Managing an Inside Sales Team During COVID-19

You have an inside sales team who is now working in a distributed manner, due to the COVID-19 pandemic. While many companies have employees who work from home, very few have a fully distributed inside sales organization.

The question is how to manage a distributed team and ensure success during the COVID-19 pandemic.  Across the country all non-essential businesses are empty as their employees have been forced to work from home. This creates several challenges for a call team.

One of these new challenges is reaching prospects—now it is more difficult to reach people by phone, especially if they don’t have VOIP systems that can be set up anywhere. Additionally, distributed inside sales teams are not used to working from home, so it can be challenging to track team productivity. Managers will need to find a way to measure their success and productivity. It’s also challenging keeping teams engaged. Most inside sales team members sit within the same area in an office. They share ideas and hear their team members on the phone. Working from home, making dials day after day, especially when very few prospects answer, can be a very isolating experience. Putting the Covid-19 pandemic aside, sales teams are struggling to achieve revenue goals—they are finding it increasingly difficult to reach people on the phone. In 2018 over 8 billion robo-calls were sent to consumers and businesses. This, coupled with email over-exposure, has made selling more difficult than ever. 

The Fundamentals

Successful inside teams utilize sales fundamentals to ensure that they achieve their revenue targets. I will outline, briefly, these fundamentals. More information can be found in my book “Teleprospecting for Executives who Sell Complex Solutions.”

Successful teams during COVID-19:

Successful teams are driven to success by proven Key Performance Indicators (KPIs) and metrics. These KPIs and metrics are built utilizing funnel math to determine the number of inbound leads (HQLs or highly qualified leads) that are required to hit revenue objectives. Once the number of marketing qualified leads (MQLs) is determined to achieve 3x the revenue objective, managers have the data required to build out other weekly and monthly metrics to achieve the following objectives:

  • Total dials/day.
  • Number of key conversations.
  • Total HQLs (high quality leads that came from the MQLs). 
  • Sales funnel, per rep, that must be built to hit 3x of revenue target. This can be tracked, each month.
  • Quarterly revenue target required to hit an annual revenue goal.

Successful teams also track leads through the sales funnel to determine the number of quality leads that are coming into the sales organization. Leads should be given statuses that makes sense to sales. I use the following statuses:

  • Untouched: Lead has never been contacted.
  • Pursuing: Lead has been called with no connection.
  • Contacted: Someone answered the phone, but the person wasn’t the right contact and/or couldn’t move the sales process along.
  • Key Conversation: The sales rep had a quality phone call with a decision maker or influencer, which leads to a HQL or another call or a demo.
  • HQL: Rep has qualified the lead and it is ready to be converted to an opportunity.
  • Disqualified: After 10 attempts, or other issues, the lead has been disqualified. It is good to have disqualified reasons, such as a wrong number, no contact, etc. 
  • Nurture: Leads that aren’t ready to purchase now will be put back into the buyer’s journey. 

Teams should ensure that everyone has built a quarterly GOSPA or other mini-business plan that enables them to track their own success. Each manager should meet with each team member weekly to track how reps are doing against their plan. Weekly team meetings should be held to review issues, highlight successes and to train the team. These can be done through any web meeting service.

Managers should hold a daily morning check-in to see how team members are doing during this pandemic. I recommend that these be group meetings. Managers can take a temperature check of team morale, address issues with systems, and determine what each team member has planned for the day (number of demos, scheduled calls, contracts to write-up, etc.). These daily check-ins allow the team to meet as a team and provide ideas on how to work from home and stay engaged, each day. My team members came up with a few suggestions, including using a timer to ensure that reps are taking breaks, eating breakfast and lunch and are exercising; doing deep breathing techniques to stay alert; and stretching regularly to ensure that reps are leaving their chairs, regularly and throughout the day. 

Additionally, in a successful team, marketing should be working hard to write content that will attract buyers. Now more than ever, search is the way buyers get their information. Your company should be writing content that makes your company a thought leader in your space, so that HQLs flow into sales. 

It is the manager’s responsibility to keep the team engaged and to solve problems as quickly as possible. During this unique period, managers may find that they are in back-to-back web meetings. They need to ensure that some of these meetings are with individual reps and with the inside sales team. 

This is not an easy time for anyone.  Keeping the team engaged, and providing the tools that they need, will help your inside sales team to meet their objectives and stay in good spirits during the COVID-19 pandemic.

Read more about sales metrics and KPIs.

Sales Productivity In the Digital Era

The increasingly blurred line between B2B and B2C has inevitably changed the nature of sales, with customers demanding a more personalized selling process. Salesforce’s “State of the Connected Customer” report recently found that 58% of consumers and 77% of B2B buyers believe technology has changed their expectation of how companies should interact with them.

As sales mandates and productivity quotas rapidly change, sales teams often fall short of these rising expectations and are unable to meet their job quotas.1 The easy solution for companies is to replace sales reps. The more effective solution, given the high career turnover rate and cost of hiring a sales employee, is to take measures that increase the productivity of existing sales teams.

Impact of High Turnover Rate On Sales Productivity

The turnover rate for sales representatives has remained much higher than that of other roles.

According to Bridge Group Research, there is a minimum 20% annual turnover for sales talent and an average annual rate of 34.7% per year in the United States; this is almost three times as high as the average turnover rate for all roles, which LinkedIn reports as 13%.2 Further research also suggests that one out of ten B2B companies experience sales turnover rates of above 55%.3

This contrast in turnover between sales and other roles can be attributed to the difference in perspective between the representative and company with job performance, as well as an increasing competitive landscape for talent. SiriusDecisions also lists deficient compensation and lack of connection with leadership as top reasons why high-performing representatives leave their organizations.3

General Costs of Hiring a Sales Representative

This high sales turnover rate means that firms are continuously spending money to hire and replace those representatives who leave. On average, US firms spend around $15 billion a year training salespeople and $800 billion on incentives, only for attrition and other factors to reduce the return on those investments.4

The key to improving employee retention is first understanding the cost of employee turnover.

