Sales DNA – Fuel, A McKinsey Company https://get.fuelbymckinsey.com Sun, 01 Dec 2019 17:57:34 +0000 en-US hourly 1 https://wordpress.org/?v=5.2.2 Unlock the Skills to Lead High-Performing Sales Teams https://get.fuelbymckinsey.com/article/leading-high-performing-sales-teams/ https://get.fuelbymckinsey.com/article/leading-high-performing-sales-teams/#respond Mon, 24 Sep 2018 19:03:16 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ There is a major misalignment in the startup sales world. Fuel’s Sales DNA research on 42 growth companies uncovered the following insights: Sales reps are not only open to good coaching and pipeline management but think it is critical to their development and success They also don’t get coaching and training on the skills that […]

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There is a major misalignment in the startup sales world. Fuel’s Sales DNA research on 42 growth companies uncovered the following insights:

  • Sales reps are not only open to good coaching and pipeline management but think it is critical to their development and success
  • They also don’t get coaching and training on the skills that matter for driving successful sales
  • Systematic coaching, using ride-alongs, tailored sessions and the like, is not routinely deployed in startups, leaving a significant missed opportunity

Think about this. In the highly-competitive startup world, where sales is often the lifeblood – sales managers are often not trained in the two most important skills that determine whether a startup grows fast or dies slow. Getting the right training accelerates good sales managers into great sales leaders. Beyond increased sales, becoming an effective leader increases job satisfaction, helps attract/retain high-performing sales reps, and can have a strong impact on a manager’s career trajectory.

  • Time: “There is no time to spend on training and run a sales team.”
  • Options: “There are too many options; which is the right one for me?”
  • Applicability: “Will this be applicable to my team/needs?”

Fuel has designed a solution specifically to bridge this divide. We created Sales Manager Academy, training for startup sales managers in coaching and pipeline management. For a limited time, startup sales managers can now take advantage of frameworks and methods used by the many of the top sales organizations in the world.

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Let us know what you’re interested in and we’ll be in touch.

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You access Sales Manager Academy at your own pace, online, and across devices. Totaling 4-5 hours for each track, the digital lessons are supported by practical offline exercises, as well as by exclusive webinars with McKinsey and Fuel experts to address any of your questions. The insights, frameworks, and templates can be implemented immediately, to achieve in-quarter results.

Erase any doubt about your ability to lead high-performing startup sales teams. Get training in the skills that have outsized impact on the success of sales teams. Tackle Q4 with confidence and accelerate your career in 2019 and beyond.

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The High Performing Ed Tech Sales Rep https://get.fuelbymckinsey.com/article/the-high-performing-ed-tech-sales-rep-it-isnt-who-you-think-it-is/ https://get.fuelbymckinsey.com/article/the-high-performing-ed-tech-sales-rep-it-isnt-who-you-think-it-is/#respond Mon, 10 Apr 2017 19:41:14 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ Did you hire reps who didn’t have the right personality traits to be successful?  Are you not coaching and training on the skills that matter?  Are you not creating the right incentives for reps to go that extra mile?  Based on a survey of 44 companies and 511 reps, with a specific deep dive on […]

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Did you hire reps who didn’t have the right personality traits to be successful?  Are you not coaching and training on the skills that matter?  Are you not creating the right incentives for reps to go that extra mile?  Based on a survey of 44 companies and 511 reps, with a specific deep dive on educational technology companies, we found that high performing ed tech reps are confident, detail-oriented, highly driven extroverts who are less empathetic and more motivated by money and by their role than their lower-performing peers.  Yet ed tech firms in our study did not recruit for such people, did not place much of their compensation at risk, and did not focus on training or coaching in the critical skills for success.  Ed tech companies that get this right can grow their sales, hit their milestones, and gain a significant advantage.

Hiring the right sales reps is critical for growth

Having a great sales team is critical to driving growth.  Sales efficiency is, after all, the growth engine—the “oxygen,” in Bessemer Venture Partners’ words—for tech firms.  As Peter Kazanjy, the Co-Founder of TalentBin put it: “The ability to attract, hire, and onboard successful sales reps and execs is an enormous competitive advantage, especially if you’re up against ossified incumbents.”

