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Moving Sales Out of the Dark Ages
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Moving Sales Out of the Dark Ages
By Paul McCord
There was a time when marketing and advertising were viewed as seat of
the pants processes, based on gut feeling, hope, and simply looking at the
overall results to determine whether they were 'working.'
Instead of trying to understand marketing as a quantifiable activity, the
marketing department would simply generate a number of targeted activities
such as direct mail pieces, radio, TV and print ads, and other such
promotional pieces, then sit back to see what happened. If sales increased,
the marketing was working. Which particular pieces of the campaign were
generating the inquiries and ultimately the sales wasn't known, but the
overall outcome was known.
As marketing became more disciplined and as the marketing department
was put under increasing pressure from upper management to justify
expenditures, marketers had to develop ways to quantify and analyze the
results of each marketing activity they engaged in. Marketing metrics was
born. Over the years, the ability of marketing to track and quantify each and
every dollar spent increased. Not only did the marketing department become
more accountable for their activity, their results increased. By analyzing the
results of their activity they became better capable of determining which
activities would work, what return they could reasonably expect from any
particular activity, and how to very quickly spot activities that were not
producing sufficient returns–and equally important, spot new opportunities.
This isn't to say that marketing has become a science. There is a
tremendous amount of art and creativity in marketing. And certainly not
every company has instituted sufficient monitoring systems to be able to
adequately manage their marketing efforts.
Furthermore, the 'science' part of marketing is still evolving, as it always
will. Managing the marketing function can never be distilled to numbers
only. Nevertheless, marketers work in a fast-paced, evolving marketplace.
They must be prepared to change as quickly as the marketplace changes,
which can be almost overnight. Without real data, needed change to keep up
with the marketplace cannot happen in a timely manner. Any marketing
department that operates off gut feeling and instinct is going to be left in the
dust by their competitors.
This combining of hard data with the art and creativity of marketing has yet
to be transferred to sales. Despite the similarities and the interconnectionbetween the two disciplines, sales has been left far behind marketing when it
comes to understanding what is really working and what isn't.
Certainly, sales has a basic set of numbers. Managers may get reports that
show the number of sales, sometimes by product, of each of their
salespeople. They get commission reports. Possibly call reports. They get
reports that show how sales have increased or decreased over a period of
time–a quarter or maybe a year.
Individual salespeople are expected to know some of their basic numbers,
their closing ratio for instance–maybe even how many cold calls they've
made. They may even know their appointment-setting ratio from their cold
calls.
For most this really isn't data because most of these 'ratios' are based on a
guess, not on real numbers. Ask most any salesperson what their close ratio
is and you'll get an answer such as "45%." Ask how many sales that is and
they'll say, "About 30." Ask how many presentations they made and they'll
say, "Somewhere around 75 to 80." Ask how many contacts they made to
get those 75 to 80 appointments and they'll say, "I don't know, maybe 400."
Ask how many attempts at contacts to reach those 400 prospects and they'll
say, "Gee, I really don't know. Maybe 900."
Their 'ratios' are nothing but guesses and those guesses often have nothing
to do with reality. In fact those 'ratios' are often purposely skewed up or
down by the salesperson to match what they think you want to hear.
Without having a solid database of reliable information, salespeople and
their company are left to guess. More importantly, their production, their
development as salespeople and their future is left completely to luck and
chance.
The consequences of not knowing the actual sales and production data of
salespeople are costing companies billions of dollars a year:
· Sales forecasts are grossly inflated because salespeople base their
forecasts on hope, not reality
· Sales training dollars are wasted because individual salespeople are
not getting the specific training that will help them increase their
production
· Sales leads generated by marketing are not converted into sales
because they are not being closed by salespeople· Sales opportunities are being lost because salespeople are engaging in
ineffective marketing activities and pursing unproductive market
segments
· Sales managers are wasting thousands of hours a year trying to
nurture salespeople in the wrong methods and the wrong activities
· Turnover is unnecessarily high because salespeople don't know what
to do to become successful in their sales efforts
On an individual level, salespeople are suffering more than their company.
