Groupon recently announced it will fire and replace the bottom 10% of its sales force. The reason? CEO Andrew Mason said Groupon wants more high-value customers. The news got us thinking, every sales team has a bottom 10%. Who is responsible for the laggards—the sales reps or the company?
Let’s explore Groupon’s sales model to see if there are lessons for other companies. An active sales training program is a central component of sales growth. But sales coaching is worthless when it targets the wrong group. Although businesses are investing more in coaching than ever, CSO Insights found no annual increase in the number of reps who meet quota.
The reason? Sales leaders tend to coach only the very highest and lowest sales performers. By coaching only their best and worst reps, companies neglect their greatest opportunity for impact—average performers. A recent HBR study shows companies can improve performance by 19% with effective coaching for their middle 60%. What would happen to your revenue if 60% of your sales team sold 19% more?
According to David Cichelli, four stages of growth characterize the corporate sales growth model:
- Volume growth.
The size of a company’s sales team, as well as its sales compensation plans, should directly reflect its stage of growth. Arguably, Groupon is in the Re-evaluation Phase. It rapidly grew from a start-up to an established business. Groupon is no longer an unknown brand selling to customers who don’t understand the model. Daily deals are now a hot commodity.
A study from Rice University shows daily deal sites will experience increasing difficulty acquiring new customers. Are Groupon’s aggressive sales goals realistic for today’s market conditions? To move into Phase 4: Optimization, Groupon may need to shift its focus from acquiring new customers to investing in its current customer base.
As we’ve explored in another post, the business model of customer acquisition has expired. Today, customer retention is currency for growth. HBR’s research shows under-performing reps may not merely need motivation to sell. Often, they just shouldn’t be in sales.
Like Groupon, the rest of us may do well to assess the innate qualities of our sales team members and find new roles for those who don’t fit the ideal sales profile. Conclusion: Set realistic sales performance targets and accurate benchmarking
Regardless of the reasons behind Groupon’s need to fire 10% of its sales team, sales success hinges on realistic sales goals, effective coaching, and accurate job placement. Sales reps must feel they can reach quota.
Remember, your biggest opportunity for sales is with the middle 60% of your sales team. Here are some recommendations for converting more sales reps in to star performers:
- Link your sales compensation plans directly to achievable goals.
- Implement benchmarking early when ramping up new reps. You’ll increase your staff retention.
- Be proactive in engaging your sales staff on a regular basis.
What are you doing to unleash the full potential of your average performers?