I just returned from Las Vegas where I spoke to business owners in the construction industry. I admit, I do get excited about wagering, especially in Las Vegas, but I realized how I was getting suckered in when a slot machine caught my eye. It said “99% payout guaranteed,” which sounded like a good thing. You essentially put in $100 and over time, you will get $99 back. When you aren’t emotionally involved, it’s easy to see the futility of gambling in Las Vegas. But the lights and the bells and the buzz of excitement reels you in and sure enough, in an hour, I handed over $60 to the resort.
This is precisely what happens to salespeople and sales managers. They get drawn into the excitement of chasing a deal. The prospect says they are interested, the quote looks good, they will be buying 10 times more in the future and that if it was up to them, they’d pick you over a competitor. It’s the equivalent of bells, lights and the buzz of excitement at the casino. The salesperson gets suckered in and chases opportunities they have no chance of winning.
2nd Place is Horrible
Every poker player knows that the worst place to end at the poker table is SECOND. That’s the player who bets (and loses) the most. The professional poker players are happy to win, but they know their advantage over the opponents is their skill to fold early and avoid the deadly position of second. This also applies to salespeople. They should identify lots of opportunities but they shouldn’t bet heavily on every single one! I realized salespeople didn’t understand this concept when a client of mine shared proudly that they didn’t win the business but they did come in second place. This client spends tens of thousands of dollars on estimates. Second place is the worst possible outcome in these situations! Even if a salesperson’s proposals cost pennies, there still is the opportunity cost of chasing deals that will never close when they could have been prospecting and identifying much better deals.
Sales managers fall into a similar trap when hiring and managing salespeople. The excitement of a new salesperson that could close millions in new business blinds their judgment. “They seem to know how to sell,” the sales manager says. So they let the salesperson try to figure things out on their own. “Chip, I don’t want to micro-manage them.” That’s like saying “let it ride” at the betting tables, except your odds are more like 9%, not 99%. Instead, managers should establish benchmarks that the salesperson can achieve early. If the salesperson is incapable in the short term, the manager can cut ties and save wasted salaries and stomach acid later.
Why Sales Managers Fail:
1. Don’t know what activities and strategies a salesperson needs to do on a weekly or monthly basis to meet goals and wait months or years for revenue that never materializes.
2. Do not insure their people are doing the weekly/monthly activities and strategies.
3. Fail to coach people to achieve the necessary results (assuming they are doing the activities and understand the strategies).
4. Keep the wrong salespeople on their team and fail to recognize the good ones because they don’t do #1-3.
The reason I’m passionate about my business is #4. It drives me nuts to see a salesperson let go when it was the manager’s fault. It also makes me crazy to see a salesperson make empty promises about future revenue while milking the company’s payroll for as long as possible.
Please don’t gamble with your sales department. Change the way you qualify proposals and stop rolling the dice with your salespeople.