Without real data about their sales and marketing activity, salespeople don't
know where to make changes that will positively affect their efforts. They
can only guess and work by trial and error, often washing out of sales before
they accidentally hit on the right things to do.
Yet, all of this wasted time, money and effort are needless. Sales production
is predictable. A salesperson and manager can know exactly what changes
to make to a salesperson's activity and skill set that will have a positive
impact on their sales efforts.
Although sales is an activity whose results are dependent upon a number of
factors such as the individual's skills, the amount of time and energy they
invest, and their ability to find and connect with prospects, those items can
be monitored, measured, and improved. However, without knowing what is
happing in a salesperson's business, effective time management change
cannot be made, effective skill improvement cannot be made, and increasing
their ability to find and connect with the right prospects cannot be made. At
least not in a systematic, disciplined, rational manner. Without knowing what
the root problem is and why it exists, you're left with guessing, with costly
and time consuming trial and error.
With proper and full data, a salesperson can know exactly what their
production will be in the future; they can know exactly where and how to
make real, results changing improvements in their business; they can know
not only which prospects they connect with, they can know exactly where
and how to find them and exactly how to approach them.
The typical data companies and salespeople keep are not only inadequate,
they are almost worthless for making real change in a salesperson's or the
company's future. A completely new set of metrics must be kept. Each
salesperson must have a complete numerical overview of their business
including:
· Complete prospecting data including:
o how many prospects they attempt to contacto how many were contacted, how many appointments were set
o how many of the appointments were with qualified prospects
o the demographic data on those prospects
o how they found and contacted each prospect
o how many prospects bought
o exactly what each prospect bought
· Complete marketing activity data including:
o what market segments they marketed to
o what marketing activities they engaged in for each segment
o what the results were for each activity, not only which activities
generated prospects but which generated sales,
o what each prospect within each segment bought
· Complete sales data including:
o who bought
o what they bought
o why they bought
o why those who didn't buy didn't buy
A lot of numbers? Yes. Will this take a good deal of time and effort? At first,
yes. However, with a well-developed system in place, maintaining these
numbers need not be overly burdensome for either the salesperson or the
company.
Yet, despite the initial trouble of setting the system up on either an
individual or a company basis, the rewards can be tremendous. With several
months accurate data in hand the salesperson or company can accurately
predict exactly:
· what a salesperson's production will be over a period of time
· exactly what changes to the salesperson's prospecting, marketing and
sales process will increase production
· exactly which market segments, marketing methods and sales process
will generate the greatest returns for the salesperson.
Although it is important to institute a metrics system on an individual or
company basis, a much quicker and equally effective process is to have each
salesperson reconstruct their previous year's (or at least 6 months) sales
and marketing history. Whereas with instituting a system going forward you
can generate highly accurate data in a matter of months, by simultaneously
reconstructing a past history the analysis and changes can begin much
immediately.
For millennia, salespeople and companies have treated sales as part art, part
luck, part hard work, with little or no expectation that it can be a predictableand controllable process. Companies spend hundreds of millions of dollars
every year using assessment tools to try to identify quality salespeople, then
leave to chance the result of their hiring process. However, just as
marketing has discovered that their efforts need not be left to chance,
accident or instinct, sales need not leave their discipline to chance or instinct
either.
Will salespeople rebel and feel they are being micromanaged with such a
system? That depends upon how the system is instituted and used. If the
metrics are used to help the salesperson improve and make more money,
then no, they won't feel micromanaged. If on the other hand, the system is
used to beat and berate the salesperson, to spy on and 'keep them in line,'
yes, rebellion will take place. Like any other system within the company, a
full sales metrics system can be an asset or a liability, depending upon how
it is introduced and how the information generated is used.
The marketplace is changing more rapidly than ever and change will
continue at an increasingly rapid pace. Today it is crucial for salespeople and
companies to know exactly what is working and what isn't.
