Does Your Sales Training Program Address Your Sales Performance Issues? Part 1

Here’s a Proven Method to Target ‘Sales Skill Training’ to Resolve Sales Performance Issues

Keywords:

SALES PROSPECTING,SALES LEADERSHIP,SALES TRAINING,SALES PERFORMANCE,SALES MANAGEMENT TRAINING,CORPORATE SALES TRAINING,SALES TRAINING PROGRAM,TRAIN THE TRAINER,SALES SKILL TRAINING,PHONE SALES TRAININ

Article Body:

Sales training programs encompass a variety of necessary components; things like company policies, sales paperwork, CRM/sales force automation orientation, sales processes, company services, sales skill training and product features and benefits.
But when I ask Sales executives and Sales trainers how their current sales training program is aligned with their sales performance issues I get the look of “No speak English’.

Let’s first categorize ‘Sales performance issues’. There are (4) distinct sales performance silos that will effect the overall outcome of any sales team, year in and year out. They are:

• % of Sales reps to Quota
• Average New-hire Ramp-to-Quota in months
• Sales Employee Turnover rate
• Time spent versus Result achieved

This is a good place to start in determining what sales skill training to implement to achieve a measurable return on investment. But here’s what will set you apart when you walk the request up to the front office. Start out with the NUMBERS.
That’s right. Take a diagnostic view of your current sales performance silos, one by one.

Let’s look at a real sales performance issue example of ‘Average New-hire Ramp-to-Quota’. I recently conducted a ‘Sales Performance Improvement Blueprint’ web-cast for this sales organization.
The company was hiring 155 sales reps per year. The ultimate objective of any new-hire sales training program is to ramp the new sales rep to Quota. Simply, give them everything they need to effectively reach their monthly sales goal.

So how was this company doing? They were obtaining this ultimate sales training program objective in 7 months. So how does one determine if that training outcome is a ‘Sales Performance Issue’? Let’s take a look.

Step 1: ‘Run the Numbers’ for any realistic ROI opportunity

• Each new-hire rep had an ultimate quota of $3500
• Sales Cycle was 17 days
• Average customer term agreement of 36 months
• Average 'Sub-Quota' revenue per month during ramp of $1300 (This number reflects the average monthly revenue a new-hire achieves before they achieve quota attainment)

Step 2: ‘Run the Numbers’ hypothetically for a ‘Specific’ improvement

In this case, I showed the sales management team what return on investment they would get by helping just 1 sales rep achieve full sales quota in 6 months versus 7 months. Based on their numbers my diagnostic X2 Evaluator™ system showed them a ROI of $79,200 just by trimming off 30 days. If they did that for all 155 of their annual new-hires, they could realize $12,276,000.
And that got their attention. So, is it now a worthy sales performance issue to attach pin-point sales training to? Not quite yet.

Step 3: ‘Run the Numbers’ for a ‘Reality Check’

The most successful businesses — and certainly, sales departments — have identified their Key Performance Indicators (KPI); individual gateways that directly effect the outcome of a particular process. Then they measure the competency ratios in line with them.

A good KPI example in the sales process might be how many times you advance the first sales appointment to the next phase, whether that’s a demonstration, a site visit, a survey or a proposal. Another KPI is how many times you gain a new customer once the first gateway is passed. And when you do gain a new customer, what’s the average revenue you achieve? And how long does it take to gain a new customer on average; i.e. sales cycle?
How about how long it takes you to gain 1 new sales appointment, defined by sales prospect ‘conversation’? And as a by-product of all this, how many new appointments are needed each week?

We ran these numbers in the X2 Evaluator™ system to see ‘if and where’ there were some leaks in the ‘KPI ship’. And here’s what we discovered; not a leak, but a big ‘ole fire hose.

Two ‘KPI issues’ were apparent. First, why does the ramp-to-quota for a new-hire take 7 months when the average sales cycle is 17 days? Second, they were only setting 3 new appointments per week when they needed to set 6, based on their other KPIs. So their sales appointment ‘activity barometer’ was only running at 50%. And that will dictate a longer ramp-to-quota.
Dig a bit deeper in the X2 Evaluator™ system and out popped a 6% conversation-to-appointment ratio; they had to conduct 15 prospect conversations to get 1 new appointment.

OK, back to the ‘Reality Check’. Is it realistic to focus on reducing the new-hire ramp-to-quota from 7 months to 6 months for a sales training ROI of $12,276,000 or $79,200 per rep?
You bet it is. These folks needed to address the front-end of their sales process; setting targeted sales appointments. To do that, they needed (1) establish an activity standard to reach quota by month six and (2) develop a sales prospecting methodology and supporting X2 Evaluator™ system to spend less time in achieving it.
Then they needed to plug their sales prospecting ‘system’ into their current sales training program and work to a weekly sales appointment activity goal to assure a monthly revenue result by month 6.

