What’s your approach to sales training? Do you have a process that defines which sales performance competency to train to and what impact it will have on selected performance silos if the training objective is successfully met? Or do you rely on ‘field feedback’ not associated with actual performance numbers and related ROI to decide where to put your training dollars?
Here’s a simple blueprint to gain more revenue in less time while maintaining fiscal accountability to the ‘Top-floor’.
At JDH Group, our go-to-market strategy is to understand a sales organization’s revenue goals and define what key results are needed in performance improvement. To illustrate it, we produce diagnostic performance solution ‘Blueprints’ for sales organizations that utilize the ‘T’ method; both vertical and horizontal.
Horizontally, we look at each KPI and help companies understand how to identify, train to, improve and measure competencies in each of the critical performance indicators.
The ‘T’ method of training evaluation is a process that utilizes both a horizontal approach to key sales performance indicators (KPI) and a vertical examination to calculate the impact, or ‘Return on Training Investment’ (ROTI). Aligning the two will not only give you the path of least resistance to your overall revenue objective but will point to performance silos that will produce more revenue and/or recover unnecessary costs from sub-par sales performance.
Horizontal Examination
Here’s an example of sales organization KPI’s that sells business solutions to small and medium size companies:
• 1st Appointment to Proposal ratio (60%)
• Closing ratio (40%)
• Average Revenue per Sale ($3500)
• Sales cycle (38 Days)
• Revenue goal ($25,000)
• Average New appointments generated per rep (5)
This model represents a sales team that statistically has an opportunity to reach 67% of their revenue goal. So let’s take a closer look at which KPI performance training could achieve the required result the quickest.
One way would be to focus on front-end activity. Improving the average appointment generation to 7 new appointments would achieve the revenue goal, all other factors remaining the same.
Option 1: Establish a Prospecting Methodology; a single, documented and agreed upon prospecting method across all sales regions. The training objective should be to spend less time to gain more ‘Targeted’ business appointments to initiate your current sales process.
Another choice might be to evaluate your current sales methodology to understand if there is any room for improvement in your current closing ratio of 40%. As an example, improving this KPI to 60% would secure the monthly revenue target with no other KPI changes. Or splitting the difference; improving the 1st appointment to proposal ratio by 10% and the closing ratio by 10% would achieve the same result while maintaining the necessary new appointments at (5).
Option 2: Initially, choose a ‘Top-down’ approach versus a bottom up; target and initiate your sales process with a fiscal level of authority. Develop a diagnostic sales process that points to the prospect company’s business objectives parallel to you product/service solution. Speak in terms of Return on Investment, Soft and Hard Dollar recovery and Investment Payback Period. Sell the diagnostic parts to your process in line with the prospect’s annual business objectives; don’t rely on ‘Features & benefits’. Then customize your proposal as a hypothetical case study with measurable results.
Vertical Sales Performance ‘Impact Silo’ Examination
Whether you are initiating sales performance training internally or outsourcing a niche training organization, most folks sitting on the ‘Top-floor’ now require accountability in line with budget expenditures.
Another way to say it is the CFO knows he’s wasting half the sales training budget, he just doesn’t know which half.
Approaching sales training expenditures with a Vertical ‘Silo’ inspection will help score points to the fiscal authorities within your own organization.
Let’s take a look at this same sales organization’s vertical performance silos:
• Average New-hire Ramp-to-Quota (5 months) (35 hires per year)
• Sales employee Turnover due to low appointment activity (30)
• Percent of sales reps at or above Quota (70%)
First, calculate your ‘sub-par’ average revenue. This number reflects the average monthly revenue a new-hire achieves before they achieve quota attainment.
As an example, if your current Average Ramp-to-Quota is 5 months, take the average total Revenue sold in the first 4 months of a new hires routine and divide it by 4. That will give you the average 'Sub-Quota' Revenue per Month during Ramp.
In this example, we will use $8,000 as the average ‘sub-par’ revenue.
One of the overall training objectives could be to improve the New-hire Ramp-to-Quota. So you consider the training result and impact as it relates to revenue recovery by selecting a ramp-to-quota goal that’s more efficient than the ‘status quo’ of 5 months. In this case a 1 month ramp-to-quota reduction would recover $595,000 in additional new sales. That equates to $17,000 per new-hire. And if you have determined that the performance training Cost-per-head is $2500, there’s your internal training ROI; 680%.
