What makes a good salesperson good? What makes a good salesperson good? I think that you think about a salesperson and salesperson performance along, I think two-dimensions. One is from a company perspective. Is the salesperson contributing in an appropriate level, is he contributing to the attainment of the overall company goals? Is it helping the firm to advance towards whatever the goals are that they have in mind? Then secondly, I think is that person, those individual salespeople are they satisfied? Are they comfortable within the roles that they're doing? If you're out of whack on either of those two issues, you're going to have a much bigger problem down the road, and it's going to surface when you talk about evaluating performance, right? Because either the performance is going to somehow be disappointing, and trying to put your finger on what is the source of that disappointment I think is a real challenge. It's a real art form in terms of understanding where the problems would lie. Moving from salespeople to sales managers, are there any sales managers that you've worked with? And what did they do that made them stand out? I think the best managers are ones that work in within you to help you to achieve your potential and manage with a light touch. I don't think anybody wants to be like really closely managed. Wants to be like under the thumb of a sales manager. I think when really smart sales managers recognize that, you can accomplish amazing things if you empower people and let them do what they need to do and get out of the way. People don't need to be micromanaged and yet a lot of sales managers out there that don't feel that they're doing their job if they are not somehow involved intimately with the sales people and everything that they're doing. Well, that's micromanagement. I don't think that's a smart way to go. Is there any one part of a sales performance evaluation that should be considered as more important than the others? I'm going to think about that for a second. I guess from a sales managers perspective, that what the sales manager is ultimately held for is delivering on the sales goals of the organization. Probably, when they look at their sales resource and all the different salespeople and what they're doing, how well are each one of those contributing to that total picture? They must achieve those goals or else they themselves are going to be looking for a new job. So, probably at the end of the day, that's the ultimate bottom line for a sales manager. In talking to a lot of sales managers though, I think sales managers are looking for sometimes something a little bit more. They want to feel like they've accomplished something. That they've been able to do good things with their sales force and they've been able to achieve greatness. However, that wishes to be defined. I think that a really smart sales manager recognizes that it's not just the numbers, but it's those subjective accomplishments that are important. Can you think of any times where of a business that's gone in with a really high budget for sales expenses thinking that they're going to kill it with sales with their high budget and then it didn't work out, and what happened there? Yeah. Well, I'll tell you. So, the answer is, is that ever happened? The answer is, all the time. So, think about this. I mean, it's human nature. You're a sales manager, right? And you think you need to spend a certain amount of money in order to generate the sales that you want to get. So, and how are you going to justify that to your management? Well, the justification is a whole lot easier if the sales that you're projecting are going to be more than meet whatever those expenses are going to be. So, no one's an idiot. You're not going to walk in with like an extraordinarily high sales expense budget and really crappy sales, right? Or if you are, you're going to have to have a heck of an explanation why a company needs to do that type of thing. So, it's human nature that if the output, that is the sales expense, if the output is high, you got to make the inputs higher, which would be the sales type of thing. So, I think it is part of human nature and all. I think sales managers are hard wired to be optimists. They have a tendency to be a best-case scenario. They want to go in and they are ambitious. I think many of them very genuinely think that they can achieve these goals that are there. What I think is important in terms of management of the sales operation would be looking at developing interim measures, interim metrics. So, you're not waiting until the end of a quarter or the end of some period to discover, ''Oh, sorry, we didn't quite make our goal, right?'' At that point, it's too late to do anything about it. So, when you talk about sales expenses for example, how are those sales expenses going to be expensed over time? What part of that budget can we cancel if sales don't appear to be picking up in order to cover those particular costs? Having that flexibility, gets away from then those very awkward surprises that occur when the sales revenue doesn't seem to fit in with the expenses. Are there any kinds of surprise expenses that can pop up and catch a business off guard? What is the fall out when that happens? I guess, the big the biggest problem when you have surprises like that, you first want to say, ''Well, what was your budgeting process and how was that done? Did you even have a budget?'' If you've had a budget, and you have a surprise, I'd argue that it's okay to have a surprise ones, but then, shouldn't you in subsequent budgets be budgeting for those? Shouldn't you have some type of contingency? Do you need to have a rainy day fund that you have to tap into to capture those kinds of opportunities? Really smart managers recognize that the future is uncertain and you have to anticipate that something like that might happen. So, setting some monies aside for those kinds of opportunities then keeps you within your budget. What are some of the factors that might lead to a sales manager re-evaluating the price or coverage policies? I think that a sales manager is going to look at, I think it's trends, what's happening in terms of your revenues? How are the revenues changing over periods of time? How are expenses changing over that same time frame? A sharp deviation from where things have been, either increasing or decreasing, should automatically force a re-evaluation of what's going on. I think a really smart salesperson recognizes, are waiting for those cues that come along that are suggesting maybe things are changing, I need to re-evaluate what I'm trying to do. How reliable and accurate is the Pareto principle when you're performing sales performance analysis? So, I'll tell you, the Pareto principle, 80 percent of your results comes from 20 percent of your efforts. I think, most of us at a gut level think, well, isn't that an overly simplistic view of the world and all? My experience is that there are a lot of things in life that seemed to follow the Pareto principle. Maybe not quite exactly at 80 percent, but