Category Archives: Sales leadership

Mama’s Don’t Let Your Babies Grow Up to Be Salespeople

It’s a hot steamy summer night in Virginia. I’m at an outdoor town fair, where the smells of cotton candy and popcorn blend with laughter, music and droning gas-powered generators, enveloping everything. I’m ten years old, and I want the giant blue stuffed hippopotamus sitting on the brightly-lit top shelf, behind the counter.

“How do you win the hippo?” I ask. “Stand up this Coke bottle,” the man tells me, pointing to a glass bottle lying on its side. “Take this fishing pole with the wooden ring at the end of the line. Get the ring around the neck, and pick the bottle straight up! One ticket gets you three tries.” He demonstrates by maneuvering the ring onto the bottle, lifting it an inch or so. I decide I’m in, and extract a single ticket from my pocket. Separating it from a small wad of drier lint, I present my ticket to the man.

Within a few seconds, I have the ring in place. I begin to raise the bottle. Ten degrees. Twenty. Intense concentration, beads of sweat. Now thirty degrees. As I elevate the bottle, the ring slides perilously up the neck. I keep trying by lowering the bottle, re-aligning the ring, then raising it again. I’m still on my first try—as long as the ring doesn’t slip off. “Must . . . use . . . quick . . . action . . ,” I think. I hold my breath, visualize the result, and with a quick wrist flick, up goes the bottle. Predictably, the ring flies off, causing a frenzied chain reaction that sends the ring spinning out of control at the end of the dangling line.

For a few harrowing seconds, the bottle totters in an awkward parabola, before settling, solidly and triumphantly, upright. Only one witness appears more shocked than me—the man running the game. “Wow! I’ve never seen that before! You’re supposed to get close, but nobody’s ever succeeded until now.”

Sorry to blow the odds, but I’ll take my hippo.

The game’s design compares to selling, where the odds of success are often unattractive and opaque. According to the 2013 Sales Performance Optimization Study, about 62% of salespeople at surveyed companies achieved quota in 2012. That’s better than in previous years, when the ratio sank into the 50th percentile. But sales achievement—or lack of it—remains a painful, festering boil for most companies. According to Jim Dickie, Managing Partner of CSO Insights, companies base their revenue planning assuming that on average, 71% of reps will make goal. We’re still well off the mark, and I don’t see anyone doing an end zone dance.

Seventy-one percent of reps expected to make goal means that companies are betting that twenty-nine percent won’t. I’m trying to think of another position in which employers have lower expectations for success. Cashier? Summer intern, maybe? Hard to fathom, but there’s a pattern: executives are not bullish on the idea that salespeople are likely to win at doing their job. In a sales risk survey I conducted with CustomerThink, nearly 25 percent of respondents agreed with the statement, “Our salespeople lack the basic skills required to compete in our markets.”

So, twenty-nine percent might fail, and twenty-five percent of companies have salespeople who aren’t competent to perform the job for which they were hired. We can hold a friendly debate about whether these statistics represent correlation, causation, or whatever. But few can deny these findings present a troubling picture. Luckily, we’ve coined a nifty term, Sales Force Optimization, or SFO, to address these issues—or not, as the case might be.

SFO generates a lot of online chatter—710,000 search results just now, in fact. Yet, for the loads of sales-productivity-certainty hype, a 71%-will-achieve-quota benchmark seems lame. After all the optimization dust settles, what does that estimate suggest? Either (1) we still have much to learn, or (2) selling effectively baffles us more than we’d like to admit. Probably, it’s both.

With the quota-attainment success needle now edging into more favorable territory, you’d think that salespeople would be job hopping like crazy. But they’re not. CSO Insights found that in 2012, about 10% of sales force attrition was voluntary, while 10.6% was not. What’s unknown is how much was in between. “The heck with this Performance Improvement Plan! I quit!” OK, I’ll tick the sort of voluntary box for that one. Either way, at just under 21%, sales force churn is now at an all-time low, according to Dickie.

Maybe salespeople are sticking around because economic conditions are uncertain. Maybe they’re more loyal to their employers. Scratch that! Maybe it’s because sales compensation is trending up slightly. A good sign, but consider the fine print. CSO Insights found that thevariable compensation component is increasing also. Translation: salespeople are shouldering an increasing proportion of revenue risks, and for now, some appear to be winning. Yet, a study that Accenture conducted found that “for two years running, sales representatives receiving between one and fifteen percent variable compensation yielded the highest percentages of quota, whereas those receiving between forty-one and sixty percent delivered the lowest performance and the highest attrition rate.” Some trends defy explanation.

