Sales Coaching - Ian Segail

2MB Size 5 Downloads 43 Views

SALES COACHING VALIDITY Ian Segail. IAN SEGAIL | SALES COACHING VS SALES TRAINING. 22. • The terms Sales Training and Sales Coaching are often  ...
SALES COACHING VALIDITY Ian Segail

Sales Coaching Validity Copyright © IanSegail.com. All rights reserved.

No part of this ebook may be reproduced, stored in a retrieval system, or transmitted by any other means: - electrically, mechanical, photocopied, recording or otherwise, without written permission of the copyright owners. The ebook is supplied for information purposes only, even though the contributors of this material are well conversed in the subject matter printed. The material content in this book does not constitute professional advice. This ebook is designed to provide accurate and authoritative information with regards to the subject matter contained. It is sold on the understanding that the publisher and its contributors are not engaged in rendering legal, accounting, or other professional advice. If legal advice or other professional assistance is required, the services of a competent professional should be sought. The readers are advised to consult with any appropriately qualified professional before making any business decisions.

IAN SEGAIL | INTRODUCTION

2

SALES COACHING VALIDITY Ian Segail

Table of Contents INTRODUCTION ........................................................................................................................................5 HUMAN CAPITAL & COMPETITIVE STRATEGY .................................................................................8 IMPACT OF SALES COACHING ON HUMAN CAPITAL...................................................................... 10 SALES PERFORMANCE OPTIMIZATION ............................................................................................. 13 SALES COACHING VS SALES TRAINING ............................................................................................. 21 The Sales Coaching Effectiveness Pulse Survey .......................................................................................... 26 SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM................................................. 39 CALCULATING ROI FROM SALES COACHING .................................................................................. 49 REFERENCES ........................................................................................................................................... 55 ABOUT THE AUTHOR ............................................................................................................................. 60

IAN SEGAIL | INTRODUCTION

3

SALES COACHING VALIDITY Ian Segail

This page intentionally left blank

IAN SEGAIL | INTRODUCTION

4

SALES COACHING VALIDITY Ian Segail

I __________________________________________

INTRODUCTION

IAN SEGAIL | INTRODUCTION

5

SALES COACHING VALIDITY Ian Segail

When we think about success, words such as vision, motivation, integrity and competence come to mind. The word ―coaching‖ isn‘t something that frequently appears on the list. The biggest misconception about coaching is that the higher up you are in the company, the less coaching you are required to do or you need for yourself. In reality, it is just the opposite. Coaching is a critical success factor at all levels in the organization. Coaching is the most powerful tool available to senior management to improve performance, retain people, and help professionals reach their goals. Without coaching, there is no sales culture. Why coach? Because coaching accelerates productivity. Coaching improves retention. Your salesforce needs it. And this is probably the biggest reason you need it… Your competitors are doing it. You are a leader. What you do matters. You‘ve been recognized for your leadership abilities, for your accomplishments. You‘ve hired good people. Now it is up to you. You have the power to make sales coaching a way of life. You can maximize your resources, help your managers‘ stretch, and help ensure you don‘t lose business to your formidable and increasingly aggressive competitors. Each and every organization with commitment to sales coaching as a way of life credited sales coaching as a key factor in:

IAN SEGAIL | INTRODUCTION

6

SALES COACHING VALIDITY Ian Segail 1) exceeding goals, 2) more control of their sales staff, 3) retaining their people, specifically their high performers. They used a coaching culture to reach peak performance. So it isn‘t coaching to be ―nice‖ — it‘s coaching to be world-class, to be #1. It has been proven that coaching is more effective than the old approach of using fear and intimidation to achieve sales management objectives. The conventional methods included command functioning tactics of fear and intimidation to motivate sales personnel. Many managers, when asked about the best coaching they ever experienced, talk about their days in sports or describe a special teacher — they were pushed hard, pushed relentlessly sometimes — but always with great support and the knowledge that the coach believed in and cared about them. By developing a coaching relationship, which includes encouragement, listening, counseling, providing positive feedback, being supportive, resourcefulness, thinking with the future in mind, and modeling, these supervisors can give rise to a foundation where sales employees will be energized, aligned, and collectively mobilized to achieve and sustain customer satisfaction and trust. And this is the essence of coaching. This report proves there is a need for these sales supervisors and managers to change their previously used tactics and embrace a new, proactive approach of "coaching" their sales employees. The new approach is described in detail and will help unlock the mysteries of becoming a viable and proactive sales supervisor. It will also give supervisors the tools needed to meet the needs of management and create a more productive, independent sales force.