Yet many growth stage ventures do not perform this basic task very well.  We surveyed 44 growth companies with an average of $35 million in funding and $40 million in revenue. More than 40% of these companies reported that at least half of the sales reps they hired left within three years.  And successful reps often are hard to retain: 36% of our survey respondents reported that more than 10% of their highly successful sales reps left within one year of joining the company.  This high churn is costly.  Companies must put more effort into the recruiting process to yield successful reps and then must go back to the well when they can’t retain those reps

Getting sales efficiency right is particularly important in ed tech because the education market is riddled with sales challenges.  Educational institutions often have multiple gatekeepers and decision makers—teachers, administrators, school boards, sometimes even legislators or voters—who have to reach agreement before making a big purchase.  As a result, procurement timelines tend to be longer than in other markets.  Education markets are also highly fragmented.  The K-12 market in particular is highly decentralized with fewer opportunities for enterprise-scale sales.  And because educational outcomes are inherently hard to measure, ed tech companies face a hurdle in demonstrating to potential customers the return on investment in their product.

Unsurprisingly, then, few ed tech companies truly achieve scale.  Our research finds that the number of ed tech players plummets after about $250M in revenue—the point at which managing the growth engine becomes the critical driver of success.  For companies that can maintain growth through $250M, the market rewards are considerable.

Hiring the right sales reps isn’t as easy as you think

So how can ed tech companies attract and retain the right sales reps for their business model? To answer this question, we enlisted 44 growth technology companies to participate in our proprietary Sales DNA and Commercial Capabilities Assessment surveys. Sales DNA asks sales reps about their “intrinsic” personality characteristics, such as extroversion, diligence, and empathy; their particular skills, such as networking, prospecting, resource management, and product knowledge; what motivates them—rewards? professional growth?—to succeed; and the cultural enablers of success in their company, such as entrepreneurship, strong leadership, and the like. Separately the heads of sales provide us with a rating of their sales reps from strongest to weakest performers. We are then able to identify the characteristics that most distinguish the highest performing reps from the weakest performing reps; in other words, the secret sauce—the characteristics that high performing reps have that their weakest team members don’t.

The big surprise? The stereotype of needing to hire a former educator who has a good network and is empathetic to the challenges of the institutions they are selling to doesn’t hold up. We discovered that what differentiates the top performers in ed tech—and what ed tech companies should therefore look for and cultivate when building their sales forces—are some of the classic traits of high performing salespeople in any tech company.

Because of the daunting challenges that ed tech reps face, diligence and a drive to achieve are key personality traits that distinguish high performers from the rest of the team. Reps must be detail oriented, ambitious, and persistent in the face of long sales cycles and multiple potential setbacks on the road to closing a deal. They must be extroverts—positive, dogged, ambitious, and confident—in order to convert naturally skeptical educators into valuable customers. And they are less empathetic than their lower-performing peers, suggesting they are willing to push to close a deal rather than lend a sympathetic ear to potential customers.

Beyond their personalities, high performing ed tech reps excel relative to their peers in certain skills. They are distinguished by their account management skills. Given the diffuse and fragmented universe of potential customers, high performing reps excel at prospecting and account planning: identifying leads, evaluating the potential of those leads, choosing targets, and creating a strategy to reach those targets. They then are highly effective at building relationships and networks among customers and potential customers. And once they have established relationships and sales strategies, they excel at developing trust over time and understanding deeply the customers’ needs so that they can tailor an offering. At the same time, they know how and when to leverage experts and support to bring particular knowledge to the sale. The best reps are also great at time management—setting and achieving their priorities. And, having invested in the time and effort of closing a deal, they maintain a relationship with the customer that they can leverage to cross- or upsell.

The highest performing ed tech reps are motivated by financial rewards, significantly more so than low performers. The design of compensation mechanisms to reward high performers is therefore just as important to ed tech companies as it is to growth companies selling into other sectors, where the low and high performers are all motivated by money. Compared to the low performers, they are also motivated in particular by the meaningfulness and purpose of being a sales rep, suggesting that hiring a former educator who doesn’t love sales is the wrong move. Finally, top ed tech reps thrive in an entrepreneurial culture in which they believe that leadership is committed to their sales development and growth. Top ed tech reps also don’t think their companies are very performance focused and aren’t tough enough on weak performers. This is supported by what the weakest performers reported in ed tech, which is that the weak performers perceived a culture whereby their performance is nurtured and supported. This suggests that ed tech companies may want to consider stronger performance management systems that reward the top performers and take appropriate actions for those reps who aren’t delivering.

