Question

Topic: Strategy

Are We Conning Software Sales Recruits?

Posted by steven.alker on 5/12/2006 at 9:06 AM ET 1280 Points
I have become concerned about the hiring and firing practices for salespeople in software and consultancy companies in our industry and related industries and I would value your views on these concerns.

When a CRM, ERP or other software firm decides that it needs someone to sell their products – a sales consultant, business development executive, new business manager or whatever title they choose to use, they either advertise the role or ask one of the hundreds of recruitment firms to find someone to match their requirements.

The personal requirements or attributes are varied, but the key abilities to do the job are always the drive, ambition and sales skill to develop new business, usually with a requirement to bring new prospects to the company and to guide them through the sales cycle until they can close the deal.

Leads are nearly always in short supply and marketing is usually very, very limited. As a consequence, the new appointee is expected to generate their own prospects and to perform most of the tasks we would associate with a marketing function.

The rewards offered are usually (In the UK at least) a basic salary of £30,000 with an on-target bonus which will double this + car allowances and modest expenses. The targets which are set vary, depending on the average value of the software and associated services sold, but for mid range solutions, they are usually around £300K - £400K per annum, rising to £600K for SalesLogix, Microsoft CRM and Sage CRM. That equates to around 20 to 30 sales a year.

The new appointee is usually talented and enthusiastic and after a month’s training (If any is given) they get on with their job. They may be given some on-going accounts to look after, but this appears to be rare and in any case, they will rarely produce substantial orders unless the customer is looking to upgrade or it is a prospect which is well down the line towards making a purchasing decision. Such accounts tend to be looked after by existing senior staff.

And that is the problem. The newbie has to start to generate their own pipeline, which, of course they do with gusto. They work the phones and use whatever tools they have at their disposal to generate leads to work on. They accept the attrition ratio’s inherent in our business – 100 phone calls can result in only one prospect who has an interest and an application which is worthy of a visit. Of course, they can make appointments to engender an interest where one does not yet exist and they can hold discussions to demonstrate the use of their software for applications which the prospect has not even thought of.

What they can’t do is conjure up a budget. Unless the potential client has the authority to create a budget, they will have to wait until funds are made available. Of course, they may be fortunate (Lucky?) to call on someone who has secured a budget for something like a CRM system in their last year’s planning process, but the figures would indicate that this is about 2% who the sales person gets to speak to.

This is the start of the con trick. The sales person works their butt off and will usually be successful in bringing on board around 10 real prospects. What they can’t bring to the table is the availability of a budget which is accessible within a period of a few months.

In fact, the enquiry to order cycle for prospects which have been identified like this is 6 months to 15 months, averaging of 12 months.

Once the end-game is in sight, a good closer will close 1:4 or 1:3 of these prospects, so they need to put 120 qualified prospects onto the company’s books in order to meet target. The timescales drop drastically if the prospects come from leads, because respondents to marketing will have already identified with the qualifying points, but the cycle time is commensurately shorter – 3 to 6 months is typical. It is a fact however that most of these new appointees will join an organisation which is unwilling or unable to carry out the marketing activities needed to put qualified leads into the hands of a talented sales person.

This is what happens. The new sales person works his or her rocks off and by month 2, they are making numerous client visits, closing the sale as far as they can. Budget usually prevents them making the final close. Were they to screen out their prospects by availability of budget they would make few sales meetings and fail to develop prospects whose true sales potential exists, but exists over a longer time scale.

By month 3 the prospective sales pipeline will be starting to look interesting – possibly 30 potential deals on the quote book, but there are unlikely to be any orders booked. By now, the sales director will be making sharp comments about performance against target. The pipeline is promising, but it is not money in the order book. We need actual orders to pay for your running costs. We need a result or I’m afraid that we are going to have to let you go.

Month 4 will consist of frenetic activity, inappropriate phone calls to pressure prospects into placing orders and an attempt to increase performance indicators such a as phone calls, visits, quotations generated and discounted offers to bring the business in, but they will be banging their head against the brick wall of the average order cycle of 12 months.

Month 5 results in the “reluctant” letting-go of the newbie with a months pay in hand.

What are the results of this? Well, if the placement was from a recruitment consultant, the last part of the placement fee is unlikely to be paid.

What do the directors of the company get for this? Probably in the region of 40 well qualified prospects which will go through to the final tendering process. 10 of which will turn into orders with a total value of anything from £100K to £200K.

