The New Economics of Field Sales, with Stephen Diorio [Episode 860]

Stephen Diorio is the Executive Director at The Revenue Enablement Institute. The pandemic has been an eye opener for business leaders, many are doubling down on changes made during the transition to remote selling in order to increase client access and coverage while retaining the cost savings. Stephen and I dig into whether it’s realistic to assume that remote selling can be a cure all and drive: (1) Revenue growth, (2) improved performance, and (3) improved productivity.

I have to admit that I’m fairly skeptical of some of this new found enthusiasm bosses have for remote selling. Remote selling is nothing new. Sellers have been doing it since Bell invented the telephone. And, In most cases I believe it’s going to be used a pretext for companies to continue to underinvest in developing the talents of our sellers. This is an interesting conversation about a topic front and center for many sales bosses.

Podcast Transcript

Andy Paul: Stephen. Welcome to the show.

Stephen Diorio: Thanks for having me.

Andy Paul: So where have you been sheltering during this pandemic?

Stephen Diorio: So I’m sheltering in Connecticut adjacent to New York city. Since I write a lot, my life hasn’t changed too much, but I haven’t been out in front of clients all like most people which is a problem.

Andy Paul: You said it’s a problem. Why is it a problem

Stephen Diorio: Whole EEQ aspect of zoom meetings is really the scientists at Wharton. Talk a lot about that, that, people who were in sales, natural gravitate to be people. And even though you can be effective remotely obviously there’s a fulfilling aspect of it that, that is missing and that’s one of the big rubs really right now.

Andy Paul: Yeah. Yeah. Wow. I would imagine so. I think this is something that we’ve talked about on this show and other places is that here may, we’ve seen this serve false the early successes that were achieved during shutdown and so on, or maybe a false positive. And that now are confronting especially with the potential and the very real potential of a second wave of of an, a surge in COVID infections, gov 19 infections possibility of secondary shutdowns is that, perhaps things are gonna be tough sledding here for awhile. That people are burnt out. People are tired of being remote. They want that human contact.

Stephen Diorio: Yeah, so you can break it down. Listening to some of your past conversations, I’ll, we’re going to arrive at a hybrid. If this chief financial officers have anything to say about it, the average. Sales overhead attached to a good field. Rep is 10, $14,000. A lot of that is real estate and travel.

And to your point, there’s been enough success selling remotely that they’re not giving all that money back. So it’s going to wind up somewhere between the way it used to be in and a fully virtual model. But I think, as we’re six months into it, some of the things we’re learning is zoom fatigue is a, it’s a scientific reality. I was just on the phone with the folks at Oculus, and a bunch of the folks I work with on the faculty of Wharton and this whole notion of AI EQ based AI related to emotional quotient is going to become a more important field and moving to three dimensions and haptics and even maintaining eye contact and whiteboards I’m feeling and hearing all these things that I want to move out of the zoom checkerboard or matrix into something that feels a little bit more fulfilling in terms of collaboration and engagement and eye contact. And I think, we’re six months in we’re moving down the maturity curve. So I think some type of a hybrid is going to emerge. And those are some of the underlying factors. That I think are gonna be on the minds of the folks who were doing sales enablement, which I think is your focus.

Andy Paul: Yeah. Certainly that’s part of it. Yeah. But we’re speaking more broadly about sales in general. And so you’d written this article on Forbes, which I saw and reached out to you and said, Hey, let’s talk about it, called the new economics of field sales. So I think definitions are important. So how are we defining field sales for the purposes of the analysis that you’re doing?

Stephen Diorio: That’s a really good question because really there is no such thing as field sales anymore.

Andy Paul: That’s right. That’s why I was asking the question. There are a few companies that have it, but the numbers diminished substantially.

Stephen Diorio: And you and I look at this discipline, I think you’re 40 years in I’m 35 years in.  Was party to, the transformation in the nineties where folks like IBM and Geico took, simpler transactions and put them into a call center. And I’m a real, I think a lot of the innovation has come out of direct marketing. I think that’s one of the reasons why ring DNA is really so relevant right now is their gene pool is coming from the right place. And so I think if you look at it now, omni-channel you pick the buzzword, I think even a field sales rep is working out of their home. They’ve been working remotely for a long time. The systems they use look and smell a lot, what was running a call center in the nineties? I think,  it is obviously hybrid job. I think the things that the field sales are obviously maybe experiential. Collaborative big ticket items fight face-to-face engagement complex buying units, relationship building.

