I plead guilty to enjoying a cold beer or two, and I’ve watched with amazement as the decade-long bull market in the craft beer industry shows no signs of abating.
Low performers, mid-level performers and even high performers need ongoing management. It does not assume high performance, and once high performing, does not assume it will always continue. Everyone needs to be managed on a consistent basis. In sales, the goal of ongoing management is participation rate.
Participation rate is the percentage of sales team members who are at or above plan. For a sales team, participation rate is easy to calculate. On a team of 10 people, where four are above their sales plan on a YTD basis, the participation rate is 40 percent.
Participation rate is a statistic that’s rarely scrutinized. Why? Sales managers are measured for making their quota. If the quota is $100 million, the sales manager’s goal is to get each salesperson to deliver an average of $10 million. Some will produce $15 million and others will produce $5 million; the sales manager only needs the total to add up to $100 million. The sales manager is incentivized to keep average performers. A salesperson who only delivers 50 percent of quota is better for the sales manager than the 0 percent they would contribute if the sales manager let him or her go.
Research reveals that a participation rate of 60 percent or less will give sales managers a 10 percent chance of making their revenue plan. Sales managers must aim for a high (70 percent) participation rate to have a good chance of making plan, although it is not guaranteed.
Given this, why do sales managers tolerate poor performance? What stops them from having tough conversations? Sales managers are nice. They do not want to rock the boat. Their strategy is hope.
Evaluating Behavior and Results
A sales rep’s performance can be evaluated on two criteria – behavior and results. Assessing whether a sales rep is or could be delivering results is fairly straightforward – it’s a math problem. There are four performer categories a sales manager works with:
In an ideal world, a sales manager would have 100 percent High Performers. Neat concept, but most likely not going to happen. The next best thing is 100 percent High Performers and Coachable Performers. This is attainable but it’s not the norm.
Most leaders will have some Tough Performers and some Poor Performers. Imagine having 10 direct reports with two in these groups. Not bad, manageable. Now imagine four out of 10. Life is tougher and tough moments happen on a daily basis. At six out of 10, it is probably tough to get out of bed in the morning.
Ongoing management of performers involves monthly (minimum) one-on-ones, observational coaching with feedback, sit-downs to try and help – all the day-to-day routines to try and lift behavior and results. When these fail to work, that’s when it’s time for the performance conversation, which has five key steps:
Sales managers know how to do this – the issue is getting up the nerve. Sales managers need to have the conversation as soon as needed – putting it off spares no one. Sales reps who want to be with you will step it up and improve. Those who are not capable/not interested will show very quickly (weeks not months) after the performance conversation. If things still don’t improve, the sales manager can move to the final warning, consulting with HR to effectively handle this and how to go your separate ways if that is required.
Kevin Higgins is CEO of Fusion Learning, a sales training company, and the author of “Engage Me: Strategies from the Sales Effectiveness Source.”