There are a few general estimations of the upfront costs behind hiring a new sales employee. A report by DePaul University states that it takes an average of $97,690 to replace a salesperson, while SiriusDecisions reports that the average turnover cost of a B2B sales representative can range above $200,000.5, 6

However, the true cost of hiring an employee in 2020 is much more complex with additional hidden costs. Employers must consider the full cost breakdown of recruiting, onboarding, and training employees until they both reach full productivity levels and cover intermediate loss in overall company efficiency.

Hidden Costs in Sales Turnover

Hidden turnover costs come from the time and productivity lost in two places: recruiting, and training and onboarding new representatives.

Recruiting

Businesses are constantly searching the market to fill vacant positions with top sales talent. Recruitment during this period often draws time out from human resources and sales leadership and impacts their respective productivity. After considering commission for external recruitment firms, McKinsey estimates that some organizations spend roughly $15,000 in internal productivity to select a mid-level sales position.7

Companies also suffer costs from supporting a vacant position during recruitment. The average vacancy costs $500 per position per day, meaning that a vacant position itself costs at least $22,000 for the average recruitment period (44 days).7 This number often increases to anywhere between $25,000 to $50,000 when lost productivity and customer dissatisfaction are also considered.8

Training and Onboarding

Once a new salesperson is hired, they often undergo training and onboarding processes to establish expectations and mentorship until they reach full productivity..

CSO Insights research found that 71% of companies take 6 months or longer to onboard new sales reps, while a third of all companies take 9 months or more.2 This indicates that a majority of B2B sales representatives are not operating at full productivity and are unable to sell complex solutions for at least half of their first year on the job.

A majority of B2B sales representatives are not operating at full productivity and are unable to sell complex solutions for at least half of their first year on the job.

companies can spend up to 2.5 times of the average salary just to fill an open sales position

Onboarding also involves time invested by managers, outside trading companies, and co-workers to train new hires. By assuming that the cost of a loss in internal time and productivity is $500 per day, conservatively approximating a salesperson will take 6 months until full productivity, and estimating that an average rep receives $3,400 in training a year, onboarding a new employee alone can cost a business over $93,000.7

Therefore, the total cost of recruiting and onboarding a new sales rep conservatively ranges between $133,000 and $158,000 when considering the upfront and hidden costs. Given that an average annual salary is $60,000 per year for a US sales rep, companies can spend up to 2.5 times of the average salary just to fill an open sales position.

How to Increase Sales Productivity

The data above show that hiring more personnel to increase the productivity of a sales team comes at a significant cost. A more effective solution is investing in efforts to improve the existing sales team’s employee satisfaction and provide better high quality leads (HQLs).

Improve Existing Team’s Employee Satisfaction

Improving the onboarding process and providing digital sales technologies are two ways to improve employee satisfaction and decrease turnover.

According to Forbes, ineffective onboarding is a major reason why companies lose 20% of new hires within the first 45 days and 17% of new hires within the first three months.9 Employees who leave during the onboarding period results in a company suffering training costs at a loss; early employee turnover also contributes to the turnover cycle by increasing the costs of replacing sales talent for a single position.

Instead of stretching the onboarding process to last as long as twelve months, businesses can accelerate their onboarding process by organizing their roadmap into a three month formal timeline. A positive three month training process not only results in 69% of employees being more likely to stay with a company for more than three years, but also leads to reps who drive more sales.10, 11

Providing technology that supports virtual selling can also improve productivity. CSO Insights states that 88% of sales professionals cannot find critical sales material on their smartphones, while 60% of sales organizations experience longer sales cycles from lack of proper tools.1 As a result, one of the top reasons high-performing sales people leave organizations is concerns about ability to meet market needs.

Virtual selling has increased in popularity as technology, transparency, and efficiency play bigger roles in the sales process. Research shows that sales reps build 3.2 times more customer connections in front of screens than meeting with customers in person. Equipping sales people with new software and technology can improve employee satisfaction, reduce costs, and improve long-term sales success.3

A positive three month training process not only results in 69% of employees being more likely to stay with a company for more than three years, but also leads to reps who drive more sales.

88% of sales professionals cannot find critical sales material on their smartphones, while 60% of sales organizations experience longer sales cycles from lack of proper tools.

Sales reps build 3.2 times more customer connections in front of screens than meeting with customers in person.

Increasing the Number of HQLs

A sales person is only as good as his or her leads. When sales reps receive poor leads, the total time and effort they waste in qualifying, engaging, and selling to low-interest prospects is significantly more expensive than the time and money spent in pursuing better quality leads.

Low-quality leads have many hidden costs: wasted time, resources, and human capital. On average, bad lead prospect data costs sales departments 550 hours and $32,000 per representative.12 Assuming the average cost of $60,000 per year for a sales representative, not including additional payroll-related expenses, this means individuals are spending over 50% of their time and payroll working with low-interest customers—for SMEs, this number can often be higher at 85%.

Companies can focus efforts on increasing lead quality to increase the number of annual closed deals. High-quality leads not only increase conversion rates but shorten the overall sales cycle, leading a representative to increase productivity by closing 10 times more deals in a single year. For more information, read our previous article on “The Cumulative Impact of High and Low Quality Leads.

