Justin Roff-Marsh is the author of “The Machine: A Radical Approach to the Design of the Sales Function”, and the Founder of Ballistix, a sales process engineering consultancy. I really enjoy having Justin on the show because he challenges so much of the conventional sales orthodoxy. And he does it in a very logical fashion. On this episode we talk about why sellers should shift their focus from conversion rate to opportunity flow. Plus, we get into the 3 main factors Justin sees suppressing opportunity in sales teams.
Andy Paul: Welcome back to the show.
Justin Roff-Marsh: Thanks for having me back.
Andy Paul: You and I were talking before we started recording. You’re actually, we’re here just to have to turn of the year. And you’re the first person I’ve talked to.
Justin Roff-Marsh: Yes, I am internationally, not just domestically, but like we were saying before, I’m lucky. Cause I was one of the sort of first or second batches of people to get COVID. I’m a little. A bit more relaxed about that than the rest of the population is?
Andy Paul: How did that experience go for you?
Justin Roff-Marsh: It was annoying. It kept me off the tennis court for, I think three days.
Andy Paul: You had a pretty mild
Justin Roff-Marsh: I had what I thought was a cold. And then then I got a fever and I still didn’t realize I had it until I lost my sense of taste. And then of course I knew I had it. So I went and got tested and I think at the time it took three or four days to get the results back.
But by the time the results were back, I was when the, actually, when the doctor rang me to tell me. He had it, he interrupted my tennis lesson and he said to me, look, how you feeling? I said I said to be truthful, you’re interrupting my tennis lesson. I feel just fine. So it had already it already gone.
And the symptoms were residual symptoms had disappeared. My taste was back like four days after that. So it was, I think pretty mild, although I know people who’ve had it even milder.
Andy Paul: Huh? Yeah. Yeah. I said you’re very fortunate in that regard. So what’s the, so you said you’re out in the Midwest, not too far. You’re Milwaukee, not too far from my hometown of Madison. So you’re presenting to groups.
Justin Roff-Marsh: Yeah. So I do a lot of presentations to Vistage groups of with Vistige they’ll generally fly me in a few and I’ll speak to a few groups in the one trip. So I’m speaking to two groups in in Milwaukee on this trip. And I got back. I was in Columbia just before just before Christmas I ran a series of workshops, 6 straight days of workshops, I think, in in
Andy Paul: Wow.
Justin Roff-Marsh: So I’m back in the saddle.
Andy Paul: You are way more than most people. I know. Yeah, hopefully 2021 is the urine. Most of us get back to doing what we liked.
Justin Roff-Marsh: I hope not because if it’s not, it’s going to be the year. We all get to experience bankruptcy.
Andy Paul: Yeah. It’s been yeah, so hard to predict, right?
Justin Roff-Marsh: Yeah. COVID, it’s been good for us. It’s actually caused us to have a a big year, but I think I would hate to gamble on that luck lasting forever. I think it’s been an opportunity for us because we’ve been preaching this idea of moving cells inside for the last 24 years. And all of a sudden companies have been forced to do that, whether they agreed philosophically or not, that it was a good idea.
And obviously we’ve benefited from that because we’re the obvious folks for them to talk to.
Andy Paul: Yeah. Yeah. Got it. So if people listening to this is listened to. My past conversations with Justin, that I love talking with him cause he has a very unique perspective on many things about sales, oftentimes. So I appear to be contrarian which is, I think more of a voice of what we need in sales. It seems like we’re, I don’t know. I just same feeling that there’s this sort of massive drive to conformity in sales.
Justin Roff-Marsh: There is, and the reason there’s a massive drive to boards conformity.
Andy Paul: Or mediocrity.
Justin Roff-Marsh: I conformity probably isn’t a bad, isn’t a bad word. And I think there is a drive to conformity. There’s a drive for people to embrace the orthodoxy as an act of faith. And the reason there’s a drive to embrace it as an act of faith is because the whole orthodoxy is built on very questionable assumptions and people tend to get.
People tend to work themselves over into a religious fervor over things they don’t quite believe in, or they’re struggling to believe in. Nobody nobody gets evangelical about the fact that the sun’s going to rise tomorrow. It’d be hard to build a, to be hard to energize a congregation around that proposition. But th there is a drive to conform and he ran sales ideas because a lot of them, they don’t stand up for you all to scrutiny.
