Does Your Sales Training Program Address Your Sales Performance Issues? Part 2

In Part 1, we went over the steps to uncover sales performance issues and decide which are applicable at a high priority for pin-point sales skill training. We first documented the main 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

Next we, listed (4) steps to find out if you have any sales performance issues in each individual sales performance silo and if so to what degree. They were:

Step 1: Run the Numbers for any realistic ROI opportunity
Step 2: Run the Numbers hypothetically for a Specific improvement
Step 3: Run the Numbers for a Reality Check
Step 4: Set the Goal and Train to It

In our first example, we looked at a sales organizations performance silo of New-hire Ramp-to-Quota and determined (1) a sales performance issue and (2) a worthy sales training objective and (3) a realistic sales training return on investment.

Lets take that same sales force and utilizing our (4) step process look at the remaining two Sales performance issues; Sales Employee Turnover rate and Time spent versus Result achieved to see what the X2 Evaluator system turns up.

Step 1: Run the Numbers for any realistic ROI opportunity

Our example sales force has 350 sales reps that are responsible for securing new business each month. They currently have a sales employee turnover rate of 45%, or 155 reps per year. Ive found in the sales industries I partner with, my clients average between 30%-70% sales employee turnover per year, so these folks are right in norm. But the norm doesnt have to be the Future.

Heres another important point. In the sales arena, 95% of sales employee turnover is due to Low 1st appointment activity. And in our example sales force, it was nearly 100%. Simply, if youre not creating enough sales appointments each month, you either go out the door or you are Shown the door. Now lets run the numbers to see exactly what this sales employee turnover is costing them and attach a weight of priority to consider pin-point sales performance training.

Here are the numbers relevant to costs:

Average Salary: $30,000
Recruiting Costs: $ 2,000
Training Costs: $ 3,500
Monthly Sales Quota: $ 3,500

In sum, this sales management team is looking eye to eye to a total of $4,512,200 going out the door each year, a combination of revenue ramp up costs on the front end, revenue production loss on the back end, salaries and benefits, then again revenue ramp up costs and salary for the replacement new hire. Its a vicious circle. And once again that total Penalty cost number is an attention getter. Simply put, each sales rep going out the door, due to low sales appointment activity, is costing the company $29,300 of lost revenue.

Does that portray a legitimate sales training Return on investment opportunity? Well, in less you need to invest $29,300 per sales rep in the training of choice to remedy the sales performance issue it certainly does.

Step 2: Run the Numbers hypothetically for a 50% improvement

In this case, I showed the sales management team what return on investment they would get by retaining just half of the sales reps going out the door due to low sales appointment activity.

Using their numbers my diagnostic system showed them a ROI of $2,256,100 just by reducing their sales employee turnover due to low sales appointment activity from 44% down to 22%. Thats keeping 77 sales reps from going out the door and adding to the sales productivity pool.

Step 3: Run the Numbers for a Reality Check

Remember in Part 1 of Does Your Sales Training Program Address Your Sales Performance Issues? we ran this sales force teams key sales performance indicator numbers in the X2 system to see if and where there were leaks in the KPI ship. And we discovered not a leak, but a big ole fire hose.

Two KPI issues were apparent. First, their ramp-to-quota for a new-hire took 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 and a subsequent sales appointment activity number. Thus, their sales appointment activity barometer was only running at 50%. And that we determined dictates a longer ramp-to-quota.

Then we dug a bit deeper in the X2 system and out popped a 6% conversation-to-appointment ratio; they had to conduct 15 prospect conversations to get 1 new appointment.

We then asked the Reality Check question. Is it realistic to focus on reducing the sales rep turnover due to low sales appointment activity in half, from 44% to 22% for a sales training ROI of $2,256,100 or $29,300 per rep?

And we answered yes if they addressed the front-end of their sales process; setting targeted sales appointments. Again as before, they needed to (1) establish an activity standard to reach quota based off of individual KPIs and (2) develop a sales prospecting methodology and supporting system to spend less time in achieving it.

Because most sales employee turnover happens in the new hire ramp-to-quota issue silo, the same pin-point sales skill training initiative kills two birds with one stone.

And if you add those (2) sales training initiatives birds up, it points to $14,532,100 of realistic revenue recovery.

Step 4: Set the Goal and Train to It

Reducing sales employee turnover due to low sales appointment activity now appears to be a worthy one. It makes good business sense for this sales organization. And if we measure our results, we will probably add some more revenue back on the table with additional reps not going out the door to the tune of $29,300 per rep.

