2010 continues to be a tough selling year for many companies.  3forward is seeing strong signals that business activity is increasing but many of the firms still tell us that their sales are flat and in some cases declining from last year’s dismal numbers. If that scenario fits your company perhaps it’s time to reevaluate your selling process.  Firms can no longer rely solely on old school methodologies such as cold calling and Rolodex selling to attract qualified leads.

We suggest you start with the basics, getting your targets, markets, and messages right is a critical first step. This is also a good time to assess whether indirect selling channels are an option to expand your presence. Selling to the wrong targets and value propositions that sound like everyone else will fall on deaf ears.  Here are some good ways to start.

• Carefully choose the segments where you can best compete, be honest with yourself on this one!
• Be creative on how you position your firm versus your competitors, focusing on price and capabilities is merely table stakes.
• Be unique in communicating your value proposition and the benefits your solutions provide.
• Identify  examples of innovation whenever possible.
• Do not ignore your existing customers in your efforts to grow your revenues.  Remember, they are your competitor’s prospect!
• Consider in-direct selling relationships and channels (alliances, partnering, sub-contracting) as an alternative sales model.  Many companies miss this as an opportunity to grow.
• Define your sales process and follow it faithfully.

Tom’s key takeaways follow:

• Keep Twitter posts relevant to your business objective, if you sell spa services don’t Tweet about your morning coffee experience;
• Sound Social Media Strategy includes Twitter, Facebook, Linkedin and Blogging – there is no single platform silver bullet;
• When to Tweet?  Consider the Dr. Pepper strategy: 10am, 2pm and 4pm (adjust to your customer base’s local time zone if different from yours);
• Leave character space for Re-Tweets, ideally at least 20 characters;
• Consider setting up AutoFollow for new followers (and always DM a ‘thanks for the follow’).

Tom also offered these Twitter and Social Media Traps to avoid:

• Be careful about who creates your company Twitter account.  Consider having it set up in the name of a company officer and that the username and login are in safe hands;
• If you’re a new user and just starting building your friends and connections, think twice about loading up with your clients right out of the gate.  It exposes your customer list to any savvy competitors monitoring your digital activities;
• Do not make all your Tweets links to something else; simple, value added messages are important.

There is a lot more great information in Tom’s deck.  View it here and feel free to share.

Next month’s Social Media Breakfast Dallas meeting is July 29^th at BravoTECH.  Register here, we’d love to have you join us!

Strangely, many CSO’s struggle in this very important responsibility – and if the numbers or their explanations sound fuzzy – other members of the team may decide the sales leader has something to hide.  Even worse, the rest of team may think the sales leader simply does not understand the numbers themselves.

If you are a Sales Leader with this responsibility we have a few suggestions before conducting your next management level pipeline review.  These guidelines will help guide the discussion and position you as the authority on your pipeline.

• First, apply definitions to your most important pipeline elements, write them on a terms sheet then provide that information at the beginning of the review meeting.   Definitions will make it far more likely everyone understands and sees the numbers the same way, and allow you to spend time on the important parts of your pipeline review.

• Second, test your sales logic on how the numbers look and feel.  Look at the implications of close rates both on existing pipeline and target values (do you have enough qualified opportunities at current close rates to achieve the goals)?   Review average opportunity age and duration to make sure you are not portraying deals that are likely dead as still valid.  Have ‘up to date’ status on the largest opportunities as they are the ones most scrutinized when review teams come together.

• Finally, consider applying activity definitions to your stages, along with traditional stage names.   Activity definitions such as those we suggest in 3forward’s pipeline stages and definitions template (found in our Revenue Planning Template) greatly increase the consistency with which opportunities get classified in the CRM and therefore improve the integrity of the pipeline value estimates.

We have seen too many pipeline reviews end badly for the sales leader when confusion or misunderstanding around the numbers casts doubt on the data.   Simple steps like these can greatly reduce the likelihood that will happen at your next review.    Try it and tell us how it goes.