Step 4: Set the Goal and ‘Train to It’

A sales training ROI goal of $12,276,000 or $79,200 per rep is for sure a worthy one. And the diagnostic system showed us they would meet this goal just by setting 3 additional sales appointment per week per rep; 6 appointments versus 3.

Actually, I lied. The X2 Evaluator system showed an even brighter picture if the sales appointment activity standard of 6 new appointments per week was met. If they could support their new-hires with a sales prospecting system that could help them achieve 6 new sales appointments per week, they would actually cut their new-hire Ramp-to-Quota by 4 months; from the current 7 months down to 3 months.
And that sales training ROI would be $316,800 per rep or a whopping $49,104,000.

One of the reasons why sales training fails is a failure to define a useful objective. In this case, our diagnostic method has defined a single useful objective for them to train to. And this same diagnostic method can be utilized if you have a ‘Sales Performance Issue’ of an unacceptable percentage of Sales reps reaching Quota each month.

In Part 2, we will take a look at (2) other sales performance issues, ‘Sales Employee Turnover rate’ and ‘Time spent versus Result achieved’ with this same sales management team and see what our diagnostic method to sales performance improvement and ROI turns up.

Does Your Sales Training Program Address Your Sales Performance Issues? Part 2

Here’s a Proven Method to Target ‘Sales Skill Training’ to Resolve Sales Performance Issues

Keywords:

SALES PROSPECTING,SALES LEADERSHIP,SALES TRAINING,SALES PERFORMANCE,SALES MANAGEMENT TRAINING,CORPORATE SALES TRAINING,SALES TRAINING PROGRAM,TRAIN THE TRAINER,SALES SKILL TRAINING,PHONE SALES TRAININ

Article Body:

In Part 1, we went over the steps to uncover sales performance issues and decide which are applicable at a high priority for pin-point sales skill training. We first documented the main sales performance issues. There are (4) distinct sales performance silos that will effect the overall outcome of any sales team, year in and year out. They are:

• % of Sales reps to Quota
• Average New-hire Ramp-to-Quota in months
• Sales Employee Turnover rate
• Time spent versus Result achieved

Next we, listed (4) steps to find out if you have any sales performance issues in each individual sales performance silo and if so to what degree. They were:

Step 1: ‘Run the Numbers’ for any realistic ROI opportunity
Step 2: ‘Run the Numbers’ hypothetically for a ‘Specific’ improvement
Step 3: ‘Run the Numbers’ for a ‘Reality Check’
Step 4: Set the Goal and ‘Train to It’

In our first example, we looked at a sales organization’s performance silo of ‘New-hire Ramp-to-Quota and determined (1) a sales performance issue and (2) a worthy sales training objective and (3) a realistic sales training return on investment.

Let’s take that same sales force and utilizing our (4) step process look at the remaining two Sales performance issues; ‘Sales Employee Turnover rate’ and ‘Time spent versus Result achieved’ to see what the X2 Evaluator™ system turns up.

Step 1: ‘Run the Numbers’ for any realistic ROI opportunity

Our example sales force has 350 sales reps that are responsible for securing new business each month. They currently have a sales employee turnover rate of 45%, or 155 reps per year. I’ve found in the sales industries I partner with, my clients average between 30%-70% sales employee turnover per year, so these folks are right in norm.
But the ‘norm’ doesn’t have to be the ‘Future’.

Here’s another important point. In the sales arena, 95% of sales employee turnover is due to Low 1st appointment activity. And in our example sales force, it was nearly 100%. Simply, if you’re not creating enough sales appointments each month, you either go out the door or you are ‘Shown the door’.
Now let’s run the numbers to see exactly what this sales employee turnover is costing them and attach a weight of priority to consider ‘pin-point’ sales performance training.

Here are the numbers relevant to costs:

• Average Salary: $30,000
• Recruiting Costs: $ 2,000
• Training Costs: $ 3,500
• Monthly Sales Quota: $ 3,500

In sum, this sales management team is looking eye to eye to a total of $4,512,200 going out the door each year, a combination of revenue ramp up costs on the front end, revenue production loss on the back end, salaries and benefits, then again revenue ramp up costs and salary for the replacement new hire. It’s a vicious circle.
And once again that total ‘Penalty cost’ number is an attention getter.
Simply put, each sales rep going out the door, due to low sales appointment activity, is costing the company $29,300 of lost revenue.

Does that portray a legitimate sales training Return on investment opportunity? Well, in less you need to invest $29,300 per sales rep in the training of choice to remedy the sales performance issue… it certainly does.

