E122 | The Issue of Sales with Justin Roff-Marsh
“If your business isn’t growing without sales, it may not be a sales problem, it may be a design problem with your product or a problem with your delivery.”
Are you struggling to make sales? In today’s episode, we’re chatting with Justin Roff-Marsh, sales contrarian, CEO and founder of Ballistix, an LA-based international management consultancy specialising in Sales Process Engineering.
Justin will be in the UK, speaking with us, on 27th January (postponed by the lockdown his workshop will now take place on 26th March!) and to whet your appetite and to get you excited he’s coming over, he’s back on the podcast. In this episode, he’s talking about lifetime value and customer acquisition cost, LTV to CAC; about how you re-engineer that into the number of salespeople you need, and how you then measure the success of that sales team so that you can make sure that it works, and then scale the hell out of it.
Justin also shares his thoughts on managers versus supervisors and the importance of supervisors, and the mindset that CEOs and businesses might have around incrementalism versus aggressive business growth. Finally, Justin expands on his view that companies shouldn’t use revenue as a performance indicator.
This is a fascinating conversation, there’s so much great content, we hope you enjoy it as much as we did.
To find out more, download and listen to this latest episode of #themeltingpot, or come and see Justin, in person, on the 26th March.
On today’s podcast:
- How to estimate lifetime value
- Measuring the success of a sales team
- Managers versus supervisors
- Incrementalism versus aggressive growth
- Revenue isn’t a performance indicator
- What to look for in a salesperson
Links:
Do you have a sales problem?
“Often clients who have a sales problem, the problem is not their sales, it’s that their product sucks. Or the service sucks, or they’re undifferentiated, or they’ve got no target market, or they’ve got no core customer or all of the above.”
This is Justin Roff-Marsh, founder and CEO of Ballistix and author of the book The Machine. While The Machine is ostensibly about sales, there’s nothing in there about how to sell. It’s more a book about how to structure your business to make sales possible; how to grow a business rapidly, but written from the perspective of sales. It then recommends a complete radical redesign of the sales function.
The deception of salespeople
Because here’s the thing, the sales function is one of the least understood roles. According to Justin, many a CEO has been duped by salespeople, particularly in the difference between prospecting and selling.
Salespeople says Justin, are the same all over the world. They prospect two ways:
- The first thing they do is they flick through a list of names looking for someone to approach.
- The second is qualification. And qualification involves initial outreach to a prospective customer, where they interview the potential customer to see if this potential customer is in fact worthy of their valuable time.
And everyone, even senior executives, thinks this approach to sales is normal. But it’s wrong, says Justin, it’s unhealthy.
“You just have to peel the lid off it and have a quick look inside, and it will become immediately apparent to any thinking human being that this is not value-adding, this is value-destroying behaviour.”
What salespeople actually are, in that case, are glorified customer service reps. When you’re calling up people who have a budget and need your services or product, you’re not selling.
“The role of a salesperson is to go and find people who aren’t planning on spending money with you and convince them to.”
How to estimate lifetime value
The relevance of lifetime value to sales, says Justin, is that in the business world, we want salespeople to win new accounts or to sell new categories of business to existing accounts. When in fact, what we should be doing is accounting for the value added by salespeople by estimating the lifetime value of the annuity that they win.
“And the reason we should be reporting the lifetime value is because in our world, salespeople have nothing to do with existing accounts, or existing business, salespeople are focusing only on pursuing new business. So we don’t want to give salespeople any credit for business as usual.”
Sales isn’t a growth plan
And here’s the misunderstanding, says Justin, sales isn’t a growth plan. Sales is a necessary evil that you plug in to an enterprise as an accelerant. The sales function shouldn’t be viewed as a fundamental piece of the business growth formula.
“If it is a fundamental component of the growth formula, then you’ve probably got something wrong with your product or your operational performance. In other words, if your business isn’t growing without sales, it may not be a sales problem. It may be a design problem with your product, or a problem with your delivery.”
What to look for in a salesperson
“I’m always drawn back to the Harvard Business Review article, ‘anatomy of a high performing salesperson’ where they reckon that 85% of salespeople never hit a target, and only 15% of salespeople are worth hiring, because they’ll hit a target in multiple places.”
If programmers, doctors or anyone else were as bad at their job as the average salesperson, they wouldn’t get rehired. Yet sales people seem to stay in their jobs and get rehired over and over again.
The first thing, when looking for top salespeople, is to be realistic, advises Justin. If you’re an organisation that sells industrial components, or any other boring industry, you’re not likely to hire sales people from the top 10%. Because those sales people are going to work for SAP, or for Elon Musk. And if somebody does accept a sales role working with you, it’s a pretty good indication that they’re probably not the top percent, and that they’re probably taking the job because it suits where they are in life right now.
If you run a business that doesn’t immediately grab people, then you need to set your sights below the top 10%, they just aren’t coming to work for you. Rather, what you want is the top 10% that you can attract and afford.
“You don’t want to look to a salesperson as a solution to a sales problem. You want to build a sales process that you can plug reasonably capable, reasonably well intentioned individuals into and have them produce outsized results, and then you want to scale the crap out of it.”
You’re not going to build a fast growth business by hiring unicorns, says Justin, you’re going to build a fast growth business by building a team of individuals, who managed to generate some reasonable margin of LTV, compared to CAC, and then you’re going to scale up that team.
The importance of a supervisor
If you can only afford two layers of management, says Justin, then you shouldn’t have middle managers, you should have supervisors. But small businesses make the mistake of jumping over supervisors and going straight to middle managers and then you end up with individual contributors who are completely unsupervised.