Most sales leaders are obsessed with their sales pipelines. They review them weekly, push their sales teams to keep them accurate, and hope they have enough to make their sales number. The reality is that many sales leaders do not use a consistent methodology to track, measure, and value their pipelines. Often the difference between a lead and a qualified opportunity becomes blurred and pipeline values become overstated.

Want to learn more?  Join our webcast: Above the Funnel – How (and Why) to Measure Your Lead Pipeline

By implementing some basic best practices you establish pipeline standards that are understood by the entire organization and gives you the greatest visibility to your real pipeline value. To start with, it is critical to know the difference between a lead and a prospect. This seems very basic but some companies don’t differentiate between the two. In 3forward’s definition a lead is a company that is in your target market and is strong or neutral fit based on your sweet spot analysis. A prospect is a company that is actively looking to solve a problem or an issue, meets the above definition of a lead, will make a near to mid-term busing decision, and you are engaged at a decision maker level.

Another simple best practice you can implement immediately is to clearly define your sales stages. For instance we believe it is critical that everyone agree on when a lead becomes a qualified opportunity. The definition of “qualified” will vary from company to company but we generally find that a lead becomes a qualified opportunity when the prospect agrees to review your solution including pricing and associated timelines. Now that you have a definition of a qualified opportunity you can apply it to all deals in your existing pipeline to assess any gaps you may have.

The chart below illustrates 3forward’s recommendations for a logical path from lead identification through sales close, loss, or delay.  We see this process fitting many services sales models or other lengthy / complex selling processes.

(Click Image to Enlarge to Full Screen).

We believe that due to the severity of the recession and the cautious hiring stance being taken by many companies a “New Normal” has emerged. Enlightened companies are looking at ways to streamline their processes and investing in tools rather than headcount to improve efficiency. In this New Normal era hiring managers will be challenged by executive teams on any requests for additional headcount. ROI requirements will replace the “I think we need more people” plea. Sales organizations will not be immune from the New Normal. The days of measuring cost of sales as a percentage of revenue are over. Sales leaders need to implement new processes for lead identification, lead nurturing, and for providing their sales teams qualified sales opportunities to pursue. Finding ways to make your highest cost and most valuable employees more productive won’t be easy. Old school approaches will need to be abandoned and new investments will need to be made, but the cost of change is much less than the cost of failure.

Disagree? Need help? Talk to us.

During a recent workshop we were helping a client standardize a revenue forecasting methodology.   Before we completed the exercise the client had already realized that based on their sales cycle duration and implementation timelines there was no way they could achieve their 2010 sale plan.  That was a pretty sobering realization since they were barely into the second quarter.

We spent some time discussing how the 2010 plan had been developed and the simple answer was that the board handed down the number and the CEO accepted it without being to factually agree to or challenge it.   The client also experienced some unplanned revenue erosion due to a large customer’s bankruptcy at the beginning of the year.   Combined, these situations put the company in a hole that they cannot recover from this year.

It’s critical that when planning for revenue growth you must be both aggressive and practical in your approach. Making sure you have the right investments from a people, product, and process perspective will ensure you have a fighting chance at making the plan, and always count on revenue erosion to avoid those surprises!

I am including a link to our 3forward proprietary revenue planning tool.  We encourage you to download it and do a sanity check on your pipeline’s ability to achieve your 2010 plan.  It will help you determine if you have enough pipeline to make this year’s number.  And if not, depending on your sales cycle you may still have the time to make a course correction and achieve your plan.    (Looking for more information, view our webcast: The Five Most Important Numbers for Sales Revenue Planning).

No longer can you hope your prospects find you on-line simply because you have a kickass, search-optimized website.  You must create a path for your best prospects to find you and a strong inbound marketing program is a good first step. The central premise of inbound marketing is to create and distribute content that is so valuable that prospects are drawn to your website to learn more. Providing information or resources that help them solve problems or make better business decisions will increase the likelihood that your prospects will be loyal, repeat visitors to your site. Also consider deploying the right lead management technology so as those prospects visit your site you can track and monitor their online interactions with you and gain keen insight as to when they become sales ready.

