Max: 00:00 So I’ve always kinda wondered about this of, like, is this a conscious effort by these organizations to churn out what they consider to be expensive salespeople? And in order to, like, get rid of, like, the expensive tier and bring in, like, oh, we’ve just hired somebody out of college at, like, whatever base instead who’s now the per like, so I’ve kinda wondered, like, is this, like, a conscious decision being made of, like, this is how we, like, force attrition without expensive layoffs or severance packages, versus just like we don’t know what we’re doing, so we just did this because this is how we we’re we we, you know, we’re, like, we’re trying to hit this OTE number, and this is what has to happen in order for them to have a 200 k OTE. Right? Okay. So, Steve, I know a lot about you, but, why don’t you, you know, for the for the sake of people that are gonna watch and listen to this, you know, explain who you are and why you’re important.
Steve: 01:15 Definitely not important, but I
Max: 01:16 You are important, Steve, because this conversation’s important. That makes you important.
Steve: 01:20 My mom thinks so. But, at least my mom thinks so. But, yeah. My name is Steve Forreu, president and CEO of The Sales Collective. And, you know, a lot of people ask what we do.
And everyone wants to know, well, what’s your value prop and elevator pitch and all this crap? And what we do is undo 99% of what people have been taught about sales and sales leadership. And so a lot of the stuff that’s out there akin to the used car salesman crap, right, always be closing. I mean, all that stuff that’s, you know, in the public eye is not real sales, right? It’s interesting to see how people view salespeople.
And, if you know, Daniel Pink, who’s amazing author, you know, he does a study in the book drive, which is the best leadership book I’ve read, but they do a study and they ask people, you know, what’s the first word that comes to mind when you hear sales or selling? I asked this right in all my talks and workshops and things, and I change it to what’s the first word that comes to mind when you hear the word salesperson? And do we get the gamut of answers, some of which I will not mention on this, our time together? But the number one word was pushy. The number 2 word was yuck.
I mean, it’s not it’s, you know, ugh, I think is force like a bodily function. So the perception of salespeople is horrendous, and it’s due to the fact that people have had bad experiences selling. And so when you have, you know, felons like Jordan Belfort, you know, who are promoted as the sub magic sales trainer, like the dude stole $200,000,000 from unsuspecting investors, hasn’t paid a dime back, went to federal prison. What does he do for a living? Sales trainer?
I mean, what are you kidding? What world are we in? What’s next? Fucking OJ Simpson’s relationship advice class? I mean, what you know, it is so unbelievable of what people think true sales are about.
It’s not Cardone, the con man. It’s not Jordan Belfort. It’s not, you know, always be closing. It’s guys like Chris Gardner, which nobody knows who that is. But Chris Gardner, is what The Pursuit of Happiness was based on.
That’s a real sales movie. You know, guts, stick to it, family. All right. Never giving up. That’s real sales.
So we run a consultancy that helps salespeople, companies, organizations, right, be able to sell more effectively by being a human being. We help companies build sales processes and onboarding, for their new salespeople. We help companies hire the right salespeople using something called sales DNA. Then helping, again, training, coaching, development, role play, that type of stuff. So just flipping the switch on on pretty much everything people have been taught about sales.
Max: 04:18 So you you talk about Jordan Belfort. Billy McFarland of Magnesis and Fyre Festival fame is out of jail and is on the Internet now pushing his marketing consultancy, you know, business. Yeah. And and I’m just like and I’m sure people are gonna pay him a lot of money too. Like, that’s the crazy part.
I am sure he is gonna be successful at it, and people are gonna pay him a lot of money at it. But, like, anyways, I don’t I’ve how are you I’ve I I just I just finished the Red Bull. Like, maybe we’ll come back to this a little bit later. We should be doing shots of bourbon, you know, or shots of tequila, you know, something else instead and make this really, really, really feisty. Okay.
So Yeah. Steve, you and I met, and I I run a, you know, technology business where we help, you know, companies find and acquire technology. Right? We’ll just we’ll we’ll use a simple version of it. But when you start talking about you look at any any startup or any mature company in their sales organization, sales stack, you know, you can get into conversations around, like, do you have an SDR, BDR function?
Do you have an AE? How are you structuring your AE? Do you have an AM or a CSR that comes after that? You know, what’s you know, like, like, terminology and phrases kinda change, and where are, like, the the points between a and b and c? And, you know, part of all this when you start trying to figure this stuff out is you start to, you know, say, okay.
Well, what is your, you know, what’s your compensation structure? And I wanna talk to you about quotas and comp structure probably the most, but I wanna talk about these other things and companies as they’re actually I actually doing this. But and I have I have some personal experience with comp that I’m I wanna get into. But let let’s start with, like, you know, bad structures for sales and bad comp structures, and then I wanna talk about what good structures for sales and good comp structures are. And and I think it probably makes more sense to start with, like, the AE kinda world, like the actual like like, what we think of as sellers versus, like, an SDR, BDR, but, you know, touch on this as well.
So let’s let’s let’s what is a I mean, you see this a lot. Right? We’ve talked about this. What is a bad comp and quota structure for a salesperson and probably what most people are trying to do, and and, let let’s start there.
Steve: 06:24 So in in your world, it might, you know, be a little bit different. I I probably shared with you probably our one of our favorite clients, right, it’s managed IT, out of Austin. And, we’ve had so much success there. Their model, again, they have AEs, then they have presales engineers, and so they work together really well. We just helped this client hire their newest AE and their director of sales in, I don’t know, 6 weeks, their new AE, if you ask her Nate, explain the cloud to me.
Right. She would say, you mean like Qumulus? That’s about her knowledge of I. T. She was their 2nd highest producing AE in her 2nd month.
She knows nothing about I. T. 0. Less than I know. She turned down, a 75 ks signing bonus and a higher salary from another firm to work with our client.
So it’s not the comp plan that gets people to come. It’s the culture, the environment. Do they feel like they’re gonna be supported? All of that stuff, and people will take less money. This is what’s happening, as you know, right, in the tech space with idiots like Elon Musk and Zuckerberg.
And, you know, these guys are completely clueless human beings, that have taken other people’s ideas and taken credit for them, which is a whole other story. But besides that, your employees are not your slaves. And certainly your salespeople are not slaves, but they’re treated like slaves, which is interesting that Twitter, you know, Elon tried to strong-arm their head of sales and she goes, yes, bye. So you have all these tech salespeople, amazing women and men right now who have been alienated, mistreated, devalued. It is so easy to find great sales talent today at a discount.
It’s never been easier. So I thank them for doing this stuff. But to go back to the comp and with this client, it wasn’t a, oh, we’ll pay you x amount of total revenue and all that stuff. They pay as a function of of GP. And, you know, the higher the GP, right, there are accelerators, you know, in their bonuses based on hitting a certain amount of GP.
So you hit 500 k in GP, you get this When you say
Max: 08:59 GP, you’re talking about gross profit.
Steve: 09:01 Right? Gross profit. Yeah. Sorry. You hit a a 1,000,000 in gross profit, you get this accelerator.
So there are things like that, that I think are more ideal in a comp plan. And you’d ask what’s bad percentage of total sales, right? That’s bad, because if you’re not making money on it, what does it matter? But there are tons of comp plans out there like that. And there are sales reps who again are told that the reason for their presence on earth is to hit this made up quota that doesn’t apply to them.
And if they hit it, they get this amount of money. So what are they gonna do? Cut corners, sell bad deals, give away profits, right? Contract, discounting all of those things. So companies are creating their own Frankensteins and then mad, right, that they now have Frankenstein.
So
Max: 09:59 I mean, really common in that in that environment, right, is we talk about, like, OTE. Right? Base plus plus, commission. And Yeah. You know, base plus commission equals x dollar.
Right? So, I mean, I’ll just pick a number out of the year, like, $200,000. So maybe you have
Steve: 10:15 200.
Max: 10:15 Maybe you have a 100 k base and a 100 k, you know, commission on top of that base, and that’s a it’s a pretty, like, normalized
Steve: 10:21 Yeah. 5050 is pretty standard.
Max: 10:24 But that but that in order to hit your OTE, you have to hit plan. And then you’d say you know? And this is this is when I started digging into this for myself. It was, I think the most fascinating thing. It was like, okay.
The assumption is that, like, 80% at plan is, like, a really good like, you’ve actually kind of nailed what your quotas are for your sellers if, like, 80% of them are successful. And, like, about 60% was, like, considered, like, you’re, like it it’s still at the higher tier of, like, like, you’ve got a effective sales force. But, you know, what’s what’s fascinating to me about this conversation around, like, OTE being base plus plant you know, plus, you know, plus a variable comp is and what you just said, and this is what triggered me originally, was like, well, what’s the quota? Right? Like, well, how do you recoup the costs?
And and especially you know? And and and what have I seen a lot of? I with my clients, well, you have somebody that just goes out and crushes it And, actually, not just clients, with a lot of our suppliers in our portfolio. Right? Somebody goes out and crushes it.
I mean, absolutely just just hits a grand slam out of the park, crushes it. And then the next year at their SKO, their sales kickoff, it’s like, here’s your new quota. Your quota just went up 400%. You know? And they go, k.
