Frank Cespedes is a senior lecturer at Harvard and author of an excellent new book titled, Sales Management That Works: How to Sell in a World That Never Stops Changing. In his practical and research-based guide for managers, sales people, and investors, Cespedes offers essential strategies for thriving in markets that never stop changing. This is a must listen episode for anyone in sales management.
Andy Paul: Frank. Welcome back to the show.
Frank Cespedes: Andy. Very good to be here. Thank you very much for inviting me back.
Andy Paul: Well, glad it’s been way too long. We shouldn’t wait till we have a new book come out.
Frank Cespedes: Yes, that’s true. On the other hand, we can do this two or three times about the new book. It’s all right with me.
Andy Paul: I think we will do that because there’s so much to cover. It’s such a good book. Called sales management that works. And the theme of the book is really starts with change. And I think that this is certainly an appropriate topic for sales, which is all about change, but you say that sales is changing, but before we get into the details of that, as I have maybe a broader question or framing question for you and this is in your opinion, because I haven’t seen any data on this is.
Are sellers today more or less productive than sellers in previous decades. Meaning, and I use this measure of dollars of revenue generated per hour of selling time, a server, a metric. But, my, my sense is I asked this question a lot is even despite. So being in this quote, unquote golden age of sales technology, and marketing technology, there’s a sense that sellers are less productive today than they were before.
And I just wondering if you had a sense about that, any of them,
Frank Cespedes: Yeah and I can also cite some data, but it’s, now I’m putting my academic hat on for a second over my bald head. But let me just say it’s circumstantial evidence, but it all tends in the direction that supports your point of view. Look selling is obviously a very diverse activity.
Selling a software is different than selling capital goods. Selling enterprise software is different than selling SAS, et cetera, but this is what the data says. If you were race. All of that hetero jannati first there is the the anecdotal data that you get, again and again, across industries about the dwindling percentage of reps that make quota.
So that’s number one. Number two is I think a bit more interesting data, but if you look at the cost structures, Of the fortune 1000 companies globally over the last 15 years. The reality is that those companies out of necessity, the financial crime ISIS in 2008, 2009, now the pandemic, but those companies have actually done a very good job managing their costs and their productivity for what you might call back office functions, board services, et cetera. On the other hand, SG and a, and especially the S part. The selling that has increased dramatically as a percentage of companies total costs. And then the third thing is the data about what percentage of time sales people actually spend in customer contact and by customer contact. I don’t just mean, showing up at someone’s office or doing it via zoom. All customer contact through phone emails, et cetera. And in most sales forces, that number is about 30 to 35%. In other words, 70 plus percent of the time is not spent doing what a sales person’s hired to do again that all of those items are going to change and differ fairly significantly across company and industry. But in the aggregate, there’s a lot of circumstantial evidence to support your instincts about this.
Andy Paul: Yeah, it was further triggered by an article I’d seen that Paul Krugman had published in the New York times last fall, talking about rate approach should be growth in the U S economy and saying it’s basically flat in the two thousands, the century. And by when you looked at his chart or the inference of productivity growth, really, since I guess it was the seventies, is that. Productivity growth. Basically, it was driven by a personal computer email and the internet and broadband. And beyond that things, it’s like we’ve served milk the productivity gains out of those. And now we’re so flat. And so all this technology we’re adding to on top of sales, isn’t making a difference.
Frank Cespedes: That’s actually, I discussed that actually in the last chapter of the book that we’re talking about here. And first Krugmans right about. The basic facts there and most economists I think no, this and that is that there has been a flattening and indeed a decline in productivity, not only in the United States, but in most other industrialized countries for the last 20 to 30 years, what is more of a mystery?
However, Is why that’s the case and the best evidence about this point, I think to two factors and one of them is definitely going to be relevant to sales, but the two main factors here seem to be first demographics, declining birth rates. And then the second one is the shift in most. Industrialized economies over the last half century from manufacturing to predominantly services, dominated economies.
The U S is a good example of that. is why the pandemic has been such a catastrophe about 75% of our GDP is in service businesses. Now Peter Drucker, the great Peter Drucker. I mentioned Peter Drucker to my MBA students last semester. And it was like I mentioned, Julius Caesar, you don’t go into business to be famous, Peter Drucker was one smart guy.
Andy Paul: absolutely.
Frank Cespedes: And he wrote an article 30 years ago, 30 years ago, he wrote an article in Harvard business review about the crisis of services productivity. And he pointed to sales and salespeople as a good example. And 30 years ago, Peter Drucker said what you said. He said, look at how much time salespeople spend essentially with computers. And he said, that’s not productivity that kills productivity. And Drucker said that if these societies don’t deal with this productivity services, productivity issue, we can expect political problems and class warfare. Sounds pretty prophetic to me.
Andy Paul: I was not. Yeah.
Frank Cespedes: it’s a big issue. And in fact, it’s one of the reasons why in the book I basically emphasize that this book about sales is not simply about increasing shareholder value, although it is. And I don’t think companies should apologize for that, but it is also a social responsibility of management because it affects economic growth opportunity. And the way societies operate.