How to find and cultivate the right sales talent

Understanding the makeup—the “DNA”—of high performing ed tech sales reps allows companies to design their recruiting and retention programs to identify, hire, and retain the best reps. Of course, all companies need to hire salespeople with certain traits that constitute a minimum bar—things like product knowledge, assertiveness, and closing ability. But our analysis reveals the differentiators that make salespeople in different cohorts not only good, but great. With this understanding, companies can tailor every stage of their sales recruiting, training and retention processes to take advantage of the distinctive characteristics that predict success.

They first have to find the right people. This is especially true with respect to intrinsic traits that generally cannot be taught. Our research found overwhelmingly that ed tech companies recruit for the wrong personality traits. Our survey respondents reported that they focus their interviews on things like openness, agreeableness, and curiosity that are not correlated with high performance. Indeed, most companies look for empathy in their reps, which is negatively correlated with success. This is a mistake. Our research suggests that ed tech companies should look for great salespeople—persistent, diligent, and extroverted reps who may initially seem like an odd cultural fit because they are less empathetic and hard driving.

Get the Full Sales DNA Ed Tech Report

How can ed tech companies screen for those traits? At the very least, they should consider more widespread use of interview guides and personality tests. Only 37% of ed tech companies in our survey reported that they use interview guides, and no ed tech company reported using a personality test as part of their recruiting process.

Ed tech companies should also look for reps who have demonstrated traditional sales skills like the ability to build and maintain robust networks, develop specific target and sales strategies, and leverage experts when needed. Here too an interview guide is an especially important tool.

But unlike inherent personality traits, skills can be taught. Training and coaching are therefore a critical part of developing a high-performing sales team. Yet in our study, most reps said that they do not receive coaching in a range of critical skills: relationship or network building, prospecting, resource management, understanding customer needs, product knowledge, value proposition delivery, or negotiation and closing. Increasing the coverage of in-house training and coaching programs could deliver significant benefits by taking those reps with strong personality traits and doubling down on inculcating in them the skills they need for success.

Most importantly, ed tech companies can materially improve the quality of candidates they attract and retain by putting more compensation at risk. As we describe above, the highest performing reps are more motivated by financial rewards than poorer performers. But more than 60% of the ed tech companies we surveyed said that very little—under 40%–of their sales reps’ total compensation was variable or performance-based. Other growth tech companies, by contrast, put much more compensation at risk—at least half of their sales reps’ total comp and often much more. By aligning their compensation mechanisms with the rest of the growth technology market, ed tech companies could better attract and retain the high performing salespeople they need.

Finally, ed tech companies should invest in the commercial capabilities that support their sales teams. Our analysis revealed significant gaps in ed tech capabilities. The ed tech companies in our survey, for example, scored poorly relative to an industry benchmark on capabilities like tactical marketing and price and contract management. The former is key to driving more leads, a particular need given the relatively fragmented nature of the education market. Price and contract management can be improved across the board—ed tech companies appear particularly unskilled at pricing for value, incorporating go-to-market strategic thinking into their pricing, and developing a robust pricing infrastructure. Improving these capabilities will help sales reps tailor their offerings to particular clients.

* * *

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In tight funding markets, making the most out of every seller is critical. The prize for getting this right is growth. In the challenging ed tech market in particular, where many try but few achieve growth beyond $250M, beating the odds requires that managers be as scientific and data-driven about their sales recruiting and training as they are about developing their product or managing their capital. Leaders who embrace the challenge of rigorously finding, hiring, training, and retaining great sales forces will see outsized rewards for their companies and be able to close the gap between their weakest and best performers.