As in Part 1, our sales training goal in this case is to spend the least amount of time to get the desired number of sales appointments each week to assure our monthly success. Now as a side bonus, lets take a look at our last sales performance issue silo, Time spent versus Result achieved, and see what, if anything, we can address related to our pin-point sales training initiative.

Time is money. Whats your Hourly rate? If youre a sales rep with a W-2 goal of $100,000 your hourly rate is approximately $51 dollars an hour. Heres an interesting statistic. My clients spend an average of 50% of their time on the very front-end of their sales process; sales prospecting for new opportunities to initiate their sales process. This sales management team gave me an average prospecting time of 45% to plug into the Evaluator system.

And heres what it showed...

The sales reps were spending an average of 20 hours per week on sales prospecting and sales appointment generation. But they were only running at 50% on their Activity Barometer and needed to generate 50% more sales appointment activity; going from 3 new appointments per week to 6. At their current sales prospecting efficiency rate of 6% (15 Prospect conversations to get 1 appointment) they would need to dedicate 33 hours per week to sales prospecting and sales appointment generation. And we know thats not realistic.

But if they set a sales training objective of moving that appointment conversion ratio to 50%, they would not only meet their sales appointment activity number but save 26 hours per week, for a time recovery of 79%, from 33 hours per week to 7. And 26 hours times $51 per hour recovers $1326 Hourly Rate money, allowing sales reps to increase capacity and pursue higher-value, solutions-based selling opportunities.

Once again with our last (2) sales performance issue silos we determined (1) a sales performance issue and (2) a worthy sales training objective and (3) a realistic sales training return on investment.

Ask any CFO what their first impression is when they hear the words Sales Training and they might communicate back their Real world vocabulary of un-accountable and un-measurable. Simply put, they know theyre wasting at least half their sales training budget dollars; the problem is they dont know which half.

As a sales management leader, methodically discovering sales issues first and then running Quantitative sales performance numbers to check for feasibility, worthiness, and return on sales training investment will differentiate you from the pack. And youll stand an excellent chance of getting the result you want.

In this case, giving sales reps a skill-set to set 1 Top-down business appointment in 2 conversations will allow participants to set the required amount of targeted business appointments to assure their monthly revenue goals. So less people will leave, theyll make more money and spend less time and you will recover measurable dollars; something you can actually put your finger on.

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 jeff@convertmoresales.com.

Calculate your sales teams Sales Performance Competencies here: http://convertmoresales.com/marketing_blitz.php

Submit your numbers for a complimentary 30-minute performance consultation with Jeff Hardesty: http://convertmoresales.com/roi_survey.php

Sales Management Training
Sales management is an integral sub-system of marketing management. It translates the marketing plan into marketing performance. Sales management is described as the muscle behind marketing management. Sales management in a modern organization holds ...

Sales Performance Management
Sales management is an integral sub-system of marketing management. It translates the marketing plan into marketing performance. Sales management is hence described as the muscle behind marketing management. The sales manager in a modern organization...

The Measurement of Sales Performance
The measurement of sales performance is an essential part of any business. The success of a company depends on its revenue, which depends on sales. To stay in business, you have to make enough sales that you generate more income than expenses. Sales ...

Sales Performance Management
Sales organizations spend a lot of money on systems, processes, and people designed to improve individual salesperson performance and increase sales results. Yet, most sales organizations remain unable to effectively manage performance, let alone dri...

Can Your Salespeople Respect Someone Who Earns A Fraction of What They Do?
Some years ago I was doing a customer service training program for a very successful financial services company in the Northwest.My contact, the VP of Marketing, told me that he had been visited by someone from a large training company that was selli...

Sales Managers: Post Your Sales Results Conspicuously!
There is nothing quite like peer pressure to make a sales force manage itself.How can you unleash peoples competitiveness?One of the simplest and best ways is by posting sales results in places where everybody can see them.Web sites are great for thi...

Six Steps To Sales Performance Management
In todays day and age a lot of senior managers and sales managers struggle with maintaining their top line growth performance because they neglect their fundamental duties when it comes to managing the performance of their sales team.If you want to t...

Learn the Lingo
A huge part of putting the networking puzzle together is figuring out with whom you want and need to do business. Until that decision is made, most are just going to be doing surface networking. To compare this to a road, if a good foundation is no...

Which is Better Hire a Salesperson or Invest in a Sales Assistant?
What does it cost to hire a good salesperson? Many companies spend about one fourth the annual salary of a salesperson on job placement. They spend another fourth on sales training before the salesperson becomes effective and efficient. Most of these...

Managing an RV Sales Lot
It is not easy to manage and RV sales lot because the sales lots are so large and people can easily come up and start walking around and you may not even ever see them on the lot. Many times these customers will have lots of questions, but they may ...