Andy Paul: Yeah. We, and you and I were touching this a little bit before we started recording, which we probably should have recorded that part, but it’s, I think you see this and you talk about this in the book with the high turnover rates and sales site, 20 to 30% per year is. Yeah. People are searching for or something, something better. I don’t think it’s driven by try and find a company with better product market fit or something like that. I don’t share in some cases it is, but I think it’s, I don’t know. It’s like they have vision of what sales is supposed to be like, and they’re trying to find that.
Frank Cespedes: Yeah. And I think I think there, one of the reasons for that and again it’s one of the themes in the book, but it’s real, really, for me, I had two major motivations in writing this book and the first one is directly relevant to what you’re saying, Andy. And it’s something that sort of puzzled and bothered me throughout my career.
Of all the various functions in business, sourcing production, operations, et cetera, sales and selling are by far the most context specific right selling in North America is different than selling an Asia different than selling in the middle East et cetera, et cetera. Yet of all the business functions for some reason, sales is that area where many people, including business, people feel comfortable making these huge app priori generalizations. That in my opinion are not only vacuous and not supported by the data, but also generate the stereotypical assumptions that you’re pointing to. And I think that’s, I think that is one of the the reasons that we see that poor ROI in training. And then I think there are other reasons that are simply built in to this function. There are inherent challenges. In hiring training and developing salespeople.
Andy Paul: Yeah. And I, we’re definitely going to get into those. Cause I think that’s, some of those popular or most engaged posts that I post these days, which get huge engagement around hiring and yeah. It’s. It definitely could be done better. So I do want to get into another point I wanted to ask though, is because, you’ve come from more academic perspective on this whole issue.
And you talk about this idea. You just mentioned the conventional wisdom about the impact of these changes on sales is misleading. In that sort of an issue though, you say it’s context specific, but isn’t that where on the really issues with sales is there is no, I don’t know. Good data. Rigorous data.
It seems like so much of the research we see about sales is self-reported results. We don’t really have the equivalent of a rigorous, double blind study that you might see in a pharmaceutical clinical trial to measure the effectiveness of anything in sales.
Frank Cespedes: First of all what you just said is true of a lot of other areas of business. This is one of the reasons why a lot of business people, I think quite legitimately have reservations about, professor X or theorist, Y when you’re doing research and gathering data in business, that’s qualitatively different than doing research.
For some pure reviewed statistically significant paper in a journal or doing double blind research to make sure the vaccine works in a clinical trial. What you’re doing in business is you have to do that research, interpret it and make changes while the boat is under full sail. In an ocean where you do not control the weather. So if in fact we evaluate the data, if what we mean by good data is what we mean in a clinical trial that rarely exists. And not only in sales, but that doesn’t mean we don’t have data that’s useful for decision-making and continuous improvement. Purposes, it’s a little bit like air pollution.
You can get rid of 80% of it one way, and then that final 20% costs a heck of a lot. I don’t think I don’t think absence is data is is an excuse not to get better and better at this core business activity. And in fact, I think a lot of talk about big data. I don’t know about you, but I’ve been hearing that all my career. 35 years ago, I was hearing about data, big data. It’s only gotten bigger. I think for many executives, that’s a convenient excuse and naive because the assumption very often in that talk is that somehow the data will speak for itself. No, it’s not. Managers have to manage. What does this data tell us about who is our customer, who isn’t, how do we segment, what does that mean for hiring training performance reviews, relevant metrics, et cetera. Again, I’ll quote, Peter Drucker wrote a great article about 50 years ago. Called the manager in the moron, by the way, Andy, can you still hear me? My computer.
Andy Paul: Yeah, no, I can hear you. I can hear you.
Frank Cespedes: The moron was the computer and the manager was the person responsible for asking the right questions of the computer? I think that’s still true, even if you’ve got allegedly self-correcting algorithms, as some people say they have in machine learning.
Andy Paul: I think this does bring a critical to a critical point about sales, which is that. Yeah. We don’t know how to use this data to your point make good decisions about it. That. People see correlations where correlations don’t exist or cause, and effect or cause and effect doesn’t exist. And it seems like that was one area where starting with sales managers and sales leadership would be really important to get more instruction, more training to them. So that, yeah, this is a societal issue, right? We were all. Not at all, but people just aren’t trained how to read data and we draw the wrong conclusions from it.
Frank Cespedes: Yeah but I think in sales, in particular again let me quote something that you and I were talking about before the podcast began. Billy being the general manager of the Oakland athletics, the godfather of data
Andy Paul: Moneyball. Yeah.
Frank Cespedes: Yeah. Sabermetrics et cetera.
