lifetime value ebook_04012015_final

FWD1

LIFETIMEVALUE

Rethinking: The Lifetime Value of a Sales Rep

http://www.savogroup.com

BACK FWD2 Rethinking: The Lifetime Value of a Sales Rep

Rethinking: The Lifetime Value of a Sales Rep

The Revenue Conundrum

There’s a mysterious force at work in the B2B selling environment that’s stymied

even the most seasoned marketing and sales leaders.

It’s something we like to call the Revenue Conundrum. We set revenue, booking

or quota expectations with our constituents – employees, shareholders,

advisors, the market – and then either have a difficult time meeting them or fail

to achieve them at all. But we’re giving it our best effort…we’re going all in. So

what’s the issue?

We’re not maximizing the lifetime value of our sales reps The lifetime value of a sales rep = the amount of investment we make in the

growth and development of a salesperson with the hope of future return. We’ve

been so focused on enabling our newly self-empowered customers, and feeding

them content on their way through their buying journey, that we’ve neglected to

do the equivalent with our salespeople.

We have not invested the time or resources to understand the unique needs of

sales learning in the context of supporting the buyer’s journey. And now we’re

flailing around trying to meet our numbers.

In this eBook we’ll look at: • How we ended up in the predicament

we’re in;

• The complicated and varying landscape of today’s sales reps;

• The stages of sales competency and what they mean for operationalizing revenue initiatives; and

• How to solve the Revenue Conundrum by increasing the lifetime value of new sales reps, and ultimately, improving revenues.



What’s the problem in today’s B2B

selling environment that’s creating

such a mismatch in the revenue

expectations that we set and the

results?

We’ve all seen the headlines and

felt the shift in the behavior of

buyers. They’re in charge now.

They are doing more research,

self-education, networking, and

social intelligence gathering on

solutions to their problems long

before they ever engage directly

with us.

This has forced us to

fundamentally shift how we

market and sell our products

and solutions, and has led to

the creation of a $3B marketing

automation market that gets

us out in front of buyers before

they’re active prospects. To feed

that $3B market, we have also

spawned another market of at

least $5B spent on customer-

facing consumable content that

we’ve generated to educate and

draw those buyers toward us.

And we’ve gotten so good at

automating this new class of

communications and plying our

unsuspecting prospects with

quality content that corresponds

directly to their buying journey,

that we’ve all but guaranteed that

they’ll choose us when it’s time to

make a decision. Right?

Almost. But not quite.

The Creation of the Conundrum: What We Got Right

57% of the buyer education process is complete before a sales rep is involved*.

*

$3B Marketing Automation Spend: Inbound, web, digital, social, outbound, etc.

$5B of buyer-facing consumable content is generated.



The Creation of the Conundrum: Where We Veered off Course

What about that other 43% of

the buyer’s journey – that time

between when the buyer engages

with one of our salespeople and

actually makes a purchasing

decision?

With only 46% of “forecasted

to close” deals actually closing

– the worst percentage for this

stat in the life of this particular

survey – it’s apparent that the

most important part of the buyer’s

journey is greatly underserved.

This is the part that is directly

managed and influenced by our

salespeople.

We’ve spent billions of dollars

creating the right content to

educate buyers in the first 57% of

their buying journey but haven’t

put the same time and attention

into creating the right content for,

and educating, our salespeople.

The difference in enabling a

salesperson is completely different

than enabling a buyer and we’ve

lost sight of what it really takes.

46% of “forecasted to close” deals that actually close*.

*



Sales training used to be all about making reps

the smartest people in the room about our

products and the business problems they solve,

and teaching them the skills to negotiate the

price and details of an agreement.

That was pretty straightforward. But today’s

reps need to understand how to traverse the

political landscape, use technology to nurture

all of the people who are going to be part of

the consensus sale, and educate buyers in the

context of their journeys.

To complicate matters further, marketing,

sales ops, learning and development, and sales

leadership – the people who are essential to

helping salespeople negotiate the new sales

landscape– are often out of sync on how to

make that happen.

A well-orchestrated, integrated, completely

different level and state of training and

enablement is required to help make

B2B sales reps more proficient in what they do.

The Creation of the Conundrum: The New Sales Landscape



The first step in understanding how to enable salespeople is to understand the salespeople themselves. By looking at a human competency model – the stages in which humans learn – in the context of a sales organization, we can see how salespeople progress in consciousness (what they know) and competency (their

proficiency in applying that knowledge).

