This document discusses analyzing sales team performance using utility analysis. It summarizes: 1) A sales team of 10 people is ranked from top to bottom performers based on annual sales. They are divided into three tiers: top "star" performers, middle "so-so" performers, and bottom "passenger" performers. 2) The average sales for each tier are calculated as $1 million for stars, $667k for so-so, and $400k for passengers. Hiring passengers instead of so-so costs $267k annually per person. 3) Raising passenger performance to the so-so level could increase total annual sales by up to $1.33 million, an 22

1. The Real World: Analyzing Your Sales team

2. 51,300,000

3. About Your Team Let’s say you’ve got a team of ten salespeople… …each carrying a quota of $600K

4. Meet Your Team Carrie Kelly Simon Ellen Jordin Chris David Kara Taylor Ruben Total Sales Fiscal Year 2008 $6,000,000

5. But what if you analyze their performance a little more closely?

6. Utility Analysis – A definition “Utility analysis is a quantitative method that estimates the monetary value of benefits generated by any intervention based on the improvement it produces in worker productivity. Utility analysis provides managers information they can use to evaluate the financial impact of any intervention, including computing a return on their investment in implementing it” - Bernstein, Allen L. “A handbook of statistical solutions for the behavioral sciences”. New York: Holt, Rinehart and Winston.

7. Utility Analysis – Assumptions Employees generate results that have monetary value to the organizations that employ them Employees differ in the degree to which they produce results even when they hold the same position and operate within like circumstances The implication is that the level of results produced by employees in their jobs have different monetary consequences for the organizations that employ them

8. Process Overview Rank your salespeople – top to bottom Create 3 performance tiers Identify salespeople on each tier Identify average sales per tier Use this information to manage the business

10. Kelly $1,000,000

11. Simon $700,000

12. Ellen $700,000

13. Jordin $600,000

14. Chris $500,000

15. David $500,000

16. Kara $400,000

17. Taylor $300,000

19. Total Sales Carrie $1,000,000 Kelly $1,000,000 Simon $700,000 Ellen $700,000 Jordin $600,000 Chris $500,000 David $500,000 Kara $400,000 Taylor $300,000 Ruben $300,000 $6,000,000

20. Total Sales divided by three $6,000,0003= $2,000,000 per ‘tier’

21. Assign Salespeople to Tiers “Stars” “Passengers” Top Tier: Carrie $1,000,000 Kelly $1,000,000 $2,000,000 Middle Tier: Simon $700,000 Ellen $700,000 Jordin $600,000 $2,000,000 BotCarrieTier: Chris $500,000 David $500,000 Kara $400,000 Taylor $300,000 Ruben $300,000 $2,000,000 “So So”

22. Calculate Averages per Performance Tier

23. Tier Averages Stars Carrie & Kelly = $2,000,000 / 2 = $1,000,000 So-So Simon, Ellen & Jordin = $2,000,000 / 3 = $667K Passenger Chris, David, Kara, Taylor & Ruben = $2,000,000 / 5 = $400K

24. Use this information to manage the business Difference between a So-Soand a Passenger?

25. So-So Average: $667KPassenger Average: $400KDifference $267K …every time you hire a Passenger instead of a So-So it costs $267K …if you’d been hoping for a Star you missed by $600K (they average $1M) …but let’s keep it conservative and focus on moving Passenger to So-So performers

26. Use this information to manage the business Difference between “Star” salesperson and “So-So” salesperson?

27. “Star” Average: $1M“So-So” Average: $667KDifference $333K …every time you hire a “so-so” salesperson instead of a “star” it costs $333K

28. So what’s your loss fromhaving Passengers vs. So So? Remember, you had five: Chris David Kara Taylor Ruben So Passengers represent a loss of $1.3M ($266k x 5) in sales… …but what’s the premium for getting it right?

29. The ‘Getting it Right’ Premium What’s the premium if: Raise one Passenger to So-So level? $267K – total sales go from $6M to $6.27M (+4.4%) Raise two Passengers to So-So level? $534K – total sales go from $6M to $6.53M (+8.8%) Raise all Passengers to So-So level? $1.33M – total sales go from $6M to $7.33M (+22%) …and these are sustainable ANNUAL increases – not one-off premiums

30. The ‘Getting it Right’ Premium If we weren’t keeping it conservative you might ask: “what’s the premium if all are Stars”? Total sales increase by $4M from $6M to $10M (+67%) Annually!

31. The Dark Side This knife cuts both ways: Lose just one Star performer and replace with… …a So-So – costs you $333K (per year!) …a Passenger – costs you $600K (per year!) Lose just one So-So performer and replace with… …a Passenger– costs you $267K (per year!)

32. “So how do I…” Hire Star salespeople first time? Raise Passengers to So-So level? Raise So-So Performers to Star Performer level? Make sure I lose no So-So or Star Performers?

33. Assessment Performance Analysis Measuring Assessment Impact

35. Case Study

36. Productivity 2010 Production Tenure 4 – 15 months = 237 100%+ Quota – 81 = 34% +100% Average 178.6% 7 months average tenure -100% Average 43.1% 6.7 months average tenure Above Quota produce 75.8% more volume

37. New Pattern Analysis

38. New Pattern Analysis

39. Key Learning Points Every sales team has uneven performance – Stars, So-So and Passengers You pay dearly for So-So and Passenger level performance Your Stars share something in common – and that can be profiled That profile can be used to raise Passengers performance to So-So level, So-So to Star level This is a more enlightened way to manage for future sales success