The rapidly expanding social media channel also plays a crucial role on inbound marketing activities. Social media and networks allow us to share information more quickly and allows people to find your firm when the knowledge you are providing spreads from connection to connection. It’s critical that the content be relevant and valuable; general broadcasting of a sales message will be painful to the recipient and have a negative effect.

Looking for guidance on developing your inbound strategy?   Leaders in this new marketing model include Chris Brogan, David Meerman Scott and Ardath Albee. Take time to visit their sites for the latest best practices.  3forward also has many resources and information on our New Tools site featuring best practices from leaders throughout the marketing industry.

There are several key components required for a successful lead generation campaign. Establishing a strong and dynamic web presence however is the fundamental base for your program. You should begin by building a strong website that clearly states your brand message, value proposition and be easy to navigate.  Prospects that come to your site are hungry for relevant information that will help them solve their issues.  Satisfy that hunger by providing white papers, blogs and proprietary tools that will help them address their problems and provide ways for better interaction with your company.  By leveraging your knowledge and expertise and sharing through your website and blog you will establish your company’s products/services as the best in the field and establish a go-to destination for your lead generation efforts.

Want more information on lead generation or website best practices, check out these whitepapers on New Tools:

State of Inbound Marketing by Hubspot

Accelerating the Sale with Web Touch – by Sales Benchmark Index

Top B2B Inbound Marketing Tactics – by Marketing Sherpa

The first step to experiencing the benefits of segmentation is to create a “sweet spot” matrix specific to your company’s ideal target accounts. Begin by establishing the prospect characteristics important to your company. These are the things that enable you to provide the most client value and deliver your services most successfully, examples include revenue, industry, company size, number of locations, installed technology, etc.

List these elements down the left side of a chart and across the top create three columns: Best Fit, Average Fit, Weak Fit. Now fill in the chart for each variable that you listed down the left. We show an example in our webcast, Building a Pipeline That Never Leaks, slides 9 and 10. You can also download our Sweet Spot template. With your “sweet spot” matrix complete you can now tier your targets into best, good, and worst fit categories.

By investing a modest effort in a basic segmentation process you can improve sales and marketing’s focus on the right opportunities.  This can dramatically increase the likelihood for sales success and reduce the time and money wasted chasing prospects that don’t fit your ideal profile.

Here’s a simple question we like to ask CEO’s in our sales readiness workshops. “If hiring sales reps equals revenue growth, why not hire as many as you can possibly find?”   Seriously, if the model is that reliable then you are foolish not to hire every rep you can get into your office. Borrow money if necessary, but just keep hiring because more sales reps equal more sales revenue.  (Yes, starting to sound a bit like stock market investing gurus in the 90′s, but hang in there a little longer).

Back to our workshop.  By now someone raises their hand and points out that not all reps make their numbers so that wouldn’t make sense. OK, true. But if your sales plan that tells you 10 reps is a good number (to pick an arbitrary point) then isn’t 100 better? Either way some make it, some don’t, so shouldn’t the formula hold?

Sometimes it takes an extreme example like this to prove a point. In this case, if the size of the sales team determines revenue, then hiring any fewer reps than all you can find says you are satisfied with growing less than possible. Right? The real question CEO’s should ask their sales leader (or themselves if applicable) is, “How did you determine the appropriate size of the sales force in the first place?”

The truth is far too many sales managers don’t really how many reps they need, so they default to common approaches like span of control ratios – or even worse – dividing total team quota by what they believe/guess a sales rep can close each year. In reality, most sales managers just try to hire as many reps they think the boss will allow, then they spread the quota across the final headcount, hold a kick off meeting and charge off into the year without an honest clue as to how it will all turn out.

Need proof it’s a broken model? Barely 50% of reps are making their quota right now – yet 85% of companies are raising quotas this year.  (And both those measurements separate further every year).  That’s great management, eh?  I’m not succeeding at this process but I’m sure I’ll do better if I set a higher goal next year. We call that a “Looks Good on Paper” sales plan.