Andy Paul: Let’s dive into something like what are what’s one or two of the key?
Justin Roff-Marsh: I’ll give you my favorite one right
Andy Paul: okay.
Justin Roff-Marsh: If you ask any executive who should be responsible for revenue, sales or operations, everyone’s going to say sales. What?
Andy Paul: Yeah.
Justin Roff-Marsh: Yeah. And it’s not just what people think is what people do. The finance will go to sales and say, look, how much revenue do you think you can generate next year?
And sales will scratch their chins and think about it and talk to customers and do forecasts. And so on. Then the underlying assumption is that say the sales department generates revenue. But it doesn’t take more than about two or three minutes of exploration and I’ll walk you through the process of, to prove that it’s absolute BS and it’s not just, it’s like obviously BS. And if anybody stopped for just a minute or two to ask a few simple questions, it would, you’d expose it as BS. The idea that sales generates revenue. So I’ll ask you the questions.
The first question is if you’re a typical business, And you let’s say you’re going to do $10 million in revenue in 2021. That’s your expectation? How much of that $10 million in revenue do you think is going to be existing customers repurchasing as opposed to brand new customers purchasing for the first time or existing customers purchasing things that are materially different from what they normally purchase?
Andy Paul: Lots of categories there. would say generally, I would say generally serve two thirds from existing customers
Justin Roff-Marsh: Exactly. So two thirds repeat business and want to, and that’s one to either brand new accounts or existing accounts buying brand new stuff. Yeah. So 70 to 80% is the answer that everyone gives me. Always, except in some project environments that sell one off big projects, but in every other case, the number is I get is 70 or 80%.
So that means of the $10 million we’re expecting to book next year, 7 million of it is going to come from existing customers repurchasing. Okay. So if salespeople are responsible for that means that we think. That salespeople should be responsible for retaining accounts.
Andy Paul: They’re not in many cases these days, so yeah, go ahead.
Justin Roff-Marsh: But we would have to think that in order. For us to believe that salespeople should be responsible for residual revenue. We’d have to think that, that they at least influence it. Otherwise it wouldn’t make any sense. And in most organizations, salespeople do own accounts and they are credited and in many cases compensated for that residual revenue. So if we then ask the question well, Why do accounts stay the easiest way to ask that question is to flip the question and ask why do accounts leave. Now it turns out if you look at why accounts, if you look at why businesses lose accounts in most businesses, the three most common reasons in descending order of frequency poor operational performance, the company breaks his promises. Number one, number two is pricing too expensive. Number three is product, insufficient range or the competitors have a product that’s technically out technically performing better or whatever the case is. They’re the three reasons.
Andy Paul: But three is different than one. So one could be the product just didn’t perform to expectations.
Justin Roff-Marsh: Yep.
Andy Paul: Broke its issues.
Justin Roff-Marsh: It was more commonly. It wasn’t delivered on time.
Andy Paul: Okay.
Justin Roff-Marsh: Yeah, but it could be.
Andy Paul: Or whatever,
Justin Roff-Marsh: Yeah. Now, which of those three a salespeople are responsible for? Or which of them do they directly influence? No operations is responsible for all three of those.
Andy Paul: Are you equating operations with customer success?
Justin Roff-Marsh: Customer service. Yes.
Andy Paul: No, no customer success. As most SAS companies have. They’ve got, yeah, most SAS companies take their existing count base and turn over to customer success to manage all the upsells.
Justin Roff-Marsh: Kind of customer success. So customer success is normally used to refer to the team that’s responsible for onboarding new customers, but then they hand them off to help desk or customer service once they are onboarded. So customer success, at least in the SAS companies I’ve been exposed to their job is to get the new customers properly hooked. So to get them using all of the features so that they can then yeah.
Andy Paul: But increasingly they are responsible for all that renewal revenue, customer success teams. I see it in Saas companies. So that’d be your operations. They’re not sales people.
Justin Roff-Marsh: Yeah. Do they live within the operations department? Do they answer to head of operations or do they answer to head of sales?
