The Wells Fargo Scandal and Setting Quotas

What can salespeople learn from the Wells Fargo scandal?

First, a recap

At this writing, the Wells Fargo CEO John Stumpf has resigned. His departure comes after it was revealed that the bank he managed was fined more than $185 million for allegedly opening more than 2 million bank accounts or credit cards without people’s knowledge or consent.

stressful salesperson trying to meet quotaThe fake accounts were opened because salespeople were under pressure to meet cross-sell quotas. Each salesperson had to cross-sell at least 8 accounts per customer. If they didn’t achieve their goals, they were fired.

Or, as Senator Elizabeth Warren (D-MA) said at a Senate hearing last month to Mr. Stumpf – “You squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket.”

So what’s the lesson here?

Answer: Don’t create unrealistic quotas.

There is nothing wrong with quotas, per se. You want to motivate your salespeople to achieve their goals. And frankly, most salespeople want something they can shoot for. It makes the job more interesting and exciting. From a company point of view, you want to drive revenue. What better way of doing that is by putting a carrot on the stick, and encouraging salespeople to chase after it.

The problem occurs where you create quotas that are so unrealistic or aggressive, that salespeople are forced to lie in order to survive. In the short-term, salespeople will keep their jobs, but in the long-term, the scam will be discovered and people will be fired. Not to mention having your company’s reputation torn to shreds.

For example, I once worked for a publishing company that sold printed bid information to construction companies (this was before the internet was popular). In order to get a complete order, the customer had to sign a contract. So you would fax the contract to your client. Get his signature. And then that’s it – a new customer! Nothing wrong there. This is a standard practice for a lot of publishing companies that sell premium information services.

However, one new salesperson felt he couldn’t reach his quota. I’m unsure why this was the case. Maybe he didn’t receive the proper training, maybe he was lazy, maybe he wasn’t confident, maybe he felt the quota was too high, but for whatever reason, he decided to lie. He gave his manager contracts with fake signatures. Eventually, the home office caught on when they started receiving a lot of complaints from angry customers. The salesperson was terminated and his manager was reprimanded.

Setting quotas isn’t rocket science. But sometimes you feel like you have to be a rocket scientist to set quotas.

Eight is GreatThe problem with Wells Fargo was that there was no method to their madness. The “Eight is Great” goal of having customers sign up for eight products made no sense.

Why “Eight is Great” – because it rhymes? Really?!? You must be joking. But that’s how Wells Fargo decided to set their quota for low paying, overworked, stressed-out salespeople who had to grind out their numbers or get canned.

Is that anyway to work?

No.

So how do you go about setting sales quotas?

Opinions vary.

Some say don’t have any quotas. But if you don’t have any quotas you’re only going to encourage laziness among your sales team. Or worst, you’re going to attract poor or mediocre salespeople who don’t have an incentive to make a good living. You know the type – they come to work late, take long lunch breaks, play computer games at their desk, and only make enough sales calls to barely break even.

The other problem with working without a quota is that salespeople have no power. Think about this for a minute. If you don’t have a quota, then it’s going to be very difficult to persuade your boss to purchase tools to help you sell better. From your boss’s point of view, why should he invest money into his sales team if they don’t have any quotas to meet. Don’t like using Excel spreadsheets to manage your accounts? Too bad. He’s not going to purchase Salesforce.com to help you.

See my point?

So if having quotas is the answer, how do you set them? Here are some suggestions –

1). Get salespeople involved. Quotas shouldn’t be handed down from Mount High by an out-of-touch CEO or the Finance or Marketing Team. You need to get input from your sales team and their management. Since salespeople are serving on the front lines every day, they usually have a better sense of the market, their customers, and their competitors.

2). Not all salespeople are created equal. Each salesperson has his own pipeline and defined territories or market segmentations when it comes to selling. As a result, not all territories or market segmentations are going to be equal. Depending on what you’re selling, some territories may have more prospects than others, and some market segmentations may have more money than others. For example, a salesperson selling to academic institutions may have a tougher and longer time to close sales vs. another salesperson selling to for-profit companies. A salesperson selling in California is going to have an easier time finding a lot of prospects compared to someone selling in Maine.

3). History is not always a good predictor for the future. Times change. Market conditions may be worse now than ever before. You are fighting against more competitors. The quality of your products or services was recently rated badly by an independent publication. The Marketing Department isn’t providing the high quality prospects that you obtained last year. For whatever the reason, past performance doesn’t always equal better future results. Take a hard look at your data before setting quotas. Just don’t come up with an arbitrary number and expect everyone to meet it.

