CHAPTER 3
The Company’s Responsibility for Sales Success
In Chapter 2, we had the individual salesperson on the hot seat. Now it’s time to shine the spotlight on the company and its responsibility for sales success. Let’s be fair. It’s not all on the shoulders of sales. There are an array of factors completely outside the control of the salesperson and the sales organization. These factors can be obstacles and impediments to executing a successful new business sales attack and are worth addressing here.
I am typically brought into a company when there is a desire to significantly increase the effectiveness of the sales organization or when the sales team is not working the way it’s supposed to, particularly in the area of acquiring new pieces of business. Because I’m a sales guy at heart, I’m biased toward the salesperson. I proudly admit it. I bleed sales. First and foremost, I see situations first through the lens of a sales hunter and next through the eyes of a sales executive or consultant. That bias works in my favor as I build relationships and begin coaching salespeople. They trust me because I’m one of them. The beauty is that because of my outside professional role, senior executives and CEOs actually listen to me (most of the time). I learned a long time ago that what sounds like whining and excuses from an employee is often considered brilliant counsel when presented by an outsider. Same thoughts coming from a different person in a different position. A prophet is not welcome in his own home? As true as ever.
Why Sales Coaching Develops into Consulting
The primary objective of my initial engagement with a company is almost always to coach the sales team, or at least certain members of the team, including the leader or manager. Nothing is more energizing to me than helping salespeople and sales leaders become more successful at acquiring new business. I address the “not-so-sweet 16” reasons I see salespeople failing and then begin coaching through the topics presented in the balance of this book. That’s my passion and what I love to do.
But more often than not, an interesting metamorphosis occurs as my coaching relationship progresses with a sales team. As I continue to ask questions, spend time with members of the team individually and in group sessions, roam the hallways, and even attend sales calls, a picture emerges that’s different from what was originally painted by the senior executives who engaged me. I’m not intimating that they lied to me, but I do realize after dozens of engagements that there’s often more than one side to the story of why sales results are not what they should be. Not concerned with corporate politics and certainly not fearful of losing my job (ah, the freedom of not being an employee!), I dig deeper and continue to pull back the covers, often exposing some pretty serious anti-sales issues. That’s when what began as a simple sales coaching assignment morphs into a full-blown consulting engagement. Most executives and CEOs who truly want to fix their sales issues welcome the intrusion and are thankful for an honest outsider who can hold up the mirror close enough for them to see why their team is not achieving the desired results. Let’s examine some of the widespread issues hindering the success of sales organizations.
Sales Follows Strategy: Mr. CEO, Please Do Your Job so I Can Do Mine!
One of the non-negotiables for a sales organization to succeed in acquiring new business is clarity. I have yet to see an individual or a sales team have demonstrable success in the marketplace without a crystal-clear picture of their mission. Let me say it another way: Sales is supposed to follow strategy. The sales team’s job is to take a clear strategy and execute it to perfection in the market. Salespeople should not be making it up as they go along. Where I’m from, it’s the chief executive’s job to determine and articulate the company’s strategy. It’s essential to be able to inform the sales team about:
Our reason for existence
The direction the company is headed and why it’s the correct course
What we sell and why we sell it
Which markets to pursue and where we are positioned in those markets
The competitive landscape and how we stack up against competitive offerings, and why we’re better or different
Why our pricing model is appropriate for the value we create in the markets we’re pursuing and against the competition we’re facing
The salesperson or sales organization is entitled to super clear answers for each of the previous bulleted items. Sadly, too often those answers do not come. The primary reason I walked away from my last position as head of sales was because the company could not answer those questions and it became fruitless attempting to lead the sales team through the wilderness. When that’s the case, 100 percent of the sales shortfall lies at the feet of the CEO, not the head of sales, and certainly not on the sales rep. It is not the job of sales to set strategy. It’s our job to execute the clear strategy provided to us. Mr. CEO, please do your job so we can do ours!
A Low View of Sales: Dumping Garbage on the Sales Manager’s Desk
Some organizations are sales-driven and some are not. In my first few jobs, sales ruled the world. Slim-Fast was run by an entrepreneur who played the role of salesperson-in-chief. What sales needed, sales got. My fraternity buddy and I turned the little plastics company upside-down. We were partners in crime. I went out to the market and told him what was needed to get deals done. He had my back at the office and made sure that the customers and I were well taken care of. As director of sales, I never once felt that the company wasn’t fully behind my sales effort. Then, at the direct marketing company, I began to fully understand what a sales-driven company looked like. Salespeople were close to royalty: They had better offices, more respect, rich compensation plans, and the ear of the CEO. If it ever came to a showdown between sales and operations, or sales and finance, the safe money bet on the salesperson coming out on top. It was the ideal environment for sales and produced a winning sales culture and incredible revenue growth.
