by Tibor Shanto – firstname.lastname@example.org
In the past I have written about the propensity of sales leaders to accept and live with the Pareto Principle, the 80/20 rule. For example, 20% of your reps deliver 80% of your revenues, I know one team with 9 reps, where 2 sellers are responsible for 71% of the revenue. At one time, in the Shanto Principle I asked the question what if organizations could move the dial to 70/30, what would the impact be?
Companies continue to struggle with this reality, in many instances the 80/20 looks more like this:
- 20% – Top of the pack, consistently successful, adaptive and responsive to market movements, often spearheading the change in sales that are required to keep and win more business.
- 55% – Steady players, not always winning, or delivering 100% of plan, but put in a steady (just enough) effort to be in the 70% – 90% of plan zone. Room to improve, but bad enough to fire (although you have to wonder).
- 25% – Perennial underachievers. Steadily underperforming, while you don’t invest time in them, they are still part of the team. While you know you should fire them, you give in to the voice that says they are better than nothing, while I look for a replacement.
You may think that the above is a variation on the traditional A, B, and C player model, many do, which is a mistake.
I strongly suggest that you look at it more like:
A Players – The top 20%, Group 1
B Players – The top half of the 55%, Group 2
C Players – The bottom half of the 55%, Group 2 X Players – The bottom 25%, Group 3
I have always argued that leaders should focus their time and attention to the A players, show the most love to those you want to lose least. Show no time or attention to the C Players; the lack of attention clearly communicates that they either need to adopt and contribute, make their way up to B status, in order to get attention, or move on to organizations. The B’s need to be put on a path to achieve A status. NOTE: this is once the sales rep has been on-boarded, trained on your systems, and integrated into the process. This could be as little as three months, or as long as a year, but there does come a point where they need to deliver on their own. I still stand by this, but have ratcheted things up a bit, by encouraging you to not waste time, resources or emotion or keep that bottom 25%, the X Players. Rather than pretending that they are C players, suggesting some hope, when in fact they are a toxic waste in your sales organization, meaning you have to dump them ASAP.
Accepting the Status Quo, (yes, we do it too), is riskier than many sales leaders want to pretend, and here is why. Any way you slice it, the majority of the sales team is missing quota. It is true that more sales teams collectively are making quota, even while most individual contributors are not. What is the take away for those on the team who continuously are missing targets? Sales teams are like any other collective of people, there is a perception of majority rule, and if the majority is not making quota, then that soon becomes the norm. Not something sales leaders should encourage or tolerate, but by not acting quickly and strongly to end that, it soon becomes the norm, and worse.
If more than 50% of the team is not making quota, rationalizing becomes easy; “it’s not me, it’s the product”, “it’s the price”, “it’s the whatever”. “After all, look at all the people who are also in the same boat, it can’t be me”. Those few that are making quota, well they become the anomaly, the pack will stick together to comfort their own, and ostracise the others.
One of the top priorities of a sales leader, and their managers, has to be to ensure that at the minimum, more than half of the team exceeds their quota. This needs to be done across the whole organization, and by each front line manager locally with their teams; having a patch quilt of teams that do and don’t is not acceptable. While ultimately we want everyone to make their goal, this is a start; 50% plus of each team, and 50% plus of the whole organization.
How do you do that, a simple upward rotation is a good start. Not only do you heavily reward success, you simultaneously punish failure. Start with the of 10% rule, every year fire the bottom 10% of each team, not just the entire sales organization, but on each team managed by a front line manager; and if they have two teams, fire the bottom 10% from each team. Many are often reluctant to do this, telling me they can’t afford to have a vacant territory, if you ask me, the opposite is true, you can’t afford having territories run by these X Players. You can’t afford having your clients be attended to by these X Players. By the way, you don’t have to wait for the end of the year. If they are not executing the activities required to win, it will not take a year to realize things. One company I know fires those who are in the bottom 10% three months running. They are transactional, and can tell early, you may need to wait the year, or not. You just need to ensure that the period you choose allows for slumps and temporary factors that you can address and correct.
As this pruning takes place, especially as it becomes the declared policy, you’ll find that those in the middle of the pack begin to self-correct and do things that drive them ahead, realizing that as the bottom is lopped off, they either move higher or face being the next to go. This upward rotation pays dividends across the team, the C’s and B’s begin to move up, and the A’s realize they have company, and their personality trait kicks in, and they improve their game to maintain the gap with the B’s. Lifting your results to higher and higher levels. You may even find after a few years of this approach that you do more with less players; alternatively, expand products and markets with a more qualified and talented team.
Once you get to where more than 50% of the organization is making goal, the dynamic switches. Rather than people rationalizing why they are not making quota, after all those who are not are now in the minority, people look for ways to make and exceed quota, and begin to share their best practices. Majority rule! If you do find yourself in an enviable position where all you reps are making or exceeding goals, may still be a viable way of ensuring continuous improvement and growth.
This may seem a harsh route, but as leaders, that’s why we get the big bucks, for big decisions and big differences. Any way you look at it, it will never be as harsh as having to explain the alternative to the executive committee.
What’s in Your Pipeline?