lifetime value ebook_04012015_final

FWD1
LIFETIMEVALUE
Rethinking: The Lifetime Value of a Sales Rep

BACK FWD2Rethinking: The Lifetime Value of a Sales Rep
Rethinking: The Lifetime Value of a Sales Rep
The Revenue Conundrum
There’s a mysterious force at work in the B2B selling environment that’s stymied
even the most seasoned marketing and sales leaders.
It’s something we like to call the Revenue Conundrum. We set revenue, booking
or quota expectations with our constituents – employees, shareholders,
advisors, the market – and then either have a difficult time meeting them or fail
to achieve them at all. But we’re giving it our best effort…we’re going all in. So
what’s the issue?
We’re not maximizing the lifetime value of
our sales reps
The lifetime value of a sales rep = the amount of investment we make in the
growth and development of a salesperson with the hope of future return. We’ve
been so focused on enabling our newly self-empowered customers, and feeding
them content on their way through their buying journey, that we’ve neglected to
do the equivalent with our salespeople.
We have not invested the time or resources to understand the unique needs of
sales learning in the context of supporting the buyer’s journey. And now we’re
flailing around trying to meet our numbers.
In this eBook we’ll look at:
• How we ended up in the predicament
we’re in;
• The complicated and varying
landscape of today’s sales reps;
• The stages of sales competency and
what they mean for operationalizing
revenue initiatives; and
• How to solve the Revenue Conundrum
by increasing the lifetime value of new
sales reps, and ultimately, improving
revenues.

What’s the problem in today’s B2B
selling environment that’s creating
such a mismatch in the revenue
expectations that we set and the
results?
We’ve all seen the headlines and
felt the shift in the behavior of
buyers. They’re in charge now.
They are doing more research,
self-education, networking, and
social intelligence gathering on
solutions to their problems long
before they ever engage directly
with us.
This has forced us to
fundamentally shift how we
market and sell our products
and solutions, and has led to
the creation of a $3B marketing
automation market that gets
us out in front of buyers before
they’re active prospects. To feed
that $3B market, we have also
spawned another market of at
least $5B spent on customer-
facing consumable content that
we’ve generated to educate and
draw those buyers toward us.
And we’ve gotten so good at
automating this new class of
communications and plying our
unsuspecting prospects with
quality content that corresponds
directly to their buying journey,
that we’ve all but guaranteed that
they’ll choose us when it’s time to
make a decision. Right?
Almost. But not quite.
The Creation of the Conundrum: What We Got Right
57%
of the buyer
education process
is complete before a
sales rep is involved*.
*
$
3B
Marketing
Automation
Spend: Inbound,
web, digital,
social, outbound,
etc.
$
5B
of buyer-facing
consumable
content is
generated.

The Creation of the Conundrum: Where We Veered off Course
What about that other 43% of
the buyer’s journey – that time
between when the buyer engages
with one of our salespeople and
actually makes a purchasing
decision?
With only 46% of “forecasted
to close” deals actually closing
– the worst percentage for this
stat in the life of this particular
survey – it’s apparent that the
most important part of the buyer’s
journey is greatly underserved.
This is the part that is directly
managed and influenced by our
salespeople.
We’ve spent billions of dollars
creating the right content to
educate buyers in the first 57% of
their buying journey but haven’t
put the same time and attention
into creating the right content for,
and educating, our salespeople.
The difference in enabling a
salesperson is completely different
than enabling a buyer and we’ve
lost sight of what it really takes.
46%
of “forecasted to
close” deals that
actually close*.
*

Sales training used to be all about making reps
the smartest people in the room about our
products and the business problems they solve,
and teaching them the skills to negotiate the
price and details of an agreement.
That was pretty straightforward. But today’s
reps need to understand how to traverse the
political landscape, use technology to nurture
all of the people who are going to be part of
the consensus sale, and educate buyers in the
context of their journeys.
To complicate matters further, marketing,
sales ops, learning and development, and sales
leadership – the people who are essential to
helping salespeople negotiate the new sales
landscape– are often out of sync on how to
make that happen.
A well-orchestrated, integrated, completely
different level and state of training and
enablement is required to help make
B2B sales reps more proficient in what they do.
The Creation of the Conundrum: The New Sales Landscape

The first step in understanding how to enable salespeople is to understand the
salespeople themselves. By looking at a human competency model – the stages
in which humans learn – in the context of a sales organization, we can see how
salespeople progress in consciousness (what they know) and competency (their
proficiency in applying that knowledge).
The Five Phases of Sales Compentency
Phase I Phase 2 Phase 3 Phase 4 Phase 5
Enthusiast Apprentice Practitioner Producer Complacent