Works Cited

  1. https://www.salesforce.com/blog/2018/05/sales-future-trends-research.html
  2. https://www.forbes.com/sites/christinecomaford/2016/06/18/how-leaders-can-engage-retain-top-sales-talent/#15470bb55cbb
  3. https://www.linkedin.com/pulse/why-turnover-so-high-b2b-sales-anthony-chaine
  4. https://blog.hubspot.com/sales/employee-turnover-rate
  5. https://www.forbes.com/sites/jeffhyman/2018/10/03/merrygoround/#3924ef44313c
  6. https://www.truesalesresults.com/2019-b2b-sales-predictions/
  7. https://www.membrain.com/blog/how-much-are-you-spending-on-lost-sales-talent
  8. https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/maximize-the-lifetime-value-of-your-sales-force
  9. https://cdn2.hubspot.net/hubfs/3319111/ConnectLeader_June2017/PDFs/CL_DePaul_Survey_2__3_.pdf?t=1505990163541
  10. https://blog.atrivity.com/how-to-shorten-new-hire-time-to-productivity-with-90day-onboarding
  11. https://www.process.st/b2b-sales-management/
  12. http://www.marketingprofs.com/opinions/2015/28122/what-is-bad-data-costing-your-company

Five Factors Affecting Revenue Growth

five factors affecting revenue growth

A study by Bain and Company shows an alarming trend: the cost of sales and marketing is growing faster than revenues. Half of the companies surveyed experienced their sales and marketing costs rising faster than revenues. Ironically, when companies achieved high revenue growth, their costs of sales and marketing, as a percentage of sales, remained flat or even declined.

This study, along with others, proves a fundamental shift in the B2B world: Buyers have dramatically changed how they buy, while sellers continue to sell as they always have.How do sellers adapt to the changing demands and preferences of the modern buyer while pursuing continuous revenue growth?

Through the Five Factors that accelerate revenue growth; these factors are:

Factor 1: Chose the Right Market Focus for Revenue Growth

This first factor advocates that you select, market, and sell to the right industry segment for your unique business’ products and services. Of all of the five factors, this segmentation and focus has the greatest potential to increase or decrease your revenue growth.


Read more

Factor 2: Remove Friction from the Sales Process

The old selling process is being replaced. Today’s buyers want to work exclusively with vendors who align their selling process to the buyer’s preferences. Buyers prefer to research and reach out to companies that the like. To capture the attention of this new brand of buyers, sellers must align their sales and marketing processes with their buyer’s expectations and preferences.


Read more

Factor 3: Tightly Align Sales & Marketing

To achieve high revenue growth, companies should perceive their marketing and sales efforts and departments as intimately linked. If your marketing and sales teams see themselves as a united force, at least 75% of your leads should be directly generated by marketing.


Read more

Factor 4: Leverage Intelligent Sales & Marketing Data for Revenue Growth

With the overwhelming amount of data present in sales, you must be careful to only provide sales reps with intelligent data. Intelligent data is numbers and figures that enable sales reps to be relevant, engaging, and convincing in their interactions with buyers. The targeted capabilities of intelligent data enables your sales team to more effectively speak to leads and prospects, increasing the likelihood of their conversion into buyers.


Read more

Factor 5: Manage Sales & Marketing Operations by Metrics

Most B2B companies today track some form of metric, but usually only in regards to sales departments. To generate revenue growth at a faster rate than costs, companies should invest in tracking the performance of their marketing campaigns. Factor 3 informs us that marketing is just as important, if not more important, than sales at generating leads and revenue growth.


Read more

In short, buyers are demanding more from sellers. They want a real partner that can ceaselessly add value to their own offering, enabling them to renew non-stop their own competitive advantage. In other words, they want to work with a top tier provider. This is no easy demand—which is why, for most B2B companies, the cost of marketing and selling is growing faster than revenues.

To fully learn how to best leverage these Five Factors to reduce your costs and grow your revenue, download our full whitepaper.

Read more about revenue growth strategy here.

FREE VALUE PROP ANALYSIS

Validate the Effectiveness of your Value Proposition.

When your company’s messaging is not clear or compelling, it is difficult for your customers to find you and see you as a solution. Validate that your value proposition is powerful and compelling with a FREE Value Prop Analysis. 


SCHEDULE NOW

B2B Selling in the Era of the Digital Buyer

digital selling in the B2B marketplace

 

The B2B marketplace is evolving faster than ever. In an increasingly automated world, sales representatives must leverage technology and analytics to adapt to changing customer needs and drive higher-value strategic sales through digital selling. Emerging research from McKinsey shows that B2B sellers often struggle between choosing a great sales force and great digital capabilities. In today’s digital age, they will need both.

What is Digital Selling?

The new era of B2B sales is defined by digital selling, the integration of AI technologies and/or predictive analytics that enhance the productivity and effectiveness of a company’s sales reps. 

In the past five years, sales productivity continued to decline by 14% despite billions invested in sales operations.1 Digital selling technologies give companies new opportunities to add value in customer experience and overall business growth as more traditional outreach channels become obsolete; 92% of B2B decision makers do not respond to cold calls and 53% of B2B buyers prefer going online to interacting with salespeople.2 Providing consistently high-quality customer experiences is now a telling competitive differentiator in the B2B market.3 Ultimately, digitization has become a sales team’s key to managing sale profitability, optimizing customer analytics, and prioritizing actions based on insights about top priorities.

The rise of digital selling can be attributed to recent changes within the B2C industry. With the emergence of Google, Amazon, and Uber, companies have completely reshaped customer interactions within their industry, and those changes are spilling over into B2B companies. Now more than ever, B2B customers expect the same level of personalization and frictionless interactions.4

From Selling to Digital Selling

The B2B digital selling experience is relatively low in maturity, especially when compared to B2C businesses. While 73% of companies recognize that new and returning customer expectations for more meaningful services and sales experiences are much higher than before, only a little over half of companies have initiated efforts towards digital strategies that address customer acquisition and retention in the past three years.5 Furthermore, only 10% of companies surveyed by McKinsey stated that digital was a top investment priority.3 This continued reliance on a SDR’s personal client relationship puts incumbents in a disadvantageous position against digital natives who prioritize customer expectations. 