Some of those things have to be done face-to-face you don’t include including. These whiteboard working sessions, where we’re configuring and designing, process equipment. And I’m hearing a lot of this from industrial folks. Field sales in my mind was always a highly skilled, big ticket, collaborative type of thing.

But again, I view this in terms of shades of gray, and I’ve got something called a channel design compass that the academics like, which is you could design any system you want just by modulating coverage control customer experience. And cost. Ultimately you’re absolutely right. And I don’t think there’s any one selling system that doesn’t have four or five parts you’re seeing specialization in terms of product specialists inside sales folks, industry specialists think about what’s going on in account-based marketing and selling, the roles are fragmenting and segmenting, which is a good thing. The trick is the teamwork and the cohesion making it all make sense for you’re going to get a lot of warm with an answers for me today because there is no black and white anymore.

Andy Paul: And that’s, I think that’s one of the points it’s. One of the thing I started reacting to in your article is, you’d written with my business leaders and I’m looking at ways to transform sales approaches, while retaining the cost savings they get from remote selling and implied in there is that, Oh we woke up in the midst of this pandemic and transition to work from anywhere and wow, we’re saving all this money on real estate and travel and my first reaction that as well. Okay. If this was such a good idea, why did it take a pen demic for companies to see the light? The technology has existed for years to be able to support this way of selling. So it’s not like zoom is new or any of this other stuff. So why did it take that?

Stephen Diorio: I think you’ve asked the most important question. And again, given the fact that you guys, you and I are almost historians here. I almost last I was the first

Andy Paul: You keep dating me.

Stephen Diorio: I will. I was the first sales tech MarTech analyst at Gartner group. We’re talking 97,

Andy Paul: See CEB, right? Yeah.

Stephen Diorio: Yeah. Yeah. And I am like, I wrote it on how sales and marketing technology is changing the sales and marketing in 2001 and they still haven’t done half the stuff. So I think you make a really good point, which is, this is more about change management. Than it is about the technology you and I know the technology has been there for decades, it works. It’s worked, one of the folks on my team, Jeff McKittrick, ran sales and they would have Cisco. They’ve had WebEx for decades. I think you got the operational thing. It’s about leadership, change management, teamwork incentives and And basically economics. So if you look at what happened in the nineties ibm.com. They had 9,000 blue suitors, remember that was the best sales rep in the world was an IBM trained blue suit sales rep. They had something they affectionately called an eight wheel sales call, eight sales engineers, two cars, probably $3,000 a meeting, but there were selling mainframes at 90% margins at million dollar transaction prices. It works when their average transaction size slip to $35,000 servers and things like that in the nineties, Lou Gerstner came in and said, Hey, I can’t sell a $35,000 server in a $2,000 sales call and you open up the call center and play it forward over the next six years, 10 reorganizations. They took their blue suit field Salesforce and that may have been the prototypical field Salesforce down from 9,000 to 3000 and they built what they called a 12,000 person tel-e-web tell a web channel, ibm.com. They fused it. They used the channel and I think what happened, there was a transaction economic model, guy like me said wait a second. And a real sales call cost me $3,000 of transaction. And I got a, probably of many of them and I can’t sell a PC that way. Meanwhile, a call center transactions 35 bucks and Oh, by the way, the customer experience is actually better because all the blue suitors were so into the proverbial veto, they ignored the guys in the cubicles are actually buying this stuff. And so you had a transaction of $35, a better customer experience, better cross sell and then we started offloading transactions to the web and lord knows it’s $1. And so that economic model took that to the board. Th that was the most seismic shift in selling model I’ve ever seen. And it was all driven by the economics. So this chief financial officer is a huge player in this equation. They think marketing is complete BS and sales, market development funds really young to come on market development, funds, that’s booze  and travel and things like that.

