Earlier today I read a blog post from the ever-thought-provoking Dan Waldschmidt. If you care about your sales team, or maybe if you’re planning a sales training initiative for 2011, you should first read the entire post, but it begins like this …

Sales training is broken.

It’s dead.  Washed-up.

And we might be all the better if we helped give it a final push into the coffin.

As regular readers of this blog will know, I care deeply about this topic, and perhaps unsurprisingly I commented on the blog post. My comment is rather long and perhaps at times a little passionate, but it’s an important topic and, as ever, I tend to speak my mind.  I thought I’d share it here.

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My Response to “The Bullocks Behind Sales Training’ by Dan Waldschmidt

Dan, your premise is entirely true. You forgot to mention that companies spend $10Bn each year on sales training, and most of that investment is wasted. Now, it might seem strange that I’m agreeing with you given that I’m CEO of The TAS Group. But when I got into this business just a few years ago I was appalled by the level of negative ROI. Industry reports would suggest that after just 30 days sales training results in only 13% retention of what was taught. Yep, that’s 87c in every dollar wasted.

We are now achieving 93% retention after 12 months.

I got into this business to fix the fundamental problem of negative ROI; to fundamentally change the approach and to deliver long-term customer value. We thought a lot about why it was so broken, why the latest 7-step methodology, color-coded sheet, or sales-tips library, was no longer lasting than the Heimlich maneouvre, and a lot less effective.

We looked at why sales people – in contrast to their peers in other professions – did not apply consistent proven best practice. I’m an engineer, and I know that there are engineering principles that always need to be applied – otherwise the bridge will fall or the software application won’t work. When I practiced as an engineer (a long-time ago) I used the engineering methodology because I could see how it helped me and it was not difficult to use. That reward/effort equation is not solved by the traditional sales training approach.

The problem with traditional sales training is two-fold. It is as you say about a mindset change. To extend my engineering analogy – I should care if the bridge will fail because people will die, but I also need my theodolite and my CAD system to keep me within the guardrails of effective practice. These tools have embedded best practice and supporting knowledge and intelligence that I as an engineer could not survive without.

As we sought to address the problem you so eloquently articulate, we built tools that help sales people to collaborate with their customers to help ensure that the customer gets what they need – not just what they want. We understand that the impact on a customer of a bad buying decision is always greater than the impact on a sales person of a lost deal, and that if the sales person’s ‘solution’ is not a good fit for the customer’s needs then the sales person should graciously withdraw. It’s better for everyone in the long-run. Our software platform (Dealmaker) supports that ideal and as a consequence our customers are more successful. We look at our customers through the eyes of their customers and help them to make their customers successful. That’s why we have customer retention rates of 93%.

The conversation you surface here is an important one, and one I enthusiastically welcome. Innovation has been lacking in this industry for 25 years and the consequence has been a cartel of mediocrity that serves no party well.

Our customers are excited about the intelligence we’ve built into our sales effectiveness software platform. They relish the automated deal coaching, they drool over the ease-of-use and how we solve the reward/effort equation. They embrace the embodied discipline and the consequence increase in their sales forecast accuracy. Most of all they value the results.

Some of my heretofore competitors have partnered with us to leverage our innovation investment to better serve their customers, because they too want to deliver sustained value and recognize that the old way just doesn’t work. They now compete with me at the high-end of the value chain and I welcome that, and would welcome others. Together we can raise the standard for all.

CRM vendors are also complicit in this morass of methodology mediocrity. Look into any CRM system today are see how many sales deals are forecasted to close in the past. As I write this, it’s August 21 2010, and I will guarantee you that nearly every CRM system (where Dealmaker has not been integrated) will have deals with forecast close dates in July and June. Good methodology integration can solve that problem, and not doing so is lazy and irresponsible. That’s what sales people waste 2 hours each week on average doing sales forecasts that are as real as a Grimm Brothers’ fairy tale.

Buyers of sales training too have a part to play in raising the bar. If they measure success by the number of hours people sit in a classroom then they will find plenty of providers will to service them. If they pay for mediocrity – that’s what they will get. If they consider instead the sustained transformative results they should demand, and then demand them from their providers, they will help solve the problem.

Thanks for calling out the bullocks.

Donal Daly
CEO, The TAS Group

This post is mainly for the non-quota carriers out there. Or maybe it’s for quota carriers looking for a little help from their friends!  We’re all in it together, right?