Ian Segail Sales Strategist (+61) 414 888 519 www.iansegail.com

IAN SEGAIL | INTRODUCTION

7

SALES COACHING VALIDITY Ian Segail

II __________________________________________

HUMAN CAPITAL & COMPETITIVE STRATEGY

IAN SEGAIL | HUMAN CAPITAL & COMPETITIVE STRATEGY

8

SALES COACHING VALIDITY Ian Segail



In a recent study conducted by the management consulting firm KPMG, they found that 83% of senior executives believed that human capital is the key to maintaining an edge over competitors.



Research on Human Capital Theory also suggests that education, training and development, and other knowledge has a positive impact on productivity and wages (Zula and Chermack, 2007)



An empirical analysis done by Becker (1993) noted three types of investments that have a direct relationship to the Rate of Return (ROR) on human capital.

1. On-the-job training, which included general and specific training from the organization and/or school, in conjunction with the direct production of goods and services. 2. Other knowledge, which included other information that a person obtained to increase their command of their economic situation outside the organization. 3. The training & development that specialized in the production of training, which was different than the firms training and brought to the organization from places other than the organization. IAN SEGAIL | HUMAN CAPITAL & COMPETITIVE STRATEGY

9

SALES COACHING VALIDITY Ian Segail

III __________________________________________

IMPACT OF SALES COACHING ON HUMAN CAPITAL

IAN SEGAIL | IMPACT OF SALES COACHING ON HUMAN CAPITAL

10

SALES COACHING VALIDITY Ian Segail



Managers must fully understand how value is created within an organization in order to incorporate a successful business strategy within their departments.



Management should attend to more than just their financials, because it ultimately affects the outcome of their strategic implementation and long term goals.



In order to truly understand and utilize the logic of "value-creation", management must focus on variables such as performance drivers, for example: customer loyalty is a key source of competitive advantage.



Sales managers must begin to understand and appreciate the precursors to financial success.



By so doing, they will incorporate the "cause & effect logic" into the framework of their goals and objectives.

IAN SEGAIL | IMPACT OF SALES COACHING ON HUMAN CAPITAL

11

SALES COACHING VALIDITY Ian Segail 

Too many sales and marketing managers continue to make day-to-day tactical decisions, without paying enough attention to their strategic direction.



Often these managers know how to increase profits over last quarter, but they do not analyze or chart the course that has taken them there.



Research suggests that organizations, in order to increase competitive advantage should mobilize its intangible assets in the form of knowledge, technological skills and experience, and strategic capabilities.



Knowledge in the form of coaching, competencies, capabilities, experience, and relationships, significantly differentiated one enterprises success from another (Birchall & Tovstiga, 2001).



In the area of sales, it has been proven that some of those competencies were the direct result of sales coaching with sales manager enhancing his/her trained ability.

IAN SEGAIL | IMPACT OF SALES COACHING ON HUMAN CAPITAL

12

SALES COACHING VALIDITY Ian Segail

IV __________________________________________

SALES PERFORMANCE OPTIMIZATION

IAN SEGAIL | SALES PERFORMANCE OPTIMIZATION

13

SALES COACHING VALIDITY Ian Segail



CSO Insights conducted research on ―Sales Process Analysis‖ (2011) and the study concludes that Sales Training has tremendous impact on sales performance.



The key issue which was the focus of the study was the sales training investment made by the company.



Key Findings, Observations & related data are in the following sections.

IAN SEGAIL | SALES PERFORMANCE OPTIMIZATION

14

SALES COACHING VALIDITY Ian Segail



Key Finding: Training investments are essentially unchanged from last year.



Observation: Companies are keeping a lid on expenses, including sales training investments.



The numbers above are virtually unchanged from one year ago, with a single exception: 2.3 points moved from the $1,501- $2,500 range up to $2,501-$5,000.



Key Finding: Training investments are down from high training days of 2008-2009.



Observation: This may have been a useful strategy in line with the economic slowdown and reduced rep turnover over the past two years. Individual reps were also more conservative by sticking with employers while unemployment figures and staff reductions filled headlines.



Key Finding: Savings from virtual training may be reflected in this year‘s figures.



Observation: Unemployment figures remain stubbornly high in many areas, but as the recovery continues to ramp up, we predict reps will begin to look at new job opportunities.



More hiring means more training is needed; fixed budgets mean there is less to go around.

IAN SEGAIL | SALES PERFORMANCE OPTIMIZATION

15

SALES COACHING VALIDITY Ian Segail 

While the figures reported above are exclusive of travel expenses, many companies are stretching their training budgets by shifting to virtual online sessions.



There are several advantages to virtual classes beyond travel savings.



