HBS article on sales best practices. AMAZING quotes.

http://hbswk.hbs.edu/archive/5028.html


"Talking to these high-performing reps is very much like talking to an accomplished doctor. "If I see A, I'll do B; if I see C, I'll do D." But this is where the parallel ends.

The "B" and "C" players, on the other hand, generally do not have the experience or capability to discover best practices on their own. At the same time, all too often sales training is general in nature, focusing on developing broad capabilities like discovering customer needs, rather than helping the company's reps master critical company-specific best practice procedures.

Sales management often succumbs to the error of exhorting reps to improve their results, or coaching parts of the process piecemeal, rather than teaching and drilling critical company-specific best practice "standards of care." In most companies, it is this absence of systematic best practice knowledge and supporting mechanisms that leads to such great variance in practice."

And:

• Train the process. The most effective training must go far beyond teaching general sales capabilities. It must focus on systematically teaching your reps your company-specific best practice "standards of care." For example, in the account penetration process, there likely will be a small number of well-proven game plans, and each of these will have several identifiable stages with particular critical activities at each stage. Every rep should know your best practice process and master in advance the essential skills necessary for success at each stage.
• Coach the process. Consider the words of Tom Brady, the New England Patriots' star quarterback: "The goal of winning three consecutive Super Bowls should take a back seat to putting together three straight quality practices." In the account penetration process there will be certain identifiable "pinch points" at each stage. For example, if a rep is moving into a stage in which the critical element is talking to engineers, the manager should coach and drill the rep in the process of talking to engineers until his or her performance is consistently excellent.
• Measure the process. All too often, sales measures are too vague and broad. In account penetration, measuring progress in moving an account from stage to stage is critical. Sometimes, important progress does not yield immediate revenues.
• Constantly improve the process. Like any "standard of care," your best performers will always find ways to make the process better. The key is to identify and capture these improvements and systematically move your whole sales force to this new and better level.

The most powerful aspect of harnessing your own best practice is that your sales force will be very receptive to the improvements. Your own best practice is literally your own. It was developed by your own top performers, whom everyone in your company respects and admires. The accounts in which the best practices worked are your own accounts, often legendary turnaround successes. Your reps will be hungry for an understanding of how they could do the same.

Harnessing the power of your own best practice is the best of all worlds. The "standards of care" are available within your own four walls. You can identify, codify, teach, coach, and spread them rapidly and effectively. And your own sales force will readily accept and embrace them.

Silicon Slopes articles

Un. Be. Lievable.

While writing for Silicon Slopes, I’ve had the opportunity to interview several successful tech-company founders, and a subject I always like to bring up is the Lean Startup movement.

It’s getting a lot of hype, but is it real? The general consensus seems to be a resounding yes. Successful founders often realize that they implemented the risk-limiting lean startup principles, and that those principles lead them to entrepreneurial success.

Scott Johnson, founder of AtTask, was an especially converted proponent. He said that starting his now multi-million dollar company was a  process of trial and error, and that the lean startup describes well what he did to achieve success.

One of the best lean startup stories I’ve heard is from Crux (http://cruxcase.com/), who mainly sells laptop-like cases for the ipad.

Brian Probst, the company's founder, pulled the one of the most intelligent, outrageous entrepreneurial stunts ever to gauge demand for his untested product.

Without ever having made a physical version of his product, Brian sent 3D drawings to be made into a video to promote one of his first products, the Crux 360. The video came out just the way it was supposed to - making the product look like it actually existed, and consumable enough to get passed around the web.

What happens next is almost unbelievable. With the Crux website live and ready to take orders, Brian sends the video to bloggers and tech writers early one Friday morning. The video gets picked up and traffic to the site spikes. And he sells over a hundred of thousands of dollars worth of the Crux 360.

What?!

That’s right. Not a single one ever actually produced, but thousands sold. Genius.

