By Kevin Higgins
When the sales team is on track to reach quota, many sales leaders feel they can relax. This is an all-too-common trap. In fact, being on track to reach your total sales target isn’t a license to rest on your laurels.
Why? Because, despite clear stability, you probably still have some salespeople who are failing to perform well. And that means you’re likely not creating an environment that fosters sustainable, predictable revenue growth.
If you want to create a reliable growth engine, you need a capable and results-producing team across the majority. Here are three steps you can take to make that happen.
Step 1: Calculate your sales participation rate.
In sales, one of the goals of ongoing management is participation rate (PR) – the percentage of sales team members who are at or above plan.
For a sales team, participation rate is easy to calculate. On a team of 10 people with four people at or above their target for the year, the participation rate is 40 percent.
Participation rate is a statistic rarely scrutinized – and here’s why:
Sales managers are measured for making their quota. If the quota is $100 million, the sales manager’s goal is to get each salesperson to deliver an average of $10 million. However, the different approaches to get to $100 million are not equal. If only a few make it, the likelihood of sustaining performance is reduced.
Whether some sales reps produce $15 million and others $5 million, the sales manager only needs the total to add up to $100 million. This incentivizes the sales manager to keep average performers because salespeople who delivers only 50 percent of their quota are better for the sales manager than the 0 percent they would contribute if the sales manager let them go.
Yes, you can achieve a great year on the success of a few sales reps, but it’s not truly sustainable. If sales managers don’t understand this dynamic, they will be compelled to keep average performers and forgo the opportunity to create increased results.
Our research reveals that a participation rate of 60 percent or less will give sales managers a 10 percent chance of making their revenue plan. Sales managers must aim for a 70 percent participation rate to have a good chance of making plan, although it is not guaranteed.
Given this, why do sales managers tolerate poor performance? What stops them from having tough conversations?
Our belief is that they don’t understand the impact of participation rate.
Step 2: Assess and categorize your salespeople.
A sales rep’s performance can be evaluated on two criteria – behavior and results. If your sales team is not performing to plan, assess whether a sales rep is or could be delivering results using the following framework.
There are four performer categories a sales manager works with:
1. High Performers = Deliver results + behave correctly
2. Coachable Performers = Behave correctly, but results are not 100 percent yet
3. Tough Performers = Deliver results + behave poorly
4. Poor Performers = Poor results + poor behavior
In an ideal world, a sales manager would have 100 percent High Performers. Great concept, but not likely to happen. What is the next best thing? 100 percent High Performers and Coachable Performers. This is attainable but it’s not the norm.
Most leaders will have some Tough Performers and some Poor Performers. Imagine having 10 direct reports with two in these groups. Not bad… manageable. Now imagine four out of 10. Life is tougher – and tough moments happen on a daily basis. At six out of 10, it is probably tough to get out of bed in the morning.
Step 3: Don’t delay the performance conversation.
Try to improve behavior and results with monthly one-on-ones (more frequently for Tough and Poor Performers), observational coaching with feedback, and regular connects to lean in and support.
If these sales management disciplines fail to work, that’s when it’s time for the performance conversation, which has five key steps:
1. Set a clear standard and set milestones of performance for sales rep
2. Inform the sales rep where they are not meeting the standard and set milestones
3. Give the sales rep the opportunity to meet the standard and set milestones
4. Offer assistance to help them meet the standard and set milestones
5. Outline the consequences of not meeting the standard and set milestones
Sales managers know how to do this – the issue is gaining the courage. Sales managers need to have the conversation as soon as needed – putting it off spares no one.
Sales reps who want to be with you will step it up and improve. Those who are not capable/not interested will show very quickly (in weeks, not months) after the performance conversation. If things still don’t improve, the sales manager can move to the final warning, consult with HR, and decide to part ways, if required.
If you need to strengthen your coaching skills or sales management disciplines, refer to our practical sales management sales training solutions. Coaching to the challenges will develop your people and enhance contribution and performance across your team.