this idea that a relative minority creates the majority of results. That notion is very much alive. We see it's been validated in marketing that the notion that something like 20 percent of your customers can account for like 80 percent of your sales. That's been validated across so many industries, so many different kinds of situations that have occurred. So, if in fact that's what reality is out there, your sales plan is going to be confronting that, and ultimately, will begin to reflect that type of reality. What's the most effective way that a sales manager can evaluate their sales team without being unfair? So, I think that the thing that when you talk about evaluating a sales team and trying to do it the best way possible, I think there's a couple of things that are very important. Number 1 is the notion of having standards. So, that people can understand what is the criteria that you, the manager, is using to evaluate and is that criteria known up front to all parties that are involved? Very important. Number 2, transparency. So, that goes hand in hand with having criteria upfront, but like the people understand how you came to your judgments. What was the factual basis of it? I think where managers get themselves into trouble though, is that along with all that hard data is what their gut is telling me. Sometimes, your gut may be a little bit out of sync with what reality can be at. I'm not suggesting, at some level, a manager has to think about what their gut is suggesting, but is that also being supported by hard data? If you think back in your memory, do you have any especially memorable times when either that you were evaluated or you had to evaluate someone else and what made that stand out to you? So, I worked in the advertising business and this one year and to this day, I swear, I was being very sincere on this. But I had to project what I thought our revenues would be. I dramatically missed it. Revenues were a lot higher than what I had anticipated to be. The rest of the management team of the company gave me at the end of the year this gigantic sand bag that was filled with sand, and like I came into my office one day and there it was on top of my desk. It must have weighed 200 pounds, this gigantic thing, and I became known as the sand bagger because I had put in a number and blew by it in a hurry. That was tongue in cheek and all, but that was one that I haven't soon forgotten. What sorts of new processes and technologies are sales managers using when they're evaluating their sales force? I think that the biggest thing that you're seeing sales managers do is trying to use multiple points of input, multiple data sources to come from it. I think one of the best things that I've seen develop in the field of late is the idea of supplementing the hard performance information such as sales and those kinds of numeric measures with more subjective measures and, in particular, talking to customers. Getting customer input in terms of the salespeople and what they're doing well. I mean, at the end of the day, shouldn't customers be involved in that? I mean, that's where the recipient of all this effort is going. I think that helps make for a more robust evaluation of salespeople is looking at that, looking at, well, number 1, multiple sources of input. But number 2, external sources. Things like customers is a very useful tool. So, when you're evaluating your sales team, what are some of the non-hard number of factors that you might look at? I think a manager struggles with two different dimensions, with the person and the person's performance. The first is measuring and evaluating a person on their outputs, what they've accomplished. That would be things like sales and so forth. But also, which part of that are what I'll call the inputs or it's the effort that a person puts into things. At some level, that's part of the evaluation process too. Managers I think struggle with the natural tension between effort and output. In an ideal world, everybody would work really, really hard and have really good results to show. In some cases, that doesn't happen and you can have a person who could be working their tail off and really, really doing a strong effort, but doesn't have the sales results to show for. Some cases, you can get the opposite too. But the point that the manager is struggling with is, how do you acknowledge that? How do you factor effort into a person's evaluation? At the end of the day, the outputs have to be the driver of it all. But shouldn't somehow effort be part of that evaluation process? What are some of the downsides of measuring sales productivity? Biggest downside that I see in terms of measuring sales force productivity is that it tends to breed a short-term orientation. You evaluate sales people, let's say on a quarterly basis, then there it tends to breed an attitude which says, "Well, if I don't do a heck of a job this quarter, I'm not going to be around the next quarter to make up for that." So, it tends to force people to going to go after the immediate sale, the quick sale, the sale that I can count on. When sometimes their effort might be even better spent on developing a customer or a prospect that you may not see those results right away, it may take a while for that to come from fruition. But the nature of evaluation tends to look at that. Now, what I'm bringing up is no different than what happens in terms of company performance. I mean, companies have to release their financials on a quarterly basis. There's actually a movement underway, at least in the United States, to do away with that and all. The big criticism of it all is it tends to breed very short-term thinking and short-term behavior. How do you measure customer loyalty and how does that play into the evaluation process? So, customer loyalty is really a behavioral measure. It is how much of their wallet are you getting? Are they spending all of their moneys with you or they splitting that with a competitor or whatever? So, of course, you're aiming for 100 percent. I think that companies have begun to look at though other kinds of measures that have to do with like how attached they are to it? Which theoretically should be related to loyalty, but it's sometimes thought of as a different construct. One tool that I really like, you see a lot of companies doing this nowadays, which is asking customers if they would recommend that company to a friend or a colleague. That's been found to be a very useful tool. It's very highly correlated to your loyalty and your sense of support. So, that's a useful data point to try to collect from people and that can be another dimension towards performance. How often should you evaluate your sales team? Well, I would say the standards ranges from a long view would be on a yearly basis. I think a lot of companies tend to do it like on a quarterly basis. I think that as long as companies are measured by Wall Street on a quarterly basis, that you were not going to get away from that whether that's good or bad, I don't know, but that's the way American businesses are run.
