By Andrew Kent

The Major League Baseball All-Star Game is upon us, which means my Fantasy Baseball team gets a few days off—and my mouse-clicking finger gets some much-needed rest.  Turns out, this wonkish fantasy “sport” has a lot to teach us about compensating a sales force.

For the uninitiated, the goal of Fantasy Baseball is to assemble a team of players that will maximize performance across a range of statistics.  Traditionally, Fantasy Baseball leagues track five key statistics each for batters and pitchers. 

But some fantasy league managers like to achieve a more granular view of a player’s performance.  Just check out this league I’m in this year – it tracks 12 stats per player:

Now somebody please tell me: with all those statistical categories and numbers on the screen, how am I supposed to decide how valuable a player is to my team?  Maybe a player gets a lot of RBIs, runs, and home runs, but how many doubles and triples should I sacrifice?  It’s overwhelming—and in fact, research suggests that our brains cannot process more than 3-5 variables when making a decision.

But while the Fantasy Baseball example seems obvious, many of us do the same thing to our sales reps with overly complicated compensation plans.  In the same way that measuring baseball players on too many statistics cripples my fantasy team decision-making ability, including too many metrics in the comp plan makes it impossible for reps to figure out what they’re being paid to do.    Read More »

The topic of sales competencies and rep development has been coming up quite frequently in our recent conversations with members.  Some sales leaders are getting more frustrated with training’s failure to make behavior changes “stick”; some have started realizing that the new economy calls for a new set of skills that is largely lacking in reps; and some are simply looking for ways to boost rigor around training to increase the likelihood of success.

All good reasons to be talking to us, especially as we’ve learned that nearly two-thirds of all sales reps (61%) are unsatisfied with the business and sales skill training provided by their companies.

The bad news is we know that training alone has a relatively small impact on improving productivity – only 22%.  The good news is companies that take a more comprehensive development approach— integrating training, coaching, and real-world experience—have seen a 4 fold increase in productivity up to 88%.

We’ve set out to find what it is these companies do differently and will be tackling this subject of training and rep development over the next few months. Here’s what we have learned so far:

1) Do not limit rep development to just classroom learning.  Our research shows that reps forget 87% of training content within 30 days. Most of the actual learning and skill improvement happens as reps repeatedly “apply” and “perfect” new knowledge and skills on the job with continuous support and reinforcement from their managers.      Read More »

By Andrew Kent

Sales leaders often assume that a detailed compensation plan can optimize “coin-operated” rep behavior.  This, however, is the wrong way to think about sales comp.

Simply put, there is no such thing as a perfect comp plan—no matter which structure you go with or how much analytical rigor you put into your plan design, you’re going to incent some undesirable behaviors and upset a portion of the sales force. 

When you over-think comp plan design, moreover, you’re overestimating the rationality of human behavior and your ability to control it.  Human beings are unpredictable creatures, and incentives are as likely to distort behavior in ways you don’t intend as they are to influence behavior in the right direction.

In other words, compensation is about psychology, not economics.   

With that in mind, we’ve developed a list of 20 principles of sales compensation we’ve dubbed “The Truth about Sales Compensation.” Here are two of my favorites from the list:

Principle #2: Compensation cannot do everything.

Sales leaders tend to over-rely on compensation as a management tool, when other levers would more effectively solve the root causes of problems.     Read More »

Our recent work on manager effectiveness – where we did a large quantitative survey about manager skills, attributes, attitudes and activities — found robust correlations between how managers are rated by their direct reports and how they’re rated by the company.   In other words, most of the time, reps and the company will rate a given manager the same way:  both good, or both bad.

However, the correlations aren’t perfect.  Sometimes, there is a significant disconnect between how what the rep says and what the company says. We’ve started to generate a picture of where these disconnects come from.

First, there are reps ‘incorrectly’ assessing the manager, which comes in two forms:

1)   Rep performance issues:  Reps who have performance issues can resent the manager for holding them back.  Interestingly, for companies we have been tracking for a while, this effect tends to go away as the rep realizes the manager is helping them perform better. These managers typically need some appreciation for the hard job they’ve been asked to do.

