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The High Costs of Hiring Mediocre B2B Sales people

mediocre sales personThere is an increasing pool of research—from respected organizations like Gallup and the Harvard Business Review, and also many newer research firms— demonstrating that the costs of a bad hire in B2B sales, more than any other functional group, are enormous. Most B2B companies tend to grossly underestimate the negative consequences a bad sales hire can bring to their company.

Some of the costs to consider include:

B2B Sales 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)

B2B Sales 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 $2.6 million over 2 years!

You must remember that B2B salespeople represent your company to your clients. Therefore, the impact of 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 B2B sales force to generate revenue, people are four times more important in building customer loyalty, than the products or services themselves” (Smith and Rutigliano).

Other Insights

CSO Insights, a sales research firm, puts out statistics it gathers every year from surveys it does with over 2500 companies.

They found that on average, only 58.2% of B2B sales reps made quota every year, out of the 2500+ companies surveyed. That means that 42.8% of sales reps missed their quota.

That is a very alarming statistic.

A Typical Observation

CSO Insights had this conversation with a sales rep from one of their interview companies.

Sales rep: “Yeah, that program is great. Really powerful. In fact, the only time it doesn’t work is when I don’t use it”.

CSO Insights: “That’s quite an endorsement. How often would you say you use the principles you learned in the program?”

Sales rep: “Uh, maybe half the time.”

Now please think about that for a moment. If it works every time the rep uses it, why wouldn’t the rep use it all the time? Does he/she simply not need a win every time? Very unlikely!

It’s usually because the sales rep hasn’t had ongoing coaching to ingrain the sales training methodology into their daily routine.

Does Training & Coaching Pay Off?

Here are two interesting graphics about training and coaching

Training without coaching

Training with coaching

As you can see from the first graphic, training gives a one-time boost in sales behaviour and results, but people quickly slip back into their old familiar behaviour without coaching reinforcement, and increases in sales are negligible.
However, with coaching after training, you can see that although there is a slight dip in both graphics right after training, the sales people who received coaching keep getting better and better results.

Through all of my coaching years, I have found that coaching costs very little compared to the increased results that have occurred. In many cases, coaching fees were less than 1% of the overall increase in revenues.

So, if you truly want to grow your business, you need to have your sales people trained and coached by professionals. And in most cases, this means hiring outside professional B2B sales coaches. You will see a very worthwhile ROI.

Conclusions

Competing at the top level is very exacting and can be very trying mentally. Anyone who has ever played golf knows that for sure.

But in order to succeed at any level, people need coaching. This is true for executives, business owners, and especially for sales and marketing people.

You use coaching for two main reasons.

1. To help you learn new skills, and to perfect or change old ones,
2. To give you feedback on how you are performing those skills, and to correct mistakes.

Feedback needs to be timely, accurate, consistent, relevant, and individualized. The other four factors are fairly self-explanatory, but let’s have a look at what is needed to be accurate, and why it is important to be accurate.

In order to be accurate, you need to have some kind of measurement system in place to give you metrics about how someone is performing all the way through the sales cycle.

You need to measure things like;
1. Is she following up on leads? (I hope you have a good lead generation system)
2. Is he using the sales and marketing methodology that you have implemented? ( I hope you have one)
3. Does she qualify prospects well, so she’s not chasing people that aren’t going to buy right now? (My GAIM Plan helps here)
4. Is he demonstrating your system properly, or does he do it too early or too late in the sales cycle?
5. Does she follow a correct proposal writing script that your company has implemented?
6. Does he follow-up properly with all prospects?
7. And all the way through the sales cycle.

You need to measure everything right through the sales cycle, until you either lose or win the business.

As you can see, in order for your company to meet its revenue targets in any year, you need to be implementing coaching in your business.

This coaching should also include the executives of your company, so everyone is on the same page.

It becomes pretty obvious that training with coaching pays off.

Are your sales reps, marketers and executives getting the training and coaching they need to understand sales and marketing better, and to able to reach quotas?

If not, please Contact Me through my email below, and let’s talk about how your sales reps and marketers can help grow your business the right way.

I have also produced three videos on the three skills most B2B sales people lack that keep them reaching quota.

To view the videos, GO TO THIS PAGE.

 
Ian Dainty
Kind regards,
Ian Dainty
Ian Dainty’s Email

 
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