Great. I’m never getting paid again. Right?
Steve: 11:36 It’s happening.
Max: 11:37 Why do companies and sales leadership do this? I mean, because I to me as an outsider, that I was always like, no. No. No. You you you want your salespeople driving Ferraris.
Like, that’s, like, a good thing. Right? You know? But, like, that’s not what happens in in in the real world.
Steve: 11:54 I mean, there’s a few reasons. One is just pure greed, which is the overriding factor. Number 2, you have people setting these quotas and goals, couldn’t sell their way out of a paper bag, have no clue what it’s like in the field. Zero clue. I mean, none.
The other part of this, which is kind of weird, I’ll ask you this. You’re married. Right?
Max: 12:18 Yes.
Steve: 12:19 So either you or your wife, whatever. Let’s say you’re cooking for your wife and you make dinner tonight and she goes, what’s this? And you go, oh, well, I asked the neighbor, you know, what she wanted for dinner, so I made it for you. What would your wife say?
Max: 12:38 Yeah. So we have this experience with our children and and what we’re teaching them to do versus what, you know, your natural response is. Yeah. I mean, I I I get the, you know, I get the point.
Steve: 12:47 Right? So any scenario like that, you players on a basketball team don’t try to accomplish another team’s goals. Last time I checked, salespeople don’t give a crap about your goals. They care about 2 things themselves and their families. They don’t go home at night and lay down next to their wife and go, honey, I am so excited for tomorrow.
Why? I can’t wait to raise my company’s even I I can’t sleep. I’m so excited. Nobody cares. And so when you just assign these idiotic arbitrary numbers that have no bearing on anything other than raising your company’s value or your stock price or whatever, what part of your brain thinks that that salesperson is going to go out there and run through brick walls for that?
Right? It’s just there’s no conceivable reason that that a salesperson would do that. But what’s worse, is that this assumption that all salespeople care about money and commissions and all that stuff. That is a complete farce. The best salespeople in the world are intrinsically motivated.
The best business people in the world are intrinsically motivated. They are not extrinsically motivated. And this idea of this carrot and stick, right, that, you know, comes from the 1300s. That is not what drives long term success on sales teams. What that will drive is sandbagging, skimping on deals, commission breath, jamming people into buying who aren’t ready, because you put some arbitrary date on the time that a prospect’s money is no good.
Max: 14:47 Looking at this and talking with people about it, I understand I think where a lot of this comes from because when you look at it from a headcount standpoint, sales is the only place where you can really have, like, a direct corollary between, like, you know, revenue versus headcount expense. Right? So if you say Right.
Steve: 15:02 Yeah. Earn your dollars. You gotta do this.
Max: 15:05 It’s Right. And so so the so the mentality I mean, like, you can’t do that in marketing. You can’t do that in operations. You can’t do that in finances. It’s like but in sales, you can say, okay.
If I go out and hire a salesperson and I pay them x, $100,000, I need to generate y in order for that hire to be worth it for me. Right? And that and that why usually be is I I need to generate $500,000 of of top line revenue per $100,000 base salesperson. Right? You know, so, like, it’s an easy trap to fall into.
And then, of course, you say, oh, I look at my my sales organization, and I’ve got you know? And and Susie, like, crushed it. And, you know, instead of her making, you know, 2, you know, 200 k this year, she made $500,000. You know? She made more than the the the than the SVP of sales, or she made more than the CEO, or she made more than the business owner.
Right? Because she just she dominate. Now when you think of, like, a sales plan, in order to make 500 k, she probably brought in, like, $5,000,000 worth of revenue. Right?
Steve: 16:01 Right. Yeah.
Max: 16:02 But so then the next year, you’re like, oh, great. Now your your success bar changes. It was like you were too successful. So now your success bar changes so that way you can never hit that, you know, success bar again and, you know, like pat on the back. Like, thank you very much.
Right? So, you know, reading and looking at and trying to understand and and unpacking going backwards of, like, where all this stemmed from and, like, Jason Remkin publishes a lot of, like, what he did at EchoSign, and and he had a very interesting comp structure. And now mind you, I think the majority of their sellers were taking inbound leads. So it was structured a little bit differently, and they were selling a different different ACV or average contract value or annual contract value. I think AC Yeah.
But he got off a quarterly system for their quotas and had a comp plan based around accelerators that was just like, here’s how much you I mean, this is a at the same time now as I verbalize it, it sounds really bad, but, like, this is how much you cost. Once you pay for yourself, then gravy kicks in. Right? And and it sounds like it solves a lot of problems, but at the same time, it seems like it still creates even more problems because you’re like you know, you’re like saying, okay. Pay for yourself first.
And and if you do that then we’ll give you a reward. Right? Like that that I mean that that, you know, there’s something about that that doesn’t sit with me well either.
Steve: 17:26 Yeah. It’s a little odd. Just think about think about football player. You draft a quarterback, right? Number 1 overall, and you pay them $40,000,000 Right.
How do you ensure that they become successful? As an organization, what do you do? You drafted the number one overall quarterback, what do you do? Do you just let them figure it out for your 40,000,000? Is that what you do?
What do they do? Nutrition coach, mental coach, training, new regimen, new diet, personal chef, 1 on 1 coaching practice, role play, game film, practice again, game film, 1 on 1 coaching. And how long does that continue?
Max: 18:26 Yeah. Forever. It never stops.
Steve: 18:28 Okay. But that’s not what happens in companies. They hire somebody and go, hey. There’s the field. What do you mean?
Yeah. I mean, you’ll you played football. You you figured out. Oh, oh, by the way, let me show you how the ball is made. Let me show you the stitching and and how they put the leather together.
Are do we have any meetings or anything? No. No. Well, yeah, we’ll have meetings to to make fun of you for not performing from the coaching we’re not giving you. So we’ll get to do that every week.
Cool. And are we gonna practice plays or are you gonna show me how to, hit these certain routes? No. No. Okay.
Well, so what kind of coaching and training do I get? Oh, we’re gonna show you how the product works. And then in 12 days, you’ll be on the field. Okay. And then what happens?
Oh, well, then we’ll get mad at you, for not performing, and then we’ll blame you. Cool. Where do I where do I sign up for this? It sounds amazing. That’s 95% of organizations.
Max: 19:41 So companies used to do this. I mean, you now it’s not common today, but, you know, meet people that worked for Xerox back in the day or, you know, IBM. And it was like IBM. They were hired into a company, and it was like they were hired, and then they went to 2 or 3 weeks. I mean, they were they were sent off to wherever it was for 2 or 3 weeks.
Yep. And they taught them how to sell. Like, it it wasn’t I mean, I’m sure there was a lot of product training, but but you know? And now when I say, you know, this, you can you can really tell the people, and they’re usually, like, late forties, early fifties now. You know?
They’re still out in the out out in the sales world because they were they did this in the early eighties. But it was like Right. Yeah. Here’s what supplies you need in your briefcase. This is how you dress.
This is how you say hello. This is how you shake hands. This is how you prospect. This is how you follow-up. This is how you create notes.
Yep. And it was like and and why did this stop? Like, why don’t companies do this anymore? I mean, even if it’s like they don’t wanna do themselves, why don’t they send like, hire people and send them off to, like, sales boot camp somewhere and be like, okay. You’re gonna you know, your your first 3 weeks, so you’re gonna onboard.
And then let’s say, not everybody doesn’t do this. There’s a lot of organizations that do this, and you can tell because they’re massively successful that they’re doing this. Yeah.
Steve: 20:52 Yeah. Most of the big ones. Fortune 50, Fortune 100. Let’s say you are about to hire somebody. Their base salary is $400.
You that’s kind of a big nut, right, where units just gonna guess and hope they figure it out. These women and men spend months and months before they’re even allowed to go in the field. Months. And then practice, drill, rehearse, repeat, right? All role play, all of that.
They can’t touch the field where the average company goes, hey, we gave you a 19 days, by the way. That’s the average length of onboarding in this country for American companies. 19 days as if that’s enough. Like you can’t become an attorney unless you put in 7 years, 6 to 7. You can’t become a physician unless you put an 8 to 12.
But you can be a salesman because I gave you a, you know, access to Zoom info and just start emailing people. Right? And so it’s laziness, 1, and complacency, I think, too. You know, the economy’s been good for how many years now? So you have a bunch of companies who have salespeople who are just glorified order takers because an orangutan could sell something right in this economy in the last 10 years.
And now they’re all in big trouble. And they’re all realizing, holy crap, we don’t have a sales process. We don’t have systems. Our comp plan sucks. We don’t have the right salespeople.
So now what? And it was just like sweeping all this stuff under the rug, you know, for the last decade. This big tech boom, right? Companies are selling for 20 X EBITDA, 3rd overpaying and all these PE for so many of them are screwed, right? You don’t buy high and sell low.
That’s usually not a good thing. But you have a bunch of people, you know, like in San Diego, they paid $3,000,000 for a, you know, 1100 square foot house. Right. And, you know, at some point, you have to realize it probably wasn’t a good investment. But that’s what’s happening to a lot of these companies who are in, you know, the VC world or these private equity guys that they overpaid because they were looking at how easy it was to make money.