And finally, they, so that’s, if you had a market development funds, travel, events and the real estate associated with these folks is 10 grand, boom, that disappeared overnight. And guess what? By and large, the machine kept running absolutely. And they’re like wait a second.

Why did I need this in the first place? Why can’t you be virtual? And you, and I know that there are some things missing.  And that’s not the model, but boy, they’re like, Whoa. So I think never waste a crisis, and I think, this is a transformational thing. I had the head of sales, who I respect that US Banks, that we’ve had more transformation in the last five weeks than in the last five years.

And I think a crisis in that regard is a good thing and everything you and I believe should have been happening. You don’t have to five, 10 years ago, across the sales name, the spectrum. It’s finally happening and even things like VR and AR, which again, we’ve been playing video games for a decade.

Why aren’t we selling aircraft engines and tractors in video games? All that stuff is actually on the table right now. So you got to be one side of their

Andy Paul: What not, but that’s good. I’m glad I did, but I still think there’s sort of fundamental issue, which needs to be addressed, which is that yeah. CFOs and sales leaders. Get it. Excited, you, you referred to this in your article about, they’re looking for ways to sell more for less. And so they’ve embraced this idea that virtual selling is the way to do it. But first of all, I think there’s a problem trying to solve two problems at once, which is selling more and selling less selling for less. But we have the primary issue in sales right now across the board is people just aren’t our productivity. And performance is dropping in B2B sales. If you look at the data points that

Stephen Diorio: I took my 20%, my numbers. We did a big study at 20% drop with the adoption of remote selling. So it’s not perfect. It’s 0% of the cross and the 80% of the productivity. Yeah, we have hard numbers. I

Andy Paul: 80% of the performance. So yeah, so I. I don’t think we can solve two problems at once, but it seems like for me, and I get the sense from your article, because you know that you’re obviously talking to a lot of the CFOs and so on and your work, but is yeah, we want to harvest savings from sales, but other hand sales is performing like crap.

So why aren’t we, why aren’t we reinvesting that money in to helping sales? Some more than the technology itself doesn’t sell. So we still have this human issue and sales is how do we make our human sellers better?

Stephen Diorio: You zeroed in on it, let’s look at the basic facts. You can’t cut your way to growth, and everybody knows that they’ll take as much as they can, but I think what’s really interesting here is if you look at what we invest in our salespeople, the things that can create the productivity you’re talking about and value.

Our training and technology and yes, by and large, the return on technology assets is painfully. No, because most of these stacks are running on one or two cylinders, but that said, if I had to look at the portfolio of investment, real estate travel, things like that, trading in tech, even though we’re paying them a hundred dollars, a seat for Salesforce are gone, it’s still a fraction of the budget.

And in my view, if I look at that portfolio, you could double training. And double tech. And I think, from experience, I have a good, there’s a good chance. That’s where the leverage is. That’s where the leverage and productivity is going to come from building more sales offices traveling more. I don’t know some, yes, but I’m looking at that portfolio saying where’s the real engine of productivity innovation. It’s in training in tech and I could double those budgets. And still come out with lower cost to sell. You can have your cake and eat it too to some degree. But the big thing is people have to believe that training and the technology are really going to drive that transformation. And again if you look at, what Revenue.io does a lot of the sales and admin technologies, they work and any sales ops guy or gal knows what to do. It’s a board level issue. Management has to commit to being data-driven management has to commit to, Building, you’re building out a tech stack that makes sales more effective and the skills, and that’s what really beggars my mind, and I know people have a lot of flexibility now to reconfigure real estate portfolios, grape hoteling, and hybrid versions. But for me, I think, and I’d love to hear your perspective on it is I believe that investment in technology and training and development, and obviously integrating those together is a much better bet. And I think the track record and accountability of what we’re getting, the return on data the return on technology return on content. And I know you and I are both content is the engine that makes sales run right now is phenomenally low. So we’re shooting ourselves in our own footage. Shouldn’t be but even with the current returns, I think a bet and training and technology double that. And reinvesting into that at least doubling that should improve coverage, control, speed, visibility, and engagement. I think the math works even in a, even in a Bowie scenario. I think the math works.