The fastest-growing companies will harness the power of advanced analytics and machine learning to address fundamental strategic issues: new high-value sales opportunities, effective resource allocation to existing clients, actions that directly result in sales productivity, etc. These digital leaders are expected to generate 3.5% more in yearly revenue and average 15% more in profits than the rest of the B2B field.3

Leveraging Human and Digital Capabilities

The emphasis on digital selling can also be attributed to a disconnect in buyer needs and seller actions, which can compromise even the strongest B2B relationships. Sellers who solely focus on digital updates can find themselves disconnected from long-time customers; those who solely focus on traditional sales cycles lack initiative on digital investments critical to modern commerce.6

To be successful, it is important for companies to leverage both human and digital capabilities to provide an intelligent, personalized level of service. A 2019 Accenture study found that companies who adopted this service-over-sales mindset saw quick benefits, with over 95% reporting higher profitability or increased market share. Additionally, companies were almost 20% more likely to employ new technology platforms to help overcome service barriers, and twice as likely to store centralized data sets that personalize customer offering and engagement across omni-channel selling.6

Digital selling strategies can complement B2B companies by standardizing a sales approach that provides more control over allocating resources and investments to high-value opportunities. The rise of service-first and self-service selling can not only give buyers autonomy over the sales experience, but also optimize the usage of customer data in the sales process.3 Combining these digital tools with traditional sales intuition can modernize a business’s process in a constantly changing market with shorter product life cycles.2

Drivers of B2B Sales Growth

The top two priorities that are driving B2B sales growth are empowering customer-facing sales teams and integrating digital technologies.7 AI and data analytics are common denominators in both of these processes.

Empowering Customer-Facing Sales Teams

Digitization gives customer-facing sales teams more data—and consequently more information—on how to better acquire new clients and engage existing customers.

This shift towards human-AI collaboration enables sales teams to pivot towards higher-value opportunities by automating tedious and repetitive activities. Representatives can then use advanced analytics to help potential customers understand how products or services provide added value by augmenting their knowledge on successful sales tactics; an example is using deal analytics to enhance pipeline and opportunity management. Through these processes, companies can harness customer data about sales efforts and modify behaviors to better optimize revenue growth.

Advanced analytics also helps sales teams achieve results in an increasingly crowded market. Propensity modeling and automated forecasting can intelligently identify where high-potential sales opportunities are for new and existing clients. On a higher level, analytics support the evolution of new sales models. By understanding the profile of high-margin digital sellers and identifying their strong points, companies can change employee experiences to see results in recruitment and compensation KPIs.

Integrating Digital Technologies

Digital technologies are the gateway into developing new business models and empowering sales teams to drive higher-value strategic sales.7 Again, the greatest benefits are realized when both human and digital capabilities are used to their full advantage.

Search-engine marketing activities, performance analytics, and digital assistants can be used to collect a “Golden Record” view of customers that continuously feeds into AI and machine learning algorithms. Information is then reanalyzed to make targeted marketing automation offers, such as personalized landing pages. With the potential to cut an SDR’s time spent on sales administration by 60%, significant reductions in cost per sale can be achieved. 

True digitization in the new era of sales is a continuous process and faces the strong challenge of legacy pradigims.4 However, it is imperative for companies who have not prioritized digital to begin now. The B2B sales process is defined by digital selling, and those who have already invested in digitization will continue to do so at a more aggressive rate.5

Sales Metrics and KPIs in B2B Sales

sales metrics and KPIs displayed on a laptop screen

Optimizing sales productivity requires a top-down approach that synthesizes business sales goals with an individual representative’s daily performance. Sales metrics, specifically key performance indicators, provide visibility into the fundamental factors that ultimately drive sales initiatives and scalable growth. 

What are Metrics and KPIs?

Sales metrics and key performance indicators (KPIs) are oftentimes used interchangeably, but are more accurately described as two sides of the same coin. 

Sales metrics are data points that represent performance, whether it be for an individual, team, or company. They are broadly used to track progress towards goals, predict future growth, and identify any complications that may arise with sales plans and targets midway through a sales cycle.1 Many companies set goals based on lagging indicators, a type of metric that reports on previous time periods such as total sales or revenue per time period. Leading indicators—number of follow up calls, number of calls to prospects—are metrics that can have a real-time impact on course corrections.4

KPIs, however, are the key sales metrics specifically identified to best track the performance of a business or individuals with their respective objectives. Understanding these key indicators can turn numbers like first response time into actionable growth plans. Because there are many common metrics across managing sales teams, it is important to identify KPIs that are relevant within the specific industries and company departments. 

Sales metrics and KPIs are the backbone of an increasingly data-driven sales industry. On their own, KPIs are just numbers on a dashboard; they become meaningful only when analyzed for underlying trends and themes that can contribute to making a sales team more efficient.2 By examining drivers for successful goal attainment, B2B businesses can use strategic insights from KPIs as a means to align key targets with company growth.3 Without metrics, nothing else matters.

Best Practices in Managing Sales Performance

Monitoring the right KPI metrics can be the difference between driving scalable growth and fighting a flatlining revenue. A Salesforce study revealed that high-performing sales teams are 3.5 times more likely to use sales performance analytics than underperforming teams, which enable them to measure performance during a set time period against goals.4 Around 97% of B2B marketing decision makers also say growing revenue, a common KPI, is a top priority.

Metrics are not intended to be the final outcome, but rather a measure of progress. Consequently, it is important to translate sales KPIs into initiatives that make sense to both the executive team and sales representatives themselves. By choosing a mix of lagging indicators and leading indicators, companies have access to data they can interpret in relevant contexts; action-oriented KPIs inspire action and can help uncover possible causes when goals are not met. Managers and executives can then compare dashboard analytics with previously established benchmarks in order to assess trends in sales activity and give the directions necessary to yield the best results. 

With many companies increasing their use of KPIs and sales metrics, only the smart companies will see their sales increase as a result. For example, the number of follow-up calls that directly result in sales is a clearly defined and measurable KPI, allowing sales managers to tweak this variable and measure the results.4 

Clearly defining KPIs is an effective first step, but what is truly powerful is using these indicators as strategic levers towards a greater initiative of driving new sales growth. Only after establishing KPIs that monitor productivity can a business make strides towards their overall business goals.

Sales Team KPIs

General B2B Sales KPIs

At baseline, KPIs can connect how a B2B sales team directly relates to a company’s overall performance, health, and growth potential. It is important for sales executives and managers to interpret and use KPI data about their teams continuously throughout the sales cycle.