Time to travel is more costly than the airfare, as reps are out of the field for longer periods of time.



Many online sessions are archived, allowing participants to review portions that may have been unclear.



And, of course, there is the convenience factor of viewing recorded classes when it best suits each individual.

IAN SEGAIL | SALES PERFORMANCE OPTIMIZATION

16

SALES COACHING VALIDITY Ian Segail

IAN SEGAIL | SALES PERFORMANCE OPTIMIZATION

17

SALES COACHING VALIDITY Ian Segail

IAN SEGAIL | SALES PERFORMANCE OPTIMIZATION

18

SALES COACHING VALIDITY Ian Segail

IAN SEGAIL | SALES PERFORMANCE OPTIMIZATION

19

SALES COACHING VALIDITY Ian Segail Conclusions: 

Firms not offering any training may be realizing a false economy.



They‘re saving the cost of training and associated expenses, but there is a cost of missed opportunities―nearly six in ten (59%) deals carried through the entire sales process result in nada—a competitive loss or no decision.



At the other end of the spectrum, $5,000+ per rep may seem heavy, but how does the fact that two-thirds of the reps make quota look to you?



And is this—combined with the lowest turnover rates and highest forecast accuracy— worth $5,000/rep to your company?



There are other factors besides dollars invested that weigh heavily on outcomes— manager reinforcement and management involvement.



To maximize the return on training investments, the senior management should be willing to enforce the use of the concepts taught and first line managers are willing to coach them.



Management involvement with balanced investment will serve you well this year and going forward.

IAN SEGAIL | SALES PERFORMANCE OPTIMIZATION

20

SALES COACHING VALIDITY Ian Segail

V __________________________________________

SALES COACHING VS SALES TRAINING

IAN SEGAIL | SALES COACHING VS SALES TRAINING

21

SALES COACHING VALIDITY Ian Segail



The terms Sales Training and Sales Coaching are often used interchangeably.



It is very important to understand the differences within sales coaching and training.



It is that difference which will provide the explanation as to why so much conventional sales training, even very high priced training, fails to deliver positive and sustained changes in most salespersons‘ behavior.



Sales Training is either conditioning or an attempt at reconditioning. It‘s the process of teaching various methods, sales tracks, tools, tips and strategies.



Sales Coaching, on the other hand, takes the position that the individual must assume personal responsibility for his or her actions.



Salespeople are encouraged to examine their personal core values and then they are coached to make the adjustments that will allow improved outcomes in both their selling results and their personal lives. IAN SEGAIL | SALES COACHING VS SALES TRAINING

22

SALES COACHING VALIDITY Ian Segail 

Sales coaching is an interactive process that provides guidance and encourages the salesperson to make productive decisions while taking personal ownership of those decisions.



This technique will encourage the development and expansion of his or her own mind, resulting in not only increased levels of self confidence but also higher self esteem.



This personal growth motivates the sales team member to seek out and create more successes in both his or her selling career and personal life.



These successes and positive, adjusted behaviors are sure to put more money on your bottom line.



Sales training is expensive and doesn‘t produce sustainable results.



Traditional sales training is a cycle that goes something like this.



A company finds a training provider, purchases a license for the material, pays for the actually training and travel costs.



Since the company knows the value of sales learning, they will want their representatives to brush up on what they had learned – in effect, starting the sales training cycle again.



According to Huthwaite Inc., in the months that follow, each sales person loses an average of 87% of the valuable skills and knowledge learned from sales training because of a lack of reinforcement/follow up sales coaching.



Instead of less cost-effective classroom-based events, sales learning should be a continual process that is applied to specific sales situations and backed-up by expert coaching.



With the help of expert sales coaching sales professionals and managers are walked through their opportunities and accounts so newly acquired skills and knowledge can be retained and applied directly to where they are needed most.



Coaching is a process, not a stack of training events, and you need to understand the differences between the push and pull dynamics of learning, applying, measuring and coaching new sales behavior.



Sales Coaching takes a process- and plan-oriented approach to management, where management and sales person resources and time is allocated according to where the need is.

IAN SEGAIL | SALES COACHING VS SALES TRAINING

23

SALES COACHING VALIDITY Ian Segail 

This requires a greater investment of time in the short term, but benefits from the most impressive and sustained results.



This collaborative approach takes in guidance and buy-in from the sales person and yields a significant shift in behavior.



It is the behavior change over time that leads the individual to maximize their potential.



This approach is the most successful and it is in large part why you see sales people following successful sales managers through different companies.



A research conducted by The TAS Group in 2010, it takes twice as long to lose a deal as to win one, so coaching on which deals to pursue and helping with the qualification phase pays dividends.



