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Sales Training Tips:

Sales Management Seminars - The Consequences of Lost Sales

What if your doctors' hit rates were as good as your sales teams? You'd fire him - or die most likely.

Think of the consequences of losing a sale to a competitor. You have just given your competitor growth hormones for market share. It's like a 2 stroke turn around. They gain share while you lose share. Yet, what happens to the sales person or sales team - virtually nothing. There may be a few words of anger expressed, but all is forgotten in a few days. Then, believe it or not, once a sale is made, this same culprit is now a hero. Go figure.

How come lost sales are tolerated so easily by CEOs, General Managers and Sr. VPs? If a doctor loses a few patients, there's an all out investigation and if it continues, he can kiss his doctorship good-by. Same with an engineer - crash a few buildings, blow-up some circuit boards or route the sewage into the wrong outlets and there would be lots of grief. However, sales people lose sales all the time and there are no consequences, other than a huff and a puff of dissatisfaction.

Consider this, how many sales were lost where your company didn't have the capability or technology to do the job - probably very few. How many were lost on price? Probably many - as your sales person said, but was it really price? My experience consulting thousands of sales people on a zillion sales suggests B2B sales are lost because the sales team didn't know what the criteria for winning was - especially the criteria of the high level influential decision makers. Even on the price sensitive deals, winners know what price to get close to and what can be left off to get it there.

Losing sales is the sales team's fault - no excuses. If it wasn't doable, it shouldn't have been pursued, bid or forecasted. As for the lack of internal resource excuse, the sales team should have figured out how to get them or no bid. I could go on, but the explanations are rationalizations. As my football coach always said, "I don't want excuses. I want results," or you'll sit on the bench. How come senior management doesn't do that? If a senior sales manager misses his forecast a couple of times he's history. How come sales people don't suffer the same punishment?

Let's look at some numbers. 1/3 of the sales that the average sales person forecasts he makes. Again, suppose that was the hit rate for your doctors or engineers? Don't answer. 1/3 of the sales forecasted never happen. That's called "long sales cycles" or dying slowly. Finally, 1/3 of the forecasted sales are lost to competitors. That's scary.

Look at what you pay for getting only 1/3 of the forecast - the fixed selling expenses - salaries, benefits, offices, travel, etc. and the variable selling expense - commissions. Let's say you pay on average 5% - more to reps and less to direct people. You sell $100 million a year. That's $ 5 million dollars in variable selling expense, and you'd be happy to pay more as long as sales are going up.

Now the sales person get's 5% if he makes the sale. That's call incentive. However, if he loses the sale, well, he get's nothing - other than his car, insurance, office, and salary. There is no consequence for losing. Getting no commission is not a consequence. He says, "Oh well." and moves on. What's more depressing is management tolerates it, which reinforces the status quo. Why do anything different if there is unlimited upside with no downside.

Here's a thought. Change the commission so the sales person get's 10% (or some big number) when he makes a sale he forecasted, and gets a commission deduction of 2-1/2% (or some tough number) when he loses anything he forecasted. If something is not forecast, then there is no commission paid or deducted. If I've done the math right, this will cost no more or you can change the numbers. But look what it does. It rewards sales and lays consequences on loses. Do this and I guarantee you will upgrade the performance of your selling team.

Establishing a penalty will force smart sales people to get a lot of critical, relevant information before they forecast an opportunity. Information gathering will improve their chance of closing or indicate that the opportunity should be taken off the table so no more resources are wasted. If they don't forecast, they don't get anything, so they will have to keep digging for good things to forecast. Opportunities that are way out or "possibles" can go into a separate prospecting funnel that the sales manager monitors diligently with the sales person to move them forward or out. Deals that are missed or not forecasted, yet sold by competition should carry some other type of penalty. We could do a lot of what ifs, but they can be worked out. The point is that the professionalism and success of your selling team will rise exponentially.

To make this work, however, senior management will have to provide great training, and great supervision. Sales people will need coaching, reinforcement, and lots of attention. But isn't that what sales management is suppose to do?

Source: Sam Manfer link

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