December 2009

White Paper

The Roadmap to Success: How Best-In-Class Sales Organizations use On-Boarding to Accelerate Revenue Selection Strategies

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Effective On‐Boarding: The Ramp to a New Sales Rep’s Success

The top 20% best‐in‐class companies with an effective on‐boarding process showed over a 3x (60% vs. 19%) advantage in time‐to‐productivity reduction when compared to other companies. “All Aboard: Effective On‐boarding Techniques and Strategies”, Aberdeen Group, January, 2008

What is effective on‐boarding? Why is it particularly important to sales organizations? How do you “operationalize” it? In this white paper, we will answer these questions as well as provide tools (see the last page of this paper in order to request a “Starter Kit”) and a practical guide on how to develop an effective on‐boarding program for new sales people. Although successful on‐boarding principles apply to all parts of the organization, because we’re concerned with sales best practices this paper will take a narrower view. The enormous potential impact of this program on the productivity of newly hired sales reps makes their successful on‐boarding particularly imperative. Simply put, effective on‐boarding is a best practice. It’s one of the cornerstones of best‐in‐class sales organizations and new hire sales success.

What is effective on‐boarding? Let’s start with what on‐boarding isn’t. Although it’s often confused with it, it isn’t just a new hire orientation program. New‐hire orientation is a subcomponent of the on‐boarding process that deals primarily with administrative in‐processing and other HR‐related activities and acts as a general introduction to the company rather than a sales focused on‐boarding program. Effective on‐boarding is a formal process that best‐in‐class sales organizations develop, implement and monitor to ensure consistent and optimal ramp‐up for all newly hired sales people. The primary objective and efficacy of a sales on‐boarding program must be measured by its ability to accelerate time‐to‐revenue. Specifically, reducing the ramp‐up time for each sales representative, so they are generating revenue faster than typical financial models plan for. While there are other metrics that may indicate how effective the program is at increasing productivity, accelerating revenue production is the single most important aspect. The following are some tenets of an effective on‐boarding program: It must be documented—a written program with specific activities, tasks, timeframes, deadlines and expected outcomes.

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It needs to be measured. It’s necessary to inspect what you expect to ensure that each activity and task is completed and validated, as well as, measuring the overall effectiveness in speeding productivity.

It needs to be time‐bound. On‐boarding is a more lengthy process than simply conducting a “new‐hire orientation” and all related activities should be tied to specific weekly, monthly or quarterly milestones. The milestones should relate to immersing the new hire in a complete business cycle with the objective of being able to effectively position and sell the solution and generate revenue as quickly as possible.

It must involve the hiring sales manager as the central figure. Oversight shouldn’t be passed off to an assistant or become an HR‐owned program. While specific activities may be delegated, in fact, individual sales reps should be expected to self‐administer many of the tasks, this program is operational in nature and the hiring sales manager must play a central role in its conduct.

It requires regular in‐progress reviews (IPRs), preferably weekly or bimonthly, so that goals and milestones are reviewed complete with feedback and progress against the checklist memorialized in the plan document.

It needs to have incentives and rewards tied to it. This may be a perfect opportunity to align with a draw or other remuneration as part of the offer process.

It must hold sales management accountable for getting their sales reps ramped‐up consistently and optimally.

Why is it important to a sales organization? Effective on‐boarding reduces the time to productivity and as a result, speeds revenue generation. Most sales organizations have metrics for new sales rep ramp‐up and productivity. While you can assign a full‐year sales quota to new sales reps regardless of when they join it’s counterproductive if they aren’t fully ramped up. The concept behind a “pro‐rated” sales quota is based on how long it should typically take a new sales rep to get ramped‐up but often these are assigned without the benefit of an on‐boarding program and so the results may be less predictable. This lack of consistent revenue production across the entire sales organization is precisely why an effective on‐boarding program is paramount. You need to gauge new sales rep time‐to‐productivity as precisely as possible. An effective on‐boarding process results in greater accuracy, because sales managers truly know how long it should take to get a new sales rep fully productive. If you can shave a month or two off of the ramp‐up period, it can have tremendously positive revenue implications. Even for a complex product or solution sale, shaving a month or two off of the new sales rep ramp‐up is quite achievable. Even if you only hire 2‐4 new sales reps (replacement and expansion hires in total) in a given year, at a $2.4MM annual quota, that accelerated time to revenue productivity (based on a 1 to 2 month efficiency gain),

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results in an additional $400K‐$1.6MM in revenue. This illustrates how having an effective on‐boarding program is important for all companies, not just large ones with numerous new hires in a year. In fact, it maybe even more important for smaller and early‐stage companies that simply don’t have the luxury of missing new sales rep ramp‐up projections. “90% of employees make their decision to stay at a company within the first six months.” Sukanya Mitra, “Strategic Employee On‐Boarding”, AICPA Insider e‐Newsletter, March 2008 Another natural byproduct of effective on‐boarding is higher retention rates relative to industry and competitive averages. Happier, successful sales people stay longer. New sales reps appreciate a process that helps them start to make money faster and maximizes their earning potential. Why doesn’t everyone do it? The fact is, a lot of companies and sales managers simply don’t know how. In many smaller companies or start‐ups, sales management doesn’t have experience developing an on‐boarding program. They may have come from larger or more mature companies, with longstanding processes in place that are developed by others. As mentioned earlier, some companies and sales managers mistake a “new‐hire orientation program” with an on‐boarding process. Paradoxically, sales managers often focus the majority of their cycles with the sales reps that are fully productive and have existing pipelines and deals to close. This focus comes at the expense of getting the new sales reps ramped‐up to full productivity. Managers need to strike a healthy balance in how and where they invest their time. Getting new sales reps off on the right foot is just as critical. A self‐fulfilling prophecy comes about in the form of companies that don’t measure and hold their sales managers responsible for on‐boarding effectiveness and sales rep retention rates. Best‐in‐class sales organizations understand this and measure and reward their sales managers for delivering optimal new sales rep ramp‐up along with higher retention rates. Not surprisingly, top performing sales managers and sales teams leverage an on‐boarding process that results in generating revenue faster, with ultimately more revenue for the company and increased earnings for the sales reps. “Operationalizing” an effective on‐boarding process There are some specific facets that should be considered in “operationalizing” the process: On‐boarding can be viewed as a “script” for the first 30/60/90/120 days for new sales reps.

