Sales people and their managers should be celebrating the economic gains of the last few years but for many of them the gains may be illusory. In a new report compiled by CSO Insights, “Running Up the Down Escalator,” there’s evidence that these will not be remembered as the good old days in selling.
According to CSO Insights’ continuing research that stretches over more than two decades, 63 percent of sales reps made quota in 2012 but five years later despite an improving economy that number dropped to 53 percent. A variety of factors account for the drop. One nugget from the report,
Buyers are getting better at buying faster than sellers are getting better at selling. This creates downward momentum: Standing still (trying to maintain the status quo) is actually moving backwards. Successful companies are running up the buy/sell escalator fast enough to counteract the forces (buyer expectations, new competitors, etc.) that are combining to pull them down.
In other words some companies are just better at selling and in prior years that logic made some sense. But companies are still making their numbers which suggests to me that they may have over hired sales talent which is puzzling.
A traditional sales manager plugs bodies into territory to ensure no opportunity is ignored. That was once understandable. But today we have so much technology to plan territories, guide sales people, suggest next best actions, and which targets to go after given the time left in the quarter that it stretches the mind to think that much is falling through the cracks. In short all the sales tools that have come on line in the last two decades should have enabled everyone to do more with less.
If so then the clear conclusion I draw is over-hiring or under use of the technology but the question is why?
Perhaps, and this is just a hunch, although we have lots of sales tools today, we’re still planning and managing territories by hand. Estimating the number of target companies and dividing them up, keeping notes in our phones or scraps of paper, relying on memory to call someone back. It’s a long list.
Maybe a better analysis is that according to the data nearly half of the companies surveyed (48.4 percent) have mediocre sales processes while another 24.8 percent have chaotic ones.
CSO identifies four levels of sales process Random, Informal, Formal, and Dynamic and nearly 75 percent of sales organizations don’t get out of the first three process categories.
CSO has also identified five types of sales organizations as they present to the marketplace. From low to high they are Approved Vendor, Preferred Supplier, Solutions Consultant, Strategic Contributor, and Trusted Partner. The higher you go in the hierarchy the better things get. Trusted Partners have earned a place at the decision table, they discuss bigger deals, and those deals close faster.
It’s the trusted partners—with dynamic processes—that make the deals while the others are working very hard hustling to bring in some revenue—any revenue. Of course, this is an over simplification but aspiring to the combination of process optimization and becoming a trusted vendor have been around longer than SFA.
It’s hard to get to those lofty places. Reps who are new in their jobs know they have to produce or perish and the churn results in bad habits like using a random or informal sales process and not being too picky about what products the customer buys as long as they buy something.
Perhaps this results in too many sales reps chasing too few opportunities. Or maybe it just results in sales rep churn with the result that territories have new people running them all the time making the same rookie mistakes over and over. Whatever the analysis this all suggests that some attention paid to how people sell and how we support them might pay real dividends.
My two bits
One of the great thigs about CSO Insights is that they’ve been collecting the same data each year for a long time. The Sales Relationship Process Matrix has been around for a long time too and while the percentages move a bit from year to year, I have not seen an appreciable change in the distribution over time.
I wish there was more data. Things I’d like to know:
- How has sales headcount varied over the last 5 years as quota attainment has tanked?
- What’s the average time in position for sales people?
- Of the 53 percent of people who make or exceed quota, are they attaining more or less as a percentage of goal than the 63 percent five years ago?
Bottom line, sales is a GIGO business. Garbage in, garbage out. Most of all it’s a process and if you aren’t attending to the fine points of your process you are losing more often than you should. My hypothesis is that the people who make quota today are killing their numbers by bigger margins than they were 5 years ago. To change that dynamic we don’t need less software but we do need to spend some time learning how to optimally use it and we also need to think hard about why we still allow random or even informal sales processes to exist in our businesses.
(Cross-posted @ Beagle Research Group)