And they had no systems in place, no continuous coaching or training. The comp plan wasn’t designed and customizable to the person and all of these things are now starting to fall apart and they’re selling stuff for you know 70¢ on the dollar and just taking a loss. But I think it’s laziness and I think it’s complacency where they’re just like, oh we can put a live body in here. Right? Make a million a year on this, you know, product.
So let’s pay someone $30, not a 100, so they hire less quality talent thinking, right, that it will produce the same amount. When in reality, you know, the delta of their saving $70 cost them, you know, $300, right, and missed opportunity. So it’s it’s a lot of factors, but I just think many of them don’t know what they’re doing.
Max: 24:19 There’s also a lot of stats with that in sales of, like, you know, the the you know, your best salespeople actually, you know, sell higher ACVs. They sell there’s there’s a higher net retention. You know, like, all the stats are better when you have a a good salesperson versus a underperforming salesperson. But, also, the underperforming salespeople rush the discounts. You know?
So it’s like your the ACV drops, the GP, the gross bar, profit drops. Like, everything it’s it’s it’s not just like there’s, like, more I mean, it’s like everything about the health of that sale just just goes in the toilet.
Steve: 24:50 Yeah. So Referrals, reviews, recommendations, I mean, the list goes on. It’s endless.
Max: 24:57 Company expecting too much out of their sales team. And when I say when I say that, what I mean is, like, isn’t is there an argument for specialization of, you know, you can’t hire a seller and expect them to be a good prospector and a good relationship person and a good account manager. I mean, do you really need like, at what at what size does it make sense that you have, here’s a dedicated inbound team. Here’s a dedicated sales development team just doing prospecting and meeting, you know, qualification and meeting setting. And here’s a, you know, here’s a dedicated AE who’s gonna own the relationship at this time.
And and do you do you go from an AE to an AM? Like like, how you know you know, like, you know, the like, what are the tiers of the stuff? I mean, you know, and how big do you have to be before this specialization really starts to kick in and make sense?
Steve: 25:44 From what we see, it’s hard to put a number on it. I would think once you’re, you know, ascending past probably 50 or 100,000,000, that becomes more of a team game, right? Because you need the support. You can’t maintain all that growth and scale. But we have a client, our largest clients, a 1,000,000,000 whatever, and they have about 70 sales reps.
But most of them do their own work. Right? They still do service. They still follow-up. They still manage the accounts, and they’re a 1,000,000,000 4.
So it’s all really based again on the product, the service, what’s involved, right? Is there fulfillment? Is there supply chain issues, right, that need to be managed? So it’s a hard answer. But I there are people that have certain skills in certain areas, again, that should be put in those positions to win and other people, right, should not be.
That’s just so why we use sales DNA so much. I mean, it just makes it so simple. And when you can go, this guy’s not a hunter. He’s a 12 on hunting. He won’t prospect.
He needs to be liked. This is not for him. But as people love him, let’s move him over right to account retention or management or whatnot because those are his skill sets. But if you have the wrong people in the wrong positions, I mean, it can be devastating. But if you’re not looking and you don’t know what to look for, how would you ever discover it?
You know, we have several friends and things that are, you know, big into EOS. And whether it comes from EOS or good to greater, wherever it comes from, Art Verne, you know, having the right people in the right seats. You know, we’ve heard this, you know, 50,000,000 times.
Max: 27:37 Yeah. And all the permutations.
Steve: 27:39 But if your driver is blind, it don’t matter. And why do companies not understand this? You can have amazing salespeople if your sales manager is inadequate, untrained, unfriendly, not a coach. What do you think is going to happen? And that is never talked about.
We don’t even care who’s driving this bus. It’s all about right people, right seats. Wrong. Who is the driver? And in almost every failing sales organization, we can point to exactly where it is, and it is always at the sales leadership level.
Always.
Max: 28:22 RPRS, right people, right seat, also applies to managers. Right? So, like, you know, you can’t pick and choose how you apply that. Let me let me go I wanna go back to something because you you’ve said a couple things have triggered this thought for me. You know, you talk about, you know, client in Austin.
They have a bunch of AEs and presales engineers. And I see this a lot in you know, we have support organizations at all the major suppliers that we work with that, you know, support us and our clients. These are quota carrying comp structured, and it’s always insane to me because and the same thing with presales. You know, pre you know, any sort of, like, sales engineering role usually has a variable comp structure as well, but, like, but it’s it makes absolutely no sense in the sense that, like, they’re not in control of their destiny. Like, if I call up AT and T and say, okay.
We’ve got a client and, you know, it’s a $20,000,000 contract. Like, the person that is gonna drive that business had absolutely nothing to do with that pipeline but then the next year, they’re gonna be like, oh, you sold $20,000,000 in this one deal so now your quota is gonna be $20,000,000 right? And like congratulations pat on the back, you know, like like it it feels and and by the way, so I’ve always kinda wondered about this of, like, is this a conscious effort by these organizations to churn out what they consider to be expensive salespeople? And in order to, like, get rid of, like, the expensive tier and bring in, like, oh, we’ve just hired somebody out of college at, like, whatever base instead who’s now the like, so I’ve kinda wondered, like, is this, like, a conscious decision being made of, like, this is how we, like, force attrition without expensive layoffs or severance packages versus just like we don’t know what we’re doing, so we just did this because this is how we we’re we we, you know, we’re, like, we’re trying to hit this OTE number, and this is what has to happen in order for them to have a 200 k OTE.
Right?
Steve: 30:25 I think it could be twofold. I think maybe there’s some planned obsolescence in there. Right? It’s possible. But I think a a bigger function of that comes from leadership.
So, again, leadership, right, gets gets, you know, their their quotas and targets foisted on them, right, by the board or whoever. Right. And so they now feel pressure that, you know, their gravy train is gonna end unless we hit this number. So these leaders have had about 0%, right, training, coaching, and understanding of how to lead other human beings in sales. So they think, well, let’s just dangle this carrot and let’s use fear, intimidation, right, and threat in order to drive production from our sales team, which clearly is not the way to go.
And that’s why so many top salespeople leave companies and have huge salaries and huge bonuses and give up their stock options all day, every day, because of this method. A second piece of that, if you take Aaron Judge, right, hit 62 home runs last year and the American League set the record right to see Yankee, which I can’t believe I’m giving the Yankee credit. But anyway, it would be akin to the Yankees going to Judge right now and going, hey, buddy, you know, congrats on the record last year. Just so you know, you gotta hit 73.
Max: 31:50 Yeah.
Steve: 31:51 What? Yeah. 73. What we’re talking about? Well, that’s the made up number we have.
You gotta do 20% more than last year. That’s what’s happening to salespeople, and it’s clinically insane to do that to someone. When in reality, if somebody blasted through their goals, quotas, metrics, dreams, whatever you want to call it, you want them to repeat the behavior. You don’t want to reduce the chances that they repeat the behavior. And what’s a surefire way to reduce the chances?
Tell them they’re not good enough. Tell them they didn’t make us enough money and tell them you’re cutting their pay. Yeah. That’ll work. And companies do it all day every day because the sales reps tell us, right?
And you I have a list that’s gargantuan of all the complaints we hear from salespeople, and you wouldn’t believe the stuff they do. There are situations where let’s say somebody’s goal is 2,500,000, right in sales, and they get whatever 5th 30 ks bonus, whatever it is. And they do 2.498000000,
Max: 33:00 then make it.
Steve: 33:02 And the company goes, well, can’t give you the money. Yeah. What part of the human brain would make you think that this salesperson would go, okay. Wait a second. So you kept all the money.
You guys made $750 in profit. Yeah. I don’t deserve that. And they wonder why people leave.
Max: 33:30 So I mean, this comes back to you see, like, you see comp plans that have an element of draw. Right? We’re gonna we’re gonna pay you a $150,000 because that’s what need in order to come over from this other place, but we’re gonna pay you a 150 k. And of that 150 k, you know, a 100 k is draw, which is gonna ratchet down month over month over month until you get to, like, 50 k. And at that point, you know, your quote your comp should you know, your your, your your, you know, your bonus element of your comp based on sales should be that 100 k, and then you’re fine.
Right? I can’t think of an example where that was a successful sales plan or that’s actually worked out for either side. And so
Steve: 34:11 I agree.
Max: 34:12 And so and intuitively, it tells me, okay, there’s something I mean, like, you have to do something different. Right? But then you get back to this, like, cycle, which feels like from a fear and risk standpoint of, like, we can’t we can’t risk hiring somebody at, you know, $12,000 a month and, you know, with all the so $15,000 a month after all their overhead and, like, you know, they don’t produce. Because if we hire them for 15 k and they don’t produce, like, you know, we we blew it. Right?
But it it doesn’t feel like structuring I mean, I I kinda wonder, like, if you look at an organization, if you just said, hey. I’m gonna pay you 200 k. Like, there’s gotta be other metrics that you can take and apply, you know, and say, is this person actually doing their job or not? Are they gonna be successful or not? Are they gonna work out well before you get to the 30, 60, 90 day mark where you kind of you know, even if you’re not going through, like, hey.
We’ve got a Sane onboarding process, and we’re gonna spend a month teaching you how to be a seller because we assume you know how to how to be a salesperson now. Yeah. You know? What should we be doing differently?