So with is product fully validated by the general public, he then fires up manufacturing in China. It took so long to produce and deliver the new product that almost half the original orders cancelled - but even those orders had proved invaluable to Brian, because now he knew - didn’t hope or guess, but knew - that his product and company would be successful.

A lean startup story for the record books.

WakeBoard Meeting

Scott Johnson, AtTask

After you’ve built a multi-million dollar company featured on the Inc 500 three years in a row and hired a few hundred employees, what do you do? Run for president? Buy a Ferrari and move to Fiji? Or maybe rekindle your childhood dreams of becoming an astronaut?

“Whatever you want” is probably the most correct answer to that question - which for Scott Johnson, founder of AtTask, means teaching at BYU and wakeboarding.

While it sounds like a life most people would love to live, Scott says giving up the helm to a new CEO and staying on only as Chairman of the board wasn’t easy. After all, he did build the company from the ground up - it is, as they say, his baby.

As he tells me about the decision to replace himself as CEO, he gives off a humble aura of maturity. The subject brings a demeanor about him which clearly shows the strength of a man who has achieved ultimate self-honesty. But having passed on the responsibility to a new capitán, Scott is free to do other things - like wakeboard and, of course, think about firing up another company or two, though probably on the other side of the table this time.

So while it hasn’t been easy, going from CEO of a hot tech company to captain of his rather unknown wakeboarding boat has been a great move.

But who knows - for a guy who likes acceleration that much, the world of startups may beckon too strongly to resist much longer.

Teach a Man to Franchise

Interview with Peter Harris, University Venture Fund

What says cut-throat capitalist better than a Venture Capital fund? But when it comes to the developing world, Peter Harris, a principal at University Venture Fund, has a softer perspective.

Venture capitalist by day, Peter goes through all the typical motions of a hard core investor - deal screening, entrepreneur thrashing, founder firing - its what you’d expect from a man who leads the largest student-managed fund in the United States ($18.2M).

What you might not expect is his outlook on third-world inhabitants. Peter has a special interest in poverty alleviation. He believes that the causes of poverty are not lack of intelligence or work ethic, but that people suffering from poverty lack the resources - not abilities - to pull themselves out.

“Teach a man to fish” is a great principle, but Peter argues that many of these people have never been taught how to fish, nor do they have access to fishing poles, boats, nets, and other equipment to be effective providers.

Peter believes that microfinance and microfranchises are steps to creating a sustainable poverty-alleviating environment for developing peoples, and has invested significant time into furthering its cause. He believes that through these mechanisms and others yet to be developed, we can legitimately create a world without poverty.

“Teach a man to fish”? It’s 2012! Now is the time to “teach a man to franchise”.

Predicting War

Interview with Charlie Harrell, ProModel Corporation

With over one million active duty personnel, a 2010 budget of $664 Billion, and the country’s survival on the line, the DoD has some serious logistical challenges. Luckily for them, Charlie Harrell started Promodel Corporation in 1988.

ProModel began as a process modeling software used mostly for manufacturing companies to accurately predict inputs and outputs of their processes.

Though ProModel has always been a big-league player - one of its initial clients was IBM - it has recently moved into the super-league of military contracting.

The military faces major challenges in logistics. Thousand of troops, vehicles, weapons, and other equipment which must be acquired and transported on time and on target to the most unstable areas of the world under the most heated circumstances, and failure is not an option. ProModel’s technology will be used to provide predictive data to military officials about future personnel and equipment needs so they can be sure to have all their ducks in a row before pulling the trigger.

With a work order like that, ProModel now moves to “superhero status” as its technologies begin to be used to save lives and help secure the nation’s ongoing safety.

I’m Fired!

Boyd Timothy, Appigo

Wife, kids, a nice house, and a good job. Isn’t that the American dream?

Not so for Boyd Timothy and Calvin Gaisford - even with families to feed and mortgages to pay, these two entrepreneurs decided to quit their good jobs in search of the true American dream: a top spot in the Apple App Store.

