Tl;dr - It's the last business day of Q1 '2023. How many of your reps are on target? How do you know? Especially if you have a long sell cycle? It's your job to make sure they succeed. And it's your job to make a change if you both fail to ensure their success. That's what a sales improvement plan supports. Here's how it works and how to adapt it to long-sales cycle, complex sales like industrial capital equipment.
What is a Sales Improvement Plan?
A sales performance improvement plan (PIP) is a set of specific actions and expectations designed to help underperforming sales reps improve their performance. A PIP also serves to formally put a rep on notice that their performance is unsatisfactory, sets a specific date for resolution, clarifies what you will do to help them improve, establishes clear expectations and metrics, and defines outcomes.
In shorter sell cycle, high-intensity sales environments, reps who fail to meet quota will often be put on a PIP after just one or two months of underperformance. The PIP itself is often structured to give them one to two months to improve their performance.
In complex sales with longer sales cycles and less intense management and revenue pressure, companies may wait for several quarters or even a full year of underperformance, and the PIP may last a year.
When and Why to Use a Sales Improvement Plan
Many traditional industrial companies don't implement PIPs, even for industrial sales reps who chronically miss quota.
There are various reasons for this. Often reps are family members or long-time employees, so concern for family harmony and deep loyalties trump inadequate performance. Companies often accept that economic cycles impact results and are beyond a rep's control.
Companies often don't consistently recruit using an effective sales hiring process, so the necessity of covering an empty territory and the cost and uncertainty of recruiting replacement reps tip the scale in favor of simply accepting continued underperformance.
|
| ai generated image by Dall E (prompt = "salvador dali style painting showing a sales manager reviewing a sales improvement plan with an underperforming rep" |
And often, short of quota, sales management doesn't have a structure of accountability, metrics and activity expectations that provide definitive performance criteria.
A strong B2B sales consultant can create this framework where the long-standing culture resists doing so.
When sell cycles are 6-24 months, revenue is a very lagging indicator but often the only one they have.
Well-managed companies identify leading indicators for sales performance, such as target account activity, meetings, prospecting, projects created, projects advancing (vs. stagnant), referrals, etc. These provide early warning of underperformance and should trigger PIPs when reps are flailing.
Every company and situation is different, and sell cycle, average deal size, and sale complexity will impact decisions regarding how quickly to implement a PIP. Generally, though, a company's obligation to all its stakeholders and to the individual rep means that they shouldn't tolerate inadequate performance for more than two quarters without implementing a PIP.
A PIP often feels punitive, particularly when a company has traditionally tolerated mediocrity. And it does serve to formally put a rep on notice that they're on the bubble.
But the real objective of a sales improvement plan is just that - to improve a rep's sales performance. A PIP should be structured around that goal. The fastest route to satisfactory sales is to help a rep who was originally promising to achieve that potential.
This requires coaching, training and tools, in addition to very clear expectations. Reps who embrace a PIP and fully implement all the techniques and activities will earn reasonable patience as they work to improve.
The corollary is that reps who fail to do so help to make difficult decisions rather simple.
Special Considerations in Long Sales Cycle Capital Equipment Sales
As noted above, the nature of a sales position necessarily impacts the details of how a sales improvement plan is structured.
In the SMB tech space where deal size is modest and sales cycles are weeks, reps may find themselves on a PIP after a single month of underperformance, with 30-60 days of runway to turn things around. That's a product of aggressive investor expectations and not consonant with the staid culture of many industrial companies. However, it recognizes a good rep's ability to proactively create and close projects.
In contrast, companies that sell enterprise B2B software (e.g. ERP systems) are a better analog for those that sell big-ticket capital equipment. The size of investment, layers of management, and consequences of purchasing mistakes mean that projects move slower. Therefore it's reasonable to adjust PIP policies.
HOWEVER, the longer the sales cycle, the more important it is to track leading indicators that can include quantitative activity levels (prospecting, meetings) and milestones (projects identified), and also qualitative attainment (uncovering a prospect's compelling reasons to buy, identifying all members of a buying team, exploring what's disrupted capital purchases in the past, relationship mapping to support team selling, etc.)
Additionally, most companies that sell $5MM systems to multinationals also sell $250K systems to privately held businesses. Those projects can be created and closed faster, working directly with business owners. A PIP should focus on those opportunities.
This is another example of areas where a B2B sales consultant with deep experience in capital equipment can help you identify appropriate criteria. It's also illustrative of the importance of CRM for tracking - not only activity through a contact manager but qualitative criteria through appropriate deal management tools.
The fact that deals are long doesn't mean that you can't clearly identify weaknesses and underperformance quarterly. Slumps are rarely self-correcting. Management must be attuned to changes and move quickly to stop and then reverse declines.
The Role of Sales Management and Coaching
Sales managers are key to the effectiveness of sales improvement plans. They should be close enough to reps and effective enough in coaching and questioning to identify problems early.
Strong sales teams also use sales team evaluations to proactively identify areas of weakness for personalized training and a sort of early warning radar - knowing where to look for emerging signs that a rep might be struggling.
Consistent coaching (several times/week) on sales tactics and strategy (not just talking about pricing and technical details) is critical to keep reps performing at expectation and off of PIPs. Coaching is also helps a rep improve performance to get off a PIP.
Most industrial sales managers don't coach nearly enough. VP of sales, presidents and GMs should establish an expectation for the amount of time spent coaching weekly, and the nature of the coaching activities in general. Then when a rep is on a PIP, approve specific coaching plans for that situation. If your company hasn't established those formal coaching expectations, a B2B sales consultant can help.
Accountability is a core function of sales managers. Keeping reps focused, motivated, and on target through clear expectations and consistent measurement against those is a sales management job.
The Importance of Better Hiring
While there are certainly environmental factors (e.g. personal problems) that can derail strong reps, generally, it's possible to preemptively identify reps who will struggle.
This can be done for an existing sales team, and then used to develop customized sales training plans, and understand historical strong and weak performance in the context of sales skills.
You've got an obligation to help those on your team to perform. Invest in the tools and training to support that. Afer all it's far less expensive than firing and hiring.
You also have an obligation to add only top performers to your team. That's the role of an effective sales hiring process, engineered as carefully as your production. And a strong sales hiring process gets built around a sales aptitude test.
Rather than a personality or behavioral test, it's important to use a sales aptitude test that's statistically, predictively reliable. In other words, a sales candidate assessment that identifies who actually will sell based on specific attributes and is customized for the details of your industry.
The bottom line is this. You are obligated to every employee and stakeholder of your company to predictably generate adequate revenue to keep the company vibrant. That means that sales must produce. Therefore you must:
- Use a strong sales hiring process and sales aptitude test to hire reps who will succeed, and run the process continuously so that you don't hesitate to make changes when necessary
- Provide sales training that's customized for each rep using insights drawn from an accurate sales force evaluation
- Set expectations for frequent, effective sales coaching
- Measure reps using leading indicators of both quantitative and qualitative performance metrics to keep folks on track and quickly identify any deterioration
- Use sales performance plans to set clear expectations for underperforming reps and provide resources to help them recover, and put reps on PIPs quickly
- Enforce accountability at all levels in the company
- Understand that when it's clearly necessary, changing reps, even long-term ones, is the right thing for them, for the company, and for all stakeholders.
An appropriate sales improvement plan provides a framework to ensure this system works.