Insultingly, they are back in the market next month looking for yet another piece of cannon fodder. The real costs are a damaged reputation for the sales person and if they used one, a recruiter who is out of pocket. I feel that this is cynical and disingenuous behaviour which is damaging to our industry as a whole. When we take on a new sales person, I have insisted that we set aside a sum of money to cover the entire costs of that person for 12 months. We will manage them and judge their performance on key performance indicators. We will monitor their visits and discussions and their pipeline. We will, from time to time check the veracity of their sales pipeline and will check it on our own sales forecasting system which looks at not only the figures, the close dates and the chances of a close, but on how these change from week to week.

I do not think that you can judge the success or failure of a salesperson in our industry by orders alone in a 3, 6 or 9 month period. We can judge their application to the job on the other indicators and if we are right, they will just about pay for themselves over 12 months. If I am right, such a person will earn a handsome profit in the second year and enrich themselves appropriately.

What are your views on this scenario and on my analysis of sales in the software industry? Include any software product where the order cycle is in excess of 6 months and where the effort needed for a sales person to generate sales leads off their own efforts is both time consuming and tends to produce leads with a longer cycle of maturity to order.

In short, I think that much of our industry is perpetrating a con on their sales people and I would be interested if you agree or disagree with me. If you do, how can we prevent it? If you disagree, what is your take on this?

Steve Alker
Unimax Solutions
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RESPONSES

  • Posted by Frank Hurtte on 5/12/2006 at 10:05 AM Accepted
    very interesting story. I have seen it repeated in a couple of industries. The commercial cell phone business in the US is very similar. Often what happens is the salesperson who does survive is such a hardened shark they become of no use to the company.

    I personally coach people to direct the actions that will lead to the results you hope to acheive. Rather than look entirely at the results. The simple truth is that very few sales managers can truly describe the sales process they feel leads to success. This fact convinces me that very few sales managers have a process.

    Frank Hurtte
  • Posted by Peter (henna gaijin) on 5/12/2006 at 12:38 PM Accepted
    You definitely describe a problem with the hiring process, which as stated before is pretty common for most any capital goods products. And you are right - the company the sales people work for can benefit by changing their system to ensure they hold on to those salespeople who are performing, yet still weed out ones who are not right for the position.

    It sounds like the compensation process is not doing that right now, and it could be good to re-evaluate the process. Perhaps add some rewards intermediary steps before the sale is completed. Maybe in the first month or two, they are rewarded for the number of cold calls. Then after that, for the number of sales meetings. Then for number of qualified prospects. And on and on. Of course, it can be challenging to ensure that you are rewarding for appropriate actions (for qualified prospects only). This is similar to what Frank had recommended above.

    And of course the new sales guy comes in to no leads/active accounts. The older sales reps are smart enough to grab these before a new sales guy comes in...

    Don't forget the elephant in the room. You mention about sales people doing marketing activities. Is the marketing department appropriate fr the business? Are they bringing in enough quality leads?
  • Posted by steven.alker on 5/12/2006 at 6:32 PM Author
    These are some fascinating responses and I'll reply in detail to each one later as it's 23.30 and I haven't yet sacked anyone today, so time's a bit tight!

    A brilliant start to the discussion. Does anyone disagree with me? Anyone think I'm being a bunny hugging wimp?!

    Steve
  • Posted by darcy.moen on 5/13/2006 at 12:36 AM Accepted
    Is it a hiring problem, staffing problem, or a business model problem?

    From the information and data you have provided, it sounds to me that the results the company expects is out of sync with the realities of the sales cycle. I used to work for such a company, used to are key words. I left them and struck out on my own.

    Look, I think the company needs to have a serious look at their sales cycle. If it takes 8 months to fill the pipeline, what sense does it make to turf the sales staff? It only slows the cycle down more as the new staff has to begin the entire process all over again.

    Before you install the revolving door, why not correct the cranial rectal inversion situation and take a bit of a chance and leave someone in the position for two years. I know its a bit of risk, but if your numbers are right, you'll be ahead of the game.

    My thoughts.

    Darcy Moen
    Customer Loyalty Network
  • Posted by steven.alker on 5/15/2006 at 8:19 PM Author
    Thanks for the rapid responses you have given. I’ll attempt to comment on them and answer some of the points made. One point though, I’m not on the receiving end of these practices, nor am I about to embark on deploying them, though were I to do so, I would undoubtedly enrich myself, if not enrich the value of my company, my reputation or my brand in the long run. And I think that “In The Long Run” offers the fiscal value that this behaviour is sacrificing.

    Vevolution: I agree that my covers almost all capital goods / high value industries, but I focussed on software for two reasons. One is that it’s my business and that I feel that this behaviour is particularly prevalent here. It’s also a market where the product development cycle is fast and whilst an enquiry to order cycle for a cold call might be 15 months and an enquiry to order cycle from a lead can be 6 months, the product is actually capable of moving on during the purchasing decision process.