Research by the Chartered Management Institute and Campaign for Learning – ―Coaching at Work‖. Results issued in a press release dated 16th May 2002:  Top 4 words associated with Coaching (from a given list) were: 1. 2. 3. 4.

Supportive (98%) Empowering (82%) Holistic (80%) Inspirational (77%)

 Top 3 words associated with Training (from the same given list) were: 1. Prescriptive (71%) 2. Rigid (70%) 3. Intimidating (50%)

IAN SEGAIL | SALES COACHING VS SALES TRAINING

24

SALES COACHING VALIDITY Ian Segail

IAN SEGAIL | SALES COACHING VS SALES TRAINING

25

SALES COACHING VALIDITY Ian Segail

VI __________________________________________

The Sales Coaching Effectiveness Pulse Survey

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

26

SALES COACHING VALIDITY Ian Segail



CORPORATE EXECUTIVE BOARD‘S “The Sales Coaching Effectiveness Pulse Survey” is designed to provide a snapshot of sales coaching effectiveness across the customer service organization.



Based on the CCC‘s popular Unleashing Service-to-Sales Potential: Refocusing Investments on the Key Drivers of Sales Performance research, the Sales Coaching Pulse Survey is an anonymous survey that measures various aspects of sales coaching, including time spent coaching and the quality of each individual coaching relationship. Overview of the Coaching Effectiveness Pulse Survey:

A snapshot of the CCC‘s sales coaching effectiveness model from Unleashing Service-to-Sales Potential: Refocusing Investments on the Key Drivers of Sales Performance.

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

27

SALES COACHING VALIDITY Ian Segail

Tenure of Survey Respondents ACME Inc. Respondents’ Months of Experience

The Sales Coaching Effectiveness Pulse Survey is designed to provide a snapshot of sales coaching effectiveness across the customer service organization. Based on the CCC‘s popular Unleashing Serviceto-Sales Potential: Refocusing Investments on the Key Drivers of Sales Performance research, the Sales Coaching Pulse Survey is an anonymous survey that measures various aspects of sales coaching, including time spent coaching and the quality of each individual coaching relationship.

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

28

SALES COACHING VALIDITY Ian Segail Sales Coaching Effectiveness at ACME Inc. My Supervisor Is an Effective Coach Distribution of Responses 42.5%

45% 40%

35%

30.1%

30% 25%

20% 15% 10%

5%

6.2%

3.5%

6.2%

8.8%

2.7%

0%

Very Ineffective

2

3

Neither Ineffective nor Effective

5

6

Very Effective

My Supervisor Is an Effective Coach Benchmark and ACME Inc. Average

Very Effective

7

5.48

5.71

4

Very Ineffective

1 Benchmark Average

ACME Inc. Average

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

29

SALES COACHING VALIDITY Ian Segail Supervisors at my Organization are Held Accountable for Providing Good Coaching

Strongly Agree

7

5.42 4.85 4

Strongly Disagree

1 Benchmark Average

ACME Inc. Average

My Supervisor and Immediate Team Members Collectively have a Healthy Coaching Culture

Strongly Agree

7 6.00

5.63

4

Strongly Disagree

1 Benchmark Average

ACME Inc. Average

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

30

SALES COACHING VALIDITY Ian Segail

Organizational Buy-In for Sales Coaching Coaching is an Effective Way to Improve Sales Performance ACME Inc. Score Distribution

54.0%

50% 36.3%

25%

7.1% 0.0%

0.0%

0.0%

Very Strongly Disagree

2

3

2.7%

0% Neither Agree Nor Disagree

5

6

Very Strongly Agree

My Entire Organization has a Well-Established Coaching Culture ACME Inc. Score Distribution 50%

33.9%

28.6% 25% 18.8%

7.1%

8.9%

2.7% 0.0% 0% Very Strongly Disagree

2

3

Neither Agree Nor Disagree

5

6

Very Strongly Agree

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

31

SALES COACHING VALIDITY Ian Segail Coaching is an Effective Way to Improve Sales Performance ACME Inc. Score & Comparison to Benchmark

More Agreement

7

6.24 6.10 6

5

Less Agreement

4 Benchmark Average

Acme Inc. Average

My Entire Organization has a Well-Established Coaching Culture ACME Inc. Score & Comparison to Benchmark More Agreement

7

6 5.60

5.00 5

Less Agreement

4 Benchmark Average

Acme Inc. Average

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

32

SALES COACHING VALIDITY Ian Segail Sales Coaching Timespend ACME Inc. Reported and Target Amount of Sales Coaching

ACME Inc. Average

Benchmark

Reported Minutes of Sales Coaching per Month

70.3 min

63.2 min

Target Number of Sales Coaching Minutes per Month

133.8 min

105.4 min

At ACME Inc., 95% of employees report a desire for more sales coaching.

