Sales people are the wealth generators for every business. So why are most sales teams allowed to be ‘just average’?
McKinsey’s Amazing Discovery
Since McKinsey carried out their original War for Talent Research back in 1999, it has been recognised that high-performing sales people deliver significantly more revenue per head than even just average performing sales people. McKinsey research showed the difference between average and high performers to be 67%; SalesAssessment.com’s own research shows that it can often be even higher than that.
This is not the real issue though!
The real issue is the fact that statistically 50% of any sales team, recruited through ‘non-scientific analysis’ or in other words ‘normal interview processes’ will be at best average, at worst terrible!
The secret to breaking through the Final Profit Frontier should by now be obvious – hire high-performing sales people and remove below average sales people.
Ahh! If only life were so simple.
Why Don’t Companies Keep Only the Best Salespeople?
There are always flip sides to the obvious, such as the fact that high-performing sales people can be perceived as ‘disruptive’. Why is this? Because they expect the organisation to ‘step up’ and operate at the same level at which they operate, and unless a business is prepared, this can cause more problems than benefits.
The other main challenge is fear.
So many organisations are afraid to ‘rock the boat’ where something as critical as the sales force is at stake. Why? Well, until recently there really have not been the robust, reliable and valid tools available to enable organisations to be comfortable ‘taking the risk’ of changing the status quo in the very team that keeps the company in business.
That has now all changed. There are now tools out there that deliver the same kind of robust analysis of sales talent, as you may apply to a production line, or the accounts of the firm.
In a recent article in the International Journal of Sales Transformation Harvard Business School’s Dr Frank Cespedes said: “Talent related issues are indeed getting more attention in sales. Companies are more aware, through software and other tools, of the big variance in performance among salespeople in their organisations, a variance typically much wider in sales than in other functions.”
SalesAssessment.com’s own research shows that the variance can truly be massive, with high performers delivering up to double the revenue of an average sales person, while low-performers trail woefully in their wake with sometimes less than 30% of the revenue of even an average sales person.
Improving Revenue by Sales Talent Assessment
This is where the latest sales specific assessment products come into their own. Using a well-constructed, reliable, and proven product such as Sales Talent Assessment from SalesAssessment.com, organisations can now focus on hiring, developing and, where necessary, redeploying sales talent to drive up revenues.
It’s a fact, reliable assessments lead directly to revenue improvement, and it’s the revenue improvement that delivers the ‘magic’.
Reliable and sustainable growth in revenue, for minimal extra cost is where the ‘magic’ happens. It doesn’t have to be a big bang. Remove a few of the very low performing sales people, after assessment and interviews show they are low performers, not just ‘non-motivated’ sales people; replace them with even just above average performers, and you have started to create the ‘magic’ with hardly a ripple on the pond.
Now use the assessment data of the ‘mid ground’ sales people to develop a few people’s capabilities. There is an evidential link between a candidate with higher capabilities, and sales people who deliver higher revenues.
OK so far. No real stress, but already the revenues have (sustainably) ticked up one or two percent, with no increase in costs – so here’s the start – one or two percent that drops straight through to at least the EBITDA line!
Now, repeat the process with a couple more sales people and watch the ‘magic’ really take hold. Another one or two percent sustainable revenue increase, for no extra cost… and the cycle repeats.
Many of our clients have been doing this for 5 or more years now. Each year driving up revenue for no (or marginal) extra cost – each year a bit more profitability drops to the EBITDA line, and in no time, that is dropping through to the bottom line. Up goes NPV (free cash); up goes Shareholder Value.
Even more important – up goes the business’ confidence to address issues within their sales talent… so maybe by year three, they are addressing a greater proportion of their population and so the profit clock is ticking up faster – yet always sustainably.
In the same article in the International Journal of Sales Transformation referred to earlier, Andrew Dugdale, SalesAssessment.com’s founder said:
“While the experts agree that finding and optimising the right talent for the right role is key, past approaches have tended to be flawed. Talent management is a complex multidisciplinary process, and one that is generally not well understood.”
When asked about whether there was a place for assessment tools in the hiring and development process [of sales people], Dr Cespedes said: “Yes, there is, and the assessment tools for sales hiring are getting better”.
He goes on to say:
“There is now 60 years of research to show that the traditional way of hiring, promoting and developing sales people is flawed, by constantly demonstrating a low correlation between how candidates are assessed in interview versus their actual performance on the job.”
This is the gap that is bridged with well-constructed and proven Sales Talent Assessment products.
For more information on breaking through the Final Profit Frontier (or for hiring or developing your own sales talent) get in touch with SalesAssessment.com and see how to make this work for you and your firm.