Why Isn't There A Dominant Sales Training Company?
I delivered a web presentation today to much of the team at Corporate Visions. (It’s pretty smart of their executive team to have outside experts present.) I chose to speak to them about ESR’s view of the current state of sales training, conclusions we’ve drawn from that view, and imperatives that are required for sales leaders and trainers to increase sales effectiveness going forward. (I’ll be delivering the keynote around this same topic at SMT’s upcoming conference in Orlando next month.)
During the Q&A, Joe Terry, president of Corporate Visions, asked me why the sales training industry is so fragmented—why there is no clear industry leader.
This is a subject that always comes up when investors considering funding the acquisition of one training company by another come to ESR for advice.
Here are a few of the reasons that there is no dominant player in that space.
The barrier to entry is minimal.
Anyone can set up a website and call themselves a sales trainer. And they do. Unlike other professions, there isn’t a certifying authority, an exam to pass, or any minimum requirements for experience, knowledge, or competence. Contrast sales training and practicing law from a store-front—another fragmented industry. (In fact, law firms are considerably more so, with Baker & McKenzie topping the list at 3,300 or so lawyers. Here’s a fact: 50% of the 1.14 million lawyers in the U.S. are practicing alone. There aren’t nearly that many sales trainers.)
Contrast being a sales trainer to being an auto mechanic, a plumber, a hairdresser, a pilot, a teacher, or an accountant. Those professions all require certification or a license from some regulating body. Not so for sales training. Barrier to entry? Zip. (I’m not suggesting that one-person training firms don’t deliver value. Many do. But many, many more don’t. I read the articles and blog posts. There is a lot of wrong information being dispensed out there and it continues to inhibit real progress from being made in the area of sales effectiveness.)
So, you’ve got a situation where there are many hundreds of sales training firms, some with one or two people, all going after their piece of the same pie. And the pie is getting smaller, not larger, as more corporations are bringing sales training in house, and/or reducing sales training budgets.
The job just isn’t getting done.
Buyers of sales training, unlike buyers of most other critical business products and services, tend to depend more on gut feel, tapping into their business network, going with whom they know, and name recognition rather than a formal evaluation approach to select a vendor. That often leads to selecting the wrong provider. And that leads to the customer not getting what they need.
So instead of a vendor having many repeat customers for 5, 10 or 20 years each, we find companies regularly switching vendors, seeking one that they believe can finally get the job done. I’ll be the first to acknowledge that many vendors, small and large, do have long-term clients, but let the fragmentation of the industry speak for itself.
Companies don’t invest enough in sales effectiveness.
Companies, in general, aren’t investing enough in a strategic approach to sales performance improvement, including training. Some large percentage of sales leaders are still—after all the research that has proven that this is the wrong approach—looking for the easy way out. That often takes the form of nothing more than a day or so of training a year for their sales people, just so they can check the box. It’s hard for a sales training company to build a substantial and ongoing revenue stream from that.
What does this mean for buyers of sales training? They’ve got much more work to do to find a partner with whom they can collaborate in a long-term relationship, which would be profitable for both. It would be so much easier if there were only ten $100 million players and a bunch (not hundreds) of smaller ones. But that’s not going to happen anytime soon.
Filed under: Presentations, Sales Training Companies
Nice post Dave. You raise a lot of great points, each worthy of more in depth discusssions.
I particularly like the discussion about companies not investing enough in Sales Effectiveness–taking the easy way out by the annual training meeting. Some years ago, systems thinking was all the rage (in about everything but sales). We need to bring systems thinking back into sales leadership, focusing on the root causes and the total problem, not just one aspect or a band aid solution.
While, most of this is a sales leadership issue, I think the vendors of sales training can take a more responsible position, as well as finding new services revenue, by getting management to focus on a more comprehensive approach to sales performance management. Perhaps by doing this, helping their clients develop sustained performance improvement initiatives, clients will look less to “programs du jour” or the most provocative thing in fashion.
Thanks for the post, as usual, you got me thinking about a lot of things.
Dave, I’ve often wondered about the question you present today. I had the chance to speak to sales leaders about their sales training choices (vendor, in house, nothing, etc) for a couple of years and it was so eye-opening. As a sales professional I know what approaches actually changed my behavior and results – it is frustrating to see leaders make decisions that hinder that outcome. Keep up the great work with ESR — the salespeople of the world will thank you!
Hi Dave – I think your point about the lack of long term client relationships for sales training firms is important and I’d love to see you delve deeper into the issue. It seems to me that many, many sales training firms provide a sound process that companies can use and build on, yet client firms seldom get the results they want. Part of it is a lack of investment in training by these clients, but another part of it is expectations. I believe that many companies still feel that sales is “magic” and that it is driven by personal attributes. If they understood that sales is a process, much like there other business processes, they might (MIGHT) change their expectations and look at sales training with a longer term view. Until the perception of sales is changed, this problem will continue.