CEO’s, here are two inside secrets your sales vp won’t tell you. First, quotas have absolutely nothing to do with how much is sold. They are simply the primary component in the sales compensation formula. Successful reps will sell as much as they can. Unsuccessful reps only fail more miserably against a higher quota than a lower one. Second, sales team size has far less impact on revenue sold than you are being led to believe.

Want to know what truly does reliably and consistently impact sales success? It is three basic elements too many companies think about last, if at all. 1. Marketing. 2. Lead Creation. 3. Sales process. Want proof? Ask your top performing sales rep to list what your company could do right now so they could sell more.   Bet we know the answer.

At the end of the first day Matt and I were in the lobby lounge to meet some friends and compare notes on the day. While we were waiting we were approached by a man who was there with his family, he saw our conference badges and asked who 3forward was and what did we do? Matt gave him the high level 3forward value prop, he smiled and replied “I sell for a living too”. I asked him what business he was in and he replied, “I can sell anything as long as it is priced cheaper than my competition”. With that statement made he headed back to his family.

Neither Matt nor I spoke for a minute and then we both burst out laughing! It should not have surprised us since many sales people often talk about providing value and results only to fall back to the “I sell cheap to win syndrome”. With buyers becoming more empowered and sellers implementing tools to improve their productivity, the days of the dinosaur field sales person are numbered. If it’s only cost that matters, an outside rep will lose to a website or telemarketer every time. We all must evolve or face extinction.

With this kind of ‘above the funnel’ lead generation process now in place (what we call Lead Ready), expanding the sales force in a controlled fashion now makes sense and can produce the revenue ROI your company needs.   Now, part 5 of this series looks at the effective hiring practices to find, attract and close on the top talent you need.  Sales hiring is a science, not an art, and it’s more important than ever.  Remember, the cost of a bad hire is far more than wasted salary and fringe benefits.  Depending on customer contract values total out of pocket cost could easily be millions of dollars.  According to Topgrading author Brad Smart, a bad hire could cost 24X (or more) salary paid in terms of opportunities lost, damaged relationships, and wasted internal resources.

5 Steps to Effective Sales Hiring

The ultimate goal of the hiring process is to increase the number of “A” players on your team.  An effective hiring process has 5 primary steps.

• Planning your search
• Attracting great candidates
• Interviewing
• Successfully negotiating with the chosen candidate
• Assimilating the new hire into your organization

1. Good search planning preparation is critical to attracting the talent you need.  This planning is more than just defining the duties and responsibilities and reporting structure of the position.   Give some extra thought to the background of the ideal candidate.  Make sure your expectations are realistic or you will have a very small pool of talent to recruit from.  Also, make sure you build a compelling company story.  Your ability to truthfully sell your company and its capabilities is an important part of the process.

2. Step two of the process is attracting great candidates.  The traditional path of using recruiters and job site postings is quickly being replaced by social media, groups, and associations.  That’s not to say that executive search firms don’t provide an important function; if you are in a unique industry or have concerns over directly recruiting from a competitor then executive search firms path may be the best for you.  The explosion of social media platforms such as LinkedIn and Facebook can speed up the search for qualified candidates. These platforms allow you to quickly identify, qualify, and in most cases provide for personal introduction or referrals from trusted colleagues.  The most common mistakes in the recruiting process are not evaluating enough candidates and not developing a compelling company story.

3. The interviewing process is the most relied upon candidate selection process and is likely the least reliable method.  Many sales leaders lack the needed skills to interview properly and many make hire/no hire decisions within the first 10 minutes of the interview.  Make sure you understand your criteria for candidate selection.  Separate the “must have’s” from the “nice to have”.  Most of the candidates you interview won’t have the perfect background you seek; you need to make sure that you find the right balance when making your selection.  As past behavior is the best predictor of future results look for a verifiable track record of goal attainment and accomplishments.  The interview is also the right time asses the cultural fit between the candidate and your organization.  For example, if your organization is dynamic and constantly changing and the applicant prefers a stable status quo environment there will be cultural misalignment.  Ensure that the candidate understands that you will check and recheck references, trust but verify!