I was disappointed to learn that my experience was pretty unique. Most companies have a painfully low view of sales, quite unlike the companies where I had thrived. In many organizations, the cacophony of complaints about the sales team can drive you mad. Any of these remarks sound remotely familiar?
“The salespeople use too many samples.” “The sales team isn’t using the materials we gave them.” “The sales team is authorizing too many returns.” “Your people are not attending the all-company meeting on Tuesdays.” “How come he took that million-dollar client to such an expensive dinner?” “Have the salespeople do their paperwork and administrative work on weekends.” “Did you see the proposal we sent out? It was awful.” “The plant really screwed up this big order; grab a few salespeople to help unpack and repack these boxes; they’re not doing anything anyway.” “Why did he fly to Nashville when it’s only a five-hour drive?” “Tell the salespeople they can ship out their own sample requests.” “She tipped 18 percent and our policy clearly states that we should only tip 15 percent.” “That customer is complaining that the salesperson didn’t return his call within thirty-eight seconds.” And so on…
Basta! Enough! For whatever reason, in too many companies salespeople are treated like the enemy and the problem. It is wrong; it doesn’t help; it certainly doesn’t increase sales.
Sales managers are often not treated with the respect they deserve. A few years back, I was chief sales executive for a $90 million distributor in a tough economic environment. After a year leading this forty-person sales organization, we reorganized to reduce costs in response to the severe drop in demand for our products. As part of the cost-saving measures, I agreed to insert myself as sales manager over one of our divisions. So, along with the bigger picture job, I was now also directly managing six frontline salespeople and moved my office into their location.
The president of this division was a detail-driven control freak. He was a nice man; I liked him personally. But he had a very low view of the sales function, and as a result, the company treated the sales manager’s desk as the garbage dump for all problems. On my second day as sales manager, I received a call on my cell phone from an angry customer. There was some quality issue with a product, and the customer started peppering me with all kinds of technical questions. As this man went on and on, all I wondered was how in the world he got my cell phone number. The company had a qualified customer service group, a supply counter staffed with product experts, a product installation technical expert, and six salespeople more qualified than me to handle this customer’s issue. There was no way this matter should have ended up on my desk, and it certainly didn’t warrant a call to my cell phone.
Deploying my amateur private investigator skills, I uncovered the customer service rep who gave the customer my number. I asked two questions to this seasoned CSR: Can you tell me what made you think I could properly answer this man’s technical questions on my second day on the job? And why in the world did you give out my cell phone number to our 248th largest client? Without blinking, she responded that all problems go to the sales manager. Not anymore, they don’t, sweetheart. All problems used to go to the sales manager, which is why your sales team is so screwed up.
Heavy Service Burden and the Hybrid Hunter-Farmer Sales Role
I don’t expect to get the Rocket Science Award for this one, but I believe it’s the single largest issue detracting from new business development success. When I start digging in with a client to help assess why the company’s salespeople are not acquiring new business at the desired rate, in almost every case I can make this brilliant observation: The sales team spends very little time proactively working target prospects for new business. Earth-shattering conclusion: little effort = little results.
Three of my current clients are frustrated their people aren’t bringing in more new business. However, in all three situations, they’ve placed a heavy service burden on the salesperson. Each of the businesses is completely different from the others, but all three are asking their people to invest an inordinate amount of time servicing customers—quoting, taking orders, fighting fires, handling customer service issues, shepherding projects through production, etc. Again, I’m all for keeping our current customers happy and retaining them as customers. But senior leadership can’t have it both ways. Don’t hire me to coach your sales team to improved proficiency at new business development and then not free up their time to actually do it.
The hybrid hunter-farmer sales role is the model that dominates small and mid-size companies. I understand that there’s no easy solution. If there was, we’d all be implementing it. But I want to be very clear here: This single issue is hurting new business development sales more than any other issue today.
I’m going to use hunting and fishing as metaphors to illustrate my point. First, let’s talk hunting. There are very few successful sales hunters. Most organizations would agree that only 10 percent to 15 percent of their sales team could be classified as true A-player hunters that can be consistently relied on to deliver new business year after year. However, most companies would also agree that solid sales farmers, aka account managers, are in much greater supply. The problem facing most companies is very logical. They’re short on acquiring new business because they’re short on effective sales hunters. That follows, right? So here’s my question: If we have so few good sales hunters and we’re falling short of our new business acquisition goals, why do we task the few hunters we have with so much account management work? Especially when we all agree there are an abundance of account managers.
