Do the top 20% really bring in 80% of the bacon?
The most recent issue of Chief Executive magazine features an insightful piece on “Raising Sales Force Effectiveness,” by the CEO of the Chally Group, and Ohio-based firm that focuses on sales force potential and performance measurement.
Some of the conventional wisdom that’s debunked in the article is worth noting, including:
- Myth: The Internet is making sales professionals obsolete. Reality: Hard data shows that sales professionals will become increasingly important, particularly in B2B, because purchasing often involves a decision to outsource. As a replacement for an internal function, sales professionals are often required to act as surrogate managers to the client companies they serve, and to protect their interests within the vendor’s organization. Lesson: Build your sales force with people who are focused on customer service, not simply on making the sale.
- Myth: Price, quality and perceived value are the most important factors influencing customer loyalty. Reality: 39% of customer loyalty is based on sales force performance, before and after the sale; 22% on perceived quality / value; 20% on breadth of offering; and 19% on price. Lesson: Sales force training and development has a tangible ROI.
- Myth: The Pareto Principle suggests that 80% of a company’s revenue is produced by the top 20% of the sales force. Reality: At most organizations, the top 20% of producers generate little more than 50% of all sales revenue. Lesson: Your best sales reps may not be as valuable as they think, but it may be worthwhile not to de-bunk the 80/20 myth.
- Myth: Sales productivity can be improved by teaching the successful techniques of the top 20% performers to the rest of the sales team. Reality: Training lower performers only yields an additional 5% gain. This compares with nearly a 12% gain achieved simply by replacing the bottom 20% of salespeople with average or above average performers. Lesson: Cut your losses early, and throw out the dead wood.
- Myth: Most client defections are anticipated and well-deserved. Reality: At most companies, 60% of lost customers come as a surprise, and 80% of deserting customers rate their vendor as good or very good. Lesson: Assume that competitors are always knocking on your customers’ doors, and to act accordingly.
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