Categories Articles, Sales and Marketing

Sometimes, bad months happen. For whatever reason, your sales team did not hit its target for the month or quarter, derailing your previously upward trajectory, and now you have to explain to your CEO and board why there was a shortfall. For a Sales VP, this type of scenario might seem like the end of the world.

Rest assured, missing a month or quarter is most certainly not the end of the world, even in sales management. The trick is to bounce back nicely the next month or quarter, something that is eminently doable…with the right approach. The correct approach to rebounding requires sales managers to first diagnose the issues that led to the missed target in the first place. Once the problems have been identified, then the appropriate solutions can be prescribed.

To diagnose the problems plaguing your sales team or selling process, consider the three P’s – people, pipeline and performance.

People

Quite simply, do you have enough people to hit your target? If you have a team of 10 sales reps working to hit a number better served by a team of 15 reps, you’re sunk from the get-go. Any team would be hard-pressed to make up a 33% deficit in time and resources.

Sales managers have to ensure that there is enough quota coverage in the sales pipeline for the entire team. Adding up the quota across all the reps on your team should equal 110-120% of your target, giving yourself that necessary breathing room when, inevitably, not every rep hits 100% of their quota. Look at your historical trends to see if your quotas are being consistently met. If not, you might have to rethink your entire operating plan for managing your reps. A key consideration is to take into account ramp time – newly on-boarded employees will require some time to get up to speed and catch up to more seasoned reps. If your quotas don’t add up to greater than your goal, you have a people problem – you simply did not have the staff to hit your goals, even given the best-case scenarios.

Pipeline

A big reason that leads to down months or poor quarters is that sales managers projected a certain pipeline and simply did not get it. This isn’t completely their fault – after all, marketing is responsible for a big part of filling the pipeline. What matters is that the pipeline produces 3-5 times coverage, relative to what your number is. You must provide enough at-bats for your reps to chase pitches. Sales Pipeline

Sales managers also have to ensure that there are sufficient opportunities in the pipeline for reps to work on. Look at your historical conversion rates to determine how much pipeline is required to meet your target. Typical metrics suggest that sales organizations need 3x more pipeline than goal. However, historical conversion rates will provide managers with a more accurate idea of how much pipeline is needed. If you planned on winning 20 deals and you typically have a 20% win rate, did you have 100 opportunities in the pipeline? If you didn’t, you’re sinking your team and hamstringing yourself from reaching your number. Unfortunately, building up a pipeline is an arduous task that requires the help of marketing and enough time. Pipeline problems aren’t necessarily a quick fix, but a strong foundation must be laid in order for it to pay off several months down the road.

Performance

If your people check out and your pipeline is healthy, then the problem of missing your May or quarterly numbers lies with the performances of your reps. Simply put, your reps are struggling to convert their opportunities into demos, trials and deals and it is incumbent upon you, the sales manager, to determine where specifically reps are struggling and why.

Sales Funnel Report - Funnel Conversions

To diagnose performance issues, look at the overall team win rate, before closely examining each individual rep’s sales funnels, as well as their activity conversion ratios. What number did you need to reach and what number did you actually hit? Then, now you can break down each rep and their performances with a fine-tooth comb. The sales funnel breaks down the conversion ratios between stages, allowing sales managers to pinpoint the exact stage in the sales process where this rep might be struggling. For example, if this rep is converting an overwhelming 85% of opportunities to leads and opportunities, but only a scant 15% of those to the late stage opportunities, this should set off warning bells in a manager’s head. Is that rep not qualifying opportunities stringently enough and simply letting every potential client through? Is he conducting his demos poorly and unconvincingly? Using the conversion rates between sales funnel stages, sales managers can sit in on calls and bring more salient and specific points to sales coaching sessions.

 

By carefully monitoring your people, your sales pipeline and the performance of your sales reps, you can help ensure that you don’t miss any months moving forward. Even if some of these solutions might not offer a quick fix for the next month, establishing a solid foundation in all three P’s will position your company and sales team very well for the future.

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