Buying and selling is a transaction where both the seller and the buyer engage in a process of negotiation resulting in value being obtained on both sides. The seller gains revenue and the buyer gains a training offering enabling them to be more knowledgeable, gain skills and ultimately be competent in what they do.

The selling process has implied rules and identifiable stages that require strategies, operating processes and metrics to be established to achieve the business goals of the training department.

The role of sales management is to ensure that a systematic approach to the sales process is implemented (see Figure 7.1), guaranteeing that sales personnel remain focused, motivated and incentivised to achieve their sales targets.

This chapter introduces the components required to establish a sales strategy, leading to the development of a sales operating model and the metrics required to manage the team and produce the expected results. The final section covers the development of compensation and incentive plans.

STRATEGY

There are four components to the establishment of an overall training business strategy, of which sales is a part. However, the sales team will require its own strategy to be defined, which needs to include input from:

• the training strategy and business execution plan;
• the training product management strategy;
• the marketing strategy.

The sales strategy should comprise the four components shown in Figure 7.2. These are:

• Strategic intent to establish overall direction and goals by:
  • establishing priorities for the achievement of strategic advantage;
  • factoring and combining the sales strategic intent with that of the training business.
• Marketplace knowledge focusing on understanding the needs of the customer base (in terms of training, services and products), training partners, key competitors and their actions, and market trends. This is a fact-gathering analytical exercise, with the objective to specify in detail what is happening in the training and target marketplace, including how commercial success factors are shifting and the implications for target customers.
• Innovation focus challenging the training sales team to actively explore and try new modes of working and selling to the target customer base.
• Business design interprets the strategic intent in terms of how training sales will execute the go-to-market requirements by considering the five points below and factoring in the output from the innovation focus exercise.
  • Customer selection: the customer segments to be focused on versus those which should be ignored.
  • Value proposition: what offerings will be sold and how they will be differentiated from competitors, and why customers would purchase or engage with them.
  • Value capture: how money will be made, what strategic advantage can be gained and how the success of the offerings will be measured.
  • Partnerships: what can be done internally and what activities will sales rely on by working with external partners.
  • Sustainability: how offerings and investments will be protected and grown within the customer base.

These five key go-to-market elements within business design, along with the innovation and strategic intent recommendations, form the input into the sales execution stage. These are then assessed and converted into key critical tasks and subsequent sales-related operational needs, which are mapped to quarterly, monthly and weekly activities.

A well-structured sales strategy helps the sales force to focus on its target market customers and communicate with them in relevant and meaningful ways. It is a key ingredient to ensuring that the sales force spends time targeting the correct customers at the right time.

In addition to the sales core strategy, the sales manager should work closely with product management and marketing to ensure product placement, promotion and testimonials are in place. Product placement and promotion help to create brand awareness. By working with both the training and corporate marketing teams, all RTM channels can be used, such as social media networks, where broader company-wide integration messages can be sent to increase the opportunity base.

Creating an effective sales strategy requires one final and very important component: metrics, namely key performance indicators (KPIs). These allow for the strategy to be measured for progress and provide an insight into any adjustments required to either address or accelerate the results.

EXECUTION (SALES OPERATING MODEL)

The sales operating model is, in essence, the execution activities associated with the conversion of the strategy into actual results. Many organisations view the operating model as a high priority due to increasing business complexity, changing customer experience requirements, technology changes and business boundary changes, all of which affect the ability of a training sales team to be successful.

Operating model

The operating model itself is a blueprint for how employees, resources and critical tasks are combined to address and maximise the business climate they are focused on. It also encompasses decisions around the nature of the business, where to draw the boundaries, and how staff work together within and across these boundaries.

After the completion of the training sales strategy (see Strategy section in this chapter), the design of the operating model can begin. The first stage is to interpret the strategy in terms of design principles, for example: ‘Expand sales coverage via training partners in emerging markets’; ‘Increase sales of training subscriptions’; ‘Reduce the level of discounts on standard training offerings’.