If you accept that nothing good happens until someone in your company sells something, then it might be worth your while thinking about how you help to make that happen.  This was how a CEO of one of our customers (I will call him Jim) explained to me how he gets everyone in his organization fully aligned and supportive of the sales organization.

Jim’s perspective was simple. He’d ask each of his employees to describe their value proposition to the sales team. Jim felt that unless each of his employees in marketing, product development, customer service, operations and finance, understood that at least part of their job was to support the sales team, then something was wrong; and the way that he would test it is that periodically he would ask each person to articulate his or her value proposition to the sales team as their customer.

I love the simplicity of Jim’s approach.  It’s an extension of the old saw ‘Everyone is in sales’ but applied in a practical way that gets everyone to understand why in fact that must be true.  So, I thought I’d try to extend Jim’s approach just a little bit. Before the sales person asks his colleague “Hey, what did you do for me lately?”, it might be worth calling out some of the areas where the sales team might need help.

[For the purpose of this post, I'm going to assume that the sales team is perfect .  Okay, you can get up of the floor now.  It wasn't that funny, really it wasn't.  But if I try to explore the foibles and inadequacies of how sales interacts with their colleagues .... that's for another day.]

Here instead I wanted to adopt the voice of the sales team, set out some hypothetical problems that many sales organization face, and ask my imaginary colleagues in Finance, Customer Service, Product Development and Marketing for their help. If any of the  issues mirror yours, then you might like to forward this blog post to your (non-sales) colleagues.  It might prompt some discussion,

• Voice of Sales to Finance: Please know that if I ask for approval on a discount, or special payment terms, it’s not because I don’t want make the effort to sell the value of our solution, but because I’m finding it difficult to get the buyer to accept our standard terms.  You could help me perhaps by working with me to develop a statement of ROI for my buyer that you would be happy to walk through with the customer.  And, on the special payment terms item, I’m not clear about what is important to you – total revenue, recognized revenue, cash-flow, or profit.  If you could help me understand your priorities, then I will manage my negotiations with the customer with your priorities in mind. You spend a lot of your time negotiating with vendors? You probably understand my customer’s financial statements better than I do?  How can you help me close more deals, at a higher margin?

Insert your answer here: ____________________________________

• Voice of Sales to Customer Service: I spend a lot of time finding and closing new customers.  I really care about each one of them.  I could ask you to not screw up the relationships that I’ve built – but that would be insulting, and I know you will not do that.  However, as you know selling more to an existing customer is sooo much easier (and profitable) than finding a new customer, so I need you to wow them.  If I’m setting inaccurate expectations – please tell me how you think I can do a better job.  I think what we do is awesome, and you guys are amazing, so sometimes I might get a little carried away.  So, what can you do to help me sell more to our existing customers, or ensure that each one of them wants to be a zealot reference for me?  How do we set the bar high, and then really exceed it?  How can you help me?

Insert your answer here: ____________________________________

• Voice of Sales to Product Development: Look, I know you want me just to sell what we have today.  You don’t like me asking for new features, or making promises to customers that you can’t live up to.  I’m cool with that.  I do think our products are the best in the market, but sometimes there might be a feature or two that the competition has that creates FUD, and I need to really understand deep down why we’ve chosen not to deliver that feature.  I know this might be marketing’s job to help me understand that – but your perspective would add value.  But you’re really smart.  You know why you’ve built the product the way you did, and I know you take a customer perspective, but can you please tell me how you can help me sell more?  What’s your value proposition to the sales team?

Insert your answer here: ____________________________________

• Voice of Sales to Marketing: Ok, we’re joined at the hip.  Some of my colleagues would say that the difference is ‘Sales is measured and marketing is not’ but that’s not my perspective.  I depend on you.  Here are my current challenges.  I don’t have enough opportunities.  I don’t mean leads, I mean opportunities.  I can’t get access to C-level executives. Is that me, or is it our messaging.  As you know, I’m doing ok YTD, but I’m worried about H2.  You done Trojan work putting all of the marketing materials on the marketing portal, but I’m not sure what to use or when to use it.  I’m not looking for a silver bullet (well, I am but …) but how can you help me solve these specific problems; more opportunities (not leads), C-level access, what marketing docs to use, and when to use them.  If these are my problems, what’s your value proposition to the sales team?

