Skip to content

Sales And Sales Management Is Broken

by David Brock on October 1st, 2018

I have to admit being consumed with CSO Insights latest Sales Performance Report.  If you haven’t had the opportunity to read it, make sure you take the time to download and study it.  It’s filled with fascinating analysis, each chart presents huge opportunities for performance improvement.

The chart I keep coming back to is their 2018 SRP Matrix, reproduced below:

Usually, as we look at charts like this, we focus on comparing Level 1, Level 2, Level 3 performances, perhaps being somewhat self-congratulatory it we are at a Level 3.  There are profound differences between poor performers and top performers in the percent of people making quota and win rates of forecast deals.

Ironically, the difference in poor performers and top performers in making plan is probably within the boundary of survey error, even if it isn’t the difference is only 2.1%.

But, as one looks at the data, one can’t help being struck by the huge wastes built into selling.  It begs the the question, “Would we tolerate the same level of waste or non performance in any other part of the organization?”  Clearly, the answer is, “Absolutely not!”  But why do we let this happen in sales (and my guess in marketing.)?

Complex sales is unlikely to be as predictive (even with AI) as a manufacturing process.  There are just to many opportunities for variance that are outside the control of sales.

But that’s not an excuse for the level of “waste” we see in sales.

Let’s focus our discussion on Level 2 performance–since that’s right in the middle and since the majority of organizations fall into that performance level.  But the same discussion applies to Levels 1 and 3.

We see, organizationally, most of these organizations are actually making their overall goal.  94% is a very high level!

But as we go deeper, that attainment is a result of only 54% of sales people making or exceeding their own goals.  This is a little difficult to assess, part of it is impacted by the games managers play in setting quotas.  A certain amount of over-assignment is necessary, we know 100% of people won’t make their individual goals, but too often, the numbers are arbitrary or way too high.  But beyond that, there are other challenges.  What’s happening with the other 46%?  Why are so many not making their goals?

Imagine the overall revenue growth and performance improvement we would get if we could get more of them meeting their goals?  While 94% are meeting their goals, one could/should argue they are dramatically underperforming the potential, they should be over-achieving their goals.

Alternatively, if we are in a low/slow growth market, we could restructure to reduce what we are spending on selling–accomplishing the same results with fewer people, at significantly less cost.

But then we drill deeper into the data.  We win only 46.2% of forecast deals!  Are you as astounded as me?  That’s forecast deals!  These are deals well into the buying/selling process.  They are deals that sales people and sales managers have high certainty about they will be won–enough to commit to a forecast!  How are we so far off?  53.8% of the deals we are “certain” we win, we actually lose or the customer doesn’t reach a decision.

Piling on, these are only the deals we forecast we will win.  But then there are all the other deals that we work, that we compete on, that we invest our time on.  These, probably, represent the majority of sales time and resources, since what we forecast is a small part of what we compete in.

Imagine the sheer amount of resource dedicated to failure.  Imagine either harnessing that resource to be more successful, or in the least balancing our spending on selling.

It seems that trying to understand what causes these huge failure rates and massive overspending should be the focus of management.  We should be asking ourselves:

Why are we making plan, yet 46% of our people aren’t?  What can we do do reduce that number?  What would our performance and growth be if rather than accepting 54% of our people making plan, we raised it to 75%?  What would that mean to our investors and shareholders?  What would that mean to our market share?

Why are we actually winning only 46.2% of our forecast deals?  What happens to the 53.8% of the deals we thought we were going to win, but didn’t?  How can we reduce this number?  How do we win more of what we forecast?

Finding the answers to these questions  can lead us into profound improvements in sales performance and productivity.

This analysis is tough, it requires deep understanding of what our people are actually doing and where we can improve performance.  It means both sales managers, sales ops, and sales enablement need to do deep analysis.

Instead of doing this analysis, trying to assess these performance gaps and what causes them, instead, we focus on doing more.  We accept these performance levels as though they are fundamental laws of physics.  Simplistically, to reach higher levels of sales, we simply have to do more of everything that we are currently doing—not look at how we do it much better.

We drive for increased activity levels—more emails, more calls, more meetings.  We drive for more content, more leads, more tools.  If doing X critical activities produces certain results, the thought is, to increase results by 20%, we simply increase X activities by 20%.

We don’t assess non-performance or non performers.  The data shows only 5.4% of our sales turnover is involuntary or performance related.  But if we are performing so poorly, might it be that a much larger number of our people aren’t performing?

I don’t understand the focus on more and the absence of focus on performance.

Based on this data, it appears we are under exploiting what we already have.  It seems if we just do better at what we already are doing, we have massive opportunity for performance improvement, growth, and over-attainment.Book CoverFor a free peek at Sales Manager Survival Guide, click the picture or link.  You’ll get the Table of Contents, Foreword, and 2 free Chapters.  Free Sample

Be Sociable, Share!
2 Comments
  1. Thanks, Dave, for initiating this so important discussion!

    If more sales leaders would start to ask themselves these questions, given their individual analysis, many organizations would perform much better.

    Some background on the data:
    Study participants provided information regarding their level of sales process maturity and how their customers perceive them regarding relationship levels, plus a set of sales performance; they metrics you discussed here.

    From a research perspective, we look at overall plan attainment, as many study participants would not be able to provide the specific sales revenue numbers only. Depending on the sales model and driven by new business models, revenue is often generated outside sales (e.g., online shops, channel, and more and more revenue is created by service organizations). And don’t forget the famous CEO deals that come in just before Xmas and fix the fiscal year (but NOT the sales force’s productivity and performance). That explains some of the observations why organizations make their overall revenue plan attainment numbers, but not so many salespeople achieved their quota.

    Regarding quota attainment, sales managers are engineering this metric a lot, and that’s very different in different cultures. Some do it quarterly, and others are happy if they don’t have to touch it throughout the entire fiscal year (if there is, for instance, a lot of worker council involvement). Also, what goes into the metric “quota attainment” is different in industries, regions, and cultures.

    Regarding the win rate for forecast deals, I’m with you, it’s actually worse than gambling in Vegas. It also shows that with simple activity instead of outcome management, salespeople are often merely asked to “build pipeline” and that’s what sales leaders get: there are deals in the forecast that shouldn’s be there in the first place.
    So, a substantial opportunity and pipeline coaching process should take place to keep the pipeline clean and realistic. And that’s about coaching and leading to sales outcomes. What we still see too often is managing activities only.

    However, these challenges exist for many years, also the challenges in the data of any study (not only ours). As we study these metrics for 20+ years, the overall trends are pretty stable and address the sales transformation needs.

    Best,
    Tamara

    • Thanks so much for adding to the discussion and explaining some of the research underlying the numbers, Tamara. While I don’t have a lot of research, anecdotally, we see huge gaps in performance–plan attainment, quota attainment, etc. These are a result of terribly unproductive games managers play and lack of understanding of the fundamentals driving their business. Thanks for the comment.

Leave a Reply

Note: XHTML is allowed. Your email address will never be published.

Subscribe to this comment feed via RSS