The Five Phases of Sales Compentency

Phase I Phase 2 Phase 3 Phase 4 Phase 5

Enthusiast Apprentice Practitioner Producer Complacent



The Enthusiast | Unconscious incompetence

• Individual does not know how to do/sell something

• They do not necessarily recognize the deficit

• They must recognize their own incompetence and the value of new skills before moving to the next stage

87% of training is lost after 30 days in a traditional learning environment*

Five Phases of Competency: Phase 1

*



The Apprentice | Conscious incompetence

• Individual recognizes they do not understand or know how to do something

• Role playing and coaching is key

• Making mistakes can be integral to the learning process

47% of companies say it takes 10 or more months for new salespeople to become fully productive*


*



The Practitioner | Conscious competence

• Individual is confident they know the information

• Demonstrating the skill or knowledge requires concentration

• Individual is ready to hit the field

>90% of sales reps make quota when reinforced with coaching and technology*


*



The Producer | Unconscious competence

• Speaking about the solution is “second nature” and performed easily

• The individual may be able to teach others

58% of your revenue is generated by the top 20% of your salespeople*


*



Complacent | Disengaged competence

78% of successful 2nd and 3rd year sales reps’ revenue comes from one or two products*

• Individual has achieved success and holds on to what is familiar

• Reluctant to take on new approaches or viewpoints

• Unknowingly influences others by behavior


*



Now let’s look at how long sales reps stay at any given company. The average tenure of a salesperson from the time they start to the time they leave is less than two years. Inside sales is even worse, with the average stay between 12-15 months. What about the sales managers and VPs of sales responsible for nurturing those salespeople through their journey? Nineteen months. They’re at the company less time than the reps they’re trying to train and grow.

Determining the Lifetime Value of a Sales Rep

Sales Reps (<2 years)

Sales Manager (19 months)

Inside Sales (12-15 months)

Average Tenure

0 6 12 18 24

The math does not

work



If we consider that it takes 8-12 months to ramp a new sales rep, we start to see the issue. How are we turning enthusiasts into producers if they’re leaving before or shortly after they reach that stage? Therein lies the source of the Revenue Conundrum.

Determining the Lifetime Value of a Sales Rep

Time to first revenue

Average 18-24 Months

REVENUE PRODUCTION

ELAPSED TIME



So how do we solve this

equation to ensure that we

outperform or at least achieve

the goals that we’ve set? We

need to move our salespeople

from enthusiasts to producers

as quickly as possible and keep

them from seeking greener

pastures in that high-churn

time between practitioner and

producer. And we need to keep

producers inspired so they don’t

grow complacent. We can’t

afford not to.

Research shows that on average,

it costs $135K per sales rep,

not including their salaries and

recruiting fees, to equip them

and enable them to sell. If we’re

not getting them through to the

higher producer stage, we are

running at a negative return for

our sales rep investment.

We have to think about our

salespeople in the same way

as we do our customers. Every

year we make a huge effort to

get more and more value from

our customers – lifetime value –

by launching new products and

services to increase revenue and

share of wallet.

What if we did the same for our

sales organization? Our products

and services would take the

form of coaching, marketing

support and training that would

ultimately increase the lifetime

value of our reps.

Solving the Conundrum



Operationalizing Revenue Initiatives: One Size Does Not Fit All

Given where reps’ knowledge and

skills are at in each phase of the Sales

Competency Model, one-size-fits-all

enablement – where everyone gets the

same coaching, training, certification

and marketing materials – is ineffective.

And given that sales managers are

busy with their own jobs and aren’t

always in for the long haul, leaving the

growth and development of sales reps

to them alone is ill-advised. Nurturing

and enabling sales reps has to be a

team effort including marketing, sales

ops, learning and development, and

sales leadership. Each of these groups

has a part in creating and managing

materials, tools and training specific to

the rep’s stage of competency.

For the enthusiasts , for instance,

the training and tools should focus on

why change is needed, and certification

should be based on their comprehension

of the fundamentals that will carry the

conversation forward. If marketing

supplies them with product collateral,

and training puts them through

situational sales training, they’re

going to jump to the conclusion that

what marketing provides is useless

and the training will go in one ear

and out the other.

This logic applies to all of the stages of

the Sales Competency Model. With

apprentices , they’re off and

running and are ready to be coached on

the what and how of their jobs. For

practitioners , they know what

they’re doing and how to do it, but need

support from a situational perspective.

In the case of producers – the

nirvana of sales competency – they

need a constant flow of new insights

and information and on-the-fly

situational support to keep them

motivated and from slipping into

complacency. And for those

salespeople who are coasting in

complacency , they need

inspiration and refreshers on client

pains and changing market conditions.



