Effective Sales Leadership is Critical – So Why Leave it to Chance?
Much has been written about the challenge of measuring and managing a remote sales team’s performance, but what about achieving effective sales leadership? What options exist to understand how leadership is spending their time, or how the sales department’s processes are working effectively and are well received, considering that much of these activities are done remotely today?
It should come as no surprise that the measurement of effective sales leadership is often simply seen as the output of the team. While this is an important metric, it can hide potential performance issues.
We have seen this challenge before. There has historically been a lack of effective metrics for measuring sales performance. Contrary to the world of sports where there are literally hundreds of KPIs (ex: there are 142 measurements focused on individual baseball player performance), the world of sales is not as well documented. Sales performance is typically measured based on just three metrics:
- Pipeline volume / change / comparison to plan
- Quota attainment per month / quarter / year
- Closing percentage / deals won / etc.
The Critical Nature of Effective Sales Leadership
While a poor performing sales representative can certainly hurt team performance, putting the achievement of an annual quota target at risk, the potential “damage” can be overcome in several ways. Others members of the team could have a great month, effectively masking the underperformance or low productivity. Or, a couple of “blue moon” orders could come in unexpectedly, effectively fixing the problem, at least in the short term.
Underperforming sales leadership, however, is not as easy to fix. The repercussions can be long lasting, often taking years to fix.
According to an article published by Andris A. Zoltners, PK Sinha and Sally E. Lorimer, a medical device company hired a vice president of sales with an intimidating management style. He ruled by fear. Achieving goals was everything. He tolerated (and even encouraged) ethically questionable sales practices. Results looked excellent at first, but the sales culture became so unpleasant that good performers began leaving in a trickle, and then in a flood. The average tenure of salespeople dwindled to just seven months. The damage to the company continued for years after the VP was replaced.
The stakes are higher when faced with ineffective sales leadership. Some of the reasons why the process to fix this problem can be long and arduous include:
- The team may need to be rebuilt once a new leader is in place as star sales representatives often leave the company, creating a need to backfill open positions
- The new sales leadership may need to implement new processes; the management and design of process, sales team structures and compensation plans can take considerable time to “fix” should the need arise
- It can take time to rebuild the culture a poor leader creates
What Attributes Define Effective Sales Leadership?
Considerable research has been done on what characteristics comprise best-in-class sales leadership. Steve W. Martin of the University of California Marshall School of Business recently interviewed 786 sales professionals and identified the key attributes of great sales leaders. The results of his research are presented here, and include some interesting findings.
- Having a well-documented and structured sales process is directly correlated to a high-performance sales team. Nearly 50 percent of high performing sales team have either well documented, closely monitored and strictly enforced, or automated sales processes. This compares to only 30 percent of all underperforming sales team.What this means is that the more ambiguity that can be removed from day-to-day processes, the better. As situations present themselves, order exceptions are presented, or other circumstances that might delay or derail a sales process, if a well-documented work-around already exists, it helps the team move past potential obstacles. Clarity of process improves sales productivity by quickly allowing sales to close the orders that it should, and “kick out” those not suitable.
- Another attribute of a high performing sales team is consistent measurement against performance and accountability. Continuing with the theme of structured sales processes, it turns out it is important to have consistent measurement and interpretation of performance metrics. A total of 30 percent of high-performing sales teams strongly agree that salespeople are consistently measured against their quota and held accountable. Only 15 percent of low performing sales teams agreed with these statements.
- Continuing with Steve W. Martin’s research findings, high performance sales team are more likely to set “stretch” goals – specifically with regards to quota attainment. Impressively, about 75 percent of high performing sales team set their next year’s quota by 10 percent above their prior year’s goal. Compare this to 65 percent of underperforming teams set their goals to be the same or decreased from their prior year’s quota.
- Another key attribute of a high performing sales team is that decisions are made quickly when it is time to fire an underperforming sales representative. This process can occur in just one quarter on a high performing team; the process can lasts as long as nine months on an underperforming team.
An Emerging Theme Surrounding Effective Sales Leadership
What should now be clear is that high performance sales team don’t just happen. They behave differently, work with different sets of expectations and performance. These teams understand the need for clearly defined processes, strict adherence to them and will take appropriate action in a timely manner if there is a failure to deliver results – which is what effective sales performance is all about.
What can be done to help promote better sales leadership? It starts by instilling these types of “best-in-class” behaviors, to help minimize the potential for underperforming sales leadership. Here are three suggestions:
- Collect the right data – transparency to what the official policy or process is must be clearly communicated, with the right wording to convey processes are meant to be followed; ambiguity can’t be tolerated; invest in systems to help automate processes where possible (this explains the incredible boom in marketing and sales automation systems – the investment in these systems is delivering results)
- Demonstrate that processes must be followed – setting policies based on what is the most effective approach to overcoming challenges, finding leads and closing sales must be embraced with a perspective of adhering to the agreed upon methods. The days of “lone cowboy” sales representatives may have worked 30 years ago, but today, that type of activity just puts the team at risk of not achieving their collective goals and objectives.
- Track and measure process performance – invest in systems that can automate policy adherence to ensure that those individuals who don’t see a need to comply with the policies can be quickly and effectively asked to leave; invest in systems that can accomplish this tracking process effectively, quickly and without bias. Systems such as what Prodoscore offers create a level playing field to track performance, identify new potential best-practices, which can then be easily shared with the rest of the team to help achieve lofty goal increases of 10+ percent, typical within high performance sales teams.
A sales leader that instills these types of strategies has the best chance of achieving a high performance team, which is then a win-win situation for the team and the company – just not the competition! With these types of systems in place, not only will higher performance be readily visible, but so too will be higher performance from sales leadership as well.