Sales Team Win Rates At All-Time Low

What’s Wrong?

One of the findings in the CSO Insights’ Sales Performance Optimization Study, reveals that the win rates for deals have reached an all-time low.   

Does this surprise you?  

Is this because customers are buying differently?  

Is it a result of more competition in your industry?  

Are your salespeople less effective?  

Is it because of the economy?  

Has there been a decrease in demand for your products and services?  

Is the lack of a sales process having an impact?

Let’s dig deeper to learn if any of the answers to these questions is the actual cause.

Customer/Clients Buy Differently?

Based on multiple sources, including CEB Global (Gartner), buyers move more than halfway through their decision-making process before they meet with a salesperson. Today, they do considerable more research on possible solutions, primarily on the Internet.

Yes, buyers are more informed. However, key challenges continue to thwart this new behavior:

  1. Building relationships and trust
  2. Getting access to key decision makers
  3. Dealing with price as part of the decision process
  4. An eventual no-decision; staying with status quo

All four behaviors stand the test of time. In my four decades of selling, they have always been a challenge, and nothing suggests that has changed today.

 

In most cases, selling to more educated buyers is to our benefit. Astute salespeople work hard to understand where the prospect resides in his or her decision-making process and the more educated the prospect, the more efficient and effective the sales process as we help them form the vision for the solution.

More Competition in Our Industry?

Competition tends to be somewhat cyclical. For some businesses, however, the effects of globalization, the internet, mergers, and acquisitions, along with the ability to buy from anyone, anywhere, at any time, have exploded customer options.

Practically speaking, most companies decide to speak with a limited number of vendors. Indeed, most try to consolidate the number and buy from fewer organizations. So, while more companies can provide products and services in more locations, companies do not include more in their searches.

To beat the competition, you need to bring perspective and stand out from the crowd. You need a clear value proposition that resonates with your prospects.

Less Effective Salespeople?

The latest reports tell us that 15.8 million people sell professionally in the United States alone. To get a grip on this number, Objective Management Group (OMG) assessed 700,000 salespeople and learned one key piece of data remains unchanged:  the divide between effective and ineffective salespeople.

On the effective side: Six percent are considered elite; 20 percent as quite effective. An astounding 74 percent classify as ineffective. With the sales population expected to increase to nearly 16 million in the U.S., the ineffective gulf will continue to widen proportionally.

The definition of ineffectiveness breaks into two factors: 1) inability to sell consultatively (customer-focused); and 2) ineffective qualifying.  While these two factors make a considerable contribution to lost sales, in reality, they do not contribute anymore today than in the past.

The Economy?

No question the economy is unsettled and not yet poised for growth. The uncertainty of the new Trump administration scares business owners and consumers alike.  Business owners look for positive direction on new policies like tax reform before they hire more employees or make purchases again.

Despite this situation, the Sales Performance Optimization Study indicates the loss rate is at an all-time low and includes 2008-2010 when the economy was in the deep tank.  So, while the economy isn’t spurring confidence, it also does not have a greater impact during the period 2011-2016.

Decrease in Demand?

If you’re selling a commodity, you may be experiencing a decrease in demand.  For example, if you own a travel agency and are selling anything other than tours and corporate travel, you’re in that commodity zone.  As Phil Kotler, The Father of Modern Marketing says, “Commodities are simply products waiting for a redefinition.” For most other products and services, the only indicator going down is margins. So, I don’t believe decrease in demand is the cause of all-time low win rates either.

Lack of a Sales Process?

In my experience, companies which train their sales reps and support them with a sales process are not necessarily committed to change corporate direction, despite their investment. Besides OMG’s data demonstrates that 91 percent of the time these processes are ineffective or not followed.

In fact, salespeople love their demos and product pitches, perhaps more than ever. Now combine this reality with the following influences:

  • The internet
  • Availability of knowledge and information
  • Technology for online and on-demand demos
  • Free trials
  • Demo-centric metrics

As a result, we see companies sell their products and services too fast. Salespeople jump into the demo stage before they have even understood the prospect’s vision for a solution, and what he wants to fix, accomplish or avoid.

Quite simply, companies sell much more transactionally than they care to admit. What’s more, demos present problems, especially for technology companies, because they are aimed at technical buyers who, ultimately, are not part of the final decision. Salespeople need to spend the time understanding what job the prospect wants to hire the product to do.

The Real Causes

My assessment of the causes behind an all-time low win rate comes down to a combination of the above factors which do create a slight impact on this metric. The greatest impact on the win rate comes from other forces. First, it’s too easy to get people to listen to a product pitch or watch a demo. Second, because it’s easy, it makes it easy for salespeople to ignore the need to follow a modern, best-practices sales process.

Many companies tell me they focus on the needs of their customers, and they use a consultative selling process. But then I see them rush right into a product demo or slanted discussion on their product or solution.

The Real Path to Revenue

The most powerful and cost-effective actions you can take to drive revenues in your organization:  Evaluate your sales team in the context of your sales strategies, systems, and processes. Be painfully honest and objective. Fill gaps. Find areas ripe for improvement. Demand of yourself critical thinking, creativity and consistency.

Over the last few years, many organizations have asked me to implement sales processes to improve sales performance. It is not that simple. I take the time to explain the importance of first understanding key issues and goals. Sounds simple enough, but it’s often overlooked, as though everyone already knows and agrees.

We learned from one of Stephen Covey’s Seven Habits of Highly Effective People; you must “begin with the end in mind.”  Are you clear about the results you want to accomplish?  Then ask yourself:

  • Why aren’t we more effective?
  • With our current group, how much more effective can we be?
  • What needs to be done to accomplish that?
  • What is the timing before we see results?

Believe it or not, these are tough questions for companies to answer.

In my experience, people misread their problems. They will answer the first question by claiming their salespeople need more qualified leads or need to call on a higher level within the organization. Perhaps the right answers for some; however, many companies do not have the right people on the team at the outset. Assuming their salespeople get to the highest level in the company, they still do not have the skill set to bring an authentic perspective to a senior-level buying influence.

To get you started, here’s a suite of questions to frame an effective evaluation process:

  • how does sales leadership impact our salesforce?
  • what are our current sales capabilities?
  • how motivated are our salespeople and how are they motivated?
  • why aren’t we generating more new business?
  • are we reaching the actual decision makers?
  • why isn’t our sales cycle shorter?
  • are we selling consultatively?
  • are we selling on price and who can become a value seller?
  • is our value proposition consistent?
  • can we close more sales?
  • do our systems and processes support a high-performance sales organization?
  • are we being consistent with our sales process?
  • how well are our sales leadership strategies aligned?
  • do we need to change our selection criteria?
  • is our ramp-up of new salespeople fast enough?
  • can we improve our pipeline and forecasting accuracy?
  • can we improve our sales culture?
  • who can become more effective in their roles?
  • what are the short-term priorities for accelerated growth?

I’ll leave you with a never-to-forget statement by the late Father of Modern Management:

By embarking on an honest evaluation of your sales team, you will improve your ability to recognize gaps in its abilities; you will strengthen your hiring needs; you will clarify potential training needs; you will understand who deserves a raise and why; you will more than likely retool your customer sales and service strategies and tactics.

See you on the upside,

Bill

For more information, go to www.pleinairestrategies.com
Or call William L. MacDonald in San Diego at PleinAire Strategies LLC at 760.340.4277 or 213.598.4700

 

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