Reported and Target Amount of Sales Coaching Self-Reported by Reps; Minutes per Month 120% 94.7%

140

90%

120

60%

135.23

64.68

43.6%

100

30%

80

70.55 0%

60

Benchmark

Firm

40

20 0 Reported

Shortfall

Target

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

33

SALES COACHING VALIDITY Ian Segail

Reported and Target Amount of Sales Coaching Self-Reported by Reps; Minutes per month

140

60.48

130.00

Shortfall

Target

120 100 80

69.52

60 40

20 0 Reported

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

34

SALES COACHING VALIDITY Ian Segail Relationship Quality

Sales Coaching Effectiveness within the Coaching Session Effectiveness of Sales Coaching Sessions

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

35

SALES COACHING VALIDITY Ian Segail Coaching Throughout the Sales Process Allocation of Coaching within the Sales Process

ACME Inc.

Benchmark

40% 28.7% 22.6% 22.6%

29.6% 28.8%

24.5%

23.4% 19.9%

20%

0% Opportunity Identification

Opportunity Pursuit Opportunity Closing Stage

Ongoing Sales Activities

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

36

SALES COACHING VALIDITY Ian Segail Sales Qualification vs. Sales Conversion Sales Coaching Blends Comparison of ACME Inc. and the Benchmark

100%

55.3%

53.8%

44.7%

46.3%

ACME Inc. Average

Benchmark Average

50%

0%

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

37

SALES COACHING VALIDITY Ian Segail Distribution of Sales Coaching Effectiveness

This graphic, maps the sales coaching effectiveness rating that employees assign their individual supervisors. In this graphic:   

green indicates high-quality sales coaching white indicates neutral sales coaching red indicates low-quality sales coaching

IAN SEGAIL | The Sales Coaching Effectiveness Pulse Survey

38

SALES COACHING VALIDITY Ian Segail

VII __________________________________________

SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

39

SALES COACHING VALIDITY Ian Segail



―Sales Executive Council‖ (SEC) conducts a range of research initiatives on topics of member interest.



SEC develops insights, applicable practices, quantitative analyses, and reusable tools and templates to accelerate the resolution.



Capable, ―solutions-ready‖ managers are desperately needed to address significant sales rep skills deficits (e.g., deep customer need sensing, financial acumen, business savvy) made evident by heightened solutions selling requirements.



Unfortunately, a majority of first-line managers are ill-equipped to lead solutions-selling efforts because they lack the most important driver of manager effectiveness—being a great sales rep coach.



Research by SEC shows that coaching impacts the performance of any sales force, especially core performers, who account for the middle 60% of salespeople.



SEC concluded that there is no other driver that can so significantly raise the engagement and bottom-line results of reps.

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

40

SALES COACHING VALIDITY Ian Segail

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

41

SALES COACHING VALIDITY Ian Segail 

The Median Exempt Involuntary Turnover Rate is 4.79%.



Despite being a ―known quantity‖ in most cases, managers fail nearly as often as sales reps hired externally.



Group I: Have the skills/ competencies to meet current performance requirements but not likely able to meet future performance requirements.



Group II: Have the skills/ competencies necessary to meet current and future performance requirements.



Group III: Lack the skills/ competencies necessary to meet current performance requirements.



Nearly three fourths (Group I & Group II) of members describe their manager pool as ill prepared to execute against the requirements of the role in the future.



Indirect Yet Quantifiable: The benefit of good sales managers has never been greater.



Getting sales managers ―right‖ pays off in a number of ways.

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

42

SALES COACHING VALIDITY Ian Segail 

SEC research indicates that quality managers are significantly more likely to positively impact overall rep job satisfaction and retain top talent.

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

43

SALES COACHING VALIDITY Ian Segail

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

44

SALES COACHING VALIDITY Ian Segail

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

45

SALES COACHING VALIDITY Ian Segail

Relative Strengths/Weaknesses of Sales Managers (Manager Skill Index)

Rewarding Individual Sales Performance

0.09

Customer & Market Knowledge

0.06

Product & Service Knowledge

0.05

Ability to gather sales resources

0.02

Sales Experience

0.02

Ability to provide direction

-0.01

Fair allocation of Sales Opportunities

-0.02

Effective Decision Making

-0.03

Innovation in improving Performance

-0.08

Coaching

-0.09

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

46

SALES COACHING VALIDITY Ian Segail



The Quantifiable Impact of Coaching: Sales managers repeatedly underperform in two critical solutions-management skills: developing and coaching their reps.