Steve: 35:20 So we we ask clients this question a lot, our prospective clients. And let’s say they’re, you know, someone they’re paying 120 ks, whatever. That’s their base. Right? So you’ve got base, you’ve got salary benefit, you got all that stuff.
Right? So all in, let’s say it’s 150 ks nut. Let’s say that They are risking just hard money, 150 k, right, that salesperson a will work out. They don’t know how to recruit effectively, have no idea how to write a job ad, how to interview. They certainly don’t use sales DNA.
They’ll use DISC or some other tool that has nothing to do with predictive ability in sales, and hope the person works out and they’ll risk at least 150 ks in real money, you’re better off shaking up a magic 8 ball, first of all. But they’re willing to continue to make this mistake over and over again, hoping a salesperson works out, willing to spend $150 to find out. We’re not even talking opportunity costs. This is just hard money, but will not build a sales process to allow this salesperson to succeed, will not build an onboarding process to ensure the salesperson is effective. And they keep going over and over again in the same cycle.
And that’s what continues to happen. And so not having the right tools in place and then expecting somebody to be great, I mean, it’s just pure insanity. You know, we we talk about so many analogies in life and cooking and sports and so on. And when it comes to goals, the probably the easiest one or or quotas or whatever, is if you use Olympic athletes. Every person that even makes the Olympics, you’re already elite, right?
I mean, it’s less than 1% of that, you’re already amazing. But what’s the goal of every Olympian to win the what?
Max: 37:22 Gold medal, of course.
Steve: 37:24 So in a typical Olympics, you know, there’s 300 events, about 10,000 athletes. So roughly 3% of Olympians will win gold and 97% will not win. Clearly, it is not the goal that makes the difference between the gold medal winners and everyone else. They all have the same goal. It’s not the goal.
The people that win gold have better daily habits than the people that don’t. Pure and simple. And that’s the part that these companies do not understand. And many of them have their, you know, KPIs. Okay.
And how you define a KPI is is different. But most companies, their KPIs are lagging indicators, which, again, the most insane intergalactically idiotic lagging indicator is sales. You cannot measure sales to grow sales. You have to measure activities and behavior in order to grow sales. So just by pure math, the most basic of equations, increased quality activity, guess what goes up?
It’s that simple. And what do companies do? Not focus on this activity. They go, We just want you to sell more. No.
Not how it works.
Max: 38:49 But even even in those cases, you hear about companies that do like, hey. It’s cold call week, and every single person in the company sits down and does nothing but cold calling and prospecting for a week. Yeah. And, boom, they fill pipeline, but then it’s like things just let go. So when you say, like, you know, I love I love this conversation around lagging versus leading indicators, and I am 100% guilty of this.
I have totally failed a lot of people that have worked for me over the last 20 years because I just didn’t know any better. I was a dumb idiot. You know? Like, I just yeah. I didn’t know any better.
Right? But so now
Steve: 39:20 invention.
Max: 39:21 Well, so now it’s like when you look at this and you say, okay. You know? You you gave an example of a lagging indicator. You know? What was our sales?
How did our our quarter end? You know? Like, I love companies that are in quarterly cycles because you know you can manipulate and abuse them at the end of the quarter. Right? It’s like, oh, your quarter ends when?
Okay. It’s the oh, your your year end is actually January 31st, not December 31st. Okay. We’re just gonna hold off until, like, January 25th, and we’re gonna you know? Because but it’s like everybody who’s ever purchased anything in a b to b situation understands this world and and, like, syncs up their purchasing behavior against company’s core you know, the vendor’s quarter and and and annual closes.
Right. Why? Because, like, it’s like boom. Instantaneously, you get, like, the magic discount out of thin air and, oh, by the way, wink, wink, nudge, nudge, this discount we’re gonna give you that you have to sign by January 31st, guess what? We really know that if we wait until February 15th, we could still get the same deal.
Right? Oh, yeah. Yeah. Yeah. This offer really expires on the 31st.
Yeah. Right, buddy. You know?
Steve: 40:26 I I I shouldn’t call out this company, but whatever. I don’t care. Most of them are criminals anyway. So before ZoomInfo, we’re talking to HubSpot. And, you know, this guy’s, you know, we’re we’re evaluating CRM as a marketing tool anyway.
So this guy goes, hey, Steve. So, I looked you guys up, you know, looks like you’re, you know, sales training company. Cool. You know, all that kind of stuff. I like what you’re doing.
And he goes, but we’re a Sandler shop here. I go, okay. Listen, dude. I’m gonna give you one piece of advice. You listening?
Don’t Sandler me. Okay. Whatever you do, do not Sandler me. You got it? What does he do 5 seconds later?
Well, Matt, can we at least agree that if you see value today, you’ll move forward, and if you don’t, we’ll part ways. I’m like, dude, are you are you a robot? I just told you not to do what you just did.
Max: 41:23 Closes. Oh, it’s so
Steve: 41:25 This is the garbage that’s being taught, but it gets worse with ZoomInfo. So we had them on and then the sales rep goes, okay, it’s the 29th of the month. So, you know, here’s what we’ll be willing to do. Okay. If you sign by, you know, the 30th, right, we’ll do it for, you know, 17 grand.
I go, guys, I have 2 questions. Are you guys selling the business? What do you mean? Well, clearly, you’re only gonna be in business for the next 2 days, or you wouldn’t be doing this. Are you guys gonna continue doing business after the 31st?
Yeah. Okay. Second question. So if I wire you $18,000 on February 1st, my wire’s rejected? Does money does money turn into Dogecoin or what what
Max: 42:18 Yeah.
Steve: 42:19 What happens on on the first? Well, no. Well, no. No. Let me talk to my manager.
Yeah. This is like a huge company. This is the crap that continues to happen because you have made up ridiculous quarterly amounts where the sales magically must be in before that day or else they don’t count.
Max: 42:44 Well
Steve: 42:45 So these companies go, hey, let’s arm wrestle all our clients into buying before they’re ready. And, you know, in order to do that, we’ll probably have to discount, which will set us up for failure because every future contract, they’ll want the same discount, and then they’ll have that over us. Yeah. That’s a good business strategy. Let’s do that.
Max: 43:06 I mean, a lot of this stems from public companies that have to issue earnings that then, of course, wanna juke their quarters because there’s MBOs attached to them. I worked for a I worked for a dotcom. I mean, this is going 20 years ago, I worked for a dotcom. And the CEO had the it was incredible. Like, you could tell, like, we would get into whatever cycle on the quarter, and and there’d be a mandate.
Just don’t pay don’t pay any bills. Do not pay a single bill. And and and there’d be, like, a span of, like, 4, 5, 6 weeks where, like, finance was not allowed to release a single check. Now, of course, it caused all sorts of problems for the business, but it didn’t matter because the quarter numbers were good. And then the quarter would close.
They’d release all this money. They’d they’d issue a correction to, like, the previous quarter that we had to re you know, restate everything. So then the next quarter was clean, and
Steve: 44:01 they would want this And
Max: 44:02 you’re like you’re like watching this. You’re like, how the how does this function in in in the real world? There was another version of that that we did that was insane to watch also. I’m trying to remember. But, you know, it was like but you could see it was like, you know, show me incentives.
I’ll show you behaviors. Right? Like, there’s what’s the version of that quote? So what are this is why I like Jason and what Jason was saying of, like, there wasn’t a quarter. It was like monthly behavior.
And he was trying to solve and I think he did solve the first part of this issue around, like, you know, like every month is still its own month, and you kinda like avoid people, like, you know, all this different stuff. But what’s what are good leading indicators? Like, how do you start to right this ship? I mean, and and we’ll start with the leading indicators and activities and habits, and then we’ll go from there into, like, how do you restructure your sales organization?
Steve: 44:51 Yeah. I mean, we call them quality at bats, and it’s a it’s just very simple to understand. You don’t need to know anything about baseball. But when you go up to the plate, if your goal, your only goal is to hit a run, you’re gonna strike out. The goal when you go up to the plate is to have a quality at bat.
What does that mean? Well, based on the situation you’re in, maybe it’s moving the runner over, maybe it’s taking 30 pitches, maybe it’s hitting the ball up the middle. Whatever it is, it is not outcome based. It is all based on having the quality at bat. Doesn’t even mean you touch the ball.
You could make the pitcher throw 40 pitches, but he’s out of the game in the 6th inning. You are the most important player in the game and you did not succeed quote unquote. So the goal is to have as many quality at bats in a game as possible. And if all your players have quality at bats, you win most of the games, not if all your players try to hit home runs. We know what happens.
So we took that concept and we changed KPI to DPI, right? So we call them daily performance indicators. So what are the things a salesperson should be doing every day? And all they need to do is that. That’s it.
Nothing else. And so what are DPIs? We have this little thing we call daily 100 and every quality and bet is worth a certain amount of points. Right. So let’s just say somebody’s an outside sales rep and they have to make 50 dials a day, right?
One dial is one point, right? Maybe they’re in software and, you know, one of their DPIs has executed demos, right? You got to have, you know, 2 demos a day and cool. Those are worth 20 points. Thank you notes, client contact, follow-up calls, moving someone from one stage to the next.
