B2B Sales Turnaround Case Study: SEM & Website Sales Turnaround
Digital Media – SEM & Website Sales Turnaround
This is a fifty-plus person inside sales division of a billion dollar corporation selling SEM (paid search) and websites direct to small businesses in a B2B simple sales environment. The parent organization’s primary operations are in the manufacturing industry, and elected three years ago to enter the digital media space in order to offset declining sales in its core business. Over these three years, the digital media division has never come close to achieving break-even sales levels, and has replaced each of the three management teams and senior executives in search of a solution.
The culture and environment of the core business is not synonymous with that of a high performance digital media sales division. However, since this division is housed within the same facility as the printing facility, labor laws require that many of the same protocols are followed whether or not they are relevant to the sales organization.
The environment on the sales floor is relaxed and quiet; more closely resembling the sounds within a church or library than an outbound sales floor. The sales staff seems to have taken on the mindset that they, like the core employees of the parent company, are also life-long employees and will receive their name in the company “ring of honor” someday for their longevity of service. The carpet has a well-worn path proceeding from the sales floor to the HR department with daily complaints ranging from behavior of fellow employees to sales management conflicts to challenging the right of the company to implement sales performance improvement plans. HR is exacerbating this situation by walking the sales floor daily as though they are the authority for the sales division and asking reps individually “if everything is ok” and advising reps to notify them if they need anything. HR also delivers paychecks and e-deposit statements directly to each rep instead of allowing the sales management to do this. Therefore, the message to the reps is clear: HR runs this sales division. This is usurping the authority of the sales management team and negatively impacting sales results.
The sales teams are divided with one side of the sales floor selling websites, and the other side selling paid search. There is little cooperation between the reps on their own sales teams: no one helps or encourages others and the mantra “every man for himself” is the prevailing theme. There is also divisiveness between the SEM and website sales groups, and little cooperation to help each other win new business. Part of this has been fostered by the sales compensation plan which penalizes a rep for forwarding a lead. For example, if a new website customer is interested in paid search and the rep forwards the customer to the SEM side, they will not receive any commission or credit for the sale on the website side. The sales compensation plan also is focused on units of sales instead of total dollar volume. Therefore, a rep that sells 3x the revenue will make less than a rep that had more total sales if they did not hit their required minimum number of sales.
The sales reporting period is one month long, and 75% of the sales come in during the last five days of the month. The sales cycle for paid search and websites is typically less than ten days, and the existing reporting period is too long of a sales cycle to create urgency to sell each day. However, the division needs to get sales ramped up quickly, and finance is at least ninety days away from being able to implement a new compensation plan with shorter reporting periods. Therefore, we will need to externally simulate shorter reporting periods through the use of contests and incentives. Also, the focus on the minimum sales objective is throttling the reps ability to achieve their personal best performance. There are no visibly posted sales results for year-to-date or reporting period results. YTD reports are only seen if they are pulled by the sales managers, and only reviewed with the reps at the sales manager’s discretion. Some reps with strong YTD results are performing near the bottom of the division over the previous sixty days, and they are hiding behind the veil of their YTD performance. This is only possible because there are no stack-ranking reports prepared or posted that rank reps by their most recent thirty or sixty days of performance. Compounding the challenges to increase sales is the fact that, as we initiate the turnaround, the marketing budget for inbound leads is being reduced by 80%.
There is a considerable problem with sales rep belief in the value of the products that they are selling. SEM reps are seeing new campaigns cancelled within the first sixty days and these are accompanied by customer complaints regarding the low return on investment of their paid search program. Similarly, the website sales team has criticized template-based websites being delivered as being antiquated and with limited functionality. Poor follow-through from the website development team has created a large number of complaints from the new customers resulting in a high cancellation rate. Therefore, the reps limited conviction in the value of the products they are selling is one of the factors impacting their lack of sales velocity.
The sales process is oriented toward the product and not the buyer. It is an antiquated advertising sales approach used in the early nineties, and lacks the consultative elements necessary to uncover and resolve the prospects problems. As a result, the reps struggle to establish personal and professional credibility with the prospects. The personal identity the sales reps have of themselves is that of a sales peddler instead of as a valued internet small business consultant…and the prospects can sense this in their conversations with the reps. There are few testimonials available for the reps to sell their story, and the current testimonials in use do not share a positive experience about the company’s products when called by prospective clients.
The sales management team is focused on administrative tasks instead of sales rep development. Most of their time is spent: 1.) Pulling activity reports and analyzing key performance metrics (KPI’s) several times per day 2.) Preparing reports for upper management regarding these performance metrics and sales results; 3.) Participating in conference calls with various departments including (but not limited to) sales management, marketing, lead generation, business development, and product development. There is very little actual field coaching, yet 25% of the reps have been put on formal action plans (with termination as a consequence) that have no commitment from the manager to coach, train, and develop these reps in order to bring their sales up to acceptable levels.
In a nutshell, there are too many layers of bureaucracy in this small startup division. The parent company has errantly provided this team with so much infrastructural support that there is nothing getting accomplished and far too many people to blame for there to be any direct accountability. This relatively new sales division should be operating lean and mean and with a startup mentality. They should have a fire in their belly that they are selling for their own survival each and every day. Unfortunately for this division, the company has lost tens of millions of dollars investing in this division over the past three years. If this initiative does not yield substantial progress during this turnaround, this business unit will likely be shut down.
The physical environment needs to change from a complacent and laid back atmosphere to an energetic high-performance sales division. In order to psychologically shake the reps complacency and shift their expectations, we will cosmetically transform the office from rows of mundane cubicles into an arena fit for sales champions. While x’s and o’s play a role in sales performance improvement, the first step in changing behavior is to change their identity. Once they have assumed the identity of a champion, only then will they conduct their business in a manner which is congruent with that of a sales champion. Establishing the physical environment reminiscent of a national championship celebration is the first step in behavioral change.
