Many Happy Returns: The Business Case for Sales Coaching
A top performing sales leader once told me, "If you want your commissions to get better, you have to get better." I love this quote because it draws a clear connection between professional development and professional gain.
Even so, getting better doesn't come easy. Sales coaching - like exercise and eating vegetables - requires effort and even sacrifice. It's understandable then for a sales professional to ask just how much gain he or she can expect to receive from committing to improvement.
We decided to break out our calculators and run the numbers.
We started by looking at sales coaching effectiveness. Articles from Businessweek and Sales Benchmark Index suggest that coaching can improve sales performance by as much as 20%! This is because sales coaching is focused on helping reps better evaluate their current behaviors and attitudes and optimize these to improve selling outcomes.
Next, we took a look at quotas and commissions. These can vary significantly depending on a given rep's territory, product, seniority, etc. For this exercise, we decided to focus on high tech software sales. (Your mileage may vary.)
There's been a dramatic trend toward inside sales teams in the software industry, and The Bridge Group offers an outstanding Periodic Table of Inside Sales Metrics. Average annual quotas here are more than $650K with a rep's average commission coming in around $50K.
From the rep's perspective, a 20% improvement in sales performance could mean an extra $10K in commissions! From the manager's perspective, a 20% bump could mean more than $100K in annual contract value toward the team's target.
Sales coaching works and these back-of-the-envelope calculations help answer the question "What's in it for me?" in wallet-friendly terms.
Still, we're not satisfied. Coaching is a daily activity, so we need to go a bit further. Using our sales coaching software solutions, we recommend that reps target ten (10) coaching activities each week. These activities include setting goals, updating goal progress, completing exercises, participating in coaching discussions, and other simple actions that add up over time.
Our software helps make sure coaching and development are happening in a consistent and convenient way. Each activity earns a rep a sort of coaching "point" and helps them shoot to the top of our leaderboard.
Using the numbers above (commissions, improvement, and points), we figure that each coaching activity equals roughly $20 in earning potential! It's been helpful to ask reps to think of their personal investment through coaching as making a deposit in the piggy bank that is their earning potential. By focusing on the right sales behaviors over time, they'll start to see better results, and their wallets will get a bit fatter.
Sales coaching provides many benefits, but this type of "show me the money" exercise can help your reps draw a clear connection between their commitment to improvement and their own bottom line.