Andy Paul: But here’s so here’s, so let’s dive into that. So let’s take training for instance, because it has been one of my big bugaboos is. Yeah, we invest. We have all this data. That’s the CSO insights that you referred to data. And so we’ve got these data points to say, B2B sales performances is dropping. This is predates the pandemic by years. So I think it’s seven or eight years in a row that CSO insights has reported this dropping. And at the same time, we’re spending $20 billion a year in sales training in the United States. And so you can make the argument that. This is not necessarily a correlation, but, or, but we’re investing $20 billion and we’re getting less performance out of our sellers. And during the same time we’re investing billions in the sales technology, and we’re also seeing a drop in sales performance. What’s that telling us, right? It’s clear that at some point is a, the training is misdirected and ineffective in a substantive way, and technologies are great, but we still don’t know how to use them. In a way to generate a return. Because again, if you look at yeah, if you look at productivity gains throughout our economy and the returns based on innovation technology and Paul Krugman wrote this several months ago in New York times is it’s basically flattened since the year 2000. No, we had the steep growth and productivity driven by technology in the eighties and nineties. And then it’s surf productivity, growth of surf flattened to 1.2, 5% a year or something like that, despite all this new technology coming into the space. So it’s  what’s going on here? And you look at it and you say the real drivers and productivity improvement and sales, assuming sales tracks the economy and it’s large. We’re. Email andbroadband and since then we haven’t really taken advantage of the technology. That’s coming to the space to improve productivity.

Stephen Diorio: You have gotten to the core issue and I’ve wrestled with this Gordian knot for decades. And I’ve got a very strong point of view. One we’re fighting the battle at the wrong altitude for good and bad reasons. The tech stack is a fragmented, it’s fragmented, siloed, functional silos. It’s a bunch of parts.

It’s if you had an engine on the ground and they’re a carburetor and the cylinders were all spread out in your garage door and the fundamental issue. Where value is being created. And that’s why categories like revenue acceleration and what you guys are doing at ring is really resonating. It’s all about connecting the dots.

Everybody, if you look at the research, most enterprises have 20 solutions that cover coaching development, playbooks, the pieces now, sales, AI, and things like that. And I think the short answer to your question is. Executives have to take a top down, look at the portfolio, just like your stocks.

Let, just like your engine and really examine how they work together. And if you want to and our big thesis and the reasonably play this game at the board level is that this is about connecting the dots. We have a picture there’s only five ways to create value, better management insights effecting the four P’s price, promotion, packaging, personalization sales resource allocation, putting the right resources in the right place. Lots of leverage there. Making the channels perform better. What you do with automation and assists and making the team perform better. There’s only at 20,000 feet. There’s only five ways to create value. And you’ve got this whole stack. And when I look at a piece of technology, sales, AI, content optimization, and LMS, it’s three steps to value. I could have intent data on the left. I could be pulling something out of conversational intelligence in your solution, but if that information doesn’t get processed and moved. To somebody who could do something about it. And that’s at least a three step process in a modern sales stack. And so the big answer to your question is the game has changed to creating better rated ecosystems that connect the dots to solve the same six fundamental sales problems. So I’ll break down the training problem. If you think about the training stack, everyone’s got an at the bottom layer. You got an LMS. Now you’ve got these, coaching programs on that,  the recording programs, all sorts of great innovation mindset Lego guys doing great things out there in the middle. You’ve got the digital asset management guys, the sales playbook, they’re supposed to be training on the repository, the measurements, the recommendations, and at the top, we’re taking this conversational intelligence and this 30 fold increase in engagement data. And we’re starting to say, who’s doing what who’s applying these lessons in sales calls. How was this working? What are the skill gaps? And then finally, as a feedback loop down to. Training learning in the moment reinforcement, which is such a big thing. I outlined 12 different solutions. That should be a closed loop process. I train, I run the play. I see how the play works. I go back and reinforce and get better. That’s a pretty simple process and there’s no reason to hurt that. Those shouldn’t be connected. Why a sales manager can’t see, I know. Bob took the training and I can see from conversational intelligence that he actually applied the training and there’s some places he did it wrong. And I’m going to go back and fix those things. She has all the tools to do that. Nobody in the organization, and I’m not talking about a czar or something like that, but, sales ops folks know what to do, but they’re just not looking at the whole portfolio. Jeff McKittrick. On our team. I talked to you about Tara. He took a look at that. He connected those dots and he, he barely got out our first year and he won serious decisions, sales enablement, executive of the year. And he almost laughed. He goes, it was so simple. I was just connecting the carburetors and the spark plug to the exalt, to the cylinder. And we’re barely even, the types of things that that your solution could do or what you call revenue acceleration. That’s high maturity stuff. Most of the, we think we’re driving a formula one race car. In fact, I would argue your solution is a formula one race car but in reality, the guy running the race or firing a one or two cylinders, the guy who’s going to win the race is going to fire on three cylinders. So we’ve got to stair-step our way into this. So I’ll back off and say, you asked a hard question. And I think when you’re really gaming out, it’s about connecting the dots. That’s not new technology. Most of the technology’s there, but it’s about connecting the dots. The only caveat would be, I think this analytics revolution is going to be the glue that makes it easy for us to connect the dots. And I think that’s, what’s really going on in their revenue acceleration category or you name it. We don’t have a vocabulary to describe this, so I’ll pause, but I think you’ve asked a really good question and I think that’s the one single answer. Connect the dots.