Based on the design principles (see Figure 7.3), the training sales operating model can be completed, using the following approach:

Formal organisation and structure: describes the interactions and dependencies on other departments, including shared service needs such as staff development, sales enablement and training team support. It also includes the dependencies on other groups, such as product sales and marketing, to assist with leverage and expertise. Following this, the training sales team organisational structure can be defined.

Accountabilities: describes the roles and responsibilities of the training sales team, including ownership of sales targets, fiscal management considerations, critical tasks and customer engagement guidelines.

Governance: refers to the management processes that need to be established to enable decisions to be made regarding strategic priorities, resource allocation and sales performance management, including management and reporting of key metrics.

Climate and culture: sets the required expectations regarding how staff should behave and operate with others in the training team and broader community to support the accomplishment of the critical tasks.

Capabilities: defines how sales management combines people, process and technology in a repeatable manner to deliver the desired outcomes.

The final stage of the operational model is that of execution, which should entail the establishment of an activity road map, development of the capability plan, enforcement of key behaviours, implementation of performance management and mitigation of risk.

Challenges

On the complexity front, changes in training modalities, customer buying preferences and geographical and cultural requirements have created the need to consider customers in multiple ways. For example, the one-size-fits-all approach to sales is no longer viable. The training sales team needs to consider growth around new customer segments, products and geographies, and within these dynamics how best to maximise reach via partners and strategic alliances.

From the customer experience perspective, many leading organisations are making a shift in relation to the way they engage and build meaningful and trusted long-term relationships. It is not simply a case of the sales team owning the relationship any more, but, rather, a combined training team relationship. This means the output from the sales strategy must involve all customer-facing employees regarding their level of involvement and ability to enhance the customer experience without losing sight of their responsibility to align and liaise fully with sales.

Digital technology is changing every aspect of business operations. This includes how and where companies interact with customers. For the training sales team, this represents both opportunity and threat. With increasing information flowing into and around a company every day, many potential opportunities can be lost. For example, customers searching technical support knowledge portals, having technical discussions on company social media sites or placing enquiries for new product information can result in training revenue growth being lost due to an inability to view customer activity that could lead to a meaningful training sales-related discussion.

Business boundaries change all the time, especially when a company is expanding and becoming global in nature. This can affect the selling model and, if handled incorrectly, result in lost orders; for example, tax implications or subsidies where the customer is penalised if they purchased training directly rather than in their home location. Changes like these can easily outdate an operating model and place it out of synchronisation with the training sales strategy. It is therefore important when developing the strategy and associated operational model that all business variables are factored in.

SALES MANAGEMENT AND METRICS

Managing a sales team requires metrics to be meaningful, relevant and aligned to the needs of the training business. This includes alignment between all parties associated with the development, support and delivery of the training offering.

Roles

Managing a sales team is no different from any other team in the sense that if you can’t measure it, you can’t manage it. It is true to say that sales, marketing, product management and training delivery also need to be fully aligned in terms of what each other is measuring and dependent upon (see Figure 7.4).

Product management is responsible for specifying what content should be developed for which target audience and for setting revenue targets based on market understanding and potential. Marketing takes this information and develops lead and demand generation activities to assist sales in locating and converting opportunities. Training delivery services converts these opportunities through course provision based on appropriate levels of student attendance to sustain or achieve required targets. Sales needs to be aware that if student numbers are at lower than expected levels it can have an adverse effect on planned ROI requirements.

Sales-related metrics

Regarding specific sales-related metrics, sales managers need to consider the points below to ensure that the focus goes beyond just revenue achievement to include improvement and maintenance of overall sales performance:

