February 2010

Neil Rackham
. . . Author of Lots of Stuff

©2010 Neil Rackham

Station Break First some Research*
In our studies: “effective sales managers”
• Consistently exceeded
goals.
How would you define an
• Improved the performance
“effective Sales of their teams.
Manager”?
• Received high approval
ratings from customers.

• Were admired by other

sales managers.
*Studies carried out in B2B sales forces from 1987-2001 by
©2010 Neil Rackham ©2010 Neil Rackham Huthwaite and Sales Strategy Institute.

Findings: The Usual Suspects Findings: The Usual Suspects

• Great time management: “Grace under • Great time management: “Grace under
pressure”. pressure”.
…the only one
• Focus on doing fewer things well.
who goes home
He never early at the end
seems of the quarter! Xerox Study
rushed
“Sales managers would have
to work 29 hours a day, 365
days a year to complete all
He always the requirements of the
has time to existing job description.”
listen . . .

©2010 Neil Rackham ©2010 Neil Rackham

Genuine Chinese Proverb Findings: The Usual Suspects

• Great time management: “Grace under
“If you chase two monkeys, pressure”.
both will escape” • Focus on doing fewer things well.
• Good motivators. …team
Half doing twice as many things is a meetings are
recipe for big effort and small reward. I‟m the highlight of
learning the week
so much!
Top performers focused on
fewer areas in more depth. I wouldn‟t
want to work
for anyone
else . . .
©2010 Neil Rackham ©2010 Neil Rackham
Findings: The Usual Suspects And Some Less Obvious Findings
• Great time management: “Grace under
pressure”.
• Knowing when [and when not] to
• Focus on doing fewer things well. get involved in selling.
• Good motivators.
• Extensive networking and coalition building. • Managing sales pipelines
differently.
He knows She knows the • Coaching, even under pressure.
everyone in the people in the
industry company who • Treating top performers like gold.
make things
happen • Understanding both efficiency
and effectiveness.
The bigger the
sale, the more
©2010 Neil Rackham
important ©2010 Neil Rackham

World Class Sales Managers Station Break

Know the difference What is the difference

between sales between sales efficiency and
efficiency and sales sales effectiveness?
effectiveness.

©2010 Neil Rackham ©2010 Neil Rackham

The Difference Station Break

Efficiency If you could spend 100 units of

Effectiveness
Getting in front of management effort improving
enough customers at Getting the business
on optimal terms
efficiency or effectiveness, how
optimum cost.
[Opening doors] once the door is would you allocate the resource?
open. Mostly efficiency?
Mostly effectiveness?
50/50?

©2010 Neil Rackham ©2010 Neil Rackham

Which is More Important? Station Break
Hi
Efficiency wins Even in large sales, you
can still have efficiency
# of issues. What are some
accounts things you should look for
Effectiveness to decide whether you need
wins
to improve your efficiency?
Lo Hi
Average size of account

©2010 Neil Rackham ©2010 Neil Rackham

Do You Have Efficiency Issues? Office Supplies Sales Force

• Do your 15% of top performers = individual salesperson
make more calls than the rest
of the sales force?
• Is there a lot of low hanging
fruit out there that your market Sales
research says you‟re not volume
contacting? [$]
• Are your calls per day more
than 25% below industry
averages?
• Is there a positive correlation
between number of calls and 20 30 40 50 60 70 80
number of sales?
Calls per month
©2010 Neil Rackham ©2010 Neil Rackham

High Value Capital Goods Sales Increasing Call Activity

= individual salesperson This is a real case. The company in the
previous slide decided to introduce an
New activity management system:
Business • orders increased by 16%.
volume
[$] • calls increased by 38%.
• average value per order fell
by 18%.
• $$ sales fell by 1.5%.
10 15 20 25 30 35 40 • 4 of 10 top performers left.
New business calls per month
©2010 Neil Rackham ©2010 Neil Rackham
The Pivotal Job Station Break
Top management
Which is the pivotal job
level for efficiency?
Top management
Middle management Middle management
Supervisors and
salespeople
And which is the pivotal
job level for
Supervisors and
effectiveness?
salespeople

©2010 Neil Rackham ©2010 Neil Rackham

The Pivotal Job for Efficiency The Pivotal Job for Effectiveness
• Decided at the bottom
Efficiency
• Using tools like:
training
• Decided at the top coaching
• Using tools like: • Top management has
little influence.
territory design
compensation Effectiveness
activity management

©2010 Neil Rackham ©2010 Neil Rackham

An Interesting Question Station Break

Should you keep
a dog and bark Should a manager be
yourself? actively involved in making
sales calls?
 In most sales
 Only with biggest customers
Should sales  Rarely, or not at all
managers get involved
in face-to-face selling?

©2010 Neil Rackham ©2010 Neil Rackham

Getting Involved in Selling A Study from Xerox
Hi Xerox compared the performance of sales
Let your dogs managers from two Divisions:
do the barking In BPD, selling simple In ISD, selling complex
products, high systems, high performing
# of performing managers managers spent more
accounts stayed in the office and than half their time
avoided direct sales actively participating in
YOU are involvement. selling and sales
the lead dog strategy.

