Whether you call these elusive creatures “Purple Squirrels” or “Unicorns”, neither exist anywhere other than fairy tales and cartoons. No matter, this doesn’t stop tech companies from cycling through entire sales teams every 12 months or so and VP’s every 14-19 months depending on the available research.
“The situation has reached epidemic proportions,” warns Dave Stein, CEO of ES Research Group, an independent authority on sales-training programs and sales methodologies and tools. Stein says he’s seen tenure (for VP of Sales) as low as 19 months – barely more than six quarters. “That’s three quarters trying to ramp up, two more of waiting until things get better, and one last quarter for executing the exit strategy,” he says.
Real World Enterprise Sales
Based on my own experience as an Enterprise Sales Executive, many of these sales cycles take a minimum of six months to 18 months. Oftentimes at least three different sales representatives have worked the deal during past sales team iterations and a minimum of two VP’s of Sales. Much of this is fueled by unreasonable sales expectations from the C level down, precisely because they are 1) feeling pressure from VC to hit specific sales milestones 2) the market just isn’t that into your product or you’re in a saturated space 3) it simply takes more time to sell an enterprise level software solution to large clients.
The Pareto Principle
The Pareto Principle is very simple, yet very important. It is named after Italian economist Vilfredo Pareto, who, in 1906, found that 80% of the land in Italy was owned by 20% of the population.
What was most important about Pareto’s finding was that this 80/20 distribution occurs extremely frequently. For example, in general, 20% of your customers represent 80% of your sales. And 20% of your time produces 80% of your results. And so on. This same 80/20 principle applies to sales teams and high level managers. Logically, only 20 percent of all the available candidates on or off the market fall within this 20 percent of top sales performers – which means 80 percent of the available talent pool is considered less than exceptional.
Many CEO’s blame the various iterations of VP of Sales for why sales teams aren’t meeting their quota. They claim, “If the Vice President of Sales was any good, the right software sales people would follow.” In my experience this theory is flawed. Very possibly the VP wasn’t to blame, though that VP of Sales wasn’t the only one attempting to recruit those great sales people; your competitors want them as well. Also, there are a number of reasons why that top 20 percent is successful, one of which could be as simple as their assigned territory or accounts.
- The average tenure of a sales person from the time they start a job to the time they leave is less than 2 years (Sales Readiness Group).
- The average tenure of a sales manager is 19 months.
- 47% of companies say it takes 10 or more months for new sales people to become fully productive (67% are 7 or more months)(CSO Insights).
- 58% of reps make quota (CSO Insights). Based on what I’ve personally encountered that number seems a bit high.
Taken together they present a frightening view of selling and the cost of sales. Basically, employers have to make money from a sales person in a little more than a year. That is, to get a return on investment in hiring and onboarding someone-who takes 7-10 months to become fully productive, but who will probably leave within the next 14 months; companies will need to have them produce at least 2 years worth of business within just 14 months!
But it gets even worse. That sales person is probably on their second manager, who takes some time to ramp and become effective as a manager. Continuously shuffling the deck with new VP of Sales and/or entire sales teams is ineffective…period!
There is no such thing as an entirely perfect candidate nor “Purple Squirrel.”