The Enthusiast | Unconscious incompetence
• Individual does not know how to do/sell
something
• They do not necessarily recognize the deficit
• They must recognize their own incompetence
and the value of new skills before moving to the
next stage
87% of training is lost after 30 days in a
traditional learning environment*
Five Phases of Competency: Phase 1
*

The Apprentice | Conscious incompetence
• Individual recognizes they do not understand or
know how to do something
• Role playing and coaching is key
• Making mistakes can be integral to the learning
process
47% of companies say it takes 10 or more months
for new salespeople to become fully productive*
*

The Practitioner | Conscious competence
• Individual is confident they know the
information
• Demonstrating the skill or knowledge requires
concentration
• Individual is ready to hit the field
>90% of sales reps make quota when
reinforced with coaching and technology*
*

The Producer | Unconscious competence
• Speaking about the solution is “second nature”
and performed easily
• The individual may be able to teach others
58% of your revenue is generated by the
top 20% of your salespeople*
*

Complacent | Disengaged competence
78% of successful 2nd
and 3rd
year sales reps’
revenue comes from one or two products*
• Individual has achieved success and holds on to
what is familiar
• Reluctant to take on new approaches or
viewpoints
• Unknowingly influences others by behavior
*

Now let’s look at how long sales reps stay at any given company. The average tenure
of a salesperson from the time they start to the time they leave is less than two years.
Inside sales is even worse, with the average stay between 12-15 months. What about
the sales managers and VPs of sales responsible for nurturing those salespeople
through their journey? Nineteen months. They’re at the company less time than the
reps they’re trying to train and grow.
Determining the Lifetime Value of a Sales Rep
Sales Reps (<2 years)
Sales Manager (19 months)
Inside Sales (12-15 months)
Average Tenure
0 6 12 18 24
The math
does not
work

If we consider that it takes 8-12 months to ramp a new sales rep, we start to see
the issue. How are we turning enthusiasts into producers if they’re leaving before
or shortly after they reach that stage? Therein lies the source of the Revenue
Conundrum.
Determining the Lifetime Value of a Sales Rep
Time to first revenue
Average 18-24 Months
REVENUE
PRODUCTION
ELAPSED TIME

So how do we solve this
equation to ensure that we
outperform or at least achieve
the goals that we’ve set? We
need to move our salespeople
from enthusiasts to producers
as quickly as possible and keep
them from seeking greener
pastures in that high-churn
time between practitioner and
producer. And we need to keep
producers inspired so they don’t
grow complacent. We can’t
afford not to.
Research shows that on average,
it costs $135K per sales rep,
not including their salaries and
recruiting fees, to equip them
and enable them to sell. If we’re
not getting them through to the
higher producer stage, we are
running at a negative return for
our sales rep investment.
We have to think about our
salespeople in the same way
as we do our customers. Every
year we make a huge effort to
get more and more value from
our customers – lifetime value –
by launching new products and
services to increase revenue and
share of wallet.
What if we did the same for our
sales organization? Our products
and services would take the
form of coaching, marketing
support and training that would
ultimately increase the lifetime
value of our reps.
Solving the Conundrum

Operationalizing Revenue Initiatives: One Size Does Not Fit All
Given where reps’ knowledge and
skills are at in each phase of the Sales
Competency Model, one-size-fits-all
enablement – where everyone gets the
same coaching, training, certification
and marketing materials – is ineffective.
And given that sales managers are
busy with their own jobs and aren’t
always in for the long haul, leaving the
growth and development of sales reps
to them alone is ill-advised. Nurturing
and enabling sales reps has to be a
team effort including marketing, sales
ops, learning and development, and
sales leadership. Each of these groups
has a part in creating and managing
materials, tools and training specific to
the rep’s stage of competency.
For the enthusiasts , for instance,
the training and tools should focus on
why change is needed, and certification
should be based on their comprehension
of the fundamentals that will carry the
conversation forward. If marketing
supplies them with product collateral,
and training puts them through
situational sales training, they’re
going to jump to the conclusion that
what marketing provides is useless
and the training will go in one ear
and out the other.
This logic applies to all of the stages of
the Sales Competency Model. With
apprentices , they’re off and
running and are ready to be coached on
the what and how of their jobs. For
practitioners , they know what
they’re doing and how to do it, but need
support from a situational perspective.
In the case of producers – the
nirvana of sales competency – they
need a constant flow of new insights
and information and on-the-fly
situational support to keep them
motivated and from slipping into
complacency. And for those
salespeople who are coasting in
complacency , they need
inspiration and refreshers on client
pains and changing market conditions.