Incremental weekly goals and metrics written and specified in the plan Weekly new sales ramp‐up plan review meeting with new sales rep and sales manager Detailed and written feedback provided and updated on a weekly basis Financial rewards tied to plan for both new sales rep and sales manager

• Always tie any draw in offer to sales ramp‐up plan

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Ramp‐up should include the new sales reps responsibility for achieving full proficiency in these areas over the first 30/60/90/120 days on‐board:

Messaging

• Ability to effectively articulate the product or solution “pitch” • Articulate value proposition • Cite unique differentiation • Relate customer “use cases” and success anecdotes • Test new sales rep message proficiency through mock sales pitch exercise(s)

Pricing

• Review pricing model • Discounting and approval process • Test new sales rep proficiency through different product pricing configurations exercise

Competition

• Review SWOT analysis for all key competitors • Test new sales rep proficiency through different competitor scenario exercise

Legal/Finance

• Review contracts and finance policies for revenue recognition and sales order processing • Test new sales rep proficiency/knowledge

Product Management

• New products or releases • Familiarize with sales field feedback loop to Engineering

Engineering

• Development process review • QA process review • Familiarize with sales field feedback loop to Engineering

Professional Services

• Scoping deals process review • Process for leveraging professional services in sales cycles

Customer Support

• Customer support process review • Success stories

Marketing • Demand generation plan for new territory with milestones at the 30/60/90/120 day marks

Sales Management • New Sales Rep Territory Development Plan • Sales process and methodology • Sales forecasting rules and procedures • Sales Force Automation

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Lastly, there are some technology vendors that automate the on‐boarding process and may provide useful tools, a few you may want to investigate are: Taleo Corporation, www.taleo.com Silkroad Technology, www.silkroad.com Cornerstone OnDemand, www.cornerstoneondemand.com

Summary If you don’t have an effective on‐boarding process for new sales reps this white paper and the “Starter Kit” can assist you in developing and implementing one. Here are the key takeaways: On‐boarding is a process not a discrete event. While accelerating revenue is the primary objective

it is also about learning how you do business and building a strong foundation in each new hire. On‐boarding has more to do with socialization and assimilation into the company and its culture

than a simple orientation program. The sales manager is central to the on‐boarding process, not HR; communicating the manager’s

intent and expectations (setting the tone & performance standards) is a critical component. The process has tactical aspects but is strategic in nature; there are administrative tasks, but they

are part & parcel of the entire approach. You need to have clearly defined on‐boarding process metrics that are measured and rewarded.

Organizational size doesn’t matter; the smaller the organization the more critical the process

because it provides more structure and enhances the ramp‐up of new hires (especially for organizations that operate virtually). We strongly encourage each sales organization to go through the process of identifying the attributes of an effective on‐boarding process unique to their environment, culture and situation. The information we’ve shared should add the appropriate tools to your skill set and help you in that effort. Good Hiring & Good Selling!

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To obtain the “On‐Boarding Starter Kit” simply reply to the original message or send an e‐mail to either of the addresses listed below and request the kit. About True Sales Results, LLC True Sales Results (TSR) provides strategic sales consulting expertise (interim VP of Sales or VP of Business Development) and outsourced sales services (virtual sales teams) to our customers. With over 20 years experience in the high tech indus‐try, TSR is uniquely qualified to help your company develop and implement the optimal sales process, acquire new cus‐tomers, fix stagnant sales models, introduce a new product or solution to the market, penetrate a new geography or verti‐cal, or rapidly build and ramp a sales team from scratch. Whether your business is a start‐up trying to sell to your first customers or a multi‐billion dollar revenue entity, TSR stimulates your sales and delivers tangible value and results. Contact: True Sales Results, LLC 925.960.0189 info@truesalesresults.com www.truesalesresults.com About Selection Strategies, Inc. Selection Strategies, Inc. (SSI) is a boutique executive search and consulting firm focused on the complex selling world of the software vendor segment of the Information Technology industry. Selection Strategies provides retained and out‐sourced search services combined with an assessment and selection methodology designed to significantly increase the odds of identifying, hiring and retaining the right talent for the role. SSI provides its selection methodology as a stand‐alone offering to assist clients as they seek to identify the attributes of success and incorporate that knowledge into their recruiting and hiring practices. Selection Strategies provides its clients with more than a source for candidates; with over 20 years experience in the high tech industry, Selection Strategies is positioned to provide its clients with more than just being a source of candidates but with the expertise and methods to build world‐class sales organizations. Contact: Selection Strategies, Inc. 773.244.1609 rossrich@selectionstrategies.com www.selectionstrategies.com © 2009, All Rights Reserved TrueSalesResults, LLC and Selection Strategies, Inc.