Why does leadership accept a 41.9% failure rate in sales?

George Brontén

In CSO Insight’s study “Sales Performance Optimization - 2015 Key Trends Analysis,” there’s alarming data showing that sales effectiveness, despite picking up after the financial crisis of 2008, has actually fallen since 2012.

The failure rate in sales is at 41.9%

The fact that 91% of the surveyed companies raised yearly quotas when 41.9% of their sales people did not reach them is mind boggling. Compare this number to other business processes – would you be OK with a 41.9% failure rate in production? Would you give the order to increase production? I think not - something is wrong with the way most companies are selling and it needs attention now! Doing more of the same just does not cut it.

The importance of sales process implementation

In CSO Insight's study, more than 1000 companies worldwide were surveyed and multiple sales effectiveness metrics were aggregated. As a part of their work, CSO Insights researchers categorized sales organization’s sales process effectiveness and plotted it against five levels of customer relationships: vendor, preferred supplier, solutions consultant, strategic contributor & trusted partner.

They identified four levels of sales process adoption:

1. Random: essentially sales reps do their own thing, their own way
2. Informal: there is a process but it isn't monitored, reinforced or enforced
3. Formal: regularly enforces the use of a defined sales process
4. Dynamic: same as formal but with flexing as new best practices are discovered

(This model is similar to my thoughts on Sales Team Maturity, described in this blog post)

Sales effectiveness has been in decline since 2012

Not surprisingly, the report highlights major differences between teams operating at different levels of maturity. What’s more alarming is that fewer sales organizations are reaching the higher levels. Instead of progress, we’re seeing a decline in sales process implementation and effectiveness.

To quote from the report: “As you read through the topical reports in the 2015 Sales Performance Optimization study, you’ll see several signs of complacency: sales process adoption is down, CRM adoption is in decline, levels of relationship with customers are slipping, and sales execution is less effective in several areas.”

Other interesting differences that comes with higher sales team maturity (level 3 compared to level 1)

• 43% lower sales rep turnover
• 34% lower customer churn

Surely, doing the math on these numbers alone ought to make sales process implementation a priority on your agenda in 2015?

Main sales objectives for 2015

When reviewing sales leaders’ main objectives for 2015, this graph speaks an interesting language:

Top sales objective

Obviously, capturing new accounts is the primary objective, followed by increasing sales force effectiveness. What I find interesting are the data points below, such as “Increase Win Rates of Forecast Deals”, “Reduce Sales Cycle Time”, “Improve Margins/Reduce Discounting”, “Optimize Deal Size” and “Reduce Ramp-Up Time”.

From my perspective, they all reflect ambitions to solve symptoms of not having implemented a proper sales process and not executing according to best practices.

Low sales effectiveness is a major leadership problem

If you are the CEO or an active board member – you need to open your eyes to the level of neglect towards what should be one of your company’s most important business processes: how to sell your products and services effectively.

A focus on sales effectiveness needs to come from the top. It’s time to stop thinking about sales as an art form. Sales is a business process that needs to be artfully executed. When the type of sales is of a complex nature, it involves multiple people and change management, making the sales process very complex.

Kill the myth of sales being an art form – it’s a poor excuse

There are many myths about sales that need to be quashed – one is that some people are born naturals and there are only a select few superstars that can become rainmakers.

"Sales is not an art form. It’s a very complex business process that needs to be artfully executed."
George Brontén

Just like in any sport, a few are naturally gifted, but that does not prevent the rest of the pack from stepping up to compete - and for their coaches to bring out the best of their ability and build a successful team. I believe the golfer Arnold Palmer once said: “The more I practice, the luckier I get” – sales is no different and we need to create an environment in which the sales team is always improving through coaching, guidance and enhancing their selling skills.

Focus on progress, not just activities

The sales space is far too focused on improving the efficiency of individual sales people. “Make more calls,” “more visits,” and “more demos.” More, more, more – however, it makes little sense to do faster what is not being done right!

The CSO Insights report shows that sales people supported by a dynamic sales process are more effective. They take the right action at the right time with the right people. They become their companies’ advantage in the battle for business with the competition.

What’s your company’s failure rate in sales? If it’s unacceptably high, you need to define a sales process tailored to your own needs. Once you’ve done this, you need to start using it effectively. This is when you should consider Membrain.

Get the CSO Insight Report

 

George Brontén
Published April 1, 2015, written by

George Brontén

George is the founder & CEO of Membrain, the Sales Enablement CRM that makes it easy to execute your sales strategy. A life-long entrepreneur with 20 years of experience in the software space and a passion for sales and marketing. With the life motto "Don't settle for mainstream", he is always looking for new ways to achieve improved business results using innovative software, skills and processes.

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