Lo Hi
Average size of account

©2010 Neil Rackham ©2010 Neil Rackham

Station Break The Five Deadly Sins: Customer

Survey C ustomer Survey

1. “They talk too much”.

What do you think customers 2. “They are more interested

in themselves than in me”.
complain about most when
sales managers come on 3. “They haven‟t done their
homework”.
sales calls to them?
4. “They don‟t show respect
for their own people”.

5. “They promise things I

know their people can‟t
deliver”.
©2010 Neil Rackham ©2010 Neil Rackham

Station Break Three Criteria from Microsoft

What do I bring to the party that‟s
unique? [and just position is not
What criteria should you set enough]

to help you decide whether

or not you should go on a Will I enhance the status of my
people and not diminish them? [who
sales call? makes the concessions?]

Have I an exit strategy? [22% of b2b

sales managers‟ time is spent
handholding customers first met during
the sales process]
©2010 Neil Rackham ©2010 Neil Rackham
 Here’s Another Management Two Ways to Improve Pipeline
Problem Performance
18 months Shorten
the Pipeline Increase the
Salesperson Yield

Get the same

How can you business from
Opportunities
increase the Contracts fewer calls
in productivity of the Out Get more [and more
($15m) ($0.6m) profitable] business from
sales pipeline? the same opportunities

©2010 Neil Rackham ©2010 Neil Rackham

Station Break Call Outcomes

Simple Sales More Complex Sales
S just two four possible
U outcomes Order outcomes
C
C • action is agreed
How can you shorten the E that moves the
S Key call objective: sale forward
pipeline? S
F
getting the order Advance e.g., “I’d like you to talk
to my partner.”
[In other words, how can you U
L
get the same business in a U
N
shorter time or from fewer S
U
Continuation • discussion will
C Key call objective: continue but no
calls?] C turning a action is agreed
E Continuation into
S e.g., “Great discussion.
S an Advance No-Sale Let’s talk about it
F again sometime.”
U More complex sales
©2010 Neil Rackham
L ©2010 Neil Rackham

Think “Advances” Shortening the Pipeline

• Top salespeople can think of twice Go with your
as many possible Advances,
compared with average
Advance people on calls
early in
salespeople the sales
• Before key calls ask your people cycle
to tell you what possible Advances Make the idea
they hope to achieve of an Advance
part of your
• Coaching people to set call plans common sales
and objectives that lead to language
Advances can shorten the
opportunity pipeline by 15%

©2010 Neil Rackham ©2010 Neil Rackham

Evidence from IBM Station Break
7.2

Calls Where should your people

5.9
needed focus to increase sales?
to take
order Early? Middle? Late?
Salesperson
Early Calls: Mid-cycle Calls: Late-cycle Calls:
initial exploration, developing and negotiating,
prospecting, customizing solutions, closing
Managers qualifying?
Managers differentiating? business?

present only present only

in late-cycle in early-cycle
calls calls
©2010 Neil Rackham ©2010 Neil Rackham

World-class Sales Managers Evidence from Xerox

• Encourage attention to
the early stages of the • Managers are actively
pipeline. involved in starting more
selling cycles and starting Salespeople who put most effort
them strongly.
into the early stages of the sale
• There is less focus on sold 27% more business than
closing the business –
although that may not feel those who put most effort into the
so at the end of the closing stages.
quarter.

• Early focus not only builds

a strong pipeline, it
shortens the selling cycle.

©2010 Neil Rackham ©2010 Neil Rackham

Final Word on Pipelines Building a Coaching Culture

• Left to themselves, salespeople World-class sales
don‟t give enough attention to forces put great A few facts:
the early part of the pipeline. emphasis on • Building a skill through
• They run out of new coaching. coaching cost six times as
opportunities. much as building the same
level of skill through off-the-
• This creates a yo-yo effect job training.
which is bad for customers, bad
for motivation and, ultimately, • Managers can‟t find enough
bad for business. time to coach adequately.

• A smoothly managed pipeline is • Many salespeople don‟t like

the sign of a great sales force. being coached.

©2010 Neil Rackham ©2010 Neil Rackham

Station Break The Impact of Training: Xerox Study
Training
So why do leading sales
forces put such great
emphasis on building a

“coaching culture”? Why not
save a lot of money by
building a “training culture”
instead?
©2010 Neil Rackham
Improvement
How much further skill
improvement will take
place when salespeople
go back to the field and
practice / refine the new
skills?
Time
©2010 Neil Rackham

Station Break The Impact of Training: Xerox Study

Training

How much post-training

improvement was there in Xerox?
Improvement

 17% gain in skill

 No change 87% skill loss-
within a month!
 43% skill loss
 More than 50% skill loss

Time
©2010 Neil Rackham ©2010 Neil Rackham

Why the Skill Loss? Preventing the Skill Loss

Training Training

Skill
Skill
Improvement

Improvement

Managers reinforce
new skills through
coaching

Results
follow as new
skills become
Results natural

Time Time
©2010 Neil Rackham ©2010 Neil Rackham
Two Types of Coaching Station Break