Insert your answer here: ____________________________________

*****

I’ve been thinking about this issue for quite a while, (in fact, we will shortly announce a new edition of Dealmaker that improves overall organizational alignment around sales) and I’m a firm believer that once (1) you get the whole organization aligned around sales, (2) and sales values that fact, and (3) everyone realizes that effective sales starts from the customer’s perspective – then you can achieve uncommon organizational productivity and velocity.  At The TAS Group, we call this rightful impatience, and I think it’s at the core of whatever success we achieve.

I’d love to hear your thoughts on this, particularly if you share it with your colleagues, I’d be really curious to know if it makes a difference.

We know that a good sales team can be a great sales team with effective sales coaching. In fact, according to the Sales Executive Council, when coaching is added, sales productivity is improved by 88%. As a result of coaching Return on Investment in sales goes up 27%, according to Gallup. And, where sales coaching is involved, customer loyalty improves by 56%.  However, we all know that not enough effective sales coaching happens, and as a result – revenue suffers.  In fact, according to a recent blog post by David Brock, sales managers only get to coach their sales people once a quarter – yikes! At The TAS Group, we’ve developed a solution to help address this problem, and I will introduce that later, but before that I’d like to set out a few thoughts about the good and bad of sales coaching.

You may remember a previous post I did about what motivates sales people. Well, the main motivator is not compensation or recognition, but it’s about making progress. ‘Making progress’ is something we’re all keen to achieve in everything we do. It’s why we practice our favorite sport, or musical instrument, and we know that our soccer coach or piano teacher can only point us in the right direction, share their experiences, and explain techniques that might help us further hone our skills.

So it is with sales coaching (or management coaching of any kind.)  But it doesn’t always happen that way.  Too often sales coaches interactions are solely critical (I never want you to approach a customer that way again! Don’t think this is not going to impact your commission.), overtly directive (Here’s what you need to do in future) or otherwise judgmental (Look, it’s clear you’re not going to make your numbers, we need to review your pipeline). There’s not a lot of value in those conversations. This kind of approach devalues both parties.

Sales is not a mechanical task.  It requires at least a modicum of cognitive aptitude.  We expect our sales people to be able to interpret, intuit, assess and make their own judgments. Putting them in a vice doesn’t help.  Based on a recent MIT study, Dan Pink explains that where cognitive skills are required, the key to motivation – which is at least part of the role of the sales coach – is to understand that people are motivated by (1) connection to a purpose, (2) the desire for mastery, and (3) the ability to be self directed.  Think about these three golden rules as you coach – it’s important.

1. Connection to a Purpose: Why is the sales coaching event happening in the first place? Either it’s to help progress a deal, or it’s to learn from a lost deal. It’s not to berate the sales person, and it’s not the forum for a performance review.
2. The Desire for Mastery: Just like good soccer players want their coaches to teach them how to be great, so it is with sales people.  Every coaching session, indeed every interaction, should be viewed as an opportunity to help the sales person achieve mastery.
3. The Ability to Be Self-Directed: It doesn’t work if the coach takes over the deal. If the coaching event is to be optimally productive, it must be a learning experience, and help the sales person to be more effective in the future – and in fact need less coaching. Sales winners want to have the ability to be self-directed.

As Dave says in his post, “Coaching is one of the highest leverage activities a sales manager can undertake. Effective coaching improves the performance of sales people”. But we need to focus on the word effective – and the sales manager and sales person each have a role to play.  The sales person must have done his, homework.  Nothing is more frustrating for a sales manager than beginning a coaching session only to discover that information is missing, or basic groundwork has been overlooked.  For the sales manager, she needs to help the sales person to highlight obstacles to progress, let the sales person suggest solutions, shape those solutions, and then support the sales person in executing on the agreed next steps.

When we (at The TAS Group) set out to design Dealmaker Coach Me, our efforts were informed by principles similar to these.  I love your opinion on our approach.

Recognizing that we don’t always have as much time to spend on sales coaching as we would like, and that unless everybody is well prepared, the coaching experience is not always the most productive – we used technology to help both sales person and manager overcome these problems .  Dealmaker Coach Me helps the sales person to achieve mastery and increases his ability to be come self-directed.  Because it provides real-time, deal-specific coaching, it enables the sales person to sell smarter, and managers to coach better.

If you’ve 3 mins to look at this video on Dealmaker Coach Me, I’d love your opinion.

