The 80/20 Rule in Sales Persists

Those of us who have been researching, advising on, managing B2B sales for many years know this statistic almost as a constant – the 80/20 rule. The rule quite simply states:

20% of the sales team brings in 80% of the company’s business, the rest will struggle to meet their quotas.

In a recent study, Dimensional Research asked 200+ SaaS Sales leaders about the performance of their organization, 78% of the leaders said that at least half of their sales teams will not achieve their quota.

 

THE MISSING CONNECTION

What is the key skill differentiation between these top performers and the underachievers, you ask?

Well, a common answer in the same Dimensional Research study was that reps who are failing often lack an understanding of the customer’s strategic goals. This could be due to lack of training or preparation, the sheer volume of calls to different accounts required of the seller, or even a lack of general business knowledge or experience. But the outcome of this shortfall is serious. If a salesperson cannot connect the value their company delivers to their buyer’s initiatives and priorities, then the buyer is not encouraged to make a decision.

The result? Either the next seller who does bridge this gap will win the project, or the project will itself die as business initiative. Remember, most deals are not lost to the competition, they are lost to companies who chose to “do nothing”.

So, what is this connection? It is about a seller being able to discuss the concept of value (i.e. convincing a buyer – in THEIR metrics – that it is worthwhile) to proceed the planned investment. Buyers always have financial metrics to report and most business purchase decisions are supported by some sort of financial analysis and forecast, using financial instruments such as: Return-on-Investment (ROI); Total Cost of Ownership (TCO); Internal Rate of Return (IRR); Payback Period; and Net Present Value (NPV). But it isn’t only a numbers game. Buyers now expect to be engaged in a conversation that demonstrates empathy, focuses on their business issues and priorities, and is not a product pitch.

This is a challenge that will expand in the future as buyers and sellers become even more accustomed to virtual interactions—where buyers will spend less time listening to sellers; and sales efforts will increasingly be led by an Inside Sales team with even more productivity pressure.

 

THE CONNECTION BECOMES CONTINUOUS

Some sales teams have value consulting resources to assist in calculating the economic value their products can deliver and provide those ROI/TCO/TCO/IRR/NPV numbers, but these are usually limited, labor-intensive resources and they are often dedicated to the most strategic sales cycles – ironically, helping the 20% of the sales team excel even more. However, most of that assistance is focused on the initial investment approval as a one-off analysis.

As businesses become more accustomed to the as-a-service model and contracts are up for renewal every year, companies are beginning to expect this level of analysis to be an ongoing, continuous assessment of financial returns. These subscription models are much better for customers and probably create more healthy providers but only if they are focused on customer success and delivering customer value on a continuous basis.

 

HELPING THE LONG TAIL

So, the 80%, the long tail of sales organizations, will continue to need help in 2021. In fact, they need more of it. They can continue to be provided with training, sales scripts and cheat sheets to improve their presentations, but based on this ongoing trend, relying solely on these tactics isn’t enough to solve the problem.

SaaS is, by design, easily measured and monitored and can therefore also provide important data about usage and other important business outcomes. Setting up a value management collection and reporting system is now possible in most cases without custom programming and extensive investments. This means that value analysis can be offered by businesses of all sizes. The ability for sales teams to generate value analysis in a self-service format enables the entire organization – putting value selling capabilities in the hands of every rep, both the quota achievers and those struggling.

In our whitepaper 2021 Predictions for Sales Leaders: THE YEAR OF VALUE, we discuss how the 80% will get more help from such a system. A sales enablement platform that supports an easy, self-service way to quantify and articulate the value the vendor provides, not just at the initial purchase but throughout the project lifecycle or even the customer lifetime. One that empowers all sellers to ensure their conversations are focused on outcomes and results. A system that can even trigger a customer-facing employee to communicate proactively with customers to provide a conversation centered on achieved value. This enables ‘value’ and ‘outcomes’ to be a powerful new lever that scales across the organization to empower every member of the team.

 

“Are we there yet?”

By David Brock

David Brock is the Author of “Sales Manager Survival Guide,” CEO of Partners in EXCELLENCE and is a ruthless pragmatist. View David’s original post and read more of his work on his blog, Partners in EXCELLENCE, here.
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Recently, I was on a road trip. I knew where I needed to end up and what time I had to be there. Before leaving, I looked at Google Maps, got a rough idea of how to go and how much time I should allow. I sent the destination to my car so the navigation system could guide me on the best route.

I was a little worried, I saw there was some construction, and the weather report said there might be snow over the mountains. So, I added a little extra time to make sure I reached my destination on time.
Fortunately, I had a colleague with me. He’d been to the client we were visiting quite a bit before.

As you might guess, halfway there, we started running into obstacles. The snow was slowing things down, I thought we were OK, fortunately I had allowed some buffer time. Then, about 30 miles from our destination, we ran into road construction. My navigation system quickly started redirecting me–unfortunately, we went right into traffic. I was worried, the system was estimating our arrival about 15 minutes late.

My colleague, jumped in, “Dave, I’ve done this drive dozens of times. Let me redirect you, we will get to the meeting with plenty of time to spare.” I started following his directions (you can imagine how the navigation system was reacting, it spent most of its time recalculating our route.)

Following his directions, we made it to our meeting with about 10 minutes to spare. If I had followed the navigation system, we most likely would have been late.

If you think of that trip, it’s a lot like our customer’s buying journeys. They know where they want to end up. They know when they need to be there. They may have some tools to help them navigate that buying journey.

But things happen.

They’ve never done this before. They encounter obstacles, so they try to navigate around them. But because they haven’t done this before, or recently, they may get lost. They may take very long, circuitous routes, perhaps getting even more lost. Or, if they see great difficulty in getting to their destination, they may just stop.

Salespeople can help customers navigate their buying journey–much like my colleague helped us reach our destination on time. Like my colleague, salespeople have been on this journey and reached the destination before with other customers.

Salespeople know how to get around the obstacles. They know the most efficient routes to reach the destination. They helped hundreds of customers navigate similar journeys before.
What leadership are you providing to help your customer navigate their buying journey?