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The High Cost of Non-Performing B2B Sales People!

Do you have any B2B sales people, or marketers, in your company that are not performing the way you want them to?

If your sales and marketers are all performing well – congratulations! Your company is in the top 1% of all companies.

If you do have some non-performing sales people, then you are definitely not alone, and there is something you can do about it.

First, let’s look at why you are not alone.

CSO Insights is a sales performance research firm. In their 2014 Sales Performance Optimization Study of 1200+ B2B companies, they found that only 58.2% of sales reps made their quota in 2013. (See chart)

CSO Quota Stats

(click on graphic to see full size)

This is down from 2011 and 2012 when both years had 63.0% of sales people made quota. In all cases, over 37% of sales people missed quota. That is a huge number of B2B sales people missing quota; 1/3 of your sale force, and last year over 40% missed quota.

And when you look at the key trend analysis, the following trends surfaced.

• Of the Bottom 30% of sales reps – only 44.7% of Reps Met/Exceeded Quota and Achieved 50.8% of Full Company Plan

• Of the Middle 60% – 63% of Reps Met/Exceeded Quota and Achieved 91.6% of Full Company Plan

• Of the Top 10% – 71.6% of Reps Met/Exceeded Quota and Achieved 116.6% of Full Company Plan

Even in the top 10% of B2B sales reps, only 71.6% of reps met or exceeded quota. So you can see how difficult it is to sell in the B2B marketplace.

But here are some more interesting facts about B2B sales reps, and how much they are costing your company if they don’t succeed.

The high costs of hiring poor to mediocre performers

There is an increasing pool of research—from respected organizations like Gallup and the Harvard Business Review, and also many newer research firms—suggesting that the costs of a bad hire in sales, more than any other functional group, are enormous. Most hiring companies tend to grossly underestimate the negative consequences a bad sales hire can bring to their company.

Some of the costs to consider include:

Direct costs

 Lost revenue (lost and delayed business)
 Extra training and management required
 Costs of turnover (firing and replacing – from both time and direct hiring costs)

Indirect costs

 Long-term impact on market share and brand – lost customers and brand loyalty
 Impact on morale – leading to lower overall performance of other team members and higher turnover— and ultimately the loss of your best salespeople

An Example of the Costs

Let’s look at a methodology developed by Croner and Abraham for a company where the sales quota of the best salespeople is $1.5 million, and sub-par performers are delivering half of that ($750,000).

The annual impact of having a poor performer on the team can be estimated at $1,360,000 (including lost revenue, lost clients, and extra management costs). The costs of delaying action, to remove this individual, are over $2.6 million over 2 years!

You must remember that salespeople represent your company to your clients. Therefore, the impact of your brand and market-share erosion over time, of a sub-par salesperson, can have grave consequences for your company.

“ In industries that rely on their sales force to generate revenue, people are four times more important in building customer loyalty, than the products or services themselves” (Smith and Rutigliano).

So how do you overcome these issues, especially non-performing sales people.

The first thing you need to do is change your hiring process. I have developed an 8 page booklet on How to Hire the Best B2B Sales People.

Training & Coaching

The other thing that really improves B2B sales’ performance is training and coaching.

Again CSO Insights illustrates how training and especially ongoing coaching improves the performance of all B2B sales people. They divided training and coaching into three levels, represented in the chart below.

The three levels represent the relationship level that each firm has attained with their client base. Level 1: Red is a low relationship level, Level 2: Yellow is a medium level, and Level 3: Green is a high level of relationship with their client base.

CSO Coaching Statistics

(click on graphic to see full size)

You can easily see how important it is to move up the relationship level to attain better sales results. And the only way you can really do this, is to ingrain a sales and marketing methodology into your company’s sales and marketing teams.

There are two ways to build this methodology. You can do it in-house, or you can get one that has been successful over the years from an outside consulting firm.

The value from an outside firm is that the methodology is tried and true, and has been implemented by many successful companies before you. It will be easier to implement and allows your VP Sales & Marketing to work more with his/her team on a day-to-day basis.

You will also get the benefit of excellent ongoing coaching, which is a must for success.

Here is More Information on B2B Sales Training and Coaching.

Ian DaintyKind regards,
Ian Dainty
Ian Dainty’s Email

 
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