One Size Does Not Fit All



If the Sales Competency Model and the associated tools and training is the ideal, how far off are we? Let’s first

consider the environment we’ve created for our sales reps. We’re launching new products, creating new channels,

implementing new systems and technologies, changing methodologies, acquiring a new product, asking them to work

with new reps or shadow senior reps, rolling out new marketing campaigns, and any number of other programs. These

initiatives alone would make any sales rep crazy.

Then let’s look at what we’re doing to prepare our salespeople for managing the chaos. Only 52% of companies have a

formal onboarding program, so neither the sales reps nor the managers who are supposed to be growing and enabling

them, are equipped to start their jobs. How can we then expect sales reps to fully appreciate and understand our go-to-

customer models and help buyers navigate that last 43% of their journey?

Secondly, only 52% of sales reps and 43% of managers say that the content their company publishes helps improve

sales effectiveness. Is it really that the content is so far off or is it that we haven’t fully understood the context in which

salespeople need this information delivered to them? Lastly, from our own research we’ve learned that just 15% of

companies consistently make collateral and sales tools available ahead of a new product launch. That flies in the face

of logic, let alone sufficiently enabling our reps.

Our Report Card

52% of companies

have onboarding

programs

43% of sales

managers find

content improves

sales effectiveness

52% of sales reps

find content improves

sales effectiveness

15% of companies

provide collaterals

ahead of product

launch

SAVO Maturity Benchmark



Orienting efforts around the unique needs of sales learning in the context of supporting the buyer’s journey is a fundamental shift in how companies operate. In addition to considering the progression of the salesperson’s knowledge and skills, it requires thinking differently about the processes and technologies essential to driving a revenue initiative.

Companies can employ technology to control the complexity of sales reps’ environments and provide visibility into the buyer’s journey by:

Offering anytime, anywhere directed instruction

• Setting the foundational and functional context.

• Delivering real-time coaching when the coach isn’t available, thereby moving reps to the next phase of competency.

• Establishing a culture of continuous learning that extends beyond the formal onboarding program.

• Offering access to SMEs and other functional experts, connecting teams and colleagues in similar

stages of the sales competency lifecycle and opportunities.

Enabling reps to “learn like they earn”

• Transitioning to real sales situations when they’re ready.

• Mapping assets, resources and coaching to opportunities in the CRM system.

• Defining processes and assigning them to different sales reps at the right time.

• Continuing the onboarding process by providing reinforcements in the context of actual selling

situations.

The Sales Foundation: Solving the Revenue Conundrum



Providing situational-specific content and tools to align to buyers’ needs

• Letting the engine predict what’s needed and when, getting the sellers the right tools – videos, collateral, case studies, battlecards, etc. – at the right time.

• Supporting guided selling with situation-specific content and tools.

• Helping sellers master competencies, then continuously reinforcing them in the context of opportunities, and giving reps strategic support through playbooks and go-to-market strategies.

Monitoring, managing, intervening and coaching when initiative progress dictates

• Using insights into the sales lifecycle to intervene if necessary and make adjustments.

• Giving managers a better feel for what’s working and what’s not to make more informed decisions.

• Enabling in-context and opportunity-specific coaching.

• Providing managers and sales leadership with a centralized, common dashboard with at-a-glance views of processes and opportunities.

The Sales Foundation: Solving the Revenue Conundrum (continued)



The investment we make in the lifetime value of our sales reps closes the gap between revenue

expectations and reality. Think about the financial implications if you could:

• Reduce the average ramp time of your new sellers and the launch

time of all of your marketing initiatives by 10%

• Turn even 5% more of your practitioners into producers

• Improve revenues by 2-5% by better equipping your reps to

draft into the buyer’s journey

• Control the last 43% of the buyer’s journey with greater

predictability and success by better empowering your sales teams

Any one of these small improvements in productivity, sales rep longevity and onboarding can give us

a much needed bump in revenue. Achieving them all could eliminate the flailing to meet our numbers

forever and set us on a trajectory of unprecedented growth. Maximizing the lifetime value of our sales

rep is the answer to the riddle that is the Revenue Conundrum.

The Signs of Success


BACK FWD21 Rethinking: The Lifetime Value of a Sales RepSAVO and Smarter Selling are trademarks of SAVO Group Ltd. All other trademarks are the property of their respective companies.

©2015 SAVO Group Ltd. | +1 312 506 1700 x3 | savogroup.com

+1 312 506 1702 | savogroup.com

http://savogroup.com


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