    For this reason, there might be a belief that staff turn-over is less important. If a company can “update” its sales staff line up as quickly as the technical boys can upgrade the software, it can be portrayed as no bad thing to the customer. The obverse is true as any solution sale depends on the sales person and their team thoroughly understanding the requirements of the customer and then matching them to the benefits the software can offer. In reality, last years product will probably largely still perform next year’s requirements. I’m also a fan of introducing new people into support roles or apprenticing them to learn their job, but that’s not the issue here.

    Frank. The shark survives to do damage to the company. True, and would that they did damage to the directors wallets in the short term, then it would stop. I once accepted a contract for an aggressive CRM vendor and I suggested that we should try to exploit the thousands of no-sales on their own database to see what had changed and to see if two or five years down the line, there was anything that we could discuss. There was, and it consisted of how they could locate and throttle the bastards who tried to mislead them in the past. Even the customers of certain departed sales people wanted nothing to do with this company, ever again. The MD still had a £80,000 car though.

    I also agree that few sales managers have an identifiable sales process. It is an area of CRM strategy which next to sales forecasting simultaneously elicits both the most interest and the most punch ups. Most sales directors know how to keep their jobs though - at least until bonus time. It consists of short term measures at other people’s expense. I once acted as the lead recruitment consultant for an ERP company, and “problem solving solution selling” was their mantra. License shifting was the mandatory requirement of the prospective candidates.

    Peter. The compensation process is defiantly not working and yet the tools to measure and reward people by other criteria exist. Either the vision or the courage to use them is lacking. I have a client who has for years managed their sales force based on 50:50 hindsight. Many might find this to be a bit like steering a ship by looking out over the stern, but this is a false analogy. They measure the number of discussions (Phone and field) and the number of presentations. They record where these come from – leads, cold calls or record cards. They note whether they are from appointments or from speculative calls whilst out and about.

    These figures, critically coupled with a basic reporting of the order potential of the visit, give the sales manager the ability to see if the sales guy is doing enough to succeed. What makes it work is that after extensive product and sales training (8 weeks) they constantly ensure that the aforementioned numbers are backed by top-of-class application of sales techniques. The two Q’s – Quantity of sales effort and Quality of sales effort are deployed.

    Equally importantly, new sales people are allowed the longest average order cycle to get their monthly sales figures up to the initially modest targets set – typically 3 months. Over the next 9 months, the monthly targets ramp to the national levels, adjusted for the historic weighting of the territory compared to the country as a whole. If things go wrong, the numbers are analysed and the sales person is guided. If the numbers are fine, then time is spent in the field to improve sales technique. If after all that, things don’t work out, the guy is given 3 months to find a new job. Staff turnover is still about 10% a year but the company is the most profitable in its sector with the largest growth. My contribution to this has been to computerise a paper based system and to give them an additional 250 hours a month to get on with some selling and stop faffing around with bits of paper.

    Interestingly, they are a fine company to work for, the sales people are well rewarded but they are regarded as very tough and find recruitment a little hard, in comparison to companies which are a lot less truthful and less supportive. Doing the right thing doesn’t always appear to make the sales directors life easier!

    As for sales people doing marketing, (The elephant in the room – nice one!), I’m against it! I’m also against them specifying the components used in electronic instrumentation, servicing their own cars, auditing the company’s books and cooking lunch for the factory floor, with the exception of Christmas Dinner when it is a good idea. Sales people should sell and if they are able to open up new prospects by virtue of being there – leafleting industrial estates between calls, asking for referrals and calling unknown companies when they have run out of all other things to do on a planning day then that’s fine. If they identify a hot prospect without marketing having to spend £70 on the lead, then well done – they should be rewarded, but if they are spending their time doing this at the expense of face to face (Or voice to ear-hole) selling time, they are not doing their job. Sales people earn their money when they close deals and everything else they do is a prelude to achieving that or a postscript in order to retain the business.

    There’s such a plethora of empty headed short sighted, stupid behaviour highlighted from your responses that it is quite worrying, were it not for the fact that we can do something about it, each in our own individual ways. That’s what makes this rather exciting rather than depressing.

    I’d like to respond to the other contributors in similar levels of detail – your comments and observations are worth it, but for tonight I think that I should sign off. I can’t do justice to the later replies at 1.00 am.

    See you all tomorrow, but in the words of my favourite poet:

    We are the hollow men
    We are the stuffed men
    Leaning together
    Headpiece filled with straw. Alas!
    Our dried voices, when
    We whisper together
    Are quiet and meaningless
    As wind in dry grass
    Or rats' feet over broken glass
    In our dry cellar

    Rings a bell, eh! Don’t forget how it ends though:

    This is the way the world ends
    This is the way the world ends
    This is the way the world ends
    Not with a bang but a whimper.

