CEOs: 42.9% Failure Rate in Sales is Unacceptable!
For the third year in a row, sales effectiveness has declined across all industries. According to the latest CSO Insights report, the average sales organization achieved 57.1% of its goal in 2015. That’s a problem, and not just a theoretical one. Declining sales performance correlates directly, across the board, to declining revenue plan attainment.
Every year when these numbers come out, I wonder how we continue to let this happen. This year, I decided to explore what would happen if other business units performed like our sales departments do.
If your production line looked like your sales line
For companies that produce goods, the production line forms the heart of the business. If you’re not producing, you’re not in business. But what if you were producing something, just not quite as much as you expected? What if the production line, for instance, produced 57.1% of its target for the year?
The company, of course, would be in an uproar if this happened for even a single week. Orders would be canceled, customers would be angry. Massive customer relations campaigns would be launched on one end, and massive internal inquiries and restructuring would occur on the other end. Senior management would become extremely interested and involved in turning the ship around. The decline simply would not be allowed to continue.
Something like this happened in the 1980s when the idea of lean management hit the mainstream. Forward-thinking organizations adopted TQM processes that gave them a competitive advantage in meeting and exceeding production quotas, and other companies struggled to keep up. Those who never successfully implemented TQM, or something similar, eventually stalled out and failed.
But production is not the only area where companies can stumble.
If your technology only registered 57% of transactions
What would happen if your technology dropped 57% of its data? What if, for instance, only 57% of financial transactions made their way into the general ledger?
There would be a board meeting, someone would get fired, and the entire system would receive a high-priority audit and upgrade to fix the problem. It certainly wouldn’t be allowed to go on quarter after quarter after quarter.
Why are we less concerned about a 57% performance rate from the business unit responsible for the organization’s revenue?
What CEOs must do?
Stop accepting mediocre performance
The first step in fixing a problem, is admitting you have a problem. The same CSO Insights report that shows abysmal average sales performance, also highlights the reality that some organizations are way ahead. Top performing organizations consistently hit 110% of their goals and above. High performance is achievable if you set your sights on it. Failing to do so will only widen the gap between your organization and those who succeed.
Make sales and marketing a C-level priority
A years-long crisis won’t be turned around with a few minor adjustments. Reversing the sales effectiveness crisis must become a cross-departmental priority at every level of the organization, and thus must be driven and championed from the C-suite down.
Understand the difference between sales activity and sales progress
In average and under-performing organizations, sales activity is often used as a measure of performance. Traditional sales tools encourage activity-based reporting, which encourages activity-based measurement, which encourages activity-based behavior. However, just driving activities alone is not what drives sales. To be successful, salespeople must perform the right activities, at the right time with the right people in the right accounts in order to achieve progress throughout the sales process. In order to do that, you need to have a formal sales process that is more than a drop-down list in your CRM system… New tools and technologies make it possible to analyze a prospect and salesperson’s progress through the pipeline. These technologies are becoming to sales departments what ERP is to inventory control: Indispensible. The ability to guide, track, measure, and analyze performance across the sales process gives salespeople, managers, and executives the map and insight they need to drive increasing levels of performance, and make swift corrections when something is awry.
Connect KPIs to business outcomes and hold everyone accountable
Once you understand that activity does not equal progress, you can begin to connect business outcomes to the processes and behaviors that actually have an impact. Build systems that allow you to measure the right KPIs to increase predictability and performance.
With a few exceptions, today’s successful organizations already have systems, methodologies, and skills firmly in place for every aspect of their operations and leadership—except sales. Sales in many ways, is the last outpost for process improvement. The technology, tools, systems, methodologies, processes, and skills are available to drive high performance—for those leaders who have the guts and the determination to make it happen.
Have you read?
- How Knowledge Bases Can Help Companies Boost Performance And Productivity
- What Is a Company’s Role In Employees’ Financial Fitness?
- Stop Taking Employee Engagement Surveys as Gospel
- The top 10 worst cities with the most polluted air, 2016
By George Brontén, Founder & CEO of Membrain.