Being always makes I think a very fundamental point and his point is, look, there’s always been a lot of data in baseball in particular, going back to 19th century box scores, lots of this data, the issue is not, can you get the data? The issue is, do you have good questions to ask about the data? And I think what’s particularly true in sales, for example, with most managers, I don’t think the most important thing for them. Is to go to a statistics course. So they understand the difference between, an R square of 0.9 and a spoon spurious correlation. Although that occasionally helps the real important thing is do they understand buying in their target markets?
And do they understand what that means for cause and effect links? In what it is they’re doing when they organize, deploy and provide incentives for sales, then the data can help. But if you lack those priors all you’re doing is what a lot of big data people do, with any database of sufficient magnitude, of course, you’re going to find stick a statistically significant correlations.
That’s just the math, but most of them are just going to be plain silly.
Andy Paul: Yeah. When I agree with you a hundred percent, it’s all about asking questions. That’s really one point I was trying to make as learning how to ask questions of the data is there’s a simple little book. I had it. A guest on called every data. Johnny James Johnson wrote it, or John Johnson, I think about just how we just aren’t able to really, to interpret data and ask the questions, the data.
And since your point is, we’re having more and more of that available to sales, leadership and sellers themselves. If they don’t know how to interrogate it, then can you use it effectively?
Frank Cespedes: No, I, the I was talking to this company will remain nameless. It’s out in your neck of the woods. One of the famous high tech firms and one of the senior executives there, and his point was a lot of this is in effect. Done for external call what you want. Public relations marketing purposes.
He said, but look, here’s the way it works. Frank, when I am talking to potential investors, I say, what we do is artificial intelligence. And when I am talking to my it, people I tell them your job is to develop the right algorithms. And when I’m talking to my managers, all I ever talk about is correlations. So, there’s ways spinning this.
Andy Paul: Let’s jump into the book again. One thing I really liked is tackling this chasm that exists increasingly between sort of the sales process and the buying process. And so you’ve laid out this idea of streams as opposed to a funnel and take us through that.
Frank Cespedes: The basic point that I’m making and again, Andy, my computer’s going through weird things here. Or am I still coming through? Good. The basic point I’m making here is that while a lot of what we’ve just finished talking about, the the information revolution, think of it that way the easy availability of of data in the 21st century, while a lot of that can impede productivity.
There’s no doubt that it has affected. Buying in both B2B and B to C markets. My favorite example of this and it illustrates the difference in buying one of my favorite examples of this is buying a car, right? The vast majority of cars both before and interestingly during the pandemic, the vast majority of cars are still bought in dealerships.
But this is what the J D power data tells you the average American Bo a car buyer now spends about 12 hours researching the purchase. They go to edmunds.com auto trader.com. They find out the wholesale price that the dealer is getting the price for each feature or package, et cetera.
And they only spend a total of about three and a half hours in dealerships themselves yet nine, your body temperature about 98.6% of cars are still bought through dealers, not online. Now, does this mean that the internet and that information is irrelevant? It doesn’t mean that it’s destroying dealerships.
It doesn’t mean it’s destroying dealerships, but it clearly has changed buying. People walk into a dealer already having product and price information. And the days of the salesperson there as slick walking, talking purveyor of discounts, those days are gone. Buying a car in America is a much nicer experience now than it was 10 years ago.
Not because these people went to Bible school. But because of what information is done to the buyer and the same is true in many, if not virtually all product categories, because of what you can now get on your cell phone because of what you can now get in B2B markets through power reviews or marks.
So you get all that information. So buyers don’t just move through a funnel. They’re online and offline in multiple at multiple points throughout their buying journeys. That’s what I mean by the streams. And you are right. Most sales models have yet to catch up with that reality of buying. There is a big gap there.
Andy Paul: Yeah, first serve or crystallized. When Gartner came out with their bio buyer enablement study back then a fall of 18, I think it was, and they show their famous spaghetti diagram flow chart of the buying process. And. And it was like, okay, huh? I’ve never talked to a single company. That’s tried to mirror their sales process or align their sales process with this process, which at its heart had four jobs.
The buyers are trying to accomplish, which are very similar to the streams that you that you define. And it’s a messy recursive process, but it’s Yeah, sales is still thinking I’ve got this linear staged based process, very neatly defined. And this is what the buyer’s going to. Sure.
Frank Cespedes: You got to have a little empathy. I think there, you got to understand. Why there’s that gap? Despite the fact that now the technology is increasingly the seller’s friend, the technology is increasingly making it easier for the people who know what they want to do in sales to deal with these streams of both simultaneous.
Offline and online buying, but there are a couple of reasons for the gap. I think fairly systematic reasons. One is, the the short-term orientation in sales. I always quote in Harvard business school where I teach, we write case studies. I’m very grateful that I’ve had to do that throughout my career.
I always remember. One of the executives in sales that I interviewed for one of the very first cases I wrote any, I was asking him questions and I probably smelled like an academic at that point in my career. And let me tell you something, Frank, in my line of work, cause I was telling you about the term you said in my line of work, if you don’t survive the short term, you don’t have to worry about the longterm.
