The Most Critical Mistake a Sales VP Can Make

Imagine if you were known for being the idiot who fired a legendary rainmaker. Mark Cuban was fired as a sales rep from a computer store. He failed to open the store on time because he was upselling a customer. “He is lazy,” said his former manager.

How are you measuring your sales managers? Is it by quota attainment only?  If so, you are making the biggest mistake a Sales VP can make. The list of rainmaker firings continues:

• Walt Disney was fired as a Kansas City Newspaper reporter.  They said about him: “He lacked imagination and had no good ideas.”

• Michael Bloomberg was terminated because he missed his quarterly number.  His former manager said:  “He has a lack of leadership”

• Lee Iacocca got sacked for an unsuccessful product launch. Henry Ford Jr. told him: “You are too edgy for the car business.”

• Bernie Marcus and Arthur Blank were fired from a home improvement store chain by missing one month’s sales.  The owner said:  “They can’t sell”.  They went on to found Home Depot.

   

These were poor and short sighted decisions. When evaluating your sales managers in your talent management program, you need to consider a minimum of 5 additional metrics other than quota. This will allow an objective view of their overall performance. It will also allow a gauge of not past but future performance. Below are some common ones to measure.  

If you would like help with this topic, visit The Studio, SBI’s multimillion dollar, one-of-a-kind, state-of-the-art executive briefing center. A visit to The Studio increases the probability of making your number because the sessions are built on the proven strength and stability of SBI, the industry leader in B2B sales and marketing.

Common Non-Quota Metrics:

1. Turnover:  The number one reason some leaves is their boss. What is the total turnover for their team this year? And how many have voluntarily turned vs. involuntary?  Are you losing A players due to poor sales manager?  Lack of great coaching and development is the number one reason sales managers lose A players.
2. Lost Selling time (a.k.a: Open Selling Weeks):  You can’t make the number if you have open sales territories.  The number of selling weeks lost in a quarter or year has a direct reflection on the Sales Managers ability to hit the quota.  Do they have more than 6 lost selling weeks in any one quarter?  If so, you have a problem.
3. Ramp to Productivity (measured from offer letter to hitting ramped productivity levels):  How long does it take for the sale rep to hit the ramp quota?  Do you know your ramp to productivity or ramp failure rate?  Longer than average for the new sales people in the company?  You should be hiring now for 2013 (use your ramp to productivity & sales cycle length to determine when to hire).   You can’t wait to ‘see’ if the Sales Manager (SM) will make it. If your SM can’t ramp new hires, it is a direct indicator of poor future performance.
4. Sales Team Quota Disparity:  Have many people on the team made quota?  Is one guy saving the day?  This is a tell-tale sign of a root problem. Disparity equates to long term success.
5. Historical Quota Performance:  The history of making quota is critical.  One or two quarter misses might not mean much.  Especially with factors out of a SM’s control. Inconsistency though can lead to deep root problems.

    

The key is to take these non-quota metrics and compare them to quota attainment.  How?  By evaluating your Sales Managers quantitatively and a qualitatively through a weighted formula based on your customers and company’s objectives.  Evaluate them both on quota performance and non-quota metrics:

By measuring the Non Quota Metrics vs. the Quota Attainment, you can come to a simple conclusion on whether to invest in the Sales Manager or put them officially on the bubble.

Call to Action:

Involve more than quota attainment when assessing Sales Managers. Use the below bullets to rearrange the way you think about SM performance and potential termination.  Remember, your best SM might be the one who doesn’t consistently make their quota.

• Use both quantitative and qualitative analysis to measure their performance and success to date.

• Choose 5-7 Non-Quota Sales Manager Metrics and weight them in the scoring equation tied to your customers’ needs and company objectives.

• Develop a key on how to measure each metric. Below is a sample of one metric developed for an individual company’s SM’s:
  • Team Quota Disparity Score
    • 5 Points: 100% of team made quota
    • 4 Points: 75% – 90%
    • 3 Points: 50% – 74%
    • 2 Points: 25% – 49%
    • 1 Point:  Less than 25%

• Determine any circumstances out of their control (i.e.: Failed product launch with the new product quota still assigned, operations nightmare with declining customer service, acquisition or financial default, poor territory design etc.)

• Plot their quota attainment and score on a grid.  And if necessary, can help make a quantitative assessment on termination (which might please your HR Leader).

Don’t make the mistake of firing someone who has tons of potential but missed their quota. Consistent quarterly performance depends on how you manage talent. As a guide your efforts to secure and retain the right talent for a transformation, download our 10th annual workbook, How to Make Your Number in 2017. Turn to the People Plan phase on pages 285 – 293 of the PDF.

If you would like my help, set-up a workshop at The Studio. A visit to The Studio increases the probability of making your number because the sessions are built on the proven strength and stability of SBI, the industry leader in B2B sales and marketing.

Photo Source: Gage / Wikimedia Commons

SAN FRANCISCO, CA – SEPTEMBER 08: Businessman and TV personality Mark Cuban speaks onstage at TechCrunch Disrupt at Pier 48 on September 8, 2014 in San Francisco, California.