By Dave Brock
At the outset, I’ll apologize. This post is likely to rub some executives the wrong way. The premise is that many organizations are under performing their potential—possibly by huge amounts.
The immediate reaction from many might be, “We’ve been beating our numbers year after year! How can you say we are under performing our potential?”
First, let’s look at the “number.” The number is always somewhat arbitrary. Ideally, it’s arrived at by both a bottoms up and tops down assessment of what we might achieve for a given investment in sales and marketing resources.
It’s always an iterative process, sometimes the number is fairly developed, sometimes it’s arbitrary.
Too often, we think our goal is to “make the number.” In reality our goal is to maximize our profitable growth and share(for a given investment) in our markets. As a consequence, our number is likely to be something we pass on the way to maximizing our growth.
Stated a little less obliquely, we don’t tell our people to stop selling the moment we hit our number. We don’t say, “Stash that away until next quarter or next year (though some of our comp plans provoke that behavior).” We say, “Congratulations, great job! Let’s see how much more we can sell!”
With that as background, we can often see companies that are consistently overachieving their goals, that are growing wildly, that are the darlings of Wall Street and their investors/shareholders, and say, “These organizations, as well as they are doing, are underachieving their potential! They could be doing a lot more than they currently are, or they are overspending on sales and marketing.”
A key metric I assess in looking at organizational performance and whether they can achieve more–regardless of what their plan or actual performance indicates, is Attrition, voluntary and involuntary.
The data on attrition in sales is stunningly bad, even with many of the “best performing” companies in the world. Let’s look at some data points:
- Research shows sales turnover at roughly 35% per year. Other reports show 50% of sales organizations turning over every 2 years and the entire sales and management team turning over every 3 years.
- Average sales tenure in the top 10 technology companies is 1.76 years.* Remember, these are top performers, the darlings of Wall Street/NASDAQ.
- Studies show across a wider number of companies, average tenure of sales people and sales managers has been plummeting, to about 16.5 months. (1.38 years)
- Average onboarding time is 5.3 months for all sales, and at least 10 months for complex B2Bsales.
- Average sales cycles are roughly 6 month,s and in complex B2B can be well over 12 months.
As you start reflecting on these numbers, you start thinking, “Something doesn’t make sense here!”
If it takes 5-10 months to onboard someone, and we have sales cycles of 6 months or longer, in the best case, sales people are just getting productive (and paying off our investment in developing them), and then the leave, starting the same cycle all over again. In the worst case, they never get fully productive, in fact even if …read more
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