Key learning outcomes:
- Recognise the signs of under-performance such as low closing rate and low lead generation.
- Distinguish between lack of ability and lack of opportunity when analysing under-performance.
- Develop tools to lift an under-performer’s results.
- Understand the benefits of training and regular reviews to boost sales output.
One of the most important roles for a business leader is to help those around them to perform to their best. It can be frustrating and disappointing for both the salesperson and the business’s management when the salesperson is under-performing. In most situations this will mean that the salesperson is not meeting their targets and goals. As a leader it is important to find out why they are under-performing and develop ways to get them back on the road to success.
You may have a “gut feeling” of what the problem is; however, it is important that you work with the salesperson to really hone in on the specific areas that need improvement. Before beginning any discussion, be mindful that the salesperson may be feeling sensitive or defensive. They know that they under-performing. Therefore, try to take the emotion out of the situation and begin by explaining that you are there to help them and that you want them to succeed as much as they want to succeed.[wlm_ismember]
Reasons why salespeople under-perform
There are two main reasons why a salesperson under-performs: a lack of ability and a lack of opportunity. In some cases it may be a combination of both. In this article we discuss how to identify the cause of under-performance and suggest ways to improve results. We will use a case study to illustrate how to apply this framework to your business.
Case study details
- The salesperson works for a new car dealership in a metropolitan area.
- The salesperson has been at the dealership for eight months, having come from another dealership that sells a comparable product.
- The salesperson has a target to sell at least 12 new cars per month and is currently averaging six per month.
- The salesperson has been provided with a database of past and potential customers to work with, and on average they generate four prospective customers per month from phone calls and other lead generation activities.
- Marketing and advertising introduces a steady stream of prospective customers into the dealership. On average the salesperson is provided with 24 sales opportunities per month through the business.
- No referral business has come to the salesperson to date.
Lack of ability
The following are some key signs that a salesperson is lacking the skills and expertise to perform their job to the maximum level.
- Low Closing Rate – This is the percentage of successful sales the salesperson makes over a period of time compared with the number of opportunities they have. For example, in our case study the salesperson is converting 6 of the 24 sales opportunities provided by the company plus the four they generated themselves. This equates to a closing rate of 21 per cent for these sales opportunities. As a business you should benchmark the closing rate percentage across your business. If the average closing rate for the business in our case study is above 21 per cent, this indicates that the salesperson may lack the relevant skills.
- Few Self-Generated Leads – In our case study the majority of the salesperson’s prospective customers are generated by the company. This indicates that the salesperson lacks the ability to prospect from the database. Either they may not be making enough calls or the quality of the conversations with prospects is lacking.
- High Number of Customer Complaints – This is an indication that the salesperson is not able to do their job in such a manner that the customer sees it as a win–win transaction.
- Substantial Need for Manager Intervention – If the salesperson consistently needs help with aspects of the sales process such as negotiation, this indicates that they need upskilling in this area.
- Low Repeat and Referral Rate – This refers to the business that comes to the salesperson via repeat customers or through referral from a third party. In our case study, the salesperson has only been in the business for eight months; however, the lack of repeat or referral business might indicate that the salesperson is either not doing a great job or they are not asking for referral business.
If you determine that your salesperson is under-performing due to a lack of skills and expertise, it is important to pinpoint the areas that need improvement. Once you have done this you are able to provide additional training. You may want to commence some one-on-one coaching or provide some other assistance to improve their future performance.
Often when a salesperson is new, a lot of attention is placed on training. However, remember that there is a lot of information to take on board in these early days, and new employees may find it difficult to retain all of this information in the first few days, weeks and months. Sometimes, a new person, such as the one in our case study, will require ongoing training for at least the first 12 months.
Lack of opportunity
You may determine that an under-performing salesperson does not lack ability, but rather lacks opportunities. There are a number of things to think about when looking at sources of opportunities for salespeople. A successful salesperson needs to have the ability to convert both the opportunities that come through the business and those from their own generation efforts. Work through the following sources of business with your salesperson to assess which areas may need improvement:
- Brand – Is the business generating opportunities for the salesperson? In our case study, the majority of sales leads are provided by the business to the salesperson, so this is not an issue. Ensure that opportunities generated by the business are giving all salespeople in the business an equal chance of success.
- Repeat Customers – Is a program in place to nurture relationships with past customers? In sales, ideally there should be an overall program put in place by the business to ensure that relationships with all customers are maintained on a long-term basis. Salespeople should also focus on building relationships with their customers to improve the chance of repeat business.
- Referral Business – The salesperson should work with their customers and other potential sources to develop referral business. These sources may include local businesses, sporting groups, and social and business networking groups. In our case study, the salesperson has not had any referral business to date, which indicates that there is some work to be done in this area.
- Database Mining – This is where the salesperson works to generate business from contacts in the database. The database may be made up of a number of customer segments, including past customers who salespeople have dealt with, past customers who dealt with salespeople who are no longer with the company, or people who might have made an enquiry but did not buy. In our case study, the salesperson is not generating many leads from the database. This indicates that either not enough calls are being made or the quality of the calls is lacking, therefore creating a training opportunity.
When we look at the above case study, there are two things that the salesperson can do to improve their results: they can either convert more sales from the potential customers who they are working with on a monthly basis or they need to generate more sales opportunities. Often the reality for an under-performing salesperson is they need to work on both areas. Use our framework with your sales team to address any shortfall areas. We suggest you monitor progress on at least a fortnightly or monthly basis. This article can be used in conjunction with others in the “Sales training” section of our website.[/wlm_ismember]
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