No longer can a salesperson or a company hope to operate successfully
based on instinct. Competition is too fierce, prospects have too many
options, and it is too costly to continue to work from trial and error.
Combining sales, technology, mathematics, and astute analysis can and
eventually will change sales. The question isn't will it happen, the question is
will you or your company benefit from it or be a victim of it?
Paul McCord is a leading authority on prospecting, referral selling, and personal
marketing. He is president of McCord and Associates, a Houston, Texas based sales
training, coaching, and consulting company. His first book, Creating a Million Dollar
a Year Sales Income: Sales Success through Client Referrals (John Wiley and Sons,
2007), is an Amazon and Barnes and Noble best-seller and is quickly becoming
recognized as the authoritative work on referral selling. His second book, SuperStar
Selling: 12 Keys to Becoming a Sales SuperStar will be released in February, 2008.
He may be reached at pmccord@mccordandassociates.com or visit his sales
training website at www.powerreferralselling.com or his highly popular Sales and
Sales Management Blog at http://salesandmanagementblog.com
Copyright 2008, Paul McCord. May be reproduced without change, with proper
attribution and brief bio. Notice of when and where article is to appear to
pmccord@mccordandassociates.comPaul McCord is a leading authority on prospecting, referral selling, and personal
marketing. He is president of McCord and Associates, a Houston, Texas based sales
training, coaching, and consulting company. His first book, Creating a Million Dollar
a Year Sales Income: Sales Success through Client Referrals (John Wiley and Sons,
2007), is an Amazon and Barnes and Noble best-seller and is quickly becoming
recognized as the authoritative work on referral selling. His second book,
SuperStar Selling: 12 Keys to Becoming a Sales SuperStar will be released in
February, 2008. He may be reached at pmccord@mccordandassociates.com or visit
his sales training website at www.powerreferralselling.com or his highly popular
Sales and Sales Management Blog at http://salesandmanagementblog.com
Copyright 2008, Paul McCord. May be reproduced without change, with proper
attribution and brief bio. Notice of when and where article is to appear to
pmccord@mccordandassociates.com
By Paul McCord
There was a time when marketing and advertising were viewed as seat of
the pants processes, based on gut feeling, hope, and simply looking at the
overall results to determine whether they were 'working.'
Instead of trying to understand marketing as a quantifiable activity, the
marketing department would simply generate a number of targeted activities
such as direct mail pieces, radio, TV and print ads, and other such
promotional pieces, then sit back to see what happened. If sales increased,
the marketing was working. Which particular pieces of the campaign were
generating the inquiries and ultimately the sales wasn't known, but the
overall outcome was known.
As marketing became more disciplined and as the marketing department
was put under increasing pressure from upper management to justify
expenditures, marketers had to develop ways to quantify and analyze the
results of each marketing activity they engaged in. Marketing metrics was
born. Over the years, the ability of marketing to track and quantify each and
every dollar spent increased. Not only did the marketing department become
more accountable for their activity, their results increased. By analyzing the
results of their activity they became better capable of determining which
activities would work, what return they could reasonably expect from any
particular activity, and how to very quickly spot activities that were not
producing sufficient returns–and equally important, spot new opportunities.
This isn't to say that marketing has become a science. There is a
tremendous amount of art and creativity in marketing. And certainly not
every company has instituted sufficient monitoring systems to be able to
adequately manage their marketing efforts.
Furthermore, the 'science' part of marketing is still evolving, as it always
will. Managing the marketing function can never be distilled to numbers
only. Nevertheless, marketers work in a fast-paced, evolving marketplace.
They must be prepared to change as quickly as the marketplace changes,
which can be almost overnight. Without real data, needed change to keep up
with the marketplace cannot happen in a timely manner. Any marketing
department that operates off gut feeling and instinct is going to be left in the
dust by their competitors.
This combining of hard data with the art and creativity of marketing has yet
to be transferred to sales. Despite the similarities and the interconnectionbetween the two disciplines, sales has been left far behind marketing when it
comes to understanding what is really working and what isn't.
