1. First we look at inhibitors to winning the individual deal.

• Can’t compete at the lowest price
• Don’t really understand the customer’s buying process
• Don’t have a competitive product
• Don’t understand/can’t control deal timing
• Don’t meet all customer requirements
• Don’t sell to a qualified prospect in our sweet spot
• Our salespeople don’t have the skills required to manage and win an opportunity
• Our salespeople aren’t consultative enough

2. Next we look at the sales infrastructure level.

• We don’t have the right tools: messages, ROI models, collateral, website, etc.
• We don’t have enough qualified sales support people, e.g. engineers
• There are imbalanced territory assignments and/or sales channels. Hunters versus farmers, inside versus outside, etc.
• 20 percent of our reps delivering 80% of the revenue
• We’re not employing the right (or any?) sales enablement technologies
• We don’t have enough qualified leads
• We don’t have a methodology/process
• Our compensation and incentive structures don’t work
• Our people need sales training
• Our forecasts are way, way off

3. At the company level:

• Our reputation, financial viability, brand awareness insufficient or challenged
• Our company’s culture doesn’t support the sales function
• We have customer satisfaction problems
• There are weaknesses in the senior management team
• Our cost base relative to competition prevents competitiveness
• We can’t produce/deliver what we sell
• We are challenged by internal communications
• Difficulty maintaining margins

4. At the external/systemic level/the outside environment

• A challenging economy
• Industry buying trends led by powerful procurement strategies
• What the competition is doing
• Public sector bid requirements/restrictions
• Localization for multi-national corporations

My questions to you are these:

1. Have you done a similar exercise?
2. Do you know, specifically, what the inhibitors are that prevent effective selling in your company?
3. What’s your plan to overcome your selling challenges?

©2011 – Dave Stein/ES Research Group, Inc. – All Rights Reserved

Mike Meisenheimer is with NewSigma, LLC, and writes a blog on compensation for salespeople.  I was speaking with Mike last week on the phone and thought I’d share the answers to some of the questions I had with you.  Here’s the interview:

Mike Meisenheimer: In addition to the regular challenges around measures, mechanics and pay levels, we’ve seen a greater emphasis on goal setting, or trying keep sales teams motivated with goals that suggested market growth in a contracting market. Sales organizations have struggled with their philosophy around goal alignment, that is, between the individual and the company, and variable pay. Should we be paternalistic, by reducing goals or providing pay guarantees, or let the salespeople sink with the rest of the company, at the risk of further sales erosion and the potential of people leaving when the market improves.

DS: Any emerging sales compensation trends in 2010?

MM: In 2010 we’ve really seen more companies focusing on revenue growth, and investing in the sales force for growth. While things aren’t turning out to be as bullish as people may have thought would be the case nine months ago, many companies are more profitable now, so no regrets. We’ve seen a significant increase in investments for supporting the sales force, including administrative and operational headcount, and systems. While the economy is pretty fickle, sales compensation investments are ramping up steadily.

Another trend this year, going back to the issues of goal alignment and pay philosophy, includes improved plan processes and governance. This is especially true in the banking industry and businesses feeling burned by plans and policies that were not in line with a contracting business environment.

DS: We often hear companies say that sales people don’t understand their paycheck, going on blind faith that incentives were paid out properly. Have you seen similar situations in your work, and if so what is your opinion on how to deal with this situation?

MM: Unfortunately, this a more common occurrence than you might think. It is not enough to simply have a good plan design. There needs to be a tight linkage between the way people learn about the plan, understand how they are doing and connect the dots with their final checks. We see three common mistakes: 1) Under-merchandising the plan launch. Rather than a robust strategy that involves sales management and engages the field, an email comes from corporate; 2) Limited progress reporting; plan participants don’t receive regular updates on their performance; and 3) Lack of detailed incentive reporting; incentive statements should reflect performance against each measure in the plan, earnings, any adjustments and the associated transactions. Certainly improved automation can help. However, in our experience, the companies that seem to be most effective employ a well defined and well orchestrated series of communication and reporting activities throughout the year.

DS: Are there any guidelines for how often should comp plans be designed and re-designed?