Step 2: ‘Run the Numbers’ hypothetically for a 50% improvement

In this case, I showed the sales management team what return on investment they would get by retaining just half of the sales reps going out the door due to low sales appointment activity.
Using their numbers my diagnostic system showed them a ROI of $2,256,100 just by reducing their sales employee turnover due to low sales appointment activity from 44% down to 22%. That’s keeping 77 sales reps from going out the door and adding to the sales productivity pool.

Step 3: ‘Run the Numbers’ for a Reality Check

Remember in Part 1 of ‘Does Your Sales Training Program Address Your Sales Performance Issues?’ we ran this sales force team’s key sales performance indicator numbers in the X2 system to see ‘if and where’ there were leaks in the ‘KPI ship’. And we discovered not a leak, but a big ‘ole fire hose.

Two ‘KPI issues’ were apparent. First, their ramp-to-quota for a new-hire took 7 months when the average sales cycle is 17 days? Second, they were only setting 3 new appointments per week when they needed to set 6, based on their other KPIs and a subsequent sales appointment activity number.
Thus, their sales appointment ‘activity barometer’ was only running at 50%. And that we determined dictates a longer ramp-to-quota.

Then we dug a bit deeper in the X2 system and out popped a 6% conversation-to-appointment ratio; they had to conduct 15 prospect conversations to get 1 new appointment.

We then asked the ‘Reality Check’ question. Is it realistic to focus on reducing the sales rep turnover due to low sales appointment activity in half, from 44% to 22% for a sales training ROI of $2,256,100 or $29,300 per rep?

And we answered ‘yes’ if they addressed the front-end of their sales process; setting targeted sales appointments. Again as before, they needed to (1) establish an activity standard to reach quota based off of individual KPIs and (2) develop a sales prospecting methodology and supporting system to spend less time in achieving it.

Because most sales employee turnover happens in the new hire ramp-to-quota issue silo, the same pin-point sales skill training initiative kills two birds with one stone.

And if you add those (2) ‘sales training initiatives birds’ up, it points to $14,532,100 of realistic revenue recovery.

Step 4: Set the Goal and ‘Train to It’

Reducing sales employee turnover due to low sales appointment activity now appears to be a worthy one. It makes good business sense for this sales organization. And if we measure our results, we will probably add some more revenue back on the table with additional reps not going out the door… to the tune of $29,300 per rep.

As in Part 1, our sales training goal in this case is to spend the least amount of time to get the desired number of sales appointments each week to assure our monthly success.
Now as a side bonus, let’s take a look at our last sales performance issue silo, ‘Time spent versus Result achieved’, and see what, if anything, we can address related to our pin-point sales training initiative.

“Time is money”. What’s your ‘Hourly rate’? If you’re a sales rep with a W-2 goal of $100,000 your hourly rate is approximately $51 dollars an hour. Here’s an interesting statistic. My clients spend an average of 50% of their time on the very front-end of their sales process; sales prospecting for new opportunities to initiate their sales process. This sales management team gave me an average prospecting time of 45% to plug into the Evaluator™ system.
And here’s what it showed.

The sales reps were spending an average of 20 hours per week on sales prospecting and sales appointment generation. But they were only running at 50% on their ‘Activity Barometer’ and needed to generate 50% more sales appointment activity; going from 3 new appointments per week to 6.
At their current sales prospecting efficiency rate of 6% (15 Prospect conversations to get 1 appointment) they would need to dedicate 33 hours per week to sales prospecting and sales appointment generation. And we know that’s not realistic.

But if they set a sales training objective of moving that appointment conversion ratio to 50%, they would not only meet their sales appointment activity number but save 26 hours per week, for a time recovery of 79%, from 33 hours per week to 7. And 26 hours times $51 per hour recovers $1326 ‘Hourly Rate’ money, allowing sales reps to increase capacity and pursue higher-value, solutions-based selling opportunities.

Once again with our last (2) sales performance issue silos we determined (1) a sales performance issue and (2) a worthy sales training objective and (3) a realistic sales training return on investment.

Ask any CFO what their first impression is when they hear the words ‘Sales Training’ and they might communicate back their ‘Real world’ vocabulary of ‘un-accountable’ and ‘un-measurable’. Simply put, they know they’re wasting at least half their sales training budget dollars; the problem is they don’t know which half.

As a sales management leader, methodically discovering sales issues first and then running ‘Quantitative’ sales performance numbers to check for feasibility, worthiness, and return on sales training investment will differentiate you from the pack. And you’ll stand an excellent chance of getting the result you want.

In this case, giving sales reps a skill-set to set 1 ‘Top-down’ business appointment in 2 conversations will allow participants to set the required amount of targeted business appointments to assure their monthly revenue goals. So less people will leave, they’ll make more money and spend less time and you will recover measurable dollars; something you can actually put your finger on.