How sales managers can make the most of performance reviews

As 2019 draws to a close and 2020 fast approaches, now is the time when many sales leaders are thinking about the performance of the team and how to do better next year.

Performance reviews are one of the ways managers can assess how team members are doing, and implement improvements for the new year.

One of the challenges sales managers face is the increase in team turnover. Right now, the average turnover rate across the profession — salespeople leaving to go to other companies — is 35%. More than double the average across all industries, which is 13%.

Why is sales employee turnover so high?

In 2018, the average tenure of a salesperson was 1.5 years, which is half of the 2010 average. Salespeople are leaving for a number of reasons. Job security is still high, despite global and regional economic uncertainty (Brexit in the UK, Trade Wars, etc.), giving people more confidence to jump ship.

At the same time, as economic growth slows, companies are finding it harder to achieve revenue goals. Market share is shrinking. Uncertainty is putting the breaks on investment plans.

Macro and micro-economic forces are having an impact on company boards and senior leaders. As a result, sales leaders are forced to put more pressure on teams. Underperforming team members are being gradually off-boarded (or jumping before they can be pushed) in favor recruiting team members who might be more effective and a better fit, or so sales managers hope.

Is there an alternative to replacing and recruiting?

B2B sales is not going through the same difficulties as the consumer retail sector. On the whole, business confidence is still high, although not as high as it once was. In the U.S. and the EU, we aren’t in a recession. However, uncertainty is a virus that weakens decision making.

Deciding to off-board team members for poor performance could, in the long-term, prove costly. Letting people go is time and resource intensive. Also, for those who know they’re on thin ice, energy usually goes into finding a new role, and at the loss of confidence they can feel can have the opposite effect to what a manager wants.

Recruiting new team members is even more expensive. Even when you recruit those with an excellent track record, getting them up to speed, familiar with the company, products, services, customer accounts, and then building a new pipeline, takes time and money.

It can take 3 to 6 months before a new salesperson is performing the same if not better than one who’s left. Some account relationships might fade in that time, or disappear entirely. There are no certainties when a company replaces one salesperson for another, except in extreme cases when someone performs so poorly that replacing them is essential.

When you consider all of that, should you consider an alternative approach?

More effective performance reviews

As a manager, one of your primary responsibilities is the performance and welfare of your sales team.

When they do well, you are rewarded accordingly. Poor performance, equally, reflects badly on a sales manager. Performance reviews and any subsequent training and coaching required to improve performance, sometimes accompanied by a formal plan.

When it comes to helping under-performing salespeople, a performance review used the right way can be a powerful tool.

#1: Start by reviewing the metrics

All of this data should be in a CRM.

Look at what is in their pipeline and the potential value of these deals. Next, go over what they’ve achieved in the last few months and quarters. What does the trend show? Is it going down, and if so, why?

What are their conversion rates, and how long does it take them to convert deals compared to other team members?

#2: Do the metrics (KPIs) make sense for them?

Next, review their customers. Are they being assessed on the right metrics?

For example, if you’ve got a salesperson who mainly spends time generating more revenue from dozens of long-term customers, then they probably aren’t going to have the time to generate a lot from new business. Long-term customers may take more time to say yes to something new, but this person always gets those results.

Metrics only make sense in context. Perhaps you need to adjust these, giving higher new business targets to a natural hunter, and pushing more account management work over to those who are natural farmers.

Everyone in sales is either a hunter (business development) or farmer (account manager): ensure workloads are allocated according to skills, experience, and the context of the accounts being managed.

#3: Diagnose the problem

Assuming they are doing the right work and being assessed the most effective way for them, now a sales manager needs to deep dive into problem solving.

Look at the performance of any struggling salesperson as you would a potential client:

  • What problem(s) are they having?
  • Why are they having these problem(s)?
  • How can we solve them?

Instead of either listening on calls or demos, or attending in-person sales meetings with them and explaining how you would do something (as many sales managers do), think about it from a consultative perspective.

Aim to understand the challenges and come up with solutions. Maybe they aren’t making enough calls to hit quota. Perhaps they lack confidence. Or they aren’t asking leads enough qualifying questions, so they’ve got a pipeline of poor quality leads.

One way or another, a solution can and should be uncovered. As a sales manager, you can then put the relevant training or coaching (or tools, such as instant online demo apps) in-place to help them achieve better results. Once that has been arranged, continue to review performance and hopefully watch it improve, which is far more cost effective than recruiting for a replacement.