Andy Paul: To me, it seems like there’s a dot that, that isn’t often thought of. And isn’t connected, which to me drives has the potential to drive substantive improvements in sales performance. And. And some people call it effectiveness but I call it sales productivity. So for me, and I’ve been doing this for decades and in the way I’ve managed companies and so on is sales teams is that, productivity is rate of output per unit of input.

And for me, if you really want to define what productivity is, we should be looking at, okay how much revenue can a seller produce? For an hour of sales time. And that’s, that is the fundamental unit that we should be trying to improve. Instead we talk about, let’s add more sales time.

Let’s it’s  no, that’s not moving the needle. In fact, I’ve had this conversation with several people. I’ve been around for a while, like myself and you and so on. And my belief is that, that measure of productivity. Even with all the technology we’ve brought into the space is no higher today than it was 30, 40 years ago.

I you’re absolutely right. And again, you are zero him. On a fundamental issue, we’re dealing with flawed metrics. And when you unpack the metric conundrum , in the nineties, I just flipped SGNA and I kept, the cost to sell metric for every dollar of sales and marketing and tech you’re getting young.

Dell was getting $8. IBM was getting four. That picture made it to the boardroom. And unpacking that picture is powerful, but that doesn’t get at it and sales productivity. I’ve built these models. It’s a flawed metric and guys like Steve Lucas who really is an impressive fellow doubled. He doubled Marquetto and profitability in a year, and folks really run big sales organizations at the top.

Say the metrics are flawed, but let me tell you what’s wrong with the productivity metric. Cause I fought this battle and this is maybe why I don’t have hair. And you still do two problems. You got the nibbled to death by ducks problem. And you got the golf course for all of us. And the nibbled to death by ducks problem is this.

When you look at the 80 20 rule in any business, you can find 80%, 80% in the factory. 80% of your problems are 20%. We know that, but not in sales. If you look at the latest Salesforce per time, utilization data. Salespeople have a bunch of 9% problems. Planning is 9% of their time. Coaching is 9% of their time.

Finding contact is 9% of their time. Presentation development is 9% of their top 9% of their time. So it was like you’re going after a bunch of nine percenters. And those break down into lots of little things. And so finding the easy button is hard and then you’ve got the golf course problem, which is, Hey, guess what?

I just did free up half of your time. Are they spending it on the golf course or are they spending it are they spending it actually selling more?  And we’ve solved that problem, with conversational intelligence and, the maddening pace of virtual selling now, but still,  but still it’s a really difficult metric.

We wrote an article with a bunch of. Sales and marketing leaders. And they’re saying we should be doing something different. We should be taking this engagement data. And when I talk about this engagement data, there’s a revolution of engagement, data email that content data, where content goes, the calendar data from T and the conversational intelligence data and the first party data that we’re pulling out of these systems.

We have 30 fold increase in data about what salespeople are doing. Every day, every minute in every minute of a sales call that just wasn’t there five years

sure.

