InSights - What you didn't know you didn't know

Looking For Love In All The Wrong Places

Everybody has heard of the 80/20 rule. This concept is based on the research of Wilfried Fritz Pareto, an Italian engineer, sociologist, and economist, who discovered that 80% of the land in 19th century Italy was owned by only 20% of the population….and it tended to stay that way over time.

The concept is often applied to sales. It assumes that 80% of your sales will come from 20% of your best salespeople. Based on their anecdotal experience, most sales execs would agree with you. The actual ratio (based on Chally’s analysis of 900+ B2B sales forces across different industries) reveals that 52% of sales come from the top performers. Still an impressive effort and they are compensated handsomely for it.

Most sales execs would love to get more of these superstars…but they don’t exist. So, many sales gurus and consultants suggest we study (for several hundred thousand dollars) how these superstars sell and then train everybody else to use the same techniques. Sounds good so far…and trials of the approach do show some improvement in sales from the average performers…for awhile. But the average performers, no matter how many new sales techniques they learn, never produce even half as much as the superstars.

So what’s going on?

Research by Arun Sharma at the University of Miami (Fla.) has exposed a flaw in the consultants’ logic. Having studied broader differences in the behaviors of sales superstars across many industry segments, he found that their sales techniques with customers were neither unusual nor unique. Their competitive difference was largely based on their ability to manipulate their own company’s resources more effectively to “prioritize” their customers. In fact, they typically managed to consume a significant percent of their company’s internal resources.

Most sales execs do recognize that their top reps are expert at bending and stretching their companies’ processes to take care of customers…and they’re often difficult to manage as a result, but who will really fire a top salesperson when there are quotas to meet and targets to hit?

In reality, we may really be paying these superstars twice. We pay once in allowing them greater resources than the other salespeople, and then again with much higher variable compensation when they consume these resources to win sales.

We certainly don’t suggest that anybody fire these superstars especially when they have figured out how to take better care of customers than their companies manage to do without them.

There is a lesson

1.  Fix our sales and customer support processes with more flexible systems and easy to understand and learn access to internal resources.

2.  Establish a true “cost of sales” measurement system to account for the (apparently extra) support that may be necessary to win and keep top customers. This, in turn, may establish a more realistic and ultimately higher selling price that customers will be willing to pay.

3.  Perform a Talent Audit of your sales force to identify developmental areas and provide routine training to teach all them how to delight their customers with top service, exceptional responsiveness, and the knowledge that someone is really taking care of them.