In essence, these results make the business case for developing great managers who coach.



Managers‘ teams that receive fewer than two hours of coaching per rep per month achieve 90% of goal.



We see that managers whose reps receive more than three hours of coaching each month perform at 107% of goal.



The data is striking; coaching explains a 17% performance difference between those coached and not coached.



Even more powerful, coaching is the difference between reps making or not making goal.



Coaching also provides the additional benefit of increasing returns on training investments.

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

47

SALES COACHING VALIDITY Ian Segail 

We see the rate of ―training decay‖ for typical classroom or other traditional training that ends with the training session.



Teams not receiving coaching underperform by a significant margin.



Reps fail to recall 87% of what they learned 30 days following the training.



On average, teams that report receiving more than three hours of coaching per month exceed their goals by 7%.



However, the research shows that when training is complemented by in-field coaching and reinforcement, productivity is quadrupled, from 22% to 88%.



Furthermore, as a result of coaching, Return on Investment in sales goes up 27%, according to Gallup, and, where sales coaching is involved, customer loyalty improves by 56%.

IAN SEGAIL | SEC: BUILDING A FIRST LINE MANAGER COACHING PROGRAM

48

SALES COACHING VALIDITY Ian Segail

VIII __________________________________________

CALCULATING ROI FROM SALES COACHING

IAN SEGAIL | CALCULATING ROI FROM SALES COACHING

49

SALES COACHING VALIDITY Ian Segail



While it is more difficult to calculate the ROI of an investment in coaching, it is certainly not impossible.



ROI= (Benefits Achieved-Coaching Costs) *100% Coaching Costs



The challenge is clearly identifying the Benefits Achieved through the coaching program and assigning a monetary value to those benefits.



In the proposed methodology, we will evaluate the ROI of Sales Coaching.

IAN SEGAIL | CALCULATING ROI FROM SALES COACHING

50

SALES COACHING VALIDITY Ian Segail 

Measuring the Results of Executive Coaching: o Some results are more "tangible" than others and are, therefore, easier to translate into monetary value or bottom-line impact. o This is not to say that the tangible outweigh the intangible in terms of importance. o In fact, intangible changes in the client's behavior can often have a wider-ranging impact than, or may actually lead to, the more tangible benefits of coaching. o Tangible impacts on business included increases in productivity, quality, organizational strength, and customer service. o In addition to tangible impacts, executives and their organizations also obtained intangible benefits. o These included improved relationships with direct reports, peers, and stakeholders, as well as improved teamwork, increased job satisfaction, and reduced conflict. o In order to calculate ROI, we have to convert these benefits into dollars.



A 2001 landmark study commissioned by Right Management Consultants of Philadelphia. Matt Bolch, Proactive Coaching. Training, 2001, 38(5), 58–64 found an ROI of nearly 600% on dollars spent on executive coaching.



We will use the ROI% for our evaluation purposes.



CASE I: Calculating Executive Coaching ROI o Let's look at example of calculating the ROI for an executive coaching case. o We will focus on a single, tangible benefit achieved through coaching for illustrative purposes. o An employee of a fortune 100 company was being considered for promotion to a recently vacated first line sales manager position. o However, the employee was considered by peers and reports to be "intense" and "intimidating" o A six-month coaching program led to breakthroughs that transformed his reputation as a leader to one of collaboration and empathy. IAN SEGAIL | CALCULATING ROI FROM SALES COACHING

51

SALES COACHING VALIDITY Ian Segail o The coaching also helped him to improve his strategic use of time through greater delegation of responsibility. o The positive changes were cited to coaching and without these improvements, the position have been sourced from outside the company. o The coaching program cost $30,000. o One key benefit from this coaching case was avoiding an outside search for a new first line sales manager. o Let us estimate the monetary value of this benefit. o Executive search agency fee of 30% of annual compensation ($300,000) is saved - $90,000. o Assuming the company's internal recruiter spends 75 hours on the search, including reviewing candidates, scheduling interviews, preparing assessments, conducting reference checks, notifying unsuccessful candidates, etc. o This cost can be estimated at approximately (75 hrs./2000 hrs. annually X $75,000 recruiter annual salary) $2,800. o Assuming the search would have take approximately 3 months, the cost of lost productivity resulting from the vacant first line sales manager position can be estimated at 25% (one quarter of a year) of annual compensation - $75,000. o Assuming a new front line sales manager recruited from outside the company is contributing at a 75% productivity level for the first year on the job as the corporate culture, policies, practices, etc. are learned, the cost of this lost productivity can be estimated as 25% of annual compensation - $75,000. o We have already reached a 700+ % return on the coaching investment. o This ROI % is in line with numerous studies performed on the ROI of Executive Coaching. o To reiterate the ROI studies on executive coaching: o According to a study of senior level executives at Fortune 1000 companies who received developmental coaching, the average return from the programs was nearly 5.7 times the initial investment. (Maximizing the Impact of Executive Coaching, The Manchester Review, 2001, Volume 6, Number 1, Joy McGovern, et.al.).