• Revenue attainment: some training groups may accept bookings as a key metric; however, in a service-based business, revenue is not normally recognised until delivered. This can create motivational issues for sales staff if service delivery is on hold past their quota and compensation recognition period.
• Selling time related to time spent with customers versus other non-related sales activities: this can help to identify aspects of a sales person’s role that could be undertaken by alternative means.
• Lead activity and response time: marketing lead and demand generation activities provide opportunities for sales teams to expand revenue potential. It is important they are followed up quickly owing to lead lifespan being comparatively short. A quick response time can improve sales performance and the overachievement of revenue.
• Average deal size: identifying whether the sales person is focused on transactional (high volume, lower value; e.g. course places) or consultative (low volume, high value; e.g. customised training solution) selling will provide sales managers with information on how to ensure the team is selling in a productive manner.
• Pipeline effectiveness: monitoring how opportunities move from one stage to another provides sales managers with vital information on how effective, competent and proficient sales staff are at progressing opportunities through to an actual sale. It enables the managers to assess if there is sufficient pipeline to reach quota, based on known or historical conversion ratios. A typical sales pipeline set of metrics is:
  • Number of unqualified opportunities to focus on and their value.
  • Number of qualified leads and their potential value.
  • Number of deals and value being progressed through the pipeline.
  • Number of deals and value with a sales commitment to close.
  • Actual deals closed and their value.
• RTM activity based on geographic and training channel partner sales activity: when investment decisions have been made regarding where to sell and what sales channels to use, it is important to measure how they are progressing and what actions need to be taken to address or accelerate sales activity.

In addition to the metrics mentioned above, other goals or KPIs can be set at the individual sales person level to drive and improve specific behaviours, such as:

• Number of lead or demand generation follow up calls made.
• Number of meetings scheduled and undertaken.
• Number of proposals sent.

The metrics shown in Figure 7.5 provide an insight into the health of training sales activities. Pipeline effectiveness records the percentage of opportunities that resulted in an order being sold. Lead time provides an insight into how long it took on average to close a deal. Average deal size reflects the value and revenue that was sold and delivered in a quarter. It is also important to monitor employee satisfaction. Failure to do so can result in loss of sales team motivation and ultimately failure to achieve the sales goals.

SALES COMPENSATION AND INCENTIVES

A key component regarding the development of compensation and incentive plans for staff is to ensure that all the training sales objectives are factored in. These can include revenue attainment, average order size, selling specific offerings to agreed targets and minimising discounts.

Another component is to understand what industry competitors are paying. This is particularly important when hiring new staff or encouraging more, senior sales personnel to join the company. This can also affect staff retention when compensation plans are not attractive enough, and create difficulties for maintenance of customer loyalty when sales staff leave.

Understanding the cost of implementing a compensation and incentive programme must be factored into the overall training business plan, especially as it is part of the cost of sales (CoS) expense line. To factor CoS into the overall business plan requires decisions to be made regarding the nature of the compensation plan to be adopted. Compensation plans vary from one company to another. Those shown below are typical:

• Margin-based: commission paid on margin attainment above an agreed minimum level. Additional incentives can include commission rate change as profit levels increase.
• Revenue/quota: compensation paid on revenue attainment over an agreed minimum level.
• Balanced: compensation is based on margin and revenue attainment and that of an additional component, such as revenue growth in an emerging market.
• Team: bonuses go to all sales team members when quarterly sales goals are achieved.

Where possible, consideration should be given to implementing accelerators, where increased commission rates are paid to sales staff who overachieve their agreed targets.

Before putting proposed compensation plans into action, it is good practice to run ‘what if?’ scenarios to pressure-test how the plans would work in reality. There are many examples of compensation plans designed to achieve a specific behaviour that have resulted in quite the opposite!

Incentive plans can be separate from compensation plans or in addition to them. Typically, incentive plans are put in place to drive KPI achievements or specific sales goals, such as selling new courses in emerging markets, and are often sponsored by other departments within the training group.

A specialised product incentive fund (SPIFF), which is a specific form of incentive, is an immediate bonus for a sale. Typically, they are paid by the training department to encourage product sales teams to include training as part of their overall deals. The origin of SPIFF is from the world of drapers, where inferior clothing carried an extra sales percentage if sold.

SUMMARY

The selling process has rules and identifiable stages that require strategies, operating processes and metrics to be established to achieve the business goals of the training department.

The role of sales management is to ensure that a systematic approach to the sales process is established and implemented. This involves understanding the overarching training business strategy and extracting a relevant and meaningful sales strategy to be converted into a sales execution plan and operating model.

After the model has been approved and accepted by the business management team, relevant metrics need to defined and aligned to the needs of the training business, supported by a funded sales compensation and incentive plan.