Managing Sales Results Date:   Friday , June 04, 2010 ‘Sales results’ is a phenomenon and managing it is like taming a beast. Sales result is the most objective indicator to the working (or otherwise) of your organization strategy and hence, every quarter end, millions of companies across the globe either celebrate or think back in introspection about the number or the measure. Investors and institutions wait anxiously to learn the outcome. And most importantly the entity that ‘supposedly’ makes this happen, the ‘sales team’, experiences an elation or a dip in emotion when it starts preparation for the next quarter. We usually think of the sales team or the people selling in the field as the ones who impact the sales results. If the results are bad, sales people are put to task and if the results are good, all are rewarded. But is that the whole truth – sales results reflecting the good or bad performance of the sales team? Can accountability for sales results be assigned to people on the field alone? When one looks at all the leading indicators that impact the sales result, it becomes clear that the accountability for those leading indicators cannot be assigned to people on the field alone; e.g. an organization chooses a wrong pricing model on a product. Irrespective of how smart your sales people are, would the organization get the desired sales results? Or, if you do not have good quality people on the field, irrespective of how good your product is, would your organization get the desired results? When accounting for sales results, it’s important to take a holistic view of all the leading factors that impact it and then learn about the entities who own up these factors. * Simply put, there are three major entities internal to an organization that impact the sales results. *Senior Management who deal at the policy level * Managers who deal with talent * Sales people on the field who deal with sales activity on daily basis Can we Manage Sales Results? Can results be managed? In our own lives, do we have control on the outcomes of all that we do? We could relate to our daily life and think. For example, you can place an advertisement in a newspaper. You can write the copy for the ad. You can tell the ad salesperson how long to run the ad and you can pay for it so it runs. You can do a lot of things that create the advertisement. But, you cannot make people respond to your ad. And, when they do respond, you can talk to them; you can help them in any number of ways, but you cannot make them buy from you. If you’re selling a product or service directly, you can decide who to call on, how to call on them, what to say and how to say it. You can manage your actions but you have no direct control over what your prospect or customer will do. The more you think about this and relate it to our day-to-day life, it becomes clear that we do not have control on the outcome of tasks that we undertake. We cannot manage results. While this sounds fatalistic, there is hope yet. We may not control the outcome but we surely control our actions that we perform towards achieving the favorable outcome. We control the help, advice, support, and so on that we obtain in the course of performing our actions. The mantra here is to ‘manage the leading factors impacting results, and results will take care of themselves’. Now let’s try and apply this to the sales world. Let’s understand what is it to focus on some of the most impactful factors for sales people and sales managers. Sales People In my experience, two most important areas that a sales person on the field needs to focus on are his * Pipeline * Relationships Focusing on pipeline would entail managing all the activities around the parameters that impact the pipeline. Important parameters that could impact the pipeline are * Number of opportunities: These are qualified opportunities that are in the pipe of the sales person. There are a lot of activities that are to be executed successfully to have a qualified opportunity in the pipeline. It starts with lead generation and then through a opportunity assessment activity moves from a suspect stage to prospect stage. * Average deal size: This is the average size of all the deals in the pipeline, * Conversion ratio: This is the probability of closure of the deals, ratio of the input in pipe to output, and lastly we have the * Duration of the sales cycle: How much time on an average does it take to close a deal. These are the four levers that can be adjusted by a sales person to impact his sales results. The same can be achieved by focusing on the various activities impacting these four parameters. In other words, Sales productivity=Number of opportunities*Average deal size*Conversion Ratio/duration of sales cycle. Also, on a softer note, but very importantly another lever that a sales person needs to work on day in and day out is his relationship with his customers and prospects. It is a known fact that nurturing such relationships is of paramount importance in making people buy from you. Sales Manager The next important entity that is accountable for managing sales results is the sales manager. A key realization all sales managers reading this article would have by now is that as sales manager one cannot manage the result himself. What you can manage is the activity that produces the result. A key difference between the sales people and sales manager is that the sales managers cannot execute the activities by themselves. Thus their sales results are dependent on how well the team that he manages executes the activities that produce the results. If your people are doing enough of the right things and are doing them well then the results will be achieved. In my experience, some of the important parameters for managers to focus on are Hiring: The first key factor for a sales manager to take care of is hiring the right talent. There is an interesting story about a father and his kid: The father comes back from his office on a rather busy day and brings work back home. His child, on seeing his father back home, insists that he play with him. Father, being occupied with work, sends the kid to his mom and begins working on his office assignments. Minutes later the child again comes back to the father and wants to play with him. The father spots an old newspaper with the picture of the world map on it. He tears the paper into pieces and gives them to the child telling it to put together the pieces, to keep it engaged. Minutes later the child again comes back to the father saying that he’s put the pieces together. The father looks at the world map and it is perfectly aligned. He is astonished as to how such a small kid could do this in such a short time. The child replies that behind the world map there was a picture of a man, he got the man right and the world was right. Thus, it is said that ‘get the person right and the world will be right’. Training: The sales people continuously seek to expand their knowledge and strengthen their skills to be able to present the company’s product or service in the best possible light. Ongoing training as per the needs of the sales people is essential responsibility of a sales manager. Thus, a manager is supposed to identify the training needs of the individuals and arrange for training sessions to help them become more effective in their selling. Coaching and Motivating: Selling skills can be imbibed by training. But it is important to understand how you use the knowledge and skills thus gained in your work life on a daily basis. It’s said that Xerox found that 87 percent of the skills taught in training is lost when people go out in the field without coaching. Thus, it’s very important that a sales manager assesses the skill level of the sales people and how effective they are in front of a customer. He needs to go out in the field with the sales people to help reinforce the desired skills. It also helps him to identify areas where each individual needs to become more effective. Monitoring: To provide correct guidance and coaching to your sales people, you need to be able to measure the progress along the path to sales. This is best done at critical milestones. To be able to do this you would need a system that gives a report on sales activity of your sales people and the status of the prospects in the pipeline. This will help you guide them through the activity that will lead to the steady flow of orders. Your sales meetings can become motivated working sessions rather than de-motivated talk about working harder to reach sales targets. Your sales people will get internally motivated by the certainty of success and their confidence will grow. Eliminating: Last but not the least is your ability to weed out the non-performers to keep a high performing team. This is especially important in a sales function as absorbing a non–performing person in a sales team radically affects the performance of the organization. Senior Management The most important entity impacting the sales results is the ‘senior management’. They decide policies and strategies of the organization and are accountable for many of the leading factors that can have huge impact on the sales results. Some of the important parameters could be Product Pricing and Positioning: Product positioning and pricing decisions at times make or break a product. Appropriate positioning and pricing of a product or a service - based on overall organization strategy, maturity of market, product, and competition - can be a great differentiator for the sales force in the market. Compensation Structure: A properly designed incentive program aligned with the overall strategy of the organization can result in a highly motivated sales force producing results in the direction that the organization seeks to move in. Organization Sales Support Structure: For effectively selling in the market and having customer focus, it’s important for the management to decide on a sales support structure that acts as an enabler to the sales process. Many a times having a structure not aligned to selling becomes a huge roadblock and de-motivator to the sales force. Sales Organization Structure and Processes: Having a well thought through sales organization structure and processes can work wonders for organizations. This could be the basis on which the success story of an organization can be written. If it’s not well thought through it could result in lot of effort being put in by people with very little or no results. Thus, it can be seen that accountability for managing sales results runs through the organization and is not dependent on the field sales force alone. Also, if individual stakeholders focus on the leading factors and activities to manage they will surely be successful. The author of the article is Abhishek Sahay, Director, Business Development APAC & MENA, Talisma Corporation.