Now, let’s talk fishing. Imagine we have a seafood business. We fish for giant fish like marlin and then sell fully prepared fish to our clients. We fully acknowledge that only one person out of nine on our staff is any good at catching fish. The other eight play at it and get lucky once in a while, but it’s really our one star that brings in almost all our big fish. But for some reason, our business model dictates that our star catcher of big fish must do a lot of work after catching the fish. In fact, policy says he needs to bring the fish back to our office, and since he caught it, he also must clean it. After it’s cleaned, he also gets to prepare it and then cook it to the liking of our guests that evening. After cooking the fish, our star proudly serves his big catch to our guests. And when dinner is over, we ask our star to bus the tables, do the dishes, and help get the kitchen cleaned up. All in all, our top producer gets to spend maybe 25 percent of his time fishing.
Okay, what’s wrong with this story? Idiocy, right? Is this any different from how most mid-size sales teams operate today? We complain that we aren’t catching as many fish as we would like, but our best fish catcher only gets to fish 25 percent of the time. And we ask him to do ten other tasks that others are capable and willing to do.
How dense are we? Play this out with me. What might happen if we freed up our star fisherman? What if we removed much of the burden that comes after landing the fish? Wouldn’t he then be able to spend more time researching better places to fish? Instead of doing the dishes, he might have time to sharpen his fishing skills and become even more proficient than he is now. How many fish might our best guy catch if we better supported his efforts and set it up so that he spent 75 percent of the time fishing instead of 25 percent?
I understand most sales organizations are not set up to work that way. But I also understand most organizations are not achieving the new sales success they want, either. I’m tired of hearing about efficiency and legacy systems. Maybe it’s time to do hard work deconstructing the model that’s not working and rebuilding it with a fresh perspective.
Illogical and Unhelpful Compensation Plans
Since I’m on a streak tackling a host of sensitive topics, I might as well go for it and touch the third rail (for anyone who’s not an urbanite, the third rail carries the power to the subway trains and there’s enough voltage passing through it to light up a small country). Medicare is often referred to as the third rail of politics; touch it and you die. Let’s talk about sales compensation.
Compensation is a sticky topic because you’re dealing with people’s livelihood, and everyone from the CFO to the rookie sales rep gets nervous when there’s discussion about changing it. I get that, and having lived through multiple comp plan changes as an employee, I am particularly sensitive to how plan changes are perceived by the team, and even more so by top performers. Smart salespeople work the comp plan. Period. It’s in the best interest of the company to make darn sure that the plan is driving the behavior we want it to drive.
I have two major pet peeves with sales compensation. The first has to do with the percentage of fixed, or base, compensation. And the second deals with treating all sales the same in terms of how they are commissioned.
In general, I’ve come to believe that too large a portion of total sales compensation is fixed (or base). There are entire books and consulting practices dedicated to compensation, so I won’t pretend to do this conversation justice here. However, my main point is that there’s not enough discrepancy between what top performers and bottom performers earn. Studies consistently show that top salespeople are motivated by competition, return on investment (or return on effort), and the opportunity to earn more money. My simple theory states that the more variable the possible results, the more variable the total compensation should be. If it’s a steady business with little chance of gaining or losing business, then the plan should have less variation with a higher percentage of base compensation. However, if there are potentially wide swings in results, there should similarly be large potential swings in compensation.
Too often I see underachievers being overpaid and top producers being underpaid. Read that last sentence again and think about the consequences. I’m arguing that most compensation plans do the opposite of what we want: retain the underperformer and cause the top performer to look for work elsewhere, where her compensation will be more equitable for the results she achieves. That model is silly.
The second peeve has more to do with driving new business acquisition. In companies where salespeople maintain a book of business, very often commission is calculated based on that salesperson’s total sales. It’s a straightforward calculation: X sales at Y commission rate = Total commission check. My disagreement is with the fact that all sales are treated equally. From the CFO’s perspective, I get it. A dollar of sales produces a certain percentage of gross profit and there is money allocated to pay the salesperson for selling expense. A dollar is a dollar is a dollar.
I would argue that when trying to acquire new accounts and influence the behavior of money-motivated salespeople, a dollar is not a dollar. If I’m fat, dumb, and happy, with a great portfolio of accounts (either given to me or acquired by me), and I’m enjoying the living that portfolio throws off, explain to me why I would not overservice those existing accounts. If my existing client base is essentially a commission annuity that will pay me the same amount every year as long as I maintain it, you can bet your ass that my first priority will be to do everything possible to keep those clients happy and buying from me. Why would I even think of taking my eye off this income stream and distract myself by going after new business—new business that takes a lot of time and energy to produce?