Just three years after founding their company, Appigo now has several employees, a slick office space with bean bag chairs and a couple of walls painted lime green, and bragging rights to some of the most popular apps ever built.

So what’s their secret? I mean, I built an app three years ago and my walls still aren’t lime green.

For Appigo, the secret was no secret at all - lots of hard work and a bit of luck. The founders began to develop their first app as a hobby in addition to the work they were doing at their real jobs. Then, when the time was right, they said goodbye to their nine-to-fives and started working on Appigo full time. Or rather fuller time, as they worked insane hours to get the company moving.

And the timing was perfect. Their first app was in the app store before it even opened, so on opening day of Apple’s app store, Appigo was one of the debut items. At the time, the app store was far less saturated with apps, so Appigo had an easier time standing out than it would have if the founders had waited a couple years to start the company.

But the early years had its challenges as well. Data on downloads was sparse and infrequent, so the company had very little upon which to measure their success. For the first month of sales the only indication the founders had of downloads was support emails coming in.

Luckily for their happy app users, Calvin and Boyd pushed through the early challenges and created a successful company with a bright future. Brighter even than their lime green walls.

Arena Machines Logos

Sales Performance Improvement

Really good site.

http://www.salesperformance.com/

Pretty good video

Arena Machines Banner Pics

Science of Sales, by HBR

The New Science of Sales Force Productivity

by Dianne Ledingham, Mark Kovac, and Heidi Locke Simon

Bob Brody leaned back in his chair, frowning. Corporate wanted another 8% increase in sales from his division this year, and guess whose shoulders that goal would fall on? Ah, for the good old days, when he could just announce a 10% target, spread it like peanut butter over all his territories, then count on the sales reps for each region or product line to deliver. Sure, some would fall short, but the real rainmakers would make up the difference. Today, the purchasing departments of Bob’s customers used algorithms to choose vendors for routine buys; pure economics often trumped personal relationships. For more complex sales, purchasing wanted customized end-to-end solutions. There’s no way one person could close those deals, no matter how much golf he or she played. Most of the time, you needed a team of product and industry experts, not to mention rich incentives and a lot of back-office support.

The fact was—he knew he’d have to face it sooner or later—Bob was overwhelmed. Nothing about the sales process was as simple or predictable as it used to be. Eight percent growth? He wasn’t even sure where to start.

If this little fable sounds familiar, it’s because managers often face similar problems. Over the past few years, we have worked through these sorts of challenges with dozens of senior executives in Brody’s position. Even though the world around them was changing, they were still handing down targets from higher management and religiously putting more feet on the street, hoping that some of those new reps would once again save the day. Even arbiters of best practice such as General Electric can recall the wing-and-a-prayer style that, until recently, characterized their sales efforts. The company would give each individual his or her patch and say, “Good luck, and go get ’em,” observes GE’s Michael Pilot, who started his career 22 years ago as a salesperson at the organization and is now president of U.S. Equipment Financing, a unit of GE Commercial Finance.

Today, the savviest sales leaders are dramatically changing the way they run their groups. They are reinventing their sales approaches to respond to new market environments. They are expanding their lists of target customers beyond what anyone had previously considered. They are boosting their sales reps’ productivity not by hiring the most-gifted individuals but by helping existing reps sell more. (See the exhibit “More Reps, or More Productivity?”) As a result, their companies are growing at sometimes startling rates. Pilot’s division—a large group in a mature industry—added $300 million in new business (about 10% organic growth) in 2005 alone, an improvement he attributes specifically to a reinvention of the operation’s sales process. Similarly, SAP Americas, under president and CEO Bill McDermott, has more than doubled its software license business in three years, increasing its market share by 17 points.

More Reps, or More Productivity?

