December 20, 2016

Episode 40: Strategic Guide to Creating a Winning Sales Team – Max Cates

Predictable Prospecting
Predictable Prospecting
Episode 40: Strategic Guide to Creating a Winning Sales Team - Max Cates
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Show Notes

Predictable Prospecting
Strategic Guide to Creating a Winning Sales Team
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How do you become a strong leader? How do you encourage your team to be not just good, but great? My guest today is an expert on managing sales teams and the author of Seven Steps to Success for Sales Managers: A Strategic Guide to Creating a Winning Sales Team Through Collaboration. Max Cates is here to discuss why sales managers should focus on continuous improvement, what separates the good managers from the bad, and using the Six Sigma process for eliminating defects and improving your team.
 
max-catesEpisode Highlights:
  • How Max Cates got started in sales management
  • Discussing Seven Steps to Success for Sales Managers
  • Why sales superstars make poor managers
  • Implementing a tactical plan for your sales team
  • The millennial sales team
  • Six Sigma for sales
  • The McKinsey Issue Tree
  • Setting good stretch goals

Resources:

Episode Transcript

Marylou: Hello everybody! It’s Marylou Taylor and today I have a guest who I think you’ll just need to get some coffee, sit back and listen to if you’re into sales management. Very top of mind for me because I’m in the process of working with a couple of vendors right now and putting some webinars together on this topic. With me today is Max Cates. He is the author of Seven Steps to Success for Sales Managers. His book is released in 2015 and it’s coming on, you said your anniversary, right Max? Max: Yes, first year anniversary. By the way, it’s a pleasure joining you. I really appreciate the opportunity to talk to you today. Marylou: Well, thank you. Max is an expert in all things dealing with the management of all types of salespeople, correct? It’s not just top of funnel. Can you elaborate on the book itself and in terms of the area of the specialty that you are talking about? Max: Yeah, primarily the undercurrent that lies throughout this book is servant leadership. I’ll give you a little background on how I got into it in sales management and that kind of thing. First, I spent the first half of my career just about 20 years on the non-sales side. Primarily in marketing, advertising, corporate communications and leadership positions. There again, for Fortune 500 companies. When I shifted over to the sales management side, I was really kinda surprised because I came from a background of employee involvement in which you would make decisions planning procedures based on employee input. You would get your employees involved in the process, some call it employee participation, involvement programs. But basically, you’d get to involve in decision making and you would share in the process. You would use their knowledge and their expertise to help come up with better decisions. This actually goes to back to 1940s with what’s known as TQM, Total Quality Management. Long story short, when I got into sales management, I found more and more of a command control type of management. I’ll typify this whole  process by one conversation I had early in the going with another sales manager. The manager was working on a pricing program. He was having problems, he was asking for my input. We kind of discussed pricing and customer discounts, real wide variety. Then, I asked him, I said, “What do your reps think about it? Do you have their input?” His response was, “Well no, why would I want their inputs? I mean, these yahoos can’t even make their objectives. Why do I want them to help me run my job?” I was kind of surprised by that but then the more time I spent, the more I found out that it seems like antiquated command control system was fairly prevalent not only in the companies that I was working for but in talking to other managers in other companies. There again, that’s kind of the impetus for it. When I first started looking, I thought there’s got to be a body of knowledge on using employee involvement in the sales arena. I went through amazon.com, I did my research and I was looking for employee involvement programs as they pertain to sales and basically found nothing. That was kinda of the impetus for me getting involved in writing a book. It primarily, in addition to not finding any resources, the more data and research I found about sales managers encouraged me even a little bit more. For example, one thing I found was that one recent research program showed that only 50% of sales managers have received any kind of sales management training from the time that they were named sales manager. In addition to that, for example the top 25 business schools in the United States, only half of them offer any kind of sales management curriculum. To capsulize it, the book is really offered as an alternative, as an option that sales manager can refer to as a way to enhance their own effectiveness. It’s really something that hadn’t been offered before that I could find. It’s an option to sales management. It’s a way to tap into the energy strengths and experience of sales people to make the sales manager’s job easier and more effective. Marylou: I know that part of effectiveness training that we focused on for sales reps in three areas is really time management, personal effectiveness and communication. For top of funnel, it’s all about trying to blend those three categories together to create an SDR whose consistently developing opportunities that they can pass to a quota carry rep in the field. A lot of what I see is that sales managers are typically grown from AEs who did really well selling and then they’re all of a sudden walking in the door given a badge, the magic wand over the head, you are now a sales manager. Did you discover that a lot in your interviews and things? Max: Here’s what I found from a research standpoint and also anecdotally. The kind of people who tend to get promoted into sales management jobs are kind