Sales Performance Gap: The #1 Reason VPs of Sales Miss Their Revenue Targets
Maybe your first thought was a dearth of decent leads. Or, general all-around inefficiency or ineffectiveness. Think again. The key reason teams miss their quotas is the sales performance gap.
As you know, we can map a sales team’s performance onto a bell curve. The sales performance gap is what separates the top 20% — the high performers — from the rest of the pack.
These superstars are the ones who outpace their peers in all the important performance metrics. But here’s the kicker. In most organizations, the sales gap is getting wider and it’s affecting your numbers, your sales costs, your sales rep turnover — and possibly your tenure as the sales leader. (Yikes!)
When was the last time your team met full quota and closed the sales performance gap? Has it ever? If not, you’re not alone.
The average percentage of teams that meet their quota across the board is shrinking, from 63% in 2011 to 50% in 2016. And yet annual quotas, according to Sibson Consulting, have risen 7.5% per year for the past two years.
And, this sales performance gap has some painful consequences that most of us have not considered.
The opportunity costs are staggering. When the vast majority of your team is operating at a middle-of-the-pack level, bad things happen:
Hundreds of “shoulda-coulda-woulda” deals simply don’t close. (Think of what a 5% higher close rate from your middle 60% could mean.)
The cost of revenue soars, as your mid-level performers have fewer wins and take longer to close deals. So, more leads are needed to get smaller deals over a longer period of time.
The dreaded revolving door spins even faster, as sales reps come and go… and come and go… and your hiring, compensation, and severance costs skyrocket. One estimate puts the average number per turnover at a costly and concerning $97,690. Yeah. Thought that might get your attention (Source: DePaul University’s Sales Effectiveness Survey)
Here’s another headline grabber:
Your job may be on the line if the sales performance gap widens. The average tenure for sales leaders is shrinking, along with their ability to meet the quota. It went from 26 months in 2010 to just 19 months today.
What’s a beleaguered sales leader to do? Here’s a thought. Let’s shift the entire bell curve. Move the whole pack to the right. Give your stars enough attention to keep them happy. Accept that the low performers are likely a poor fit and that they’re a hiring problem, not a training or a coaching issue. To consistently grow your revenue, you need to turn your sights on raising the performance of the middle of the pack.
If that sounds like a mountain that’s just a little too high, I can tell you from experience that it’s not. You can pinpoint what makes your star performers shine – and how you can use that knowledge to help the middle tier replicate those behaviors.
In the end, conventional approaches and conventional metrics don’t work because they don’t get to the root of the problem. Gaining a true understanding of your team’s unique sales behaviors and tactics is the all-important first step toward narrowing the performance gap and shifting your whole team upward and onward.