4). Consider using sales forecasting/quota setting software. Rather than come up with “pie in the sky” numbers, why not use software to determine quotas.

Here are some examples of what’s on the market –

Anaplan
Xactly Quota & Territories
Optymyze
eSalesTrack
IBM Quota Management

To help you further, here are some helpful articles about setting  quotas –

“Tough Truth about Quotas,” by Renee Houston Zemanski
“How to Use Sales Metrics to Set More Accurate Quotas,” by Cara Hogan
“Sales Operations and Quota Setting: Use the Right Data,” by Joseph Schroeder

Whatever you do, please don’t base your sales quota on how it rhymes. Because if you do anything illegal or unethical, your next rhyme may be —

“I’m in jail, where’s my bail?”

Note: If you like my post, please read my book Advice for New Salespeople: Tips to Help your Sales Career.

Should you forget Sales Quotas?

Quotas. The “Q word” in sales.

Some love the challenge of achieving quotas while others hate them.

Quotas can make or break you. In most cases, if you achieve or exceed your quotas, you will earn higher commission checks. If you don’t meet your quotas, in most cases its goodbye job and don’t let the door hit you on the way out.

racing to achieve your sales quotaSome complain that quotas are too high and unrealistic – and they may have a valid point. I’ve seen cases where more than 50 percent of salespeople are fired or just quit because they don’t meet their quotas. The turnover in some sales departments is so high, that they constantly having to hire and train new salespeople Very costly.

While I don’t offer a solution to helping you meet your specific quotas, I do have a suggestion that could help.

Below is a great video from YouTube from Reggie Rivers at TEDxCrestmooreParkED. Mr. Rivers, a former Denver Broncos Running Back, speaker and author, makes the argument that if you want to achieve your goals, don’t focus on them. Now, I know what you are thinking – this is beginning to sound like psycho babble. But hear me out  – what Mr. Rivers is suggesting is that you focus instead on changing your behaviors in order to achieve your goals.

Let’s say you have a monthly or quarterly quota to achieve. You are anxious. You are worried that you are not going to make your numbers. You get stressed out. You complain to your co-workers. You procrastinate.

Why? Because you are focusing on the quota. What you should be doing is focusing on how to improve your behavior to achieve your quota.

Let me give you some examples –

1). Rather than coming to work on time, why not come to work 20 minutes early to start making phone calls to catch decision makers before the gatekeeper arrives.

2). Rather than make 50 calls a day, why not push to making 60 or 70 a day.

3). Rather than leave work on time, why not try staying a little later to catch decision makers after the gatekeeper leaves.

4). Rather than ignore the advice of your sales manager, why not sit down with him on a one-on-one meeting and map out a plan on how you will achieve or exceed your quota.

5). Rather than envy the better salespeople, why not ask them if you can sit in on their conversations and listen to how they work the phones.

6). Rather than sending long emails that no one is going to read, why not send shorter and more concise emails that a prospects may respond to. (More people than ever are reading emails on their mobile devices than on their desktops).

7). Rather than do administrative paperwork throughout the day, why not set time aside to perform that work so that you can focus more time on making sales calls.

8). Rather than just repeatedly make call after call, why not spend about 3 minutes quickly reviewing your prospect on LinkedIn to ensure you are actually calling the right person.

9). Rather than rewrite the same email each time, why not create templates of emails to send that you can customize on a case-by-case basis.

10). Rather than bitch about the bad prospects you are receiving from the Marketing Department, why not find your own prospects from Data.com (formerly Jigsaw), LinkedIn or other sources. (I actually bought prospects out of my own pocket in some of my previous jobs in order to increase my sales). Do you see my point?

If you have a quota to achieve, don’t panic. Sit back. Relax. Review your sales process. Create a list of ways you can quickly improve your behavior. Then go. Move forward.

Sounds easy? No, it’s not. It takes time to change your behavior. Don’t try to do everything on at once. Take it in baby steps. As the old saying goes, the first step in achieving your goals is to take the first step.

So take it.

Below is Mr. Rivers’ video presentation from YouTube –

 

10 places to find sales leads

prospecting for sales leadsFinding sales leads or prospects is much easier today than when I began in sales. I literary had to use the Yellow Pages at one point in my career. Needless to say, I wasn’t very effective. Now with the internet, you have a much easier time finding leads. The real challenge is making sure you are using your time wisely to prospect and find the right leads to call on.