4. Now that you have the right person how do you successfully close the candidate. Continue to focus the candidate on the compelling story of your company, keep reminding the candidate why they would want to work for your firm but make sure they are valid reasons.  Hopefully you started the compensation discussion early in the process, the first or second conversation would be ideal. There is nothing worse than going through the long selection process only to find you are miles apart on compensation. Allow yourself a little wiggle room on compensation but don’t fall into the trap of playing games.  Make allowances for the right person but don’t make commitments that could cause conflict with the existing sales team, it’s hard to keep compensation confidential in any organization.

5. The applicant accepted, now what? Assimilating the new hire into the team is an urgent matter. I can think of several occurrences during my career where I lost a good person because I thought my job was finished when the acceptance letter was signed. If you don’t have a formal orientation program develop one.  Making sure that the new hire has a thorough understanding of the company and its processes will help get a new person comfortable quickly. Send a note to the spouse of the new hire welcoming them to the corporate family. Our jobs are always easier when we have the support and backing of the home team. I have also found that providing an internal mentor/confidant will help the new person navigate the political landscape more quickly and also gives them an additional go to point if their sales leader is not available.  Effective hiring requires a significant investment of time and effort, assembling a team of “A” players should be the number one priority of your time.

The primary sales benefit of integrated lead management is tracking and reporting on the digital behavior of prospects to determine when they have entered a research state or are ready to buy. Knowing when a prospect goes from unqualified to qualified ensures higher quantity of leads at the lowest cost, since expensive sales resource is not being wasted tracking unqualified prospects.   There are now several feature rich tools available to automate the lead management process.  In fact, some tools have so many features that it is possible to build in too much complexity.  A best practice is to implement a basic process first then add features and capabilities as you become proficient at managing the activities.

When you are ready begin evaluating the following lead management systems consider these features and capabilities (just remember know your markets, targets and messages before you try to automate anything!).

The ability to launch and track emails and newsletters

This function is critical to effective nurturing and drip campaigns. Having knowledge of who opens your email and the ability to track when they click through to your website will allow you to understand their specific area of interest and will also help to establish a lead scoring methodology. The tool can also be used to automate the drip marketing function. If a prospect shows interest in a specific area, workflow rules in more advanced products can automatically email a white paper or other relevant information to the prospect either immediately or on predetermined schedules, an excellent way to stay top of mind with your prospects.

Lead Scoring and Prioritization

The ability to track who specifically is reading your outbound messaging, who visits your website, what they look at, and how long they look are important components of lead scoring. Large amounts of activity by senior executives would rate a higher score than lower activity by less senior people.  The benefit is this process keeps sales focused on leads that achieve high scores, meaning their activity has shown they are in research or buy mode.   Advance thought needs to be given to establishing your scoring methodology to ensure you know when a prospect moves from unqualified to qualified.  Having the capability to include category tags or fields in your lead database is important for more refined scoring approaches.   This feature is also available in more advanced products.

CRM Integration

By integrating your lead management system with your CRM system it is possible to track prospects real time. The minute a prospect hits your qualified stage it can be automatically moved into your CRM system and assigned to the right rep for immediate action.  If the sales organization determines it is not yet qualified they can move the prospect back into the lead management system for additional tracking and nurturing. This ensures no prospects leak from your funnel.

Analytics and Campaign Measurement

This key capability is what ties together the all the push, campaign and content delivery elements of the more advanced lead management systems.  This feature allows you to track visitors to your website and determine who is actively researching or interested in your products and services.  It tells how they originally reached your website, and what features of your offerings they’re most interested in learning about based on the pages they visit and the downloads they complete.  Visitor analytics information also helps you to refine and fine tune your scoring process.  It’s hard to achieve this level of integrated dashboard with disparate tools – so to really make this work seamlessly consider only the more advanced lead management offerings.

