The Real World: Analyzing Your Sales team

51,300,000

About Your Team

Let’s say you’ve got a team of ten salespeople…

…each carrying a quota of $600K

Meet Your Team

• Carrie• Kelly• Simon• Ellen• Jordin• Chris• David• Kara• Taylor• Ruben

Total Sales Fiscal Year 2008

$6,000,000

But what if you analyze their performance a little more closely?

Utility Analysis – A definition

“Utility analysis is a quantitative method that estimates the monetary value of benefits generated by any intervention based on the improvement it produces in worker productivity.

Utility analysis provides managers information they can use to evaluate the financial impact of any intervention, including computing a return on their investment in implementing it”

- Bernstein, Allen L. “A handbook of statistical solutions for the behavioral sciences”. New York: Holt, Rinehart and Winston.

Utility Analysis – Assumptions

1. Employees generate results that have monetary value to the organizations that employ them

2. Employees differ in the degree to which they produce results even when they hold the same position and operate within like circumstances

The implication is that the level of results produced by employees in their jobs have different monetary consequences for the

organizations that employ them

Process Overview

• Rank your salespeople – top to bottom• Create 3 performance tiers• Identify salespeople on each tier• Identify average sales per tier• Use this information to manage the

business

Your Team - Ranked

• Carrie$1,000,000

• Kelly $1,000,000• Simon $700,000• Ellen $700,000• Jordin$600,000• Chris $500,000• David$500,000• Kara $400,000• Taylor$300,000• Ruben $300,000

Add all sales results and divide by three

- to create performance break-points that will allow us to allocate our

salespeople across three performance levels or ‘tiers’

Create Performance Tiers

Total Sales

• Carrie$1,000,000

• Kelly $1,000,000• Simon $700,000• Ellen $700,000• Jordin$600,000• Chris $500,000• David$500,000• Kara $400,000• Taylor$300,000• Ruben $300,000

$6,000,000

Total Sales divided by three

$6,000,0003

= $2,000,000 per ‘tier’

Assign Salespeople to Tiers

Top Tier:Carrie $1,000,000Kelly $1,000,000

$2,000,000

Middle Tier:• Simon

$700,000• Ellen $700,000• Jordin$600,000

$2,000,000

BotCarrie Tier:Chris

$500,000David

$500,000Kara

$400,000Taylor

$300,000Ruben $300,000 $2,000,000

“Stars”

“So So”

“Passengers”

Calculate Averages per Performance Tier

Tier Averages

• Stars– Carrie & Kelly = $2,000,000 / 2 = $1,000,000

• So-So– Simon, Ellen & Jordin = $2,000,000 / 3 = $667K

• Passenger– Chris, David, Kara, Taylor & Ruben =

$2,000,000 / 5 = $400K

Use this information to manage the business

Difference between a So-So

and a Passenger?

So-So Average: $667KPassenger Average: $400K

Difference $267K

…every time you hire a Passenger instead of a So-So it costs $267K

…if you’d been hoping for a Star you missed by $600K (they average $1M)

…but let’s keep it conservative and focus on moving Passenger to So-So performers

Use this information to manage the business

Difference between “Star” salesperson

and “So-So” salesperson?

“Star” Average: $1M

“So-So” Average: $667K

Difference $333K

…every time you hire a “so-so” salesperson instead of a “star” it costs $333K

So what’s your loss fromhaving Passengers vs. So So? Remember, you had five:

Chris David Kara Taylor Ruben

So Passengers represent a loss of $1.3M ($266k x 5) in sales…

…but what’s the premium for getting it right?

The ‘Getting it Right’ Premium

• What’s the premium if:– Raise one Passenger to So-So level?

• $267K – total sales go from $6M to $6.27M (+4.4%)

– Raise two Passengers to So-So level?• $534K – total sales go from $6M to $6.53M (+8.8%)

– Raise all Passengers to So-So level?• $1.33M – total sales go from $6M to $7.33M (+22%)

…and these are sustainable ANNUAL increases – not one-off premiums

The ‘Getting it Right’ Premium

If we weren’t keeping it conservative you might ask:

“what’s the premium if all are Stars”?

Total sales increase by $4M from $6M to $10M (+67%)

Annually!

The Dark Side

This knife cuts both ways:

– Lose just one Star performer and replace with……a So-So – costs you $333K (per year!)…a Passenger – costs you $600K (per year!)

– Lose just one So-So performer and replace with……a Passenger– costs you $267K (per year!)

“So how do I…”

1. Hire Star salespeople first time?2. Raise Passengers to So-So level?3. Raise So-So Performers to Star Performer level?4. Make sure I lose no So-So or Star Performers?

Assessment Performance AnalysisMeasuring Assessment Impact

Case Study

Productivity

2010 Production Tenure 4 – 15 months = 237100%+ Quota – 81 = 34%

+100% Average 178.6% 7 months average tenure

-100% Average 43.1% 6.7 months average tenure

Above Quota produce 75.8% more volume

New Pattern Analysis

79%+ 78%-$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000$8,528,179

$5,136,486

Revenue

Revenue

JMP PTQ # Q Revenue79%+ 170.6% 159 $5,000,000 $8,528,17978%- 102.7% 199 $5,000,000 $5,136,486

Difference $3,391,693

500+ 100-500 0-100

73.0

74.0

75.0

76.0

77.0

78.0

79.0

80.079.9

76.275.6

JMP

JMP

% JMP500+ 79.9

100-500 76.20-100 75.6

New Pattern Analysis

Key Learning Points

• Every sales team has uneven performance – Stars, So-So and Passengers

• You pay dearly for So-So and Passenger level performance

• Your Stars share something in common – and that can be profiled

• That profile can be used to raise Passengers performance to So-So level, So-So to Star level

• This is a more enlightened way to manage for future sales success