of the sales superstars. Here’s the irony of it is that great salespeople usually make poor managers. In fact, I was reading one research study that showed that as high as an 85% failure rate of sales superstars who have gone in sales management. There’s a lot of reasons for that in addition to not receiving sales management training. Here’s how it normally works, this is kind of an over generalization but here’s what I’ve seen personally and even in research studies. The super successful salesperson, when they’re promoted, at first has this concept of, “I’m successful, here are the things that I’ve done to be successful, I’m a great closer, I do great presentations, here’s how I organize my files, here’s how I set appointments.” There’s a very specific skill set that they have going into the sales management job. The overall thought is what I’m gonna do is I’m going to take my approach and I’m going to shape a sales team in my own lightness and it just doesn’t work. Because the sales team is such a complex mixture of human dynamics, you can’t go in and say, “Here’s how we’re going to do it and here’s the plan, I want you to follow me. If you follow me, then we’re gonna be successful.” I can even think back in my early career, I was the same way. I’m a great follower, I’m gonna use these things to be a leader. What happens is salespeople, as naturally independent as they are, they’re not real good followers. When you have a sales manager who comes up with a follow me plan, a lot of sales teams will kind of smile and kinda nod and say, “Yeah, that’s a great plan.” But then what goes on behind the scene is they kinda go on and do their own thing irrespective of what the plan is. Here’s the analogy I use. If you are a really good salesperson, if you’re an outstanding salesperson, you might have up to a 50% closing rate. That’s a pretty good closing rate for a salesperson. But when you’ve got that kind of closing rate as a manager, you’re going to fail because you have half of your team working for you maybe, and then you have the rest of your team who are either against you or indifferent. Either way, if your salespeople are indifferent or if they’re resistant, it’s not working with you. It’s real tough for a sales manager to come up with a plan and get everybody to follow them if they’re not getting buy ins from the sales group. If the salespeople haven’t developed a little sweat equity, if they haven’t become part of the plan and if they feel like they’re not respected enough to be asked their opinion or asked for their input or asked for their involvement, the easiest thing in the world for a salesperson to do is kind of agree on the surface with a plan and then make it an eight to five job. Do my job, go home and forget it. The whole idea of employed participation is to develop this sweat equity approach to get people involved in decision making, to get people involved in planning and organization because the more they’re involved, the more they buy into the program. The more buy in you have, the better their efforts are going to be because it’s their plan. If they’re out executing a plan that’s theirs, they’re going to execute better than executing somebody else’s plan.   Marylou: What I heard you say earlier was there’s a lot of tactical that a sales manager coming into the role will implement or want to put into play because it’s something that’s worked for them. If you have a plan like that and you want to enforce it, how do you get your folks or team to buy into that? Do you present it as an option of this is one way we can get there and look for input to fine tune in? Do you start with a plan that you present to them, are you just bringing everybody in a room and saying, “Okay, here’s our objectives for next year. Let’s roll up our sleeves and design a plan together to get there.” Max: There’s a variety of different ways to do it. I have seen some start with a plan but what I’ve found to be most effective is just to start at ground zero with more of a vision, creating a vision with your reps. For example, you get your reps in a room with you and you start out with what do we need to be doing to be successful and where do we wanna go? How do we create a vision of success? In the book, I used the JFK moon landing vision. John F. Kennedy created this crazy vision of landing a man on the moon. When you compare that to a sales objective or sales vision, it might be we want to be number one in our corporation, we want to be number one in the state or whatever your ultimate, long term vision is. And then develop an action plan to get there. It first depends on getting your people involved and letting them know that number one, we want to be the best we can be. Then asking how do we actually get there? Once you set the vision, then everything starts following down below that. In addition to that is that mutually agreeable objectives for the sales team and mutually agreeable objectives for individual salespeople. In addition to that, you set specific ground rules, metrics. It’s really important to develop the right set of a metric to make sure that they’re commensurate with their overall vision. But once you get your employees involved in this and letting them know that me, that I as a sales manager, am your partner in progress rather than I’m the guy who’s telling you here’s how we’re going to do it, then you start getting a consistent series of input and you develop in your work team, in the book it’s called an entrepreneurial approach. An entrepreneur is an entrepreneur who’s operating in a corporate environment. This kind of salesperson is the kind of person who’s going to come to you with ideas on how to get the job done better, on sales techniques, on training. You’re getting this consistent set of data and information flow coming into you. That not only improves your decision making but it also makes your job a lot easier. You’re not having to do all the heavy lifting. The traditional command control manager is kind of a lone wolf. He’s kind of in his own silo or she is in her own silo. They’re developing plans, procedures, ways to monitor success, tracking metrics