In SKILLS COACHING
how many people can a manager
coach in the field during a 3 month
period?
And how many people could a
Strategy Coaching manager STRATEGY COACH in
Skills Coaching
• Planning the same period?
• Field observation • Creative thinking
• Feedback • Strategy and tactics
• Monitoring

©2010 Neil Rackham ©2010 Neil Rackham

Running the Numbers Station Break

If you can‟t skill coach all

your team, who should you
• Most experts believe • A manager can choose?
that the MAXIMUM coach up to ten
number of people people in sales
that a manager can strategy.
coach in selling skills
is three.

©2010 Neil Rackham ©2010 Neil Rackham

Choosing Who to Coach Coaching and Results

HI Top 15% usually have their own
successful style. Coach them to send
a message.

Average
• If a team • It‟s sometimes performers show
member asks • Younger, or less good to choose a results fastest
for coaching experienced top performer
that‟s a good salespeople are because it shows
sign they will more likely to that coaching isn‟t
be motivated welcome a punishment for Bottom 25% will be slow to change.
to change. coaching and bad performance.* LO Leave until later except for new hires.
will learn faster.
* But see the next slide
©2010 Neil Rackham ©2010 Neil Rackham
Station Break Coaching Mistake
PLAN

What are the biggest

mistakes sales managers REVIEW DO
make in Skills Coaching?
• Most managers spend more time on
REVIEW than on PLAN.
• Managers who spend more time on
PLAN get superior skill improvement.
©2010 Neil Rackham ©2010 Neil Rackham

Station Break Motorola Study

• Many managers were convinced they
could intervene briefly to bring the call
back on track. It rarely happened.
If a manager is skill coaching • If managers intervened, customers
realized the manager was more
and sees that a call is going skilled, so they wanted to continue
badly, what should the talking with the manager.
• If managers intervened soon enough
manager do? to save the call, sellers didn‟t realize
their mistakes.
• If managers waited until the call was
failing, the sale was lost and so was
the manager‟s credibility.
©2010 Neil Rackham ©2010 Neil Rackham

Don’t Mix Selling and Coaching Station Break

Coaching Call

What kind of sales calls

Coach
If it‟s the kind of call the
seller should be able to
handle, better to stay
quiet, let it fail and learn
lessons from it.
©2010 Neil Rackham
Sell are best for skills
coaching?
If something unexpected
happens, or if it‟s a big
opportunity, forget
coaching and give 100%
of your attention to
selling.
©2010 Neil Rackham
What Kind of Calls? Station Break
Your people will set up . . . But for coaching you need . . .

Closing calls Calls earlier in the sales

cycle
How should you treat your
Safe selling situations
top performers
Tough calls
differently?
Calls with moderate
High Potential calls potential

Calls where they sell,

Calls where YOU sell you coach
©2010 Neil Rackham ©2010 Neil Rackham

Managing Top Performers: Survey

Results Station Break
“She gets away
“I keep the with murder – and
company off my that‟s OK”.
top guy‟s back”.
Why do top performers
“He takes my leave the company?
“I consult my two parking slot and I
top people on every don‟t complain”.
key issue”.
What do you mean
„manage them‟?
They manage me”.

©2010 Neil Rackham ©2010 Neil Rackham

Exit Study of High Performers Station Break

• Poor performers are most likely to
leave because they are fired, they
don‟t like co-workers or they feel Your top performer tells you “I
pressured. want three day weekends, so I
• Average performers are most likely won‟t come to work on Mondays.”
to leave because of pay and working
conditions. What do you do? And how would
• High performers are most likely to you handle other salespeople
leave because they are dissatisfied when they complain?
with their manager or because they
don‟t have control over their
activities. [But they tell you it‟s
because of better opportunities
elsewhere].
©2010 Neil Rackham ©2010 Neil Rackham
Managing Top Performers: Survey
Results
• Top performers are like gold.
Give them freedom.
• Many good managers say
“My job is to keep the
Company off of the back of
my top performers”.
• Processes and systems are
often resented by top
performers, who feel
controlled. You must make it
easy for them.
©2010 Neil Rackham
Rewarding Top Performers
• Consultation: use top performers
as advisers to management.
• Recognition: show top performers
are important.
• Trips: President‟s Club or
equivalent.
• Spread rewards, giving more to
top performers, less to poor
performers.
• NEVER try to save by an earnings
cap.
©2010 Neil Rackham
Station Break
How do you reward top
performers without
destroying your budget?
©2010 Neil Rackham
World-class Sales Forces
• Don‟t always pay more but they do
give a bigger slice of the pie to top
performers.
• They recruit only high performers
and will leave positions vacant
before lowering standards.
• High performers are offered non-
financial rewards such as
recognition and status.
• Managers bend the rules to keep
their top performers happy.
• Poor performers are weeded out
quickly.
©2010 Neil Rackham