Stephen Diorio: And there’s a revolution. And so what are you going to do with this data? Are you going to spy on people? Know what the smart people are saying is they think about Nadia Comaneci gymnastics or ice skating.

You tell me what a 10 looks like in terms of three things sales, effectiveness, pipeline, health account health. And aggregate those metrics. For example, a healthy account has a lot of engagement. A lot of stakeholders involved, a lot of response, good meetings. They keep their meetings. They share the content.

They’re engaged regularly. You can almost build an EKG. Any customer success person could build an EKG of what a healthy account looks like. We have that data we should be rating. What was Steve Lucas says is define a 10, if an account falls below a nine. Ring the alarm bells, same thing with a sales rep.

Think about that. I can see how they’re spending their time, between customers between all of these different things. And we’re not spying on them, but there’s a healthy mix of activity that suggests there they’re executing probably define what a productive rep is. And again, I’m agnostic as to whether that’s a customer success

Andy Paul: I don’t, but that here’s the issues. And this is the reason I think why productivity is so important is it’s almost immaterial to some degree what, how productive someone is today. I’m more concerned about the rate of improvement.

Stephen Diorio: Fair enough.

Andy Paul: And because I, I’m not sure objectively how we measure productivity if we’re talking other than the fact that I can collect data and I’ve done that.

I was doing this back in the nineties with teams. I ran, I knew exactly how many hours it took of selling time and sales, engineering time and so on to produce a dollar revenue. And when people talk about, as you’ve referred to this before is, we’ve got this accelerated pace of selling.

It’s okay, Yeah. I was looking at a deal, not that long ago. Deal review when people are talking about close the SIM wonderful target account. And I looked at the number of sales hours involved in making it happen. And the first thing that popped in my head as well, this is not scalable. So by just defacto, that was unproductive effort in order to capture those big deal.

If we don’t learn from the experience to say, because it wasn’t right now. Yeah. People focus on all his challenge, sales leaders and CEOs. And this is, they talk about their sales cycle. I said But the sales cycles is a meaningless statistic or metric. And some because what’s meaningful is how many hours you had to invest to bring that deal from initial point of interest to close.

And that could take place over a month or could take place over six months. But if you add those hours together, then you start being able to say, okay, now I can start mapping out what theoretical performance we should be able to achieve, because if I know. In our selling times is actually going to generate this much revenue.

Then I can put together a model that says, yeah, this is our path to growth because this is how we’re going to prove it, move the productivity of the individual. But yeah, we have no focus on that. And I think, we can apply all the technology in the world we want, but if we don’t have a common definition, sales of what productivity means, then we’re still gonna be fighting this battle 20 years from now.

Stephen Diorio: I think you asked me a very complicated question and we can get into it a lot. I think one is the metrics, eh of defining. And it’s bespoke to every organization. You know what, teamwork, what is it that, that you need to be doing to build lifetime value for the customer? So let’s break down the three fundamentals underlying some of your important point. One is you can’t coach output. You can only coach activity. It’s easy to say, hit this number every month. But you can only coach the activities. The good news is.

Andy Paul: I think you coach behaviors.

Stephen Diorio: Behave behaviors and activities. That’s what I meant.  But if you thought about it, a ride along used to be a really expensive thing, you’re good. You check in on your folks, you hear how the meeting went. You wouldn’t hear it firsthand like you can today. And then you go along for ride alongs and you give them some guidance. So this revolution of data has given sales managers full transparency down to the minute and the word and sales calls. The second you’ve got.

A couple of things, evaluation. We have a way to evaluate this is where you screwed up in the sales meeting. This is where the client’s face one arm arms crossed. This is where you went off script, or this is what worked. So automated evaluation is great and also prioritization. Why are you chasing this lead?

Why are you choosing to spend your time here versus here? So I think when you break it down, The potential is there to use this information to make people better. I think he made an important point, which is, onboarding and ramping and making people better. Measuring productivity is one thing, but you’re saying, how are we going to make it better?

So I obviously it’s a coaching problem. It’s an incentive problem. But the, I would argue that the granularity. In which I can go in and specifically point a lot of the folks smart folks saying teaching happens in the moment, not post-facto, how did the meeting go? And so what gets me excited and I think we have to acknowledge all the flaws are pointed out is managers do have tools and leverage that.