  1. Marketing qualified leads (MQL) to sales qualified leads (SQL), also known as lead to opportunity, is a KPI that requires synergy between marketing and sales departments. In the MQL stage, businesses have expressed interest in products or services through signing up for the email list, downloading website content, or other avenues. A company moves into the SQL stage after they have been vetted to speak with a salesperson and have potential to become a prospect client. The MQL to SQL conversion rate can determine if marketing efforts are leading to a high-quality pipeline, as well as provide visibility into the quality and volume of leads handed over to a sales team.6
  1. Net new revenue attainment, the total additional revenue generated from acquiring new customers and investing in existing businesses, can reflect the overall contribution to a business’s revenue growth. By comparing planned and actual revenue performance, sales leaders can then identify the changes needed on a representative level in order to increase organizational attainment percentage (percentage of the revenue plan that was achieved).3
  1. The Net Promoter Score (NPS) is a growth-focused leading indicator that measures company health from customer loyalty and satisfaction. If revenue is dropping and/or the number of leads decreases, the NPS can assist sales KPIs in understanding their customer base. Knowing if and why customers lack loyalty enables businesses to uncover what is turning away potential customers and improve the sales experience of existing clients.5
  1. Sales cycle length offers information about where the sales process is stalling, time-to-onboard, and churn rates. With data on the average time taken from first contact to closing the deal, managers can identify what sales cycle length produces the highest number of closed-won businesses and the success rate of those deals down the line to adjust accordingly. For example, if a representative is closing deals in record speed but frequently have dissatisfied customers who churn after a few months, a longer sales cycle length could result in a higher retention rate.7

Prospecting

Lead generation and pipeline creation KPIs are useful metrics for sales prospecting as representatives make outbounding efforts in hopes of creating opportunities.

  1. The number of accounts contacted is a leading indicator of how many opportunities the sales team will move forward to account executives; this can include the total number of companies prospected, as there may be multiple points of contact, and total number of companies that have responded to outreach. A conversation between sales representatives and account executives should occur to establish the level of contact needed before the moving converting a prospect into a sales opportunity.3
  1. Average lead response time is how long it takes for a sales representative to respond to a contact made from a lead. A Harvard Business Review study “The Short Life of Online Sales Leads” comments on the idea that time kills all deals, revealing that the average company responds to leads within 42 hours of an inquiry—if at all.8 Every minute matters in sales. Ideally, representatives should follow up with leads quickly to increase the chance of it being high quality. To decrease lead response time, representatives can explore options in live chatbots and automated email workflows.
  1. An ideal sales process is defined by low system touch, or low customer interactions that indicate salespeople are efficiently closing new leads. Salesforce estimates it takes six to eight touches to generate viable sales leads, while other sources report seven to thirteen.10 If an individual has missed their target quota and additionally has a high number of touchpoints per closed-lost deals (ex. 4 video meetings, 15 email correspondences, 8 phone calls), they may benefit from restrategizing their techniques which can refine the overall team’s average sales cycle.
  1. Opportunity creation by lead source is a KPI that should be consistently monitored. For outbound SDRs, this metric is commonly the percentage or number of sales opportunities created through proactive outreach on different platforms. B2B sales have a low average conversion rate of only 10 to 15% of opportunities typically leading to sales. Tracking the common sources of sales opportunities gives representatives the data that shows what efforts are effective in driving sales opportunities.
  1. Pipeline creation is an important predictor of revenue generation, and should be monitored on a weekly, monthly, and quarterly basis; the more visibility into a sales pipeline, the more visibility into revenue. If the opportunity pipeline is decreasing in size, representatives have the information to identify where in the process prospects are leaving and improve those areas; insight may lead back to the quality of opportunity creation from certain lead sources.10

Field Sales and Inside Sales

Metrics on new businesses and existing businesses are critical for field sales and inside sales representatives. These KPIs not only position efforts as contributing to larger team goals, but also stimulate healthy motivation to reach on-target earnings.

  1. Once sales development reps (SDRs) track where leads are coming from, a KPI on estimated revenue by lead source can measure what portion of a company’s revenue derives from major sources. If a company has $40,000 revenue in sales with half from social media engagement, then social media outreach would account for 50% of total revenue. Comparing current metrics with historical data can both show profitability of each source and figure out where sales representatives should be dedicating efforts in order to meet revenue targets.
  1. The average revenue per account (ARPA) is the average revenue per customer upon closing a deal. Tracking ARPA by business segment is useful for comparing average sales prices or transaction sizes within respective market averages. ARPAs can expose trends in account expansion and contraction and evaluating effective or changing pricing plans within monthly cohorts. This metric varies depending on product and pricing levels, so constant data collection from past quarters and years can serve as effective benchmarks and target predictions.11
  1. A new business win rate assesses how efficiently account executives are turning qualified leads into new customers and revenue. Important things to keep in mind when analyzing new business win rates are lead source and cohorts: inbound opportunities will inherently have a higher win rates than outbounding efforts, and win rates will fluctuate as companies in the pipeline mature at different stages. Ultimately, the goal of new business win rates is to establish reliable benchmarks to predict future targets. Representatives can improve win rate calculations by cross-referencing win rates of cohorts with past data or computing the metric on a rolling basis.3
  1. Together, gross customer churn rates and churn dollars provide insight into customer behavior. Because it is anywhere between five and 25 times as expensive to acquire a new customer than to retain an existing one, customer retention and expansion are key for driving sustainable revenue growth. Recognizing patterns in large churn events or the occurrence of many smaller churns across an existing customer base indicate what products and services inspire customers to return and contribute to company revenue, which allows representatives to optimize that information. 
  1. SDRs can determine if certain verticals are responding well to products or service pitches by tracking upsell and cross-sell numbers. Established credibility and knowledge of client preferences provide encouragement to expand customer accounts and decrease the likelihood that a company will churn. The more integrated a customer is, the more difficult it becomes for them to switch vendors.12 
  1. Percentage of time spent demoing is a KPI that can provide insight into an SDR’s productivity and help understand how long it takes to reach revenue targets. This metric tracks how much time is spent demonstrating products to potential customers. The faster an individual can hit sales targets, the faster a company can hit sales productivity.10

Case Study: Intercom

Intercom is a business chatbot unicorn that provides a platform for businesses to communicate with customers. Since its founding in 2011, the company has used KPIs to drive business closer to the next level of sales growth.