Andy Paul: Great question. So getting back to your original point is where should they report? I think it’s the answer is both. No I’m saying in the same company, it’s not both, but you’ll see different companies in operations and someone in sales.
Justin Roff-Marsh: My point is that it simply doesn’t make sense to, to make cells to wholesales accountable for revenue. Operations should be held accountable for revenue because of the seven, $7 million we’re planning to book next year. The part of the organization that has the biggest influence over whether or not we’re going to book. It is not the sales department. It’s operations department.
Andy Paul: I’m just laughing because yeah. Thinking about that is that yeah. I know companies that have moved just recently, have moved customer success under sales and just thinking about your, what you’re saying, it’s yeah, they’re responsible for the lion’s share revenue. Shouldn’t be the other way around?
Justin Roff-Marsh: Now the, to go one step further, if we’re looking at the incremental growth. I would argue that incremental growth is also going to come from operations, not for themselves. For example, if you supply fasteners and you supply, Phillips head screws and flat screws, do you really need a sales person tapping a customer on the shoulder and say, do we sell a bloody whatever they call it, the star head screws.
Yeah, it’s not necessary. If you want incremental growth, if you want your existing accounts to buy a bit more, a few more licenses or few different types of screws, you don’t need salespeople involved in those transactions. If you want that incremental business, the best way to get the incremental businesses to do a good job of, delivery, pricing product, and it should be operations responsibility. And the responsibility of sales should not be revenue in general, it should be explicitly new business revenue. Okay. And that means we need two different calculations. We need to account for revenue and hold operations accountable to that. And then we need to take new business revenue and we need to gross it up for the lifetime value of customers of well each when new businesses concerned each initial transaction represents an annuity, the acquisition of an annuity. If you sell a new SAS client, or if you go to existing customer and sell them a new category of service, that’s an annuity. So what you should be doing is you should be saying the net present value of this annuity is seven, eight, 12 times the value of the initial transaction.
Where sales is concerned, we’re going to take the value of those initial transactions. We’re going to gross them up to to lifetime value to net present value. And that’s what we’re going to hold sales accountable for, but there are two different numbers calculated in two different ways and they can’t be added together. They shouldn’t be added together. They should be always kept apart.
Andy Paul: Interesting. Yeah, processing as you’re talking.
Justin Roff-Marsh: And if you don’t do that, it leads to bad decisions. So here’s an interesting one. For many of our clients, if operations does an extraordinary job of doing its job, delivering on time product range pricing, the organization will naturally get incremental growth. Naturally get incremental growth.
And in fact, in a reasonable size organization the volume of incremental growth will be sufficient to dwarf new business revenue. In other words the new business revenue. It will be locked in. Yeah, it will be lost in the noise. It will be indistinguishable. So unless the organization goes to the trouble of recognizing new business revenue and grossing it up to to, to net present value the value that’s being added by the sales team will be invisible, lost in the noise.
So we’re holding salespeople accountable for something they have virtually no control of. And in the one area where they actually adding value, we don’t go to the trouble of making that value, even visible. Some of them should go for someone should go to jail for that. Shouldn’t they? That’s serious misconduct. If you were responsible for running a business and that’s the level of care that you’ve applied to, calculating the economics of your own business.
Andy Paul: So you still, okay. I’m just thinking this through. So have you extended that through to say, okay, then what’s the impact of of revenue of, instead of focusing on your churn rate, but focus on percentage of new business as a person on per new business, as a percentage of the total. If that number drops below a certain point, then you’re going to have an ultimately have a growth issue.
Justin Roff-Marsh: I’m not. Yeah, I’m not sure you need to compare. I’m not sure if it’s necessary to compare the new business as a percentage of the repeat business, because in different stages of the evolution of the organization, that ratio is going to change dramatically. If you looked at, say Amazon web services to try and use it, to use a tech example, today, as opposed to AWS, 15 years ago, those numbers would be dramatically different.
Andy Paul: Sure. was talking about something more mature, but right. Yeah.
Justin Roff-Marsh: Yeah, I think the issue is well, at what rate are we generating new business revenue relative to the rate at which we intend re rate at which we need to hit our growth targets. I think that you should essentially ignore revenue, if you’re discussing sales and growth. What I’m saying is if you want to have a conversation about growth, you shouldn’t be talking about revenue in, in, in the traditional sense. You should be talking, you should be focusing exclusively on the net, the net present value of the new business one.
