by Scott Gillum
Estimated read time: 5 minutes
People, we have a people problem. The US unemployment rate once again hit a 50 year low at 3.5 percent this month. But that’s not the big story. Something more menacing is at work. The US crossed “peak employment” earlier this year — the number of job openings now exceeds the number of available workers.
This “crossing” has created a problem that now threatens to make buyers unreachable. It also changes the relationship between employee and employer. And it’s not just “skilled labor” (which gets most of the press) that is in rare supply it’s ALL labor.
Right now there are 400,000 entry-level sales positions on LinkedIn. According to CSO Insights, it takes 4 months to recruit a one and 9 months to make them productive. New hires who are mismatched for the role or company (15% according to CSO) turnover within the first 90 days. The time to recruit them could actually be longer than the time they spent with your organization.
With an average tenure of only 1.5 years and plentiful job opportunities, reps could and do leave before ever becoming productive. (To keep a revenue-producing position filled for at least 3 years you’re looking at least 2 hires, for 5 years at least 3 hires). And, you’re swimming in a very shallow talent pool, it’s become a decision of hiring a “warm body” versus an “able body.”
This is the reason sales organizations have become obsessed with hiring for the last few years. Crossing the “peak employment” threshold has only compounded the problem. Once demand exceeds supply, employees gain leverage. Add that to a generation, like Millennials, and you have a recipe for a whole new set of expectations that comes along with hiring. If you’re not providing a clear career path, advancement opportunities, upskilling/training, a vacation policy, etc that aligns with their expectations, they’re gone.
This “people problem” has unleashed machines to fill the void. Robo dialers are now making hundreds of dials a day, at a rate of 33 calls per connection (a dramatic increase from 3 calls to connect 15 years ago). AI has now made its way into ABM tools to try to help inexperienced reps be more productive and that’s about to create another problem.
We are now caught in a cycle of what Hank Barnes of Gartner termed “The Machine of More.” With Robo dialers now pounding the phones, sales has set its sight on outmarketing marketing — sales now sends more emails than marketing. This is all ending up on the doorstep of buyers, who according to Hank and Gartner, are now only spending 17% of their time during the buying process speaking with reps.
How did we get here?
Good economic times have created a mentality that there is a linear correlation between hiring and revenue — more reps equal more revenue. As if the number of deals and buyers are keeping pace with this expansion. It’s a number game, namely volume. Cast a wider net and bring back more fish…except that’s not happening.
CSO Insights’ annual Buyer Preference Study finds that only about half (53%) of sales representatives are achieving quota. So what are smart sales managers doing? Knowing that about half of the sales force is ineffective, they’re hiring (or trying to) more reps to make their numbers.
How do we get out of this mess?
Here’s a handful of ideas to consider for 2020.
- Long term focus on new hires – according to Seleste Lunsford of CSO Insights, who spoke last month at the University of Texas Dallas Sales Summit, 60% of the sales organizations surveyed are not providing sales coaching. Let that sink in. We’re hiring entry-level positions, who might not be a good fit for the role, and we’re providing little to no coaching. Finding, training, coaching and retaining salespeople has to be a focus. Focus on hiring half as many reps and make them twice as productive.
- Focus on conversion, productivity, and profitability – this “mentality of more” is not confined to sales. Investors, you’re complicit in this as well. If you’re working at a SaaS company with investors on the board, you have probably been given the mandate to work the numbers — X in the top produces Y out the bottom. That’s incorrect and it’s creating the wrong behaviors. To be rewarded in today’s market a startup has to focus on driving profitability. The easiest way to do that is to narrow your focus and double down on conversion rates. Do more with less, and do it better.
- Watch for sales creeping further into marketing – as I mentioned earlier, ABM tools are using AI in the goal of helping reps become more productive. Here are two areas to watch that are dangerous. The first is DISC personality profiling. Scraping the digital domain, AI tools can build individual buyer profiles in about 2 seconds. In a sense, sellers can now create “one to one” personas that do not align with typical marketing created “one to few” personas. This conflict will cause mixed messages to be sent to an audience who is increasingly becoming tone-deaf. The second challenge is curation tools which allow sales reps to send what they believe to be relevant content to buyers in hopes of being “value-added.” It’s instant ammo in their email spam gun. It’s also a missed chance to use the information to generate more engaging thought leadership content.
- Enable buyers – this is the key to changing the tide. Allow buyers to go as far into the sales process as they want and let them choose how and when they want to engage reps. Remove all barriers to information they might need to make an informed purchase decision. Provide digital guidance on how to find the right content specific to their needs on your site or other sites (this will require improvements in UX). Become the source of the most credible information available. According to Gartner, buyers don’t trust reps to provide ALL the information needed. Let buyers do the curation, and you facilitate the process of helping them find it.
Finally, If you take anything from this post, remember these two numbers. First, only about half of sales reps are making their quota, (a decline for five straight years according to the CSO Insight report). Second, 17% of the buying process is spent speaking with sales reps (down from 19% the previous year).
These are two lights flashing something is wrong. Buyers are signaling to stop, but instead of picking up that signal we are ignoring it and the machines are throwing more at them.
The reality that we face today is that the supply of sales reps now has exceeded the demand from buyers for them. We have reached “peak sales hiring.”
At the Sales Summit, I asked the audience how many of their organizations have asked customers what they want, how buyers wanted to be sold to, a grand total of zero hands went up. If you want to create a sustainable competitive advantage, especially if demand slows, find out how buyers want to buy. We have to stop shouting at them and start listening. The machine has to stop.
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