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Is sales activity a 'perfect plan'?

The commander of America’s Third Army in Europe during World War II, Gen. George S. Patton Jr., commented that there are times when a “good plan today is better than a perfect plan tomorrow.” His message was that if one waited too long to engage in battle, it might be too late.

At first glance, it might appear Patton’s words are applicable to the field of sales, particularly advising salespeople not to wait to increase their sales activities in order to improve their results. In this case, sales activities refer to the number of sales calls, demonstrations and proposals salespeople make.

The following management scenario is all too common: A sales force is not achieving its performance targets, and neither is the company. What is the quickest fix? To monitor, inspect and increase sales activity levels. From senior management down to first-line management, the mistaken consensus is often that if sales activity increases, an increase in performance will follow. This is a partial truth and a potential trap!

In the smaller, more transactional type sale (single-visit, low-dollar-value and low-risk buying decision) such as cosmetics, paper products, magazine subscriptions or office supplies, increased sales activities have proven to improve order rate and, subsequently, sales profits. However, this is not necessarily true in a larger, more complex type of sale (multiple visits, multiple decision-makers, high-dollar-value and high-risk buying decision) such as local area networks, sophisticated medical devices or corporate benefit programs.

Why? A recent story illustrates this point well: The vice president of sales for a leading telecommunications company involved in sophisticated phone-switching systems recognized he would not hit his sales projections for the quarter. He immediately directed his sales managers throughout the country to ensure that their salespeople increased from 12 sales calls per week to 15 and from two proposals per week to three.

Once the grumbling subsided, the order rate gradually began to increase—for a while. It appeared there was a cause and effect between sales activity and sales results. For a short time, indeed, there was an improvement in order rate. It was just long enough to once again reinforce in management’s mind that there is a strong correlation between activity and order rate.

Here is what really happened: The order rate increased for a 60-day period, but the profitability per order dropped. Why? Normally, the focus turns to number of orders and not quality of orders. Put a different way, salespeople will pick the “lower hanging fruit” rather than invest the time to really understand the account’s needs. Their focus moves away from quality to quantity.

When emphasis is placed upon quantity (activity levels), quality (profit per order) usually suffers, according to a research study cited in “Managing Major Sales,” by Neil Rackham and Richard Ruff. More specifically, the wrong problem is solved. If a company wants more sales profitability, its focus should be on quality of calls, not quantity.

So why does senior management fall into this activity trap? The trap is counter-intuitive. It does make a certain amount of sense that if you increase activity, i.e., work harder, you will achieve better results.

However, this principle works much better for the smaller, transactional sale, where buyers are willing to make decisions because they perceive a poor decision to carry minimal risk. Since there are more frequent decisions and the sales cycle is shorter in the transactional sale, working harder works. In the larger sale, activity levels do not primarily drive results, but they are driven by strategies and more sophisticated skill sets.

Rather than emphasizing activity levels for improved performance and profitability, one may want to emphasize improving the strategies and skill sets, coupled with strong coaching reinforcement techniques, to achieve targets over the long term.

Performance in high-level selling is about how skilled you are when you are in front of the customer, whereas performance in transactional selling is about getting in front of a lot of customers. It is important to differentiate between the two types of sales.

A corollary to Gen. Patton’s good plan vs. perfect plan concept might be: The perfect plan of focusing upon skill set development for people involved in the large sale will produce more profit over time.

Canada can be reached by e-mail at rcanada@dartmouthgroup.com.

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