Sales is notorious for being the most expensive yet least accountable department in just about any organization. It’s quite interesting to watch what happens when a sales manager increases rep accountability with a monthly territory review process.
Monthly territory reviews, one rep at a time, have always been a key fixture in our Sales Process Engineering engagements. Almost every time, the reps begin to surreptitiously refer to them as the “monthly beatings” or by some similar term of endearment. The level of accountability brought to bear is something new, something different, something unpleasant.
Two phenomena begin to kick in, however; one based on logic, the other on ego. After a while, the perception begins to change. (Follow the chart above.) Most often things get started when the boss asks for a forecast for the upcoming year. The normal response includes a quite eloquent explanation of why forecasting is not possible for this territory, because… Boss then asks if rep will cause sales in the territory to grow or decline vs. last year. Rep: Of course I’ll make it grow.
Boss: How much? 10%? 20%? Rep: Oh, I’d say at least 10%. Well, son of gun, it is possible to forecast out 12 months! That establishes the long term growth trend along with projected cash in-flow for the company and commission for the rep.
Now the next boss question… I just looked through the new “CRM” sales opportunity system and it doesn’t look like you have much going on. What are you working on to create that growth? Rep: Well, I haven’t exactly figured out where every dollar will come from. Boss: Oh. Then what’s the gap between what you have in your funnel and your forecast?
Rep: Let’s see… Based on the value of what’s there factored by odds to win and projected close date, I’m about $300K short. Boss: Does that mean since you typically close a third of what’s in your funnel you need to identify $900K worth of additional potential? Rep: Yep.
Boss: Hmmmm. Rep: Hey, no worries, I created this matrix in a spreadsheet. Each row has a customer and the columns show our major products and services. It’s easy to scan it to see what customers aren’t buying what from us …yet. It’s a great way to identify new opportunities. I also have a list – and it’s a really long list – of problems that we can solve with each product and service. I use it to put together my plan for topics to discuss with each customer. Not only that, since I know their businesses so well, I can make a pretty close estimate of how much money they’re throwing way by not using our stuff.
Boss: Gee, that sure sounds like a negative approach. I don’t think attacking a customer’s operation is too smart. Rep: The problem statement is only to quantify the amount of pain they have. I only talk about it long enough to make sure they know they’re hurting. As soon as that happens, I switch to value statement mode. With all the “pain” numbers already agreed to, the discussion instantly becomes focused on how much money we can save them.
Boss: I see. You know, if you use that quantified value statement as the opening line in your proposals, you’d get customers thinking about the business value we bring to the table. It would lead any follow-up conversations away from the product itself and reduce their tendency to go price shopping. Rep: What a great idea! (…like I didn’t think of that on my own…)
Boss: So how much new opportunity do you think you can identify before next month’s territory review? Rep: Well, if I had more tech support…
You can fill in the rest of the conversation yourself. Here are the key points:
- All reps hate the accountability of monthly reviews (…for a while)
- No rep (that you haven’t already fired) will agree that he or she just doesn’t have what it takes to grow a territory
- The logic of the “Monthly Beating” process is rock-solid
And one final note. Sometimes quickly and sometimes slowly, reps come to the realization that they really cannot do their sales job effectively without the discipline of a recurring opportunity ==> goal ==> forecast ==> $ gap ==> product/service gap ==> problem quantification ==> value quantification review.
Added accountability only fails to generate more revenue when a sales manager lacks the toughness to implement it.