That could be right, a DPI. But you want your salespeople feeling good when they leave the day. Not horrible, not inadequate, not fearful. And if you use the progress principle in the way that you teach salespeople, they’re going to leave happy. They’re going to come in happy.
But all I want my team doing is having quality at bats. That’s it. Can’t control the outcome. If I hit the ball hard, I hit a rocket down the 3rd baseline and the guy makes a diving stab at 3rd. That doesn’t mean I suck.
But that’s what I’m told in sales. And it’s the reverse. It’s the polar opposite of what you should be doing. Because if you tell the guy he sucks, and you put pressure on him, he’s going to strike out on 3 pitches the next time he’s up to the plate because he’s got you in his head telling him he’s inadequate. And that is what happens on future demos when people are made to feel like crap because they didn’t sell something.
And that’s the key. And every client we’ve ever had that’s put in DPIs has increased sales. Every single one.
Max: 48:05 So I I love this concept, and and we’ve talked about this before. So then it goes from I mean, you have to figure out what the DPIs actually are and how it it comes up to your business. But then the second thing that we’ve talked about is, like, you know, if if you’ve got a target of a 100 and you’ve you’ve figured out, you know, what what those things are that equal a 100. Right?
Steve: 48:25 Yeah.
Max: 48:26 And Yeah. And now you’re looking at your sales organization. You’re saying, okay. On a on a trend line, you know, are you hitting a 100 every day? Right?
And if you’re not, why didn’t you? And and then it’s not like you missed it one day, but, like, if if you’re not, then what’s going on? And if you’re over it, great. You’re gonna be even more successful, but it becomes like a much more tangible like, today, I did the work I needed to do today. And Yes.
I think those are the biggest misses I had for a long time was really understanding, could you actually explain to your employees, your team, what their job was and a very concrete, like, basis. And this is across the entire organization. Like, your job is to do these things. And if you do these things, you’re doing a good job. Right?
So I love this I love this I love this idea. But so now my my follow-up for you is beyond trying to figure out what the DPIs are for your business, how long does it take you to ramp a salesperson into this? Now if you show up and you say, okay. We’ve got a ton of, you know, like, not that we’re using like a Zoom info and we’re just giving you a bunch of leads to prospect, but we actually have some sort of pipeline that we’re gonna give you. It still is gonna take them time to ramp into this.
So Yeah. How do you ramp a salesperson into this, and how much time are you assuming before that salesperson should be successful? And then when I say successful, I’m not saying successful in terms of generating closed business for you, but successful in terms of executing the sales process as you’ve defined it so that way they can then build success. What does that look like?
Steve: 49:54 So if we think about why we teach this, physiologically, you know, people have different answers when we ask them how many days does it take to form a habit, right, of, you know, people have all their different answers. They use their Cladwell thing 21 days, right, which is not a chance in hell. It’s 21 days. So the study that I like to point to, is from the European Journal of Social Psychology. It’s from the fifties or sixties.
It says 66 consecutive days of doing an activity, right, will therefore increase the likelihood of it becoming habit. So you have salespeople, sales managers, CEOs, whatever, who’ve never done any of this ever in their life. And so it’s physically impossible mentally, psychologically, scientifically to assume that they would somehow adopt this within a week or 2. So it is at least 2 months of doing this before this becomes a habit. You know, one of the people in your Vistage group, our buddy.
Okay. And when I went to his office right after we put this in, it it’s gave me the most joy probably I’ve ever had in my life. I saw some of the reps and they had, you know, 3 ring binders or whatever on their desks full of their daily 100. And one of the people who adopted it was probably going to be fired when we first started working with them. In less than a year, she won their salesperson of the year award.
And it was mainly because of that. Those her words, not ours. So it’s it’s just like anything else. Most companies and you know this from our group wherein people will see a good idea and they go, oh, I’m gonna drink water. I’m gonna drink 70 gallons of my body weight every day.
Right? And you do it for 3 days and then it’s done. Let’s go on to the next thing. Oh, you know what? I’m on bulletproof coffee.
I’m going to do that now. Right? So you go from thing to thing to thing. You’ve never done one thing in your life for 66 days in a row and it’s always on to the new shiny object. So it takes a commitment from the company to be willing to do things differently than they’ve done.
And it’s quite a simple equation. If you track the DPIs, even just for 2 weeks, you’ll see a dramatic improvement in activity. But the mistake most companies make, and you know these, they’re called QBRs. Right. For those of you listening, right, quarterly business review.
It’s in again, I’m using the word insane a lot because it lacks sanity for someone to think, well, I’m not going to help this person. I’m going to let them die for 89 days, Blow all these leads, all these appointments, then I’m gonna tell them how bad they did and tell them to fix it or else they’re going on a performance improvement plan. Are you nuts? Would you let a baseball player go all for a 179 before you address the issue. And so you can see those issues in a week.
And so then you’re able to adjust on the fly 12 times sooner and go, hey, man, You’re kicking butt, bro. You’re you’re doing your calls. You’re doing your demos. You’re doing this, but we’re not converting. Let’s figure out what we’re saying.
Let’s role play together. Right? Let’s do some exercises together. Let’s go over your hook, your value prop, your intro, your demo. What that’s the role of a sales manager or a sales leader that they’re not doing.
And they wait till these people are downtrodden, desperate, right? Just totally distraught that they’re not producing when they could have fixed that 9 weeks earlier. That’s what DPIs allow you.
Max: 53:56 So this is also I mean, if you say 66 days, I mean, sales is not a 7 day a week activity. Right? People need to unplug usually on the weekends. Right? So you’re really talking about a quarter in habit forming, and then you’re talking about probably at least another quarter based on what your close rate is and close time is for companies.
You’re you’re you’re talking a 2 quarter investment by most companies in order to actually see if this is, you know, like, get to the point where they’re gonna see differences. Probably 3 quarters. I mean, we we work on deals where, it might be I mean, let me think about this one. I’ve had some where it was maybe, like, a 6 to 9 month engagement to when you get to contract signature. Then at that point, you probably have, you know, 3, 4, 5 months of implementation and migrations.
And then you’re plus another 90 to a 100 days before, you know, you see revenue recognition out of that. Right? So, I mean, a year, like, 12 months to 15 months before I mean, that’s not an unusual, like, cycle in in in my world when you start talking about, like, large enterprise technology kinda cycles. So, you know, I I think about this a lot when I when I think about our structure in terms of, like, you know, is it a is an SDR BDR function? Is it an AE function?
Is there an AM behind the AE? You know, what is an what does a sales engineering role look like? And and, oh, yeah. You know, you either need to optimize for, you know, an SMB smaller transactional acquisition where you’re maybe gonna go the entire cycle in less than 6 months, or you’re gonna go up stack. And if you go up stack, this is what this really means for you.
And I think that’s a lot of the conversation. I don’t know how much that conversation happens, you know, at the upper ranks within companies when they start making and thinking about this stuff. I’m I’m I’m it’s not really a question, but I’m kinda curious what your you know? I mean, you you get hired to do sales training for organizations. Are Yeah.
Is is this like people realize there’s something wrong and wanna change it, or is it like, oh, you know, like like, what you know, where where where do you like, how do you get engaged with this? And what are companies I mean, is it just like, hey. Our revenue’s down. We need to fix it, and we finally maybe think that there might be a problem that need to address, or is it like our sales team sucks coming in, like, fire everybody for us because we can’t we can’t figure out how to
Steve: 56:16 do it? Yeah. There’s so many functions of it. You know, starting with hiring the wrong people, which is what the biggest challenge is. You you’ve gotta start with great people, which is why we do DNA.
But other than that, let’s say you do start with an amazing person. There are 97 on DNA and you put them into an organization with no accountability, no coaching, no habits, no nothing. They’re gone. So there’s and then the organization will blame the salesperson. So again, we got a turnover problem.
No, you have a you problem. But until it becomes a real major pain, like we’re losing vendors or we’re losing our long term employees or profitability is down or until it really hurts, that’s when people start to address it, which is unfortunate. And if you think about sales in terms of culture, you know, we talk about culture a lot. You know this in our group and so on. If your organization, let’s just say, has a bad culture, how long does it take to turn that around?
Max: 57:19 I mean, it you first have to make the assumption that the people that are driving the culture actually are aware of it and decide to make a change. Right? I mean, like, that’s a foundational question. And considering that culture really gets set by the ownership and the executives, the managers, and people at the top and permeates I mean, this is culture really is a top down thing. Right?
It’s not a bottom up issue. So if you have a bad culture, you you know, that issue starts with the people that actually have to change in order to make culture change. So, like, your question is is, like, how long does that take? Well, I mean, probably never.
Steve: 57:54 Yeah. If you had to if you had to bet your life, if they actually had a study on this, maybe they do, where you’ve seen a company go from a bad culture to a good culture, how many months or years do you think the median would be?
Max: 58:09 I see this more in in sales and acquisitions. So ownership changes because of some sort of sales transaction or exit. And it feels like in that role, it takes probably somewhere up to, like, the 6 month mark, you know, of real concentrated we’re changing the culture before, you know, trust really kinda starts kicking in and people you know, and, like, and then probably another 6 6 months after that. So about a year of, like and this is, like That’s right. We’ve been saying intense.