[Credit: I was reminded of Dan Pink's work by a post on the excellent blog from Bridget Gleason of BLG Consulting Group.]

When you encounter excellence in an area that’s of real interest to you, you feel that your life is enriched. Along with music, technology, and many other areas, I’m really interested in the business of doing business. What I do today is what I’d do if I didn’t have a job tomorrow. But, alongside that, I’m really passionate about what Bill Gates called Creative Capitalism, and I would describe as using your business acumen to the betterment of others as you carry on with your capitalist endeavors.

And so it was with sadness that I heard of the untimely death of C.K. Prahalad last week.  For me, he brought a sense of values to leadership strategy and other business teachings that was uncommon.  It was in no way anti-commerce, but recognized that integrity and respect are intangible assets that grow the tangible assets that are more commonly found on a balance sheet.

I won’t eulogize him for fear of falling short.  Instead I will list here the 11 points from a lecture he gave to MBA students each year for 33 years – without changing a word.  The relevance, longevity and prescience of these words paints a better picture than any words I could write.

His remarks were intended to serve as a spur for people to reexamine their values before they plunge into their daily work routines.

• Understand the importance of nonconformity. Leadership is about change, hope, and the future. Leaders have to venture into uncharted territory, so they must be able to handle intellectual solitude and ambiguity.

• Display a commitment to learning and developing yourself. Leaders must invest in themselves. If you aren’t educated, you can’t help the uneducated; if you are sick, you can’t minister to the sick; if you are poor, you can’t help the poor.

• Develop the ability to put personal performance in perspective. Over a long career, you will experience both success and failure. Humility in success and courage in failure are hallmarks of a good leader.

• Be ready to invest in developing other people. Be unstinting in helping your colleagues realize their full potential.

• Learn to relate to those who are less fortunate. Good leaders are inclusive, even though that isn’t easy. Most societies have dealt with differences by avoiding or eliminating them; few assimilate those who aren’t like them.

• Be concerned about due process. People seek fairness—not favors. They want to be heard. They often don’t even mind if decisions don’t go their way as long as the process is fair and transparent.

• Realize the importance of loyalty to organization, profession, community, society, and, above all, family. Most of our achievements would be impossible without our families’ support.

• Assume responsibility for outcomes as well as for the processes and people you work with. How you achieve results will shape the kind of person you become.

• Remember that you are part of a very privileged few. That’s your strength, but it’s also a cross you carry. Balance achievement with compassion and learning with understanding.

• Expect to be judged by what you do and how well you do it—not by what you say you want to do. However, the bias toward action must be balanced by empathy and caring for other people.

• Be conscious of the part you play. Be concerned about the problems of the poor and the disabled, accept human weaknesses, laugh at yourself—and avoid the temptation to play God. Leadership is about self-awareness, recognizing your failings, and developing modesty, humility, and humanity.

One of the issues that I’m often asked about is how to improve Sales Win Rate.  Sometimes the question is presented as “What’s a good Win Rate?”, or “What percentage of deals that I bid for should I win?”  Of course there is really no universal answer to this question – and the reason for that is that it’s the wrong question.  In my opinion, energy is more productively spent in determining why you lose deals, and in my experience, the explanation follows a fairly predictable pattern. If that is true, then if you can identify the common attributes of lost deals, you can work to avoid deals with those attributes, or focus on how to overcome the weaknesses that gave rise to the failure. Then by definition, your Sales Win Rate will improve.

In reality there are really only two reasons why you lose a deal:

1. You Should Not Have Been There (pursuing the deal) In The First Place, or
2. You Were Outsold.

I will substantiate this claim a little later, but first I want to share some alternative perspectives.

When I ask sales managers why their teams lost a specific deal the most frequent responses include things like:

1. “Well, he wasn’t speaking to the Decision Maker.”
2. “She didn’t understand what the customer really wanted to achieve.”
3. “We should never have bid in the first place, the customer is locked into our competitor.”
4. “Our solution just wasn’t a good fit, and he (the sales person) tried to squeeze a round peg into a square hole.”
5. “The competitor had a stronger relationship with the customer.”
6. “There was never a project there in the first place.”
7. “We didn’t understand the personal motivation of the Decision Maker.”
8. “He couldn’t get the customer to understand our value proposition.”
9. “She never realized that the budget was way too small for our product.”

