is a critical determinant of a well-run sales force. It is justifiably important to both salespeople and sales management, though for different reasons. When you get sales compensation right, sellers feel motivated and rewarded, and their behaviors are aligned with your organization’s goals. Life is good for everyone involved
The Good Ideas
CHAPTER TWENTY-TWO
YOUR MATH IS WRONG!
Salespeople and their managers are not the best mathematicians. In fact, it’s fairly common for even the most basic mathematical equations to yield completely unexpected results in the sales force. It’s not because salespeople are poorly educated or unintelligent—to the contrary, research shows that people who work in sales are much more educated than the general population. And it’s not that Excel or calculators don’t work in the hands of salespeople—they function just as well as they do in the hands of engineers or financiers
Rather, the sales force suffers from something akin to perpetual wishful thinking. In such a world, numbers tend to get stretched in one direction or the other with little regard to the otherwise immutable rules of math. Numbers get pushed, pulled, rounded (up or down), chopped, boosted, and even outright ignored if the conclusions don’t suit the desired outcomes of the person punching the keys on the tabulation machine.
The Good Ideas
LET’S KEEP THE PARTY COING
Now that you’ve been alerted to the existence of the sales Worst Practice and the insanity that accompanies it, you’ve probably come up with a few examples of your own. If not, don’t worry—chances are you’ll start to notice them everywhere you look. It’s a phenomenon called psychological priming, like when you buy a car and suddenly every other car you see on the road looks just like yours. After reading this book, your mind is now primed to recognize insane sales behaviors.