    Regards

    Steve
  • Posted by steven.alker on 5/15/2006 at 8:22 PM Author
    I nearly forgot – perhaps this is inviting a bloody nose, but here goes.

    I was wondering if some of our more hard-nosed members (No, I don’t know who they are) would have the courage to come out up front and say, “Hey, that’s the way the world works, we hire them, they know the rules, they know the targets and they should know the timescales in the industry, so if they can’t defy gravity and bring me in an on-target quota after 4 months that’s hard luck. And if I get rich in the process, so what, that’s capitalism for you. There are winners and losers and I’m a winner. You were a loser, so push off”. “I would say, “thanks for the enquiries and the quotes”, but that might imply some liability for your ruin and that I know what I’m doing, so in the words of The Apprentice, “You’re fired!” And I’ll get the cheque, so tough.”

    But that’s like expecting turkeys to vote for Christmas or Thanksgiving. One admission and the game’s up, but maybe it is about time that we started to close this particular game down and you appear to be giving me ample reasons why we should do so and alternatives which are better for sales and marketing as a profitable and rewarding profession, better for companies which sell in a professional manner, better for the customers who can benefit from a relationship with a sales person which lasts for longer than 5 minutes and better for the careers, health and self esteem of those who have chosen the demanding but potentially rewarding career of a sales person.

    Steve
  • Posted by Peter (henna gaijin) on 5/17/2006 at 3:43 PM Member
    You won't get me to say that "it's the way the world works - get used to it". But that is because even if it works that way, I think we can almost always improve things.

    In this case, there sure seems to be room for improvement. Decide what you want the sales guys to be doing, and reward them when they do that (and not when they don't do it). Sounds like they do have some intermediary steps covered, based on what you wrote. Are they the right ones - not sure about that.
  • Posted by steven.alker on 5/17/2006 at 6:15 PM Author
    Here’s some more feedback on your responses. Sorry it’s a bit long winded – my conciseness gene seems to be malfunctioning tonight.

    Elaine (danmcewen) Thanks for posting this and for your direct email to me when you couldn’t access your password. Your experience is unusual in that you are given an excess of training, it’s just a pity that the company can’t get its training focus correct. It reminds me of a sales team I was tasked with sorting out. As no one had a clue what they got up to my first port of call was some structured reporting. The company’s idea of Sales Reporting was a 1500 word essay from each salesman on every call they made, delivered every week. How on earth I was expected to read that times 15 and do my management job is anyone’s guess. So I replaced it with a numerical report via my new CRM system with a subjective assessment in 200 words of their week, in whatever language they felt fit. I could analyse the former and judge mood and sentiment from the latter. Once the usual excuses for not being able to do things were eliminated, we went for sales training, majoring on technique.

    The best excusologist after that had a problem in that after I’d equipped them with mobile phones, laptops and got them decent cars, that he had too many leads. He was sitting on 7000 enquiries he’d been unable to follow up from the old days and felt that he didn’t know where to start (Those more than 12 months old would have been a sensible place, but as the guy once gave “Having to walk round puddles” as an excuse for being late to an appointment and got me lost in his own home town en-route to another meeting, we had to do something! Still, I gave him a year which is more than the MD wanted.

    Your sales funnel is one of the most valuable tools both to sales people and to management many contributors have alluded to this. Sales forecasting from activities carried out and historic sales levels resulting from activities is, as I’d said earlier a great starting point, but once the sales conversations and visits start, there should be an objective or subjective assessment of the value of the sale, the confidence in closing it and the date you think it will come in at. I used to call this “Canonical Sales Forecasting”. Canonical Ensembles are discrete and isolated units often used in statistical Thermodynamics and in this instance, the ensemble is a salesperson. They are not really canonical unless they don’t talk to their sales manager and to each other, but an awful lot of them keep their performance and their reasons for their performance too close to their chests.

    Using this method and some statistical treatment, the company sales forecast is the sum of it’s parts. It is remarkably accurate because the errors, the enthusiasms and the pessimisms all cancel out. It only fails by chance or if the sales team act in unison and in consort to mislead, and I can spot that by utilising other analysis techniques. I feel happy at giving some reward as a prelude to a bonus on booking a sale because the forecast is so reliable. When someone at 6 months is projecting £300K of sales over the next 12 months despite having booked just a £50K to date I’m actually pleased because I’ve not got rid of them, despite the fact that their £50K will barely pay the bills.