That’s why change is always difficult in sales. And by the way, that’s why sales is always a great place to look. At technology adoption, precisely because technology has to demonstrate its existential usefulness in sales in ways that it doesn’t have as much pressure to do in other areas. So that’s one reason the other reason.
And this one I think is changing. But I have been involved. Yeah. I do a fair amount. Yeah. Work with companies around the world. I’ve probably run as many strategy meetings as anybody, certainly as many as anybody at Harvard business school. And I can’t tell you in the last two decades, how many meetings I’ve been in.
Where we’ve got, what I consider these fairly sterile academic debates about, should we be online? Should we be offline? Should we be selling through sales people or through the website? And the answer in the 21st century to that question is, yes, you got to do both. That’s a false dichotomy. I think that one’s breaking down.
I think the pandemic actually is, has accelerated that breakdown, but then I think there’s a. A third reason. And again, this is something you and I touched briefly on before we started recording, but it, the C-suite, this is a big change that doesn’t get enough attention. In my opinion. If you look at the composition of the senior executive groups, the C-suite.
Of companies around the world. There’s a wonderful study that was done by a colleague of mine just a few years ago. And what she found is that over the last 25 years on average, the number of executives reporting to the CEO has doubled right. Twice as much. But then if you ask yourself, who are these people, where did they come from?
What did they do before? They became senior executives? Very few of them. We’re had actually been general managers in the sense in which I think people like you and me use that term, a general manager, someone running a line of
Andy Paul: A division,
Frank Cespedes: p and L responsibility. Most of them were specialists, the CIO, the CMO general counsel, head of data analytics, et cetera, et cetera.
Now, why is that the case? Most companies don’t wake up in the morning and say, Hey, let’s be siloed. And bureaucratic. The reason is the business has gotten more complex because of the data revolution. It’s a full-time job to stay on top of what a CIO or a CMO, et cetera needs. But the reality is that’s the composition of the C-suite in more and more companies and fewer people than ever before have made it to the C-suite with P and L experience and sales experience in particular.
And I think that’s another contributing factor too, to the gap that you’re putting your finger on.
Andy Paul: but having identified it and this gap being identified is yeah, the Gartner study has been out for two plus years. I’m sure you’ve been talking about your forest streams for awhile is again, I don’t, I haven’t had a single conversation with a sales executive sales SIM leader to say, yeah, we’ve this gap is a problem because I think it informs how they approach the customer.
And. And I think it’s a contributor to, the, some of the trends we talked about in terms of say a sales performance sales productivity is the, how the buyers moved on and sales hasn’t.
Frank Cespedes: You know what you’re asking in some ways is, okay, how do we close? That gap am I
Andy Paul: Yeah.
Frank Cespedes: I think, look as with any gap, you gotta work both sides, right? The the supply and the demand side, I think the key responsibility for sales managers is to make sure they understand how buying happens.
At their target accounts today, not yesterday. The most important thing about selling is the buyer and the buying process. And then you ask yourself, this is also what sales managers have to do. What does this imply for the key sales tasks? In other words, what are given the way buying works? What are the tasks where my people have to be great.
And given the buying, where are the tests were? They just have to be good enough, right? Because any other manager, they’ve got to set priorities, they have to make trade-offs et cetera. That’s what they need to do to argue for the right resources. So they can do hiring training. Development correctly then on the other side I don’t think the answer to the C-suite gap is micro-managing, which I see going on a lot of with data.
I don’t think that a CIO or a COO or even the CEO, their job is not to be the best sales leader in the world there, but their job is to understand. What is given the buying in their market, a relevant versus an irrelevant sales model. And then as Billy Bean said, their job is to know what are the questions to ask.
I think as with any gap that there, it takes two to tango, and those are the areas where I think people need to pay attention and work harder at.
Andy Paul: Yeah, no, I think this gap is to me is a huge. He is the place where the problem exists. Now, so I just wanna go through and identify the four streams. You talk about the, these are parallel activities, parallel streams that buyer’s going through. You call them, explore, evaluate, engage, and experience. And I summarize them as explorers to identify the problem, evaluate, explore options, engage well.
I know in the gardener, that’s more of the. Finalize the requirements stage, but and then experiences the formal buying decision.
Frank Cespedes: You’ve got it. And you’re a vocation of that Gardner study is is exactly right because I was actually involved. With them when they did that study. And really what I’ve got here is a variation on that. And then the rest of the book is what I call the, so what now, what.
Questions. What does this mean for core areas in sales management, like who you hire, what you do with them, once you hire them, how do you conduct performance reviews? What about pricing? Channel management? It’s cetera, but the whole point of those streams is that they are streams. They’re not linear sequential funnels because of a technology, but technology is simply an enabler.
Oh for the
Andy Paul: One question I have. And I’m interested in your take on this because, when I looked at the Gartner study and, reading this part of the book where you described the streams, it has thinking about this in context of my own experience. And experiences selling large deals, large enterprises and so on.
