Category: Corporate Culture

Productivity

I am going to preface the following by telling you I am a big believer in Lean. Most people think of Lean Methodology as something only for manufacturing, but more and more people are coming to see organizations can implement Lean practices to improve operations and internal harmony. Dan Markovitz is an avid proponent of this philosophy and he is one of my influences when I’m consulting for companies, or thinking how companies could be better.

Recently, I was listening to a book-on-CD (yes, I still do that) by Womack & Jones called Lean Thinking. The title caught my eye because I thought it would be in line with my thinking. Alas, the book, written originally in 1997, is focused on manufacturing and the gains to be had by using lean practices. But something the narrator said caught my attention and it is completely applicable to sales and sales operations.

Briefly, the discussion was around “muda” or “waste” (the big three are muda, mura & muri or waste, overburden & unevenness). In Lean Manufacturing, waste is money down the drain, either by time or production. But where it is easier (but maybe not just easy) to track down waste in a manufacturing line, the 3M’s , but mostly muda, can be seen constantly in business on the sales and marketing side.

And this is the crux of smart sales operations–we look at sales processes as additive. What do I mean? I mean instead of looking at how a sales rep gets their work done and how do we extract information from that work stream, we layer a process on that sales rep to report on that work stream.

Let me give you an example to illustrate. A new sales rep is given a book of accounts in a given territory. Then, the sales rep is given a tool like a CRM, to prospect into these accounts, build a pipeline and funnel and start to close deals. Most of you are probably nodding your head in agreement, “Yes, that’s how it’s done.” Next, management wants to track the progress of the rep, so they ask the rep to produce a report. “No big deal,” you say, as all the rep has to do is create a report in the CRM and run it and give it to management. Then, management wants to know where deals stand, so they ask the rep to produce a report. Again, you may say, “No big deal,” and the rep produces another report. Soon, management wants to meet to go over the reports, which by now has grown to multiple reports and multiple meetings. The sales representative who was hired to sell has now become a reporting fool, spending significant time on administrative tasks, and trying to figure out how to balance their time with the other priorities of the job–like achieving quota.

As a personal example, my most recent experience was a manager who asked us to create a report used only by himself so he could present the team numbers to his management, showcasing the manager in the best light possible. The report was tedious, arduous and an exercise in frustration as it required two or more hours to produce each time (it was a Word doc, and none of the information gathering could be automated). This, coupled with the one hour accompanying meeting to go over the report and then the additional one hour meeting with the team to go over the collective reports was almost criminal in how much time it sucked. When confronted about this (as every rep had) the manager would say with his default response, “It only takes five minutes.”

Tying this back to Lean, what was wrong here? Waste. Waste of time, of processes and specifically of consideration. (While you might feel consideration can’t be wasted, how many times have you thrown your hands up in the air when your patience has reached its maximum? If someone who has been trying your patience continues to come back to you with the same issue again and again, you would more than likely snap, tell them about your frustration and tell them to get their problem fixed before they came back to you again.)

The problem for all this is a foundational issue: If the data has been captured in the beginning, then there should be no reason it couldn’t be pulled in an automated report. Computers are great at manipulating data, it is what they are built to do. So why was (I’m sorry, is–he’s still doing it) my manager wasting his team’s time to pull data he could have pulled? Because he didn’t value his team’s time. Why, as in the first example, is management layering on a report when the data for the report is readily available if it is being captured in the first place?

Smart Sales Operations deals with these issues in a foundational manner. We need to first look at what’s being sold, what is important information for the sales rep to keep track of and what is important information which sales management needs for visibility, and we build our tools around the information needed.

Recently I was having a discussion with a former manager of mine who has gone on to sales performance consulting. Our disciplines overlap a little, but his perspective on sales comes from a different angle than mine–he is looking to use tools to get more out of the reps, and I am looking at what is in place which can removed/tweaked/re-worked to produce better results. In the end, we both are working with companies to get more sales, for as I have said before, if the rep is making money, then the company is making money. Anyway, back to the conversation, he is a huge proponent of Salesforce. He believes it is infinitely tweakable enough to put processes in place to get the desired behaviors from the reps. My take on Salesforce is that it has morphed from a tool for the rep to manage customer interactions cradle to grave, becoming a reporting tool for management. While my former manager and I both see each other’s perspective, what I think is at the overlap of this Venn diagram is data. What is captured, what is needed, what is reported.

