Nov 12, 2019
As products and services are increasingly commoditized by automation, low-cost manufacturing, and offshore competition, value- and outcomes-based selling become the stuff of the CRO’s dreams. In this environment, building an organization of salespeople that aligns pricing to outcomes and differentiates based on insight, long-term partnership, and need-driven solutions becomes mission critical. However, this transformation does not start and end with hiring ‘proven’ sales résumés.
The data tell us it’s increasingly difficult for enterprises to generate revenue and drive growth. Analyst firm CSO Insights found that average quota attainment for sales reps in 2018 was 54.3% — far below the 2014 rate of 63%. And earlier this year, a number of cloud companies cited poor sales execution in earnings calls. One CEO stated that newer reps were less than half as productive as more experienced reps and that they “need to improve the support of [their] new reps with training and experienced oversight to help them ramp and close new business.”
The underlying imperative is that CROs must relentlessly pursue every avenue to equip sales teams with the competencies and capabilities they need to be on message and task every time they interact with a prospect or customer. Ensuring these competencies and capabilities reflect the current needs of the business and align with customer expectations is an ongoing priority. But the journey of every great salesperson starts with and ties back to how they are first familiarized with the organization: aka the sales onboarding program. Onboarding doesn’t just set the tone; it impacts the outcomes that define revenue organizations: rep productivity, predictable quota achievement, and regrettable rep turnover.
When organizations fail to enable the best possible results as related to the three outcomes noted above, they struggle to achieve their revenue goals. Let’s discuss the impact of poor onboarding practices on these key outcomes.
Impact #1: Inconsistent rep productivity because onboarding was designed for a ‘universal seller’
Unlike machine parts, salespeople can’t be stamped off a production line to be carbon copies of an original. There is always a target profile and target behaviors, but there is no single sales rep, nor one selling role. It’s essential to build a granular understanding of the needed pre-sales, sales and post-sales profiles and corresponding behaviors and competencies specific to your customer and businesses. Otherwise, you probably are also missing the ability to determine what skills need to be built or what applied learning needs to take place. Simply put, if your onboarding program is designed for a template of one, you have put rep productivity at risk.
Sales reps are hired to meet the needs of specific geographies and segments, and must be equipped with corresponding competencies and capabilities. In addition, each of these new representatives has different backgrounds, product and market experiences, education levels, and skills. This understanding is particularly important because the CRO must have a near-perfect understanding of how long it will take to gain full productivity (aka ramp) across a wide variety of profiles. When onboarding is not set up to be the first phase of long-term investment in capability (i.e., ongoing readiness). it becomes extremely difficult for a sales or sales operations leader to confidently predict the average or median ramp to first deal or quota attainment.
This problem is exacerbated by the fact that the typical sales organization falls on a distribution curve where around 20% of reps are low performers, 60% are average performers, and the remaining 20% are the game changers. When you lack a good understanding of rep performance distribution, it’s impossible to effectively hire and develop reps to be top performers.
Impact #2: Inability to drive closing behavior in the field after onboarding
Confidence in hiring and pride in a slick sales academy, bootcamp or 30/60/90-day plan is one thing. It’s an entirely different thing to send sellers into the field knowing what phone calls to make, emails to send, what CRM fields to prioritize, or how to respond to key objections. A great onboarding program requires that every piece of content, virtual role play, pre-learning and quiz is tied to developing a capability deemed vital to the sales person’s success. This will help them become ready for that time when they make their first call or onsite visit without the benefit of a frontline manager riding shotgun.
Unless onboarding programs are tied to measurable, demonstrable capabilities that are reinforced and extended over time, CROs are depending on the charity of customers or a product that sells itself. The problem is that even in good years, companies are falling behind. Only 53% of reps made quota in 2018 per CSO Insights. As Seleste Lunsford, Chief Research Officer of CSO Insights explains, “For us, it’s always a red flag when we see top line revenue numbers going up while all the leading indicators for sales are going down.”
The moral of this story is that companies can’t assume that a strong economy, empowered, self-qualified prospects, or competitors going out of business will come to the rescue. No army, or sports team puts their new recruits on the field hoping for a miracle; why would a CRO?
Impact #3: Regrettable rep turnover due to poor onboarding
While the maxim is that the best sales reps follow great leaders, insights can be gleaned by studying the most successful salespeople for two things — where they choose to work and how long they stay.
Good reps quickly realize that a poor onboarding program will likely extend into their ongoing readiness, or lack thereof, and choose either to leave or become missionaries. When even missionary reps fail to achieve quota, receive W2s well under their comp plans, lack in-field coaching or manager engagement, and don’t see a clear path to hit their personal targets, they are likely to leave. This is bad news because while the CRO misses a proven lever for production — the battle-proven backing and resources of their seasoned reps — they are also forced to constantly backfill.
This is particularly painful because the most effective onboarding partly hinges on exposing new reps to experienced reps. According to a 2018 Sales Compensation Administration Best Practices Survey, the typical company considers sales turnover rates below 15% ideal. How many CROs can confidently claim they’re consistently hitting this benchmark? If the reps you do hire and onboard see that their more experienced counterparts are in fact not that experienced, it’s usually a short runway to their concluding that adequate investment in the success of your team is not being made
“De-risking” revenue starts with treating onboarding as one of the most valuable activities of organizational strategy focused on revenue growth
De-risking and preventing these negative outcomes starts with effectively onboarding — and continuously readying — your next generation of revenue producers. Knowing that new sales reps will be constantly joining while you experience some attrition — and realizing that each of these reps has different needs on their path to readiness — is critical. Ultimately, your success starts and ends with effective onboarding.
Want to learn more about how CROs can quickly and predictably implement a system to ramp new sellers that drive deals to close faster and more profitably? Read the CRO Essential Guide: Sales Onboarding Best Practices.