Over the past couple of weeks I’ve had a lot of conversations about sales performance. It’s largely driven by planning for the next calendar year. Too often, I get the comment, “People are making their numbers, but we aren’t achieving our goals!”
Too often, the driving metric for sales performance is “the number,” quota, or the revenue goal. Performance and comp is driven by a single number. It’s binary, you make/exceed it and you are a hero. You don’t make your number and you are on an improvement plan.
One group was, largely hitting their revenue targets. But as we dove into the numbers they were really failing to achieve the overall corporate growth goals. Most of their performance was driven by recurring revenue from existing customers. When we looked at new customer acquisition and expansion within accounts, there was virtually none.
We dove deeper, we looked at the product lines driving the most revenue. Over 95% came from their older, traditional product lines. Yet the future growth of the company was based on success with sales of new product lines and new markets they were targeting.
So while sales people were high-fiving each other for goal attainment and making plans to attend the 100% Club, the company was failing in achieving it’s strategic goals.
Sales performance and goal attainment is much more than making the number. We sellers are responsible for executing the company growth strategies with our markets and customers. This means selling the entire product portfolio, it means expanding into new markets, it requires us to expand our footprint in our current accounts. If we are to support our growth aspirations, the job must be more than maintaining current revenue streams.
Our performance expectations and goals for sales people must be more than just hitting the number. We have to look to balanced performance across the entire product line. We have to look to growth through acquiring new accounts or expanding within current accounts.
Let’s try a thought experiment (many of you have been through this before).
- Imagine a company that has two product lines, A and B.
- We have two sales people, sales person 1 and 2. Each has made their number, they’ve each hit their quota of $5M revenue.
- Sales person 1 did that by selling only product line A.
- Sales person 2 did that through selling a combination of product lines A and B.
Now who is the better sales person and why?
Many respond, “They are both great! They made their goals! Isn’t that what we want?”
My perspective is Sales person 2 is the better sales person. She made her goal by selling all the company’s offerings. The company strategy growth strategy is based on selling both products. She did that, executing that strategy with her customers.
I’d go further, saying Sales person 1, even though he hit his number, significantly underperformed the potential in his territory. He made his number selling a single product line, product line A. Yet there exists potential for product line B in his territory. So he could have sold so much more if he had focused on executing the company growth strategy and not just selling the product he was most comfortable with.
As managers, we need to set goals based on executing our company’s growth strategies. Success is not just making the number, but it’s about making the number in the right way.
We have to make sure we are holding our people accountable for selling the entire product/offering line-not just their favorite products. Even if we have product specialists, account managers must develop strategies to introduce these specialists into their accounts.
We have to grow our relationships within accounts, not just maintain the revenue we currently have. This means we have to prospect, acquiring new divisions, business units, selling to different functions and locations. We have to make sure we are developing strategies to find opportunities for all our offerings within the account.
We have to acquire new customers, not just rely on those we currently have.
As managers and leaders, we accountable for assuring our teams are executing the company growth strategy. Making the number is insufficient. We have to hold our people accountable for balanced performance in supporting the company strategies.
We have numerous tools for doing this, not just the comp/incentive plan. We have to make sure we leverage all the tools, in balance, to assure our people are executing our company strategies with their customers.