Why Sales Managers need to work on the business, not just in the business

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Why Sales Managers need to work on the business, not just in the business

May 26, 2010 in Sales Management, Sales Planning, Strategy

Playing “catch up” is a common challenge for organisations of all sizes. Whether you have enjoyed a period of rapid growth and prosperity, or encountered some unexpected obstacles or losses, with little warning, businesses can discover that their decision making and activity has become very reactive. Too much time is spent putting out spot fires and reacting to situations, while too little time is spent on pro-active and strategic activities.

The very real and legitimate day to day business pressures result in many (if not most) decisions being made on an ad-hoc basis, with each one disconnected from the next. The end result can be inefficiencies, unproductive sales teams, poor business performance or simply wide-spread frustration – leaders are reacting to the markets instead of acting with forethought and vision. If left unchecked, this can become a way of life with disastrous consequences.

By contrast, high performing organisations (both small and large) anchor all tactical activity, decision making and effort to carefully considered and clearly understood strategic objectives which have been underpinned by the discipline of business planning, a capability necessary for all people at managerial level. For clarity, the Encarta Dictionary defines planning as “a method of doing something that is worked out in advance”. With this in mind, what business can afford not to?

With the move to a globalised business world, decisions once made with only the local market in mind now need to take in many more variables and more complex arrangements. With this shift in market complexity we are seeing the need for Sales Managers of all levels to possess more strategic thinking and business planning capabilities if they are to lead and guide their sales teams to business success in the short and long term.

However the reality is that most Sales Managers, particularly at the state and regional level are not trained or equipped for strategic thinking and business planning. From our observations in the field and, in particular, our work in Job Profiling, too many Sales Managers are leaning towards tactical skills and behaviours rather than the strategic. They are often more comfortable working in the field sorting out products, deals and customer issues alongside their sales teams rather than stepping back and looking at the bigger picture. This suggests that the Sales Managers are spending more time working in the business, rather than on the business.

The business world has fundamentally changed and with it has come the need for more sophisticated thinking and action, especially in sales. Whether at a state, national or global level it makes perfect sense for our Sales Manager to be competent in these core capabilities for today and the future.

Dalrymple, Cron and DeCarlo, authors of ‘Sales Management’, state that the core competencies for the 21st Sales Manager are now:

Strategic Action: Understanding the industry; Understanding the organisation; Taking strategic actions
Coaching: Providing verbal feedback; Role modelling; Trust building
Team Building: Designing teams; Creating a supportive environment; Managing team dynamics
Self Management: Fostering integrity and ethical conduct; Managing and balancing personal drive ; Developing self awareness
Global Perspective: Cultural knowledge and sensitivity; Global selling program
Technology: Understanding new technology; Implementing sales force automation; Implementing customer relationship management (CRM)

How do your Sales Managers measure up?

What’s clear is that the 21st Century Sales Manager role at all levels requires an ability to plan, organise and monitor activity, projects and resources to deliver business outcomes and to support the business strategy.

With respect to the future training of all Sales Managers, we find we are encouraging the inclusion of business planning and strategic thinking as part of their training agenda, which will teach them how to plan for success both as a Business Manager and a Sales Manager.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

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What’s channel stuffing and why is it problematic?

April 21, 2010 in Ethics & Values, Sales Management, Sales Planning, Strategy

How much do you actually sell? How profitable are your sales? How accurately can you forecast your sales results? How many ‘returns’ do you receive? How often do you need to discount? How often are you left with old stock? What are your sales cycles? Are your sales people rewarded on volume only or on margin, account growth, account retention, and customer satisfaction?

The answers to these and other key questions will tell you just how effective a sales force is functioning, how they measure their effectiveness, how they think about their business, their customers, their careers, and how likely they are to deliver profitable, sustainable sales results.

Through our observations quite a few companies still only measure their sales results by revenue not what they get back by way of product returns, faulty product recalls, lost business, margins, length of sales cycle, etc. This singular measurement approach doesn’t take into account the real cost of sale or the true sales results that the business is experiencing. This is a common mistake often made by start-ups and new businesses and if left unchecked can lead to unprofitable and unproductive behaviours and compromised relationships with business who take advantage of your situation.

When it really becomes really problematic is when it becomes Channel Stuffing. The following excerpt I found on Wikipedia under Ethically Disputed Business Practices gives a very good explanation of this issue:

“Channel stuffing” is the business practice where a company, or a sales within a company, inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large. Also known as “trade loading”, this can be the result of a company attempting to inflate its sales figures. Alternatively, it can be a consequence of a poorly managed sales force attempting to meet short term objectives and quotas in a way that is detrimental to the company in the long term.

