It takes a lot of effort from diverse teams across the organization to get $4M revenue into the system but it just takes one Sales Manager to lose the same amount of money!
CEB recently reported that a failed Sales Manager would cost the company $4M. (CEB Sales & Service Data). As a trickle effect, this could reduce productivity, take a toll on customer experience, impact team engagement and not to mention questioning the ROI on salary, training and recruiting fees.
Now, this is at a single sales person level. If these numbers are looked at from an organization wide level, the multiplier effect kicks in. A sales team failure hits the organization at all the levels and the failure percolates and impacts every single employee in the organization.
In the article, failure of a sales team is defined as, “when a sales team fails to achieve the quota/plan provided to them.”
If you are still wondering how the negative impact of the poor performance of sales can lead to a snowball effect, read on:
1) The Trust Gap
How do the shareholders feel when the CEO of a company faces the stakeholders for the third consecutive quarter without meeting the revenue numbers? You can look at it from the CEO and Board of Directors’ point of view, of course, and lament the short-termism of profit philosophy. But, if you look at it from the shareholders point of view, at this point, they might just be waiting to hit the sell button on the shares they had faithfully held so far. Well, why won’t they? Let‘s say a company like Gucci which has many diverse shareholders. If the company is not able to deliver on the promised revenue number repeatedly, the trust in the company is lost. And we don’t want to stop trusting brands we love. Agree or not, a large portion of the strong word “responsibility” would lie with none other than the sales teams.
2) The Set-up-to-Fail Syndrome
With series of poor performing quarters, the equation of the Sales heads with the leadership team will gradually change. It would result in an ideal “Set-up-to-Fail Syndrome”. The syndrome surreptitiously begins because of the initial impetus of undershooting the target and slowly the relationship spirals from bad to worse. And this only ends with a change in sales leadership positions or leadership as such and stops only when the spiral chooses to end. We have seen this play out in too many companies.
3) The “Why should I believe” mentality
Once the spiral starts, the belief in data dwindles. Supply Chain teams don’t believe the build numbers that are provided to them. And this is not just with the Supply Chain teams but with all the teams in the organization. Every team in the organization starts questioning the efforts and leading to decreased productivity and a slow death of trust.
4) The Demotivation Crumble
As the whole setup crumbles, the account managers are the first to witness the hit. Sales teams stay demoralized, the positions and accounts get changed drastically. Territories change and this adds more salt to the wound. Because of these changes, there are more negative vibes within the organization making the vicious circle really hard to control.
How did it all start? Missing on that one plan number, $4M, by one salesperson. As the markets become increasingly competitive and companies use multiple strategies to stay relevant, the $4M spiral could become a much wider syndrome.
We all know the humongous amount of effort it takes to move the needle from negative back to positive. But is there a way to keep the needle from slipping to negative?
Would love to hear your views and thoughts. In my next post, I’ll propose data-driven methods by which you can stay “green” without missing on the plan/quota/revenue.
On that note, read about BRIDGEi2i’s advanced sales enablement platform: Sales Decision Engine (SDE). The platform was featured in Gartner’s September 7th, 2016 Market Guide for SaaS-based predictive analytics applications for B2B sales and marketing.