As Intercom’s customer base moved upmarket in 2014, the company utilized KPIs as a way to monitor new outbound initiatives that would help reach global revenue targets. LB Harvey, Intercom’s SVP of Sales & Support, hired outbound sales representatives to sell to larger companies, working with the finance team to establish realistic metrics and timelines. This process of explicitly defining KPIs on win rate, new net revenue, and number of opportunities created allowed the department to plan for how they could achieve an ROI of 4X on each outbound SDR.

Harvey also shared the importance of KPIs during product launches. When Intercom launched their new sales and marketing chatbot, setting a specific target for new net revenue gave sales managers the opportunity to come up with a clear amount of pipeline each representative needed to create. Tracking a dedicated KPI ensured that their “investment in our product has a positive financial impact.”

Accountable Leadership in a High-Performance Culture

Group of friendly business men and women shaking hands with no friction

Management often makes the mistake of measuring the performance of individuals based on the belief that strong personal performance leads to strong corporate performance, rather than focusing on accountable leadership. This is true only when management understands all the dynamics in the organization that lead to successful business outcomes, and when the business environment is stable. However, even the most casual observer immediately recognizes that usually neither of these assumptions is true.

Companies that want to build high performance cultures must focus on organizational performance and accountable leadership, not personal performance. By setting clear organizational metrics, the individual performance metrics will fall into place quite easily.

This is illustrated best by case studies, not an abstract line of reasoning.

BioPlus Specialty Pharmacy

Let’s look at BioPlus Specialty Pharmacy. Its medicines are expensive; they treat rare, complex diseases. Although the company enjoyed stellar growth, it was not fast enough for the president. He knew the company could grow even faster, but he didn’t know how to do it.

Rather than trying to figure out a solution himself, the president pulled together a team of trusted advisors who wrestled with the issue for a few months. They eventually realized that the roadblock to faster growth was quite simple: the company needed to be able to process new orders in a couple hours rather than a few days. This one change – which measured the quality of its service, rather than its products – proved pivotal in leading to an even greater growth rate.

The challenge in finding a solution was in deciding what to do and how to do it. This solution was easy to measure at the corporate level. It also led to spinoff metrics for staff along the way – and those staff always understood how their efforts contributed to the organizational objective.

Through implementing this solution, the company grew over 400% in three years.

Abbott Laboratories and Amgen

Abbott Laboratories is another excellent example of how accountable leadership fostered a high-performance culture.[1] Abbott hired a financial officer, Bernard Semler, who specifically used accounting mechanisms to drive cultural change. He called his approach Responsibility

Accounting. This approach tied every expenditure back to a specific manager. Each manager was held tightly responsible for his or her return on investment. Each manager agreed to be held responsible for a clear set of objectives during the coming year as well as the budgets to achieve those objectives. These managers were encouraged to be entrepreneurial in how they used their budgets. But deviations from the agreed-upon objectives were not tolerated. This created a culture that required strict adherence to financial responsibility, while at the same time it encouraged highly divergent thinking and truly creative work.

When George Rathman left Abbott to found Amgen, he applied Responsibility Accounting to his new company with the same rigor to create the same culture. What happened next is staggering: within 20 years he built Amgen into a $3.2 billion company with a staff of 6,400. Its stock grew by a factor of 150 times from its IPO price and its stock appreciation was 13 times better than an investment in the general stock market. Rathman clearly built a high-performance culture by implementing strict adherence to accountability.

Hewlett-Packard

Hewlett Packard is recognized as one of the pioneers in what eventually became the Silicon Valley phenomenon. Long before the notion of culture was popularized in the management literature, HP was organized in a highly decentralized structure. The company gave each division manager full responsibility for running their operation as a small business – including full P&L responsibility.[2] This may have been one of the first times a high technology company applied the notion of accountable leadership to senior managers.

But was HP a high-performance organization? To answer that, let’s look at its track record: After incorporating the company in 1947, its sales jumped from $679,000 that year to $5.5 million in 1951, only four years later. Eight years later, in 1959, the company established an overseas presence with a marketing organization based in Geneva and a manufacturing facility in Germany. By 1970 its sales reached $365 million. 15 years later – 1985 – its sales were at $6.5 billion with 85,000 employees. The company had developed a very high-performance culture – and its founders credit their corporate success to a large extent to holding their leaders accountable for their results, not their activities.

The Take Away: Accountability is Non-Negotiable

At the risk of overstating the obvious, accountability at every level is essential to building a high-performance organization. It is not optional. At the same time, our case studies highlight that accountability for results is not incompatible with management freedom or restrictions on creativity. Top performing companies usually urge their managers to be highly creative and take risks – but to do so within a framework that holds them fully responsible for the outcomes the managers committed to originally.

Top performers like to be measured – if the measurements make sense to them and relate to outcomes that truly impact the well-being of the company. But if the metrics are activity oriented rather than results oriented, they are quite likely to “game the system” to “hit their numbers” without regard to the things that are truly important to customers, investors, employees, and other stake holders.


[1] Good to Great: Why Some Companies Make the Leap and Others Don’t, Jim Collins, 2001

[2] The HP Way, David Packard, January 3, 2006

These Five Factors Are Affecting Revenue Growth

five factors affecting revenue growth

A study by Bain and Company shows an alarming trend: the cost of sales and marketing is growing faster than revenues. Half of the companies surveyed experienced their sales and marketing costs rising faster than revenues. Ironically, when companies achieved high revenue growth, their costs of sales and marketing, as a percentage of sales, remained flat or even declined.

This study, along with others, proves a fundamental shift in the B2B world: Buyers have dramatically changed how they buy, while sellers continue to sell as they always have.How do sellers adapt to the changing demands and preferences of the modern buyer while pursuing continuous revenue growth?