Is it, I always felt like it’s divided into surf to the buying process, always surviving the two steps. One is we’ve got a certain amount of motions that we go through to define how we’re going to solve a problem, and then having decided how we’re going to solve it. We choose who we’re going to solve it with. And so I look at, the explore, evaluate, engage stages, streams that you talk about as, yeah, fundamentally this is, look, we’re going to define our problem to find the potential outcomes that we can achieve by solving it out. We’re going to go out and evaluate options in the market.
We’re going to winnow that down. As you talked about to a select number of options, we’re going to choose one of those options, which may or may not be vendor specific. And then we’re going to choose a vendor. Having solved the sort of the, how problem we’re going to choose a vendor to help us.
Frank Cespedes: I think that’s right. Yeah, no, that’s I think that’s a very good summary and analog for what I’m saying about those streams, now let’s look at the other end. What does this mean for the selling?
Andy Paul: And that was the point. That’s the point? I was just gonna say, that was the point I was gonna make is that I think that one of the fundamental problems that exists in sales is we train people to sell, to solve the who, and not enough to solve the, how.
Frank Cespedes: Yeah. Yeah. Th the way I phrase that, and I think. I also think by the way, there was a lever available in my experience to 99% of sales managers that they don’t use appropriately to deal with this. But the distinction I always draw is between the buyer’s motivation in that category, that purchasing process and their perception of you, your company, your product, by and large, it is very difficult to change a buyer’s motivation.
That’s called customer discovery. what we do is we need to understand, but what is more malleable? And this is the artist. Salesmanship is the perception of what it is that we do or don’t do the perception of the solution. They are trying to solve how to measure. The value outcomes, et cetera.
And a big part of that is framing. That’s one of the chapters in the book and that is something one can work on. Now, the other vehicle, I think that’s relevant here, Andy and this, gets us back to data and other things, but the way things work, especially with the big deals that you were using in your experience in this example, The most important data in situations like that is not an aggregate data about an industry or a market.
A market has never bought anything in the history of business. A market has never bought a thing only specific accounts by so the most important data is usually only available to a sales manager. By doing good account reviews with their reps, good performance reviews. And that’s vital. When sales managers do what I call drive by reviews, sloppy reviews.
They’re there, they’re not only in effect perpetuating a culture of underperformance. They’re inhibiting the flow of vital information that no database is going to give them. Because it’s very account specific information. So you know, that’s a lever that they need to use. And by the way and I learned this in the business Iran for 12 years, doing performance reviews, as opposed to, just talking about compensation, that’s a very trainable skill and it’s almost always well worth the investment.
Andy Paul: Right.
Let me ask another question about that as is. Because one thing that you’re talking about is understanding where the customer is in the. Pro in their process is central to effect of selling. I think that was a quote from it. Isn’t that? To me, one of the real issues with this gap that exists is a sales manager.
They’re doing their reviews and they’re saying where’s the customer stand in their stand. And the seller tries to answer it by saying, wow, we’re at the discovery stage or the qualification stage, which has no relevance at all to what the buyer is actually going through.
Frank Cespedes: He may or may not have relevance, but it’s, it’s a random walk as they say on wall street. And by the way, I think again, you’ve got to ask yourself, why is this so prevalent? Why do you see it? Why do I see it? If you look at CRM software, most CRM software. Is built on that sequential, linear, funnel, all the pipeline stuff that you hear about in 90% of sales blogs, and what the software does is wait the probability of a sale, depending on where in that.
Funnel that set of funnel categories of the buyer is, but that’s not the way people buy now for the most part, that’s not right. What the gardeners study or what I call explore more evaluated, et cetera is about. So you’ve got it disconnect there as well in the data that not only sales man managers are often looking at, but what their bosses are looking at.
Andy Paul: Yeah, all connected. I wanted to jump into. Talents and hiring, because again, it’s I mentioned, I think maybe when you were talking before the we’d restart recording, it’s just the seems to be a topic that people are continuing to struggling with. And I know it’s something that’s hard to perfect, but it seems to me like the processes we use to hire salespeople that I’ve seen.
Maybe one company in my experience that you actually have a system and said yeah, let’s, we’re going to track data about the people we hire and then use that to educate ourselves about how to make better decisions with candidates in the future. And you described a process in general is fairly random in the way people hire.
Frank Cespedes: Yeah, but I think just two things about this topic, which is you’re exactly right. It’s a big topic. It all begins with people, especially in sales buying and selling have always been social as well as economic. Transactions. And for the most part, you don’t create a relationship with your computer, unless you’re, let’s put it that way. First there are inherent challenges in sales hiring that really don’t exist in, in some other areas. If you want to hide it, they’re an engineer. You can go to an engineering school and it’s like a buffet. What are you looking for? Electrical engineering, chemical engineering. If you want to higher up.
An accountant or finance person. There are people that majored in those subjects. The same is true for programmers, but that’s not true in sales. Very few schools have a, even have a sales course, let alone a sales program. So the vast majority of people who go into sales. Go in almost totally unprepared.