MM: At a minimum, companies should evaluate their sales comp plans annually to ensure plans are in line with the business requirements. Most of the firms we work with are dynamic – new markets, new products, acquisitions, reorganizations. About 70% of the companies we survey on this question change their incentive program each year because of changes to the business plan. More generally, plans should be evaluated and (potentially) redesigned as business conditions and sales priorities evolve. With improvements in automation and the accompanying flexibility, we’re also seeing an increase in the number of companies that make mid-year plan changes. Whatever the frequency, the important thing is to define and follow a structured analysis, design and launch process that engages cross-functional stakeholders and reflects the priorities of the business.

DS: There has been quite a bit of press around software solutions for compensation administration; are companies really finding a positive ROI?

MM: Based on recent survey data, between 70% and 80% of companies report a positive ROI within the first 12 months of an ICM investment. There are other benefits, such as the ability to measure and test coverage model changes, that management can’t easily quantity but have strategic implications. We currently track approximately 25 vendors offering solutions in this space. Due to the variability in how companies pay their salespeople, complex rule sets (e.g., splits, product overlays, global accounts), and typical data challenges, the implementation of these systems can be time consuming and difficult. But for those companies reporting tangible benefits, they tend to classify them into one of three categories: 1) pain avoidance or gap closure — an example might be an improvement in accuracy rates or the time to process payments; 2) aspiration, such as improved reporting; and 3) regulatory or compliance.

DS: What should sales leaders and their compensation managers be thinking about as they prepare for 2011?

MM: For those sales leaders having made investments in their sales forces this year, they need to demonstrate a positive return, or show some evidence that positive ROI is forthcoming. Similarly, compensation managers need to assess the degree the sales compensation program is in line with expectations. If they haven’t started already, management should be evaluating the plans and support processes given current requirements and next year’s strategy.

We’re advocates of starting the plan evaluation and design process early, since modeling and launching program changes usually takes longer than management anticipates. We always hear managers say “never again” after rollout of their plans comes weeks late. Well, now is the time to make good on that promise. Sales leaders also need to keep stay current on what’s motivating their salespeople, and what’s distracting them. Like you said, it’s been a tough couple of years for a lot of sales teams. Disengagement and distraction has a direct impact on sales productivity and profitable revenue.

DS: Thanks, Mike.

Photo source:  Fotolia – Andrea Danti

I met Jeff at the National Collegiate Sales Competition a few years ago, where we were both judges. He was just finishing the second edition of Mentor. I read through every page of the first edition, only wishing I had this sage advice when I was a young, inexperienced sales manager.  In fact, The Sales Manager’s Mentor is my all-time favorite book on the subject of sales management.  I recommend it to sales managers all the time.

The only regret I have about The Sales Manager’s Mentor is that it never received the accolades it deserves.

I’ll write about Jeff’s new book in two weeks, when it’s published.  Stay tuned.

The high point of the yesterday’s workshop event in Dublin was the CEO Forum.  My guests were (left to right) Gerard Keenan (Keenan Systems), Bernie Cullinan (Clarigen) and Dermot Farrell (Lakeland Dairies).

They each shared with the group their unique challenges with respect to exporting their products internationally.  Some areas covered were credit management (Ireland experiences most of what the U.S. does, and not long after), the challenges of employing both a direct and reseller channel, and the cultural challenges related to selling into other countries.

Today’s CEO forum included (left to right), my guests, Helen Ryan (Creganna), Gerry Raftery (Dawn Farm Foods) and Ian Bolger (Bolger).

There were a host of take-aways for the other CEOs attending the event.  Here are a few examples:

Q:  How do you adopt your sales process internationally?

A:  Helen Ryan: We modify it to align with how the customer segments or types buy (that’s large versus small entities, regardless of the deal size).  It has much more to do with how they operate as a business than their geography.

Q: As you expand into each new country to use local salespeople or relocate Irish salespeople.

A: Gerry Raftery: Local people are the answer.

Q: Has the employment of the sales process you developed from the International Selling Programme enabled you to sell more effectively with respect to corporate buyers?

A:  Ian Bolger:  With all the training, strategies and tactics employed by big U.S. multinationals, our process has enabled us to stay even.  Those buyers get tougher and tougher each year.