Through the Five Factors that accelerate revenue growth; these factors are:

Factor 1: Chose the Right Market Focus for Revenue Growth

This first factor advocates that you select, market, and sell to the right industry segment for your unique business’ products and services. Of all of the five factors, this segmentation and focus has the greatest potential to increase or decrease your revenue growth.


Read more

Factor 2: Remove Friction from the Sales Process

The old selling process is being replaced. Today’s buyers want to work exclusively with vendors who align their selling process to the buyer’s preferences. Buyers prefer to research and reach out to companies that the like. To capture the attention of this new brand of buyers, sellers must align their sales and marketing processes with their buyer’s expectations and preferences.


Read more

Factor 3: Tightly Align Sales & Marketing

To achieve high revenue growth, companies should perceive their marketing and sales efforts and departments as intimately linked. If your marketing and sales teams see themselves as a united force, at least 75% of your leads should be directly generated by marketing.


Read more

Factor 4: Leverage Intelligent Sales & Marketing Data for Revenue Growth

With the overwhelming amount of data present in sales, you must be careful to only provide sales reps with intelligent data. Intelligent data is numbers and figures that enable sales reps to be relevant, engaging, and convincing in their interactions with buyers. The targeted capabilities of intelligent data enables your sales team to more effectively speak to leads and prospects, increasing the likelihood of their conversion into buyers.


Read more

Factor 5: Manage Sales & Marketing Operations by Metrics

Most B2B companies today track some form of metric, but usually only in regards to sales departments. To generate revenue growth at a faster rate than costs, companies should invest in tracking the performance of their marketing campaigns. Factor 3 informs us that marketing is just as important, if not more important, than sales at generating leads and revenue growth.


Read more

In short, buyers are demanding more from sellers. They want a real partner that can ceaselessly add value to their own offering, enabling them to renew non-stop their own competitive advantage. In other words, they want to work with a top tier provider. This is no easy demand—which is why, for most B2B companies, the cost of marketing and selling is growing faster than revenues.

To fully learn how to best leverage these Five Factors to reduce your costs and grow your revenue, download our full whitepaper.

Read more about revenue growth strategy here.

FREE VALUE PROP ANALYSIS

Validate the Effectiveness of your Value Proposition.

When your company’s messaging is not clear or compelling, it is difficult for your customers to find you and see you as a solution. Validate that your value proposition is powerful and compelling with a FREE Value Prop Analysis. 


SCHEDULE NOW

Removing Sales Friction in B2B Sales

Group of friendly business men and women shaking hands with no friction

Factor 2: Sales Process is Buyer Process

Research by McKinsey & Company, Bain & Company, and the sales force training firm The Rain Group all show the same thing: Buyers now prefer to work with sellers who align their process to the Buyer’s process. A seller that does not comply is one that complains about unreturned phone calls and emails—hence increased marketing and sales cost, as well as increased sales friction.

The New Buying Process

The studies show that Buyers prefer to conduct their own research and determine who gets invited to work with them to further refine a possible solution.

The buying process starts internally, typically when some pain becomes no longer acceptable, driving a new initiative to address it. The head of the business or functional unit (the business driver) who is responsible for the resolution of the issue now heads this new initiative. She typically assigns someone on her team to conduct preliminary research and report to her with findings and recommendations.

This is the beginning of the “Buying” process. At this point, no seller is aware that the buying process has started.

The team member assigned to this task now begins the research by entering keywords in her preferred  search engine. She thenreviews the search results and begins tagging the promising ones.

Later, she will go deeper into each result to determine  which will make her final cut. At no point has she called any company—this is all digital content review.

A few days later, she returns to her boss to report and make her recommendations. The business driver then makes the decision of who they will review—in other words, who makes the short list. She then tells her researcher to contact the short list and schedule meetings with the vendors’ representatives.

The New Selling Process

Marketing

Since the buying process starts with research, the first thing that a Seller must do is make sure the seller’s website has deep and relevant content that addresses the issues that its market typically faces.

If the Seller has a focused market as described in Factor 1 above, then not only can it stay abreast with changes in its chosen market, but it can actually be ahead of them with thought leadership. The Seller can anticipate trajectories in regulations, changes in norms, shortages of key supplies, etc.

Because it specifically focuses on a single market and because it has depth, the Seller’s content will surface among the many sources examined by the Buyer’s researcher, thus reducing sales friction. The Seller’s chances of making the short list is pretty high, and it will likely be invited to present.

Lead Generation

In addition to having highly search optimized content that drives inbound leads, if the seller also has outbound lead generation campaigns, then it is virtually guaranteed to make the short list of vendors that get invited. Its emails are likely to be opened as their message is directly relevant and always refreshing its subject matter. Its voicemails are right on and are likely to generate call-backs.

Selling 

When invited to meet the business driver, the Seller must recognize that this is a collaborative event and should invite the buyer to fully participate in defining the problem as well as the solution. Read about Factor 3: Sales and Marketing.

This is exactly what buyers today are looking for since their needs are complex and will need customized solutions rather than ready-made ones. . They want Sellers who are willing to work towards customizing a solution that functions perfectly for them.

The Old Selling Process and Sales Friction

Lets compare the new selling process with the old. The Old Selling process consists of  “blasting” a huge list with irrelevant emails and “dialing for dollars” in hopes that someone picks up. If through sheer persistence, the sales rep gets an appointment, the chances it will get canceled are high.

And if the rep actually gets the meeting, the rep typically will blow it off by forcing a process the buyer does not find useful—first I am going to tell you about me. Then I am going to ask you about you. Then I will show you my product. Then I will send you my proposal…

The old seller driven and seller biased way no longer works. Sellers must understand that Buyers are looking for committed partners.

Market Focus is the Key to High Growth

Two people focused on their paperwork discussing higher growth

Factor 1: Market Focus

Of all Five Factors, market focus probably drives high growth more than any other.