on their own. What the book emphasizes is that the days of the lone wolf sales manager are pretty much over now for a number of reason. Number one, you’ve got global competition. In addition to that, as you had mentioned earlier, technology, rapidly advancing technology. You also have a workforce that’s changing dramatically because now we have baby boomers who are being replaced by millennials. They have their own set of challenges to traditional managers. For example, millennials are more likely to like to work in teams. They’re kind of collaboration oriented, they also seek more input than baby boomers did. They’re more technological savvy. There’s a whole difference that management needs there as we see the workforce changing. That kind of gets into one of your prior questions is what have I been developing since I started on the book. That’s one of the biggest changes because officially, millennials are now the largest workforce segment having replaced baby boomers. It takes a lot of complex approaches to management that the lone wolf manager just, you just can’t do it, it’s just too complex, too challenging. One premise of my book is this, that it’s a lot easier to be a successful servant leader than it is to be a poor manager. Being a poor manager takes a lot time. You’ve got to invest a lot of time in planning, developing and monitoring. It’s really a lot of heavy load, a lot of heavy lifting. When you could share it with your reps, it not only makes your job easier but makes your decision making better and it creates an environment, the sales culture that’s going to be more successful than a typical command control sales sculpture. Marylou: Especially in the newer sales models, like the ones that we advocate which is separating out the sales roles into multiple role types. If there’s one manager over all of that, it makes it difficult to be a command in control because there are very different styles of management and managing depending on the role of the sales person. As an example, the top of funnel folks that I worked with, business developers are really on a daily metric rhythm. We’re looking for more of that hard worker profile, they’re coming in and doing a lot more communication on a daily basis with daily metrics that are actionable in nature that they’re trying to meet. When the prospect moves further into the sales pipeline, we get more of a relationship building, sales person. The metrics may change to weekly, quarterly depending on the size of the actual revenue potential. But if you have one manager overall that you’re trying to micromanage, it’s an impossible task. Something is going to break in that type of model. One of the other things that I thought was interesting from your book, I’m a big fan being an engineer of course, of the lean, six-sigma, that methodology. I apply it actually to my framework. I notice that you’ve also adapted, adopted, taken pieces or maybe even the whole thing to looking at the the success of the team, performance. Could you elaborate a bit on that? Max: What I’ve recommended, I’ve got two models here; the six sigma and the dimming process. Just to give you an example on six sigma, you can use six sigma in a sales environment. What I recommend is to use it as a teamwork tool. For example, the six sigma process has five basic steps. First, this is part of the whole continuous improvement concept in sales management. Continuous improvement meaning that you don’t settle for last year’s accomplishments, you continuously build and continuously make your sales process better year by year. Using six sigma, the first part of it is to define your problem. In a teamwork environment, let’s say for example that you have a sales cycle that’s two weeks longer than the industry average, you need to compress your sales cycle. You define the problem. First, you have a longer sales cycle than you’d like and then you define the components of that problem. It could be a lack of technical assistance, it could be a level of customer knowledge, it could be discounts and all these things that impact your sales cycle. Maybe you’re not offering enough discounts or promotional incentives. Maybe you’re not offering adequate technical assistance to make the sales faster. Maybe the customer doesn’t know enough about the product and they’re taking longer to make a decision. You define the problem and the components of the problem. Then, second step is to measure. Let me back up a little bit, you do this with your team because these people are really the ones who know the answers to your problems. If you have a slow sales cycle, a manager might have some ideas of what the problem might be, but you could probably go to any sales person and say, “Hey, we need to make this sale cycle faster, how do we do it?” They can probably tell you, they know, they know the answer. Sitting down, getting your team involved in the process, asking them these questions, defining the problem. And then number two, how do you measure? In this particular phase, you might measure it by contract dates. You develop a measurement tool. We get sales people to identify contract dates and as well the status of their particular customer. Where do they stand as far as product knowledge, do they need technical assistance? You develop the data to feed your ultimate decision making and then you analyze it. The third step is to analyze that data, to take a look at the dates, the discounts. For example, what level of technical assistance was involved in sales? And then the fourth step is to improve. For example, let’s say that you find customers who have technical person come out and help them in the early going of the sales buy faster. That tells you right there we need to get more technical people out on the sale early to speed up the sales cycle. Or, it could be discounts. Maybe you’re showing a positive correlation between the level of discounts offered and the speed of the sale. Maybe customers will buy faster if they’re offered the discount earlier. You institute, you implement these various tactics to improve your sales cycle. The fifth one is really the easy part and that’s