Let them isolate the places this lead wasn’t going to close. You shouldn’t have followed up on it. I’ve heard people tell me that when  they core tile RFPs and reject the bottom core tile productivity goes through the roof. It’s hard. Tell me, a lead is an asset. It’s an insurance policy.

It makes me go to sleep at night. The last thing I want to do is turn away a lead, but that’s actually the driver productivity. We can be rational about those types of things.

About the potential.

Andy Paul: A lot of this gets done compensation incentives. There are managers who are incented or incentivized by the size of their pipeline.

Stephen Diorio: I would agree.

Andy Paul: And pipeline covers ratios, which is, a perverse incentive. And yeah, it gets back to compensation again, for, even for individual sellers is back to this notion of productivity.

Think how much more effective it would be. If, instead of saying, look, we’re going to pay you a commission, which is basically, piecework, we’re paying you on piece work. Like a factory worker is.

Stephen Diorio: A crude metric and I think you got it. And SQLs and MQL are flawed. I haven’t met a progressive executives who think that’s gotta be abandoned. The unit of production is just wrong

SAS world.

Andy Paul: But if you looked at proactive in the way that I talked about it and said, look, I got to measure for you. I know that when you’re engaged in sales, this is the amount of know amount of revenue you’re generating part. Let’s say our selling time, your incentives can be based on improving.

That number, that unit of how much dollars of revenue you generate per hour of selling time. Now, suddenly somebody has an incentive to seek out training, if not get more serious about the training that provided, but the seek out the type of training that will help them become more effective. If coaches were geared more towards that type of focus.

I think we transform have the opportunity. Let’s say to transform sales. If we just align incentives to the place we want them to go, but we’re so stuck in the past.

Stephen Diorio: Stuck in the past change management and a nurture. I even see myself falling into it. And I think what w what Steve Lucas says with his customer engagement metrics in the reason I think this battle has to be fought at the top is you’ve got to get someone at the top of the organization to craft.

Think about it. You’re providing them a paint set and a palette that it didn’t have five years ago to craft. Beautiful compensation schemes that reflect real customer value or lifetime value. For example, the service folks need to be emphasized. They’re always deemphasized. And the front line guys who are creating digital signals of buying or attrition.

You need to be motivated incentive to throw that over to the right person. Metrics are crude and asymmetrical. I would argue that most of the value is being created in the back end of the process. Cross sell retention in a SAS model. And I think digital marketing. Is saying, Hey, there are signals.

Yeah. I know some of these digital marketing people are ridiculous, but at the end of the day, they’re sitting upon signals and data that can make the whole engine run and they need to be motivated just, by the same to do the right thing. So I think this is almost like. And oppression is painting and it’s got to come from the top and it’s technically possible.

It’s technically possible. That’s what bothers me. But some of the top has to say I’m abandoned MQL. Robin Matlock has a great video where she’s just rant about this. And she works at Dell VMware. And she is, I think, at the Vanguard. Of creating measurement schemes that are really reflective of how value is created on an activity level, regardless of whether your sales, marketing service or account management.

And I think that’s where it’s got to go. That’s a huge change. Metals were a problem. I don’t want to sound like I’m pulling out, but one year and remember Steve Lucas was a CTO. He wasn’t head of sales and he had to make it happen.

Andy Paul: But I think you’re absolutely right though. Let’s take a step back. Let’s look at, you talked about coaching. Let’s say, this is an activity that everybody acknowledges is perhaps the thing that more than anything moves the needle individual sales performance. We now have all this technology recorded calls, conversational intelligence, conversational AI, as we have a ring DNA that, that provides.

Great tools to be able to facilitate that. And yet it’s not happening at the level that it should. And partly because managers are also saying gosh, I’m being distracted by all these other things. I need to be able to do a report to my bosses, yada, yada. And so I give an example. I said okay, fine.

Sales is a performance based profession, just like sports. So if you look at a professional sports team, they have a roster of specialized coaches, that, that I spare the audience, my analogy with soccer. Cause I give it all the time

Stephen Diorio: Oh, you’re talking to I’m Italian. So you can talk soccer all day long.