    We use a number of sales forecasting tools, some rule based, some subjective and all are capable of “Drill-Down” so that everyone can see the components, at individual sales level of where a forecast is coming from. I’ve not invented it yet, but a button which identifies “Fairies at the Bottom of the Garden” will be a useful tool. Actually, managing the variations from month to month in a forecast and being able to ask for team members to justify their confidence is equally useful. Dislocations between effort and forecasted results indicate a surfeit of optimism etc. That’s analysis and review by difference and it is often done on a series of spreadsheets, subtracting one months forecast from the last one and the final humiliation: subtracting the last forecast from reality as booked on the accounts system.

    In the context of my question, this kind of system should be capable of being used to prevent the hire / fail / fire situation we have identified, which is management by asking the impossible and then purloining the efforts of the sales person to reap the benefits personally. It’s actually hard to sack someone when all their numbers are in the right area, when their attitude is good and their forecasts are promising and sound. I’ve also been looking at some other sales forecasting tools to assist with the process and Nomis, at www.nomislimited.com which is another Maximizer Business Partner and have developed a very powerful tool called SalesVision which I am looking to get more involved with. In short, it does everything many of you have identified and used as a management tool would allow companies to reward sales people for their efforts in the early days, reasonably sure in the knowledge that the income to pay for their bonus was in the pipeline. Incidentally, it is also very hard to fiddle the figures, so it fits my requirement of not wishing to micro-manage sales people.

    Darcy, I think that were the company have identified a process, it is a fault of policy. That it appears to be an intentional fault is what worries me most – the aim which is emerging is to pay around £12K to £16K in total to gain orders to the value of £100K to £200K. If that is done for reasons of alack of insight, then fine. As a consultant I can seek to put it right with our clients. What really worries me is that there is a sub-text which seems to indicate but not to admit that this hiring behaviour is intentional. I’ve had so many private off the record communications now on this subject that either I’m the target of a conspiracy to make me whinge on others behalf or that it really is widespread and intentional.

    Most of our clients regard the training spent on their sales people as one of their most significant investments and I agree with you that is stark staring bonkers to through away this asset for the sake of short term gain. On the other hand, £200K of business for £12K of investment is a fantastic return and many must be tempted. Especially if the board, the shareholders or the bank are pressing.

    That’s all for this one – 8000 characters you know and I am being rather expansive about this.

    Steve Alker
    Unimax Solutions
  • Posted by steven.alker on 5/17/2006 at 7:38 PM Author
    More feedback:

    Puru: I’ve covered much of what you comment on and you make your points most forcefully. The apprentice and mentoring approach is how it used to be. IBM hired staff as a systems engineer and after a couple of years they could have their own accounts. After 5 years, they could find their own accounts, but they recognised that the sales cycle was 1 to 5 years. That’s gone and it is to the discredit of larger companies which can afford to take the longer view. In some ways it works in their favour in other ways than the “Buying Sales” Over here a couple of IT giants have cocked-up more government projects than I’ve done projects, total. The longevity of their staff is about 6 months and guess what? One of the reasons for failure is staff turnover and the need to release poorly performing staff! The average product sales cycle is 2 years. The promised delivery time is 2 years. The actual delivery time is now nudging 6 years.

    I must comment on your last point. I’ve worked for companies where my knowledge of their target industry has been essential. My knowledge of their own industry is also useful; I know what others are going after. But on joining a new outfit, apart from what is in my head, I won’t expect to hand over a list of clients and on-going projects. They don’t belong to me and any salesman who comes on board with a copy of his ex-employers database is probably committing a crime, his integrity is challengeable and if he’ll do it for me, he’ll do it to me if he leaves.

    In any case, if upon joining a firm a guy goes out to sell the product he was competing against last week, he looks duplicitous and silly. If however he has a fine reputation in my industry, then there’s nothing wrong with him coming along with his contacts and letting them know where he is now working. On-going deals apart, people buy people first and if an account wants to follow the executive then that is up to the customer.

    Tom: Your idea of an internal newsletter, building towards what might be called an empowered independent sales organisation of contractors is a fascinating one. Most industries which employ commission only sales people are in some of the most difficult or nastiest areas of sales where the motivation is money, money and money. Double glazing and flogging over-priced speciality goods to vulnerable people spring to mind, Paediatric beds to seniors and anti allergy vacuum cleaners to asthma sufferers, as do time shares.

    Commission-only is a route to individual riches and is not used as it might be. Instead it seems to be used where the need to close and to close hard or the sale will be irretrievably lost seems to be the norm – take the timeshare market, where if the punter is given the time to really think about the offer on the table, few will retain their sales-person induced enthusiasm to place the order in the cold light of day. My original industry, Instrumentation is one where commission only sales reps still exist and they know that by conscientiously working their territory over several years, they can build an income of £100K for themselves. Few new recruits however will take the bait of a high reward on results but without the comfort of a basic salary and the other trappings of salesmanship that go with it.