And we’re not done yet.
You have defined that 30 sales reps per year go out the door directly related to low activity, not setting enough new business appointments to justify the required revenue result.
Let’s take a closer look at it pertains to related costs and potential recovery. Here are your expense breakdowns relating to a new-hire sales rep:
• Average Salary: $28,000
• Recruiting Costs: $1,200
• Training Costs per Rep: $2500
• Monthly Sales Quota: $25,000
If the focused KPI training initiative reduces your sales rep turnover by 50% (15 reps), that recovers $1,953,500 in measurable dollars, something everyone can actually put their finger on.
That’s over $130,000 of real return for every rep that learns how to effectively set new business appointments.
Considering this cause and circumstance versus the realistic training benefit as a ROI factor, you choose Option 1 to establish a Prospecting Methodology across all sales regions. And in this case, that also justifies the training investment to the “Top-floor’.
In the 3rd Vertical Sales Performance ‘Impact Silo’ we determined that an average of 70% of the sales reps are achieving quota per month. And the average month ‘sub-quota’ revenue achieved for the 30% of reps not reaching quota is found to be $16,000.
We also determined the average new appointments generated per week is (5), but
by improving the 1st appointment to proposal ratio by 10% and the closing ratio by 10% we would achieve Quota consistently.
Next, let’s determine our Return on Training Investment if we meet our training objective of improving the 70% team Quota ‘water-mark’ up to 90%.
• 1st Appointment to Proposal ratio (Improve to 70%)
• Closing ratio (Improve to 50%)
• Average Revenue per Sale ($3500)
• Sales cycle (38 Days)
• Average New appointments generated (5)
• 100 sales reps
Implementing a focused performance improvement system to advance our middle KPI’s in supporting an additional 20 sales reps per month to achieve Quota would increase our monthly revenue results by $180,000.
That’s an annual return of $2,160,000 or a training ROI of 864% based on a $2500 cost-per-head training investment. And with a 38-day sales cycle, the training investment ‘break-even’ point would be approximately 80 days.
Because of this cause and circumstance versus the realistic training benefit as a ROI factor, you choose Option 2 to establish a ‘Business acumen’ sales methodology, develop supporting diagnostic tools to establish financial business metrics parallel to your prospect’s initiatives and your product/service solution.
Adopting this ‘T’ method to sales performance training will allow you to determine the shortest path to your revenue goals, determine and implement ‘Best Practice’ sales performance training and justify the training investment to the “Top-floor’.
Because at the end of the day… it’s all about Return on Investment.
Adopt the ‘T’ Method to Sales Performance Improvement
Are You Missing Your Best Quality Improvement Ideas?
November 2005. Winter is just around the corner here in Western Michigan. The leaves are literally raining off the trees. Just this morning at breakfast as I looked into the woods and I could see a steady stream of golden brown, red and yellow leaves heading towards the earth.
Last month I talked about keeping your quality improvement changes in place—using a manual that you develop of SOP’s, standard operating procedures. By the way, if you missed that issue, you can find it on my website, and several earlier ones too.
This month I want to address starting a quality improvement project. That is, how do you decide what project to work on? What issue or process is causing the most waste, is doing the most harm, is most affecting the bottom line? Maybe you are a leader at your site and you have an idea of what is generally causing problems. For instance, you may think that patients with catheters are getting a lot of infections. Perhaps, checking patients in at your site is taking too long and creating a bottleneck. Maybe patients are complaining about having to wait too long at check in at a doctor’s office. It could be that certain departments are running short of supplies too often. There are many other possibilities. The probability is that unless you are directly involved in the contentious process, you probably are not aware of what the exact problems are and are not aware of possible solutions.
This leads us to the conclusion that in order to discover the many problems facing every organization, especially in terms of wasted effort, time and money, there has to be in place a mechanism for the problems to surface to the leaders from the front lines of the organization. There has to be a way for the leaders to hear about the problems from those who are directly involved. For instance, does anyone in your organization know what ideas the cleaning staff has for making the organization better? When I say that there has to be a way for the ideas to surface, I don’t mean that the only ones with a voice should be nursing staff and other professionals. Rather, as in the Baldrige Improvement Plans, the entire staff is involved in quality improvement.