Now that you have the right targets, the right messages, the right tools, how do you build and motivate a high performance team?  We will finish this series with Part 5; Now, Hire That Rep!

Their reasons for delay were the same objections many others have when considering these new tools and new model for selling.  Those being: time to learn both what to do and how to do it; concern they won’t have enough value-added content to make it work and the lack of internal resources to launch and manage the new operation.

What I’m afraid may not have sunk in during our talk is that not participating in this new customer engagement and acquisition model is conceding to a guaranteed demise.   That some industries and segments are not as far along as others is the only thing saving some of these companies who fail to recognize or admit to what’s happening in the marketing and sales world.

Bottom line: the time is fast coming when you won’t be able to hire enough reps, make enough cold calls or push enough brochure-ware to keep your revenues above the breaking point.   As more and more buyers (business, consumer, small, large, etc.) move to ‘Buying Process 2.0’ every industry will eventually reach the stage where those suppliers not active, participating and engaged in the new marketplace will become irrelevant.

*****

For more on what’s changing and the impact it’s having, here are a couple excellent blog posts by some other leaders in this movement that we follow.

Could Sales 2.0 Turn Your Company Into a Victim of Change?

The 22 Immutable Laws of Marketing No Longer Apply

Generating leads and managing those leads through their lifecycle requires a disciplined approach to yield the greatest value. A combination of inbound and outbound elements allows your firm to be top of mind with both immediate and future prospects. This process allows your sales team to focus the bulk of their sales activity on those “qualified” prospects that have an identified need and are showing the right indications of making a buying decision in the near term.  For those targeted prospects that are not yet qualified you need a process that allows you to “stay in touch” with them and to identify when they become sales ready.

We believe that the keystone of any lead generation process is the ability to manage, nurture and score all these leads (1) over time and (2) in an automated system.  Fortunately, there are several strong software solutions which provide this dual functionality.  The very compelling ROI from these products comes from better targeting of sales ready leads and the reduction of sales time your team will expend following non-qualified / non-sales ready leads.

Looking at outbound lead generation, both cold calling and email marketing are typical examples most companies deploy.  Each has pros and cons but both require the need to deliver a clear message in order to capture the attention of the prospect and get them to take the action you want.  The action may be a return phone call, signing up for a webinar, or responding to an email.  Investing time on script and message development will significantly improve lead generation response.   A word of caution, do not use either of these push methods to “sell” a prospect.  What they can be when applied correctly are excellent ways to drive in-bound traffic to your website, create lead traction and begin moving leads into your sales process.  For content that works well, consider providing unique insight or information, a tool or template or some other form of relevant content that will engage prospect and lead them to viewing you as a resource point.

Your outbound program should dovetail with your inbound lead generation program.  Email marketing and webinar invites should attract traffic to your website. The use of social media products such as LinkedIn, Facebook, and Twitter, if aimed at the correct audience, can also generate traffic and help establish you or your firm as a credible, go-to source for information and insight.  The key to effective social media participation is both the discipline to provide meaningful content and the time commitment to participate on a regular basis.  It’s usually a good idea to separate your personal and professional social media participation; prospects aren’t really interested in seeing your vacation pictures or reliving your college memories with you.

Our next post will focus on the required features of the tools and solutions that automate the lead management and nurturing process.

Where to invest? Consider linking in-bound and out-bound lead generation programs with sales intelligence tools that help identify when a prospect is a sales ready lead. This kind of lead management and analytics can make your team far more effective and allow them to focus their limited time on high probability targets. Getting there requires focus and collaboration of both sales and marketing leaders. Both groups need to rely on each other for action and the necessary feedback needed for course corrections as the program matures. The tasks below will help you set a course for success.

