Improving Sales Effectiveness With Tight Sales Performance Management

I have found through over 200 interviews with sales & marketing vice-presidents, general managers, salespeople and their mangers that momentum in their selling efforts often breaks down in advanced stages of the selling cycle. Late stage opportunity losses are as high as 25% in some of the Fortune 500 firms I have consulted with. These are leading companies who have, mostly unknown to them, incurred huge costs of ineffective sales pipeline management.

There are many reasons but the rather common ones I have found are:

• the lack of an effective Lead and Opportunity Qualification process, My experience is that not enough time is spent here and “killing” or moving an opportunity forward takes analysis, follow up and a good pre-screening process.

• the lack of a consistent and agreed-to process for lead handling and routing. Here the initial hand-off process of suspects and prospects to salespeople would be well served with discipline and a healthy dose of technology. For example, having inside sales or junior analyst, a $40,000/year job, do a quick follow up with a prospect to confirm basic facts frees up a $110,000 Sales Account Manager to concentrate on bigger things.

• the breakdown of marketing and sales connections and collaboration. How many times has a marketing manager overheard a juicy bit of information at a trade show for example but not been able or forgotten to communicate it to a sales person on time to enable a sale? Many times I suspect.

• lack of key performance indicators (KPI’s) that fit the company’s strategies. Generic KPI’s are great as a starting point, but you have to make these fit the business strategy to really make them effective

• little or no performance management. Read: Sales Managers are not managing for effectiveness, salespeople are not managing for effectiveness or efficiency

“Not knowing what to measure is leading to sub-optimal application of resources – put simply, we are throwing away money and flogging our already time constrained sales people.” Given that the sales performance dynamics of many industrial sector companies is getting highly complex with multiple systems and processes to complete for each transaction, coping with customer buying cycle demands, while at the same time pushing the sales team to maximize face-time with the customer, are companies expecting too much? My research findings show 27% effective face time with the customer in the US and approximately 29% in Europe. This is down from 31% in the US in 05/06 and 33% effective face-time in Europe. Barry Trailer of CSO Insights http://www.csoinsights.com/barry.htm cites similar metrics. The cycle time to close an average sized deal from lead-to-close, is approximately 100 days which is approximately 10 days longer than in 05/06. I really don’t think that the problem is formulaic, i.e. just add a few more salespeople to the mix and we will get back to where we were.

The problem as I see it lies in the ‘gray area’ – the warming up (prescreening) and the smart hand off/routing of leads and opportunities to the individual sales person. In my view companies already have excellent tools and processes that can be leveraged to experience dramatic improvements. Basic business intelligence and performance management will provide quick insights to pipeline, customer past performance, productivity and more. A BIG task is to have the sales manager actually manage the pipeline process, and this is a prescribed transformational exercise that has been harder to implement than I expected. The warmer the lead, the better vetted, the better managed upfront, the better likelihood for a higher close rate and reduction in late-stage-decay.

Given the complexity above, are companies fighting a losing battle to truly optimize the selling cycle with the sales team they currently have? Are there other considerations, e.g. organizational design? How big is the issue of late stage sales decay?