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Hiring Successful Sales People: One Size Doesn’t Fit All https://get.fuelbymckinsey.com/article/hiring-successful-sales-people-one-size-doesnt-fit-all/ https://get.fuelbymckinsey.com/article/hiring-successful-sales-people-one-size-doesnt-fit-all/#respond Wed, 04 Jan 2017 21:31:46 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ Our research shows that when it comes to sales reps, one size does not fit all: The characteristics of high performing sales reps depend critically on the sales model.  There are, of course, certain skills and traits that every good salesperson should have.  But the characteristics that separate good from great salespeople are different for […]

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Our research shows that when it comes to sales reps, one size does not fit all: The characteristics of high performing sales reps depend critically on the sales model.  There are, of course, certain skills and traits that every good salesperson should have.  But the characteristics that separate good from great salespeople are different for those selling into single-industry vertical markets and those selling functional products into horizontal markets that cross several industries.  Startups and growth private equity companies that find and keep great salespeople—by recruiting for the right personality traits, training them in key skills, and maintaining a culture in which they thrive—will be at a significant advantage.

Sales force turnover is costly and time consuming, but widespread

Having a great sales team is critical to driving growth.  Sales efficiency is, after all, the growth engine—the “oxygen,” in Bessemer Venture Partners’ words—for tech firms.  As Peter Kazanjy, the Co-Founder of TalentBin put it: “The ability to attract, hire, and onboard successful sales reps and execs is an enormous competitive advantage, especially if you’re up against ossified incumbents.”

Yet many growth stage ventures do not perform this basic task very well.  We surveyed 44 growth companies with an average of $35 million in funding and $40 million in revenue. More than 40% of these companies reported that at least half of the sales reps they hired left within three years.  And successful reps often are hard to retain: 36% of our survey respondents reported that more than 10% of their highly successful sales reps left within one year of joining the company.  This high churn is costly.  Companies must put more effort into the recruiting process to yield successful reps and then must go back to the well when they can’t retain those reps.

Hiring the right sales reps isn’t as easy as you think

So how can a company attract and retain the right sales reps for their business model?   To answer this question, these 44 growth companies participated in our proprietary Sales DNA survey, which asks sales reps about their particular skills, such as networking, prospecting, resource management, and product knowledge; their “intrinsic” personality characteristics, such as extroversion, diligence, and empathy; what motivates them—rewards?  professional growth?—to succeed; and the cultural enablers of success in their company, such as entrepreneurship, strong leadership, and the like.  Separately the companies provided us with a ranking of their sales reps from strongest to weakest performers.  We were then able to identify the characteristics that most distinguished the highest performing reps from the weakest performing reps; in other words, the secret sauce—the characteristics that high performing reps have that their weakest team members don’t.

The big surprise?  We discovered that one size doesn’t fit all.   Our analysis shows that what differentiates the high performing reps—and what growth companies should therefore look for and cultivate when building their sales forces—depends on what and to whom they are selling.   Sales reps selling an industry specific or ‘vertical’ solution have very different challenges than reps selling a ‘horizontal’ solution such as HR services solutions.  The capabilities they need and their sources of motivation reflect these differences,.

Vertical reps who sell into particular industries must have deep knowledge of those industries.  Their job is to convince skeptical customers, who think they are the experts in their own businesses, that they need a new product.  These reps therefore need to convince their prospects that they know the business better than the prospect does.   In this environment, dominance is the key personality trait that separates high performers from the rest of the team.  Reps here must be able to take charge, lead a conversation, and sell with confidence.  They enjoy being the center of attention, and can hold court with customers.  They are goal-oriented, focused on convincing customers that they know the customers’ business even if their company is young or lacks name recognition.  And they have strong intrinsic problem solving intellect that they use to think on their feet and show customers how their product is relevant.

Beyond their personalities, high performing reps excel relative to their peers in certain key skills.  They are considerably better at building trust-based relationships that enable sales.  They listen, pick up on customer cues, and are seen as authorities in the field.  They are good at handling objections, and know the sector well enough to anticipate and respond to concerns or issues that customers raise, and to tailor their offerings in turn.  Finally, they have strong time management skills, know when to leverage specialists to communicate their points effectively, and have expertise in account planning, driven by an ability to gauge potential targets accurately and develop their strategies accordingly.