Steve: 58:40 Around a year? Yeah. If you don’t change the culture, what does that cost the company? Right? I mean, it’s incalculable, right?
But there are companies who pay 1,000,000 of dollars to go through this transformation because they understand the value. That same company won’t spend 5 grand on looking at who they have on the sales team. What are our processes? What’s our value prop? What’s our sales debt?
What’s our tech stat? They won’t spend a penny. And just think, well, it’s the wrong people. Or maybe we’re going to change the price or maybe we’re going to do this. It takes a year, 6 months to a year, right.
To see the fruits of your labor, same with culture. Right? So when we implement DPIs, sales, DNA, detaching from outcomes, all these things, It takes a while. It is not like we bring in the magic selling system from the seventies and that’s going to fix our shit. No, that doesn’t work.
So you have to have leaders who are committed to putting the time in to to benefit, right? And there’s a million examples. You probably know some of these but when I was teaching all the Aflac people around the country I found this picture of this bamboo. And then somebody told me, oh, is that you know, do you got to use the Chinese bamboo analogy? I’m like, oh, what’s that?
You have to water bamboo for years. Every day. What every day? Nothing happens. After a year, it’s dirt.
After 2 years, it’s dirt. After 3 years, it’s dirt. And in the 4th year, it will grow 80 feet in 6 weeks. But you have to be committed to watering your plants every day. And your plants are your salespeople.
And you won’t see it today. You won’t see it tomorrow. You won’t see it next week. You won’t see it this quarter. But all the work you’re putting in will eventually allow them to skyrocket in success.
But the problem is, they never get there because you stopped watering them after 19 days. And you wonder why you just have a pile of dirt. And that’s what I see.
Max: 01:01:06 You’re talking about tools. You you mentioned tools, and you also mentioned CRM earlier. So let me connect these. Right? So, you know, topical for right now, Salesforce has done their first round of layoffs, I think, probably in the history of Salesforce.
And, and many of us has made comments that went, of course, leaked about and and it’s like productivity and and is our remote cult you know, is our remote work impacting productivity, and we’re hiring all these people. And and there was a there was a something that came out that was talking about I forget the exact numbers, but, like, sales based on productive and experienced AEs, you know, and, like, literally carrying, like, 80, 85 percent of the sales for the business versus, like, you know, like, the 80, 20 is absolutely up upside down with this company. We’re, like, 20% are selling 80, and the 80 are selling 20. And and what are they gonna do about all this stuff? But, again, I think you talked about this earlier.
It stems from, hey. We just hired all these randos off out of college, gave them no support. We the thing was the industry was so hot. Like, every company had to run this platform. So we were just taking orders, and there wasn’t anything more to it.
Now people are really looking at, do we need to spend this money or not? And and I’m gonna connect this to a question for you. But, you know, in the sales space and in sales enablement, now we have a lot of tools that sit on top of the CRM. You know? We talk about, you know, tools to help you prospect and do email sequences and do auto dialing.
And, like and I feel like, you know and I’m guilty of this because I’m in in the tech world, but, like, there’s this run to tools. Like, oh, we have a sales problem. Let’s go out and get an Outreach or a SalesLoft or one of these tools because now it can make our sales team more effective, and our sales should go up. But, like, do sales go up? So how do you you know, if you say, okay.
You have to make 50 dials a day, you can make 50 dials a day without using Outreach. Right? Like, so how how do you talk to people about, like, right I don’t wanna say rightsizing, but, like, repairing their thoughts around sales management and sales activities and, like, tooling and, like, recording data in the CRM. I feel like every company has the same kinda did you put your stuff in Salesforce? And the answer is like, no.
You know, you know, blah blah blah. Right? Like, how do you deal with this as an outsider being hired to fix these problems?
Steve: 01:03:19 Yeah. I mean, if we take the CRM thing, which, you know, salespeople would would rather have a colonoscopy than put something in their CRM. But it’s because they’re told they have to use the CRM. And, you know, this goes back to, the philosophy that we teach and and why so many salespeople don’t get it right. Unfortunately, right, is because they just sell features and benefits and that’s not what drives people to buy.
You have to let people know what happens if they don’t buy your stuff. You do not tell them what they gain if they do buy your stuff. You tell them what they lose if they stay the same. And that’s why most salespeople don’t adopt their CRMs is because they’re told what to do. They have to understand what they lose if they do not use this.
Future relationships, referral business, repeat, you know, MRR. When you can equate what they lose if they don’t spend 9 minutes doing this, big surprise, they start adopting it. So that’s one piece of CRM. And again, companies change CRMs, right, like the weekend golfer changes drivers, like, but must be the driver. I, you know, I don’t like the head on that ping.
It’s not the driver, but they will get Salesforce. Well, now we’ll do HubSpot. Now we’ll do Pipedrive, whatever. It’s you. But in terms of the technology, you know, there’s already this.
It’s not a hindrance. It’s more of a myth, right? That you can sell, you know, selling by email, right? Where you let me just automate it. Right?
That’s what companies think. And so they don’t even know how to pick the phone up. It’s unbelievable. And so when you have these automated cadences that go out, and I get it, if you’re sending 50 a day, 100 a day, whatever, it’s fine. But if that automated cadence number 1, if it looks like it’s just tacky automated trash, you’re retarding the effect of using it because nobody’s gonna want to do business with you, because you just send some automated crap.
Language is everything. I just had to edit a couple things for somebody we’re gonna work with and so on. And I’m saying myself, like, who wrote this? Like, what is this? It was so god awful.
Like, I it’s crazy, and they don’t review any of this. So they’ll use some standard prepopulated automation, maybe outreach sensor house or whatever, right, which is also garbage. And so they’re not even looking at what’s being said. And so they think, right, that it’s helping them when in reality, it’s retarding their own growth. It’s the well, let’s just put the automated, cash you know, we just need a self checkout.
Right? We don’t need people anymore. Do you still need people because somebody hits the wrong button or they didn’t weigh their kumquats or whatever. And you cannot just brush under the rug investing in your people and role playing and developing and coaching and actually doing something right as a sales leader other than drawing up thermometers on your wall and seeing what hey, hey, everyone. Let me send you out the charts of who’s doing what missile drive people, and it’s just stuff from the seventies, man.
It’s great.
Max: 01:07:03 When you close a deal don’t don’t work. You can’t go have a giant selling on your own. So
Steve: 01:07:09 Yeah. Don’t get me started. I
Max: 01:07:12 There’s a bunch of sales methodologies on the market today, and actually like like a lot of them. I’m not gonna mention them by name, but a lot of them if you pay attention, you can track back to, like, inception. So there’s a lot of stuff on the market today that comes back to challenger sale and Chris Dixon that then refines it. Right? And and a lot of them I really agree with and I really like.
And I’ve and I’ve started buying just because of curiosity. I’ve been buying sales books, you know, going back to, like, the fifties and the forties and the thirties. I haven’t read them all yet, so I can’t give you any reviews. But I’m really kinda curious to see Yeah. What was being taught in the thirties.
You know? Because you have the, like, the the Carnegie, like, how to how to make friends and influence people that, like, I feel like half of that, like, gets regurgitated in, like, everything that we’re doing now. It’s like there’s no original thought at some point. Like, where does it actually come from? So, like, I need to find the original Greek on, like, how sell if you’re a merchant street, you know, like like, guide.
And we could probably, like, connect it altogether. Okay. So let’s say let’s say a company, they make the first step, which is they understand, okay. We’re gonna go to a leading indicators versus lagging indicators. We’re gonna figure out what kind of activity base we wanna have.
We’ve we’ve figured out, you know, like, how to score. You know, maybe maybe you’re not, like, highly you know, it’s not a cold call and cold email because you’re in an AE and we have an SDR for that. So we have different metrics for our different people. Right? How do you design a good compensation structure?
You know, you’re gonna hire an AEN. You know? You’re gonna assume that it’s gonna take them, you know, a 180 days. It’s gonna take them 2 quarters before they’re gonna have any sort of positive revenue that’s gonna start coming in, but even that’s gonna maybe take another another 6 months. Right?
Yeah. How do you what what is a sane compensation structure, you know, for a healthy company look like?
Steve: 01:08:49 You know, this is not a popular opinion, but, again, if you look at all the science and data, the most successful salespeople in the world are intrinsically motivated and have an ambivert type of style. In other words, some extroversion, some introversion, but they’re generally motivated by mastery job well done. Right? Those types of things. So if we know that and our comp plans are all purely, extrinsically based money and so on, it’s not going to motivate a percentage of the population akin to you go to a restaurant with your wife and they have one meal available.
Is there anything else on here? No, that’s our meal. It’s, raw seared, donkey liver. It’s what? Yeah.
I love it. So? Well, because I love it, you should eat it. And that’s the problem with comp plants. Right?
And so we have variable comp plans. In other words, they can choose the one they want. So you have families, let’s say, you know, mom is a breadwinner. The dad, you know, just lost his job. Right.
And she’s the only one working. She might take a higher base salary because she’s got to support the family. But now let’s go reverse. You’ve got 2 people. The wife just, you know, sold our company, you know, and they’re just looking for stuff to do.