    Steve (stlubahn) I agree with everything you say and all the recommendations you make, especially as your comments are derived from a deep personal knowledge from an executive position. Your comment about CRM systems rings very true, but isn’t it depressing that many of the companies which fail to utilise the capabilities of such a system to track, analyse, improve and reward sales people are the very companies which sell CRM systems? That’s seems to say something depressing about my own industry. Your last point about cruelty to be kind, of letting go people who are not up to it is also something I agree with.

    Sadly it’s often built into the employment terms, regardless of the contributory activities. Some software companies even have a policy of “Letting Go” (sacking) the bottom 10% to 25% of their team, regardless of the other indicators. Siebel used to be a company reputed to do this and I’ve even heard that Microsoft are now going to churn their own talent pool based on the individual’s position according to a raft of indicators. If these criteria are known and they are agreed on along with the steps to achieve them then I can see nothing wrong with the policy. If they are used as a cart-blanch to reduce and refresh headcount then each and every salesperson will find themselves working under pressure that can be counter productive. They can make target and still get the chop. However, the company has a right to optimise performance and if one group are doing twice or three times as well as another and the former group cannot make a shift towards better numbers over your 90 days, then it is right that some action should be taken, tough though it is. That’s rather different though to hiring with the apparent intention of firing before someone can be seen to succeed on the headline figures.

    Ron (rbauman): I’ve covered what I think about being expected to come on board with someone else’s hit list, but you also raise the point about the case load that people get assigned. Is cold calling really still a valid tool in the software industry? My analysis of the statistics says that it provides a very marginal return in exchange for a lot of stress and rejection, especially amongst junior team members.

    Have senior people cold call? If only! As you say, it’s, “been there done that, now someone else can do it for me”, yet you’ve got me thinking. The attrition ratios which work against cold calling are those of getting through to a decision maker (10%) and credibility in the call in order to bring an interest and an application to the surface. Most juniors fail miserably on both. But if a senior guy phones up, especially one with an industry reputation, both barriers can be obliterated. The exec will take the call and will then usually be pleased to have a conversation with someone on his or her peer level. So I was wrong about my blanket dismissal about the cold call. I think that it needs preparation though for it to be effective and reputation and publications are a good way in.

    Finally Peter again: From your writings I wouldn’t have had you down as someone who would take that attitude and I’m glad to hear it. The intermediate steps do require a lot of attention and a consensus which is evolving here is that the employers need to be persuaded to look at those steps, define them, measure them and manage their staff based on what they find. I too am not sure that I’ve identified all the correct steps, though by the time I close this I will have a better idea.

    This correspondence has shown me many things and to my mind, proved one of my tenets flawed. I was also coming to the conclusion that my understanding of modern sales management practice was starting to take a disconnection from the practice encouraged and approved in 2006. From your comments, it would appear that my basics are still correct. What I’m seeing a lot of is probably the dumbing down of sales management and management in general, so that the leaders of these companies don’t really know what they are leading their people to or how to lead them to it. The result of this is the hire and fire mentality which prompted me to ask the question in the first place. What an indictment of some of our peers!

    Best wishes for now


    Steve Alker
    Unimax Solutions

  • Posted on 5/19/2006 at 5:24 AM Accepted
    Hi Steve,

    As I'm not an expert, but you asked me to give a comment (this one student home work question and the navarrin for which I was so nice to send you half a cook book) here I am.

    What is it in fact that bothers you?
    What are you afraid of?
    Or angry against?

    Haven't we all gone through the mangle of certain bully bosses and haven't we all had certain unpleasant and maybe even very unpleasant working experiences?

    That mentioned, there have been tons of books written on managing people, performance, HR techniques, hiring and firing processes, ...
    I even had some of these courses specialised for the hotel industry (which you mentioned quite rightly to be one of the most competitive and harsh, specially when it comes to climbing the ladder) at Cornell University.
    All these techniques and all this theory are all very nice and well and they do work, but they do ask a lot of time too. Time of which nowadays nobody has any anymore...
    The cycles you describe are very harsh, so the system needs to be adapted.

    In the strategy planning of the companies there should be a part on what happens if we sack our rookies and end up with nothing in the end ... How on earth is that sustainable and those who do follow certain ethics and that follow the market trend swill prosper in the long run.

    Some companies in the UK thrive on the Investors in People thing, well certain companies do not want to do business with others if they are not IIP.

