Sales Coaching Blog

Sales Coaching: What's the ROI?

Posted by Will Kloefkorn

July 12, 2016

ROI of Sales CoachingWhat 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 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, would you have more energy, would you lose weight, would you be more fit, would your cholesterol levels improve, would your blood pressure decrease, etc.? Would all of these new found 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.

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 few.

So, what type of ROI can we 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 example below:

Here is what we know 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.

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 underperforming 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.

(More on the topic in this Management Minute)

Are their 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. 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.

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.

For argument's sake, let’s pretend the numbers from the example above are overinflated 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. I don’t mean to be harsh, but the number one item that motivates sales people to sell more is coaching. 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.

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Want to learn more about how you can measure sales coaching? Check out the ebook below:

"Sales Coaching: No Longer a Soft Skill"

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Topics: sales leadership, sales coaching, sales coaching roi, Roi of sales coaching

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