Understanding the Challenge
Recently, I spoke with the president and the COO/CEO of a $45 million manufacturing company. Our discussion focused on why his sales team wasn't performing as expected. We explored various factors influencing performance, including building better KPIs and conducting more effective funnel reviews.
I pointed out that being a cheerleader for the sales team is vital. He responded, "I pay them. Isn't that enough?" Many managers share this sentiment, but the answer is no. Payment alone does not foster a successful sales environment.
I pointed out that being a cheerleader for the sales team is vital. He responded, "I pay them. Isn't that enough?" Many leaders share this sentiment, but the answer is no. Payment alone does not foster a successful sales environment.
The Data Doesn’t Lie
A Gartner survey found that 90% of salespeople in the United States experience burnout. Of that group, a staggering 70% are actively seeking new job opportunities. This data highlights that simply compensating salespeople is insufficient. When we ask salespeople about their frustrations, they often mention something we call “drag.”
What is Drag?
Drag consists of obstacles hindering a salesperson's ability to sell. Common issues include excessive administrative work, too many meetings, and the paperwork necessary for various approvals. Many salespeople face challenges with technology that doesn't function properly, forcing them to juggle multiple tools that complicate their workflow.
For instance, I once encountered a company whose CRM system would refresh and erase filled-in data, leaving salespeople frustrated. Roadblocks disrupt progress; salespeople may require input from engineers or legal teams before moving a deal forward. When responses take weeks, these delays interfere with selling efforts and create what can be deemed a "sales prevention" environment.
The Cost of Turnover
When considering the investment in hiring salespeople, the financial commitment averages around $200,000 per sales rep. This figure may include salary, training, and technology support. In some cases, that’s base pay. With such a considerable investment, businesses must think strategically about how to maximize their expenditure.
Statistics reveal that 60% of salespeople will not reach their targets. Of that 60%, half are performing at less than 50% of their goals. This means one-third of the sales team is significantly underperforming. Only 30% hit their targets, while a mere 8% exceed them. This represents a significant loss of investment and productivity.
Moreover, the average tenure for sales positions is three years, with an annual turnover rate of approximately 30%. In practice, this means companies constantly replace one-third of their sales teams each year, at a cost of almost $100K per turnover. It becomes evident that while compensation is important, it is far from sufficient.
Strategies for Improvement
In light of these challenges, I propose three critical steps sales leaders can implement to enhance their teams’ performance:
1. Hire the Right People
Hiring must be targeted and strategic. Many organizations look for a salesperson who can do everything well. This ideal does not exist. Instead, focus on hiring individuals with the specific skills needed for the role.
2. Set Realistic Goals
Avoid making wild guesses when setting sales targets. Businesses often aim for a 10% or 20% increase without considering actual data. Half of sales leaders lack confidence in their ability to meet forecasts. In fact, 80% of American companies struggle to predict revenue accurately within a 25% margin. This leads to confusion and anxiety among sales teams. Analyzing your current landscape before determining future goals is essential.
3. Support Your Team
Salespeople need comprehensive support to thrive. This support encompasses training and motivation. Ensure your team understands the product, the company, and the market. Invest time in educating them about the sales process and trends. Regular coaching and guidance are crucial. As a sales leader, your role should be to help remove obstacles rather than contribute to them.
Make the Most of Your Investment
Focusing on these three areas allows business leaders to create an environment where salespeople can flourish. Many leave their roles due to poor management, with 70% of interviewees citing a bad manager as their reason for quitting. Therefore, excellence in leadership is non-negotiable.
Successful sales leaders foster a nurturing environment where salespeople feel valued and supported. They must be proactive in identifying signs of burnout and provide the resources necessary to help their teams succeed.
Ultimately, creating a culture that empowers sales teams leads to greater success—both for individual team members and the organization as a whole. Big investment, bad odds. Let’s shift the odds in our favor by applying these strategies to our sales teams.