Certainly, sales has a basic set of numbers. Managers may get reports that
show the number of sales, sometimes by product, of each of their
salespeople. They get commission reports. Possibly call reports. They get
reports that show how sales have increased or decreased over a period of
time–a quarter or maybe a year.
Individual salespeople are expected to know some of their basic numbers,
their closing ratio for instance–maybe even how many cold calls they've
made. They may even know their appointment-setting ratio from their cold
calls.
For most this really isn't data because most of these 'ratios' are based on a
guess, not on real numbers. Ask most any salesperson what their close ratio
is and you'll get an answer such as "45%." Ask how many sales that is and
they'll say, "About 30." Ask how many presentations they made and they'll
say, "Somewhere around 75 to 80." Ask how many contacts they made to
get those 75 to 80 appointments and they'll say, "I don't know, maybe 400."
Ask how many attempts at contacts to reach those 400 prospects and they'll
say, "Gee, I really don't know. Maybe 900."
Their 'ratios' are nothing but guesses and those guesses often have nothing
to do with reality. In fact those 'ratios' are often purposely skewed up or
down by the salesperson to match what they think you want to hear.
Without having a solid database of reliable information, salespeople and
their company are left to guess. More importantly, their production, their
development as salespeople and their future is left completely to luck and
chance.
The consequences of not knowing the actual sales and production data of
salespeople are costing companies billions of dollars a year:
· Sales forecasts are grossly inflated because salespeople base their
forecasts on hope, not reality
· Sales training dollars are wasted because individual salespeople are
not getting the specific training that will help them increase their
production
· Sales leads generated by marketing are not converted into sales
because they are not being closed by salespeople· Sales opportunities are being lost because salespeople are engaging in
ineffective marketing activities and pursing unproductive market
segments
· Sales managers are wasting thousands of hours a year trying to
nurture salespeople in the wrong methods and the wrong activities
· Turnover is unnecessarily high because salespeople don't know what
to do to become successful in their sales efforts
On an individual level, salespeople are suffering more than their company.
Without real data about their sales and marketing activity, salespeople don't
know where to make changes that will positively affect their efforts. They
can only guess and work by trial and error, often washing out of sales before
they accidentally hit on the right things to do.
Yet, all of this wasted time, money and effort are needless. Sales production
is predictable. A salesperson and manager can know exactly what changes
to make to a salesperson's activity and skill set that will have a positive
impact on their sales efforts.
Although sales is an activity whose results are dependent upon a number of
factors such as the individual's skills, the amount of time and energy they
invest, and their ability to find and connect with prospects, those items can
be monitored, measured, and improved. However, without knowing what is
happing in a salesperson's business, effective time management change
cannot be made, effective skill improvement cannot be made, and increasing
their ability to find and connect with the right prospects cannot be made. At
least not in a systematic, disciplined, rational manner. Without knowing what
the root problem is and why it exists, you're left with guessing, with costly
and time consuming trial and error.
With proper and full data, a salesperson can know exactly what their
production will be in the future; they can know exactly where and how to
make real, results changing improvements in their business; they can know
not only which prospects they connect with, they can know exactly where
and how to find them and exactly how to approach them.
The typical data companies and salespeople keep are not only inadequate,
they are almost worthless for making real change in a salesperson's or the
company's future. A completely new set of metrics must be kept. Each
salesperson must have a complete numerical overview of their business
including:
· Complete prospecting data including:
o how many prospects they attempt to contacto how many were contacted, how many appointments were set
o how many of the appointments were with qualified prospects
o the demographic data on those prospects
o how they found and contacted each prospect
o how many prospects bought
o exactly what each prospect bought
· Complete marketing activity data including:
o what market segments they marketed to
o what marketing activities they engaged in for each segment
o what the results were for each activity, not only which activities
generated prospects but which generated sales,
o what each prospect within each segment bought
· Complete sales data including:
o who bought
o what they bought
o why they bought
o why those who didn't buy didn't buy
A lot of numbers? Yes. Will this take a good deal of time and effort? At first,
yes. However, with a well-developed system in place, maintaining these
numbers need not be overly burdensome for either the salesperson or the
company.
