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lifetime value ebook_04012015_final

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lifetime value ebook_04012015_final

  1. 1. FWD1 LIFETIMEVALUE Rethinking: The Lifetime Value of a Sales Rep
  2. 2. 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.
  3. 3. BACK FWD3Rethinking: The Lifetime Value of a Sales Rep 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.
  4. 4. BACK FWD4Rethinking: The Lifetime Value of a Sales Rep 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*. *
  5. 5. BACK FWD5Rethinking: The Lifetime Value of a Sales Rep 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
  6. 6. BACK FWD6Rethinking: The Lifetime Value of a Sales Rep 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
  7. 7. BACK FWD7Rethinking: The Lifetime Value of a Sales Rep 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 *
  8. 8. BACK FWD8Rethinking: The Lifetime Value of a Sales Rep 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* Five Phases of Competency: Phase 2 *
  9. 9. BACK FWD9Rethinking: The Lifetime Value of a Sales Rep 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* Five Phases of Competency: Phase 3 *
  10. 10. BACK FWD10Rethinking: The Lifetime Value of a Sales Rep 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* Five Phases of Competency: Phase 4 *
  11. 11. BACK FWD11Rethinking: The Lifetime Value of a Sales Rep 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 Five Phases of Competency: Phase 5 *
  12. 12. BACK FWD12Rethinking: The Lifetime Value of a Sales Rep 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
  13. 13. BACK FWD13Rethinking: The Lifetime Value of a Sales Rep 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
  14. 14. BACK FWD14Rethinking: The Lifetime Value of a Sales Rep 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
  15. 15. BACK FWD15Rethinking: The Lifetime Value of a Sales Rep 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.
  16. 16. BACK FWD16Rethinking: The Lifetime Value of a Sales Rep One Size Does Not Fit All
  17. 17. BACK FWD17Rethinking: The Lifetime Value of a Sales Rep 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
  18. 18. BACK FWD18Rethinking: The Lifetime Value of a Sales Rep 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
  19. 19. BACK FWD19Rethinking: The Lifetime Value of a Sales Rep 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)
  20. 20. BACK FWD20Rethinking: The Lifetime Value of a Sales Rep 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
  21. 21. BACK FWD21Rethinking: The Lifetime Value of a Sales Rep 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