I’ve spoken about clean data before, and I am a huge proponent of data hygiene. But also in consideration is what data needs to be collected and how does this affect how the collector goes about their job. Because if your sales rep is spending more time creating reports, collecting data and meeting with their managers, then they aren’t out in front of customers doing what they were hired to do. They may be internally productive, but overall, they are not PRODUCTIVE.

Help your reps be productive. No muda.

Thinks, Inc. is a consulting firm which specializes in Smart Sales Operations. If you’d like for us to come and assess your chaos, drop us a line at contact@thinks-inc.com

PS The Infrastructure Guy  and Smart Sales Operations are Trademarks of Thinks, Inc.

Smart Sales Operations – Target Revenue vs. Quota

Picture this: in the annual shuffle at beginning of the year, territories are assigned, accounts are assigned and quotas are assigned. If one were to watch the man behind the curtain as these machinations were being performed, I’m sure the wizard would look more like a butcher, with his sparkly robes and wild hair replaced with a bloody apron and a dangling cigarette.

Why do I say this? Because many times to the sales rep, coming up with a quota number seems to be an exercise in capriciousness. As an example, I’m reminded of one of my sales positions where I didn’t receive my quota until April. Yes, after the first quarter had already passed! Then, once I had received my number, I was puzzled. How did they arrive at this number based upon the history of previous sales and sales in the territory?

Here is where the magic came in. Using figures published in business journals, Hoovers, D&B, etc. (…some source…), my company would take the target prospect’s annual revenue and estimate the percent of that revenue which would have to be spent on our product category. For instance, if the prospect was $100MM, then 10% or $10MM was going to be spent on IT related purchases. Based upon that, quota would be set at a percentage of this estimate, and this dollar amount was additive to create my total quota.

Seems harmless, right? Well, it’s not, which is why am I mentioning this as a Sales Operation issue. At its best, it is merely hopeful. At its worst, it is inaccurate and misleading–to the company and the rep. Let’s give some examples: a form being printed for a telecom company, and computer equipment purchased by a steel manufacturer. For the first example, while many large companies still have some paper forms, most have been digitized or obsolesced so whatever historic data one is using to arrive at that figure, it is always representative in arrears of actual use. To base the revenue on a declining number will only lead to inaccurate results and the rep’s quota is being based on unachievable numbers. Let’s look at the second example. Does a steel manufacturer buy computer equipment? Yes! But where is the primary investment for the steel manufacturer? In the making of steel! Which means the percent of revenue number used for quota isn’t representative of what the customer is purchasing. Will the steel manufacturer buy computer equipment? Yes, but more than likely on a three-to-five year cycle, not on an annual basis, and it’s computer equipment related purchases will be more along production systems, not desktops.

What quota setting like this creates is false hope for the company. It is akin to looking at all the accounts in a territory and thinking about how many potential customers you have and how much money each one has to spend–kind of a land grab mentality. It doesn’t focus on the actual fact of what, dollar-wise,  has the customer actually purchased in your sales vertical. In my observations, in outside sales the average rep can handle about 50 accounts. Assigning a territory of 3000 accounts with accompanying quota may seem like a favor to the rep, but what it really does is dilute effort. As a corollary which I feel is applicable, there have been psychology studies showing when a consumer has more choices it actually leads to fewer decisions. So when rep has 3000 accounts, it seems as if the world is their oyster, but in reality they will only be able to actually service a fraction of that, and of the fraction serviced, only a fraction of that will be really good customers. For example: There is a Value-Added Reseller (VAR) I’m very familiar with and know they limit their top reps to no more than six accounts. Six! But what is amazing, is the good sales reps are able to generate fantastic amounts of revenue off their six accounts because they are focused on penetrating and selling their entire portfolio of products and services. To counter this observation, I have seen a senior rep working for another VAR who was allowed to cherry picked the top producing accounts from other reps, and had more than 300 accounts in his stable. He mostly sold those accounts renewals, and because he was stretched so thin, these accounts were always being courted by other companies. Last I heard, his methodology was backfiring with the majority of his customers complaining they never saw their rep and going to other companies whose sales reps were more available and paid more attention to them.

So back to quota estimation. Looking at what the territory will potentially produce, how many Fortune 500 accounts it contains, etc. doesn’t shed any light on what the territory will actually do. It comes down to data. If the company is starting in a greenfield territory, some of the planning data and analysis can be helpful, but holding the rep to imaginary numbers is like dividing by zero. In an established territory, looking at historical performance as well as the company target will be more insightful than speculation.

