Sales Struggling to Make Quota
It's never a good sign when respected experts use analogies to scary roller coasters and failing track teams to discuss the state of sales performance entering 2009. Yet in the recently released "2009 Sales Performance Optimization (SPO) Study" from CSO Insights, that's exactly what happens. The good news is that the seemingly dire state described by the report can be taken as a sign of impending economic recovery. The bad news is that said recovery won't appear in most sales figures this year.
The report uses the Disney theme park ride Space Mountain to indicate what last year was like for sales professionals:
"You get seated, suitably strapped-in (you hope), and you feel the car you are in start to move and slowly climb into the darkness. You notice yourself being pulled backwards into the seat, the first sign that gravity is at work, but also an indication of a steep accent. But the pace is nice and slow-no problem.
"And then it happens. You crest the tip of the arc, and suddenly the car is shooting down at what feels like breakneck speed. You are thrown forward, then left, then right, and then further right again as the car accelerates into a seemingly endless series of twists and turns. It rises and falls, your body and mind trying unsuccessfully to achieve balance, because all of this is happening in a pitch-black environment that gives you zero insight into what is ahead. After what feels like forever, the car slows and seems to be coming to a stop.
"Now in your mind replace the image of Space Mountain with the thought of the economy during the second half of 2008. Weren‘t we on exactly the same ride? Blasting up, down, sideways, and always with no clue where we were going next? For chief sales officers (CSOs), sales managers, and sales reps alike, navigating the sales process last year was a thrill ride."
The ups and downs are not over yet, according to Jim Dickie, partner with CSO Insights and co-author of the report. "Everybody's struggling with 2009, struggling to make quota; many companies [in 2008] failed for the first time in four years," Dickie says. "But 86 percent of companies raised quotas for this year." In his "Reality Check" column in March's CRM magazine, Dickie compares this behavior to a high school track coach raising the high-jump bar when 40 percent of the team (or more) can't clear the present height.
CSO Insights has been producing its SPO report for 15 years, so it has seen some of these behaviors before. In previous tight times, the sales situation got worse before it got better, and this time will likely be no different. "In the last downturn, 2002 was also a bad year," Dickie says. "If you ask anybody ‘when did sales recover,' they'll probably say 2003, but it wasn't; only 40 percent of reps made their numbers. [Sales results] follow the market; the market recovered in 2003, and sales came later." CSO Insights predicts sales performance will continue to decline through 2009.
One thing that will help is a change in focus on what technologies sales organizations use to improve performance. Dickie makes it clear that technology helps in two ways: efficiency and effectiveness. Efficiency makes the job easier and increases handling capabilities, but effectiveness improves results. "We saw a lot of efficiency plays recently, but the question is what else are [sales organizations] putting in," Dickie says. "Lead management, knowledge management, et cetera-companies putting those in are doing better. Businesses have got to start working on giving their people the tools they need to sell more effectively."
Efficiency and effectiveness are both important though, because selling is becoming a harder job. "Ramp-up is getting longer; now it's about 10 months before a new salesperson is profitable," Dickie says. "In general, assumptions are 30 percent too low" when it comes to expectations of the time it takes to learn the ropes, he adds.
The reason the job has become harder is that the target has shifted. "Sales training experts have always suggested finding the one decision-maker and focusing on that person throughout the engagement," Dickie says. "We don't know who that is anymore. Purchasing by committee is the new reality."
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