FACTORING BLOG

Performance Management – The Biggest Miss in Sales Growth

by Gary Braun

Owners are constantly trying to drive profitable sales growth in their companies. The typical tools they use to fuel that growth include:Two people discussing something on a clipboard

  • Adding/changing salespeople
  • Swapping out sales leaders
  • Sending the team to sales training
  • Investing in technology like CRM or marketing engines
  • Tweaking the sales incentive plans to “motivate” their team

 

Any one of these could potentially have some impact, but most owners rarely see the sustained growth they need from these approaches. The one factor that they overlook is something that costs them nothing – simple performance management.

When you ask most people about performance management, the first thing that pops in their heads is the annual performance review. That is not what we are talking about here. When we say performance management, we mean a weekly (or bi-weekly) formal, structured 1-on-1 meeting between the sales leader and the salesperson. Of the hundreds of sales leaders that I have spoken to, about half of them even have regular consistent 1-on-1s because “I talk to my team members all the time, multiple times per week.” That may be true, but those conversations are almost always about the deal or issue of the day. For the other half, they actually do have 1-on-1s, but those meetings are typically a deal or pipeline review. “What’s gone on with the ABC account? What’s happening with the XYZ opportunity?” Don’t get me wrong. Those are necessary and meaningful conversations and they should happen, but they do little to drive overall performance.

A true performance management conversation each week is based on comparing the salesperson’s performance against an expectation or standard. It is based on data. For example, let’s say a sales leader has set a standard for his/her team that says in order to hit their goal of $200,000 per month, they each need to generate 10 new qualified opportunities, close 40% of them and maintain an average deal size of $50,000. That is crystal clear to the salespeople what they should do.

[su_box title=”Example” style=”bubbles” box_color=”#354251″]Let’s look at an example of Alex who is sitting at 75% of goal. The sales leader could “remind” them that they are below goal and that they need to pick things up (most common approach by sales leaders). Hint: they already know this. They could tell the salesperson to pick up the activity, but that may or may not be the issue. It could be that they are scaring up opportunities like crazy, but are not converting them. It could be that they find them and convert them, but they are all small deals and they need to target bigger. It could be that they only have a few opportunities that they keep working over and over and don’t have enough new opportunities coming in. The fact is that you don’t know unless you look at data. By tracking data and having meaningful discussions with the salesperson, you have the opportunity to correct course and coach them to better performance.[/su_box]

That’s a productive 1-on-1 and it rarely happens. This simple conversation can and has led to increased performance. I can recite multiple clients who have restructured (or implemented) this type of 1-on-1 and it has changed how they work with their team. Salespeople are now getting better direction and coaching specific to an area where they need help. The results are obvious. Performance increases and sales go up. The cost – $0.

So why don’t these critical, weekly performance management meetings happen? The short answer is that nobody trains the sales leader to have these types of discussions. Many don’t know a) that they should have discussions like this, or b) how to have them. Nobody ever did that with them when they were a salesperson. How are they supposed to know how to do it themselves? Rather than investing in technology or sales training that fades if not reinforced (a discussion for another article), invest in your leader. Teach them how to do this critical part of their job.

Finally, the owner is not off the hook in this area either. Just like we outlined the sales leader-salesperson meetings above, the Owner-Sales Leader 1-on-1 is also critical to performance and should occur weekly or bi-weekly. However, this meeting tends to occur even less consistently than the sales leader-salesperson version. Owners should be checking to make sure that their sales leaders are managing performance, that they have a plan for the week or month, that they are making adjustments with their team members as needed. Don’t just talk about the forecast or deals, it is your role as an owner to manage your sales leader’s performance as well. Make them commit to actions that will improve the team.

If you need help in these areas or would like to learn more, please go to www.pivotaladvisors.com to learn more.

 

Gary Braun is a co-founder of Pivotal Advisors, a sales management consulting firm based in the Twin Cities that has worked with hundreds of businesses to help them achieve predictable and consistent sales growth.

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