How to work and train smarter Data-driven solutions to improve sales effectiveness By Devra Hirshfeld Now, more than ever, companies must maximize the effectiveness of their sales force to gain a competitive advantage in a difficult economic landscape. Further, in an era of budget constraints, companies are looking to do so in the most cost-effective way possible. Yet companies are spending huge amounts of money on sales training. According to a 2011 survey by CSO Insights, more than half of the 308 companies surveyed worldwide reported that they spent $500 or more each year on training for each sales representative1. The problem with this approach is that those companies are not seeing a return on their investment in training. Indeed, over half of those same survey respondents admitted that their sales representatives retained their new skills for a mere four months. CSO analysts suggest that those estimates may be too optimistic, suggesting that the retention rate is likely closer to one month. A CSO Insights study states that more than half of the 308 companies surveyed worldwide reported that they spent $500 or more each year in training for each of their sales representatives. The problem with this is that those companies are not seeing a return on their investment in training. www.FactorLab.com 888.958.3476 1 CSO Insights, “2011 Selling Skills Reinforcement Research Project.” 1 What accounts for this disconnect between investment in training and improvement in performance? There are three common mistakes companies make in implementing sales training. • Companies often do not identify the most important training needs. • Many companies fail to monitor sales reps’ adoption of the newly acquired skills. • Sales leaders often fall short on proactively coaching their sales teams to reinforce and support their skill development. Each of these three mistakes is rooted in a common problem: data that is either not available or never considered at all. When one or more of these mistakes is made, the likelihood of a measurable return on the training investment plummets. Solution 1: Diagnose the problem A major reason for the lack of effectiveness of many training programs is that companies do not pinpoint with enough specificity the areas of training that their sales team requires. Rather, companies choose training programs based on a generalized sense of “important” selling skills. To get the most benefit out of a training program, however, companies need to identify the performance gaps between their top and bottom salespeople and develop a training plan focused on closing that gap. There is an objective data-driven process to identify performance gaps: determine how well sales people can recognize and respond to certain key customer behaviors and compare the responses to the sales representatives’ revenue generation. The top performers, as indicated by revenue generation, will have a greater ability to identify and drive key customer outcomes. This is the idea behind Beyond ROI’s proprietary PowerView™ survey tool. Users of the PowerView assessment provide a survey to all sales representatives that determines the frequency with which the sales team is able to achieve certain client outcomes that are indicative of 2 successful sales. For instance, sales representatives are asked how often a client gets them involved early in the planning and decision cycle, how often a client provides access to C-level executives and how often a client provides insight into its larger goals and business objectives. Upon completion of the survey, a company will have a detailed account of the strengths possessed by top performers that must be taught to less successful sales representatives, and those strengths will be a correlated to key customer outcomes. ...the truest indicator of skill is focusing on key customer behaviors. That metric provides the strongest correlation with revenue. This focus on customer behavior, rather than an individual’s subjective view of his own abilities, provides an objectively verifiable measure. The link between identifying customer behavior and effective selling has been proven by Beyond ROI’s 800+ engagements with Fortune 500 companies. According to Scott Watson, Beyond ROI’s Chief Measurement Officer, he has consistently observed that the truest indicator of skill is focusing on key customer behaviors. That metric provides the strongest correlation with revenue. This focus on customer behavior, rather than an individual’s subjective view of his own abilities, provides an objectively verifiable measure. Solution 2: Monitor progress What happens after a company has implemented the appropriate training program? Often nothing. Therein lies one of the greatest mistakes a company can make in the process of developing and transforming its sales team. Indeed, the truism that one cannot manage what one does not measure applies with training. To obtain the most benefit from employing a training program, companies must continue to track the performance of each sales person to ensure that the learned skills are being implemented, or if not, to identify with specificity the areas of additional training or reinforcement that is required. By gathering performance data, managers are Effectively tracking successful application of sales training is a function of the granularity of the data collected. able to proactively determine which sales representatives need what specific help and coaching on certain deals in order to close them. In