IAN SEGAIL | CALCULATING ROI FROM SALES COACHING

52

SALES COACHING VALIDITY Ian Segail o According to a survey of 30 executives who participated in a large executive development program at a Fortune 500 company, coaching resulted in a 529% return on investment (Executive Briefing: Case Study on the ROI of Executive Coaching, Merrill C. Anderson, Ph.D., Metrix Global, LLC.). o According to the Harvard Business Review, three stock portfolios comprised only of companies that "spend aggressively on employee development" each outperformed the S&P 500 by 17 - 35% during 2003 (How's Your Return on People?, Harvard Business Review, March 2004, Laurie Bassi and Daniel McMurrer). 

CASE II: Calculating Sales Coaching ROI o Now we will be expanding the previous scenario further to calculate ROI of Sales Coaching. o Sales Executive Council research shows that when training is complemented by in-field coaching and reinforcement, productivity is quadrupled, from 22% to 88%. o We will consider the first line sales manager portfolio and to emphasize the value of ROI of Sales Coaching, we will choose ―Low Performer‖. o Corresponding graph is the following:

IAN SEGAIL | CALCULATING ROI FROM SALES COACHING

53

SALES COACHING VALIDITY Ian Segail



The value of the sales manger portfolio is $24 million.



When Sales Coaching is in place, as proved the productivity is quadrupled i.e. $ 96 million.



The net change increase dollar amount of sales after enabling sales coaching is $72 million.



Combining these results with the results of Case I the ROI of Sales Coaching is 3100%.



It is very important that we stress, we have excluded other tangible and intangible benefits resulting from the improvements from the sales coaching, many of which are quite substantial.



Even with all the factors zeroed in, even for the most conservative figure the ROI of Sales Coaching is 3100%.



It’s a fair assessment to say that actual ROI after sales coaching implementation will be manifold and at the very least is 3100+ %.

IAN SEGAIL | CALCULATING ROI FROM SALES COACHING

54

SALES COACHING VALIDITY Ian Segail

IX __________________________________________

REFERENCES

IAN SEGAIL | REFERENCES

55

SALES COACHING VALIDITY Ian Segail



Zula, K.J. & Chermack, T.J. (2007). Human capital planning: A review of the literature and implications for human resource development. Human Resource Development Review, 6(3), 245-262.



Becker, G.S. (1993). Human capital: A theoretical and empirical analysis with special reference to education (3'^ ed.). Chicago: The University of Chicago Press.



Birchall, D.W. & Tovstiga, G. (2001). Assessing the firm's strategic knowledge portfolio: A framework & methodology. International Journal of Technology Management, 24(4), 419-434.



Gebhart, F. (2006). Managing right for the 21" century. Sales and Marketing Management, 158(4), 38-41.

IAN SEGAIL | REFERENCES

56

SALES COACHING VALIDITY Ian Segail 

Coaching To Win: A Systematic Approach To Achieving Productivity Through Coaching. Joseph B. Mosca, Monmouth University, USA, Alan Fazzari, Monmouth University, USA, John Buzza, Monmouth University, USA.



Managerial Coaching as a sales performance indicator, David J. Good, Central Missouri University.



TAS group, The Coaching Imperative.



MEASURING THE ROI OF A COACHING INTERVENTION, Jack J. Phillips.



Maximizing the Impact of Executive Coaching: Behavioral Change, Organizational Outcomes, and Return on Investment, By Joy McGovern, Ph.D., Michael Lindemann, Ph.D., Monica Vergara, M.A., Stacey Murphy, Linda Barker, M.A., & Rodney Warrenfeltz, Ph.D.



2011 Sales Performance Optimization, CSO Insights.



The Sales Coaching Effectiveness Pulse Survey



SEC, Improve Rep Performance Through Coaching.



TAS group, Real Sales Success Delivered Virtually.



TAS group, The Sales Coaching Imperative.



Sales Executive Council, World-Class Sales Coaching Building a First-Line Manager Coaching Program.



Sales Executive Council, Boosting Sales Coaching Quality.