The critical factor in all of this is ramp up time and traction. It has been estimated it takes a technology sales rep 9-18 months to ramp up properly and be running on all cylinders. If the company allows the rep to build their pipeline, get some wins and move towards really owning the territory, then both the rep and the company will have success. If the company saddles the rep with an unrealistic quota and a short ramp, they will be looking for a new rep in short order and be repeating the same cycle of onboarding–which means another unproductive rep (also known as an unprofitable rep).

There are more and more tools coming out every day which help companies automate the establishment of quotas and commission plans but most of these look at sales in the traditional way: set quota high, and only pay well for over achievement. They tend to look at one size fits all, and every territory is the same.

So take a step back when setting quotas and find some real data. Look at the company’s targets through realistic eyes, and then when setting a quota remember if your sales rep is successful, the company will be successful.

Thinks, Inc. is a consulting firm which specializes in Smart Sales Operations. If you’d like for us to come and assess your chaos, drop us a line at contact@thinks-inc.com

The Infrastructure Guy  and Smart Sales Operations are Trademarks of Thinks, Inc.

Smart Sales Operations – Setting Quota

Quota.

It is a loaded word, with multiple meanings and connotations for the speaker and the listener. It can be a source of frustration, relief or consternation. It can represent a perspective of hope for executives or a perception of sham for sales reps. Quota embodies a notion of achievement for performance, but many times the reward for performance is not well thought out in relation to the effort for achievement.

Daniel Pink in his book Drive talks about the how the quota/performance system is broken. How only in sales can someone work to achieve a goal and be told to achieve more the next time–essentially never getting a rest or recognition for a job completed. And while I have worked for sales companies who have tried to create reasonable quotas, I’ve also worked for companies who used a dart board for quota setting. In Drive many of the reasons for this appearance comes from the arbitrary feeling of quota setting aligning with the seeming capriciousness of company goals. The disconnect of tying these to the rep’s quota creates ensuing chaos. Admittedly, I will be coming back to this topic a lot since sales, quota and operations are tightly tied together, but this is my first swag at it–with a lot of anecdotes to start the ball rolling.

First anecdotal evidence…A friend of mine was hired as a sales representative into a territory where every previous salesperson had foundered and missed the company set goal. And, hand-in-hand with this, each of the previously failed reps ended up having a tenure of just over a year. He found the position because he had worked with the hiring manager years before, and they both agreed it would be a great fit for his skills so they signed him up. Braced with the knowledge of his predecessors and hoping the relationship with his manager would help temper the company’s prior foibles, when it came time to establish quota he figured the company would be reasonable. Nope. The target number came back doubled over previous year’s number; more than twice the revenue the territory had ever produced. In a territory which had struggled to produce $2MM in revenue, they set his plan at $5MM. After he picked his jaw up off the ground he asked why.

“Because we feel the territory can support it.” was the response. Huh?

By setting the my friend’s quota at a ridiculously high number, the company sent two messages without really realizing it. One, start looking for a job because you are going to fail, and two, we aren’t really paying attention to what’s going on inside the territory, only what’s on our spreadsheet of territory revenue estimates. A third possible message was, Oh, and we have to meet Wall Street’s expectations and you’re replaceable, so…here you go.

What this quota lacked was data. It had a lot of speculation and expectation, but up to that point in time, none of the speculation actually was accurate nor was the expectation being achieved.

At another company, quotas were set by looking at the prospective revenue spend of companies. If a prospect was a $100 million dollar company, then based upon “industry norms” it would spend 10% on products sold in the target category, which translated to a potential for $10 million dollar spend. Therefore, the thinking went, this prospect will potentially spend $10MM dollars this year and we should be able to sell them something.

This method is equally flawed, in many ways, and which I’ll expound upon later.

So, how do we start to align commissions with revenues? In my sales operations consulting, I’ve worked with companies who know the amounts of revenues they want to generate, but don’t understand what it might take to achieve–be it through sales efforts, marketing efforts, revenue incentives or commissions accelerators–they start from the wrong side of the equation to add growth. How? They look at the previous years revenues and say, “We want to be 10% bigger next year.” and then figure out how to distribute that burden among its sales people. What they should be doing is looking at it from the other side of the problem, since right now the company doesn’t know how to articulate the direction needed to set the revenues which creates the margin to set reasonable quotas. Meaning, they haven’t looked at their data to see where they should focus.