They don’t care about money. They got 40,000,000 in the bank, but you don’t know because you don’t know anything about them. So having customizable comp plans to me is what I see amongst many of the successful clients we have and their culture is abundantly amazing because of it. We have another client. They do about 150,000,000 a year.
They pay no commissions. None. Not a cent. Every sales rep makes between they start at 80 and go up to like 150. You can’t go past that.
They’ve got company cars and cell phones at 41 can every benefit known to man and they pay them spot bonuses. Nobody knows when they’re coming. Nobody knows what they’re for. So this one guy, Scott, he shipped like a bunch of chicken to Jennie O or some or Jennie O chicken of HEB. So big huge order of chicken, right?
Their food distribution. And they showed up one day at his desk and he go, Hey man, here you go. Congrats. And it was a Rolex. And he’s like, Wow, what is this for?
And they’re like, Just for being you, man. We appreciate everything you’ve done. Great job. Keep it up. How did they know that he wanted a Rolex?
Max: 01:11:45 Are they actually talking to their employ I mean, like, I don’t I mean, like
Steve: 01:11:48 Who’d they talk to? Because it wasn’t him.
Max: 01:11:51 I mean, this is I mean, to think about a company actually doing this is amazing.
Steve: 01:11:56 Your wife. They said, Jenny, what would Scott really want? What’s he always wanted that he’d never buy for himself? And she goes, that’s easy. Rolex.
Yeah. Actually knowing who your people are.
Max: 01:12:13 I’m I’m connecting this to, like, attrition rate and churn. And I’m just on the surface, I would bet that this company has a very low attrition rate and churn.
Steve: 01:12:23 90 98%, you know, retention rate for employees, their their customer, you know, lifetime debt. I don’t even know what the years are, but the 99% don’t leave. Right. It’s this kind of stuff. No commissions.
No, they don’t have that crap goals and quotas. No, no. Our goal is to help the customer. That’s the goal, right? That’s it.
And their average length of tenure for their sales reps, they’ve been around, I don’t even know, 15 years maybe is 12 years. No one leaves. They have no issues recruiting. Gee, I wonder why. Because all these people tell their friends every weekend how lucky they are.
They have thousands of resumes waiting for people to apply for the next role. No commissions, no quotas.
Max: 01:13:19 Yeah. Sounds like a great place. Right?
Steve: 01:13:20 Doesn’t mean it’s you have to do it. It just means that you can do it in a nontraditional way and have success.
Max: 01:13:30 And, otherwise, I mean, this comes back to, like, the whole variable comp component of it, which is every time I’ve done this math and I’ve looked at a sales sales plan, a comp plan, and I’ve kinda, like, you know, dug through it, you know, and and, like, the healthy ones, it’s like they’ve all hit they know what the number is. Right? It’s like they’re gonna they’re gonna pay 20% of, you know, gross profit in terms of, like, sales. You know? I I mean, 20% just seems to be like the magic number that every and, like,
Steve: 01:13:56 when Yeah. Basic principles. Right.
Max: 01:13:58 Unpack this stuff, any kinda math that you work out, like, oh, we’re paying an SDR based on an MQL or an SQL or, like, meeting set or whatever the thing is. And, like, still get back to the same point, which is like, we know what our percentage is. And I’ve kind of always wondered of, like you know, you were talking about gross gross profit earlier of, like, why don’t more companies just do this? Just say, hey. Look.
You know You know, if you’ve got somebody who’s motivated by I wanna make as much money as possible. Like, it’s pretty easy to figure out. I think so. Like, I’m not I’m not that person. Right?
Like, I fit in this other category. I’m way more driven by, like, oh, man. I just like, even if you don’t get a pat on the back from, like, the the client, but, like, knowing, like, I just did something that is gonna be that’s gonna make the difference for this company. And, like, when it actually clicks in, the people that it’s gonna matter for aren’t even gonna know I was involved. Right?
Like, it’s so far removed from, like, you know, that kind of thing. And and and a lot of those lot of those times, it’s like, I’m gonna make a I make a do very well. Right? I’m gonna make a killing off of that. But, like, it’s not like, oh, great.
I’m gonna go out and buy myself a car. You know? Like, it’s not, it doesn’t it doesn’t connect that way. So, I mean, I get what you’re saying with that, but, like, at the same time, the income is a byproduct of success. Right?
So if you are successful, your income should increase. Like, you should have, like, the bank account to show that, like, you have done good work. So how do you connect this and give that back to, you know, your sales team of saying, you, you know, you are really good at your job. We’ve made a ton of money off of you. You know?
Yeah. You’re driving a Corvette that we paid for or whatever it is, or we’ve given you Rolexes, but, like, like, how do you actually connect a sales plan and variable comp back to, you know, GP in a same way that’s not quarterly motivated, that’s not, you know, all these evil things.
Steve: 01:15:46 So if you know, okay, to cover this person’s nut, right, they have to do a million in sales. Let’s just say that’s your math. Right? You’re All in OTs 200 grand. Are they gonna do a mill or whatever?
Just say that’s the case. And we know we need them to do a million. Let’s say that’s the case. How do we ensure that they have the best opportunity to generate a $1,000,000? Well, what I can tell you the answer is not is you need to do a $1,000,000 and if you don’t, you’re going on a pro that is not what will generate the million.
Wanting them to generate a million, yeah. That don’t work either. Them writing a $1,000,000 on their mirror, that don’t work either. And having them fill out a big happy Gilmore check. What do you wanna write this year in business?
I’m gonna put this on my wall and do a vision board. That don’t work either. So what does work? Investing in them. If you had to have somebody build a house on a cliff for your family and it’s on the cliff and you have to live on this cliff, who do you want building the house?
I mean, it’s no different. Yeah. And but you have to find the person and you better make sure they’re trained, bonded, you know, all the rest. But we don’t do that with our salespeople. Like, if I want my salesperson to sell a $1,000,000, I’m going to teach, train, coach, invest, role play, practice, inspect what I expect, do it again, monitor, encourage, support.
That’s not done ever or in very rare cases. And then companies are mad that the person didn’t write a $1,000,000. That’s where all the effort and time goes.
Max: 01:17:49 I mean, just thinking about that from, like, oh, you’ve just been hired into a company, and you’ve gotta go sell a $1,000,000 with a fill, you know, blank, right, in order for you like like, that kinda number, like, to me, like, immediately doesn’t elicit, like, oh, I’m gonna go out and sell a $1,000,000 and maybe hugely successful. But at the same time, if I went out and sold a $1,000,000, show me the money. Right? Like, there’s so how you know, again, we’re talking about, like, how do you design this? So now you’re a healthy organization.
You know? You’re you’re doing DPIs. You’re bringing training. The training isn’t like, hey. Here’s how you conduct an effective demo.
You’ve got, you know, you’ve got the ability to do, like, coaching and, like, stuff. It’s you know? And, like, again, you tools or no tools. Right? Whatever it is.
Right? Yeah. But then you say, okay. Great. You know?
Steve, you know, you’ve you’ve you’ve you’re you’re here you’ve been here for 9 months now. You know? You’ve you’re hitting your stride. Right? Like, this isn’t we’re gonna show up and give you a Rolex.
Right? This is like, how do you design a comp plan? You know? Because, Steve, you came in and you said, hey. I’ve got money in the bank.
I’ve got, you know, health care for my my partner. I don’t need this stuff. What I want is I wanna what is the lowest base that you can give me? Oh, you’re legally required to give me $24,000. I want $24,000, and I want I want a piece of everything I do for you.
Like, how do you how do you build that comp plan for that personality?
Steve: 01:19:07 So here’s the this is really the whole thing. If you don’t know who that person is, you can’t build the comp plan. Again, if if I’m making you a dinner for you and your wife’s anniversary, I’ll probably need to know what you like to eat. I should probably know whether or not you’re a vegetarian and have any food allergies.
Max: 01:19:35 Right.
Steve: 01:19:36 I’m not going to cook what I want. And so if a organization does not have this data, how could they possibly come up with a meal to satisfy their person? That’s why to again to go back to it, I wish I owned it, I don’t, but that’s why we use sales DNA. We can tell you in 5 seconds are these people extrinsic, intrinsic, altruistic? What do they love to do every day?
What are they good at? And we can craft DPIs around those skill sets and or craft the comp plan around what they want and what they’re driven by. When you do personality the decline.
Max: 01:20:18 But when you do personality tests, you know, assessments. Right? And this is a personality test. Right. But this is a again, I I’m my brain works by, like, really crude associations to some degree.
Right? So it’s not a personality test, but it’s an assessment that’s, you know, like, you would you would take and say, okay. This is the sales version of a personality assessment to some you know, so that way you can you can put somebody into, you know, how how does this person actually group. Right? You know?
Because what you’re looking for is you’re looking for indicators that’s gonna group, you know, your sales team into a, you know, some sort of category. Like, I know more about this person now because they fit into this behavioral pattern. Right? And this is what’s gonna motivate them. And so I don’t know.
I haven’t gone through the sales DNA. I probably should do it. But, like
Steve: 01:21:00 Sort of. That’s the motivation piece. Okay. That’s just superfluous. That that that is just a tiny piece of understanding what drives them that will not lead to their success.