Geoffrey Moore defines a B2B market segment as the intersection of industry, role in that industry, and geography— for example, hospital administrators in the US. Evidence suggests that the tighter the definition of a market segment, the greater the performance of a Seller in that segment.

Therefore, if all other factors are  equal, a company that sells to “Hospital Administrators in the US” will see higher growth rate and profitability than one that sells to “Health Care Professionals in the US”. To expand upon this example, a company that sells to “Hospital Administrators In California” will see the fastest growth.

What usually happens, however, is that Sellers keep widening their definition of the market they serve thinking that they will get more business by doing so. The reality is often the opposite. To demonstrate this principle, we will need to analyze these three different markets.

Let’s assume that XYZ Corp is a $100 million provider of software products for the healthcare industry.

The question is where it would realize faster growth and profitability: Hospital Administrators in CA, Hospital Administrators in the US, or Health Care Professionals in US.

SegmentA. Hospital Administrators in CaliforniaB. Hospital Administrators in USC. Health Care Professionals in US
Estimated number4002,200128,000
Key competitors4-670-120200 – 300
MessageManaging value-based reimbursementManaging value-based reimbursementRegulations in healthcare
Conferences317211

The prospect of selling to 128,000 Health Care Professionals in North America instead of only 400 Hospital Administrators may seem more appealing. However, what really matters is the perspective of the buyer.  Does XYZ offer the best value?

Imagine how XYZ Corp will have to demonstrate such evidence of value to 128,000 Health Care Professionals in the US.

First, it has to reach them in some way. You can imagine what it takes to reach such a widely diverse audience. Does it attend 211 conferences? Does it run TV or Print Ads? Does it try to buy email lists? What would be the subject line? What would its compelling message be for a wide assortment of professionals including Doctors and Nurses, Therapists, and Hospital Administrators? How would it organize its sales force—  by geography or by profession?

Whichever road it takes, XYZ Corp’s choices remain the same—either go shallow and wide, or spend an enormous amount of money to build the necessary expertise in each of these professions.

When faced with that choice, most companies seem to choose the wide and shallow route, rather than choosing market focus. Unfortunately, companies that go shallow and wide are always beaten by those that go narrow and deep—hence the cost of sales and marketing rising faster than revenues.

In reality, there is a third choice—one that is actually better than either of the above. That choice  is to go narrow and deep in only one segment at a time.

For example, if XYZ Corp decides to go narrow and deep with a focus on Hospital Administrators in California, it will face a totally different scenario. It can now direct its product, messaging, and services to just that market. It only has to compete with 4 to 6 other providers, and if it chooses to attend conferences, it only needs to attend the top 3. Both are doable tasks.

Finally, its sales reps only have to work with Hospital Administrators in CA, so it is perfectly feasible to have sales reps who are experts on the issues that their customers face.

In which segment would you say that XYZ Corp has a better chance of closing more deals faster and at better prices: segment A, B, or C?

It is worth repeating that Focus is the most important of all the Factors Driving Revenue Growth.

Read about the second factor driving revenue growth here.

The New Realities of B2B Sales (Part 1)

Business men and women in a room discussing B2B sales

The 21st Century Reality

A fundamental shift we see in the reality of Business-to-Business (B2B) is that prospecting and sales results are becoming more difficult, time-consuming, and expensive to produce. Lead conversion rates are lower, sales cycles are longer, and closing ratios are not what they used to be.

The success of acquiring and retaining customers relies on delivering exactly what customers want and in the manner they want it. For modern B2B companies, this means developing highly personalized and specific products and messaging to address individual business needs. The idea of marketing and selling the way customers want to buy is not something that most B2B companies truly get, let alone do well. Most tend to have a standardized method that fits their internal needs, which they try to force on their buyers—who consequently shut them out.

The realities of B2B sales and marketing have changed, and we have outlined two of these changes below.

In coming articles, we discuss other changes and recommendations for better aligning with Buyers to increase the number of quality leads that close faster and at a higher rate.

Reality 1: The Millennial as the New Buyer

A 2016 American Marketing Association survey discovered that 73% of all millennial workers are in some way involved in the purchasing decisions of their companies. Furthermore, the number of Millennials in charge of B2B purchasing power increases every year. In 2016, 34% of sole buying power was in the hands of employees under age 35.

With millennial control comes the digitization of the buying process. As consumers, Millennials conduct 80% or more of their transactions online—preferably on mobile devices.  They do not see why they can’t do the same at work. Millennial buyers are also more likely to research and review companies and their products, rather than wait for sellers to approach them. This process allows them to feel more confident in finding  sellers whose services and products fit their specific needs.

In addition, Millennials incorporate social media into their businesses and use them as purchasing resources. The collaborative aspect of social media helps companies form teams that review and analyze potential products before making a purchase decision. Perhaps as long as ten years ago, B2B sales transpired in a linear fashion from sellers to buyers. Today, sales often begin with buyers checking out the reviews and advice of their companies’ network before considering a purchase. Purchasing is now strongly influenced by buyers operating in a web-like system.

Reality 2: Strategic Procurement is Not Purchasing

The terms “procurement” and “purchasing” are often wrongly used interchangeably. Procurement is the process of selecting vendors, which involves vetting, establishing purchasing terms, and negotiating contracts on behalf of prospective clients. ItProcurement refers to the broad range of processes that lead up to the purchase of goods and services.

Procurement is a strategic procedure, while purchasing is transactional. When developing strategic procurement, businesses integrate and align the purchasing needs of their various lines of businesses and departments with their overall company-wide objectives. Doing soThis not only controls costs, but also controls the quality and reliability of input products and services needed. Through strategic procurement procedures, B2B companies can continuously improve and re-evaluate their purchasing actions to optimize their resources and generate efficiency.

B2B sellers that fully appreciate this difference and align their marketing and selling strategies with the procurement strategies of their buyers will find more success.

Read about how the globalization of competition and digital transformations of B2C companies are changing the landscape for B2B companies in “The New Realities of B2B Sales (Part 2)”.