Pat’s Blog

“Establish specific numerical criteria and goals to measure results.” — Peter Drucker

In today’s business climate, it is more important than ever for managers to understand their costs and sources of profitability. One common mistake managers make is analyzing marketing and selling costs only at the gross levels.

When aggregating at a gross level, management teams can’t tell which marketing and sales activities produced which results. As a result, ROI on specific activities is unknown. Without a loan level analysis, it is impossible to determine how much of your marketing and sales activity produces little or no results. Likewise, what activities produce the biggest bang for the buck is not known either.

To obtain an accurate financial snapshot, marketing and selling costs must be examined at the asset level or loan level. Only then can you determine the true value and costs of your firm’s lead generation.

“The test of an innovation is whether it creates value.” — Peter Drucker

Managers who want to improve their sales results often look at the sales funnel first. The problem with this approach is that a sales funnel is not precise enough for an analysis and improvement process. Only a sales process can be managed and improved.

Because it encompasses a world of potential buyers, a sales funnel focuses inward and involves companies asking “What can we do for the potential customer given his or her position in the funnel?” This is the wrong question to be asking. The better question is to focus outward and ask, “How can we help the customer get what they want at this point in the buying process?” This is a subtle difference but when companies focus outward, it enables the company to add value both for the prospects and their customers in measurable ways.

“The organization’s function is to put knowledge to work.” — Peter Drucker

There is no doubt that ongoing training is essential for better sales performance but how and when sales training is implemented can make a difference in the final results. In my travels, I still see companies using a one-size-fits-all approach and throwing away valuable training dollars in the process. The problem? The information salespeople most need to know varies by individual. The solution? First, test the sales person on his or her sales knowledge and then provide customized training that targets any area that needs to be improved.

One more factor that can impact results: Training must be easily accessible to all participants. Gone are the days when companies hosted lengthy sales training sessions off-site. Web-based custom training that provides 24/7 access to the material is a more cost-efficient method with higher compliance.

“Take steps to expose your people to the best ideas and see to it that they are trained in how to apply them.” — Peter Drucker

In today’s limited-resource economy, managers are challenged to get more production from fewer sales professionals. Training can help a company instill change but two important factors must be taken into account if training is truly going to pay off.

First, companies need to have the right talent in place. The reason? If an individual is not matched for the position, no amount of training will transform that person into a top producer.

Second, once the right talent is onboard, it is important to customize training for the individual sales person. A mass approach to training can be a wasted effort as sales staff already knowledgeable about the material tend to tune out. Customized training enables every sales person to achieve optimum results.

“Know the strengths of each person you hire.” — Peter Drucker

One hot topic among financial companies is how to use technology (such as CRM systems) to achieve a “deeper dive” relationship with the customer. The truth is: If the initial face-to-face or phone contact with the sales person isn’t a “Wowing” experience, the best technology in the world will do nothing to help you connect with that customer.

In today’s marketplace, logging “good” interactions with customers is not enough. Every customer interaction must be great if the company is going to capture referral business. The key to creating great customer experiences is hiring sales people who are well-matched for consultative selling. How skilled is your sales staff at building customer relationships?

“Don’t hire a person for what they can’t do; hire them for what they can do.” — Peter Drucker

I’ve been traveling a lot recently and it still surprises me how low performance standards seem to have dropped. Companies with an average production of 3 or 4 units a month per sales person is becoming the norm. When you dig deeper, the picture is even worse because on average, a significant amount of the production is done by the top 20 percent of producers. This means in reality, the average production is much less than the 3 or 4 units.

The big question facing managers then becomes, “Is it better to have a high number of sales people doing small numbers or a smaller number of sales people who can actually sell? In my opinion, the latter option is a smarter, more efficient way to go. It is less expensive dollar-wise especially when you take into account the high turnover costs and lost sales opportunities that come with hiring individuals not matched for the position.

“An organization can only perform to the capacity of its individual workers; thus, people decisions must be right.” — Peter Drucker

In our industry, one of the most common mistakes I see — at companies of all sizes — is management investing substantial resources in transforming C players into A players. This is a strategy that is doomed to fail. Why? Just as there are natural “athletes” in the world, there are also people who possess natural sales ability. Natural sales talent consists of specific innate personality characteristics formed early in life and you either have them or you don’t.

A 16-month longitudinal study examined the performance gap between A players and C players and concluded that no amount of knowledge, training, time or experience will enable an individual without sales talent to perform at the same level as someone with sales success character traits.

The smarter strategy for managers? Hire candidates who have the personality traits that correlate to sales success.

“If we didn’t spend four hours on placing a man and placing him right, we’d spend 400 hours on cleaning up after our mistake.” — Peter Drucker

Managers today have a choice: Hire smart or manage tough. What this means is that it is worth the effort to spend time upfront to select the right sales candidate than to hire the wrong person and spend countless hours trying to transform a C player into an A player. By making better hiring choices from the beginning, managers can get twice the sales performance from their sales teams.

Think about your most recent hiring decisions. Are your hiring smart or managing tough?

“Make decisions on people — selection, placement and evaluation — your top priority.” — Peter Drucker

In my recent travels, one issue I have noticed is companies that did not “right-size” because of last year’s hot market are just now coming to grips with the fact that 2010 will be challenging. One Top Ten lender is faced with a 50 percent reduction of sales staff. It is interesting how companies have not been more aggressive in their planning. In my view, the paradigm for the financial industry has already shifted to a “less is more” mentality. Executives are challenged to get more from better and fewer people.

Similar to sports teams who must determine if they have the right combination to compete for a Super Bowl or World Series, culling the talent pool will be a frequent activity for sales managers. What is the sales talent make-up of your current team? Do you have the sales talent in place to ensure that your team is a winner?

“Set objectives for attracting and retaining the best people, including goals for performance standards and employee attitudes and skills.” — Peter Drucker

One of the trends I’m seeing now is that top producers —A players — are staying with their current employers longer. That means that the available hiring pool is made up of more salespeople who are performing at a lower level. Fortunately, there are several steps managers can take to ensure they’re hiring better quality sales candidates:

1. Have a system in place to objectively determine whether candidates possess sales talent.
2. Increase the number of interviews you conduct. In the past, managers might have interviewed 10 people for an opening. Now, it may take 50 interviews to find the right sales talent.
3. Look for sales talent on a continuous basis vs. hiring sporadically