Value Proposition of Salespeople
I was preparing a proposal for one of my prospects and I happened to chance onto an insight with regard to the value of sales and salespeople to organizations
What I observe around me in various companies be it start-ups, SMBs or Corporate, is that they put a lot of value into the historical experience of sales people. One of the main trends I noticed is that unless you are a salesperson with recent experience in the same industry, you will not even be considered for an interview with the hiring company. ?Even if you have been in the industry, if you don’t show a history of successful quota achievements, then chances are very likely that even the interview (I prefer to use the word discussion to be honest) with the sales leader will not pan out in your favor.
In fact, if a company is looking to grow its revenue for an existing business model, they do one or all of the below:
All of this is done by considering their experience and quota achievements in the company’s industry. Period.
That got me thinking, Why?
What is the reason for this trend? Is it that they want to reduce the ramp up time for the sales person to be effective? Is it that the sales persons they are looking for already comes with the connections and know the language of the industry? Is it because the person has successfully sold something before, they could repeat the same?
I admit that this process works. Initially.
But sincerely, how much has the ramp up time reduced as compared to the salesperson who does not satisfy the above criteria of experience and successful quota achievement?
Market Research
I have recently engaged in 100+ conversations with people involved in sales, who are sales people, sales managers and founders/ high level executives and discovered out a surprising fact from analyzing these conversations.
Ramp Up Time
While there is a small difference in ramp up time of around 1-2 weeks in favour of those who satisfy the criteria, there is barely any effect of the above criteria in the success of a salesperson in the company, which is predominantly defined by achievement of quota.
Best Practices
I asked them how do they learn about the best things which work and which don’t. 90% said that they learn on the job, and if they are lucky someone will mentor them or give them advise along the way. They are usually expected to “hit the ground running”.
Perceived Value
I had asked them another burning question I had in mind, what is the value of a salesperson in their company, and the answers I got where shocking. 95%+ of the salespeople and sales managers and a whopping 70%+ of high-level execs told they only had value if they achieved their minimum quota.
Is Quota the only KPI for Sales?
Now I agree that achieving quota is the primary KPI of a salesperson, but is that their only value to their company? If not, what other values can be considered in evaluation of the performance of a salesperson?
A salesperson is so much more than the number he/she brings to the table. And I want to open the perception of people to this.
To uncover this, I use the framework of the Value Proposition Canvas created by a company called Strategyzer. It is a visual means to articulate the Value Proposition of a Product or Service to the Target market defined by a Customer Profile.
This particular method is used to define value proposition of a business towards it target market. However, I have found it extremely relatable to many contexts within a business. In this case, I will be taking the context of the Value Proposition of the Company to their salespeople as their target market.
The first step in this process is to define the target market profile, called the Customer Profile Map. This tool is used to understand and define the customer’s Jobs To Be Done (JTBD), Pains and Gains.
I will share the overall Value Proposition Map in another article.
Profile of a Salesperson
In this profile of a salesperson, I will bring your attention to the JTBD of a salesperson. There are 3 main sections, the functional JTBD, the Emotional JTBD and the Social JTBD.
I am focusing on the functional JTBD here and have broadly segmented these into the below sections:
Let us take this further and arrange the same into a typical sales pipeline and the assume the below conversion ratios between each stage of the funnel.
Lead -> Qualified Lead - 20%
Qualified Lead -> Demo – 50%
Demo -> Proposal – 50%
Proposal -> Nego – 25%
Nego -> Close – 20%
To achieve 01 sale, they have to be negotiating with at least 05 prospects, which requires 20 Proposals sent, which required, 40 demos done, which required 80 qualified leads, which requires 400 leads.
I’m sure there are many of you who will say, but of course, this is expected of them. You are correct and I agree to it.
So, for sorting through all the leads, holding discovery meetings, establishing a relationship with clients, coordinating with presales to execute demos, coordinating with marketing for specific sales content, writing a detailed proposal coordinating with the product team, negotiating and closing, their main KPI is the amount of Wins they get.
If they are expected to do all this, then why are their KPIs only focusing on quotas, which frankly is not the only outcome of all the above actions.
What else Matters?
Who are the people salespersons interacting with the most? The clients.
Have you considered that they, being in the frontline to your targeted market, are in the most ideal position for primary market research?
To be fair, there are regular catchup sessions between the sales and other departments to provide insight about the market. Now, let me ask, are companies leveraging this interaction between the salespeople and their targeted market to improve their outreach?
For example,
How to Measure & Standardize Value for Sales?
Are companies leveraging this and considering that this is also an outcome of the work of sales people. Because whether you like it or not, your company branding is being done, involuntarily, every time your salespeople interact with another client in your target market.
How to measure? The same way your support function measures metrics like CSAT (Customer Satisfied) and DSAT (Dissatisfied). By asking the customers to give feedback.
So now your sales people are all from different backgrounds, how will you provide the baseline and establish standards for effective measurement of execution?
Set up a Playbook and provide systematic training to your Salespeople.
Train the salespeople on the market and the various sales methodologies which have worked. Give the salespeople a playbook or training in which they can learn things like best ways to generate leads, to qualify, to execute demos, how to establish as a thought leader, how to make a proposal, how to negotiate, how to not discount, etc.
That sets the baseline for measurement.
And with this training, is there a need to search for specific industry experience and quota achievement?
Conclusion
That being said, I am sure the value of not only salespeople, but also of every individual in the company, from the c-suite to the housekeeping to some extent is not completely appreciated or utilized. It is up to the company and its leaders to identify What and How to leverage all possible resources to grow and develop.
There is a risk to this approach for sure, but the end result is you will be changing the perspective of your employees while getting a variety of benefits in return. All it requires is to ask, why is it done the way it is and why not another.
I shall leave you with a statement (I am paraphrasing here) made by Rory Sutherland, the Vice Chairman of Ogilvy, in a podcast.
Every company is different, and if you want differentiate yourself from your competitors, how will you be able to do so by doing what they are doing?