Andy Paul: But the point being is that you look at the coaching staff of a professional sports organization, and they’ve got these specialized coaches that whose job is very finite. And yeah. Yeah. I advocate that maybe sales managers shouldn’t be coaches. Why don’t we hire coaches, professional coaches into sales organizations, but you’ll get the pushback from the CFO saying what’s the payback on that?

The payback’s maybe two years down the road, but we have to fundamentally restructure and we may have more costs now. But if the impact is we generate substantially more profit through increased sales, then it’s gonna be more than worth it. But what I see as a repeated pattern over decades of top leaders, refusing to invest.

Even consider investing and radically restructuring sales to become more productive. repeating the same mistakes we’ve done for decades.

Stephen Diorio: Yep. I’m in the business of affect and change as you are. These are very difficult problems, Andy, and I think I want to go back to the very beginning of this conversation. I’m like my daughter’s taking a history class and I’m like, I think a skeptic’s view of history. I say, whenever you look at a history event, Think about the money, follow the money trail.

The founding fathers were in debt to England for billions of dollars. They were highly motivated to succeed from the union. So let’s go back to what I say. Economics drives everything and the CFO matters. Not because they’re a Verconian and they’re just dying to cut these discretionary budgets, but they have to see the economic business.

I’m fascinated by professional football and soccer, because the economics are such that you can have 10. Coaches, I think he nailed it. It’s an economic proposition, which is winning that game. We’re playing a little bit better, means a lot of money. It also means a lot of money to sales organizations, but this is not generally.

Accepted truth. The prevailing wisdom is a lot of sales and marketing funds are vanity. They’re afraid to cut them. They’re soft. And one of my six big trends is this notion towards attribution. I’m a member of Mosbey the marketing accountability standards board. I’m a big leader in connecting sales and marketing to share price.

Because in fact, when we go to the board level, if you cannot connect a sales enablement system, A data investment, a training investment to share price. You’re not going to affect the train. So at the end it changed it. So at the end of the day, I think one of the things we’re saying about sports is that there’s no general acknowledgement in the business world. That there’s economic value in training. And I think that’s the rub of it. And somebody has to wake up and realize that the same level of coaching on an offensive line or for a soccer midfielder is relevant to a sales person change isn’t going to happen. So I’m really all about making the change happen.

Even though, as you point out, these are very nuanced. Persistent and difficult problems. I’m just trying to find a way to move. And I think this crisis. And the fact that folks are real, if they realize in the first half of the equation, which is I can sell virtually pretty effectively 20% less, but they have to realize the second part of the equation that every dollar I’ve pumped into training development and technology that makes that happen is the best investment I could be making.

There is no conventional wisdom on that front. And I think that gets to the core or the frustration that you and I have.

And not you and I it’s a speaking for anybody who runs a field

Andy Paul: Yeah. All right. Stephen, thank you very much. This has been great. We’ll have to do that. Make sure we do this again. So people want to find out more about the revenue enablement Institute. What should they do?

Stephen Diorio: The Revenant Naval Institute is what I view as some of the smartest people in the world from academia. Practitioners and experts, you belong to the club coming together to find ways to solve these problems. If I do my job I’m the stupidest guy in the company. And so far I am first@revenueenablement.com.

As I mentioned, and have you figured out any I’m a nerd. I fight battles with data. And the reason I need that data is I’m trying to convince boards, CEOs, and CFOs of the things that you and your constituents and sales ops understand. And so you can reach us@revenueand.com. We’ve done some of the, a lot of this research is available there.

And and in particular, we’re focused on three federations. The one we’re talking about today, which I think you might be interested in is integrated learning and development. We’ve built a blueprint for how you connect those dots. Another one is the digital selling platform and the third is data-driven selling and all this is like a shoots and ladder game or checkerboard on how you connect the dots to double coverage.

Control customer experience, visibility and engagement. So that permission connect the dots. I believe, what you folks are doing at DNA is a big part of that. And probably it’s the reason why it’s so hard to describe the value you create, people get it in their belly.  But I think I’ve checkerboard is a much better way to explain how you make all the pieces work together.

Andy Paul: All right, Steven. Thank you.