don't know why more subscription vendors don't do this. Subscription companies collect
mountains of data from their customers, and analyzing the aggregations can deliver profound insights virtually for free. Yet too often subscribers are reluctant to let their data be stripped of identifying characteristics and used for research. Too bad, because there's gold in that big data.
Building a Sales Team by the Numbers
One subscription provider that isn't afraid to do the analysis or to ask its customers to contribute to generating new knowledge is Xactly, the sales incentive compensation ninjas. For many years the company has captured data about sales performance and provided concrete information to its subscribers about things like attainment vs. quota and how they compare with peers.
One of the early findings they released was that women sales reps were more loyal and were better at delivering on-quota performance -- yet they were paid a little less. Sad.
The Most Fertile Ground
Xactly has been doing this kind of analysis because it has the data, and because its customers understand the value of seeing how they compare to the averages. Good on them. The most recent data to come out of Xactly involves understanding the nuances of different cities as places to plant your next sales office. That might sound a little in the weeds, but I guarantee you every sales VP thinks about it at some point.
The data concretely shows that cities on the West coast and in the South have a lot to offer, while some of the big cities of the North and East are surprisingly... different. Conventional wisdom says that you simply must have an office in New York or Boston and Chicago -- yet these cities have some of the lowest average staff attainment rates: New York 60 percent, Boston 54 percent and Chicago 46 percent.
Interestingly, turnover in those markets is very low relative to other places, with New York at 16 percent; Boston, 19 percent; and Chicago 24 percent. Compare those cities to a place like Austin, with turnover at only 20 percent but attainment at 75 percent -- and Austin isn't alone.
The West coast has some of the most productive cities -- but Denver, at 83 percent attainment, takes the cake.
Xactly also tracks things like the cost per square foot for real estate, which you'll need to plug into your cost calculation when aiming to open a new office -- but what does this all mean? How do you analyze this?
Understanding the Data
It would be easy to say that sales reps in the Northeast are terrible, and the people on the West coast have it all together -- but maybe not. It takes more than meets the eye to analyze this.
First, everyone wants an office in the big cities, especially in the Northeast where there are loads of big corporate headquarters -- a condition one of my sales managers once described as "target rich" -- so the region attracts sales managers and their people. However, if everyone has the same idea, it drives up competition to the point where no one really wins, which is one interpretation of the data.
Second, variable pay is a much larger share of compensation in the East than the West -- for instance, just topping US$47K in New York but only $8.8K in Seattle. This leads me to wonder about turnover. It's 41 percent in Seattle and only 16 percent in New York.
Do people leave more readily in Seattle because there's never much on the table? Or, flipping it around, are companies more reluctant to fire people in the Northeast because they're all taking a serious draw against commissions? Fire people, and say good-bye to the recoverable draw.
You can understand a lot from a few charts -- but as a manager, you need to make the right calls when hiring and expanding. A compensation plan has to be competitive for the market the office serves, or you'll risk not being able to hire good people because their perception will be that another offer that is more in line with local norms is better.
Real Costs of Real Estate
The least-expensive cities for real estate costs per square foot are Atlanta at $23.51, Denver at $25.80 and Chicago at $30.13. So, at the end of the day, you find yourself calculating quota attainment vs. real estate costs vs. fixed and variable costs per rep.
At some point, you need to factor all of it into the actual cost of a rep, and play that against expected revenues. You still won't be done, because as good as those numbers are, they are all largely extraneous to most businesses.
You need to understand where your customers are, and how they like or expect to be treated -- and for that, there's a big overlay of experience and industry clustering. So, as good as this information is, we need to take it as a first cut when determining where to situate the next sales office.
What's great is that with this information and more to come, we can begin to rely less on gut instinct, and manage better by the numbers.
