Sales Efficiency
Introduction to SignalsFromTheOP
Guide to Episode
- Statistics show that sales rep performance is plunging
- The impact on tech & SaaS sales is starting to hit industrial sales where growth is suddenly harder
- This is a secular change - based on buying behaviors and market changes - not just a cyclical blip
- We have to improve industrial sales efficiency in order to regain control of our revenue growth system
Transcript follows:
Greetings. I’m Ed Marsh, host of Signals from the OP – a biweekly video blog that focuses on revenue growth related issues of emerging interest and importance to industrial manufacturing company execs and directors. If you know of someone who might find value in this, please share it with them.
B2B Sales Is Harder & Sales Rep Performance is Falling
I’m going to start by dropping some statistics that should make all our blood run cold. According to various research from Ebsta and Pavilion1, B2B sales is in an existential crisis. Here are some really alarming numbers.
- Only 29% of reps made quota in 2022
- Win rates decreased by 15% in 2022
- Average deal values dropped by 32%
- Length of sales cycles increased on average by 32%
- Then RepVue research2 finds that the number of reps who report hitting their goal fell 10% in the 12 months ending in Aug of 2023
So, first, a few caveats. This research pertains primarily to tech companies, and much of it focused on 2022 numbers. Does that mean it’s not relevant to B2B industrials? Can we simply ignore it, confident that our world is different?
My answer is no.
There’s a storm coming that’s going to hit industrials.
It’s only partially a function of economic uncertainty.
Sales Lags Changing Markets & Buying Habits
There are fundamental changes happening in how companies and people buy. I’ve talked about many of them here.
Buying teams, risk aversion and indecision, consensus decisions, overwhelming information, overwhelming workloads and available bandwidth, changing expectations for research and interactions with vendors, and the role of partnership marketing and sales.
Many are coming together at once.
Industrial Sales can Learn from SaaS Sales
And I’ve spoken before about the lessons industrial companies can learn from SaaS and technology.
They operate under massive pressure for growth from demanding investors. So they have to figure it out. That means experimentation with marketing and sales.
Does all of it apply to industrials? Of course not. Selling $ 1 million dollar machines that lie at the core of a factory's operations is different than a $1,000/month software subscription, and industrials typically don’t have 50% of revenue available for marketing. So it’s different.
So what? There’s still a lot we can learn.
What Technology Sales Terrifying Stats Tell Us About Industrial Sales
I’m taking two key lessons away from this research.
First, technology is our canary in the figurative coal mine. Sales plunged in about June of '22, and companies started massive layoffs of swollen marketing and sales teams. At the time, industrial companies still had order books swollen with COVID related demand.
Industrials only started to feel the same stirrings in Q2 of 2023.
The second lesson is that tech experienced this even with their emphasis on integration of marketing and sales, sales enablement, carefully constructed sales process, great training and coaching, optimization and efficiency.
There are massive market changes.
Secular vs. Cyclical Change
The problem for B2B industrials is that they’re accustomed to cyclical changes.
Many execs tell me they are seeing a slowdown in lead generation, project creation, pipeline momentum, sales forecasts, and closed/won sales. But they’re not freaking out yet because they’ve been through cycles before.
While it’s unproductive to panic, at the same time, I believe their insouciance is misplaced. What we’re seeing isn’t a cyclical change, but rather a secular one. Fundamental changes are happening in how companies buy.
That means that we have to change how we sell.
We must improve sales efficiency.
That’s easy to say, but hard to do.
Improving Industrial Sales Efficiency
Boosting sales efficiency will take a number of proactive steps – steps like those I outline in the Overall Revenue Effectiveness™ Framework.
Sales efficiency isn’t a simple isolated output. It is a product of many factors including, for instance, the company strategy and culture. Are they focused on the right market and buyers, with the right products at the right price, and are they oriented around solving customer problems or touting their technology? It depends on marketing to attract more prospects early in their journey, facilitating connections with sales who can establish credibility as a business resource and gradually work toward deals. Are sales properly trained, coached and measured – do the teams even have the right people with the right skills? And does technology support the buyer experience and sales efficiency and rep effectiveness?
Those four pillars:
- strategy and board oversight
- manufacturing marketing
- industrial sales
- marketing and sales technology
are the core of ORE or overall revenue effectiveness - and sales effectiveness is an integral thread.
It’s a systems approach to revenue growth that adopts many best practices from production and operations and applies them to revenue growth.
Running Revenue Growth Like an Operational System
Continuous improvement, process engineering, measurement KPIs, accountability and rigor are common in production and often missing in marketing and sales. Just like a production line, if we can optimize each aspect and improve the efficiency of each step, small changes along the way can have massive impacts on the net output and system efficiency.
Reengineering the Revenue Growth System Quickly
Changes are coming for industrial sales – changes which I believe will rattle and challenge industrial manufacturing execs who may expect a cycle and are unprepared for a fundamental market shift. We’ve got to move quickly and proactively to begin to improve sales rep efficiency, understanding that it is a product of numerous interrelated functions.
I’m Ed Marsh and this is Signals from the OP. I hope you found this episode helpful. If so, please hit the bell. Like the episode, subscribe to my channel and share this with others.
1 - Trends in B2B Sales in 2023