Yet, despite the initial trouble of setting the system up on either an
individual or a company basis, the rewards can be tremendous. With several
months accurate data in hand the salesperson or company can accurately
predict exactly:
· what a salesperson's production will be over a period of time
· exactly what changes to the salesperson's prospecting, marketing and
sales process will increase production
· exactly which market segments, marketing methods and sales process
will generate the greatest returns for the salesperson.
Although it is important to institute a metrics system on an individual or
company basis, a much quicker and equally effective process is to have each
salesperson reconstruct their previous year's (or at least 6 months) sales
and marketing history. Whereas with instituting a system going forward you
can generate highly accurate data in a matter of months, by simultaneously
reconstructing a past history the analysis and changes can begin much
immediately.
For millennia, salespeople and companies have treated sales as part art, part
luck, part hard work, with little or no expectation that it can be a predictableand controllable process. Companies spend hundreds of millions of dollars
every year using assessment tools to try to identify quality salespeople, then
leave to chance the result of their hiring process. However, just as
marketing has discovered that their efforts need not be left to chance,
accident or instinct, sales need not leave their discipline to chance or instinct
either.
Will salespeople rebel and feel they are being micromanaged with such a
system? That depends upon how the system is instituted and used. If the
metrics are used to help the salesperson improve and make more money,
then no, they won't feel micromanaged. If on the other hand, the system is
used to beat and berate the salesperson, to spy on and 'keep them in line,'
yes, rebellion will take place. Like any other system within the company, a
full sales metrics system can be an asset or a liability, depending upon how
it is introduced and how the information generated is used.
The marketplace is changing more rapidly than ever and change will
continue at an increasingly rapid pace. Today it is crucial for salespeople and
companies to know exactly what is working and what isn't.
No longer can a salesperson or a company hope to operate successfully
based on instinct. Competition is too fierce, prospects have too many
options, and it is too costly to continue to work from trial and error.
Combining sales, technology, mathematics, and astute analysis can and
eventually will change sales. The question isn't will it happen, the question is
will you or your company benefit from it or be a victim of it?
Paul McCord is a leading authority on prospecting, referral selling, and personal
marketing. He is president of McCord and Associates, a Houston, Texas based sales
training, coaching, and consulting company. His first book, Creating a Million Dollar
a Year Sales Income: Sales Success through Client Referrals (John Wiley and Sons,
2007), is an Amazon and Barnes and Noble best-seller and is quickly becoming
recognized as the authoritative work on referral selling. His second book, SuperStar
Selling: 12 Keys to Becoming a Sales SuperStar will be released in February, 2008.
He may be reached at pmccord@mccordandassociates.com or visit his sales
training website at www.powerreferralselling.com or his highly popular Sales and
Sales Management Blog at http://salesandmanagementblog.com
Copyright 2008, Paul McCord. May be reproduced without change, with proper
attribution and brief bio. Notice of when and where article is to appear to
pmccord@mccordandassociates.comPaul McCord is a leading authority on prospecting, referral selling, and personal
marketing. He is president of McCord and Associates, a Houston, Texas based sales
training, coaching, and consulting company. His first book, Creating a Million Dollar
a Year Sales Income: Sales Success through Client Referrals (John Wiley and Sons,
2007), is an Amazon and Barnes and Noble best-seller and is quickly becoming
recognized as the authoritative work on referral selling. His second book,
SuperStar Selling: 12 Keys to Becoming a Sales SuperStar will be released in
February, 2008. He may be reached at pmccord@mccordandassociates.com or visit
his sales training website at www.powerreferralselling.com or his highly popular
Sales and Sales Management Blog at http://salesandmanagementblog.com
Copyright 2008, Paul McCord. May be reproduced without change, with proper
attribution and brief bio. Notice of when and where article is to appear to
pmccord@mccordandassociates.com