continuing to track your sales cycle, continue to monitor incentives, to provide training and all the administrative support to implement those improvements that you’ve identified. That’s kind of a nutshell of the six sigma using the specific example. It’s basically a five step process. The key thing is getting your team involved in it because they’re gonna provide you with rich data. But, even more importantly than that, they’re going to buy into the process and really make your execution a lot more effective in the long run. The other kind of things that you look at in this whole six sigma process, one of the key things is root cause of analysis. Too many times when we get involved in problem solving specially in sales management, you take a look at a problem and you take a look at how we’re gonna solve it without necessarily looking at what the root cause of that problem is. Six sigma gets you to the root cause because you defined the problem and you developed metrics to measure how your solution is working to the problem. Instead of saying, “Okay, our sales cycle needs to be speeded up,” or, “We need to be generating more new business.”  What do we do, do we offer new incentives? What do we do on a superficial basis just to kinda get the problem addressed and move on to other things? Well, six sigma goes below that down to the root cause and it develops a sustainable program that you can use year after year. But in addition to that, to developing a sustainable program that’s going to be successful on an annual basis, it also gives you the numbers to see where maybe this solution at one time worked but a year later it doesn’t seem to work as well. We need to go back and take another look at it. I’ll give you an example in a six sigma process, you can come up with let’s say your sales cycle. Let’s say that you are trying to compress your sales cycle and you found out that discounts really made a difference today but in a year you find out through your tracking that discounts aren’t working as well, customers are getting tenured to discounts upfront. We need to look at some other alternative because everybody is offering discounts so it’s kind of deluding the effectiveness of your discount program. That’s the other good thing about the six sigma process and that’s sustainability. Marylou: We use a portion of that to define at the top of funnel the pain points that we’re going to have in our sales conversations. We actually settled on the Mckenzie issue tree because sometimes the six sigma, the five whys was a difficult thing for some clients to grasp. We use this issue tree where we start with the root issue and then we drill down from there and eventually get to root cause but it’s more of a less structure way, I guess, of just kind of branching off of a tree to say well, it’s this problem but that means it’s really comprised of all these different things. That allows us to then take those pain points and create effective campaigns for email or scripts for voice mail, things like that, tactically. I love the idea of looking at these and analyzing it through the root cause it does. Everything changes. One of the things that I think your book really speaks to is the fact that this is something that you don’t set it and forget it. It’s a continual cycle of continuous improvement. We’re really trying to build a cohesiveness with our teams but also stretch goals and get to the point where we can continually improve the sales environment and also the revenue potential. Max: Yes, exactly. One point that I make in the book is to stretch but don’t over stretch. Stretch objectives are great. However, one of the studies that I was taking look at… First, 75% of high performing sales team set stress objectives, set objectives that are 10% or higher. However, that’s the good side of it. On the other side of it, sometimes we have a tendency to over stretch. It’s estimated that it’s as high as 80% of stretch goals are not achieved. Here’s one thing that I put in the book, instead of making for example a 15% sales goal that you know you can’t achieve, why not set it at even 8%? Which is a stretch but something that you can achieve. Here’s what happens, let’s take a look at two years time. It would be better to achieve 8% on an 8% objective. Over two years time, you have 16% growth as opposed to 15%. Even if you achieve 8% on a 15% objective, you made the same percent of increase, however, it’s viewed as a failure. It’s kind be more realizing for sales team when you over stretch when you can make that stretch objective a little bit more moderate but something achievable. Marylou: Indeed, indeed. Max, how can people get a hold of you if they want more of your time to discuss the material in the book or other learnings that people can flock to you for that relate to this book? Max: I do regular articles on LinkedIn. The best way to take a look at sampling is to go to my LinkedIn account. I have a full array of articles there that all pertain to subjects from my book. And then also all of the booksellers online have excerpts from the book as well including amazon.com, Barnes and Noble, any kind of bookseller online has the book as well. Marylou: Very good. So LinkedIn is one way to get a hold of you. Is there a website that you have that people can go to or is it mainly through the LinkedIn vehicle? Max: Primarily through LinkedIn. Marylou: For those of you again, the book is on all the major retailers, it is an excellent read for those of you who are in management or even considering going into management because you know that a lot of times, the more tenure we have with the company, there is a little bit of an expectation that we’re gonna be moving up into management. This will give you a well rounded recipe, if you will, of how to get there and get there in a way that’s going to ensure success for you, your team, and also the quality of life of a sales team I think will be enriched by reviewing and reading and following the steps in Max’s book. Thanks again Max for your time, very much appreciated. Max: I appreciate it too, thanks a lot.

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