3. Determine the maximum performance improvement potential (PIP).
This sales force had a PIP of 6.6 ($5,000,000/$750,000), meaning the star salesperson was 6.6 times more effective in selling than the average. If it were possible to get everyone to perform at the level of the star performer, annual revenues would go from $19,250,000 to $100,000,000--a potential increase in revenue dollars of $80,750,000.4. Establish a “realistic” PIP.
Differences in the sales environment (number and type of accounts, market conditions, etc.) do have a bearing; do not ignore them. Furthermore, of those 19 “non-star” performers, one or two may be new to the sales force and thus have less experience. Therefore, to be conservative, calculate a “realistic PIP” by determining one-fourth of the total PIP.
The right-hand side of Figure 1
shows that the realistic performance improvement potential of the sales force in the example is $20,187,500, double the existing revenue.
Who would not be delighted to double existing revenue? The good news is that this is doable. Gilbert’s research reported that the very best performers do just a few things differently from the rest of the pack.2
In most cases, skilled observers can define those behaviors in a matter of days.
Usually, they can readily teach what they learn to the rest of the sales organization with awesome results. This is truly an area of low-hanging fruit. My work in applying these concepts with clients confirms this potential. It is a powerful way to focus research on those few vital areas that make a big difference.
My recommendation is to dramatically change your focus on sales force development. Put your time and money in the place that will yield the greatest ROI: your top performers. Use their results and behaviors as the targets and models for everyone else. The laggards will “de-select” themselves, and the average performers will step up to the challenge.
Best practices for improving sales performance are as follows:
- Conduct a yearly “star analysis,” and use it as the framework for establishing PIPs, determining critical sales behaviors, and creating hiring profiles for future recruits. Train everyone who touches the customer on the behaviors that work.
- Reformulate your sales development plan to spend:
- 40 percent of the time working with your very best. Observe and question to find out their secrets.
- 50 percent of your time observing your average performers. Teach them what you learn from the best.
- Only 10 percent of your time working with the laggards. Yes, they deserve a chance to improve, but this is almost always a system issue and not a coaching problem.
- Make sure your sales management system is performance-based, not activity-based.
- Make managers personally accountable for the recruitment, development, and retention of top performers.
- Dole out substantial incentives for employees that induce top outsiders to join the sales team.
- Tolerate unusual behavior from the stars. Often their success lies in going around the existing system and snubbing the accepted norms of behavior.
- Form a partnership with a professional services-savvy search firm.
- Create alumni networks to maintain relationships with key personnel.
- Encourage your stars to write and speak.
- Encourage and reward stars for mentoring new salespeople.
- After two or three years, conduct a star-performer analysis of a top-flight sales organization outside your industry.
Want to have the reputation of a world-class sales leader? Follow my advice and reap the rewards and recognition.References/Endnotes
1. Gilbert, Thomas F. 1978. Human Competence: Engineering Worthy Performance. New York: McGraw-Hill.