Responses from sales people to the same question include many of the above, but there are sometimes some additional reasons given:

1. “We’re just too expensive.”
2. “We couldn’t provide a reference because we’ve never sold to that type of customer before.”
3. “I never knew [the deal] had to be approved the technology committee.  He never told me that.”
4. “The customer just doesn’t get it. I don’t understand it – she really needs our stuff.”
5. “I never knew that the competitor wrote the RFP.”
6. “He never told me that Capability X was important.”
7. “My [internal] sponsor just didn’t have the juice to make it happen – even though he told me he did.”

For mid-to-large deals in an enterprise B2B market, the costs incurred in pursuing a sale will typically range between $10,000 and $100,000. Our research at The TAS Group has shown that it takes 50% longer on average to lose a deal than to win one.  Think about that for a moment.  If your sales team is spending more time losing deals than winning deals, what’s that going to do to your quota achievement?  Or, if you could fix the problem, what impact would that have?

No matter how you look at the reasons given above, in truth there are really only two reasons why you lose a sale:

1. You Should Not Have Been There (pursuing the deal) In The First Place , or
2. You Were Outsold.

It’s as simple as that – just two reasons. In my experience, failure is weighted fairly evenly across both. So, let’s look at these in a little more detail.

Reason 1. You Should Not Have Been There In The First Place

At The TAS Group, we discuss ways to help sales teams win 4 of 7 deals, instead of 3 of 10.  This means that you pursue fewer opportunities.  It’s not about ‘getting up to bat’ more often. In fact it’s the opposite.  In practice it means determining at the outset if your solution can uniquely and competitively add value to the specific customer that you are targeting. Of course it means research, and work, and understanding of what the customer wants to achieve, and how your solution might be applied to solve their specific problem.  This information is only useful if you understand what the competitor might be offering.  Often, it’s as simple as defining your ’sweet-spot’ customer – listing the attributes that describe the profile of the customer to whom you can competitively add value. When you hear yourself saying “We’ve not sold to this type of customer before – but I think I can make it work.” – then move on. You’re wasting your time.

If you look at the ‘lost deal’ reasons listed above, items 3,4,6, and 9 in the Sales Manager’s list, and items 2 and 5 in the Sales Person’s list fall into that category – you should not have been there in the first place.

Reason 2. You Were Outsold

Sometimes this is hard to accept. I know that in my case, if it’s not Reason 1, then I’ve been outsold. I didn’t understand what the customer wanted to achieve, I was not politically aligned in the customer’s organization, I didn’t understand the customer’s buying process, I chose the wrong competitive strategy, I failed to articulate my value proposition in terms that the customer understood, I failed to demonstrate ROI for my solution, or, more likely, a combination of a few of these.  Looking at the lists above, items 1,2,5,7,8, and 9 in the Sales Manager’s list, and items 1,3,4,6 and 7 in the Sales Person’s list fall in to this category. I’ve been outsold – someone else did a better job.

Now, even if you’ve done a great job in qualification – and that’s what you’re doing to pass the ‘Should I Be There In The First Place?‘ test, you won’t win all of the deals.  Sometimes, you will be outsold, 3 out of 4 is a realistic Sales Win Rate target.

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When I express the perspective outlined here, I get a range of reactions, ranging from animosity (“Who does he think he is? He doesn’t understand what I go through to win a deal”) to guarded acceptance and excitement (“Wow, if we could actually achieve that, it would be incredible. We should give it a shot.”).

As we’ve watched our customers move to these kind of ratios it’s been really gratifying to know that we’re making that kind of difference for some.  I’ve spoken at length to those who excel on this journey, and there are a number of common attributes – some organizational, and some with respect to the tools they use to help them.  Organizationally, the companies just seem to be run better, and sales is viewed as the engine that fuels growth, and investment is commensurate with that view.  From a sales tools perspective, the common elements are a sales process that maps to how the customer buys, deep analysis of the customer’s political structure, and collaborative interaction with the customer to truly understand their business problem and what they want to achieve.

The following movie links give an overview of components of how the Dealmaker Sales Performance Automation platform is used to support these three goals.  Though, as it uses our Dealmaker product, it’s a little self-promotional, and I don’t like to do that in the blog, it’s the best way I can think of to elaborate on the areas that I think add considerable value and I’ve seen executed well .

• Sales Process
• Political Alignment – go to the 3min mark in the movie
• Collaboration