So what that increases the difficulties of hiring, then you get to the processes and what I’m about, the research I am about to site is as close to an established fact, as anything you will ever hear. In a management school it’s supported by now about almost 70 years of studies that consistently show the same results, the correlation between the evaluations that people get in their interviews and their subsequent, on the job performance.
In most businesses is significantly less than 0.5. In other words, significantly less than flipping a coin. And in fact, in service businesses, because that’s a very people intensive set of tasks, the correlation is around 0.2. Now the interesting thing is that when I show this research to executives their response is a classic example of the, the Kubler-Ross stages of grief. There’s denial. Oh, that’s BS, look, 70 years of research, I literally showed them, the reviews then it’s anger. Then it’s what they call exceptionalism. In other words, this is probably true of you and that
Andy Paul: We do it differently.
Frank Cespedes: Yeah. I, somehow I know how to appear into people’s souls. I have many colleagues who basically on the basis of these facts about interviewing say companies should abolish interviews.
In my opinion, only someone who’s never managed the business can say that. Of course you interview. People have to work with people. People have to manage people, especially in sales, but you have to augment those interviews with other processes. And sales is fundamentally a performance. Art sales is about behavior.
It’s not about how well they interview and what you need to do. And by the way, this is much more possible. Then many managers think it is whenever possible. You want to put in place, some kind of process where you get a chance to actually observe behavior. It might be a three to six month trial period.
It might be something. Yeah. Th those I think are the big issues around sales hiring. And I think, again, the pandemic has thrown a lot of this into a relief, a lot of companies during the pandemic. Out of necessity, essentially went back and said, all right, we got to make choices about who’s a keeper and who’s not, if in fact the recovery and I hope I’m wrong about the recovery.
I think it’s going to be tougher than what we’re hearing, but if in fact we have a V-shape recovery. These hiring and talent issues, especially in business development functions, they’re going to be paramount. The issue is not going to be technology. The issue is not going to be, Hey, how do you run?
The zoom meeting usually was going to be the people.
Andy Paul: Yeah.
Frank Cespedes: Companies need to get better at this.
Andy Paul: Yeah, are you, I have a statistic you say in the book that 50% of us college grads will work in sales at some point maybe where they have business development responsibility, and that’s not even including the 75% of our so white collar workers that Dan pink identified as having responsibility for influence to get their job done.
Yeah. That’s a lot of folks, if there’s a V-shaped recovery being put into what you talk about as these serve unstructured interviewing processes, where, first impressions are so important and yeah, I love the Moneyball example you gave where the Scouts ranked players higher.
Cause they were handsome and I’ve seen that. Yeah. I’ve had a client that. Hired somebody because he looked good in a suit. What can I say?
Frank Cespedes: Yeah, but, notice but notice what’s embedded though in, in that data, you’ve got very few people with even taught, take, taken a sales course in their entire educational career. And yet more than 50% are going to work in sales. The point is it’s on the job learning out of necessity.
And this says something about what you do with people after you hire them. And it’s important to understand how sales people learn in this. I think points to why a lot of money in sales training is wasted, but sales learning is a classic example. Of what the theorists in this area call modeling behavior. And we know this, we know the recent research says you go to the training seminar. The rep forgets almost everything or at least 90% of what they learned within 90 days. One quarter. The way they learn is two ways a modeling behavior. They look the motivated ones, at least look at what the best of their peers are doing.
And they say, that’s clever. I hadn’t thought about that way of dealing with that objection or that way of framing, the value proposition, et cetera. And then the other learning that’s important, especially in sales is just in time learning. In other words, getting me the information that I need when I need it.
Not X or months earlier in a training seminar and hear the technology. Is the seller’s friend, there’s more and more technology available. Some of which I talk about in the book, but more and more technology available that allows companies to provide that information when rep reps will actually use it on their way to a sales call, or sometimes literally during the sales conversation.
Andy Paul: Yeah so ring DNA that a company that owns this podcast is, it’s introduced a product called Yoda AI, which is in context, when you’re on a call, you’re a seller. Somebody asks you a question and the system is listening, adheres. The key words that might, let’s say it asks about a competitor, they’ll still say, Hey here’s a battle card for you on that competitor.
It’ll pop up on your screen, click here to download it. That’s happening, that’s out there now.
Frank Cespedes: Yeah. And by the way I forgotten, I hadn’t realized that ring is our godfather here, but I’m not shy about this. You’ll see, in the book I use some of their data. And the data I think that they have about what information is relevant when you’re calling at level a vs level, B is very illuminating.
And that’s exactly the kinds of things that that reps need having a C-level conversations, one of the perennial issues in sales is qualitatively different. Then talking about product and specs with the gatekeepers to the seat. Yeah.
Andy Paul: Thanks is that right? And that’s where that type of system can help in terms of being that omnipresent, digital sales assistant to help why would get back to the hiring part because. Yeah, you talk a little bit about a process in there. And I think this is such a big thing because companies I said are just all over the board.