For example, if I was a $10 million a year company selling services and I was ready to bring on a rep, what would I focus on? On my data! First, I would analyze where my revenue in services was actually coming from as it might surprise you (the “what”). Next, I would analyze who and/or how those services were won (the “why” and the “how”). Was one rep particularly successful? Did the owner do it? Did the sales come through other channels? This matters, because figuring out where the seller is having success can fuel the enablement of methodologies to exploit that capability.

Let’s say it is a small business and the owner is the best sales rep (as is the case many times in small businesses). Making the owner’s abilities reproducible is critical to future growth. So teaching the keys to the owner’s successful selling will be very different than if the owner is looking to exploit a market segment or expand the business outside of its normal bounds. And analyzing the data would reveal this trajectory. From there I would look to see if there is any history or precedence for the sales being won to then calculate what I might expect a new rep to do (e.g. relationships, negotiating, etc.).

Ultimately, the purpose of hiring a new rep is to increase the company’s revenue. Which means the rep’s purpose is to sell and have the rep be successful–and by our current metric this means make quota. If the salesperson is struggling to meet quota, and the analysis hasn’t been done, the company will more than likely be doomed to repeat their sins when it brings on the next rep. When one adds in the cost of on-boarding, training and ramp-up time, it is too significant an investment to then just cut bait . By scrutinizing the needs of the job and really understanding what the expectation is for the salesperson, a quota can be set which allows the rep success and the company success. Some may read this as too indulging, but I would rather plan for success than be in a continuous mode of failure and clean up.

Because if the rep is making money, the company is making money. And that is success.

Thinks, Inc. is a consulting firm which specializes in Smart Sales Operations. If you’d like for us to come and assess your chaos, drop us a line at contact@thinks-inc.com

The Infrastructure Guy  and Smart Sales Operations are Trademarks of Thinks, Inc.

Remote Workers Working Remotely in a Remote Office – Part II

In my first post about working remotely, it focused on what should be happening at the mother ship to ensure the remote worker successfully started in their new position.

But “remote” is a bidirectional communication. The home office needs to communicate and connect to the remote office, but the remote office/worker needs to communicate and feel connected to the home office.

Too many times when a company hires a remote worker, I see an unexpressed conflict. The company hires a remote sales resource under the auspices of growing the company but what they really want is a mercenary. The employee takes the job under the auspices the company wants to grow and that the company will provide support to that end. The company wants someone to go into the territory–independent of company culture and without any supporting company-based background–and begin producing sales. They want the sales rep to “crush the competition” “steal sales away” “bust into the territory” and other pugilistic possibilities. They want for someone to establish a name for the company in that new territory as quickly as possible.

Now I can hear your collective brains buzzing, “What’s wrong with that?” And for both the newly hired and the newly hiring, there is nothing wrong as of yet, except the gap between what’s discussed before hiring and what happens after hiring is like looking into a reflection pool. Not the reflection part so much, but what’s lurking underneath. How deep is that water under the surface? I may see the reflection of the company on top, but is it supported? Is this freshly minted corporate mercenary presenting the best foot forward for what the customer needs–and what the customer expects? How should the remote worker communicate to the mother ship what they are doing? And, if they are doing it correctly and to expected corporate standard.

This goes back to the previous post, but by instilling culture and expectations the company looks to see that message spread from the rep to the customer. And just like parenting, after initial hand holding by the mother ship and then giving progressively more autonomy, the company transfers its corporate image and beliefs, and the remote worker has a better chance of reflecting that image in their local market.

So I said the remote worker should be communicating to the corporate office, but what should they be communicating? Here’s where it gets a little complicated for me to explain, and not sound like I’m completely tap dancing, but the remote worker needs a neutral resource to which they communicate their activity, their efforts and their plan–in short, a mentor. Not their manager, but someone at HQ who knows the systems, understands what the worker is trying to do (in this case, sales) and give them perspective and guidance. This allows a conduit for the remote worker to HQ, as well as a way for corporate culture to be shone back upon our remote newbie. And, we don’t have to use the same mentor all the time and paring only one-to-one, but use more than one mentor and expose our remote guy (or gal) to others in the organization as well.