But there is a more ominous problem facing the sales profession, which surfaced in none other than Forbes, The Capitalist Tool: “These days salesmen are regarded as shmucks,” says Elli Sharef, co-founder of HireArt a recruiting firm serving the country’s rising tech community, adding, “I’ve noticed that people in the Millennial generation just don’t think sales is a cool job.” No need to worry about any of this unless you, or someone you love, needs a sales force in the next three to five years.

Before I forget, I should also mention the career path at Your Father’s Sales Organization. It won’t take long. Here it is: make your number, keep your job. Repeat every year—if you can. Oh, yay! In computer programming, that’s called a do-loop. If Millenials aren’t lining up to land a job in sales, can anyone blame them? Mama’s, don’t let your babies grow up to be salespeople!

In a sales leadership session I attended, the facilitator asked how many had a parent who encouraged them to go into sales. Out of 150 people in the room, about three hands went up. The year was 1993. I suspect there would be even fewer hands today, because college students have attractive choices. The Wall Street Journal recently reported that “Mirroring trends in the broader economy showing that engineering and computer skills are highly sought, eight of the ten highest-earning [undergraduate] majors come from these departments.” (Good News for New Grads: Salaries Rise, January 24, 2013) A 21-year-old with a computer engineering degree now earns an average annual salary of $70,400 the day after graduation. Want to make serious coin? Buy a programmable calculator, a pocket liner, and take multi-variable calculus in high school.

Yet, despite unfavorable odds, long hours of arduous work, loneliness of the road, and bad hotel food, being in sales holds powerful appeal for many. Now if you’ll excuse me, sir or madam, it’s been mighty nice to meet your acquaintance. Much obliged. There’s a blue hippo out there, and I’m going to win it.

Watch Out! The Sunshine Pump Will Swamp Your Company With Toxic Levels of Enthusiasm!

Thanks to good old human optimism, the gambling and wedding industries rack up billions of dollars in annual revenues. It’s reassuring to know that a positive outlook can create so much ka-ching.

But unfortunately, within organizations, unrestrained optimism creates planning nightmares that can drive executives bonkers. Fittingly, we’ve assigned a cheery-sounding name for this phenomenon, The Sunshine Pump.

Sunshine Pump optimism starts its organizational meander benignly, often snaking its way from Sales through Human Resources, over to Operations Planning, gurgling into the C-Suite, then back out, flowing through other departments until finally reaching its terminus, Shareholder Relations. When the pump completes its cycle, the effluent oozes out, making a barely audible noise. It’s hard to duplicate the sound, but here’s my best impression: “earnings were below analyst expectations.”

Let’s trace the Sunshine Pump’s circuitous path from one of its many origins, the District Sales Manager’s opening remarks at the annual sales kickoff: “The Regional Sales VP will be visiting our office this week, and we really want to show her how we’re going to blow out our number. We’ll need to provide her a spreadsheet of the hottest opportunities we’re working on, and you’ll need to book some sales calls so she can accompany you.” The requested spreadsheet has many populated rows, but the booked calls are few. That is the Sunshine Pump—primed, plugged in, and ready to work!

The Regional Sales VP excitedly reviews aggregated numbers on the spreadsheet, while the District Sales Manager rationalizes the paucity of appointments. “A lot of people are still catching up after the winter break.” It’s January 15th. “Thanks,” she says without looking up. “I’ll let Corporate know what you’re working on. Should we go with these numbers for cash planning and procurement?” “Sure!” says the District Sales Manager, “I feel really good about our pipeline.” You probably know the rest of the story.

Along with Sales, other departments operate their own Sunshine Pumps. Product Development’s Quarterly Product Release Roadmap, Marketing’s Market Share Forecast, and the CEO’s Revenue and Profit Projections, to name just a few.

Sunshine Pumps use social networks and personal biases within their machinery. Daniel Kahneman wrote about the first five in his book, Thinking Fast and Slow:

1. Confirmation Bias: I see what I already believe.
2. Anchoring and Adjustment Heuristic: I am influenced by the first piece of information I receive.
3. Ambiguity Effect: I avoid options with unknown probabilities.
4. Bandwagon Effect: I follow the crowd.
5. Availability Heuristic: The story I remember overrides other information I have.
6. Cheerleading bias: I want this outcome. Therefore, I will forecast it.
7. False surety. A roll-up of all of these. “Mike just clicked on the link I sent him, and we had a good conversation. This lead is solid.”

