Editor's Note: This blog has been updated for accuracy and comprehensiveness on June 15, 2020.
Good news! According to this recent research article from ADT, more and more organizations are starting to realize that investing in their sales managers ability to coach, has a significant impact on sales results. Which begs the question, what type of ROI can we expect from sales coaching?
It is a fair question, but the answer is complicated and simple at the same time. My visceral reaction to this question is to always qualify the conviction of the person asking the question via an analogy:
"If you worked with a well-qualified personal trainer and you ate well, worked out diligently, and followed their month by month wellness plan that was proven to provide amazing progress and improvements, how would this impact your well-being? Would you look better, have more energy, lose weight, become more fit, lower your cholesterol levels and decrease your blood pressure decrease? Would all of these newfound benefits spill over into your success and effort at work, your parenting, your philanthropic efforts?"
Of course, all of these things would likely happen, but the caveat to all of it coming to fruition is, are you going to put in the effort and discipline to realize the results? Like in the analogy above, understanding that more coaching and better coaching will lead to more sales growth, more self-directed sales teams, more engaged sales teams, less turnover, etc., is not the challenge.
THE RESEARCH BEHIND SALES COACHING
There is literally a wealth of research that supports the impact that great coaching has on performance results from our organization and others like the Center for Creative Leadership and Harvard Business Review to name a couple others.
So, what type of ROI can you expect from sales coaching?
It depends. Our clients unique ROI’s are a reflection of their commitment to building world-class sales coaching teams and their commitment to measuring their sales coaching quality and quantity.
An even simpler truth is that if you are not measuring sales coaching activities and behavior, then you have absolutely no idea how much a team sells, or does not sell, is a result of coaching and their front-line sales leader. Consider the research below from a recent EcSell Institute research study and white paper titled Coach More, Coach Better.
The top 20% of sales coaches . . .
- average 110% of goal (bottom 80% avg. 91%)
- do 30% more high performance coaching activities
- have 18% better high performance coaching quality scores
- have teams that produce an average of $4.1M additional revenue
The first important question to ask when considering ROI from your sales coaching is: "Are we willing to start quantifying our coaching quality and quantity via measurement?" If yes, you are on your way.
THE ROI OF SALES COACHING
Now, think about all of your front-line leaders and the number that each individual leader is accountable for hitting. For this simple example, let’s imagine you have 10 front-line sales leaders that are responsible for obtaining a $20 million quota from their team.
- Your top 20% of sales leaders achieve 110% of their quota and bring in $22 million in revenue.
- Your remaining eight leaders achieve roughly 90% of their quota and bring in $18 million.
- So you now have a delta of $4 million per under performing manager when compared to their high performing peer who is a great coach.
That adds up to $32 million in revenue being left on the table because front-line leaders are not coaching as often or as well as they should be.
This does not even take into account the support and development you could be offering your top performing coaches, or the cost of turnover due to losing high performing sales people due to their poor relationship with their front-line leader or coach.
Are there additional factors at play here such as market conditions, mergers and acquisitions, and other items outside of a leader’s control? Of course, and there always will be, but in most instances almost every reason a team’s number is hit, or not hit, is a reflection of coaching. (Tweet This). Find me a coach that disagrees with that statement and I will find you a coach that is in the bottom 80% of their organizations bell curve.
And for argument's sake, let’s pretend the numbers from the example above are over inflated and there is only $16 million in revenue being left on the table due to average and below average coaching. Do you think there is a CEO in the country that does not want to close that gap? Excuse my language, but hell no. They just don’t know they have this gap, but they will soon enough and their executive sales leaders who don’t want to close that gap will be in search of new work.
THE SALES COACHING SELF ASSESSMENT
There are four key questions to consider if your organization is serious about creating an effective and sustainable sales coaching process. If you can confidently answer YES to these four questions, you're in good shape.
1) Do you have the ability to measure your sales managers' coaching activity frequency and effectiveness? Yes or No
2) Have your managers been educated and trained on how to execute the highest payoff coaching activities? Yes or No
3) Do you have an ongoing implementation plan in place that ensures what was learned is being executed? Yes or No
4) Do you have a coaching software to track and analyze the manager to sales person relationship while also identifying opportunities for growth? Yes or No
If you answered NO to any of these questions, download this guide to better understand what your managers need to drive sales in 2019, and beyond!
THE FUTURE OF SALES COACHING
The greatest coaches, the late John Wooden’s of the world, fully accept that the actions and behaviors they exhibited with their players and coaches are the leading indicator of how many wins they would obtain or how much revenue their teams will bring in.
I don’t mean to be brash, but the number one item that motivates sales people to sell more is coaching. (Tweet This) It is not going away, in fact it is only going to get bigger and bigger because for the millennial generation and anyone younger, great coaching is not a “nice to have," it is an expectation.
If you're interested in taking a deeper dive into the Xs and Os of sales coaching, you'll want to download the first chapter of our book, The Coaching Effect.
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