I’ll probably write about mentors in sales operations at a later date, but there is a reason people need mentors: they don’t come into a position knowing everything. I’ve heard it stated that for experienced hires, companies hire someone with 60% – 80% of the desired skill set expecting to train for the remaining needed skills. That means the new hire is still lacking 20% – 40% of the knowledge needed. So this begs the question, how are you treating your remote employees? Or if you are remote, how are you being treated? Now, reverse the ask on those two questions. Open communication between the remote employee and the company HQ will only make things better. And that, in the end, will bring more sales, and ultimately enable better Sales Operations.

Thinks, Inc. is a consulting firm which specializes in Smart Sales Operations. If you’d like for us to come and assess your chaos, drop us a line at contact@thinks-inc.com

The Infrastructure Guy  and Smart Sales Operations are Trademarks of Thinks, Inc.

Remote Workers Working Remotely in Remote Offices – Part I

Siberia. So Cold. Brrrrr… At least, that’s what I’ve heard.

When I was growing up, I would always hear the threat that if someone in Russia (technically then the U.S.S.R.) did something wrong they would be shipped off to Siberia.

I never quite understood why. When I asked my father, he would say because it was so cold and remote. And like the kid that I was (admit it, that we all were), I didn’t really think about what that meant–until I had to do a little research on it and found out what “cold” and “remote” really were and where Siberia really was.

When someone was sent to Siberia, it was to do two things: Punish them and remove them. The former Soviet Union didn’t dilly dally here, if you were considered a dissident, you were unceremoniously shipped off to the frozen wasteland via a train on a trip which could take up to nine days to get to the destination. Nine days. That certainly was remote. And during winters, the temperature would hover around -35F. Ouch.

So, when one looks at working remotely for a company, is the company punishing the individual? or do they really want them to perform?

As businesses grow, typically they want to expand into territories and grow their footprint. Placing local bodies there is really important, because local resources know local buyers. Kind of like the dictum, “Promote from within the company”* my corollary would be “Hire from within the territory”. As businesses expand they should place people in the territory that are from the territory. It simply gives a leg up to that worker and to that business.

But since every business has a culture, and has people which create that culture, it is really important not to unintentionally ostracize those individuals who can’t participate in the HQ culture. Especially those who work solo and/or remotely. If you want to ensure they are in sync with your company goals and doings, you need to make sure the employee is somehow fed enough culture to feel a little more warm and snuggly.

One of the best ways is to have your remote employee(s) come to the corporate headquarters once or twice a year. Also highly recommended is to have people other than the immediate supervisor come visit them at least once a year. While this may seem expensive, if it increases sales and productivity, then the cost will be offset. In the same vein, if you choose to save the cash, make sure to calculate the cost of onboarding and ramping a new employee.

In my last job working for a Value Added Reseller, initially the company had an all-hands summer meeting and an all-hands winter meeting. While I was working remotely, my management would come down once a year to our satellite office and work from there a couple of days, and I always had a parade of engineers coming through for various projects, even though most of my projects were handled by my local engineer.

Then, the vibe changed and there was no longer a summer meeting. While I wasn’t a fan of spending time going over a pages of company data, the afterhours portion of the meeting connected me to the other sales people in the company, as well as the inside sales people I spent so many hours on the phone with correcting processes, and allowed me to interact with the back office staff whom I spoke to on the phone but rarely face-to-face. It allowed me to see people interact with others, hear snippets of gossip, and feel like I was a contributing cog of the machine. And then, with no corporate meeting, I wasn’t. As new people were brought in for the various back office and inside roles, I had to create new relationships based upon nothing but what I needed.  It took at least twice as long to get into a groove and develop rapport, and even then I found myself going back to those I had worked with originally since I trusted them. And trust with my new people could have similarly achieved with a couple of beers onsite.

Why does this matter? Because people don’t just work for a paycheck. Productivity goes up when people feel they are part of a team or cause. And when people work remotely, they are in their own special bubble. In someways they are insulated from office politics and the day-to-day shuffle which can distract from their job, but they also are blind to corporate decisions, discussions and determinations. They have no say and aren’t asked for one–because no one knows them.

And, like Cheers, in the end what they really want is a place where everybody knows their name.

*We will be covering the topic of Promote from Within in a different post.

Any better ideas for remote workers? I’m always interested in learning.

Thinks, Inc. is a consulting firm which specializes in Smart Sales Operations. If you’d like for us to come and assess your chaos, drop us a line at contact@thinks-inc.com

PS The Infrastructure Guy  and Smart Sales Operations are Trademarks of Thinks, Inc.