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Written by Jeff Hardesty
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Thursday, 14 September 2006 |
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Word Count: 1176 Does Your Sales Training Program Address Your Sales Performance Issues? Part 1
Sales training programs encompass a variety of necessary components; things
like company policies, sales paperwork, CRM/sales force automation orientation,
sales processes, company services, sales skill training and product features and
benefits.
But when I ask Sales executives and Sales trainers how their current sales
training program is aligned with their sales performance issues I get the look
of “No speak English’.
Let’s first categorize ‘Sales performance issues’. There are (4) distinct
sales performance silos that will effect the overall outcome of any sales team,
year in and year out. They are:
• % of Sales reps to Quota
• Average New-hire Ramp-to-Quota in months
• Sales Employee Turnover rate
• Time spent versus Result achieved
This is a good place to start in determining what sales skill training to
implement to achieve a measurable return on investment. But here’s what will
set you apart when you walk the request up to the front office. Start out with
the NUMBERS.
That’s right. Take a diagnostic view of your current sales performance silos,
one by one.
Let’s look at a real sales performance issue example of ‘Average New-hire
Ramp-to-Quota’. I recently conducted a ‘Sales Performance Improvement
Blueprint’ web-cast for this sales organization.
The company was hiring 155 sales reps per year. The ultimate objective of any
new-hire sales training program is to ramp the new sales rep to Quota. Simply,
give them everything they need to effectively reach their monthly sales goal.
So how was this company doing? They were obtaining this ultimate sales training
program objective in 7 months. So how does one determine if that training
outcome is a ‘Sales Performance Issue’? Let’s take a look.
Step 1: ‘Run the Numbers’ for any realistic ROI opportunity
• Each new-hire rep had an ultimate quota of $3500
• Sales Cycle was 17 days
• Average customer term agreement of 36 months
• Average 'Sub-Quota' revenue per month during ramp of $1300 (This number
reflects the average monthly revenue a new-hire achieves before they achieve
quota attainment)
Step 2: ‘Run the Numbers’ hypothetically for a ‘Specific’ improvement
In this case, I showed the sales management team what return on investment they
would get by helping just 1 sales rep achieve full sales quota in 6 months
versus 7 months. Based on their numbers my diagnostic X2 Evaluator™ system
showed them a ROI of $79,200 just by trimming off 30 days. If they did that for
all 155 of their annual new-hires, they could realize $12,276,000.
And that got their attention. So, is it now a worthy sales performance issue to
attach pin-point sales training to? Not quite yet.
Step 3: ‘Run the Numbers’ for a ‘Reality Check’
The most successful businesses — and certainly, sales departments — have
identified their Key Performance Indicators (KPI); individual gateways that
directly effect the outcome of a particular process. Then they measure the
competency ratios in line with them.
A good KPI example in the sales process might be how many times you advance the
first sales appointment to the next phase, whether that’s a demonstration, a
site visit, a survey or a proposal. Another KPI is how many times you gain a new
customer once the first gateway is passed. And when you do gain a new customer,
what’s the average revenue you achieve? And how long does it take to gain a
new customer on average; i.e. sales cycle?
How about how long it takes you to gain 1 new sales appointment, defined by
sales prospect ‘conversation’? And as a by-product of all this, how many new
appointments are needed each week?
We ran these numbers in the X2 Evaluator™ system to see ‘if and where’
there were some leaks in the ‘KPI ship’. And here’s what we discovered;
not a leak, but a big ‘ole fire hose.
Two ‘KPI issues’ were apparent. First, why does the ramp-to-quota for a
new-hire take 7 months when the average sales cycle is 17 days? Second, they
were only setting 3 new appointments per week when they needed to set 6, based
on their other KPIs. So their sales appointment ‘activity barometer’ was
only running at 50%. And that will dictate a longer ramp-to-quota.
Dig a bit deeper in the X2 Evaluator™ system and out popped a 6%
conversation-to-appointment ratio; they had to conduct 15 prospect conversations
to get 1 new appointment.
OK, back to the ‘Reality Check’. Is it realistic to focus on reducing the
new-hire ramp-to-quota from 7 months to 6 months for a sales training ROI of
$12,276,000 or $79,200 per rep?
You bet it is. These folks needed to address the front-end of their sales
process; setting targeted sales appointments. To do that, they needed (1)
establish an activity standard to reach quota by month six and (2) develop a
sales prospecting methodology and supporting X2 Evaluator™ system to spend
less time in achieving it.
Then they needed to plug their sales prospecting ‘system’ into their current
sales training program and work to a weekly sales appointment activity goal to
assure a monthly revenue result by month 6.
Step 4: Set the Goal and ‘Train to It’
A sales training ROI goal of $12,276,000 or $79,200 per rep is for sure a worthy
one. And the diagnostic system showed us they would meet this goal just by
setting 3 additional sales appointment per week per rep; 6 appointments versus
3.
Actually, I lied. The X2 Evaluator system showed an even brighter picture if the
sales appointment activity standard of 6 new appointments per week was met. If
they could support their new-hires with a sales prospecting system that could
help them achieve 6 new sales appointments per week, they would actually cut
their new-hire Ramp-to-Quota by 4 months; from the current 7 months down to 3
months.
And that sales training ROI would be $316,800 per rep or a whopping $49,104,000.
One of the reasons why sales training fails is a failure to define a useful
objective. In this case, our diagnostic method has defined a single useful
objective for them to train to. And this same diagnostic method can be utilized
if you have a ‘Sales Performance Issue’ of an unacceptable percentage of
Sales reps reaching Quota each month.
In Part 2, we will take a look at (2) other sales performance issues, ‘Sales
Employee Turnover rate’ and ‘Time spent versus Result achieved’ with this
same sales management team and see what our diagnostic method to sales
performance improvement and ROI turns up.
Jeff Hardesty is President of JDH Group, Inc. and the Developer of the X2 Sales
System®, a blended training system that teaches sales professionals the
competency of setting C-level business appointments. Jeff can be reached at
This email address is being protected from spam bots, you need Javascript enabled to view it
.
Calculate your sales team’s ‘Sales Performance Competencies’ here
http://convertmoresales.com/marketing_blitz.php.
Receive a complimentary 30-minute performance consultation with Jeff Hardesty
complete with a customized Performance Improvement Blueprint:
http://convertmoresales.com/roi_survey.php
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