The sales executives reporting to these CEOs are concluding an eight two-day module program.  The 2009 series begins in January.

Many thanks to hosts Claire McBride (DIT) and Eileen Banks (Enterprise Ireland).

I’ll be headed back to Ireland next month to facilitate two one-day workshops as part of the CEO Series for the Dublin Institute of Technology and Enterprise Ireland’s International Selling Programme.  I’ll be working with 60 CEOs and managing directors over the two days.

The topics require a bit of explanation.  Each is a critical capability for a CEO of a small to mid-size company.

In 2002 I was hired to deliver a speech to 300 technology executives in Dublin.  The subject was qualification.  The person who hired me was an executive at Enterprise Ireland—the Irish government agency responsible for the development and promotion of the indigenous business sector. He told me that one of the biggest challenges for CEOs of Irish companies was to NOT get on a plane to America every time their phone rang with an inquiry from a large U.S. corporation. (This executive shared with me that I was hired for this speech because I was the only one of several well-known sales experts that actually qualified him before agreeing to meet with him face-to-face.)  He told me that the lack of qualification was an epidemic.  Fortunately that situation has improved considerably over the last six years.  With that being said, even CEOs need to be able to prioritize their companies’ portfolios of business opportunities, especially in mid- to smaller-size companies.

Hiring of sales executives is critical as well.  Too many Irish companies, in their quest to expand to the U.S. and other countries, hired what seemed to be a strong salesperson/manager.  Many of them didn’t work out.  This has been a significant problem.  Typical: A Dublin-based telecomms company hires a person to commence operations the U.S.  Six months later, after the person has been fired, the company is at least €100k poorer, has lost a year in the international business development component of their business plan, and has probably damaged their reputation for years to come.  Again, I can report real improvement on this front as well.  CEOs in general, have become more discerning, patient, and unwilling to repeat the mistakes of the past.

Back in 2003 I asked a room full of Irish CEOs if they would feel comfortable writing a check to a salesperson for €1 million.  (It’s a standard, unscientific test I give to get a sense of how CEOs measure the importance of the sales function within their organizations.)  I was almost ejected from the room.  The Irish business community then looked at selling very differently than we do here in the U.S.  I asked the same question to last year’s group.  Only one out of 25 CEOs had a problem with it.  More progress.

I’m delighted to be on the faculty of the Dublin Institute of Technology and thoroughly enjoy my professional and personal relationships with my relatively new and growing network of Irish business associates.  I was thrilled when the former New York Consul General for Ireland, with that appealing Irish sense of humor, introduced me to the Irish Minister of Education as “Dave O’Steen.”

What’s really fun is to see these CEOs and the sales executives that work for them, hungry for knowledge, exceedingly coachable, and genuinely passionate about growing their businesses internationally.

If you have an opportunity to buy from, or do business with, an Irish company, please share your experience with me.  I’m really interested, and they’d really like the feedback.

Photo: The Gap of Dunloe (Dave Stein)

During the research process for an article I’m writing, I came across a piece written by Maureen Hrehocik entitled, “Secrets of a Successful Comp Plan.”  Only now do I remember having been interviewed for the article.  I also remember passing the name of my colleague Steve Grossman, a partner with Mercer, along to Maureen.  He is quoted in the article as well.  He’s an expert in compensation, among other areas relating to sales effectiveness.

I am bringing this up because compensation is another dysfunctional area within many companies.  During the past quarter, I’ve been engaged with several clients where “errors of commission” are preventing them from achieving their team and corporate goals. 

There are a number of symptoms of a dysfunctional comp plan.  Here are two:

• Salespeople aren’t selling what the company needs to achieve its corporate goals and objectives.  The best example: a company has a goal of bringing on a 150 new accounts during the year and the salespeople are mostly selling add-ons to existing customers.  On the present course the company will fall far short of the objective. 
• Salespeople are distracted and confused because the products or services they are being paid to sell don’t match their customers’ requirements.  Deals are lost and when deals are won, new customers are dissatisfied.

One important point: Having the right people in sales jobs comes first.  The best comp plan in the world doesn’t mean much when the salespeople it is intended to motivate don’t have the requisite skills and traits to succeed. 

Rather than repeat what I and others said in the article, I recommend that you read it.