In recent discussions with sales executives, I have asked a critical question: “What percentage of time do your salespeople prospect for new referral sources?” Most managers estimate that originators are prospecting 70% of the time. However, when we tracked actual prospecting efforts, in many cases, that percentage is actually closer to 10% to 20%. With percentages that low, it is no surprise when production is lackluster. Even more disturbing is the disconnect between what managers believe their originators are doing and the amount of prospecting actually being conducted.
What is going here and how are originators spending the majority of their time?
When delving deeper, we found that much of an originator’s time is spent baby-sitting their files. Originators will tell you that they must do this to have their files close on time. The problem is that eventually they won’t have any files to oversee because referral sources have either retired, changed jobs or rerouted their business to a competitor who does call on them. Failing to prospect for new business is a fatal flaw for originators and their managers.
In many ways, prospecting is a numbers game. When you look at the recent real estate agent data from the National Association of Realtors, it is clear that the average retail producer needs to have at least 20 or more active referral sources. What this means is that an originator’s pool of potential referral sources needs to be a minimum of 50 prospects. (Prospects are potential clients who an originator has had a face-to-face meeting with in the last 90 days.)
Consequently, a manager’s primary job is to ensure that salespeople are spending their time selling. Prospecting is an ongoing process, not an event. The best salespeople cultivate new referral sources on a continuous basis. To ensure success, sales leadership must establish prospecting benchmarks that originators must achieve if they are going to stay in the position. Obviously, individuals who are most likely to perform prospecting activities need to be identified during the recruiting process. (For more on this topic, read my article “Why Johnny/Jane Won’t Originate.” Many managers look at W-2s as proof of an originator’s prospecting skills but this screening method can easily mask the reality of an underperformer. With so much future volume at risk, isn’t it time to implement a research-based strategy for hiring salespeople who will prospect? Contact me for details.