Episode #37 The Death Valley In Sales

Sales is an emotional roller coaster. It is also a roller coaster of results. We have sales rolling in and we think this is great. We are kept super busy servicing the deals we have struck. Then it happens, we run out of gas. Suddenly, there are no sales coming in and we have to race around trying to stoke the fire to get something happening. This is the valley between the peaks of production and this is a harsh environment we should try and avoid at all costs.

Before we get into this week’s topic, here is what caught my attention lately.

The number of people 65 or older expected to require nursing care is projected to grow by more than a fifth by fiscal 2025 to about 7.7 million. On average the national ratio of those who need nursing care to the entire population of senior citizens is expected to rise to 21 % in fiscal 2025 from 18 % last December. The costs are going up. Seniors used to pay 10% of their medical costs in 2000, in 2015 it went up to 20% , this year it is now 30% for those whose annual incomes is over 3.4 million yen. Nursing homes seek a guarantor or reference provider to sign a contract when someone is admitted to a nursing home and 30% refuse entry without it.

This is episode number 37 and we are talking about The Death Valley In Sales.

Soredewa ikimasho, so let's get going.

Sales cannot run like a manufacturing production line. We are not making industrial cheese here. This is more like an artisanal pursuit, closer to art than science. Yet, every sales force on the planet has targets which are usually uniform. Each month, the sales team has to deliver a specified amount of revenue, rolling up into a pre-determined annual target. The construct may be logical, but sales is far from logical, as it is steeped in emotion, luck and magic.

Having said that though, sales is also a numbers game and to some extent pseudo-scientific. There are accepted algorithms which apply. You call a certain number of people, speak to a lesser number, meet a few and from that residual group, you conclude an agreement. There are ratios, which when calculated over time, apply as averages linking activity with results. So we call 100 people, speak to 80, see 20, strike a deal with 5. In this construct, to make one sale, on average we need to call 20 people.

With this type of precision available, you would think that we could industrialise the sales process and confidently set annual targets, neatly divided into units of 12, to arrive at a consistent steam of revenue achievement. Sales managers would be multi-tasking, sipping their afternoon martinis, propping their cowboy boots on the desk and carefully calculating their next car upgrade, as the sales team obligingly track to the revenue plan.

Sadly, it doesn't work like this. Sales flow without rhyme or reason, some months exceeding the target and other months missing it completely. Some sales colleagues are precociously consistent producers and others are annoyingly unpredictable and some are just annoying because they don’t seem to be doing much at all. Why is there this perplexing inability to automate the production of results? The valley of sales death is the problem.

This is the plunge between sales peaks. It is the lull in the fighting, the quiet before the storm, the brief interlude in the phony war of sales. Sales people work hard, usually because they are on commission structures which guarantee not very much if you don’t produce. Japan is a little different - basically here it is either a base and commission or straight salary and bonus system. Few sales people in Japan are on 100% commission. Why? Because they don’t have to and the Japanese preference for risk aversion means forget it! Nevertheless, they know they have to produce, so they tend to be diligent.

Commission structures vary but many “industrial structures” specify that you have to hit a monthly or quarterly target before your commission kicks in. If this is too industrial, it may fail to take into account seasonal downturns, because each target unit is the same throughout the year. This is hardly motivating and probably needs a bit more nuance around expectations and reality.

Sales people cannot be consistently successful unless they have two great professional skills. They must be machine-like time managers and they must also be highly disciplined. The two interlock. The ebb and flow of sales is based around customer activity. Networking, cold calling, following up with previous clients, chasing leads which come through marketing activities etc., all of this takes considerable time.

If we pump out enough client contact activity we will get appointments, sales and therefore generate follow up. Time starts to disappear from the mining activities that made us active in the first place. We can’t do the prospecting work, because we are too busy executing the follow up. Once the fog of being busy clears though, we suddenly see that we have a very pitiful pipeline ahead of us. So we work like a demon again to kick start generating new leads.

Downturns in activity lead to massive holes in revenue. This is The Death Valley In Sales. It is the messy counter point to industrial sales production, which is consistent, predictable, uniform, and when graphed for boss presentations, is beautifully shaped, balanced and ascetically pleasing to upper management.

To avoid this valley phenomenon, we need to make time to keep prospecting every week. Hence the requirement for excellent time management skills and the discipline to make sure we are doing it every single week. Otherwise, we find our time for pipeline development is stolen away by client demands, emergencies, mistake correction, more detailed discussions and results follow up with the buyer.

Sales people who do not block out time in their diaries for prospecting everyday will be Death Valley dwellers in short order. They will be joined there by those who don’t plan their day in detail. That means planning the necessary activities with numbered action priorities. Winging it, being “spontaneous”, living in the moment unshackled from schedules are all delusional activities which cannot be part a successful sales life.

If we don’t wish to enter The Death Valley In Sales, we must block time for prospecting and craft a carefully prioritised daily To Do list. Failure here is permanent, because the consistency of production will elude us forever. We will get lost in the harsh environment of the valley and perish by the wayside bleached bones in the sand.

Let’s commit to build the pipeline every day and avoid the The Death Valley In Sales at all costs.

Action Steps

1. Adjust sales team targets to account for seasonality of sales to keep motivation high
2. Know your sales activity ratios required to produce sales revenues
3. Become a maniac about good time management and self-discipline
4. Protect time in the schedule for doing prospecting each week