Don't let your Sales Management Slip - in bad times or good
Article posted on 6th June 2007
If your business is to both grow and be resilient in the face of whatever might come around the corner in the future continual prospecting for new customers is simply essential. The conventional wisdom is that every business needs to have its sales force spent 20% of their time prospecting - that's one day a week!
So how do you judge whether your sales people are doing a good job - just on performance against budget?
I find the Sales Management Matrix model a very useful tool to view your sales people from the helicopter.
The y-axis represents prospecting activity and the x-axis performance against budget - be that based on orders achieved or on contribution.
Your salespeople are then characterised into four types - Junior, Star, Cow and Dog.
Let me explain some more:
A new salesperson will always start off as a Junior since they have no customers and everything they do is, by definition therefore, prospecting. As they develop and secure customers you expect, and need, then to move across to Star - indeed it is where you want a majority of your sales force to be located. Not only are Stars spending significant time prospecting they are also operating ahead of budget.
Now we get to the critical part -
Stars can fall to Cows very quickly!
It may simply be that the Star gets complacent - times are good, the business is humming, we're riding the wave of a buoyant market or it may be that the Star's customers are demanding more and more of their time to service the account and slowly but surely the prospecting falls off and the Star becomes a cash Cow - probably acting more like a key account manager than a salesperson.
This is dangerous since inevitably that above budget performance will become more and more dependent upon less and less customers over time.
So what then happens? We just need one of two of those major customers to disappear - say they've re-engineered their product, they've moved production to China, the new strategy is to focus on a different area of their service activity.
Whatever it is suddenly the Cow has become a Dog - not only are they not prospecting for new customers they are now operating at the below budget level of performance from the ones they have.
It is perhaps easy to see how these dynamics can have happened in a business that is fallen on more difficult times - or where a business, like one of my Clients, has in the past never really had to sell and where any selling that was done was merely an adjunct to somebody's principal job function. In these circumstances there is a need to almost start from square one and ensure that there is a proper salesforce in place, that they have had specific sales training and that they recognise the need to aspire to Star status.
I was recently talking to a banker who told me that traditionally his bond traders were also the salesforce and, not surprisingly, prospecting was something they rarely did -- and indeed probably do not have the skills to do. His solution was to recruit two "Business Development Executive's" to become the real salesforce whilst the bond traders in effect fulfilled the key account management function.
I was recently in Dubai where simply every business is riding the crest of a wave and growing at rates of 30, 40 or over 50% per annum. In this climate there is a serious danger of all your salesforce moving into Cow territory.
So why is that a problem? Why should we worry about prospecting when the businesses flooding in any way? Well I believe you must. Firstly to avoid complacency and to ensure that you have robust practices in place in preparation for any potential downturns in the future. More importantly, however, this is the opportunity for you to choose your customers - to work at getting rid of the ones you don't want and work hard at getting the ones you do want for the future. Only by doing this will your business become not only more efficient, more profitable and easier to run but most importantly it will be fun to run again.
For you as the CEO riding this tiger you're simply worn out by the frenetic activity - the constant need to recruit - the constant need to increase capacity of the business. There is simply no time at present to think about the future.
You know what?
You must find the time
- - you must find time to get in your helicopter and have a look at your salespeople and how they fit on the Sales Management Matrix and then take action.
Here's your check list:
Juniors (High prospecting, Low profit):
Things to look for:
- v High Call Rate (even though low profit)
- v Growing Quote rate
- v Growing Funnel
Things to look out for:
- v Low Call rate
- v Static Funnel
- v Low quote rate
Stars (High prospecting, High profit):
Things to look for:
- v High Call Rate
- v Many Funnel Opportunities
- v Growing Funnel
- v High Quote rate
- v Focus on new customers
Things to look out for:
- v Over confidence
- v Poor Paperwork
- v Cannot be told /managed
Cows (Low prospecting, High profit):
Things to look for:
- v Funnel opportunities come in on a regular basis
- v Significant time spent planning Sales Approach
- v Significant focus on building existing customers
Things to look out for:
- v Less time actually selling (face to face time)
- v Reduction in new customers
- v Reduction in Call rate
- v Arrogance/ I have arrived , cannot be told attitude
- v Reliance on getting the "one big order" for next year
Dogs (Low prospecting, Low profit):
Things to look for (if the Sales Executive is to continue with the company ):
- v Able to have a reality check (I am below budget and have low opportunities)
- v Willingness to accept "things much change"
- v Increase in call rate
- v Willing to delegate some account responsibilities to free up more new "call time"
- v Willing to accept help
Things to look out for (Sales Executive may not continue):
- v Complaints about things they have no control over
- v Constant returning to accounts they have been previously successful with
- v Poor attitude - aggressive, secretive, subversive
- v Poor call rate , declining funnel
- v Poor quote rate
On a final note I believe this is too important to the business to simply leave to your sales management - you need to get stuck in there and make it happen!
PS: If you like a copy of the Sales Management Matrix slide just email me at roger@rogerharrop.com
© 2007 Roger Harrop Associates