2)   Long-beloved managers: There are well-loved managers who have been around a long time.  Reps love them, but the company can often more clearly see the skills they lack.  While they might not always have the competencies to progress to the next level or be the highest achievers, they do a lot for the organization and the company should recognize the loyalty that these managers engender in reps.

More problematically, there are cases when the organization ‘incorrectly’ assesses the manager, again in two forms:   Read More »

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In my last post I talked about how changes in customer behavior have made our growth goals harder and harder.  Specifically, customers may be more open to buying a vision, but getting a deal to completion has gotten a lot more challenging, and less predictable.  And our biggest leverage point for helping navigate customer organizations to get a deal done?  Managers.

The first-line manager has arguably always been the most important (and least-defined) role in a sales organization.  But recent changes in customer behavior, coupled with the shift to solution selling, have changed what matters most for managers.  So here’s the new story of manager excellence.

As a reminder, we amassed a huge dataset from our Manager Effectiveness Survey – over 5,000 returned surveys regarding over 1,000 managers – to explain the primary drivers of manager excellence.

Our first finding is no surprise:  managers need to be good at the fundamentals.  These are things like integrity, reliability and listening, which are important to any manager, not just sales managers.   Luckily, it turns out most managers are good at these.   For the 3.5% of our sample who failed at the fundamentals—they’re probably not cut out for a job in management.

More interesting are the sales-specific activities that matter most.  These fall into three high-level categories, with the impact on performance in parentheses:

• Selling (26.6%) – being personally effective at selling, particularly the Challenger™ behaviors
• Coaching (28.0%) – helping others improve, particularly with tailoring and asserting control
• Owning the Business (45.4%) – when managers run their territory as if it were their own business

Owning the Business breaks down into two parts:     Read More »

Tacit selling skills have always been important, but as our work on the new high-performing sales rep has shown, these skills (things like tailoring and asserting control) are absolutely crucial for success in today’s more complex selling environment.  

The problem is, tacit skills don’t lend themselves well to traditional rep upskilling approaches. Classroom training alone is insufficient because these skills require judgment and context (things that that can’t be accurately captured with process and how-to guides), and coaching by itself can also be insufficient, because managers may struggle to explain and demonstrate these intangible concepts.

In fact, the best way for reps to acquire tacit skills is through experiential learning.

One way for reps to gain this experience is to practice in live-fire settings, in front of the customer. But I think we’d all agree, that can be incredibly risky—things can go horribly wrong if not done well. 

So, the other way to provide reps with experience is to practice via role plays in training and coaching sessions. But the problem with role plays is that they typically feel so artificial. Usually, you break up in pairs and someone says, “OK, you’re the rep, and I’m the customer…” and off you go. Not only is the exercise too fake to feel real, it’s too fake to feel valuable. 

So how do you find the compromise?  How do you simulate a customer interaction with a high degree of reality, but a low level of risk?

St. Jude Medical came up with a pretty ingenious answer to those questions. St. Jude split the difference between the fakeness of internal coaches and the riskiness of actual customers by having reps role play with someone they named the “customer proxy.”    Read More »

This week marks the official release of the Customer Effort concept into the “wild” with the publication of our article, entitled “Stop Trying to Delight Your Customers,” in the July/August issue of Harvard Business Review. If you haven’t seen the article, feel free to download a complimentary copy. You will also find some cool podcasts and our Customer Effort Audit tool available to download.

As you’ll read in the article, our research shows that “delighting” the customer—in other words, going above and beyond—yields only marginal additional loyalty from the customer.

We also found that customers are four times more likely to leave a service interaction disloyal as compared to loyal, and the primary thing companies can do to mitigate this disloyalty in the service channel is to focus on reducing the effort customers must put forth to get their issues resolved.

Put succinctly, loyalty in the service environment is a matter of reducing effort, not delighting the customer.