One Size Does Not Fit All

If the Sales Competency Model and the associated tools and training is the ideal, how far off are we? Let’s first
consider the environment we’ve created for our sales reps. We’re launching new products, creating new channels,
implementing new systems and technologies, changing methodologies, acquiring a new product, asking them to work
with new reps or shadow senior reps, rolling out new marketing campaigns, and any number of other programs. These
initiatives alone would make any sales rep crazy.
Then let’s look at what we’re doing to prepare our salespeople for managing the chaos. Only 52% of companies have a
formal onboarding program, so neither the sales reps nor the managers who are supposed to be growing and enabling
them, are equipped to start their jobs. How can we then expect sales reps to fully appreciate and understand our go-to-
customer models and help buyers navigate that last 43% of their journey?
Secondly, only 52% of sales reps and 43% of managers say that the content their company publishes helps improve
sales effectiveness. Is it really that the content is so far off or is it that we haven’t fully understood the context in which
salespeople need this information delivered to them? Lastly, from our own research we’ve learned that just 15% of
companies consistently make collateral and sales tools available ahead of a new product launch. That flies in the face
of logic, let alone sufficiently enabling our reps.
Our Report Card
52% of companies
have onboarding
programs
43% of sales
managers find
content improves
sales effectiveness
52% of sales reps
find content improves
sales effectiveness
15% of companies
provide collaterals
ahead of product
launch
SAVO Maturity Benchmark

Orienting efforts around the unique needs of sales learning in the context of supporting the buyer’s journey is a
fundamental shift in how companies operate. In addition to considering the progression of the salesperson’s knowledge
and skills, it requires thinking differently about the processes and technologies essential to driving a revenue initiative.
Companies can employ technology to control the complexity of sales reps’ environments and provide visibility into the
buyer’s journey by:
Offering anytime, anywhere directed instruction
• Setting the foundational and functional context.
• Delivering real-time coaching when the coach isn’t available, thereby moving reps to the next
phase of competency.
• Establishing a culture of continuous learning that extends beyond the formal onboarding program.
• Offering access to SMEs and other functional experts, connecting teams and colleagues in similar
stages of the sales competency lifecycle and opportunities.
Enabling reps to “learn like they earn”
• Transitioning to real sales situations when they’re ready.
• Mapping assets, resources and coaching to opportunities in the CRM system.
• Defining processes and assigning them to different sales reps at the right time.
• Continuing the onboarding process by providing reinforcements in the context of actual selling
situations.
The Sales Foundation: Solving the Revenue Conundrum

Providing situational-specific content and tools to align to buyers’ needs
• Letting the engine predict what’s needed and when, getting the sellers the right tools – videos,
collateral, case studies, battlecards, etc. – at the right time.
• Supporting guided selling with situation-specific content and tools.
• Helping sellers master competencies, then continuously reinforcing them in the context of
opportunities, and giving reps strategic support through playbooks and go-to-market strategies.
Monitoring, managing, intervening and coaching when initiative progress dictates
• Using insights into the sales lifecycle to intervene if necessary and make adjustments.
• Giving managers a better feel for what’s working and what’s not to make more informed
decisions.
• Enabling in-context and opportunity-specific coaching.
• Providing managers and sales leadership with a centralized, common dashboard with at-a-glance
views of processes and opportunities.
The Sales Foundation: Solving the Revenue Conundrum (continued)

The investment we make in the lifetime value of our sales reps closes the gap between revenue
expectations and reality. Think about the financial implications if you could:
• Reduce the average ramp time of your new sellers and the launch
time of all of your marketing initiatives by 10%
• Turn even 5% more of your practitioners into producers
• Improve revenues by 2-5% by better equipping your reps to
draft into the buyer’s journey
• Control the last 43% of the buyer’s journey with greater
predictability and success by better empowering your sales teams
Any one of these small improvements in productivity, sales rep longevity and onboarding can give us
a much needed bump in revenue. Achieving them all could eliminate the flailing to meet our numbers
forever and set us on a trajectory of unprecedented growth. Maximizing the lifetime value of our sales
rep is the answer to the riddle that is the Revenue Conundrum.
The Signs of Success

SAVO and Smarter Selling are trademarks of SAVO Group Ltd. All other trademarks are the property of their respective companies.
©2015 SAVO Group Ltd. | +1 312 506 1700 x3 | savogroup.com
+1 312 506 1702 | savogroup.com

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