The Small Business Sales Quota Dilemma

Same Old QuotasEarlier today, I read “Why are Half of All Sales Reps Still Missing Quota in a Booming US Economy?” and found the article itself, and the comments within LinkedIn around the article, a little disturbing. Almost all the points were towards the reps themselves and not the businesses… Let’s face it: if any business is having more than 50% of their reps miss their sales quota, something is very wrong! No business should ever have 50% or more of their reps missing numbers, and if they are, that is a failure on the business’s part—period.

As many businesses gear up for their yearly planning sessions, now is the time to really look in the mirror before developing new quotas and truly understand the business itself. Again, if 50% or more of your sales team missed their quotas last year and are going to miss this year, you truly need to ask “why?” Is it talent, training, something else within their business, or were their quotas improperly set to begin with? As leadership, it is critical to look beyond your own thoughts of what a revenue target “should be” and bring into consideration other items such as the industry, economy, and job market. Setting the stage, it is safe to say that most leadership believe that the reason reps miss their number comes down to the rep’s ability to hit their personal quotas and not that targets were improperly set to begin with. This is a scenario we play out year over year… As a result, leadership’s plan for hitting the next year’s revenue target simply comes down to either cutting staff and bringing in new talent or increasing headcount. Regardless of the strategy, is it really viable? Well, like we said earlier, it’s a strategy that plays out year over year in small businesses, with the same unfortunate results. This is almost the definition of insanity, yet the cycle always continues.

A majority of reps missing their quotas is not a talent issue. Plain and simple: there is a fault in the business that leads to the miss. Again, starting backwards, most business leadership create a revenue target number based on what they think is a viable revenue target. Some literally make up a revenue number based on what “they believe” is a proper revenue target for the business to hit, and others slap a percentage increase over last year’s numbers and then essentially break up quotas based on a number they created… Very few truly take a look in the mirror to reflect on last year’s performance, industry, economy, and other items before coming up with a realistic revenue target. Regardless of the method, here are a few things that should be considered before coming up with a revenue target.

Current Situation – It starts with understanding the current team and the “why?” around performance. Again, we believe that if 50% or more of your reps are not hitting there number, there is something fundamentally broken within the business. Now is the time to reflect and try to understand the reason. You should ask yourself: Is it truly a talent thing? Did your sales management hire the right quality reps? Is the proper training in place? Is there a brand perception problem? Is there a broken process? The key is to identify areas of improvement for the year ahead, but to also recognize that changes do not happen overnight… Meaning, when creating a revenue target, the ramp up time for these changes need to be taken into consideration.

Talent Acquisition – Talent is a big one. Going back to some of the comments we saw around this article shared on LinkedIn, most pointed to talent or lack of talent for the reason reps are missing their numbers. Honestly, this could be the case, but that means that changes must be made around the way your organization does talent acquisition moving forward. However, you also have to recognize the current job market as well… We are in a time where there are more open positions than unemployed looking for jobs. This essentially translates into the hard fact that finding good talent is difficult to do. This means that if part of your plan going into the New Year is to either trim current reps and replace them with newer “A” talent, or simply increase head count, it is going to take time… Again, something that needs to be taken into consideration.

Current Economy – It is astounding that even the biggest companies out there do not really take the economy into consideration. As an example, in the economic downturn of 2009, most businesses quite frankly ignored the signs of a down economy and stuck to their guns for revenue targets. As a result, they missed—and some missed by large margins. This was a disaster for the stock market, as investors were quick to pull their investments from these organizations. And the rest is history. Not that something like 2009 could have been completely avoided, but the companies that truly looked at the economy and made proper adjustments did do much better from a numbers standpoint at the end of the day.

Current Industry ­– Again, it truly amazes us when businesses refuse to look at their current industry’s performance. A perfect example is the cable industry… Consumers are cutting the cord at alarming rates, and businesses such as Comcast are all but completely ignoring the fact and continuing to raise rates year over year. Time will tell the true fate of the cable industry, but it’s not a good outlook. Sometimes there are external pressures that come into play with specific industries, and unfortunately, too many businesses ignore the signs which, at times, can devastate them completely. Could this be the root cause of a decline in numbers? If so, simply increasing quotas or finding new talent is not going to fix the issue.