Again, the company says it wants its people focusing on acquiring new accounts. But just like the service burden and account management situation, the compensation plan is not set up to encourage the behavior that management says it wants. If we truly want to incentivize salespeople to pursue and close net new business, then the comp plan should communicate that loud and clear. Said less pleasantly, put your money where mouth is.
I’m a fan of plans that decrease the commission payout on existing business over time and bonus the commission for new business that is closed. Radical. Align the pay plan with the business goals. Make the annuity less attractive over time to encourage more hunting. And drive that point home by paying an overly generous commission in year one of new deals.
Mistrust, Micromanagement, and Treating the Sales Team like Children
Lastly, I want to address the company’s responsibility for creating a culture that promotes sales success. Sales is a unique profession. My former partner at my first consulting business was a master at creating a sales culture. Donnie continually preached the importance of having a sales environment that was fun, energized, competitive, results-focused, and heart-engaging. Sales is as much about the heart as it about the head, he’d say. I knew what he meant, but couldn’t fully grasp the importance of the concept because I’d only worked in positive sales cultures, including working for him before we launched our business together.
Over time I’ve been exposed to more and more companies with unhealthy sales cultures. I’ve seen controllers run wild, taking deductions from commission checks with little explanation to the salesperson. I’ve seen vice presidents of sales lead by fear, intimidation, and humiliation. I’ve seen CEOs who incorrectly believed they were sales experts tell salespeople exactly how they should approach a prospect and conduct a sales call. And most recently, at a former client, I witnessed the worst case of mistrust, micromanagement, and treating salespeople like children you could imagine.
I was referred to this client and had a few extensive phone conversations with the president before starting the engagement. It was a smaller company that sold very high-end products. The company had done a complete sweep of its sales organization and was practically starting over when I arrived to begin coaching a young sales manager and a fresh crop of salespeople. There were some glaring issues that emerged during my first few days on-site at the client’s headquarters. Here is an excerpt from a note I sent to the president after the first month:
One of my big takeaways from the first month of this engagement is that we must create a positive sales culture at Superior, Inc. There is a general feeling of unsettledness among members of the sales team, including Terry (the sales manager)….
I also sensed an undercurrent of an anti-sales culture at the company. Lots of critique of the new sales hires’ handling of customer objections, requesting samples, inability to get appointments, failure to write orders, etc…
… I think it is important to hear from an outsider that there is a cultural anti-sales feel at the company. If not changed, this practice will prevent Superior from building the type of successful sales team it desires.
My frustration with this client and the president mounted. He treated the salespeople like they were children, not allowing them to make even inconsequential business decisions about their territories and customers. I became uncomfortable with the role I was playing. I didn’t sense that I was getting my points across and began debating whether I should maintain the relationship. The president began talking about this latest round of sales “mis-hires” and the possibility of needing to replace much of the team again. I also realized that my counsel was neither sought nor followed. The president was simply using me for training the people and improving their sales process.
At the time, I had just returned from a conference where I sat under the teaching of Alan Weiss. Alan is a masterful consultant and coach to other consultants. He shared something that stuck with me and applied to my situation: If you cannot improve the client’s condition, then you should stop taking the client’s money. I knew he was right. I decided to fire my client and took my best shot at trying to wake up this president. My hope was he would understand that I felt strongly enough about what I believed to walk away from his business. I left him with these parting thoughts:
Sales is not accounting. It’s not warehouse work. For that matter, it’s not like any other job. Sales is about people connecting with other people. When sales reps walk into an account, their demeanor, their pride in the company, their energy level, their confidence, their ability to personally connect with the buyer all matter—a lot. Salespeople have to believe in their company, and they must have their hearts engaged to succeed.
But I find exactly the opposite happening at Superior. There is almost a disdain for the sales team, and you can sense the reps’ negative feelings toward the company growing. This is not a recipe for sales success, and also makes sales coaching a waste. We can spend all the time we want sharpening the sales story and instructing how to conduct professional sales calls. It’s meaningless if the people have no passion for their jobs…
As I shared on the first page of this note, I don’t understand how a next round of hires will be any more successful unless there is significant cultural and structural change to the sales organization.
I meant that line about sales coaching being a waste if the salespeople have no passion for their jobs. It’s true. You have to want it! Just as important as having a clear strategy and a logical compensation plan, companies share in the responsibility of creating an environment that promotes healthy, positive, engaged salespeople.