The first step in the process is to develop a target prospect list. This seems simple enough but many of the firms we work with truly believe that everyone in the universe is a prospect. One way to avoid this mistake is to develop a prospect sweet spot matrix. Look at your existing client base and determine why those clients are a good fit with your organization. Is your success based on client size, vertical market or industry, a special need or situation where your firm excels?

Once you have completed this exercise you can then build a realistic target list.  Prospect lists can be purchased from a variety of sources such as InsideView, Hoovers, Genius.com and several other companies. Many of these tools have excellent features and functionality and can really accelerate the research process. Be aware that these lists compile information from several sources and although generally accurate, additional research is often needed to confirm names and contact information. We believe it is a best practice to outsource the list verification process, as using your sales people to do this work is a very expensive way to accomplish this task!

Now that you have an accurate target list it’s time to get selling, right? Rather than turn the sale force loose on low probability cold calling we suggest a far more effective model. Implementing an in-bound and out-bound lead generation process provides your team with sales ready qualified prospects and also nurtures those targets that may become buyers in the future.

When implementing this process think about these critical components:

• Messaging and value propositions specific to the buyers in your target list
• Lead nurturing programs to keep your firm ‘top of mind” with your prospects
• Automated lead management tools that determine what clients are really interested in and how to engage with them in an effective manner

Next, we’ll expand on best practices for lead generation and lead management tools that will supercharge your sale efforts!

You now have an open position with quota associated with it so you must act quickly to fill the slot.  Hopefully you began the recruiting process well before the attrition took place.  If so, you probably spent 40 hours of management time refreshing the job requisition and position description, meeting with Human Resources and external recruiters to get the recruiting process underway and wading through the stack of “qualified” applicants that were presented to you.  You were very lucky and found two candidates that have the experience and the track record you need. These candidates went through the corporate interview process and you settled on one of them as the final candidate.   The offer was made, accepted, and the new hire is on board.   It only took a total of eight weeks and the problem is solved, right?  Well, maybe not.

It may have only taken eight weeks to get the new rep on board but it will likely be quite some time before the sales person achieves any meaningful results.   For all practical purposes this person is starting from scratch, even if they come with “Rolodex.”  Qualified sales pipeline will need to be established which can take several quarters of prospecting and presenting.  Once the pipeline is established, based on your sales cycle it could easily be 1-3 more months before any opportunities begin to close.  That means it’s probably too late in your plan year to have a meaningful impact on quota attainment.

What did that cost you?   Your cost of sales started on day one with the new hire. You incurred salary, draw, benefits, and overhead costs well in advance of generating the first sales dollar.  We tell ourselves that’s the way it’s always been, we need to make investments in sales before we see results.  It is true that we need to invest in sales to see results, but there are new methods that can yield better and quicker results.  Based on the scenario above and assuming a solution sales environment, total compensation, fringe benefits, and overhead load can easily exceed 300k annually for a rep at 100% of plan.  If a new rep becomes productive in month 6-9 your fixed cost before sales contribution is in the 150K-200K range.

Let’s consider the costs and benefits associated with bringing on a new sales person versus raising the performance of the existing in-place sales team through the use of new tools, inbound/outbound demand generation programs, and business intelligence tools that allow for precise prospect targeting.

This alternate approach would be to use that same 150-200K in expense dollars and use them to make investments in both your existing sales team and the processes you employ to ensure their continued success.  This approach not only yields better results it also ensures that you reduce the risk of non-planned attrition. A sales team making good commission is less likely to seek other green fields.

In part two of this post we will explore what investments make sense and yield the most in sales increases.   In part three we’ll provide a more metrics based model to help define when it is time to get back to growing the team.

The current economy and increased use of technology by buyers has changed that process forever. Buyers can now research companies, products, and solutions without even engaging with a sale person. Sales resources continue to be constrained and revenue expectations continue to rise.  Finding ways to gain actionable insight into an account is critical to increasing sales effectiveness.  Fortunately, there are highly effective new tools available to replace the old school methods that are no longer effective. Prospect analytics and integrated lead management are two commonly used methods of gaining insight to prospect digital behavior and will help guide the sales organization to sales ready opportunities.

