What, you didn't read the first post? I said this has been niggling at my mind for 15 -17 years! I know it has been several months since I promised the continuation but A. Life Intervened and B. I wanted this topic to be understandable and usable. Had to think about it some more. A couple months more shouldn't have mattered?
Truth is I feel a little guilty about not finishing this earlier and I know there is a certain relationship we have that says I will post regularly and I haven't. Maybe it is just me. If not I hope you will accept my apologies. Enough housekeeping. Lets talk about sales.
Our last conversation defined the value of indexing complexity as 3 things;
- If I know how to deal with the complexities of my selling environment than I will have an easier time and be more successful in my efforts
- If I am hiring sales people, or being hired as a sales person, matching experience regarding complexity will save a lot of time and frustration, as well as dollars for everyone in the longevity of that sales position.
- If I am selling in multiple environments, being able to categorize, and adjust to varying levels of complexity will allow me to more effectively relate and excel in those environments.
In all three cases the values have a direct impact on dollars for the seller, time to revenue and quality of life. Pretty good reasons in my book to get a handle on this.
We further discussed that indexing complexity served not what you do and when, but rather why you do those things. Sales Process is for what you do and when.
Finally, we talked about what are the three things I can think of that are the roots of indexing complexity;
- Length of the sales cycle
- Dollars in the deal
- Choosers Participating
Each of these elements plays a separate and distinct role in determining who is suited to sell in that environment and what is necessary to be successful. Partially this is because of the amount of impact the sale has on the buyer and partially it is based on how well the seller relates to the buyer.
Length Of The Sales Cycle goes back to the conversation about choosing to buy dessert after a meal versus choosing to buy a hydro-electric generator that goes in the bottom of a dam. Pretty much the extremes on the scale. LOSC would also include a weighted value for how many calls it may take to finalize a decision. Calls may include developing a relationship or gaining information to properly present a solution. The formula for developing the index on LOSC would be increments of time, times number of calls necessary to gain a decision to move forward or not.
I believe it is important to use a standard time increment and for that purpose, the Solomon Sales System has adopted a week as the standard increment. Longer periods are expressed as whole numbers and shorter periods are expressed as fractions. More important than the increment itself is the database of standards to compare against and I maintain that database for several organizations.
So an example would be a standard sales effort that takes a half week and 3 calls would have a number of 1.5. Rounded up that is a complexity number for LOSC of 2. The example of the hydro electric generator which I know was 3 years or 156 weeks times say 43 calls would be 6708. For our purpose that is way to large a number to use effectively and I round it to the nearest number between 1 and 99. In this case, 99.
Right now then we have a Complexity Index of, CI:99-?-?.
Dollars In The Deal. The next item to figure out is the number of dollars in the deal. This is less a figure based on how much someone charges for their product and more based on what percentage of the monthly financial revenue of the buyer does the sale represent. So buying a house for example, the number of months it takes someone to earn money to pay for the house (not the mortgage, the entire price of the home) is a representation of the impact of the home purchase on the buyer. A 500,000 dollar home will take 58 months for someone earning 100,000 dollars a year if all their income goes into the purchase. It will only take 12 months though if you earn 500,000/year. It doesn't matter if the buyer is a person or a company, each has their monthly revenue as an impact determinator. It is important to recognize that we are indexing this for the purpose of equating sales skills or experience to the standard buyer. If we are a Realtor selling to both low end and high end homes, than our skills need to encompass all those products.
Again, we can use a number from 1 to 99 and rounding to the nearest whole number. The example of 58 for dollars in the deal, along with the unlikely number of 2 for the sales cycle would give us our new complexity index. CI:2-58-?.
Yes I know, this is very complex, and you have to wonder about now if it is worthwhile. The answer is in many cases yes and in many others, maybe not so much. It is excruciatingly valuable if you are responsible for the revenue of your company and hiring the right team to bring that revenue in. (I would accept however, your emphasis on the excruciating part.)
Finally factoring in the choosers completes the index. Choosers is a number based on the total number of people who can say yes OR no times their responsibility to the individuals/families/companies greatest ROI. Again going back to the buying units annual revenue, who in the choosers group has responsibility for the greatest amount of income to the unit? What percentage is that of the annual revenue for the entire individual/family/company? Using that percentage, DIVIDE by the number of choosers who can say yes or no to the choice.
In our home-buyers example, 2 choosers with responsibility for 100 percent of the families revenue would be 2 divided by 1, or 2 as the value. It is important to know that smaller number is the least complex in this element. Again, round to the nearest number between one and 99 and god help you if you exceed 99.
Our new Complexity Index in total than reads like this, CI:2-58-2. This indicates a short cycle, financially impactive, not too complex sale cycle. If this is the standard for your sales organization, than you will want to hire people from any sales background that have been quick, good with pressure and dollars, and comfortable with smaller groups of people.
What we have effectively done is taken very complex human and financial scenarios and reduced them to a numeric value. The numeric value can be translated across multiple products and services and let you know whether the person you are intending to hire or work with has the skills, emotional intelligence and maturity to deal in this market regardless of their previous background.
This for me though is a work in progress and will one day be relegated to a computer program. Far too difficult to work with on a daily basis, it is nevertheless, an important component in hiring and education for successful sales teams.
Respectfully, (and mentally exhaustedly) submitted,
Michael D. Goodman
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