Andy Paul: Lifetime contract value.
Justin Roff-Marsh: Yes. Yes. And that should be completely separated out from day-to-day revenue. The two should never be mixed except for when you do your tax. So the only time you need to blend those numbers together is when you submit your tax to the tax office, aside from that those numbers should never be added together when it comes to making business decisions. I can’t think of a single decision that would require that you add those numbers together.
Andy Paul: Yeah, except compensation, the chief revenue officer.
Justin Roff-Marsh: But hang on now you’ve got one person. So chief revenue officer the title is that person is miss titled. They should be chief new revenue officer. Unless under the chief revenue officer, I guess you have to, because, so how’s that gonna work? If we’re saying that repeat revenue is the responsibility of operations. Are you saying that operations answers to the chief revenue officer?
Andy Paul: Yeah, the way that you’re just, it oftentimes does in SAS companies, the way you’re describing operations, it’s really the customer success function. It’s got account managers, got your technical support and so on your implementation and onboarding,
Justin Roff-Marsh: Okay.
Andy Paul: And analysts.
Justin Roff-Marsh: Do you have product down sewing and the engineering team? Do they all come up under the chief revenue officer? If so, I guess that’s fine.
Andy Paul: No. Typically engineering, separated, product development, engineering, and separated.
Justin Roff-Marsh: Yeah.
Andy Paul: Don’t rarely don’t see that in SAS companies under an operations function.
Justin Roff-Marsh: Yeah. When I think of chief revenue officer, I think of someone who’s responsible for growth. So I would argue if the goal is for that person to be driving the growth of the organization, I would argue should they be responsible for all the revenue or just new revenue?
Andy Paul: Yeah personally I think they should be just for new revenue.
Justin Roff-Marsh: Yeah, I agree.
Andy Paul: Because, cause I think that’s, it’s easy to get complacent and saying look, our recurring revenue is growing at X rate and then miss on the new business.
Justin Roff-Marsh: Yes. And now someone listening to this may be thinking, Oh, but what about churn? W we don’t just want to be generating new revenue and turning it in. And I think there might be a case in. SAS businesses and some other similar businesses where you’re essentially trying to sell a subscription and this would apply to two simple distribution businesses, too.
I think that there’s an argument that sales shouldn’t just be responsible for the first transaction. You, it might make sense for sales to be responsible for getting the customer hooked. You might in some environments getting the first transaction is means nothing. If you go to the customer and beg them for the opportunity to quote, they will let you quote, if you go to them and beg them for one transaction, they’ll give you one transaction.
It means nothing. So w we might, some of our clients, they won’t give salespeople credit for a single transaction that they took. They talk about the, they use the term first qualifying transaction. So we’ll say, look until we’ve received three con three consecutive transactions or three transactions from this client.
You don’t get to win that opportunity.
Andy Paul: And so they don’t get paid any of their incentive pay until they’ve done the third transaction.
Justin Roff-Marsh: Clients don’t pay incentive pay, but the salespeople in on I’ll watch salespeople never get incentive pay. They get paid salaries, but they don’t get in any recognition for the sale.
Andy Paul: Okay. So when you talk about your clients, don’t pay commission. Let’s dive into that because tell us about that.
Justin Roff-Marsh: A whole approach is involves the sort of radical approach of division of labor to sales environments, just like manufacturing, and. And they used to be piece rate pay and production environments, but of course, piece rate pay disappeared when division of labor was applied in a principle way, because, if you imagine a manufacturing plant, you’re not interested in trying maximize individual productivity, you’re interested in maximizing throughput of the plant as a whole.
And in fact, and attempt. An attempt to maximize individual productivity would do enormous damage to the fruit of a plant. And the same thing would apply in a software development environment. If we said we want each sales person to check in as much code as possible, as many lines of code as possible every day, that’s not going to add up to a more productive environment.
What we need to do is to manage the environment, to maximize the rate at which new features get released to customers, not the number of lines of codes that get lines of code written. Otherwise, all they’re going to do is generate rework. The same thing applies in sales environments.