Channel stuffing has a number of long-term consequences for the company. Firstly, distributors will often return any unsold goods to the company, incurring a carrying cost and also developing a backlog of product inventory. Wildly fluctuating demand, combined with this excess inventory, leads to costly overtimes and factory shutdowns. Even mild channel stuffing can spiral out of control as sales works to make up for prior over-selling. Discounts used to drive trade loading can greatly affect profits, and even help establish gray market channels as salesmen no longer adequately qualify their prospects.

Occasionally, distribution channels such as large retailers have been known to identify the practice of channel stuffing in their suppliers, and use the phenomenon to their advantage. This is done by holding back on orders until the end of the suppliers’ quota period. The supplier’s sales force then panics, and sells a large amount of the product under more favorable terms than they would under ordinary circumstances. At the beginning of the next period, no new orders are placed, and, barring any action, the cycle is then repeated. This has an impact on customers, with gluts and shortages as buyers turn to competing products.

Corporations have been known to engage in channel stuffing and hide such activities from their investors. In the United States, the U.S. Securities and Exchange Commission has in some cases litigated against such corporations.”

Although not illegal, the challenges this business practice sets up can have catastrophic effects on business performance. How a business measures its sales results and how sales people are rewarded can have a dramatic impact on channel stuffing behaviours. For instance, if sales people are only rewarded on the volume of sales they send into the market, are tied to unrealistic sales quotas that do not match market expectations combined with no accountability for margins, returns, accurate forecasting, account maintenance and retention, then the ideal conditions for a channel stuffing are in play and we are in real trouble.

To avoid falling into this trap, you may like to analyse the following amongst other things:

True cost of sale
Margins and volume discounting arrangements
Returns policy
Product recall conditions
Trading terms and conditions
Sales incentive schemes
Sales performance expectations
Customer service policy
Length of sales cycle

With you and your sales people being very clear about what is expected and checking for any competing motivations which may create undesirable behaviors will help you from falling foul of the channel stuffing nightmare.

Remember everybody lives by selling something.

Author: Sue Barrett, www.barrett.com.au

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Measuring and managing the right things in sales

October 28, 2009 in Performance Management, Sales Management, Self Development

Who wants to work with accountable, responsible, and self-directed sales people? Of course we all want these types of sales people in every sales team. Yet, most businesses do not support this by setting up their sales team to clearly measure and manage their sales performance.

Sales performance management begins with accurate role descriptions and perception, data collection, and measurement in line with set goals and strategy, however many organisations measure only one variable, sale results (outputs measures).

This type of approach leaves businesses and sales teams in the dark about how they arrived at their sales results making it hard to replicate good results and eliminate poor results.

What is needed in sales teams are clearer measures of what constitutes good sales performance and we need to be able to measure and manage the right things.

So, what is performance and why measure it?

Performance can be equated to behaviour, as it involves what people actually do. It is observable, measurable, and can be changed through the learning and application of new behaviours. It is, however, important to select the right measure in a performance management system as performance measures can influence behaviours and attitudes within the organisation. A good performance measure will reinforce desired behaviours, while a poorly selected or incorrect measure can encourage behaviour that is unproductive and inappropriate.

An effective Sales Performance Management System measures sales results (output measures) and two additional critical variables, input and behavioural measures. The framework means this is done in a consistent and structured way. The following diagram illustates examples of Input, Behavioural and Output measures for sales people.

Input, Beh, Output Measures Small

Evaluation Arrow By giving sales people access to explicit performance information about how they need to do their job they can begin to align themselves to organisational expectations. With adequate training and coaching to support them we will now have sales people working consciously in their roles and on themselves to achieve greater, more competent performance.

Take this opportunity to check if, or how well, your sales people know their performance measures and are they on the path to being accountable, responsible, and self-directed sales people.

Remember, everybody lives by selling something.

Sue Barrett is Managing Director of BARRETT

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The coming together of sales leaders in Australia

October 1, 2009 in Sales Leadership, Sales Management, Sales Research, Strategy

I recently had the opportunity to attend the inaugural Optimising the Sales Force Conference (http://www.osf2009.com.au), along with over 120 high level sales leaders across Australia. I was privileged to be part of the panel of international and local experts presenting on sales effectiveness where we explored the latest research on sales strategy, leadership, learning and development, sales management, sales people, and current market trends.

This was the first time in Australia we have had the opportunity to come together as a profession and share ideas and discuss important matters moving forward. There have, of course, been industry specific forums held for the profession of selling but not one that brought industries of all kinds together to discuss sales specifically. It’s hard to believe but this was the first time this has occurred in Australia and about time to! It was really about driving a better profession. Many people are unaware of just how skillful you need to be to run a sales team or lead a successful sales career.

The conference was full of important information and we also had the privilege of hearing from the elder statesmen of strategic selling 78 year old Bob Miller of Miller Heiman fame, who pulled no punches and reminded us of the foundations of our success. We also heard from Tom Snyder who is world renowned for his expertise in creating high performing sales teams.