One thing this article pushed us to do was to think about the prescriptive advice we would give companies who want to pursue this low-effort journey. It’s not easy summing up more than four years of research around effort, what causes it and what leading companies are doing to eliminate it, but we managed to come up with the following list of five things that low-effort companies do (and are different, we have found, from what most companies do):     Read More »

By Andrew Kent

The Gulf of Mexico oil catastrophe is quickly spiraling from “worst oil spill in US history” to “one of the worst man-made disasters of all time.”  Scientists worry that massive undersea plumes of oil could kill plankton and cause a collapse of the Gulf of Mexico food chain. 

We all know hindsight is 20/20.  Still, according to the Wall Street Journal, there’s some evidence that all this could have been prevented by a US$500,000 “acoustic trigger”–which rig owner Transocean opted not to install on its rig to backup the supposedly failsafe blowout preventer.  Which makes you wonder, what did the Transocean procurement rep say to the acoustic trigger sales rep?

At the risk of grossly oversimplifying an incredibly complex, highly engineered transaction, the tragedy in the Gulf may just bust the most cherished myth in all of business: “the customer is always right.”

In fact, the customer is often wrong – and it’s the job of Sales to teach the customer why.

For example, with BP and Transocean, it appears they grossly underestimated the chances of catastrophic failure of the rig’s blowout preventer.  CEO Tony Hayward recently called the device’s failure “unprecedented,” praising the blowout preventer as “the ultimate safety equipment on a drilling rig.” In reality, an AP investigation based on Minerals Management Service statistics found that blowout preventers “have failed or otherwise played a role in at least 14 accidents, mostly since 2005.”  And a 2003 report coauthored by Transocean’ executive Earl Shanks warned of blowout preventers’ “poor reliability.”  That’s the type of data a sales rep needs.         Read More »

In a lot of conversations I’ve had with heads of sales lately, their CFOs have been reaching out to sales to discuss reinvesting in growth.  CFOs are currently mulling over how to reinvigorate top line growth without killing margins.

During the last year or two, most companies have gone through significant cost cutting.  This has meant that despite the destruction of demand, most companies were actually able to expand margins.  As we come into what most CFOs believe will be an upswing, we’ve seen them turn attention from a sole focus on managing cost/margins, to a joint focus on top and bottom line.  Put simply, they want to get back on the growth train but without killing the margins they’ve worked so hard to attain. 

Over the last 3-6 months we’ve seen CFOs starting to loosen the purse strings to get growth going; they’re doing things like fund more innovation, look into M&A adjacencies, and remove restrictions on hiring and travel.  We expect to see this trend continue over the next few quarters but it will likely still be slow.  And CFOs are struggling with where and how to make smart investments. 

There are several ways for sales organizations to help CFOs as they think through these joint objectives.  A few questions members are asking are:

• What can sales do to drive the top line without sacrificing the bottom line?
• How can they identify wins that will help make a case for more robust investment in sales?
• What role should sales play in making broader growth investment decisions?

Here’s how I’ve navigated these conversations with CSOs – by helping them change their conversations from driving sales value to driving enterprise value.     Read More »

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In my last blog post, I introduced the idea of sales innovation, and how it is the most important thing a sales manager can do to drive growth.  I left you hanging about the specific activities inherent to sales innovation–and I promise to get there–but to really understand the concept, we need some context.

This story starts with why growth is so hard right now: changing customer behaviors.  There has been a lot of change in customer situations–increased price pressure, decreased budgets, etc –but while these changes may dissipate over time, we see a few trends that we think are here to stay:

1. More customer stakeholders involved with the deal
2. Customers pushing risk onto suppliers
3. Rise of third party consultants auditing deal agreements

What this means at the 10,000-foot level:  it is getting harder and harder to get a deal to close.  Looking closer, you can see that it’s getting harder in a very specific way that relies on the manager.

It helps to think about the path of a sale in two main stages:

• First, selling a customer on a vision
• Second, getting them to buy an offering customized to their specific needs

Think about it:  with every sale, we begin with the customer in some sort of status quo—uncomfortable as it may be, given the tough economy of late—then, through the recognition of a need, the customer agrees on a vision.   Read More »