While most reps are motivated by financial rewards, top reps are also motivated by a sense of autonomy.  They derive satisfaction from having ownership over their work much more than the rest of their team.

Horizontal reps have a very different challenge.  They don’t specialize in an industry.  Instead, they pursue multiple verticals simultaneously.  With a much wider funnel for generating and converting leads, they must excel at both building the network to open the top of the funnel and the skills to prioritize the pipeline so they aren’t wasting their time.  The persona of the high performing horizontal rep therefore is quite different from the high performing vertical rep.  In terms of personality, the highest performing horizontal reps have strong problem solving ability and enjoy challenge.  They are persistent and competent.  They know their products and solutions are helpful for all sorts of clients and will put in the time and effort to craft a compelling value proposition for each customer.  At the same time, they need to be—and are—comfortable with uncertainty.  They are emotionally stable, dependable, and resilient, important traits when you are pursuing, and likely to be rejected by, multiple leads.

The skills that most differentiate high from low performing horizontal reps are deep knowledge of their products and features, along with the ability to ask customers the right questions and answer their objections.  Together, these skills enable the best horizontal reps to craft winning proposals for customers across multiple sectors.  They are also highly skilled in pipeline management—building a strategy, identifying leads, and tracking those leads to a closing even without a market base defined by a single sector.    They are much better lead management, ensuring they aren’t wasting time pursuing prospects that aren’t going to convert into customers.

Top horizontal reps are motivated by competence—they seek to demonstrate excellence and gain satisfaction from knowing they have what it takes to do a good job.  They want to be the best in their field, and to expand their portfolio of duties and responsibilities.

How to find and cultivate the right sales talent

Understanding the makeup—the “DNA”—of high performing growth sales reps allows companies to design their recruiting and retention programs to identify, hire, and retain the best reps.  Of course, all companies need to hire salespeople with certain traits that constitute a minimum bar—things like product knowledge, assertiveness, and closing ability.  But our analysis reveals the differentiators that make salespeople in different cohorts not only good, but great. Growth companies need to be clear about which sales model they are following, and then they should tailor every stage of the sales recruiting and retention process to take advantage of the distinctive characteristics that predict success in that model.

They first have to find the right people.  This is especially true with respect to intrinsic traits, which generally cannot be taught.  Vertical companies will sometimes, for example, turn away dominant personalities because they worry about fit within the startup team culture.  Our research suggests this is a mistake.  Dominant personalities are critical to success in vertical sales environments.  Similarly, horizontal companies should not just look for great salespeople, particularly from big competitors, but should screen for reps who are intellectually and emotionally flexible enough to handle the stress of being a product advocate in a diverse selling environment.

How can growth companies screen for these traits?  At the very least, they should consider more widespread use of interview guides and personality tests.  Only 25% of our respondents reported using an interview guide, and only 25% reported using a personality test as part of their interview process.

Sales force recruiting should also take skills into account—here too an interview guide is an especially important tool.  But unlike intrinsic personality traits, skills can be taught.  Training is therefore a critical part of developing a high-performing sales team.  Yet in our study, a majority of skills were not covered in coaching at least half of the companies we surveyed.  This is a critical gap.  Increasing the coverage of in-house training and coaching programs could deliver significant benefits by taking those reps with strong intrinsics and doubling down on inculcating in them the skills needed for success, like trust building for vertical reps and pipeline management for horizontal reps.

Finally, our insights into what motivates high-performing reps suggest that companies can improve their retention of such reps by making sure that they have a company culture and incentive structure that aligns with what motivates their high performers.

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Every company that participated in our survey had room to improve.  Some companies, for example, got the intrinsics right—they were good at screening for and hiring the right people—but then failed to develop in their salespeople the skills that matter.  Others had the opposite problem.  But our conclusion across the board is that growth companies are wasting valuable resources in building their sales teams—hiring the wrong reps and not training or coaching them to succeed and incentivizing them to stay.

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In tight funding markets, making the most out of every seller is critical.  The prize for getting this right is growth.  But doing it right requires executives to be just as scientific and data driven about sales recruiting and training as they are about any core business process like product engineering or financial management.  Leaders who embrace the challenge of rigorously finding, hiring, training, and retaining great sales forces will see outsized rewards for their companies.

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