Lower the Cost and Boost the Productivity of B2B Sales

Sales Growth on a blackboard with Thumbs UpLast month, David Brock, president of Partners in Excellence, published an excellent article titled A Frightening Look At the Cost Of a Sales Person.  Brock recounted some statistics that should disturb senior sales executives, as well as their CEOs and CFOs. For example:

  • The average tenure of a salesperson from the time they start a job to the time they leave is less than two years (Sales Readiness Group).
  • The average tenure of a sales manager is 19 months.
  • 47% of companies say it takes 10 or more months for new sales people to become fully productive (67% are 7 or more months)(CSO Insights).
  • 58% of reps make quota (CSO Insights).

Talk about a recipe for heartburn.  Just when a new rep is starting to become productive, they (and their sales manager) are in the waning days of their tenure with a particular company. And only 58% reach quota. Brock lists a number of reasons for these negative indicators as well as potential solutions. Given the enormous cost of recruiting, training, managing and retaining sales talent, this should represent a red flag for many companies.

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I get a chance to work with many B2B sales executives, and from a marketer’s standpoint, I believe four major problems contribute to a high cost/low performing sales organization:

  1. Poor alignment between the marketing and sales functions. This has become a mantra for me because I see it often and its impact is so negative. You are probably spending big dollars on marketing and sales resources. These resources need to be in sync to be effective, with a clearly defined service level agreement showing objectives, deliverables and timeframes.
  2. An ineffective lead-to-revenue framework. Sometimes, there are too many ad hoc processes going on in a sales organization. For example, rep A handles leads one way and rep B another way. There is no clearly defined set of processes that effectively moves prospects from the “merely interested” to the “paying customer” column.
  3. Failure to grasp the new selling reality. By new reality, I mean that the buyer is more in control of the buying process than you are of the selling process. In other words, the buyer’s funnel has replaced the sales funnel as clients/customers conduct product research, read reviews, discover pricing details and generally equip themselves in a way that make themselves tougher to manipulate, but easier to sell.
  4. Lack of training. By training, I don’t mean the traditional “how to close reluctant prospects” type of education, but rather, teaching sales reps to add tailored information above and beyond what the prospect can find online, and how to be and service-minded partners to your customers.

Jim Hale, founder of Mprove Sales, has a well-earned perspective on this issue that applies both to how you find good salespeople and how you train them to represent you properly. According to Hale, “The costs associated with employing sales and service people are high and finding true performers is a daunting task. Selecting from the best choices reduces your investment risk and increases the likelihood of a successful new hire. B2B companies need to carefully evaluate prospective sales reps in these often overlooked criteria:

  • Territory and Pipeline Development – What processes does the candidate use to develop a robust and high-quality pipeline?
  • Compelling Conversations – What does he or she do to create a business conversation that has substance and value?
  • Business Value – How does the rep create, quantify and articulate the business impact of a solution vs. the technology?
  • Negotiations and Closing – How does the candidate set up the initial offer to the prospect – and explain their framework for negotiations?”

So take the advice of smart people like David Brock and Jim Hale: Get your marketing and sales teams in alignment and build a solid lead-to-revenue framework that will lower your cost of sales and improve your productivity.

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Christopher Ryan

Christopher Ryan has 25 years of marketing, technology, and senior management experience. As both a marketing executive and services provider, Chris has created and executed numerous programs that build market awareness, drive lead generation and increase revenue.
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3 comments

  • Rhiannon J. January 15, 2015   Reply →

    I have managed high sales turnover from a communications perspective. I love your reasons section from a “hard business” standpoint, however, I also would add that companies should make sure they have a cogent field sales communication strategy and the right tactics for reaching their sales teams. We were able to draw a correlation between a new sales force communications strategy and retention at a major Pharma company I worked for– the ROI was intense! Thanks Chris–this is an important topic.

  • Dave Brock January 15, 2015   Reply →

    Christopher: Thanks for the reference to my blog post. I think you’ve hit the nail on the head on several of the key factors that impact marketing/sales and overall organizational performance. A 5th that I might add to your framework is an absence of quality coaching and development by management.

    Without having strong management coaching and developing their teams’ capabilities in each of the 4 areas you outline, and across those 4 areas, each individual and the team will never achieve the full potential possible.

    It’s interesting, we spend billions on the first 4 and invest virtually nothing in helping managers become great coaches. As a consequence, our investments in the first 4 are never fully realized–and in too many cases completely wasted.

    Thanks for the great post, I learned a lot from it. I’m flattered to have been referenced in it. Regards, Dave

    • Christopher Ryan January 16, 2015   Reply →

      Dave, thanks for the kind comments. You are spot on with your point about the importance of management coaching and development. Effective sales coaches know how to evaluate reps and improve their performance over time. They help turn good reps into great reps. who not only make quota, but also create happy and repeat customers.

      Chris

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