Companies that choose to take a scientific approach to sales force effectiveness may want to evaluate the two options shown here. The growth target for this fictitious global manufacturer—in this case an increase in revenues of $1.1 billion over five years—can be attained through various combinations of productivity improvements and new hires. But the cheapest and most effective route is usually to increase productivity as much as possible through use of the four levers—targeted offerings; optimized automation, tools, and procedures; performance management; and sales force deployment—and only then to put more feet on the street. The management challenge is ensuring that you have put enough science into your sales organization to drive that productivity predictably.

What these leaders have in common might be called a scientific approach to sales force effectiveness. It’s a method that puts systems around the art of selling, relying not just on gut feel and native sales talent—the traditional qualities of the rainmaker—but also on data, analysis, processes, and tools to redraw the boundaries of markets and increase a sales force’s productivity. The goal isn’t to replace rainmakers but to narrow the gap between the top 15% or 20% and the rest of the sales force. Companies that use the tactic well have found that, while even top sellers do better, reps in the lower quartiles show dramatic improvement, with productivity jumps of 200%. Such increases enhance the performance of the sales team as a whole and enable a company to reduce the expense of hiring new reps. Some firms using the approach have seen their average sales per rep increase by as much as 50% in two or three years, though most gains cluster around the 30% mark.

No latter-day Arthur Miller is likely to write a play about the practitioners of the new method; the drama is in the results, not the details. But if “the future of business is to do things by design, not by chance,” as one sales leader put it, this new science may be what’s required of the men and women charged with bringing in a company’s revenue.

Putting Science into Sales

GE’s Pilot understands how extensive a reinvention can be. As recently as the mid-1990s, the company was still expecting sales teams to assemble and prioritize their own database of prospects for their territories. The company’s field sales managers even manually classified all the names in the division’s database as either high priority or low priority. “We relied on telephone books,” recalls Pilot. “And newspapers. And signs on trucks as they went by or signs on buildings.” By 2004, says Pilot, he knew that GE Commercial Finance had to “put some science into it.”

Pilot’s first step was to revise the way he segmented customers—by using data that included records of past company transactions. The new database held information such as four-digit standard industrial classification codes, the type of equipment being leased, and so on. Then Pilot asked his field managers to create a list of prospective-customer characteristics, criteria that they believed would correlate with a customer’s likelihood of doing business with GE. He took the 14 features they came up with, ran regression equations against the database of transactions, and identified six criteria that had high correlations. If a prospective customer tested well on those six criteria—such as predicted capital expenditures and number of filings for new business transactions—the probability that it would do business with GE was high.

The division scored its list of prospects based on the six attributes and then worked the new list for a while. Something interesting emerged. “We found that the top 30% of prospective customers were three times more likely to do a deal with us than the bottom 70%,” says Pilot. In other words, that top group was made up of the new highest-priority prospects—and yet only about half of them had previously been classified as high priority by sales managers. The company had, in effect, identified 10,000 new high-priority prospects that it would otherwise have overlooked.

But it wasn’t just the increase in sales acreage that made the difference; the new information also allowed Pilot to redesign his sales force. For example, he could take on the difficult job of restructuring territories, ensuring that each one contained plenty of opportunities. In some cases, that meant narrowing assigned areas based on the caliber of leads, reevaluating territories, or creating new territories entirely. “When you look at the market with that kind of scientific approach,” Pilot says, “you’ll never knowingly have territories that could intrinsically underdeliver.”

To continue reading, register now or purchase a single copy PDF.

Registered users may view 3 HBR magazine articles for free each month. Become a paid subscriber
for full uninterrupted access. Already an online or premium subscriber? Sign in.

Dianne Ledingham (dianne.ledingham@bain.com) is a partner with Bain & Company in Boston.

Mark Kovac (mark.kovac@bain.com) is a partner in Dallas, and

Heidi Locke Simon (heidi.lockesimon@bain.com) is a partner in San Francisco. All three are leaders in Bain’s Global Performance Improvement practice.

http://hbr.org/2006/09/the-new-science-of-sales-force-productivity/ar/1