Not every management forecast suffers from being bloated with sunshine. Some people just forecast better than others. In Nate Silver’s new book, The Signal and the Noise, forecasters are divided into two archetypes, Foxes and Hedgehogs. Foxes are “tolerant of complexity,” he writes, able to “see the universe as complicated, perhaps to the point of many fundamental problems being irresolvable or inherently unpredictable. They express their predictions in probabilistic terms and qualify their opinions.” Hedgehogs, on the other hand, are “order seeking,” and “expect that the world will be found to abide by relatively simple governing relationships once the signal is identified through the noise . . . They take a prejudicial view toward the evidence, seeing what they want to see and not what is really there.”

Most Sunshine Pumpers are Hedgehogs. They search for articles containing the words “the answer is simple . . .” Ironically, it’s the Foxes who are often called out for not being “team players.” “Don’t tell me what you might sell, I want to know what you will sell!” Go figure.

“Wherever there is human judgment there is the potential for bias,” according to Silver. “The way to become more objective is to recognize the influence that our assumptions play in our forecasts and to question ourselves about them . . . You will need to update your forecast as facts and circumstances change. You will need to recognize that there is wisdom in seeing the world from a different viewpoint. The more you are willing to do these things, the more capable you will be of evaluating a wide variety of information without abusing it.”

Every company can benefit from pumping a steady trickle of sunshine. It’s essential for morale. But watch out. When you’re pumping sunshine, a trickle of optimism can quickly become a torrent.

Six Essential Leadership Competencies, or Why Salespeople Cannot Live by Charisma Alone

“I sell ice in the winter; I sell fire in Hell.
“I’m a hustler, baby; I’ll sell water to a well!

—Jay-Z

If pure, unadulterated charisma alone could persuade prospects to buy, we’d all be recruiting Jay-Z’s for our sales teams. But for leaders, “charisma without substance and competence is meaningless, even dangerous,” according to University of Virginia management professor Thomas S. Bateman

In his article, Leading with Competence: Problem-Solving by Leaders and Followers, Bateman offers six essential personal capabilities leaders should possess:

1. Clearly defining problem scope and goal
2. Generating multiple alternative courses of action
3. Thoroughly evaluating those alternatives
4. Making the choice
5. Implementing the decision
6. Following up by changing the approach

These skills should be familiar to anyone who works in professional sales development, because they are the same skills sales leaders must bring to customer engagements. Today, salespeople who don’t possess these skills will experience sales opportunities that self-destruct into a rubble of friction and mistrust. Here are the pitfalls when leadership needs aren’t matched with corresponding competencies from sales professionals:

Clearly defining problem scope and client goals. Salespeople often tackle the wrong business issue or challenge. Key problems are overlooked and ignored. “When you sell hammers, every problem looks like a nail.”

Generating multiple alternative courses of action. Salespeople regress into either-or thinking in which only two outcomes are possible, and only one—a sale—is desirable. “I want to be your ‘trusted advisor.’ But first, to make my quota, I urgently need your business this quarter.”

Thoroughly evaluating those alternatives. Salespeople are often burdened with a distorted view of customer risk and opportunity, and fail to consider the myriad issues that accompany technological and organizational change. “We just don’t understand why our prospects don’t make timely decisions when our business case is so compelling.”

Making the choice. “Get the deal off the street” versus “make the right choice.” Frequently, short-term vendor revenue goals clash with the longer-term objectives of prospective customers.

Implementing the decision. After prospects purchase, many sales organizations do not offer meaningful incentives for salespeople to stay involved in customer relationships, often contributing to post-sale support problems. “After we bought, we never heard from our salesperson again.”

Following up by changing the approach. Following a major win, vendor euphoria can cloud reality, and customer success is often prematurely assumed. In fact, customer angst and frustration can be highest right after implementation. Ongoing evaluation of new value-producing opportunities solidify the buying-selling partnership.

“Naïve sugarcoating, cynical spinning, denying problems, and other misleading communications about harsh realities undermine credibility, support, and performance—and make people think their leader is incompetent,” Bateman writes. Customer leaders need salespeople who understand and can support their leadership challenges. Sure, charisma never hurts. But charisma and leadership skills? Gosh, with that, you just might be able to sell water to a well!

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