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Would You Trash A Multi Million Investment After 18-22 months.

by David Brock on November 2nd, 2016

Imagine you are investing in a fantastic sales automation tool.  It’s a multimillion dollar investment.  It takes some time to implement the system and get it fully productive, perhaps 7 months to a year, depending on the complexity of your operations.  Once it’s in production, it drives the results you expect.  But after 18-22 months, you decide to abandon it, you decide to go through the same process again, with the same levels of investment with a new sales automation tool.

Most of us would consider that insanity!

Why would anyone invest multimillions, go through a long implementation process, start seeing results produced, then abandon it and start all over?

Perhaps you sell products or services that require this level of investment.  It could be capital equipment, it could be professional services for a large project, it might be a major software (web or premise) system.  It could even be embedded products critical to your customers new products.  You know your customers evaluate those investments very carefully.  It’s a complex decision making process, they want to make sure they are investing in the right solution, they want to minimize risk, they want to make sure they get the expected results.

Once they make the investment, they make sure they have a sharp implementation plan, minimizing the risk of project failure.  When they go live, they make sure it’s producing results.  They keep the system, maintaining and improving it so it can continue to produce results and get the return expected.

It’s simply good business to look at maximizing the return of these investments over as long a period of time as possible.  It would be unimaginable to abandon it after a short period of time–unless they made the wrong decision in the first place.  But that’s why they are so caustious in their buying process.  They know they can’t afford to make a mistake.  If they do, they know it can cost them their jobs.

Right now, you are saying, “OK Dave, we get it.  We’ve known it forever, it’s what we face when we sell our products and solutions.  What’s the point you are making?”

Glad you asked…..

Now look at your people.  More specifically, look at how/who you recruit, how/who you hire, your onboarding process, your ongoing coaching/development, your retention strategies.

For complex B2B sales, each investment we make in a sales person is multimillions of dollars.  Over their “lifecycle” it could be $10’s of millions.

Why are we so cavalier about the process of hiring, onboarding, coaching/developing and retaining these multimillion dollar investments?  We wouldn’t do this with any capital investment, any major services project, but we seem to do this with great regularity with our sales people.

Some of you are saying, “Dave, you have it all wrong, at best it’s only a couple hundred thousand dollars.”  (I’m really cheap, so even that statement has me on edge, why are we cavalier about that?)

It’s dead wrong, this thinking only looks at the direct expenses we make in recruiting, training, and salary/earnings.  What it neglects is the huge opportunity costs from the revenue we are losing.

Think of the revenue drain—for most B2B sales people we are looking at revenue expected revenue production of at least $1M, more commonly in much more.  So we have huge opportunity costs:

  • Open territories, while recruiting.  Customers aren’t stopping buying because we don’t have someone to sell to them.
  • Revenue loss while onboarding.  The sales person isn’t fully productive.  There are opportunities they are missing, there are opportunities they are losing because the aren’t yet competitive.
  • Revenue loss because they are bad sales people.  This can be huge–both in the short and long term.  If the sales person isn’t performing, we are losing opportunities to competition.  If the sales person pisses the customer off, they may not buy from us for years, and they may share their bad opinion with colleagues and other organizations.
  • Revenue loss because we aren’t addressing performance issues.  Bad performers aren’t maximizing their share of customer or territory.  Customers are diverting their spending to competitors or other projects.

All totaled, the potential lost revenue can be in the millions of dollar (or whatever your favorite currency is–in the case of the old Zim dollar, it’s trillions).

For managers that we are hiring and onboarding, the impact is even greater, if they can’t maximize the performance of their team, multiply the revenue drain for each sales person across the entire team.  Think of the impact of high performers leaving because they are frustrated with bad leadership.

So far, this should be a huge wake up call about the value of our people—but it gets worse.

Data shows (CSO Insghts, CEB, other) average onboading time of 10 months for sales people in complex B2B sales, for some it’s much longer.  So they don’t get productive for a long period of time (go back to looking at revenue loss while onboarding).

Then the real killer is average time in the job is 16 months for SDRs, 18 months for managers, and about 22-26 months for sales people!  We get a maximum of 4-16 months of full productivity in these multimillion dollar investments!

We would never do this with capital equipment or large service contracts, but why do we persist in doing this with the our people?!?

Why do we rush through the recruiting process, selecting the best available candidate, rather than looking for the right candidate?

Why do we ignore the onboarding process, wishing our new people good luck as we give them their territory, quota, laptop and passwords?  If they have to figure it out themselves, they will take much longer time ramping up, losing much more opportunity.  Or the really good ones will leave, going someplace where they can be successful.

Why do we ignore retention through ongoing coaching and helping them grow in the job and their contribution to the organization.  People want to grow–not just in their earnings, but in the responsibilities and what they want to do.  If we aren’t providing them that development and those opportunities, then they will leave and go someplace that does provide those opportunities.

What are we doing to make our company the best opportunity around?  It’s not just compensation, but people are looking for great challenges, great leadership, inspired teams and workplaces.  They are looming for opportunities to learn, grow and develop,  They are looking for opportunities where they can succeed.

But too often, I don’t see leadership teams focusing on these.  They seem to have a “disposable” mentality, or they accept they will be way-stations for people as they look for better opportunities.  Somehow we look at these time in job numbers, accepting them as given, rather than recognizing how damning they are of the job we are doing in leading our people.

We would fire any person making bad decisions on multimillion dollar projects and investments.  Yet we let this happen everyday through bad leadership.

It’s insanity!

Our sales people–SDRs, Sales People, Managers are our most critical “production assets.”  We need to treat them as such, maximizing the return we get from them over time.

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