I have examples of companies I’ve talked to, for instance, that from an interviewing standpoint is if yeah, companies love to bring people’s candidates in and talk to multiple people. When they do that. Now these organizations, they have. Yeah, everybody that talks to that person with the exception, I guess many of the hiring manager asks the same questions in the same order.
And so then I have the ability to get together afterwards. And when they debrief, they say they can compare how this person answer this question. What’d you think of that? And so they have a common context. And I just wondering if you have other things that you’ve seen, that companies are doing that sort to help standardize the process or give more data points that they can then also look at me even retrospectively to, improve the quality of hiring decisions are making.
Frank Cespedes: Yeah, and I think you’ve pointed to one simple, but very important and fundamental one. And that is precisely because we know. That the individual interview has very low predictive power. We also know the the power of first impressions, right? The single most important thing you can do is make sure that you get multiple inputs, multiple independent, separate inputs.
About the candidate and that’s exactly what you’re pointing to and what you’re pointing out is that, listen we then can compare. If we have some kind of standard protocol, we then can compare how answered your question, what you thought, what you interpreted and me, so that’s very important.
You’re going to laugh at this, but there’s an exercise that I use in my MBA class. Have done for the last few years. And it’s a sales hiring exercise the students and I literally bring in salespeople for them to interview. They get their LinkedIn pages beforehand. So they’ve got this information about them and they’ve got to hire them for they’re interviewing people for two positions in two different companies that.
Earlier in the chorus we discussed in case study. So they know something about the company, their strategy, the buying process, the tasks, et cetera, they go through this and then we debrief, they literally interview these people in the room this year via zoom. And then we debrief with both the interviewees, the salespeople that they interviewed and the students.
And when I asked the students. What did you think? The first thing they always say is, wow. People who sell for a living a really good at interviews who know
Andy Paul: Right.
Frank Cespedes: of course, but that’s learning. You’re not hiring. The the interview version of the person you’re looking to a hire for behavior. And then the second thing that they always say, and I think this is relevant to managers.
I always ask the students beforehand. What they’ve got a hand in this is, the preparation for the exercise. Here’s what you’re hiring for. Here’s a per person you’ve been assigned interview. Tell me what it is. You’re looking to find out. And always when you total up the responses and I showed this to the students, always near the top of the list is something about their cultural fit, all their, their quote motivation, and then down near the bottom of the list are things like their communication skills.
Or experience and what they learn when we do the debrief is that there I’m going to use a wonderful American phrase, Andy, they get it. Exactly bass ackwards as do most managers. What you can learn in an interview is somebody’s communication skills. Are they mumblers? Are they not mumblers experienced?
That’s what a resume is about. And you can explore that. What is very difficult, if not impossible to learn are the things at the top of their list, right? Their motivation is et cetera. And many managers, I think simply commit the same mistakes that these relatively inexperienced MBA students do. And, but at least they learned from it.
Andy Paul: Okay. Or maybe not because yeah. I don’t know my impression over the years. Not just my experience, but yeah. Hiring people, but other people is that yeah. They tend to make the same mistakes.
Frank Cespedes: The old definition of insanity doing the same thing over and expecting a different result.
Andy Paul: I want to cover two things in the time we have left real quickly. One is I thought was really interesting is there’s a lot of reliance in some companies on a personality assessments and, I think, okay, maybe nothing wrong with them as a data point, but I know companies that, that.
Swear by them as serve up qualifier disqualifier. And you wrote that the research behind these is not substantial, but I think there’s a quote here from the book as research does not. Sean has shown not shown that personality traits. I didn’t type it correctly basically saying that personality tests don’t correlate with selling performance.
And yet there’s still, almost seems like an increasing reliance on these. I’m just wondering in your opinion, what’s the right place to use. These are the right purpose. Do you use a personality assessment?
Frank Cespedes: First you gotta know what these assessments are and are not good for, of what they were designed to do. Then you got to understand how to use them as opposed to misuse them. And then thirdly, you ask yourself the question, why am I doing this? Most of the personality assessments in my experience, Myers-Brigg would be a
Andy Paul: Right or disk.
Frank Cespedes: Yeah. They were never developed for hiring purposes. They simply weren’t developed for that. Reason that’s not there, that’s not the diagnostics that they’re aiming at. Secondly, with some of the, Myers-Brigg a good example. The diagnostics themselves are a very debatable, as a number of people have pointed out you can almost answer any of those questions, different ways.
And in fact what the social science is called, the replicability test, w Myers-Brigg and many of these other assessments fail that test. You give the same test to the same person, three, six, nine months later, they come out very differently. There’s a, was what it was designed for B do I have a valid assessment, even of what even if I’m using it for what it was designed for.
And then we come to the managerial issue. Most managers in my experience are literally untrained in how to interpret the results they do get. From the assessments. I think if you’re going to use the, if you’re going to swear by these assessments, that’s a big mistake. Now. I think companies, some companies swear by them in an attempt.
