Ask a group of salespeople to complete the following sentence: "In any company, salespeople exist to…"
Then ask a group of business owners or executives to complete the same sentence.
Here’s what you’ll get. Salespeople will say, "close deals," "cultivate relationships" and something about sales being some kind of "special art" that’s too hard to quantify.
Executives will say, "close profitable deals," "communicate our value message" and "manage company resources." At least that’s what many hundreds of salespeople and executives from more than 30 companies have told us.
I like the executive response. Maybe that’s because it agrees so closely with my own mantra about the role of salespeople: they exist to contribute profitable revenue to their own companies and they do that by helping customers see beyond product and price and by committing company resources according to potential return. Everything salespeople do should be tethered to this endgame.
With that as a philosophical point of reference, here are seven questions to help you measure sales results in any company. As you can see, it does – and should – go well beyond simply closing deals.
1. Realistically, how much additional revenue could we gain from within our existing account base? If I had to identify the one most frequently cited source of executive heartburn it might be: "Why aren’t we getting more business from our installed base?" There are several answers. I believe the most common one is that salespeople often prefer to leave well-enough alone. "What if I introduce another department from my company into this account and they screw it up?"
2. What is our hit-rate on competitive opportunities? I believe there are two independent questions here. Why don’t we win more and, on those that we lost, why didn’t we walk sooner?
3. How much avoidable discounting could we eliminate? It’s important to be realistic about this one. "Avoidable" is key here.
4. How much sales time and other company resources do we spend on lost opportunities that, in retrospect, were either unwinnable or not even real in the first place? Why didn’t we know earlier? Why didn’t we take action earlier? It’s not so much that we don’t know the qualifying questions to ask, it’s more a matter of not knowing how to ask them.
5. How much sales time and other company resources do we spend on won opportunities that, in retrospect, did not require the level of time and other resources that we gave them? I’m not sure, but I think it was Willy Loman who said, "They love me in Omaha." Selling can be brutal. When we’re lucky enough to be in friendly territory, we don’t often want to leave.
6. How much preventable revenue loss did we experience from current customers? Customers go out of business. They exit product lines. They change directions. These are unavoidable reasons for lost business. The key word in this measure is "preventable." The biggest preventable reason for lost business is a customer reorganization that displaces a key contact. We can’t prevent customer re-orgs but we can prevent a revenue hit as its result.
7. Realistically, how much new revenue could we generate by creating demand or displacing incumbents in new accounts? "Realistically" is key here. Demand creation is not for the faint of heart. It can be time-consuming and expensive. You better have one very compelling value proposition if you want to succeed at it.
These seven questions have helped many companies think about how they compensate and motivate salespeople.
Let’s close with one additional question which, in my view, isn’t thought about enough, even though how you answer it can help determine whether you should have $40,000 per year salespeople or $400,000 per year hotshots. Any company’s overall success depends on many variables, some controllable, some not. Of the controllable variables, what role does "effectiveness of the sales force" play in determining your company’s overall success?
One client company asked itself that question and within a year had replaced its 10-person direct sales force with a staff of fifty phone reps – and never looked back.
Jerry Stapleton is the founder of Stapleton Resources LLC, a Waukesha-based sales force effectiveness practice. He can be reached at (262) 524-8099 or on the
Web at www.stapletonresources.com.