Pricing – We cringe at this strategy. Some businesses believe that in order to make up the gap in revenue loss, they should simply increase the price for their products and services. There is a right way and a wrong way to do price increases… We do believe that, at times, you do need to increase prices; if Coke was still going for a nickel, they would have gone out of business a long time ago… but there needs to be a strategy to the increase. Also, you need to understand how your market will respond. Going back to the example of Comcast, their market simply is not responding well to their annual price increases, and they are losing customers in record numbers.

At the end of the day, every business wants to see increasing numbers year over year, and no business wants to set a target lower than the year before. However, the way your business sets its yearly revenue targets has more of an effect on the business than you may think. First is the overall attitude of a business, as a business that is winning acts much different vs. when they are losing; a winning attitude is just as contagious as a losing one. This brings us back to the fact that if you are having a majority of your team missing their numbers, you can guarantee the morale of the team is low—negativity breeds negativity. Then there are the financial repercussions, as when you have a losing team, you have employee turnover. Well, those lost reps need replacing, training, and ramp up time…all things that cost money and take attention away from things that could be moving the business in a forward direction. So again, if more than 50% of your reps are missing their numbers, take a deep look in the mirror and find out why. Then, put the ego aside and set proper expectations for the business… A winning team will outperform a losing team 100% of the time and will put less strain on the business as a whole.

 

How To Make CRM Play A More Important Role In Your Small Business

How To Make CRM Play A More Important Role In Your Small BusinessMost CRM systems these days such as: Salesfore.com, Zoho, SugarCRM, Infusionsoft, and HubSpot are highly customizable, yet, even at their bases, they have enough capability to have significant impact on your business and efficiencies within it. In spite of this, you wouldn’t believe how many small businesses still run their firms with a piece of paper or Excel spreadsheet! What is even more unbelievable is that most small businesses have some type of CRM within their organization, but it sits to the side like some leftover desktop computer from the 90’s collecting dust. When used properly, CRMs can be one of the most useful and time saving tools within your business. In this article, we will cover how a CRM can be used to optimize your small business, and we’ll cover one of the most challenging topics when it comes to CRM in any organization—usage.

While CRM implies a tool for the sales team, when properly implemented, a CRM can be used as a single point of reference throughout the organization. However, at its base, a CRM is only as effective as how it’s being used and the data quality inputted. When it comes to CRMs, the expression that I like to refer to the most is “garbage in, garbage out,” and a CRM is pretty much useless without the various teams using it properly. Before we get into the mechanics and usefulness of a CRM, we need to first talk about usage.

When it comes to CRM implementation, especially when first being implemented into an organization, usage is typically the biggest hurdle. Most people see it as an additional step to their already busy and packed daily schedules as they are not aware of the downstream effects of a system like a CRM. The first step to usage is to implement a system that measures the team utilizing the reporting capabilities of the system and keeping the mindset of “what gets measured, gets done”. This means that essentially every team connected to the CRM needs to have some type of measurement: sales – pipeline and connections, marketing – lead counts, customer service – call resolution count, etc.

However, it doesn’t stop there; management needs to adapt a policy of then tracking these metrics on a consistent basis and using them for corporate reporting & meetings (not Excel Spreadsheets). Too many times, we see leadership defaulting to Excel spreadsheets, emails, or a piece of paper for tracking details, and this will frustrate employees. The question of why take the time to input information into a system that is not even being used by management always gets asked. Furthermore, another fix to ensure usage of a CRM is to directly tie compensation to stats and usage. As an example, no sales rep should ever receive commission if an opportunity is not in the system and doesn’t have proper documentation. Similarly, if your Customer Service team has a call resolution quota attached to their bonus, this information should be pulled via the CRM and not by other methods like Excel. At the end of the day, to ensure proper CRM usage throughout the organization, it truly does need a top down approach reflecting on the actions of management in what gets measured, gets done. As a tip, we have a habit of pulling up our CRM reporting in meetings and forcing the team to talk to their stats based on the reporting in the system.

As mentioned earlier, CRM is not just for sales. A properly implemented CRM can be incorporated throughout an organization making it a single point of reference for the organizations and improving efficiencies across the board. Remember, at its base, CRM is not meant for “oversight”, it’s just a byproduct of proper usage. Below we’ll review some of the departments and use cases for proper CRM implementation.