W when we strip away. All the responsibilities from salespeople apart from selling conversations, they become, it becomes a team sport. We have a promotions team with generating ops. We have an engineering team that’s working with salespeople and solution design and budgets and proposals and so on.
And it no longer makes sense to say we’re going to compensate members of this team on a piece rate based upon the assumption that we want them all to work as fast as possible. We don’t, we’re trying to maximize throughput for the team as a whole.
Andy Paul: Or that in a team environment is the message would be that. Why would we compensate the salespeople if other people play a yeah. An equal role, let’s say in landing the opportunity.
Justin Roff-Marsh: Yeah. Some of our clients that sell sort of engineered solutions or products of some kind, the sales person might do set do five or six hours cumulatively of work to win a deal. But other folks, including the engineering team, might’ve done a hundred hours a week. And the engineering team could well contain some individuals whose market value is much higher than salespeople.
So the idea that we’re going to have a sales person earning $300,000 a year and driving around in a shiny black Porsche, it’s just not going to fly well. And that’s why in most sort of heavy engineering environments where we work, we don’t have to talk them out of paying commissions. They eliminated that years ago. Cause it’s unconscionable. So we eliminate it and it annoys me. I didn’t have to talk about it. It’s it should be one of the least controversial things we do. We eliminate it. And our position is that perform. If you’re in sales, it’s no different from any other role in the organization, performance should be compulsory, not optional. If I decide I want to join an organization as a welder, I would show up on my first day of work with my welding mask and my sticks. And my job would be to weld the parts as they moved towards me. And I should weld at the rate at which parts moved towards me and no faster. If there’s no welding for me to do, I shouldn’t be wondering around the organization looking for things to weld and if there’s work accumulating, upstream for me, I should probably weld a little bit faster to avoid becoming a bottleneck.
Andy Paul: And so downstream from the salesperson in your system that you implement with your clients is marketing, generating ops.
Justin Roff-Marsh: Upstream, upstream. Yes.
Andy Paul: Yeah. Upstream, right? Sorry.
Justin Roff-Marsh: So our clients would structure marketing similar to procurement in a manufacturing environment that there’s almost like a min-max, it’s not quite a min-max configuration. There’s SAS salespeople look at cues of opportunities and their sales people’s job is to assign activities, to queue to their queue of opportunities until individual opportunities to resolve, to either won or lost.
As soon as that happens, the opportunity drops out of the queue. And the very next day that queue has to be replenished. So with an insight and an insight sales environment, a typical sales person will have 15 selling conversations a day maybe 60 attempts, 15 selling conversations a day that will result in them closing about 10 opportunities a day.
Maybe they win one, lose nine. The percentage of the win rate will vary, but the throughput is always roughly the same. It’s always about 10 ops per person per day. That means the job of marketing is to replenish salespeople’s queues at the start of every day. So every day each sales person on average gets pushed 10 new ops to replace the 10 they closed yesterday.
Andy Paul: And in the environments that you’re working in with your clients is, so how does marketing achieve that predictability? Because there has to be a fair of a variability in the quality of the opposite. They push them to the sales. Using the scarf assembled on our conveyor belt type analogy or metaphor.
Justin Roff-Marsh: Yes. So we can’t fix both. We can’t fix quality and quantity in order. And we’re most definitely gonna fix quantity. So that’s non-negotiable if you join the marketing team, you understand that you must have a plan itself. It was all community kids, every single day come hell or high water.
Otherwise you won’t work there anymore. Or the whole bloody thing will be shut down and rebuilt. But that’s not optional. So we have to allow for a variation in quality. Now. Th that should be expected. The cells is probabilistic. There’s no way of, there’s no way of eliminating nor would it be healthy to attempt to eliminate the variation in quality if by quality, we mean variation when right.
I’m not sure it’s even healthy to equate quality with when,
Andy Paul: No, I think there’s, but I think are there’s fit. That’s something you can, and at least on a surface level, you can have some control over it.
