Four Reasons Why Companies Waste 90% of Sales Training Dollars
Companies spent more than $70 billion in training in 2015, a 14 percent increase from the previous year’s study. Of that, $3.4 to $4.6 billion is spent on sales training providers.1
However, 85 to 90 percent of those training dollars fail to impact after the first 120 days 2 ending up with billions of dollars in training waste with short-lived benefits.
As a profession, we need to stop this hemorrhaging of already strapped budgets.
Companies need an entirely different approach to sales education: One that embraces the company culture, uses a common language and a repeatable process, and designed to specific markets and prospects.
In my training work through PleinAire Strategies, I see sales training initiatives fail for all sorts of reasons. As I am committed to full disclosure, I tell clients that few organizations go on to world-class results because of the quality of their training programs, and I give them examples.
One such company, a national retirement advisory firm, spent thousands of dollars with me on training. Although the CEO was most gracious, saying his people learned a lot, in my opinion, it failed. The company never defined for itself the expected outcome. The CEO did not want to invest front end time to evaluate his team’s learning needs, particularly in an area of greatest need─closing new business.
Instead, he invited his regional offices to attend a two-day workshop where we trained the sales team on sales methodology. I did push for some pre-work against his insistence to do the workshop one day.
Quite simply, he wanted to transform his sales team and change behaviors in one-day. One salesperson told me that he closed one of his largest opportunities within sixty days of the training. I was relieved to know some people received tangible value within the 120-day vanishing impact window.
The unfortunate mistake the company made, which I see often, is the failure to adopt a sales process at the corporate level. As we see from the research done by CSO Insights, a sales process makes a significant difference. Notice the firm’s assessment of the four critical levels of a sales process:
Level 1—Random Process: Your company may be perceived as being anti-process, though what you really lack is a single standard process. Essentially, sales reps do their own thing, their own way.
Level 2—Informal Process: Your company exposes your salespeople to a sales process and indicates that they are expected to use it, but usage is neither monitored nor measured.
Level 3—Formal Process: Your company regularly enforces the use of a defined sales process (sometimes religiously). You conduct periodic reviews of the process to see how effective it is and make changes based on that analysis.
Level 4—Dynamic Process: Your company dynamically monitors and provides continuous feedback on sales reps’ use of your formal sales process. You also proactively modify the process when you detect key changes in market conditions: new competitors emerging, governmental regulations changing, or economic shifts occurring.
Now, notice in the chart below how sales performance across all levels improved with a formalized, dynamic sales process. More reps meet quota, company meets plan, and forecasted wins improve.
Let’s look at the four primary reasons why sales training can fail.
1. Random to Dynamic Sales Process ─ Reinforcement
Admittedly, my retirement client CEO was a tough sell. He needed a repeatable sales methodology and toolset, and he made the investment. However, senior managers neglected to make it part of the culture. What was learned was soon forgotten, with everyone reverting to old ways of doing things.
You cannot move from a random to a dynamic process without the company reinforcing and making the process integral to how you do business. Any one of my consultants at my former company, CRG, will tell you our competitive advantage was our sales process; it dictated how we interacted with prospects and clients and served as a major part of the culture.
Most sales training focuses on a two- or three-day event where salespeople learn and practice new skills. However, the effect of event-only training quickly fades.
Regardless of how much participants enjoy the training, without reinforcement, it is rare for salespeople to return to the office, review their training guides and notes, and continue to improve skills.
It is strange to me; salespeople will take a golf lesson then go straight to the driving range to practice the skills learned, but when it comes to their profession, they don’t do it.
2. Fixing the Wrong Thing
Another common failure occurs when companies try to fix the wrong thing. Sales managers often assume hiring a “top” training firm is a safe bet, much the same way IT managers used to believe that “nobody ever got fired for going with IBM.”
Unfortunately, the confidence sales managers place on established training firms is often misplaced. Even the largest firms offer specific areas of expertise which may not meet the needs of an individual sales team.
If locating the root cause of a sales problem is not a core competency of a particular sales training firm, it is likely the training will be a wasted effort. For example, if a sales team experiences difficulty in closing fully qualified leads, lead generation sales training only makes the problem worse.
3. Not Committing to Coaching
As the sales team continues to struggle with qualifying leads, opening new opportunities, and meeting quotas, it is getting little help from sales managers. On the flip side, companies which embrace coaching outperform their peers. According to the International Coach Federation, the average company can expect a return of seven times the initial investment in coaching.
Most sales managers who do not coach their sales team tell me, they do not have time, it is not their job, or they do not have access to the tools and resources to help them get the most out of coaching.
Random coaching doesn’t work either; when you watch Sunday football, you do not see the coach showing up every other week. You need to establish a consistent rhythm of coaching conversations.
4. Technology Can Fix the Problem
Another issue I encounter─companies think technology is the answer. Granted, a major revolution in sales technology has taken place.
I worked with one such client company whose management championed technology. It had a 30 percent quota attainment within its sales team. Its opportunity win rate was only 15 percent. I soon learned the company had no idea how to fix these problems. Management knew quota attainment was poor. Conversion rates were awful. And leads were not converting to opportunities.
Why didn’t it fix these issues? Because they were chasing the shiny stuff, the technology. The company implemented the best new CRM system and purchased the best marketing automation solution.
What drove the investment in new technology? Management wanted to track more customers and prospect data, thinking technology would drive more leads and upgrade forecasting accuracy.
Bottom line? The client was not executing on the fundamentals. Technology alone won’t fix its quota attainment problem. It will not convert more opportunities to customers. The company was unable to assess the true problem honestly. While both purchased technologies can be incredibly powerful tools, you must first fix or change your internal sales processes.
Your Training Takeaway
Before you spend a single dollar on sales training, be certain you’re not destined to make these four wasteful mistakes:
- Lack of sales training reinforcement
- Fixing the wrong thing
- Not committing to a consistent coaching effort
- Thinking technology can solve your sales problem
Your saving grace is investigation and preparation.
Dig deep into the culture to ferret out the root of your sales problem. Hire the best training team matched to your individual sales issues. Before sales training nears completion, set up a robust sales coaching process and keep it consistently implemented.
Above all, don’t shortchange yourself by thinking that technology will solve your root problems.
Technology can never replace human ingenuity.
(no matter how well Artificial Intelligence develops in our lifetime)
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
- Dave Stein, Sales Training: The 120-Day Curse (ES Research Group, 2011)
- “Outsourced Sales Training Worldwide: Examining the Major Markets” (ES Research Group, 2013).