Thanks, Dave.
The vendors are in a tough spot. The very people they sell to (most often VPs of sales) are the ones who often can’t, or aren’t willing to, take a strategic approach to sales effectiveness. It’s hard to go the the VP of sales’s boss and tell them the VP of sales is the problem, not the solution.
On the other hand, only a few vendors that I know of will walk away from an opportunity if the customer doesn’t take what they believe to be the right approach. The rest will take what they can get, even if it isn’t in the customer’s best interests long term.
The bottom line for me is the point I continue to make. Sales is last on line in most companies when it comes to process, measurement, attrition and productivity. The responsibility is with the CEO and board to remedy that.
Thanks, Jill.
There is a lot of blame to pass around when it comes to the state of B2B selling. (See my previous comment to Dave Brock.) With that said, I believe salespeople are last on the list. They get hired into sales jobs they can’t do. Many aren’t trained, supported, coached, or managed with any degree of real leadership.
I’m with you, Keith. Thanks.
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Dave,
Great, thought-provoking post. It raises issues that are close to home for me.
I’m one of the folk who “hung out a shingle”, and for the second time. While not a sole practitioner, I’m providing sales force development, sales training and coaching as a very small firm at present. And even from my perspective, the “state of sales training” is frustrating. From my particular vantage point, the poor quality of much of what passes as “sales training” that’s provided by sole practitioners and very small firms has two sets of roots.
First, many of those who are now offering sales training services were successful salespeople, but never required to build a successful sales organization. That’s key. Making knowledge transferrable and demonstrating successes doing it over time are essential qualifications for anyone claiming the ability to sustainably improve performance.
Second, most top tier salespeople are lifelong learners. In fact, most of those I know have an insatiable curiosity. That’s just as essential for a consultant or trainer. Arriving at one model and believing it will apply universally in every situation is just as myopic as the top performing salesperson who is promoted to sales management and then sets out to create clones of himself. That’s one of the most classic early mistakes of newly-promoted sales managers.
Subject matter expertise isn’t enough. In fact, that’s the easiest part. Harder is learning how to coach, to train and to serve as an effective agent for change. One reason that industry-specific sales training (the space most often filled by small firms) tends to be so poor is that little or no effort has been invested to find out how people learn, how new skills are built and retained. So seminars continue to multiply, “secrets” and “tricks” continue to be promoted, and lasting improvement is elusive.
A longer term relationship between the training / consulting organization and the client company is essential if the disciplines, the suite of selling skills and the business literacy essential to a very high performance sales organization are going to be developed and retained. Only within that kind of relationship can a solid sales process be built, and the essential tools and resources developed for each stage in that process.
Like you, I don’t see change on the near horizon. But some of the smoke is being blown out of the room. It is now easier for potential clients to find and talk with others about the real value that’s being created, and whether sustained improvement is resulting including measurable results. That’s undermining the old training model of running a big event, selling presentations and curriculum up front and providing nearly nothing afterward. And that’s a good thing.
great post and great topic, Dave.
On your 2nd point, I believe there is a mutual (vendor and sales exec) lack of commitment on training execution following training delivery.
Perhaps a fourth point is that customer needs for sales training vary tremendously.
Selling houses is different than selling cars which is different than working a retail floor which is different than selling enterprise software which is different than selling a brand new technology/capability that requires strong education and demand creation – since most training vendors do not meet the “one size fits all” category, then it is in the customer’s interest to partner with a vendor that can (a) get the job done AND (b) be the best fit for their type of sales environment/culture.
Point taken, Eric. Thanks.
Dave, very good synopsis of the state of state around sales training. Sales training consultants in most cases simply train sales people and have little expertise in being able to work with organizations to help them establish sales philosophies, systems for long term development and performance management.
Also, seekers of sales training rarely have any idea of what is needed to have a sales force move to the next level. Training is just the start. There has to be reinforcement of the training through effective sales management..
I think there is a distinction between sales training, learning the skill of selling, and sales skill development, using the skill effectively. Development is where a long term, collaborative relationship with a sales training consultant is valuable.
Three great points, Andre.
Thanks for joining the conversation.
Dave:
It is interesting to compare the sales training industry to another, similar industry: the six sigma training industry.
– Both are based on a similar model: Valuable IP is delivered predominantly via classroom (with some self-study), supported by field and management coaching.
– the IP is intended to change the way people think and behave, so it requires implementation (driving the need for field coaching).
– Success also requires changes to the way people are managed, so managers also need to improve, not just workers (driving need for management coaching).