CALCULATING ROI FROM EXECUTIVE COACHING, by Tim Morin, Chief Financial Officer, WJM Associates, Inc.



http://www.coachfederation.org/includes/docs/049ManchesterReviewMaximizingImpact ofExecCoaching2.pdf



https://sec.executiveboard.com/Public/Login.aspx?ReturnUrl=%2fMembers%2fPopup% 2fDownload.aspx%3fcid%3d100050324&cid=100050324



http://www.dentalcoachesassociation.org/files/ROI%20of%20Coaching.pdf



http://www.innovativeleader.com/articles/manchester_pressrelease.htm



http://getyourcompetitiveedge.com/executive-coaching-roi/ IAN SEGAIL | REFERENCES

57

SALES COACHING VALIDITY Ian Segail 

http://www.better-leadership.com/leadership-coaching-stats.html



http://www.abetterperspective.com/coaching_statistics.htm



http://www.pameladunn.com/quotesAndStats.html



http://www.conduitcoaching.com/pdf/business_case.pdf



http://www.secsolutions.com/sales-coaching.html



https://sec.executiveboard.com/Public/Login.aspx?ReturnUrl=%2fMembers%2fPopup% 2fDownload.aspx%3fcid%3d100050324&cid=100050324



http://www.atomus.co.uk/pdf/7-Metrics-for-measuring-Sales-Force-effectiveness.pdf



http://www.coaching.com/Marketing/Common/newshardfacts.htm



http://www.orangecoaching.nl/wp-content/uploads/2010/03/The-ROI-for-Coaching.pdf



http://www.associationforcoaching.com/memb/ACSumROI.pdf



http://www.coachwithjeremy.com/blog/benefits-of-coaching/roi-coaching-case-studybenefits



http://www.astd.org/NR/rdonlyres/1B4451B8-D0DE-40B0-B31464317EACF9FD/17681/Tool324.pdf



http://www.cambriaconsulting.com/wp content/uploads/2007/06/coaching_impact.pdf



http://www.lemar.co.za/images/resources/MentoringROI.pdf



http://www.fundraisingcoach.com/articles/ROI.CompassPoint%20Study.pdf



http://www.coaching.com/Marketing/Common/images/ImpactReport.pdf



http://www.solutionmaps.com/solutions/sales_coaching.cfm



http://www.alocgroup.com/knowledge-base/articles/does-executive-coaching-pay



http://www.progressu.com.hk/downloads/e-book_coaching-effectiveness.pdf



http://www.integrabiz.com.au/Uploads/Downloads/measuring-the-roi-on-coaching.pdf



http://thenationonlineng.net/web3/mobile/health/27708.html IAN SEGAIL | REFERENCES

58

SALES COACHING VALIDITY Ian Segail 

http://www.momentumcoach.ie/ROI.pdf



http://ezinearticles.com/?The-Business-Case-For-Executive-Coaching---The-ICFCoaching-ROI-Global-Study&id=2498753



http://www.freshleadership.com/executive_coaching/Executive_Coaching%20Case_Stu dy.pdf



http://www.paulbernard.net/articles/Sample_ROI_study.pdf



http://www.bestdocumentinfoblog.info/business-2/training-vs-coaching-there-is-adifference/

IAN SEGAIL | REFERENCES

59

SALES COACHING VALIDITY Ian Segail

ABOUT THE AUTHOR As one of Australia‘s leading sales strategists and authorities on sales and sales management, Ian Segail has been involved in the training and development of salespeople and sales managers for over two decades. Ian is the author of ―Bullet Proof Your Sales Team‖, which is regarded as Australia‘s number one book written to enable sales management to get more sales, faster and with higher margins. Ian has a gift for rapidly figuring out what this clients need to do to very quickly to generate sales revenue and hit their targets. Drawing on his real-world experience in sales, sales management, Human Resource Management and C-level management, Ian works as a Sales Strategist with both experienced and novice sales managers and business owners across a wide variety of industries and selling disciplines, including: Microsoft, St George Bank, Chubb Fire & Security, AMP, Astra Zeneca, Rebel Sport, JVC, just to name a few. Ian has successfully helped numerous sales organizations generate millions of dollars worth of sales with his systematic sales management ‗sales boost system‘ that motivates sales teams to achieve more sales, faster and at higher margins, in 180 days or less. Ian takes you by the hand and shows you exactly how to implement his proven sales management tools and systems into your business to get you the sales numbers you need and give you that competitive edge.

Ian Segail Sales Strategist www.iansegail.com Phone: +61 2 9460 7022 Fax: +61 2 9460 9144 Email: [email protected]

IAN SEGAIL | ABOUT THE AUTHOR

60

Comments