I know of a few hospitals where the leadership—president, CFO, COO, etc.—go out several mornings every week to talk to staff at all levels and patients to see how things could be better and to get some positive feedback about what things are going well. Perhaps at your site you want to start something like this. As time goes by and as suggestions are implemented, staff will feel safer about making suggestions.
Leadership needs to make sure that staff feel safe about making suggestions, no matter what the method of suggesting changes is used. Perhaps you might want to use an anonymous survey for collecting initial suggestions. After some of the suggestions are acted upon, the staff will feel like the leaders really want good ideas and will feel safer making them known. Perhaps you might want to use a consultant in Lean Healthcare (many of these ideas I suggest come directly from Lean Healthcare) to teach the staff the principles and processes of Lean Healthcare and other tools as may seem fit. This approach will help a large organization start making many positive changes quickly, rather than using the idea of slowly spreading the means of change throughout an organization, as some prefer.
Whatever your initial process of getting the ideas percolating up in the organization, after some ideas for quality improvement recommended by the rank and file are successfully implemented and after the improvements and savings are made known in the organization, it is time to create ways to get more ideas. Perhaps you want to have regular meetings with a designated leader and representatives from several staffing areas that will bring up ideas. That means that the rest of the staff must feel comfortable about making suggestions to these team members. If your site has few employees, then perhaps it would be best to have regular staff meetings with all employees where the agenda always includes time for quality improvement ideas and for updates on ongoing projects. Whatever method you decide works best for your site, be sure that an atmosphere safety and security exists for all the staff. This may mean going so far as to guarantee that no staff will lose there position as improvements create more time to get things done.
So, once you have a steady flow of quality improvement ideas being generated by all in the organization, which ones should you act upon? Next month, I’ll address that issue. This issue I decided to concentrate on the Define step of Six Sigma’s DMAIC (define, measure, act, improve, control). Next, I will discuss the measure segment. Sometime in the future I’ll cover team dynamics too.
Have a great Thanksgiving!
A Single Mom's Guide to Home Improvement
When I bought my house nine years ago, my son was about to turn three and I reveled in the security of owning my slice of the American dream. Being a single mom was (and is!) both challenging and rewarding, but I knew that having a house to call my own was the best thing that ever happened to my son and me.
My house was ten years old when I bought it, and it was in excellent condition. Still, as time passed, a variety of issues cropped up. I think my way of handling (or not handling) home improvements is fairly typical for single women who own their own homes. Hopefully, my experiences will help you navigate the waters of home improvement. Here's what I've learned:
1. You can go places with a good book and a toolbox. The Christmas of the year I moved in, my sister and brother-in-law gave me a toolbox filled with the basics: screwdrivers, wrenches, a hammer, nails, nuts and bolts, and so forth. They also gave me a book on basic home repairs. Their gift literally provided me with the tools I needed, but it also gave me confidence that I could tackle minor home improvement projects. My advice: invest in some tools and use a book or online sources to guide you through the routine maintenance that your house requires.
2. Ask for advice. As a single woman who is now 49 years old and has limited knowledge of more complex home improvement issues, I'm always afraid that I'll be taken advantage by a repair company. When my air conditioner conked out on a 100-plus degree day, for example, I had no way of knowing if I really needed a new unit. I've learned to call on neighbors, family members, and friends - whose collective knowledge exceeds mine - to get their impressions. They've steered me in the right direction on a number of occasions.
3. Keep tabs on the neighbors. All of the houses in my immediate vicinity were built by the same builder at roughly the same time. Getting to know my neighbors and talking to them about home improvement has helped me get a sense of what to plan for. For example, two years ago I began to see that the houses around me were starting to get new roofs. Although I didn't have a leaky roof, a few months ago I decided to re-roof. I wanted to be proactive so I didn't get stuck with the expense of drywall repairs in addition to the cost of a new roof.
