Within the sales ops department, we often spend a lot of time diagnosing problems. When something goes wrong, we’re the ones who figure out why.
In these situations, it’s really tempting to go with your gut instinct or your first hypothesis—especially if you find correlating data that seems to back up your initial thoughts.
But you absolutely must remember that “correlation is not causation.”
Need proof? Check out the Spurious Correlations website. There you’ll discover that per capital cheese consumption correlates with the number of people who died by becoming tangled in their bedsheets each year. Also, the graph for the divorce rate in Maine lines up almost identically with the graph for per capita consumption of margarine.
Now as much as we’d like to believe that believe that eating less margarine is the secret to a happy marriage, the truth is that what you put on your toast has almost nothing to do with whether or not you reach your twentieth wedding anniversary.
Unfortunately, within sales ops we often run into similar correlations that can lead us to mistaken conclusions. And in B2B sales, it can be much more difficult to know whether or not you have identified a true root cause for a particular problem.
For example, we know of a company that was experiencing a huge variation in the price paid by customers on very large deals. An initial analysis revealed that most of that variability could be traced to the individual sales team members involved. A couple of reps were getting consistently low margins, while a couple always seemed to be exceeding the target prices.
The knee-jerk reaction in that situation is to assume that the salespeople are the problem and fire the low performers. But in this case, the sales ops team kept digging.
They discovered that the high-performing salespeople had all received negotiation training at some point in their careers prior to getting hired on at the current firm. The low performers, on the other hand, hadn’t had that training.
The true root cause of the price fluctuations was that some of their salespeople didn’t understand negotiating tactics, so they were falling prey to procurement groups’ schemes. By adding a negotiation module to their sales training, the team was able to correct the pricing problems and improve margins for their high-volume deals.
In another example, a firm was experiencing consistently low sales in its western territory while its eastern territory exceeded their quotas every quarter. The sales ops team’s first hypothesis was that the eastern territory probably had more experienced sales reps. And in fact, that did turn out to be the case.
Fortunately, the sales ops team didn’t stop investigating when they found that correlation because it would have led them to the wrong conclusion.
One of the sales ops folks had the idea of layering a map of the total addressable market on top of the territory map. It turned out that 41 percent of the potential customers for this particular firm’s products resided in their eastern territory while just 12 percent of the market was in the West.
Given that information, the only surprise was that the revenue differences between the territories wasn’t higher. In fact, when they analyzed their sales reps’ performance relative to the market size, the highly experienced eastern reps weren’t the stellar performers they had originally seemed to be. The less-seasoned western reps were actually the ones working their butts off.
The obvious solution in this case was to re-map the sales territories so that they were more equitable and more accurately reflected the market.
Both of those examples come from our webinar Diagnosing Sales Problems. It’s a great place to start when you need a strategy for getting to the root cause of issues that have been plaguing your firm. And if you’d like more tips and advice, check out the research on Why Companies Lose or Win Strategic Sales. These resources can help you avoid laying blame on scapegoats and instead find long-term solutions that will help your sales team excel.
Diagnosing Sales Problems
Failing to identify the true root causes of sales performance problems often leads to a frustrating game of Whack-A-Mole. In this on-demand training webinar, learn how to identify and correct the real root causes behind sales performance issues.