    What does that mean, that means that official instances will get involved. Do we want that?
    What if the rules and regulations will be changed by governments the world around in regards of rookie sales people hiring and firing?

    Talking bullshit, no sir. I have to deal on a daily basis with staff issues and the unions, and exactly because others do it wrong and take the rules bull by the wrong horns if you catch what I mean.

    All this what you say is common practice in my industry. Hiring and firing is the policy of many "decadent" general managers in my industry. It sucks and has contributed to the reputation that the hotel industry has. Result, nobody wants to work in it anymore...

    Will that be similar in your industry? Will the rookies stay away also from the good companies?

    In my view it comes down to a lot of common sense and human relations that have to be kept human. People leave because of their bosses. People stay if they are intrigued by and feel good with their bosses. People learn and that is the key in your quest: LEARNING. The pool of rookies needs to be big enough in order to generate what you need most: leads, then the senior managers take it further, like somebody else mentioned above. It is in the end a SKILL that needs changing hands. What if the senior guy drops dead tomorrow and you just sacked the only rookie left?
    Then you are standing there with your mouth full of teeth, no?
    And that is why it is not sustainable. Your scenario plays big time in the cards of those that do it right as:
    Leads will eventually result in sales, whatever time it takes, pressure needs to be there to keep the spiral tended and going, like a long spiral where one thing influences the other; a dynamic system of recruiting, training, on the way generating leads, tons of them, then training further and making leads become sales etc...
    That is how we here in the hotel have expanded our sales and marketing team and like you rightly said sales people should sell! They have to sell as part of their wages depends on it. From the other hand do they need support and this support needs to come from the marketing. If in the case like our hotel the marketing has rightly founds its place amongst the other departments you get a team that is very successful and where things HAPPEN.

    What happens in the end: more sales, its a circle.
    The youngsters start from the bottom and work their way up, ...

    So I'm personally against any of these practices you mentioned. We have in this hotel strict rules on hiring and firing (ok, i know the hotel world is not the IT industry, but there are ethics in the equation here that apply to all companies). I do my share of training, supporting, counselling etc etc. We set targets based on parameters relevant to the business and the environment it is on. AND we CHANGE.

    As for the last point CHANGE: this world is constantly changing and a clear thing in what you stated is that those in the bad practices will be the losers as they are not changing.

    So, lets all do a dance around the fire now and change.

    Haha,

    You asked me to give my view so I did, I hope the Navarin tasted nice,

    Regards,

    Wouter
  • Posted on 5/19/2006 at 5:44 AM Member
    Steve,
    And something else; what with the opinion of the potential customers?
    Anybody thought of that?
    What a face do you make as a company when first you let loose an over eager little rookie on a certain account, pushing the prospect to enter in a sales, and probably in an unprofessional way to say the least, then to have this "that pushy idiot from that IT company" dissapear...
    Where leaves that 1. this potential customer, 2. you as a company?
    You look pretty stupid also if the competition fishes out of the murky pool this poor little fish, feeds it, grooms it and lets it back loose as a little bigger fishy, maybe sharky and then goes back with some better tools to the same customer, appologises and on the first hit nails the deal...
    Well,....
    What to do?
    Regards,
    W
  • Posted by ReadCopy on 5/21/2006 at 3:25 PM Accepted
    Its interesting, I have worked around the B2B telecoms and IT industries for 16 years in various marketing and business development roles, and I haven't come across this issue exactly as reported, but something close.

    When a new sales team is recruited or drafted in, it's usually a killing machine, its usually the sales people who can generate their own prospects, or get a good marketing team to generate a good prospect list, or indeed bring their old customers with them (if applicable). Then work with marketing through the classic acquisition cycle (awareness, engage, appointments, sales aids, retention) to help develop the prospects with the sales teams.

    The sticking point with any sales team is the forecasting, a field sales force is an expensive team to operate, they are usually fairly well paid (basic) with perks (pension, car, expenses etc), and their field sales activities (visiting prospects is expensive) ... I recently heard a figure of £250 per visit (but I have worked on larger estimates before).
    There needs to be a spread of forecast, including targetting these teams on prospects contacted, prospects presented to, proposals generated, and orders won. This allows for senior management to see that their sales team is working positively and working towards those all important sales orders.

    This is my view and the way I have managed sales teams in the UK.

    THIS IS A REAL SCENARIO I WORKED WITH:
    I know this is slightly off topic a little, but I though "what the hell, I'll share it".
    Another aspect is what business is cost effective for field sales to persue ... is we accept that the cost of winning a customer for product x out-weighs the revenues product x will generate, then the field sales should not be allowed to sell these items, but to solely rely on a direct sales team (telesales or online etc)

    So we developed products that telesales and field sales could sell, and they differed depending on the revenues the products would generate.

