- March 24, 2007
- Posted by: Dave Kurlan
- Category: Understanding the Sales Force
DePaul University recently published their study of Sales Organization Practices. The survey is comprehensive and representative of more than 300 companies in many, varied industries. It can hardly be called and rightly isn’t called “Best Practices”; just practices. The survey shows that a very large percentage of the companies surveyed are not performing some important functions effectively. While 55% relied heavily on sales or marketing to generate revenue, the problems sited in the survey include:
• lack of processes or effective practices for selecting and hiring salespeople;
• outdated compensation programs;
• tied heavily to clunky, under utilized in-house CRM;
• not providing enough selling skills training and development
Of most interest to me were the following findings:
• only 22% utilize talent identification
• most of that group uses personality-based criteria
• only 19% match talent to job
It amazes me that, with all the information available to companies, they still ignore hiring best practices, including the four areas in which OMG can help: optimization of the pool of candidates, candidate qualification, candidate selection and on-boarding and development. It is very clear to all of us with expertise in sales force development, that companies have little clue, exercise little discipline, and have even less patience in these areas.
For example, we have found that companies in Financial Services who turnover upwards of 80-90% of their new salespeople, can’t seem to understand that hiring 3 good people who will stay and produce is far more effective than hiring the first ten who agree to work on straight commission and then fail inside of 6 months. I’ve done the math before but let’s take another look.
Company A hires the first 10 people who agree to work for them and pay a total of $150,000 ($30K annually) for 6 months to people who produce little, if anything, before turning over.
Company B hires 3 quality people who are paid a total of $150,000 ($100K annually) for 6 months and produce measurable revenue and stay on to become productive.
Why can’t the companies in high turnover businesses see this? The tools are available to accomplish this but since these concepts are not driven from the top down, managers, accustomed to being compensated by body count rather than average sales per rep, panic and revert back to old, ineffective methods.
It doesn’t take a rocket scientist to see the difference between company A and B. And it doesn’t take a rocket scientist to implement the process either. But it does take more than a 60 day commitment to the new process. When it’s been broken for a decade it doesn’t get fixed in a calendar quarter.