Justin Roff-Marsh: So we have to start with the definition of opportunity. If you ask salespeople to define opportunity, though, they’ll think that they can define it easily. And then they discover that they can’t, it starts to get a bit messy because the sales people do not want to define a sales opportunity as simply an opportunity to sell. They absolutely do not want to do that because they recognize if they define a sales opportunity as an opportunity to sell. There is no, there was never an excuse, not for them to be busy. Yeah, so I was talking to someone this morning. I said how many it, the guy was from an ad agency. I said how many companies are there in your region? That would be a type and a size where you would be interested in winning their accounts. You said, Oh, probably about seven or 8,000. I said of those seven or 8,000, how many of them are clients? He said no, they’re the ones who aren’t clients. I said, Oh, so seven or 8,000. So was opportunities for yourself, people. He said all, they don’t see it that way. I said hang on sales opportunity to my mind, infers opportunity to sell the reason they don’t see it that way is they don’t want to see it that way. But the executive team,
Andy Paul: Why doesn’t the sellers want to see it that way?
Justin Roff-Marsh: Becausetheir life is much more comfortable. If they only attempt to sell things to people who are walking towards them, waving money.
Andy Paul: Always the case.
Justin Roff-Marsh: Yeah. So it’s not the responsibility of the sales team to define the term sales opportunities. So the responsibility of the executive team, and then us as members of the executive team, we need to decide, do we want to define words? So as to make salespeople happy or to do we define, do we want to define words? So as to model the true nature of reality, To allow language to model the true nature of reality. And the latter tends to be the more sensible approach to communication.
Andy Paul: Yeah, but at least the least taken, but the most,
Justin Roff-Marsh: Yes. Yeah. So if we say an opportunity is exactly a sales opportunity, exactly. That an opportunity to sell then qualification to the extent that it should exist at all, which in my view is no, not at all. Simply means approaching. Those organizations that are oversized and type that they have some a non zero likelihood of purchasing in the indefinite future.
And they are not already customers. Now, nobody has problems with qualification. If that’s all we mean by it. A junior marketing person can solve that problem in about eight minutes. No, let’s get list of SIC codes. Let’s call up. Let’s get a list of every single organization in the marketplace. With those SIC codes, let’s remove the ones with less than a hundred employees, and then let’s remove the ones that are already accounts.
Okay. Now we have 8,456 companies to go and sell to the, all of those are sales opportunities in my book.
Andy Paul: And you were saying about qualification, but if that’s the case, you don’t need to qualify.
Justin Roff-Marsh: No, and I, you all could qualify them. But that’s not what sells people use the word qualification for salespeople use qualification and they try not to make this explicit because they understand that it wouldn’t be received well if they made it explicit. But you and I both know that salespeople, you, I think that you and I both know that salespeople use the term qualification to differentiate between those prospects that are walking towards them and those prospects that are walking away from them. And their life will be a lot more comfortable if they sell to people who are walking towards them, approaching them with money in their hands, which is why the two default qualification questions all over the world. Do you have budget? And when are you planning on purchasing?
Andy Paul: That’s right. Budget timeframe. Yes.
Justin Roff-Marsh: Yeah, but we don’t. When we’re working with our clients, we don’t want salespeople talking to prospects.
We’re walking towards the organization with money in their hands. We would much rather that we will not, we will direct all of those people to customer service. We don’t want salespeople to have anything to do with them. It’s, there’s a very strong risk, a very big risk that if you allow sales people to talk to those people, sales people will actually talk some of them out of transacting. We want salespeople to be focused exclusively on the prospects who are walking away from it.
Andy Paul: Very interesting.
Justin Roff-Marsh: No people, if we tell sales people that they’ll say you mean you want me to cold call? To which I will say if you, if by Coco you mean, do I want you to talk to strangers then the answer of the questions and absolute unequivocal? Yes. I want you to talk to strangers and if you don’t like talking to strangers, let me ask you a follow-up question. That’s why the hell are you in sales in the first place? Now if salespeople have a concern that they will attempt to start hundreds of conversations, w with an extremely low strike rate, not of sales, but if they will try unproductively to start large volumes of conversations. And that will be soul-destroying then I have exactly the same concern. I agree with them. Absolutely. Yes, that’s a concern. We have to figure out a solution to that. But the solution to that is not to avoid talking to strangers. What we have to do is to come up with a proposition that’s compelling enough that strangers are prepared to talk to our salespeople. Then our salespeople have to grow the hell up and talk to strangers.