Over the next few weeks I thought I would share with you some of the insights and findings from the conference in more depth but here is a summary of the topics we discussed and where our attention was focused. This might give you some insight into where the world of selling is heading.

Everybody is in sales: there was overwhelming agreement that everyone in business is in sales – You are either selling or supporting someone to sell. If your people are disassociating themselves with sales then you need to let them know in no uncertain terms we all live by selling something and they had better get with the program or get out.
New customer behaviours: the economic downturn has changed how customers conduct business and interact with suppliers, while this comes as no surprise there are now new customer behaviours we need to contend with. In particular, the increase in risk aversion was cited as being one of the most contentious issues. This risk adverse approach is leading to indecision by clients meaning that rather than losing to a competitor, nothing happens. So it is critical that sales people are able to work more strategically with clients and challenge them to help them make good decisions moving forward. This requires a more assertive, confident style of sales person.
The Challenger Sales Person: research by The Corporate Executive Board Company reported that we need to find and cultivate the ‘Challenger Sales Person’ who is best suited for these markets moving forward. Some of the key characteristics of these people are that they always have a different view of the world, understand the customer’s business, love to debate, and challenge the customer’s ideas and perspective; in short they are at their best as commercial educators and bringers of new ideas and innovations to help businesses function better.
Coaching, coaching, and more coaching: At least 40-60% of a sales manager’s job should be dedicated to coaching their sales people. Yet it still remains an area that is poorly executed. We were shown excellent case studies which demonstrated the financial return of sales coaching. Many of the case studies indicated that a blend of competent internal sales coaching by sales managers supported by external experts in sales coaching was very advantageous to their sales teams’ performance and productivity.
Role clarity and clear expectations: make sure salespeople and sales managers understand their roles and what is expected of them. Make it explicit and ensure people are adequately skilled to carry out their responsibilities.
Clear the dead wood quickly: sales managers spend too much time with people who produce too few results. Focus your attentions on those people who are already showing they want to do well and are actually doing their job. You have more hope in getting to your better performers to be much better producers than wasting your time on people who will never perform. As Tom Snyder said “Sales managers are guilty of thinking they can ‘save’ these people from themselves” – his advice is “get rid of them now!”
Insight and awareness: despite all the skills, tools, and processes around salespeople and sales managers need to be able to develop their own internal guidance and support systems. The ability to reflect on our own performance, be resilient, show empathy, and work ethically was high on the agenda. Personal insight and making a personal commitment to the corporate objectives is also important for ongoing success.
Connect strategy to activity: your strategy should translate into practical actions people can apply and see results from.
Marketing and sales unite: marketing needs to support sales and sales must support marketing. There is no in between. Hugh McFarlane from MathMarketing stressed the importance of making sure that all touch points and messages are in alignment.
Really connect with your key clients: Bob Miller pressed home the importance of being truly connected to your best clients, however he said you cannot have a strategic relationship that is only one way. Your clients must want it as much as you do and there is mutual agreement on the conditions of the relationship. He stated that most companies are very poor at managing this aspect of their business and it leaves them vulnerable to losing major accounts.
Corporate assets: today’s reality is that in addition to people, property, plant equipment, and IP some of the biggest and most often overlooked assets are companies strategic accounts. They need to be on the agenda of the ‘C’ suite i.e. the CEO, CFO, COO, etc.

I hope that this provides you with some valuable information and insights into what is happening in sales today and into the future. I will go into more depth in the ensuing weeks about these and other topics we covered.

Happy selling.

Sue Barrett is Managing Director of BARRETT

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Who’s delivering your sales training?

September 2, 2009 in Sales Management, Sales Training

You cannot fake real sales experience and sales wisdom. It is one of the professions that is the hardest to teach and train because without real life sales experience you are at risk of being seen as inauthentic.

To help you make the best choice when it comes to selecting the right sales trainer let’s consider the following:

What capabilities do you need to be a good sales trainer?
What attitudes and mindsets can makes sales people and sales results worse?

To sell or not to sell

Without real life sales experience, you will are likely to lack empathy and real insight for the daily challenges of the intricate world of sales. Those who talk about selling but have never had a sales budget to achieve, prospecting calls to make on a daily basis, or need to meet new people and quickly adapt to their styles while trying to understand their needs, will not be as authentic as someone who has been out there and experienced selling for real.

You can have certain knowledge about selling processes, sales figures, or selling strategy but talking about selling and actually living and experiencing a long-term sales career are two very different things.

Over the years of building my own business I have seen my fair share of good facilitators and trainers, but when it comes to training in sales those trainers who lack genuine sales experience find it hard to tackle sales training. They often don’t stack up when it comes to feedback from participants.