This physical environment shift will coincide with the initial team meeting where we will provide vision, direction, and confidence to the sales force. At this meeting, we will announce that 100% of the performance plans are being revoked and that all reps will start with a clean slate. We will establish personal and professional credibility by sharing our story of success as sales reps, managers, and leaders. The vision will be provided for creating a world-class and championship sales team, and then the direction will establish how we are going to accomplish this. Our goal is to make each and every sales rep the best they can be. Through our focus on individual rep development, this division will collectively become a championship team.
The culture needs to change in order for the attitudes to change and for sales leadership to gain control of this division. HR will be notified that sales will distribute paychecks henceforth, and that they are not allowed to walk the sales floor without the approval of the division manager. Not only is it slowing down sales momentum due to lengthy conversations, but it is confusing the reps and usurping sales leadership control. This sales team needs to be separated from the manufacturing culture as much as possible under the circumstances, and corporate divisions providing support need to be scaled down considerably in order to accelerate sales.
As evidenced by customer complaints and cancellations, the back-end fulfillment for both websites and SEM needs significant attention in order to regain the reps confidence and belief in the product. We will work directly with the manager of product development to identify discrepancies and produce quick-fixes where possible. A small team will be established to fix the problems, with no more than one person per department assigned to the team. Each leader will be given their project responsibilities, and is responsible for achieving the result in accordance with the project deadline. This will result in high accountability and lead to rapid results for the entire initiative.
In order to get the sales teams from both sides to accelerate their sales throughout the month, we will create an externally driven sense of sales urgency by establishing contests and incentives in one and two-week segments (since we cannot amend the sales comp plan). We will implement sales performance shifting to increase the reps sales goals, and sales boards will be posted at each end of the floor for daily posting of numbers relative to the performance shifted target. We will increase sales visibility, accountability, and peer awareness by posting a six-week stack-ranking report next to each sales board. This will rank the reps from top to bottom based on their most recent six-weeks of sales. The stack-rank will also be personally delivered to each rep by the division manager and discussed each week. In concert with the release of the weekly stack-rankings, the top three reps for SEM and website sales will be acknowledged with highly visible signage above their workstation which is numbered by their division ranking from the current stack-rank report.
Incoming sales leads and calls are currently only given to the top reps, yet, there is no evidence that this is improving the lead to close ratio. Contrarily, the top reps seem to be doing the minimum with this opportunity and have a backlog of unworked leads in the system. This is being changed so that all reps have an equal opportunity to work incoming leads, and sales managers will coach accordingly. Pipeline management will be improved by scrubbing the Salesforce.com CRM of leads by status. Reps will be given two weeks to close new leads prior to re-assignment. All leads will be reviewed with each rep each day, and the manager will update their status report accordingly. Sales reps will be taught how to prospect for new clients, and each will be assigned a territory for prospecting.
Sales managers are given coaching on strategies, tactical plans, and tools for driving their teams. The sales management daily agenda is established with admin being handled prior to 9AM, sales coaching at the reps desks (not remotely) from 9AM-12PM and 1PM-4PM in 30-45 minute increments. Large timers accompany the managers to the coaching session and are placed on top of the cubicle divider so reps that need help or have questions have a visual understanding of when the coaching session ends. Therefore, managers will not be pulled away from a coaching session for fire drills, and reps know when they can get assistance without needing to interrupt. A binder-driven sales management system is being developed so that all necessary tools are at their fingertips even when they are coaching. These tools include the most recent stack-rank report, rep tabs with KPI’s/lead status/coaching reports, and any performance counseling plans. The division manager will conduct “coaches coaching” by sitting with the sales managers while they conduct their rep coaching in order to sharpen the sales manager’s coaching skills.
We anticipate possible kick-back from some of the sales managers for revoking 100% of the performance-based corrective counseling plans. The justification of this is two-fold: 1.) To give all reps a new opportunity to succeed, thereby improving their attitude and 2.) Since none of the performance plans included a commitment from the sales manager for coaching and rep development, they are deemed invalid. When a rep needs to be dismissed for performance, the manager must have equal culpability for the low performance since they hired them and trained them. Therefore, they need to be committed to keeping them if at all possible. The behavioral edict for the sales managers is to be highly energetic, positive, enthusiastic, and motivating. They must make their people better than they would have been without them. We treat reps as partners, and never question their intent to do the right thing. Ten pats on the back for every one kick in the rear. Sales management is there to serve the reps…not vice-versa.
With the marketing budget reduced by 80%, this was a tough nut to crack. Not only did we need to fix the products on the back-end fulfillment side in order to build belief and confidence from the sales reps, but we had to implement a new sales process along with teaching them how to hunt for new business. As the reps came to understand, prospecting is as much about attitude and commitment as it is about approach and expertise.
After five weeks, it was apparent that the process was starting to take effect. During Christmas and New Year’s weeks (after the reps firmly complained that no one was open for them to call), both the web services and SEM teams increased their results by a 2:1 margin over the previous year. They went on to set a company record in sales during the second week in January, and then proceeded to break their own record for five consecutive weeks. The division validated to the parent company that the business model will work by surpassing the break-even point for the first time in the division’s three year history. During this turnaround, this sales division increased their sales by 200% in ninety days together—a 3x multiple increase.
Our sales case studies are designed to provide you with a "big picture" snapshot of sales problems faced by various companies, the broad strategies used to guide the sales turnaround, and the subsequent results. Certainly there are many strategies that can accomplish a single desired result, however, the key to the success of any sales strategy resides within the implementation.
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