The Big Short in Sales That Led Me to Datahug

This post is by Russ Hearl, our new Vice President of Sales in San Francisco.

When I agreed to become the VP of Sales at Datahug, I didn’t do so because of my experience as a happy customer at DoubleDutch. Or because in just four months of using Datahug, we were able to improve our average win rate by 20%.

Having built a high-velocity sales machine that delivered nearly 2,000 closed won opportunities in three years, I constantly think about how to improve my team’s performance. I have benefited from many easy-to-use and sales rep-friendly software products, including Salesforce and InsideSales.com. They all helped my teams increase effectiveness and efficiency.

In truth, I joined Datahug because they opened my eyes to a bigger problem that exists in our profession; a silent killer that will make it hard for companies who rely on direct sales teams to meet expectations in the coming years.

Silent Killer

I remember in 2009 when uncertainty dampened investment in a broad range of industries. That lean period was the genesis for modern Challenger Selling. The fittest who survived taught us all a lesson in bringing value to customers. This time round, the same rules will apply. Companies will need to re-learn to run their operations more efficiently and proactively seek out value for their customers and prospects.

Unfortunately, a silent killer has infiltrated our profession since then. It comes from a misunderstanding of what our customers actually want from us. We have convinced ourselves that prospects need to be wooed by clever emails rather than old-fashioned phone calls and that if we provide one stakeholder with all the information they need, they will do the selling for us within their organization.

There is a lot of demand out there today. As managers, we look at our sales pipelines in aggregate. We ignore the suboptimal win rates, the poor health of most of our deals, the long sales cycles and are 100% blind to the experience of our customers. This works in the good times, but we’re starting to see uncertainty in the market.

Recent Volatity in the Bessemer Cloud Index

BVP Cloud Index

The Big Short

The recent movie about the financial crash of 2008 tells the story of a number of investors who bet against the property market ahead of time. While the morality of their actions is still being debated, I am fascinated by how they came to realize that the jig was up.

Michael Burry discovered that the property market was highly unstable, not by looking at the performance of funds, but by examining the health of specific mortgages in the funds. He looked at the payment schedules of each one in detail. Mark Baum went to visit the actual houses in Florida that acted as collateral. He found them abandoned and in disrepair. For these investors, their competitive advantage came from understanding the true health of each underlying asset.

In the coming years, Sales VPs and managers will find that their competitive advantage will lie in their ability to understand the dynamics of each deal in their pipeline, not in their ability to report on the aggregated number. When the tap of demand runs dry, those who are forecasting on historical results will be ones most lost at sea.

These four changes make that inevitable.

1. Sales Complexity

In their recent and often quoted bible for start-up growth, Aaron Ross and Jason Lemkin talk about how increasing deals sizes are essential for driving growth. The world of complex solutions-oriented selling is constantly changing and becoming, well, more complex. When I read another book called The Challenger Customer last year, I took a step back and tried to determine what the latest changes in buyer behavior meant for me as a VP of Sales and for our occupation as a whole.

Sales Methodologies and Guidebooks

Sales Methodologies and Guidebooks

It is true that organizational decision making has become much more complex and consensus-driven. Therefore, the idea that the true cause of drag on sales cycles is the ability of our salespeople to engage multiple stakeholders in every deal really hit home for me. Sales leaders, including myself, have struggled to encourage our sales team members to branch out beyond the person they have identified as their key contact or coach. Imbuing sales reps with the confidence to potentially alienate themselves is not an easy thing to do.

2. Too Many Clever Emails

Anyone who knows me or has worked on one of my sales teams knows that I’m a big fan of picking up the phone and talking to prospects and customers. In the last several years there has been a proliferation of sales tools that have, effectively, turned salespeople into highly inefficient 1-to-1 marketers. I love innovation but, sadly, this is not progress.

One of the Many Clever Emails I’ve Received

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There’s definitely a time and place for a well-written email to a prospect (when you’re already engaged in a sales cycle or if you’ve been leaving voicemails for them), but many salespeople have devolved into 1-to-1 messaging spam machines. This email-centric behavior usually masks the underlying fear of picking up the phone. This needs to be addressed for a salesperson to realize their full potential. Sales leaders play a crucial role in setting the right expectations and creating compensation plans to discourage the email cop-out.

3. Managers Are Running Blind

Over the years, I’ve conducted thousands of 1-on-1s with sales team members. These 1-on-1s often focus on reviewing the pipeline in an attempt to extract a forecast to be rolled up. The process of reviewing deals is fraught with problems that result from a lack of visibility into the activities the rep is taking to move the deal forward. I’ve led sales teams who have been amazing at adhering to our CRM data entry expectations. Yet, even with great CRM adoption, sales leaders are relying on a lot of gut feelings to evaluate opportunities and determine whether the forecast is accurate.

Simply put, sales managers have a significant blind spot when it comes to the frequency and volume of communications their reps are having with various stakeholders associated to an opportunity. All too often, reps are not communicating often enough nor are they engaging all necessary stakeholders in order to get a deal done. This lack of visibility by the manager and the salesperson negatively impacts win rates and sales cycle time.

4. Sales Reps Are Left Guessing

Author Rick Page taught us long ago that hope is not a strategy when it comes to closing the complex sale. And yet, many salespeople fail to fully assess the dynamics of influence and power that exist within the organizations they are selling into and they relegate themselves to working with the classic NINAs (No Influence No Authority).

Salespeople have a tendency to attach themselves to any positive information or possible signals that indicate a deal is heading in the right direction. Optimism is a great trait and this is one of the things that makes salespeople great to work with, but it can also be their Achilles heel. Most often this manifests itself in single-threaded opportunities where a salesperson is working with just one person who is providing positive buying signals.

A New Approach

Sales compensation experts recommend that you tie monetary incentives back to key performance indicators. However, in my experience, Sales Operations and Finance leaders who are creating sales compensation plans often don’t give much thought as to the behaviors you need to encourage in order to attain the desired outputs. As it turns out, there are specific behaviors pertaining to the level of activity and follow up with prospects and customers that drive the outputs (closed-won opportunities). Reps know that it’s hard work to consistently deliver high activities. That means lots of calls, lots of emails, and many meetings. But, to date, that’s been impossible to measure accurately.

That’s why I joined Datahug.

Ray Smith and his team have found the antidote. They have built a Sales Optimization solution that extracts key information directly from the Gmail, Exchange and phone systems and integrated it into Salesforce with analytics that measure and motivate reps to follow the correct behaviors.

Deal Level Analysis Provided By Datahug

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We’ve analyzed thousands of opportunities and have, unsurprisingly, found a direct correlation between activity levels and the likelihood of deals being won. It may seem somewhat draconian to measure Account Executives or Sales Development Reps on activities, but if you don’t, you are implicitly telling your reps that they are free to choose whatever path they want to take to reach quota. In reality, many reps know they need to execute a high volume of targeted activities to build and keep momentum.

Pipeline Management Dashboard Provided by Datahug

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You can help your reps win more deals faster by coaching them and compensating them to follow the correct patterns of behavior. This is all in our native Salesforce application. And you can avoid the big short by knowing the true health of each deal in your sales pipeline.

If you are seeing some of these issues today in your sales team and would like to do something about it, feel free to email me directly or contact our sales team for a demo. I look forward to talking to you (on the phone or in person).

I’m also running a webinar on 4/14 to discuss ways to build the ultimate sales machine.

Russ


See below some related articles and resources that might help too:

Cultivating a Sales Culture of Transparency

Four Sales Activities That Kill Sales Performance

Sales Compensation Plans That Optimize For Growth


Sales Coach Quiz


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