These are close similarities between those two industries.
You pointed out three reasons for the fractured state of sales training:
1) low barriers to entry
2) the job isn’t getting done
3) companies don’t spend enough on sales effectiveness
*Low barriers to entry*
There is also a low barrier to entry for the six sigma industry, no governing authority, and although there are a few somewhat sizable players, the industry is dominated by lots of small shops. (Both industries have been hit pretty hard by the recession, of course.)
*The job isn’t getting done*
Judging by the success rate of six sigma and lean initiatives in companies, you could say they don’t do a great job of “getting the job done,” although there are enough verifiable, quantifiable successes that momentum keeps going in the market.
Six sigma and lean aim to transform a company’s management approach to a more scientific method, based on data and evidence. Helping organizations make this transition successfully is one of the most difficult kinds of consulting there is: it requires getting managers and senior executives (not just employees) to think in more productive ways.
In places where companies have successfully implemented lean and six sigma, this job gets done. However it requires a collaborative effort between the consultant and the client. It cannot be achieved by either one alone.
This, too, is a similarity between the two industries, I think. However, I believe this is where the similarity stops.
*Companies don’t spend enough on sales effectiveness*
IMHO, there is a good reason for this, Dave: companies have almost no way to measure ROI on their investment in sales and marketing. No hard data. How are they supposed to objectively determine if revenue problems are caused by the market, the marketing, the sales force, or the product? And, if they can identify these, how are they supposed to know what to do about them?
As evidence, consider the Harvard Business Review issue that was devoted to professional selling a couple of years ago. There wasn’t a process measurement anywhere in it. The issue was filled with floating terms (for example, “it is better to sell solutions vs products”). In fact, the editors and writers seemed to think they didn’t need to define their terms, and the problems of measurement didn’t even exist. This was very disappointing coming from an academic institution that is supposed to be devoted to discovering scientific truth.
If you were the president of a company, the one held accountable for ROI, for investing the company’s money, you too would be reluctant to throw money to people who do not define their terms and base their decisions on gut feel, because they are unable to trace their conclusions to any observable evidence or data.
In all likelihood, you would have had experiences in your past where you believed in a market, a concept, and took a risk to throw money at it, only to get burned. Executives should be expected that executives would be reluctant to invest in unmeasurable things like “sales effectiveness,” They should not be criticized.
*Sales Effectiveness will Take Off When it Can be Measured*
Gauging the return on investments in manufacturing production is easier to do, of course, because the value and the waste they produce is tangible. You can see it and measure it. Changes to the production system can be readily traced to measurable results.
The sales and marketing world produces value too. The main difference is the value created in sales and marketing is intangible. As example: A salesperson invests three months working with a national account on a big proposal, but the deal hasn’t closed. OR: A marketer invests three months on a campaign for the launch of a new product, but it isn’t launched yet. How do you know if they have created value, or waste?
The fact that the value they may have created is intangible does not mean it is not measurable! It only means we must devise a means of measuring it. Bacteria used to be invisible too, until people devised ways of seeing them.
Companies need a way of identifying what creates value and what creates waste in sales and marketing. They need a way of tracing it to observable evidence, something everyone involved can recognize and identify, something that can be proven with a track record and statistics.
Once they have this, they will be able to translate operational terms (such as five hundred sales opportunities of a certain quality) to financial terms (such as a cost of $5 thousand dollars per sales opportunity). Changes to the production system will be readily traced to measurable results. They will be able to reliably predict the revenue value of “opportunities in process.”
Then, the best people in the best companies will be able to correlate their marketing and selling actions to customer results in ever more precise ways. They’ll be able to pro-actively manage their work to continuously improve productivity. They’ll figure out how to remove more waste and how to get more of the right customers to respond to their offers.
They’ll be able to diagnose what is actually wrong with their sales and marketing, and apply training only when their problems are caused by a lack of it.
When that happens, the nature of the industry will change, and for the better.
Michael Webb
http://www.salesperformance.com
Hello Dave,
As usual I find your opinions not only valuable but correct.
I have come to realize that most, if not all, of the sales training out there is good. There are going to eventually be some dominant companies surface. I am convinced they will be the ones that have the best implementation strategies. Not just the best, but from organizations that are passionate about insisting implementation go along with training.
After all, I believe if I can’t sell an effective implementation strategy, I might as well have delivered sub standard training at the start. Of course no one is willing to do that, so why is creative implementation, that doesn’t rely on the local sales manager, included every time? I think the answer is short term profits, which, to your point, is the reason there is currently no dominant sales training company.
By the way, we aim to change that and so far it has been at the expense of short term profits. We are nevertheless going to stay the course.
Thanks for your insight.
Best Regards,
Bob Branson