To avoid two other things. One is all the biases that I talked about earlier by simply doing unstructured interviews. Thirdly, in certain businesses you do have regulatory issues. So you can say we’re not guilty of some other kind of bias because everybody had to do this test. See what the, see, what the result is, but what its actual behavioral impact is I’m afraid is not that simply not that compelling.
Andy Paul: Yeah. I’ve always been uncomfortable with them tests that claim that, Hey, on the basis of this test, we can tell her that this person has yeah. Has what it takes to be good in sales. And I don’t know, I just personally have seen so many people across such a broad spectrum of personality types succeed.
Nice succeed. That, yeah, just for me, it’s okay. It’s interesting data point, but not deterministic.
Frank Cespedes: And, but, and that’s relevant to, the other research in the book that you quite rightly pointed to. And again, this is like a centuries worth of research. The, the correlation between different personality attributes and selling effectiveness is all over the place.
You’ll find studies that talk about, a personality attribute, a correlates very highly with sales success. You try to replicate the study. And it’s very different. One of the reasons again, is because sales is so context specific and, the example I always point to is, yeah. Know how many companies do you know that hired the guy or gal who was an absolute superstar?
You are in skills at company a. And somehow they lose it. They’re not good at our company or the startup. The early stage venture where the VC say, boy, I can get you this star from Oracle and bring him in. Why is that the case? Those people didn’t suddenly get stupid. When they left that company, it’s not like they lost.
Their individual capabilities, but so much of selling in particular depends on the context. Depends on who else you’re working with in your company. Your ability to develop those relationships. Those people have to recreate all of that when they move from company a to company B. The assessments are only going to get you just so far in making that judgment as well.
Andy Paul: But I think this is that was, you grabbed the last point I wanted to bring up because this is been a pet peeve of mine for a long time is in the old days, used to be called hiring a Rolodex, is yeah, almost never saw it workout. It just, it doesn’t translate. Yeah. I remember in the early days of tech, some of the companies like Apple, where I worked and others were expanding and they were hiring people from big companies to come in.
And quite frankly, many of them struggled for the reasons you spoke about is that they didn’t have the infrastructure around them that they’re accustomed to. And it didn’t mean they were bad people or they weren’t good in other environments, but. Yeah. The are like, say horses for courses. And you talk about this as, as well as hiring the right person at the right time.
The temporal dimension of hiring is, yeah, they’re just not a fit for what you have. And this is hard for people to think. They think that just SIM sheer talent will always win out and it doesn’t.
Frank Cespedes: Yeah. At first I agree with everything you just said. The only thing I would add, the only caveat I would add, Andy is again, let me get back to what I think is the fundamental issue. Facing a lot of sales managers, making sure. That, because we understand how buying happens at our target accounts today.
Not yesterday, we understand the key sales tasks. I think you can occasionally die the Rolodex. If in fact, what you’re asking for is for that person simply to open the door, but then you got to ask yourself the relative ROI question is it worth the money I’m paying? Or other ways I can open this door besides hiring this person, whether it’s better lead gen processes or a channel partner, et cetera. So I, occasionally the Rolodex can in fact pay off. But usually because the what I’ll call the buying company knows what it is they want and what it is they don’t want. And if we get with the person can actually sell for us as well. Hey, that’s a bonus. That’s been my experience.
Andy Paul: Say blanket that doesn’t work, but it’s to your point, it that’s my experience substantiated. What you had written in the book as this. Yeah, stop. And also I, hiring people for in, from the end outside and giving them key accounts and so on for those who are being brought up throughout the organization, that’s a huge de-motivator.
Yeah. I’ve seen that as well on companies where, they want to grow, they want to get into a certain type of accounts or so on and so forth. And it’s always Hey, let’s go hire the hired guns to do that. And you end up getting, people that are. In processing the career, developing, moving up in terms of the type of accounts they can handle and they’ll leave.
Frank Cespedes: Yeah, I think that’s right. I think whatever else you do, you got to grow your own as we used to say about cannabis. And I think you can add on to that. If you, if indeed you really know what it is, you’re you’re looking for.
Andy Paul: Yeah. Yeah, I agree. Good. Frank, we’ve run out of time for this session. We’re definitely going to have you back to talk about the rest of the book. People want to grab the book. I presume it’s on Amazon and so on.
Frank Cespedes: Yes it is. And it’s called sales management that works. How does sell in a world that never stops changing? And you can get bulk discounts from the, a publisher Harvard business review press as well, but it’s also available on Amazon. Good reads, et cetera.
Andy Paul: That’s cetera. And if people want to connect with you, LinkedIn, I presume as well.
Frank Cespedes: Yeah, I’m on LinkedIn as well. That’s correct.
Andy Paul: Perfect. All right. Frank, thank you so much. And yeah, we’re going to do this again very shortly.
Frank Cespedes: Do you my thanks to you. And I mean that sincerely, thank you very much.
Andy Paul: Okay. Allie.