Business LockerRoom Blog

3 Levels of Sales Leadership (only one creates top performance)

by Kelly Riggs

In general terms, you can divide sales managers into three separate buckets – 3 levels of sales leadership.

First, there are the managers who are hyper-focused on results. In effect, they manage sales from the perspective provided by individual and/or corporate results. They pour over sales reports, slicing and dicing the numbers to get a sense of who is performing and who is not. They analyze sales performance from six different directions, and from those results they make decisions about changes that need to be made.

Their feedback (or criticism) sounds like this:

“You finished the quarter at 88% of plan. You’ve got to find a way to make up that revenue.”

“Currently you’re sitting $35,000 short of your goal. At an average sale of $12,000 and a win rate of 4-in-10, you need about $90,000 in opportunities in your pipeline to reach your objective.”

“Congratulations! You are pacing at 122% of goal! Keep up the good work!”

At its extreme, this kind of management is like a football coach who coaches his team ONLY by looking at the game’s box score.

Here’s the problem: A team may have played very well, but lost on an unlucky break (it happens). The team might have played terribly, but still won the game. The team may have been mediocre and uninspired, and made several mistakes, but won because the other team played even worse than they did.

When there is no context, there is no ability to address specific challenges. Which, by the way, is why successful sports coaches never coach that way.

From a sales perspective, look at it this way: Perhaps your sales ability is average (or worse), but you get lots of deals by giving away a big chunk of the company’s profit in the form of a discount. Your revenue is on target, but your margins are way off. The sales manager says this:

“Good job hitting your number!! You do need to work on bringing that margin up, though.”

Insightful, huh? Just…brilliant.

Yes, results are how companies keep score, but how can you actually manage those results?

The Second Level of Sales Leadership

So, that brings us to the second level of management—those who manage activities.

This is a much better idea since the leader is focused on the activities that actually produce the results. It also allows a sales leader to break down performance into its component parts

These sales leaders scrutinize dials or calls, lead conversion, win rates, calls per sale, dollars per lead, and any number of other “critical” activities that lead to the actual results. They know that activities are the critical building blocks of results, and that only by understanding the connection between activity and result can you effectively diagnose and troubleshoot performance issues.

But there is still a lot of room for error.

“Jim, based on your funnel conversion rate, you don’t have enough leads to hit your objectives. You will need to make at least five more calls every week to be successful.”

Good insight…but, just for the sake of argument, what if Jim makes five more BAD calls? Will it help?

Here’s another:

“Janet, your closing ratio is almost 50%. The company average is about 1-in-3, so you are doing an excellent job. If you can add about a six more deals each month, you will hit your number.”

Perhaps. But why is Janet’s closing rate so high? Is she constantly calling on smaller, price sensitive accounts and discounting her way to closed deals? Is she selling low margin, commodity products and avoiding other more profitable lines?

Here is one more:

“Jack, you are doing a good job moving most of our products, but you haven’t really capitalized on the industrial market, and your numbers in service and repair are way below average. Let’s add some calls in each of those areas and you will easily hit your overall objective of a 12% sales increase.

Again, excellent analysis. If done well, it should create good results.

If done well…which is a big “if.”

Jack heeds his manager’s advice and starts making calls on the new market. He starts making calls to sell service and repair. He takes his eyes off of a critical account and suffers a big Q3 loss. Or, he makes a whole lot of poorly planned and poorly executed sales calls that produce a big, fat nothing. Now what? How often do sales managers push salespeople in a specific direction, but neglect to consider the impact of that direction?

I hope you get the idea. Leading at this level is far better than managing results, but it still leaves a lot of potential to swerve into the ditch and create flawed data for future analysis.

Where the Big Dogs Run

The top layer of sales managers doesn’t focus on results, or even activities per se. Instead, they use results and activity data to create and revise specific sales plans.

In fact, the most significant objective you should have as a sales leader is the creation of specific action plans for specific opportunities. Not plans like ‘making more calls.’ Or ‘improving closing ratios.’ Or ‘selling more’ of a specific product. Which may all be great ideas, by the way, but they are necessarily incomplete.

The reason to create plans is that it is much easier to manage a salesperson’s activities when it is directed towards the right types of calls and the right size of opportunities. It is much easier to troubleshoot performance issues when you understand the intersection of results (keeping score), activities (which leads to the score), AND specific plans (the application of those activities in a context).

For example, no one (that I know of) goes on vacation based solely on analytics: meal costs per day, hours on the beach per week, quality time per family member, or some other nonsense.

Instead, they make plans while considering the critical data – cost of travel, time available, number of sites to visit, etc. Then, perhaps, the next trip will need a reduction in travel costs or an increase in hours on the beach, or fewer sites visited. The point is that families make plans and use data (some more so than others!) to make informed travel decisions.

The point is THEY MAKE PLANS.

So, why is it that MOST salespeople don’t make specific, account level plans? Why don’t sales managers require salespeople to target specific customers for specific reasons. Why aren’t forecasts created based on actual plans rather than just projected numbers?

The answers are very simple. It is hard work, it takes time, and most people simply don’t know how.

After two decades of training and coaching salespeople, I can assure you that is the whole problem in a nutshell. Too hard. Too much time. And, they do not know how to make a truly effective sales PLAN.

So, what passes for sales leadership often sounds like this:

“You need to make more calls.”

“You need to sell more of Product X.”

“You need to improve your closing ratio.”

My favorite example of this nonsensical approach is the salesperson who tops the sales charts in both revenue and margin. However, it is observed that she typically makes fewer calls than everyone else, although she does achieve a much higher revenue-per-sale than everyone else.

At year’s end, after being highly awarded and handsomely compensated for her success, she meets with her sales manager to review her performance. Here is his conclusion:

“You know, you had a great year…but I have noticed that you make considerably fewer calls than all of the other salespeople. Next year, we need to work on making more calls each week. Just imagine what your revenue would look like then!!”

Yeah. Just imagine.

Or you could look at all the other salespeople in the group and probably get your answer right away.

NOTE: For more on this topic read, “The Nonsense That Passes for Sales Management,”
and “Misleading Sales Metrics and the Impact on Management.”