A Sales Guy Consulting Blog

A client and I were talking about 2013 the other day. He told me he his growth strategy for 2013 was going to be through improved sales productivity. His thought process made sense, considering this year we spent a lot of time growing headcount. He is headed into the last part of a wildly successful year of 165% bookings growth.

Looking into 2013 my client sees tremendous opportunity to grow through productivity. In other words, he thinks he can get his existing team selling more.  Considering how new the majority of the team is, I think he’s right. There is a lot of room to grow. But, how much room?

We started talking about how much he could grow and his maximum productivity. I asked what he felt maximum productivity was and how much growth could that could provide.

To get to the answer, we did the following.

We identified the key sales metrics he felt represented sales productivity.  In his case, it was average deal size, number of deals sold in a year and number of sales reps. We then took those metrics and made some assumptions on what we believed were realistic expectations.  We then did the math.  We subtracted this “optimized” number from the 2012 numbers and found the growth rate for 2013.

I know that was tough to follow, so I’ll try to make it easier.

(X=average deal size) x (Y=average number of deals a rep can close in a year) x (the total number of reps) = MP Maximum Productivity

(MP=Maximum productivity) – (CP=current productivity) = P=Productivity growth potential

Once we have this number, the question then becomes, is it enough growth? If yes, proceed. If no expect to hire more people at sometime, or evaluate the underlying average deal size assumptions, number of deal assumptions etc.

This is a simple model. It can certainly be come more complicated. However, I try to keep things as simple as possible.

This model will tell you a few things:

1. What your maximum growth ceiling is. In other words, how much growth/revenue can you get out of your existing team
2. When you need to hire more sales people
3. If your optimizing your sales resources
4. The strength of sales leadership
5. How much money you “may” be leaving on the table

To download a simple sales team productivity calculator click here; Sales Team Productivity Calculator

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Footnote: I’ve intentionally kept it simple for this blog post. There are some additional complexities to be aware of. For example, new sales people must be factored in.  New sales people will not be as productive therefore that must be accounted of in the model. Underlying assumptions must be data driven. If not, it can have an adverse effect on the outcome.

I see this far too often.  Sales managers and sales leaders reactively manage their people. They reactively manage because they to manage to results.  Results are a trailing indicator in sales. If you manage to results your too late.

It’s a common approach in sales.  The sales rep misses quota. The manager says that’s not good, don’t miss quota again.  The rep misses quota again, the manager puts him on a PIP (performance improvement plan), which in essence lays out goals the rep must meet in the next 30 to 60 days or be fired.  In the less agressive scenerios like this, the manager works with the rep to figure out what is wrong but even then it’s still being reactive.

I have always felt this is a bad way to manage and lead sales teams, yet it has staying power and seems to be the course of action for most organziations.

Being reactive does little for anyone.  The key is to be proactive.  Like most things in life getting ahead of the problems or preventing them entirely is far better than trying to fix them. The key is find the leading indicators of failure.

To find the leading indicators I break down sales management into 4 integrated categories; planning, execution, results and talent.

Failure and poor performance can and will be seen early in any and all of these categories. They are a barometer for failure or success.

If a poor plan is put in place, failure is imminent even if it’s executed well by a talented sales person. – Manage the plan.

If a great plan is in place but is executed poorly by a talented person, failure is just around the corner. – Manage execution.

If the sales person lacks the skill or talent a good plan won’t make a difference. – Manage talent

If it’s a poor plan, executed poorly by someone with out the talent you’re screwed. – Manage all three.

If it’s a great plan, executed brilliantly, by a talented sales rep and the results aren’t there, you’ve messed up somewhere. – See 1, 2, or 3.  The problem is there.

Proactive management requires a process that embraces and monitors all the critical elements to sales delivery.

My management process to increase sales and get ahead of the problem works like this;

1) Everyone on my team builds a yearly plan.  They share it with the entire team, peers and all.  We cut it up, attack it, challenge it, and rework it until its a solid plan.  Plans go through a rigorous evaluation process to ensure they’re sound.

2) I focus on execution.  Plans are reviewed every quarter asking the following questions: what did you say you would do, what did you do, what did you learn, what are you going to do next quarter.  The process ensures proper execution by evaluating WHAT a rep is doing and HOW they are executing to the plan.  This allows problems to be identified early and changes made on the front end.

3) I hire for talent, and coach.  The most important aspect of proactive management is talent.  I hire for talent and I coach them.  I have standing one on one meetings every 6 weeks with all of my direct reports.  During these sessions we talk about what they do well, what they need to improve on and what they need to stop doing.  These are not performance reviews.  They are coaching sessions, designed to help them grow as a sales person and as a leader.

A process that embraces all of these elements is proactive.  Problems are seen early and symptoms are separated from root cause.

Getting poor results with proactive management is almost impossible.  You see it coming long before the boat sinks.  It gives you time to course correct, limit the damage or turn things around.

If your results aren’t there, if the numbers are off, if quota is in jeopardy it’s one of 3 things; a bad plan, poor execution or lack of talent or selling skills.  

Quick can you tell me which it is?

How do you know?

The feedback has been fantastic on our recent 8 Part Series on Account Governance or account management. 

Therefore, to make it easy to get to all 8 posts, I figured I put them all on one page. This way if you're like me, you won't have to click so much. 

I had fun doing the series and hope it helps you get more out of your existing customers. Also, be sure to download all the helpful templates. They make all the difference in execution. 

Enjoy!

Account Governance — Part 1

Introduction to account governance and why it matters

Account Governance — Vision

The importance of establishing and account vision and how to create one that works.

Account Governance — Account Plans

How to build the perfect account plan

Account Governance — Relationships

Learn how to build account relationships that actualy turn into new business, not just more lunches. 

Account Governance — Cadence

How to build a pro-active account cadence that keeps you ahead of the competition and connected to the account. 

Account Governance — Strategy

Learn to build an account strategy that increases revenue, creates more opportunity and grows the account.

Account Governance — Reporting

Learn how to use reporting to know if the account is healthy, how to increase revenue and manage resources. 

Account Governance — Tools 

Identify what tools are at your disposal and which you should use to better manage your accounts.