    Thats my lot.

    Good Luck ;-)
  • Posted by steven.alker on 5/26/2006 at 12:29 PM Author
    It’s time to close this one down and thank everyone for their contributions but before that, I would like to make some last comments of the later postings.

    Wouter (Woutkok) – firstly thanks for the recipe, it was great and to put of anyone else from bugging you on line for “How-to cook” guides, when you get a recipe from a Master Chef, don’t be surprised if it takes you about 12 hours to do everything properly!

    I suppose that a huge difference between our industries is that at in catering, there is little to gain in dismissing someone before they have come into their potential, unless they can’t cut it – a point made by Tim (Wiglaf) as well. I’m in awe about the levels of training which rookies have to go through before they get to wear the hat and the trousers and you do make a very important point – what is the alternative to the situation I’m concerned about? It certainly isn’t legislation or more rules. We have enough dead wood in the UK, mainly in the public sector these days (Thanks to Mrs Thatcher, we don’t have many passengers in the private sector anymore.) I think that the protection has to be contractual, with new recruits being prepared to insist on terms of employment which recognise the length of sales cycle.

    And yes, the customers do notice – I’ve had a few prospects of mine who have complained that a competitor has ditched someone who has invested 3 months of their time in building a relationship and understanding their business only to be pushed out. They have been incredulous when a senior manager has expected to take over from where the rookie left off and are suspicious about the commitment the company will offer to them in the long term. It cuts both ways.

    Andrew – I think that your points about forecasting and the cost of making calls go to the heart of the matter. Back in the 1980’s, with an OTE of £12,000 I was astonished to discover that I cost the company £50,000 – that’s £65 a call for a 4 call a day field sales effort, so £250 a call when you are looking at capital sales and a higher remuneration makes sense. It therefore can make sense to farm out the low revenue or low profit calls to another team, but you have to be careful about this. Another team is another expense and if a sales person has otherwise fallow time, you have to do the numbers to calculate if they are better off reaping some low value business at a marginal return or doing some speculative business development work.

    On forecasting and using forecasts to manage sales, I think that we are of one voice. I’ve just launched a series of consultations on the subject of sales forecasting. The deal is that I will give a sales director an hour of my time in order to tell them what I think about their current methods and what they could do if they wanted to. The take-up is about 5 times greater than offering to show them how CRM works – I suppose that is because it is an issue which can be more easily grasped. I actually cover how to measure effort and, if they have collected any figures in the past, how to relate past effort to future sales. The answers are sometimes uncomfortable and a little embarrassing.

    Tim (Wiglaf) Well, well, I can’t accuse you of mincing your words! I can’t disagree with you about the training time, but what I’m getting at is sacking people before they can possibly have bedded in to a company. What you seem to be saying is, “Sh*t happens! So when you are in sales, watch out.”
    Actually, you are right and as long as people walk into this with their eyes open, I’ve not got any problems. I do recognise that hiring someone for their rolodex is a reality. There are two types of experience – one is knowing your industry, your technique and your market backward, the other is knowing of 40 deals which you can muscle in on. The latter type, without the former will fizz like a Catherin wheel until their stream historic deals peter out and they will then fail. Maybe they deserve to.

    If they have the ability to bring in new deals from old contacts, I don’t have a problem with that and if they can generate new deals from new contacts their future is secured. If they try to bring in new deals from partly completed old deals where they didn’t do the work, well, if they did that for me, I’d be a bit worried that they’d do that to me! It’s a dilemma I’ve faced personally – a big deal I knew someone was struggling with makes a tasty opportunity for my new enterprise. In the end, I had to make the call – did the previous employer / partner substantially invest in getting this business to the table or did I, and could I legally take it with me. The answer was usually no.

    Thanks again everyone for this. I’ve had a heap of correspondence about this privately and their conclusions are roughly in proportion to the balance shown here. One recruiter who telephoned me about it said that It highlighted a problem he was aware of and that in future, the only way he’d enter into a success fee payable after 3 months in software sales was if the contract of employment was such that targets were realistically aligned to the sales cycle. Interestingly TEC have just published a white paper on aligning sales goals with SFA procedures and part of that is judging performance by a variety of metrics, not just headline sales. If you want to have a look, here’s the link. Not for the first time, this site is ahead of the field!

    https://www.technologyevaluation.com/Research/ResearchHighlights/CRM/2006/0...


    Bye for now


    Steve Alker
    Unimax Solutions
  • Posted by ReadCopy on 5/26/2006 at 12:49 PM Member
    Thanks Steve, it was fun to be part of that one :-)
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