For the longest time, the ability to sell has been considered an art. It has been thought of as a quality that you either have or not. However, with the advent of Sales Intelligence tools such as Salesken, there’s a change in perception. Maybe she’s born with it, maybe there’s a science to it?
While sales leaders regularly dissect numbers, metrics, and performance indicators to evaluate and improve the performance of their teams, a key indicator that is usually neglected is “Preventable losses.” In this article, we’ll understand what preventable losses are and how this concept could be the missing piece in your sales strategy.
Let’s say that each member of your sales team is working on a set of 100 leads. The top performers are closing about 20 deals on average, while the rest of the team is closing about 12 deals. There is a gap of 8 deals between your best performers and the rest of the team. While some of these 80 deals may be lost for reasons beyond the sales rep’s control, the ones that are lost due to mistakes on their part are known as preventable losses. These could be due to poor research, the way they responded to a potential customer or several other reasons within their control. Well, as the name suggests, these losses are preventable. The good news is that preventing these losses could be the biggest opportunity for your business.
Let’s figure out the cost of this performance gap between your top and average salespeople and how you could benefit from closing this gap.
2. Sales Performance Gap: Threat or Opportunity?
Ever heard of Pareto’s Principle? It states that 80% of consequences come from 20% of causes. This principle applies to sales as well. It is usually the top 20% of your sales reps that bring in 80% of your revenue. As per research by CEB Global, in their book called “Challenger Sales,” the performance gap between star and average performers is 59% in a transactional selling environment. However, in complex environments, this gap can be as high as 200%.
HIGH PERFORMING REPS CAN BE 400% MORE PRODUCTIVE THAN AVERAGE ONES.
A similar study by McKinsey found that high performers can be 400% more productive than average ones. This gap in performance costs you money. For example, if the performance of your team varies between 30% and 100%, with the top reps bringing in $500K per year, it means you are missing out on revenue of $350K for each of these sales reps. This could add up to millions of dollars over time.
In such a scenario, you may think the best way to drive up revenue is to hire more of these star performers. Well, not really! There are a few reasons for this.
Firstly, there are only so many star performers, and everyone wants them. Secondly, someone who is a top performer at Company A may not be the best performer in your team due to the unique skills and demands of your business. In fact, research by HBR suggests that the productivity of a sales rep can fall by 20% when joining a new company.
A very big reason for turnover in the sales community is missed quotas. In fact, nearly 46% of salespeople missed their quotas in 2018. And every time a sales rep leaves your company, it costs you upward of $115k to replace them. So, you don’t want them to leave. If we can’t hire more star performers and we don’t want the existing team to leave, what can we do?
The best solution to this problem is to nudge the remaining 80% of your team towards the top performers club. If this group of people is able to improve their performance even by a small measure of 5%, the aggregate effect of this improvement on your business could be significant.
If you were to improve by 1% every day, you’d be 37% better by the end of the year.
Bestselling author James Clear calls this the “aggregation of marginal gains” in his book Atomic Habits. He says if you were to improve by 1% every day, you’d be 37% better by the end of the year. If the bulk of your team improves even by a small amount, your revenue will increase many folds.
Now you have all the reasons to fix this gap, but how do you actually do it? The answer lies in technology.
3. Technology can help you close the sales performance gap
If you could listen in on Jeff Bezos or Tim Cook closing a deal, would you not jump at the opportunity? Imagine the insights you could get on what to say and how to say it. What if we told you that you could have insights from millions of sales calls at your fingertips? And even better – best practices from sales calls by your star performers?
These insights are now available to you through the power of Conversational Intelligence. Sales Intelligence tools can help you analyze your sales calls to understand what makes your top performers tick, where your sales reps are faltering, and how to bridge the gap. To know how, read How Conversational Intelligence Provides Visibility and Control to Sales Leaders.