Sales

The sales department is clearly the best use case for a CRM; however, to ensure you are getting the most out of the system, do not limit usage to just sales opportunities or contacts. Sales should be using their CRM as the sole system of record and ensuring that they are transcribing all conversations, connections, and actions in the system. This will allow sales to ensure that they have a working knowledge of all their activities within each account—and most important of all, a proper pipeline. With so many conversations happening within a sales person’s day, it is fairly easy to forget conversations that happen earlier in the morning or throughout the week. With proper usage, they can use a CRM as that system of record, which allows them to keep tabs on past conversations and actions needed. Furthermore, as other departments interact with these same accounts, the sales notes become equally important to understanding the history of an account.

Marketing

Marketing has changed over the years from being completely independent from sales, tending now to being fully integrated with sales, and in some cases, having the same leadership teams. Years ago, Sales had their CRM, and Marketing had their Marketing Automation Platform where they were two completely separate systems. However, as an example with Salesforce’s purchase of Pardot, marketing capabilities are now being built directly into CRMs. Especially with small businesses, this means that there is no need to purchase expensive marketing automation software anymore. This integration also allows sales to have a complete view of prospect and account activities leading to more efficient sales cycles.

Customer Service / Tech Support

Most organizations look to deploy separate systems for these departments, which might work for larger enterprise type organizations, but in small businesses, it is a key mistake. Small Businesses should look to take advantage of their existing CRM which may already have these capabilities out of the box. As an example, Saleforce.com has “Cases”, a complete section built out of the box for Customer Service or Tech Support. A few key advantages of using your CRM for these teams starts at simplicity, where there is no need to duplicate information across multiple systems. Not having to purchase a separate system keeps software and software management costs down as well. However, another advantage is that these teams now have access to critical sales notes to understand more about the history of an account. This leads to faster and higher quality closed calls ratios, as well as an overall better customer experience. Also, as sales is interacting with these notes, it gives them the ability to see call history which also leads to better customer experience from a sales perspective.

Product Development

Most likely, one of the most overlooked departments from a CRM perspective is Product Development. However, companies like HubSpot have fully integrated their product teams into their CRM. Why? It’s simple: within their CRM, they actively track each and every customer’s usage and apply a score to that usage. This score can then measure how active or inactive each client is; this allows for sales and support teams to take actionable steps within each account to improve customer experience as it relates to their software. The overall effect is more customer usage and happier customers. There is also another byproduct; this view gives HubSpot’s entire product team access to usage data allowing them to pivot and make changes within the software. Although this information can be pulled from the software itself, the benefit of having it tied to the CRM is that they can have visibility into the specific accounts and history, giving them a more holistic view.

Finance

Finance is another overlooked department for CRM usage. Typically, like Customer Services and Support, organizations will deploy additional financial software. However, within a Small Business, it is not necessary. Although most out-of-the-box CRMs are not built for the financial department, small customization or plugins can offer solutions. For example, FinancialForce will give most financial teams the full capabilities needed in order to do their jobs. Again, this leads to a single system of record and decreased software cost.

Executive & Leadership

Executives are hit and miss when it comes to CRM usage, however, most are unfortunately a miss. Typically, you’ll find CEOs and Leadership running around at the end of the quarter with a piece of paper or some type of Excel spreadsheet looking for “real time” updates from their teams on opportunities to close or other stats. However, with a properly motivated team, a CRM can be updated in real time along with reporting functionality displaying real time updates directly to the CRM. Some areas included, but not limited to, are total pipeline, pipeline age, average close time, average deal size, average collections outstanding, call resolution times, etc. Many executives believe there is a need for an expensive EPM system in order to obtain cross-organizational insight, however with a properly set up CRM, a Small Business can get all this information and more in one spot.

Again, it is staggering the amount of businesses that do not have a CRM, and the ones that do barely scratch the surface of functionality. With a small amount of customization, a CRM can become an extremely powerful tool to optimize the performance of a business and get everyone on the same page. Most importantly, remember that “what gets measured, gets done”; your CRM should not be a set-and-forget system. Finally, management, once your system is set up, drop the Excel spreadsheets!