other words, “[s]ales becomes more of a science and less of an art, and in doing so, we will close more deals, increase margins, and improve the predictability of our businesses.”2 Effectively tracking successful application of sales training is a function of the granularity of the data collected. Imagine if it were possible to gather data on a deal-specific or customer interaction-specific level. The ability to empower proactive coaching and to pinpoint key behaviors at every stage of a sales cycle would increase exponentially. Solution 3: Coach and reinforce The third critical mistake that companies make when implementing a training effort is failing to coach and reinforce the newly acquired skills. Consider this: 85 percent of companies that do training reinforcement see improvement in sales effectiveness. Further, 87 percent Consider this: 85 percent of companies that do training reinforcement see improvement in sales effectiveness. of best-in-class companies in a survey of 291 companies reported that they had a structured process for sales managers to communicate with sales representatives to give feedback on performance, and 86 percent regularly reviewed performance analytics against agreed to objectives. Similarly, Beyond ROI’s Scott Watson has documented a 2X to 3X difference in performance improvement based solely on the frequency and focus of one-on-one manager coaching with reps. The importance of coaching to ensure improvement in performance highlights the need for specific performance data. Indeed, in this economy managers are stretched thin and the ratio of sales reps to manager increasing. Consequently, it is imperative to do whatever possible to support and enable managers in providing proactive coaching. Making these data-driven solutions real The three solutions described are powerful in their effectiveness and reach in sales organizations. But they are powerful when the right data is available on-demand, is deal- or even stage-specific, and is real-time. Traditional SFA and CRM solutions fall short in their ability to deliver this kind of high-quality, coachable, detailed data. A new breed of customer-behavior based data is emerging that meets the timely, on-demand, granular information requirements necessary to support these sales effectiveness solutions. Two such solution providers are Beyond ROI and FactorLab. Beyond ROI quickly provides the customer behavior diagnostics and analytics necessary to focus organizations’ sales training efforts. FactorLab helps sales organizations identify, capture, and act on verifiable customer behaviors to: (1) support engagement with and regular application of organization’s chosen sales methodology, and (2) focus coaching for further developing sales reps’ skills, based on deal-specific customer behavior insights. FactorLab’s technology seamlessly integrates with CRM systems for intuitive, fast application in the field. Jim Dickie and Barry Trailor, CSO Insights, “World Class Sales Management: Closing What You Forecast” (2011). CSO Insights, “2011 Selling Skills Reinforcement Research Project.” 4 Aberdeen Group, Peter Ostrow, “Sale Performance Management 2012—How the Best-in-Class Optimize the Front Line to Grow the Bottom Line” (December 2011). 2 3 3 Conclusion Improving sales effectiveness has become one of the most pressing priorities of organizations in this economic climate. While many look to training to do so, they regularly make three fundamental errors. To ensure that they obtain the maximum benefit from often costly training, sales organizations are wise to adopt three data-driven sales training and reinforcement solutions. First, companies must identify the gaps in performance between low and high performers and direct the training program to fill in the gap. To make this assessment, companies must look to sales representatives’ abilities to recognize key customer behaviors—the singularly reliable metric of sales effectiveness. Second, after diagnosing and treating the specific problems of low performers, a company must gather real-time data regarding the post-training performance of its sales force to empower sales managers to proactively coach the team. Finally, sales managers must regularly engage, reinforce and coach. By doing these three things, a company can ensure that their team obtains—and retains—the core skills necessary to compete and succeed. In short, companies can train and work smarter. About the Author: Devra Hirshfeld is an attorney and freelance writer. She is currently in-house counsel at Kixeye, Inc. She is a frequent blog contributor to Above the Law (www.abovethelaw.com). Previously, she worked for SCIEnergy in both legal and marketing capacities, and she has litigated for Novack and Macey and Mayer Brown. This White Paper provided by FactorLab FactorLab works with your existing CRM, sales process language and methodology, saving your reps time while helping managers coach to the customer behaviors that drive pipeline velocity and close business. GrowTM, our flagship product, helps companies sell more with the resources they have today by paying attention to the things that matter most. Accurately record customer behaviors, velocity and account history in seconds, with easy to read reports that help you focus exactly where each account needs attention to move forward. To learn more or get a demo, please contact us FactorLab, Inc. www.FactorLab.com 888.958.3476 [email protected] PowerView is a trademark of Beyond ROI. FactorLab ©2012. 4