4. Ask for referrals, and then check them yourself. Through my neighbors' referrals, I've been able to find a superb roofer, an impeccable exterior house painter, and a terrific tile guy. But I don't just rely on their word. I always - repeat, always - check with my state's contractor licensing board to verify their licenses and with the Better Business Bureau to check on past complaints. I get all estimates in writing, and ask for proof of insurance.
5. Don't put your head in the sand. There has been more than one occasion when I've chosen not to deal with a home improvement issue, and I've always regretted it. I knew, for example, that the exterior of my fireplace had some dry rot. Unfortunately, by letting it go for so long it cost me much more than if I would have dealt with it immediately.
6. Make a list. This last bit of advice is basic, but critical. Start and keep a home improvement list. As a single mom, it's all too easy to get caught up in the hectic pace of daily life and let routine home maintenance fall by the wayside. I divide my home improvement list into three sections: one for items that need attention in the next three months; one for home improvement projects for the coming year; and one that maps out what I want to accomplish with the house over the next five years. The short- and medium-term lists keep me motivated, while my long-term list helps me save the money needed for the big-ticket items.
UNLOCK YOUR SELF IMPROVEMENT POWER
When we look at a certain object, a painting for example – we won’t be able to appreciate what’s in it, what is painted and what else goes with it if the painting is just an inch away from our face. But if we try to take it a little further, we’ll have a clearer vision of the whole art work.
We reach a point in our life when we are ready for change and a whole bunch of information that will help us unlock our self improvement power. Until then, something can be staring us right under our nose but we don’t see it. The only time we think of unlocking our self improvement power is when everything got worst. Take the frog principle for example –
Try placing Frog A in a pot of boiling water. What happens? He twerps! He jumps off! Why? Because he is not able to tolerate sudden change in his environment – the water’s temperature. Then try Frog B: place him in a luke warm water, then turn the gas stove on. Wait til the water reaches a certain boiling point. Frog B then thinks “Ooh… it’s a bit warm in here”.
People are like Frog B in general. Today, Anna thinks Carl hates her. Tomorrow, Patrick walks up to her and told her he hates her. Anna stays the same and doesn’t mind her what her friends says. The next day, she learned that Kim and John also abhors her. Anna doesn’t realize at once the importance and the need for self improvement until the entire community hates her.
We learn our lessons when we experience pain. We finally see the warning signs and signals when things get rough and tough. When do we realize that we need to change diets? When none of our jeans and shirts would fit us. When do we stop eating candies and chocolates? When all of our teeth has fallen off. When do we realize that we need to stop smoking? When our lungs have gone bad. When do we pray and ask for help? When we realize that we’re gonna die tomorrow.
The only time most of us ever learn about unlocking our self improvement power is when the whole world is crashing and falling apart. We think and feel this way because it is not easy to change. But change becomes more painful when we ignore it.
Change will happen, like it or hate it. At one point or another, we are all going to experience different turning points in our life – and we are all going to eventually unlock our self improvement power not because the world says so, not because our friends are nagging us, but because we realized its for our own good.
Happy people don’t just accept change, they embrace it. Now, you don’t have to feel a tremendous heat before realizing the need for self improvement. Unlocking your self improvement power means unlocking yourself up in the cage of thought that “its just the way I am”. It is such a poor excuse for people who fear and resist change. Most of us program our minds like computers.
Jen repeatedly tells everyone that she doesn’t have the guts to be around groups of people. She heard her mom, her dad, her sister, her teacher tell the same things about her to other people. Over the years, that is what Jen believes. She believes its her story. And what happens? Every time a great crowd would troop over their house, in school, and in the community – she tends to step back, shy away and lock herself up in a room. Jen didn’t only believed in her story, she lived it.
Jen has to realize that she is not what she is in her story. Instead of having her story post around her face for everyone to remember, she has to have the spirit and show people “I am an important person and I should be treated accordingly!”
Self improvement may not be everybody’s favorite word, but if we look at things in a different point of view, we might have greater chances of enjoying the whole process instead of counting the days until we are fully improved. Three sessions in a week at the gym would result to a healthier life, reading books instead of looking at porns will shape up a more profound knowledge, going out with friends and peers will help you take a step back from work and unwind. And just when you are enjoying the whole process of unlocking your self improvement power, you’ll realize that you’re beginning to take things light and become happy.