Andy Paul: Yeah. It seems yeah, there’s always this issue of coral actins, but it seems like in general, these days, there are some companies that talk to us. Not a problem making calls. In some cases almost seems and this is, I think I have to be part two of a conversation because we’re running out of time here today.
But yeah, it’s some cases, it seems like too many people they’re talking to and they’re not discriminating enough. But what’s the sort of interest is to get your feedback on that in the terms of qualification?
Some point you have decided whether somebody is worth your time or not.
Justin Roff-Marsh: Oh, okay. I see what you’re getting. Yes we, okay. We see that we see salespeople. Yes, we see salespeople who are not selling in any meaningful sense. They’re having a perpetual conversation. W with the same pool of customers and management needs to put a stop to that. Sales salespeople need to operate in an environment where they’re supervised.
We address that problem in two ways. Then three ways, probably the first way that we address it is we say that we like this isn’t new. We break the opportunity workflow into stages. And at each stage, the objective is to sell up to the next stage and The sales person at each stage should be looking for a yes or no, not a maybe.
The result of that is that if I talk to you and I say, Andy can we schedule a, can we schedule a workshop with our engineering team where we can build a set of requirements that will allow us to generate a proposal? And you say yes, and we go ahead and schedule that’s a meaningful, next activity, right?
Yep. It gets scheduled in, it gets scheduled in the calendar. The activity appears in CRM and your supervisor can sit with them with you and look at it and say, yep, I handed you that well done. We’ve progressed this opportunity to the next stage. That’s a meaningful, next activity scheduled. But if you look in salespeople’s calendars, Like against, if you look at the upcoming activities against ops, you will see a note to call someone back in three months.
Like, why the hell are we calling them back in three months? W what’s you know, there’s a note in there to call the prospect on the fifth of. March why the 5th of March is it because the 5th of March is three months from last time you talked to them or is it because something specific is happening on March five and supervisors need to put salespeople on the spot, ideally in front of their peers and say, what exactly is happening on March five?
Why is that cool book for them? And it’s likely that the sales person simply got reluctant agreement from the prospect. Who’s too polite to say piss off. That they can call them back in three months and that management should be responsible for shutting that kind of malarkey down. It’s not sensible, it’s not useful.
You should be auditing salespeople’s activities in CRM to make sure that the pending activities against opportunities are meaningful. And if they’re not meaningful, You want to flush that out and you want to tell salespeople to grow the hell up and close. That opportunity is lost. And so supervision and Papa usage of CRM are two of the ways we solve that.
The other way we solve it is we choke the release of ops to salespeople. So salespeople only get new ops when they close out all ops. And we simultaneously enforce a minimum volume of selling conversations a day. So if you’re in an environment where you have to have 15 selling conversations a day, cause it’s a necessary condition.
Andy Paul: Keep going. Yes.
Justin Roff-Marsh: Yeah. If that’s not negotiable, you have to do that. And you I’m reluctant to close opportunities. You can S you can kind of string. You can string yourself along for a little while by simply, Making those call me back in three months type activities but sooner or later that’s going to fail and you’re going to find yourself sitting in a big hole with no one to talk to because every single one of you opportunities has requested a call back in three months.
So at that point, you’re going to be desperate for opportunities and your supervisor is going to say no I’m not I’m no, Andy, I’m not going to release any more ops to you because you’re still sitting on a queue of 80 ops. You better close some. So by having a one at one in whew it balances salespeople’s reluctance to abandon ops against their desire for new ops. And it. Yep. Keeps it keeps things healthy. Anyone who’s released anyone who’s released ops indiscriminately to salespeople, if it sells people, operate in an environment where there are plenty of opportunities, you quickly see salespeople sitting on two or 300 opportunities because they don’t like to close them.
They like to be like a chicken sitting on hundreds of eggs, just in case one of them hatches.
Andy Paul: Yeah, that’s one of my bugaboos. We are going to actually, that was going to lead to a topic we originally planned to talk about. I didn’t ask any of the questions I had planned, which was a really interesting article. You’d written about deal flow versus conversion rates, but we’re going to have you come back and talk about that.
Cause we’ve run out of time. As always, it’s so much fun to talk with you. Justin, I said always a pleasure and we’ll do this again . Shortly.
Justin Roff-Marsh: Excellent. Thank you, Andy.