The overwhelming feedback from participants on sales training programs, based on research both locally and internationally, shows they want to be trained by a real sales person who understands them on all levels: the thinking and skills required to sell, the resilience needed to keep going, empathising with the challenges and setbacks and how to overcome them, the ability to deal with different people who are not always welcoming, and the business knowledge and street smarts that come from being in the field earning your way as a sales professional.

Based on this information you may well think that all you need to do is put a great sales performer up the front of the classroom and press play.

Wrong!

Many companies do follow this line of thought without the proper consideration for the other skills involved in being a competent sales trainer. Here are some of the common traps companies often fall into when trying to deliver sales training:

Trap 1: Motivational speeches

Many companies think that all sales people need is a bit of motivation to make them sell more so they get in a pumped up motivational speaker with a bit of sales experience to tell war stories and how you can be like them if you only do this or that. The effects of this approach are short lived. It soon wears off. This type of approach is like a hot bath that soon gets cold.

We get a lot of salespeople saying they are sick of these types of approaches to sales training because they are left with little to show for it – they are given no real skills or tools they can use in the field. Here is some feedback from one of our training participants, “Your program was very down to earth and engaging. A wonderful contrast from the loud music, gimmicky motivational speakers we often get. A very effective style, we learnt real skills and took away real tools we can use.”

Trap 2: Promoting your sales person to sales trainer

Another trap can be promoting your sales people to sales trainer with very little support to become a good sales trainer and program designer. As a result we have seen plenty of disasters when you let good sales performers loose on sales training.

If your sale trainer has not been properly trained in adult learning principles, classroom facilitation techniques and strategies, and is unaware about how to create practical learning content that works based on good instructional design, then you are likely to get a good sales performer up in front of the participants telling war stories about their experiences and telling everyone to be like them. That is not training or educating people – at best it may be entertaining but that is about all you can hope for.

This is a recipe for disaster.

Just because you are a great sales person or great motivational speaker does not make you a great sales trainer.

Being a Competent Sales Trainer

The latest research shows that there are 5 competencies encompassing 18 separate skills, associated with being an effective sales trainer. These include business acumen and communication, instructional planning, effective selling skills and experience, talent management, and teaching capability.

The sales trainer is one of the key factors that can influence the effectiveness of the sales training program. Sales trainers perform many different roles including talent developer, coach, mentor, sales talent evaluator, sales skills evaluator, and training program design and implementer.

As facilitator lead classroom training is still a key component of sales training we would do well to examine the competencies and skills required to effectively run these sessions. Barrett have developed a sales facilitator/ trainer competency model that helps us determine and identify skills and performance expectations for new, as well as experienced sales trainers.

Some of the main categories of competencies we look for in a competent sales trainer are:

Sales

Planning and Organising
Prospecting
Building Relationships and Networks
Consultative Problem Solving
Results Focus
Self-Management
Quality Orientation
Comprehensive communication skills
Business acumen and Common Sense

Facilitation

Create Collaborative Client Relationships
Design and adapt course content for an effective learning outcome
Plan Appropriate Group Processes
Create and Sustain a Participatory Environment
Guide Group to Appropriate and Useful Outcomes
Build and Maintain Professional Knowledge
Model Positive Professional Attitude

Within these main categories of competencies there are also several subsets of behaviours and capabilities. Being an effective sales trainer takes more than you would expect.

Trap 3: Not passing on the right attitudes and beliefs

Besides skill, experience, and capability, you should also assess for the right beliefs, attitude and values needed for being an effective sales trainer. Poor or inaccurate perceptions about selling passed on by the sales trainer can damage your sales training efforts on a grand scale.

If you hear a sales trainer say the following:

“Oh we don’t call ourselves sales people here”
“We don’t have to sell – we consult”
“The product sells itself”
“All sales people are pushy and rude and we aren’t like that here, are we?”

Stop the sales training and find yourself a new sales trainer.

Do your internal and external audits:

Be wary of sales people coming to you offering to be your sales trainer. Check their motives. Are they struggling with sales or ashamed of being called a salesperson and looking for an excuse to get out and find another role? Are they overly addicted to self help books and motivational pep talks which pump them up to feel positive, only to be in need of more when the effect wears off? Do they look for or talk about getting ‘quick fix’ answers to theirs or other sales people’s emotional issues about selling?
Be wary of external consultants or sales trainers who are unable to accept that they, too, are sales people. Ask you prospective sales trainer or consultant: “Are you a good sales person?” If they say anything that indicates an emotional denial of their sales role like “I’m a consultant not a sales person’ then that say goodbye fast.

You do not want people like this near your sales teams as they often unwittingly pass their negative, jaundiced views about selling on to their unsuspecting peers and course participants.

Think of the saying ‘watch who you let near your mind’ and remember that includes your sales trainers.

So, who’s delivering your sales training?

Author: Sue Barrett is Founder & Managing Director of BARRETT Pty Ltd

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