Does Your Sales Education System Address Your Sales Efficiency Issues? Element 2
In Part 1, we went over the measures to uncover sales overall performance problems and decide that are applicable at a high priority for pin-point sales skill training. We initial documented the primary sales efficiency concerns. There are (4) distinct sales efficiency silos that may impact the all round outcome of any sales team, year in and year out. They may be:
% of Sales reps to Quota
Average New-hire Ramp-to-Quota in months
Sales Employee Turnover rate
Time spent versus Outcome accomplished
Next we, listed (4) steps to discover for those who have any sales performance problems in every person sales overall performance silo and if so to what degree. They had been:
Step 1: Run the Numbers for any realistic ROI opportunity
Step 2: Run the Numbers hypothetically for a 'specific improvement
Step 3: Run the Numbers to get a 'reality Check
Step 4: Set the Purpose and Train to It
In our very first instance, we looked at a sales organization's efficiency silo of New-hire Ramp-to-Quota and determined (1) a sales efficiency issue and (2) a worthy sales coaching objective and (3) a realistic sales training return on investment.
Let's take that very same sales force and utilizing our (4) step procedure look at the remaining two Sales performance concerns; 'sales Employee Turnover rate and Time spent versus Result achieved to determine what the X2 Evaluator system turns up.
Step 1: Run the Numbers for any realistic ROI opportunity
Our instance sales force has 350 sales reps which can be accountable for securing new business every month. They at present possess a sales employee turnover rate of 45%, or 155 reps per year. Ive located in the sales industries I partner with, my consumers average amongst 30%-70% sales employee turnover per year, so these people are correct in norm.
But the norm doesnt need to be the Future.
Here's another crucial point. In the sales arena, 95% of sales employee turnover is on account of Low 1st appointment activity. And in our example sales force, it was practically 100%. Just, if you're not creating sufficient sales appointments every month, you either go out the door or you will be 'shown the door.
Now let's run the numbers to see exactly what this sales employee turnover is costing them and attach a weight of priority to contemplate pin-point sales performance instruction.
Here are the numbers pertinent to expenses:
Average Salary: $30,000
Recruiting Fees: $ 2,000
Training Expenses: $ 3,500
Monthly Sales Quota: $ 3,500
In sum, this sales management team is hunting eye to eye to a total of $4,512,200 going out the door each year, a combination of income ramp up charges on the front end, revenue production loss on the back finish, salaries and benefits, then yet again revenue ramp up fees and salary for the replacement new hire. It's a vicious circle.
And when again that total Penalty cost quantity is an focus getter.
Just place, every single sales rep going out the door, on account of low sales appointment activity, is costing the company $29,300 of lost revenue.
Does that portray a reputable sales coaching Return on investment chance? Well, in less you need to invest $29,300 per sales rep in the training of decision to remedy the sales overall performance issue it certainly does.
Step 2: Run the Numbers hypothetically for a 50% improvement
Within this case, I showed the sales management group what return on investment they would get by retaining just half of the sales reps going out the door as a result of low sales appointment activity.
Using their numbers my diagnostic technique showed them a ROI of $2,256,100 just by lowering their sales employee turnover due to low sales appointment activity from 44% down to 22%. That's maintaining 77 sales reps from going out the door and adding to the sales productivity pool.
Step 3: Run the Numbers to get a Reality Examine
Bear in mind in Part 1 of Does Your Sales Training System Address Your Sales Overall performance Concerns? we ran this sales force team's key sales performance indicator numbers inside the X2 program to determine if and where there had been leaks in the KPI ship. And we discovered not a leak, but a massive ole fire hose.
Two KPI issues had been apparent. 1st, their ramp-to-quota to get a new-hire took 7 months when the average sales cycle is 17 days? Second, they were only setting 3 new appointments per week once they required to set 6, according to their other KPIs plus a subsequent sales appointment activity number.
Therefore, their sales appointment activity barometer was only operating at 50%. And that we determined dictates a longer ramp-to-quota.
Then we dug a bit deeper in the X2 technique and out popped a 6% conversation-to-appointment ratio; they had to conduct 15 prospect conversations to get 1 new appointment.
We then asked the 'reality Check query. Is it realistic to concentrate on minimizing the sales rep turnover as a result of low sales appointment activity in half, from 44% to 22% to get a sales education ROI of $2,256,100 or $29,300 per rep?
And we answered yes if they addressed the front-end of their sales procedure; setting targeted sales appointments. Again as ahead of, they needed to (1) establish an activity normal to reach quota based off of individual KPIs and (2) develop a sales prospecting methodology and supporting program to spend less time in reaching it.
Simply because most sales employee turnover occurs within the new employ ramp-to-quota situation silo, the same pin-point sales ability coaching initiative kills two birds with a single stone.
And if you add those (2) 'sales instruction initiatives birds up, it points to $14,532,100 of realistic income recovery.
Step 4: Set the Objective and Train to It
Reducing sales employee turnover on account of low sales appointment activity now appears to become a worthy a single. It tends to make very good company sense for this sales organization. And if we measure our outcomes, we'll almost certainly add some much more income back on the table with extra reps not going out the door to the tune of $29,300 per rep.
As in Portion 1, our sales education goal in this situation is to spend the least quantity of time to obtain the desired number of sales appointments each and every week to assure our monthly good results.
Now as a side bonus, let's have a look at our final sales efficiency issue silo, Time spent versus Result achieved, and see what, if anything, we are able to address associated to our pin-point sales coaching initiative.
Time is money. What's your Hourly rate? If you're a sales rep using a W-2 aim of $100,000 your hourly rate is around $51 dollars an hour. Here's an interesting statistic. My clientele commit an typical of 50% of their time on the extremely front-end of their sales process; sales prospecting for new possibilities to initiate their sales approach. This sales management group gave me an typical prospecting time of 45% to plug into the Evaluator system.
And here's what it showed.
The sales reps were investing an average of 20 hours per week on sales prospecting and sales appointment generation. But they were only operating at 50% on their Activity Barometer and needed to generate 50% more sales appointment activity; going from 3 new appointments per week to 6.
At their current sales prospecting efficiency rate of 6% (15 Prospect conversations to have 1 appointment) they would should dedicate 33 hours per week to sales prospecting and sales appointment generation. And we know that's not realistic.
But if they set a sales training objective of moving that appointment conversion ratio to 50%, they would not only meet their sales appointment activity quantity but save 26 hours per week, for any time recovery of 79%, from 33 hours per week to 7. And 26 hours times $51 per hour recovers $1326 Hourly Rate cash, enabling sales reps to improve capacity and pursue higher-value, solutions-based selling opportunities.
As soon as yet again with our last (2) sales performance issue silos we determined (1) a sales efficiency issue and (2) a worthy sales coaching objective and (3) a realistic sales training return on investment.
Ask any CFO what their first impression is when they hear the words 'sales Training and they may well communicate back their 'real world vocabulary of un-accountable and un-measurable. Basically put, they know they're wasting at least half their sales training budget dollars; the problem is they dont know which half.
As a sales management leader, methodically discovering sales concerns very first and then running Quantitative sales efficiency numbers to verify for feasibility, worthiness, and return on sales education investment will differentiate you from the pack. And you'll stand an excellent possibility of acquiring the result you desire.
In this case, providing sales reps a skill-set to set 1 Top-down enterprise appointment in 2 conversations will allow participants to set the required amount of targeted enterprise appointments to assure their monthly income ambitions. So much less individuals will leave, they'll make a lot more funds and invest less time and you will recover measurable dollars; a thing you can truly put your finger on.