What leads to their success are understanding what’s living in their brain. If they need to be liked, if they’re uncomfortable discussing money, and if they can’t recover from rejection quickly, it’s irrelevant what their motivation style is. This is why personality tests are useless. It doesn’t mean anything. So it’s a it’s a piece of it when I start with the right dude and I know right what this guy is going to be able to accomplish.
And it’s using the knowledge that’s deeper in terms of what drives him to be successful. Oh, he likes nice cars. Right? I’m just making sure he he like cars, right? Okay, dude.
So we’re going to talk about what we need to accomplish here as a company. We do this through these DPIs and so on. If we do this, we pretty much know you’ll end up around here. What do you think? I know you’re new here.
What are some of your goals and thoughts about what you could accomplish? Well, you know what I hadn’t thought of is I think I can build a relationship with with whatever, Poland Spring. Cool. So how are you going to do that? Well, I think I can do this.
And they’ll come up with some other ideas or DPIs that they want. I want to do trade shows. I want to do podcasts. I want to do whatever. Okay.
Cool. So he or she comes up with some kind of goal or metric or something. It’s not you assigning it to them. And he says, You know what? I think I can do 2,000,000.
You do. 2,000,000. And our expectation is 1,000,000. Yeah, I think I can do 2. Cool.
You do 2,000,000 I’ll get you a lea I’ll lease you a Porsche for a year. Pick whatever one you want, whatever model. Because you know the guy likes Porsches because you found out about him in the interview. That’s just one small thing. Other people it’s vacation time.
There are people that haven’t taken vacations in 6 years, right? Or because of COVID they wanted to go to Disneyland and couldn’t go. So it’s it’s the intimate knowledge of knowing your people and spending time with them when they first start working with you, which people don’t spend that time. They’re just looked at like a number. That’s why they don’t over perform.
Half of people hit their quotas. Half. So For a reason.
Max: 01:23:38 So I I know what you’re gonna answer, but I’m gonna ask you this question anyways. Is this actually scalable on a one to one basis for a sales organization? Right? You because what you’re talking about is, you know, I’m gonna sit down. I’m gonna I’m gonna do my job as your sales manager.
Right? And and now we’re really talking about sales leadership. You know? You’ve got managers. You’ve got directors.
You’ve got a VP. You’ve got a you know, whatever the hierarchy of your sales organization is. But I’m gonna do my job as your sales manager, and I’m gonna understand that you, Steve, more than anything else in the world, want a yellow gold, blue dial, blue bezel Submariner. Right? Yeah.
Like like Yeah. Like, you’ve wanted this thing since you were a 12 year old child, and this is like this is like you’ll never buy it for yourself. You know? Even if I gave you a check for $40,000, you would not go to the Rolex store and buy it. Right?
But, like, this is it for you, and I know that. Yeah. Obviously, if if you crushed it and you came back and you said, hey. I hit this 2 you know, whatever it is, and I dropped off, you know, I and I I gave you, like, a first off, you’d have to be able to source the freaking watch because that’s a different game right now. But, like, you know, gave you this as a you know, like, you you we we have a great relationship in terms of, like, you know, the business.
But is that scalable for companies to deal with and say, you know, we’ve got 20 sellers. Okay. 10 sellers, you can do it. We’ve got 20 sellers. We’ve got 30 we’ve got 500 sellers.
We’ve got a 1000 sellers. I mean, it feels like at some point that breaks down, and, like, a Salesforce can’t implement this just because they’re not geared culturally to come after this. And is there a different way to go about this where we say, hey. Look. You know, as a first step, I’m not gonna figure out, like, that you want the Rolex, but I’m gonna give you the option of saying, I want a high base with very low comp based on GP, or I want a really low base with really high comp, and I’ve got, you know, scales of versions a, b, or c.
And you, see, if you get to I’m gonna sit down with you. We’re gonna have a conversation, and you’re gonna look at the menu, and you’re gonna say, I want c. That’s what I want. Right?
Steve: 01:25:41 Correct.
Max: 01:25:42 So Yeah. And and and is is that is just doing that giving you a better a leg up in the market of having a better culture and environment for your sales team?
Steve: 01:25:51 100%. And when people always ask, well, is it scalable? I always go back to if if you had a a camera that followed a sales manager around every day, your head would fall off at the unbelievable lack of productivity. That is a sales leaders job. You are to lead the salespeople.
That’s what you should be doing every day. Most of them don’t do that. They’re not trained to do it. They don’t know how to do it. Sales managers get the least amount of coaching and training of any level in a sales organization.
But I will go back to let’s take Chick Fil A, right, which, you know, is part of the best example, right, of a franchise, right? They make 2 and a half times, right, what McDonald’s and frickin’ all those other ones make. But they started not with 10,000. 1. So it’s the same question I would ask a corporation.
Well, how do we scale? Get it right for these 5 people, then hire a another sales leader to do the same thing, then you hire another one, then you hire another one. But if you don’t do it right the first time, it will never scale. Right? It’ll never get there.
Max: 01:27:13 Sales suffers from the same thing that we see in tech all the time, right, where the leaders, the managers become people that were successful in in, you know, individual contributors. So you have a really good engineer. You have a really good salesperson. You have somebody who’s a really good IC at that role, and it’s like, oh, you’re a successful you’re a successful salesperson. Boom.
You’re the sales manager. Right? Like, when you talk about, like, stuff that makes my skin crawl, like, I am not a like, that is not I like, I don’t wake up in the morning and be like, gee. You know, I’m looking forward to, like, going out and managing people. Like, it’s just it’s not how my brain is wired, but, like, I see this over and over again where companies are promoting people just because they’re good at the job.
They’re like, well, obviously, you’re gonna be good at managing other people at the job. So you you know, like, this is gonna be great for us.
Steve: 01:27:56 No. This is important. A a good important topic to end on because we talk about this all the time and they go, well, you know, Michelle was good at sales. So what are you talking about? They don’t make flight attendants to pilot.
But this is a huge mistake that companies make because they equate while they’ve been here and they’ve sold that so automatically, there’ll be a good coach, good teacher, whatever. And it’s cannibalizing organizations. Because you take your best person out of sales, put them in charge of salespeople they don’t want, they think they want to be a leader. Then when they find out that it’s different work, they go, I want to go back into sale. I mean, it’s just a major headache.
And so it’s not impossible to find a great salesperson who became a great leader, but it’s less than 10% of the time. They have both skill sets.
Max: 01:28:46 Last question for you, because this contradicts something that you said earlier, which is, by definition, if you’re trying to hire good managers, they’re not necessarily good salespeople. And so this idea of they don’t have experience actually doing the job is not necessarily a negative as long as they are trained and understand how to manage, lead, and incur you know, encourage and develop salespeople doing the job. Right? So, like, you know, it’s it’s again, it’s this example of, like, not all salespeople become good sales managers, and not all good sales managers were good salespeople. Right?
Like, it’s it’s 2 different jobs, like, very drastically different different realities of people.
Steve: 01:29:27 2 different jobs, 2 different tests. That’s why we have sales manager DNA and salesperson DNA. Completely different tests, completely different metrics. When we train and coach organizations and we train and coach salespeople and sales leaders, completely different curriculum, completely different everything. Bill Belichick’s never played a down in the NFL.
It doesn’t mean anything. But could he are there coaches that were good players? Yeah, but there are a ton more magic johnson’s who are unmitigated disasters, right? As coaches, right? Best point guard in history, worst coach the Lakers ever had.
So you have to be able to identify and and and understand what tools, traits, and styles people have to be able to take on that role. Sometimes they do come from the sales ranks, but oftentimes it’s not somebody who was the top performer. And that’s across every sport in history. Look it up. Very few people like Michael Jordan are great coaches.
Very few.
Max: 01:30:37 Steve, next time we do this, I’m gonna schedule, like, 4 hours, and we’re gonna do it in person, and we’re gonna have some kinda alcohol, and we’re gonna get really crazy with this. But in the meantime, I’d say thank you very much. This is fantastic. I can I mean, I
Steve: 01:30:51 Thanks, man?
Max: 01:30:52 I I I really do think that this this applies to so much more than just sales. I mean, because what you’re talking about at the core really is organizational health and, like, how do you approach building a company and an organization at at different levels. Right? Because you can a lot of what you’re talking about, you can apply to your finance team. You know, you can fly to your operations team.
I mean, this this not Yeah. What motivates people and how to take care of them isn’t a sales only centric thing. And, you know, the more the more I think people really understand this and and get into this, probably the better off we’ll all be collectively.
Steve: 01:31:28 Yeah. Thanks, man. I’m excited. I’m always happy to talk about this stuff. And, again, half the peep think I’m nuts which is fine, right?
That’s good because I think they’re nuts. So what I do know is that if you keep doing what you’ve always done, how could you possibly expect, right to grow and scale and expand beyond your horizons? It just doesn’t make sense to me. So sometimes hey we know what you’ve tried has accomplished this. What’s the worst that happens?
Let’s try this. And if it sucks you can go back to this. But it’s being willing right to take that risk. And what do we really lose? Nothing.
But what can we gain? Everything. Awesome. Thanks, man.
