THE PEAK BLOG

All the latest insights on sales and sales hiring

Sales Manager and the 80/20 RuleMany sales managers accept the 80-20 rule – that 20% of their reps make 80% of the sales – which I suppose is acceptable if the sales manager is consistently meeting targets, but it certainly is not a recipe for superior results. There are many downsides to allowing under-performers to exist on your sales team. Sales leaders who regularly exceed targets are vigilant about removing the weak performers from sales force.

“Traditionally, sales teams fall into a pattern: Twenty percent hit well above target – they are your high performers; 60 hit their target fairly consistently – they are your workhorses; and another 20% underperform” Colleen Francis – Nonstop Sales Boom

Wasted time and effort

While it is customary for sales leaders to pay more attention to their best reps and neglect the weaker ones, the poor performers require an inordinate amount of coaching and management time relative to their output. As a young sales manager for a B2B Internet solutions company I had two reps on my team that weren’t hitting targets. As I was unused to aggressively pruning my teams at this point in my career, I tended to work with each rep as they suffered through their troubles. I would spend considerable time coaching them through account strategies and in many cases, reworking their proposal to fix basic mistakes. It didn’t take me long to realize that my time was better spent on finding more capable reps.

U.S. managers waste an average of 34 days per year dealing with under-performance. Senior executives claim they spend seven weeks a year — or over an hour per day — managing badly performing employees.  – Inc. Magazine

Under-performers do more than hamper results

Anyone who is missing their goals, is not an overly happy person. Reps are no different. In spite of the perception that reps are overly optimistic and eternally happy folk, they are emotional and can become sullen when they are not succeeding. Just as positivity is infectious, so is a negative attitude.  Furthermore, when some people get in a rut, they take it upon themselves to actively bring others down with them.

In one of my previous companies, an unhappy team member acted like a contributing and “on-board” member of our team during sales meetings, but outside the meetings she opposed the direction we were going in and was verbal about it to others, trying to solicit support for her viewpoint and undermining our efforts to execute on our plan and create momentum.

Lost Opportunity

Once after terminating a rep for lying to a prospect, I made calls to the accounts the rep was managing and learned that while the customer liked the benefits they received by using my company’s products, they were reluctant to refer us to others since they really didn’t like the rep that they were dealing with. This situation was salvaged by assigning a new rep to the account, but how many other opportunities were lost because we were unaware of the dislike for our rep? Research shows that customers are far more likely to share bad experiences with companies than good experiences. How much bad buzz did our unlikeable rep create?

66% of B2B customers stopped buying after a bad customer service interaction. 

95% share bad experiences. 

54% shared bad experiences with more than five people

45% share bad customer service experiences and 30% share good customer service experiences via social media

Survey: The impact of customer service on customer lifetime value – Dimensional Research / Zen Desk

Morale 

Top sales achievers take a lot of pride in the companies that they choose to work for. Poll your best sales producers and you will find that they are annoyed when some people don’t meet the performance goals that would justify their role on the team, but are allowed to remain as a team member. Over time this frustration can boil over and cause a good rep to consider moving to a company with higher standards. As a sales recruiter, we see this all the time and make a living out of meeting great sales people who are open to considering a career change.

Replace the weak with the strong 

Perhaps the biggest reason for rejecting the 80/20 rule of sales rep output is that the gains of replacing low achieving reps are huge. Consider this – if you replace a rep performing at 70% of target with a rep at 120% of target, you get a 50% boost in sales output with less management effort. Win-win.

There are a lot of reasons why sales managers fail to trim inferior sales talent for their teams  – lack of awareness, sense that there isn’t anyone available to replace the rep, fear of change are some of the main reasons – however failing to make hard choices can be the difference between success and a long downward spiral.

To your success!

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