Whether you are trying to expand existing relationships or win a new logo, effectively deployed account intelligence and will help you craft a winning playbook. Clearly understanding the client landscape by gaining in depth knowledge of the account’s sourcing process, current suppliers, and key issues will allow for better prioritization of sales assets.   As well, these lengthy, complex sales will require a combination of periodic “deep dive” assessments coupled with ongoing active surveillance to adequately monitor key trigger events.

Integrated lead management tools are solutions that monitor your website activity and report back to your lead tracking and CRM the digital behavior of who is visiting your site and what they read.  Knowing who these otherwise stealth prospects are, and what specific interests they have, can both shorten the sales discovery process and allow you to provide targeted information timed to their buying stage.  It also allows you to formulate stronger value propositions tailored to each unique visitor. Through the use of lead scoring you can measure when a sales opportunity truly becomes sales ready and a sales person should engage.  The integration between these systems also ensures that as leads and prospects’ sales status changes, the sales organization has instant insight and can act in a timely manner.

Embrace these tools and see your sales and paycheck increase!

Compensation plans are often the last component of a new year’s plan to be designed, but arguably they are the most important – right behind a realistic revenue plan. According to the 2009 CSO Insight Sales Compensation study only 52.6% of surveyed B2B sales orgs met or exceeded their quota last year. This statistic illustrates the need to build effective plans that are both motivational and achievable. If quotas and incentive programs are misaligned you risk having unwanted turnover. Unfortunately, turnover from poor compensation plans often comes from the high performing reps can least afford to lose.

Effective compensation programs are both easy and hard to design. They need to balance the sales and revenue needs of the organization and be highly motivational to the individual sales person at the same time. Finding the right balance between fixed and incentive compensation is a good first step in sales plan design. Based on the type and duration of your sale cycle, making sure the sales person is kept whole from a cash flow perspective is important. This is especially true for companies entering new markets where the sales person’s pipeline is in a development stage.

Simple plans are best; who wants sales person spending hours each month trying to make sure they are being paid correctly, their time is better spent pursuing the qualified leads your marketing team is providing them. Finally, make sure sales accelerators drive the intended behavior. If the accelerators start too late for the majority of your top performers they will have little motivational impact. If they start too early they reward mediocre performance and could result in runaway commission costs!

Balance and common sense is the key to a good plan. Need help, we’re always glad to talk.

Looking for breakout gains?  Here are the top five changes to make this year in your company’s sales model:

• No longer allow sales leaders to replace the “bottom 20%” with new reps.  Instead redirect that investment into technology and 2.0 tools such as lead automation, prospect and competitor analytics, and social media engagement.

• Formalize a Lead Creation and Management position, and report them to Marketing.  Responsibilities should be to design, implement and manage all aspects of lead development and conversion.  Make sure this position has shared goals, metrics and quota with the sales leader for lead creation.

• Begin using benchmarking and hard metrics to evaluate sales organization and lead generation performance.   Demand that the black box days known as “the art of sales” come to an end.  (See Do Your Sales People Make the Grade and Sales Management 2.0 by CSO Insights for information on sales benchmarking.

• Start the shift to measuring and compensating sales on variables other than contract revenue (bookings).   Paying on billings and margin rather than top line contract value will focus sales on closing higher quality deals earlier in the plan year.

• Expect sales pursuit decisions to be based on prospect analysis, profiling, scoring and formal insight.  Too much bid/no-bid influence is often given to individual sales reps (who have no disincentive to tying up as much company resources on their deals as possible) as the sole decision point on pursuit decisions.   While many reps cannot confirm flight reservations without VP approval, those same companies allow reps to commit tens or even hundreds of thousands of dollars in company sales resources at their sole discretion.

The gap between the best performing sales organizations and the industry average is widening.  CEOs and presidents that make these bold moves will not only be more likely to surpass their 2010 goals, but will further distance themselves from the majority of companies that continue trying to sell they way they always have.

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