Below is a list of sources  to help you –

1). Industry newsletters – subscribe to as many industry newsletters as you can. You can always find leads to contact. Most newsletters are free.

2). Live Chat – set up a Live Chat box on your website. Sometimes people are shy about calling your directly, so at a spur of the moment they will send you a Live Chat to ask questions or obtain quotes.

3). Trade Shows – rent out an exhibit booth at a trade show. If you can’t afford a booth, consider speaking at a workshop or sign up as an attendee and make the rounds – both during the trade show and after hours at social events.

4). Customer Referrals – hey, if your clients like your products and services, it doesn’t hurt to ask them for a referral. You may want to consider offering a discount.

5). Good Marketing Content – providing useful content on your website will encourage prospects to visit your site, and hopefully, they will download your material and provide you with contact information, e.g., name, email address, phone number.

6). LinkedIn – since LinkedIn is a professional site, you should be able to find plenty of prospects to contact. Also, target discussion groups within your industry – there you should find a lot of potential buyers.

7). Twitter – you can find prospects by seeking buying signals. For example, if you sell bike accessories, type in “bike accessories” under search to see if someone is trying to buy those items. Or, look for a hashtag like #bike accessories.

8). Your Competitor’s website – believe it or not, many companies list their clients on their website. Big mistake. You may think you are impressing your clients and potential prospects, but all you doing is giving your competitors a list of your clients to contact.

9). Paid Lead generating tools – Below is a list of the most  popular ones:

Sales Genie (from Infogroup, Inc.)

InfoUSA (also from Infogroup, Inc.)

Hoover’s (from Dun & Bradstreet, Inc.)

USAData, Inc.

Data.com (formerly Jigsaw from Salesforce.com)

RainKing (used in the IT industry)

DiscoverOrg (used in the IT and Finance industries)

10). Your old expired trials or clients – Just because you haven’t heard from your expired trials or clients for a while, doesn’t mean they may not be interested in ordering from you. Give them a call. Drop them an email. Who knows, they may be glad to hear from you. Maybe they now have budget to make a purchase. Maybe new upper management came on board and now they are interested in speaking with you again. It can’t hurt you to swing back and see if they are interested again.

I hope the above list helps. Please let me know if you have any suggestions.

Three (3) ways to distribute leads to your Sales Teams

If you have been in sales for a while, you know that sales leads are usually distributed to sales teams in three ways. Each way has its advantages and disadvantages.

1). Geographic territory: States and/or countries are assigned to salespeople. You are responsible for prospecting any leads in your assigned area. In addition, any incoming leads from your location are handed over to you. Sometimes lead transfer can be a little sticky, especially if you are dealing with large corporations with several global locations. In most cases, where the corporation is headquartered is usually the determining factor in whether that lead is assigned to you or another sales person. In addition, I once worked for a small publishing company that actually assigned “fenced off” accounts, i.e., large national accounts would be assigned to other salespeople even if some of those accounts fell into your territory.

2). Market segmentation territory: Rather than assigned leads based on geography, you are assigned leads based on specific market segmentation. This type of distribution is common if you work for a large corporation. Examples would include law firms, academic institutions, nonprofit organizations, federal and state governmental agencies, etc. Sometimes market segmentations may be broken down further by employee size or estimated revenue. For example, one group of sales people may be responsible for Fortune 500 companies, while others may be responsible for Fortune 100 companies, and so on.

3). Round Robin: This process appears to be most common in start-ups or small companies. Under Round Robin, leads are assigned to the sales team on a first come, first serve basis regardless of size or geographic territory. Usually the sales manager oversees the process to ensure fairness. Sometimes the sales manager may use his discretion to fall out of the Round Robin process and assign specific leads to salespeople he feels will have a better chance of closing the sale. For example, you may have someone who has experience working with financial institutions, or someone else who has experience working with automobile companies.round robin leads

During the Round Robin process, if your lead bucket is too full, a sales manager may temporarily suspend you receiving more leads until you close more sales, or put leads on a back burner to contact them later.

Lead distribution is always a touchy subject. While there is never a full proof way of handing out leads, salespeople need to be reassured that leads are being distributed fairly.

Please let me know if you have any comments or know of other ways leads are distributed.